Republic of the Philippines

SUPREME COURT
Manila
EN BANC
G.R. No. L-29646 November 10, 1978
MAYOR ANTONIO J. VILLEGAS, petitioner,
vs.
HIU CHIONG TSAI PAO HO and JUDGE FRANCISCO
ARCA, respondents.
Angel C. Cruz, Gregorio A. Ejercito, Felix C. Chaves & Jose
Laureta for petitioner.

In this petition, Hiu Chiong Tsai Pao Ho assigned the following as

his grounds for wanting the ordinance declared null and void:
1) As a revenue measure imposed on aliens
employed in the City of Manila, Ordinance No.
6537 is discriminatory and violative of the rule of
the uniformity in taxation;
2) As a police power measure, it makes no
distinction between useful and non-useful
occupations, imposing a fixed P50.00
employment permit, which is out of proportion to
the cost of registration and that it fails to prescribe
any standard to guide and/or limit the action of the
Mayor, thus, violating the fundamental principle on
illegal delegation of legislative powers:

Sotero H. Laurel for respondents.

FERNANDEZ, J.:
This is a petition for certiorari to review tile decision dated
September 17, 1968 of respondent Judge Francisco Arca of the
Court of First Instance of Manila, Branch I, in Civil Case No.
72797, the dispositive portion of winch reads.
Wherefore, judgment is hereby rendered in favor
of the petitioner and against the respondents,
declaring Ordinance No. 6 37 of the City of Manila
null and void. The preliminary injunction is made
permanent. No pronouncement as to cost.

3) It is arbitrary, oppressive and unreasonable,

being applied only to aliens who are thus,
deprived of their rights to life, liberty and property
and therefore, violates the due process and equal
protection clauses of the Constitution. 7
On May 24, 1968, respondent Judge issued the writ of
preliminary injunction and on September 17, 1968 rendered
judgment declaring Ordinance No. 6537 null and void and making
permanent the writ of preliminary injunction. 8
Contesting the aforecited decision of respondent Judge, then
Mayor Antonio J. Villegas filed the present petition on March 27,
1969. Petitioner assigned the following as errors allegedly
committed by respondent Judge in the latter's decision of
September 17,1968: 9

SO ORDERED.
I
Manila, Philippines, September 17, 1968.
The controverted Ordinance No. 6537 was passed by the
Municipal Board of Manila on February 22, 1968 and signed by
the herein petitioner Mayor Antonio J. Villegas of Manila on March
27, 1968. 2

THE RESPONDENT JUDGE COMMITTED A

SERIOUS AND PATENT ERROR OF LAW IN
RULING THAT ORDINANCE NO. 6537
VIOLATED THE CARDINAL RULE OF
UNIFORMITY OF TAXATION.

City Ordinance No. 6537 is entitled:

II

AN ORDINANCE MAKING IT UNLAWFUL FOR

ANY PERSON NOT A CITIZEN OF THE
PHILIPPINES TO BE EMPLOYED IN ANY
PLACE OF EMPLOYMENT OR TO BE
ENGAGED IN ANY KIND OF TRADE, BUSINESS
OR OCCUPATION WITHIN THE CITY OF
MANILA WITHOUT FIRST SECURING AN
EMPLOYMENT PERMIT FROM THE MAYOR OF
MANILA; AND FOR OTHER PURPOSES. 3
Section 1 of said Ordinance No. 6537 4 prohibits aliens from being
employed or to engage or participate in any position or occupation or
business enumerated therein, whether permanent, temporary or
casual, without first securing an employment permit from the Mayor
of Manila and paying the permit fee of P50.00 except persons
employed in the diplomatic or consular missions of foreign countries,
or in the technical assistance programs of both the Philippine
Government and any foreign government, and those working in their
respective households, and members of religious orders or
congregations, sect or denomination, who are not paid monetarily or
in kind.
Violations of this ordinance is punishable by an imprisonment of
not less than three (3) months to six (6) months or fine of not less
than P100.00 but not more than P200.00 or both such fine and
imprisonment, upon conviction. 5
On May 4, 1968, private respondent Hiu Chiong Tsai Pao Ho who
was employed in Manila, filed a petition with the Court of First
Instance of Manila, Branch I, denominated as Civil Case No.
72797, praying for the issuance of the writ of preliminary
injunction and restraining order to stop the enforcement of
Ordinance No. 6537 as well as for a judgment declaring said
Ordinance No. 6537 null and void. 6

RESPONDENT JUDGE LIKEWISE COMMITTED

A GRAVE AND PATENT ERROR OF LAW IN
RULING THAT ORDINANCE NO. 6537
VIOLATED THE PRINCIPLE AGAINST UNDUE
DESIGNATION OF LEGISLATIVE POWER.
III
RESPONDENT JUDGE FURTHER COMMITTED
A SERIOUS AND PATENT ERROR OF LAW IN
RULING THAT ORDINANCE NO. 6537
VIOLATED THE DUE PROCESS AND EQUAL
PROTECTION CLAUSES OF THE
CONSTITUTION.
Petitioner Mayor Villegas argues that Ordinance No. 6537 cannot
be declared null and void on the ground that it violated the rule on
uniformity of taxation because the rule on uniformity of taxation
applies only to purely tax or revenue measures and that
Ordinance No. 6537 is not a tax or revenue measure but is an
exercise of the police power of the state, it being principally a
regulatory measure in nature.
The contention that Ordinance No. 6537 is not a purely tax or
revenue measure because its principal purpose is regulatory in
nature has no merit. While it is true that the first part which
requires that the alien shall secure an employment permit from
the Mayor involves the exercise of discretion and judgment in the
processing and approval or disapproval of applications for
employment permits and therefore is regulatory in character the
second part which requires the payment of P50.00 as employee's
fee is not regulatory but a revenue measure. There is no logic or
justification in exacting P50.00 from aliens who have been

cleared for employment. It is obvious that the purpose of the

ordinance is to raise money under the guise of regulation.
The P50.00 fee is unreasonable not only because it is excessive
but because it fails to consider valid substantial differences in
situation among individual aliens who are required to pay it.
Although the equal protection clause of the Constitution does not
forbid classification, it is imperative that the classification should
be based on real and substantial differences having a reasonable
relation to the subject of the particular legislation. The same
amount of P50.00 is being collected from every employed alien
whether he is casual or permanent, part time or full time or
whether he is a lowly employee or a highly paid executive

Republic of the Philippines

SUPREME COURT
Manila
EN BANC
G.R. No. L-15972

Ordinance No. 6537 does not lay down any criterion or standard
to guide the Mayor in the exercise of his discretion. It has been
held that where an ordinance of a municipality fails to state any
policy or to set up any standard to guide or limit the mayor's
action, expresses no purpose to be attained by requiring a permit,
enumerates no conditions for its grant or refusal, and entirely
lacks standard, thus conferring upon the Mayor arbitrary and
unrestricted power to grant or deny the issuance of building
permits, such ordinance is invalid, being an undefined and
unlimited delegation of power to allow or prevent an activity per
se lawful. 10
In Chinese Flour Importers Association vs. Price Stabilization
Board, 11 where a law granted a government agency power to
determine the allocation of wheat flour among importers, the
Supreme Court ruled against the interpretation of uncontrolled power
as it vested in the administrative officer an arbitrary discretion to be
exercised without a policy, rule, or standard from which it can be
measured or controlled.
It was also held in Primicias vs. Fugoso 12 that the authority and
discretion to grant and refuse permits of all classes conferred upon
the Mayor of Manila by the Revised Charter of Manila is not
uncontrolled discretion but legal discretion to be exercised within the
limits of the law.
Ordinance No. 6537 is void because it does not contain or
suggest any standard or criterion to guide the mayor in the
exercise of the power which has been granted to him by the
ordinance.
The ordinance in question violates the due process of law and
equal protection rule of the Constitution.
Requiring a person before he can be employed to get a permit
from the City Mayor of Manila who may withhold or refuse it at will
is tantamount to denying him the basic right of the people in the
Philippines to engage in a means of livelihood. While it is true that
the Philippines as a State is not obliged to admit aliens within its
territory, once an alien is admitted, he cannot be deprived of life
without due process of law. This guarantee includes the means of
livelihood. The shelter of protection under the due process and
equal protection clause is given to all persons, both aliens and
citizens. 13
The trial court did not commit the errors assigned.
WHEREFORE, the decision appealed from is hereby affirmed,
without pronouncement as to costs.
SO ORDERED.
Barredo, Makasiar, Muoz Palma, Santos and Guerrero, JJ.,
concur.
Castro, C.J., Antonio and Aquino, Fernando, JJ., concur in the
result.
Concepcion, Jr., J., took no part.

October 11, 1920

KWONG SING, in his own behalf and in behalf of all others

having a common or general interest in the subject-matter of
this action, plaintiff-appellant,
vs.
THE CITY OF MANILA, defendant-appellant.
G. E. Campbell for appellant.
City Fiscal Diaz for appellee.

MALCOLM, J.:
The validity of Ordinance No. 532 of the city of Manila requiring
receipts in duplicate in English and Spanish duly signed showing
the kind and number of articles delivered by laundries and dyeing
and cleaning establishments, must be decided on this appeal.
The ordinance in question reads as follows:
[ORDINANCE No. 532.]
AN ORDINANCE REGULATING THE DELIVERY AND
RETURN OF CLOTHES OR CLOTHS DELIVERED TO
BE WASHED IN LAUNDRIES, DYEING AND CLEANING
ESTABLISHMENTS.
Be it ordained by the Municipal Board of the city of
Manila, that:
SECTION. 1. Every person, firm or corporation in the city
of Manila engaged in laundering, dyeing, or cleaning by
any process, cloths or clothes for compensation, shall
issue dyed, or cleaned are received a receipt in duplicate,
in English and Spanish, duly signed, showing the kind
and number of articles delivered, and the duplicate copy
of the receipt shall be kept by the owner of the
establishment or person issuing same. This receipt shall
be substantially of the following form:
No. ______________

MANILA,
______________________________________________
_, 19________
Received of
Mr.__________________________________________
(Name)
_______________________________________ the
following articles delivered
(Residence.)
to me to be
_______________________________________
(Washed, cleaned or dyed.)
"_____________________________________________
_____

"_____________________________________________
_____
"_____________________________________________
_____
"_____________________________________________
_____
This articles will have been
___________________________________________
(Cleaned,
washed or dyed.)
may be taken at ___________m. on the ________ day of
______________, 19 _____ upon payment of P________
the amount of compensation for the work done.
_________________________________________
(Owner or person in charge.)

business of laundries and dyeing and cleaning establishments

could be regulated, as this term is above construed, by an
ordinance in the interest of the public health, safety, morals,
peace good order, comfort, convenience, prosperity, and the
general welfare.
The purpose of the municipal authorities in adopting the
ordinance is fairly evident. Ordinance No. 532 was enacted, it is
said, to avoid disputes between laundrymen and their patrons
and to protect customers of laundries who are not able to
decipher Chinese characters from being defrauded. The object of
the ordinance was, accordingly, the promotion of peace and good
order and the prevention of fraud, deceit, cheating, and
imposition. The convenience of the public would also presumably
be served in a community where there is a Babel of tongues by
having receipts made out in the two official languages.
Reasonable restraints of a lawful business for such purposes are
permissible under the police power. The legislative body is the
best judge of whether or not the means adopted are adequate to
accomplish the ends in view.

Provided, however, That in case the articles to be delivered are

so many that it will take much time to classify them, the owner of
the establishment, through the consent of the person delivering
them, may be excused from specifying in the receipt the kinds of
such articles, but he shall state therein only the total number of
the articles so received.

Chinese laundrymen are here the protestants. Their rights,

however, are not less because they may be Chinese aliens. The
life, liberty, or property of these persons cannot be taken without
due process of law; they are entitled to the equal protection of the
laws without regard to their race; and treaty rights, as effectuated
between the United States and China, must be accorded them.

SEC. 2. No person shall take away any cloths or clothes

delivered to a person, firm, or corporation, mentioned in the
preceding section, to be washed, dyed or cleaned, unless he
returns the receipt issued by such person, firm, or corporation.

With these premises conceded, appellant's claim is, that

Ordinance No. 532 savors of class legislation; that it unjustly
discriminates between persons in similar circumstances; and that
it constitutes an arbitrary infringement of property rights. To an
extent, the evidence for the plaintiffs substantial their claims.
There are, in the city of Manila, more than forty Chinese laundries
(fifty-two, according to the Collector of Internal Revenue.) The
laundrymen and employees in Chinese laundries do not, as a
rule, speak, read, and write English or Spanish. Some of them
are, however, able to write and read numbers.

SEC. 3. Violation of any of the provisions of this ordinance shall

be punished by a fine of not exceeding twenty pesos.
SEC. 4. This Ordinance shall take effect on its approval.

1awph!l.net

Approved February 25, 1919.

In the lower court, the prayer of the complaint was for a
preliminary injunction, afterwards to be made permanent,
prohibiting the city of Manila from enforcing Ordinance No. 532,
and for a declaration by the court that the said ordinance was null
and void. The preliminary injunction was granted. But the
permanent injunction was not granted for, after the trial, judgment
was, that the petitioner take nothing by his action, without special
finding as to costs. From this judgment plaintiff has appealed,
assigning two errors as having been committed by the trial court,
both intended to demonstrate that Ordinance No. 532 is invalid.

Plaintiff's contention is also that the ordinance is invalid, because

it is arbitrary, unreasonable, and not justified under the police
power of the city. It is, of course, a familiar legal principle that an
ordinance must be reasonable. Not only must it appear that the
interest of the public generally require an interference with private
rights, but the means adopted must be reasonably necessary for
the accomplishment of the purpose and not unduly oppressive
upon individuals. If the ordinance appears to the judicial mind to
be partial or oppressive, it must be declared invalid. The
presumption is, however, that the municipal authorities, in
enacting the ordinance, did so with a rational and conscientious
regard for the rights of the individual and of the community.

The government of the city of Manila possesses the power to

enact Ordinance No. 532. Section 2444, paragraphs (l) and (ee)
of the Administrative Code, as amended by Act No. 2744, section
8, authorizes the municipal board of the city of Manila, with the
approval of the mayor of the city:

Up to this point, propositions and facts have been stated which

are hardly debatable. The trouble comes in the application of
well-known legal rules to individual cases.

(l) To regulate and fix the amount of the license fees for
the
following: . . . laundries . . .
(ee) To enact all ordinances it may deem necessary and
proper for the sanitation and safety, the furtherance of the
prosperity, and the promotion of the morality, peace, good
order, comfort, convenience, and general welfare of the
city and its inhabitants, and such others as may be
necessary to carry into effect and discharge the powers
and duties conferred by this chapter. . . .
The word "regulate," as used in subsection (l), section 2444 of the
Administrative Code, means and includes the power to control, to
govern, and to restrain; but "regulate" should not be construed as
synonymous with "supress" or "prohibit." Consequently, under the
power to regulate laundries, the municipal authorities could make
proper police regulations as to the mode in which the employment
or business shall be exercised. And, under the general welfare
clause (subsection [ee], section 2444 of the Manila Charter), the

Our view, after most thoughtful consideration, is, that the

ordinance invades no fundamental right, and impairs no personal
privilege. Under the guise of police regulation, an attempt is not
made to violate personal property rights. The ordinance is neither
discriminatory nor unreasonable in its operation. It applies to all
public laundries without distinction, whether they belong to
Americans, Filipinos, Chinese, or any other nationality. All, without
exception, and each everyone of them without distinction, must
comply with the ordinance. There is no privilege, no
discrimination, no distinction. Equally and uniformly the ordinance
applies to all engaged in the laundry business, and, as nearly as
may be, the same burdens are cast upon them.
The oppressiveness of the ordinance may have been somewhat
exaggerated. The printing of the laundry receipts need not be
expensive. The names of the several kinds of clothing may be
printed in English and Spanish with the equivalent in Chinese
below. With such knowledge of English and Spanish as
laundrymen and their employees now possess, and, certainly, at
least one person in every Chinese laundry must have a
vocabulary of a few words, and with ability to read and write

arabic numbers, no great difficulty should be experienced,

especially after some practice, in preparing the receipts required
by Ordinance No. 532. It may be conceded that an additional
burden will be imposed on the business and occupation affected
by the ordinance. Yet, even if private rights of person or property
are subjected to restraint, and even if loss will result to individuals
from the enforcement of the ordinance, this is not sufficient
ground for failing to uphold the hands of the legislative body. The
very foundation of the police power is the control of private
interests for the public welfare.

YU CONG ENG, ET AL., petitioners,

vs.
W. TRINIDAD, Collector of Internal Revenue, ET
AL., respondents.

Numerous authorities are brought to our attention. Many of these

cases concern laundries and find their origin in the State of
California. We have examined them all and find none which impel
us to hold Ordinance No. 532 invalid. Not here, as in the leading
decision of the United States Supreme Court, which had the
effect of nullifying an ordinance of the City and Country of San
Francisco, California, can there be any expectation that the
ordinance will be administered by public authority "with an evil
eye and an unequal hand." (Yick Wo vs. Hopkins [1886], 118 U.
S., 356, which compare with Barbiervs. Connolly [1884], 113 U.
S., 27.)

The issue in these proceedings is the validity of Act No. 2972 of

the Philippine Legislature, popularly known as the Chinese
Bookkeeping Law. It is a question of paramount importance which
the record shows, has been laid before this court following the
failure of diplomatic negotiations and executive pressure to
secure from the local law-making body either the repeal of the law
or a modification of its provisions. It is, moreover, a question
which, extensive argument and original investigation disclose,
stands in the shadowland betwixt constitutionality and
unconstitutionality, to the solution of which we propose to give
careful consideration.

There is no analogy between the instant case and the former one
of Young vs. Rafferty [1916], 33 Phil., 556). The holding there was
that the Internal Revenue Law did not empower the Collector of
Internal Revenue to designate the language in which the entries
in books shall be made by merchants, subject to the percentage
tax. In the course of the decision, the following remark was
interpolated: "In reaching this conclusion, we have carefully
avoided using any language which would indicate our views upon
the plaintiffs' second proposition to the effect that if the regulation
were an Act of the Legislature itself, it would be invalid as being in
conflict with the paramount law of the land and treaties regulating
certain relations with foreigners." There, the action was taken by
means of administrative regulation; here, by legislative
enactment. There, governmental convenience was the aim; here,
the public welfare. We are convinced that the same justices who
participated in the decision in Young vs. Rafferty [supra] would
now agree with the conclusion toward which we are tending.

The petitioners are Chinese merchants claiming to represent

themselves and all other persons similarly situated and affected,
particularly twelve thousand Chinese merchants. The
respondents, against whom the petition for prohibition and
injunction is directed, are the Collector of Internal Revenue, the
Fiscal of the City of Manila, and Honorable Pedro Concepcion,
Judge of First Instance of Manila. The allegations of the petition
center on the unconstitutionality of Act No. 2972 abovementioned.

Our holding is, that the government of the city of Manila had the
power to enact Ordinance No. 532 and that as said ordinance is
found not to be oppressive, nor unequal, nor unjust, it is valid.
This statement disposes of both assignments of error, for the
improprietry of the question answered by a witness for the
defense over the objection of plaintiff's attorney can be conceded
without affecting the result.

In order that the court might be assisted by having before it all

possible facts and circumstances which might aid it in arriving at
a correct conclusion, the parties were permitted to offer evidence
to substantiate their claims. Nearly one thousand pages of
testimony, more or less relevant to the issue, have resulted. While
all of this testimony has been gone over with painstaking care, it
is not feasible for the court to encumber the decision with rulings
on the multitudinous objections which have perfunctorily been
raised before the commissioner.

After the case was submitted to this court, counsel for appellants
asked that a preliminary injunction issue, restraining the
defendant or any of its officers from enforcing Ordinance No. 532,
pending decisions. It was perfectly proper for the trial and
appellate courts to determine the validity of the municipal
ordinance on a complaint for an injunction, since it was very
apparent that irreparable injury was impending, that a municipality
of suits was threatened, and that complainants had no other
plain, speedy, and adequate remedy. But finding that the
ordinance is valid, the general rule to the effect that an injunction
will not be granted to restrain a criminal prosecution should be
followed.
Judgment is affirmed, and the petition for a preliminary injunction
is denied, with costs against the appellants. So ordered.
Mapa, C.J., Johnson, Araullo, Avancea and Villamor, JJ.,
concur.

Republic of the Philippines

SUPREME COURT
Manila
EN BANC
G.R. No. L-20479

February 6, 1925

Gabriel La O, Palma and Leuterio and Gibbs and McDonough for

petitioners.
The City Fiscals Revilla, Guevara and Felix for respondents.
MALCOLM, J.:

To the petition (later amended), a demurrer was interposed by the

respondents which met squarely the main issue of
constitutionality, while raising, in addition, the preliminary question
of jurisdiction. Following oral argument, the court overruled
respondents' demurrer and required them to answer. To
respondents' answer to the amended petition, petitioners
presented a demurrer.

Before passing to our principal task, it is necessary to say

something about the preliminary point of jurisdiction argued by
counsel, relating to the propriety of the constitutional question
being decided in original proceedings in prohibition.
The Supreme Court is granted both concurrent jurisdiction in
prohibition with Courts of First Instance over inferior tribunals or
persons, and original jurisdiction over Courts of First Instance
when such courts are exercising functions without or in excess of
their jurisdiction. (Code of Civil Procedure, sec. 516.) It is a
jurisdiction, however, which must be exercised circumspectly, for
otherwise, the court would usurp the powers of judges of First
Instance. The law having given to judges of First Instance
jurisdiction to try criminal cases, the appellate court should not
meddle with the initiation or trial of such cases, except for good
reasons, and should not permit the substitution of extraordinary
proceedings for appeal.
As before held by this court, and by the Federal courts, equity has
power, to be exercised in power cases, to restrain criminal
prosecutions under unconstitutional statutes, and to grant
preliminary injunctions where the constitutionality of a given penal
law is doubtful and fairly debatable, and permanent injunctions
where the laws are held invalid. The remedy by injunction to
restrain the enforcement of unconstitutional statutes or abuse of
authority under a valid statute, seems to be limited to cases

where property rights are threatened with irreparable injury or

where persons would be subjected to a multiplicity of suits.
A more complicated question arises, with reference to what stage
of a threatened criminal prosecution, an accused person shall
have the right to test the validity of a criminal statute by means of
original proceedings presented in the appellate court. We believe
the correct principle was announced in Cadwallader-Gibson
Lumber Co. vs. Del Rosario ( [1913], 26 Phil., 192). In other
words, as a general rule, the question of constitutionality must be
raised in the lower court and that court must be given an
opportunity to pass upon the question before it may be presented
to the appellate court for resolution. Yet occasionally, under a
recently enacted statute affecting numerous persons and
extensive property rights, liable to give rise to a multiplicity of
actions and numerous prosecutions, it is proper, right at the
threshold of a prosecution, to have the validity of a given law
determined in the interest of the accused and of the public, so as
to permit of the orderly administration of justice. (Ex parte Young
[1908], 209 U.S., 123; Truax vs. Raich [1915], 239 U. S., 33;
Wilson vs. New and Ferris [1917], 243 U. S., 332; Hammer vs.
Dagenhart [1918], 247 U.S., 251; International News Service vs.
Associated Press [1918], 248 U.S., 215; C. A. Weed & Co. vs.
Lockwood [1920], 255 U.S., 104; Terrace vs. Thompson [1923],
263 U.S., 197; Young vs. Rafferty [1916], 33 Phil., 556; Kwong
Sing vs. City of Manila [1920], 41 Phil., 103; Dimayuga and
Fajardo vs. Fernandez [1922], 43 Phil., 304; and Fleischmann,
Injunctions Restraining Prosecution Under Unconstitutional
Statutes, 9 American Bar Associations Journal, March, 1923, p.
169.)
Inasmuch as the property and personal rights of nearly twelve
thousand merchants are affected by these proceedings, and
inasmuch as Act No. 2972 is a new law not yet interpreted by the
courts, in the interest of the public welfare and for the
advancement of public policy, we have determined to overrule the
defense of want of jurisdiction in order that we may decide the
main issue. We have here an extraordinary situation which calls
for a relaxation of the general rule.
We come then to take up the question of the validity of Act No.
2972. Said Act reads as follows:
No. 2972. AN ACT TO PROVIDE IN WHAT LANGUAGE
ACCOUNT BOOKS SHALL BE KEPT, AND TO ESTABLISH
PENALTIES FOR ITS VIOLATION.
Be it enacted by the Senate and House of Representatives of the
Philippines in Legislature assembled and by the authority of the
same:
SECTION 1. It shall be unlawful for any person, company,
partnership or corporation engaged in commerce, industry
or any other activity for the purpose of profit in the
Philippine Islands, in accordance with existing law, to
keep its account books in any language other than
English, Spanish or any local dialect.
SEC. 2. Any person violating the provisions of this Act
shall, upon conviction, be punished by a fine of not more
than ten thousand pesos, or by imprisonment for not more
than two years or both.
SEC. 3. This Act shall take effect on November first,
nineteen hundred and twenty-one.
Approved, February 21, 1921.
Subsequently, pursuant to the provisions of Act No. 2998, Act No.
2972 was made to take effect on January 1, 1923. But due to the
unavailing efforts of the Secretary of War, the present GovernorGeneral, and the Chinese Community to have Act No. 2972
repealed, so counsel for the petitioners intimates, its enforcement
was suspended until the adjournment of the Legislature in
February, 1923.

On March 2, 1923, the agents of the Bureau of Internal Revenue,

in the exercise of their legitimate functions, inspected the books
of account of the Chinese merchant Yu Cong Eng. Upon finding
that said books were not kept in accordance with their
understanding of the provisions of Act No. 2972, they took
possession of the merchant's books and referred the matter to
the city fiscal of Manila for appropriate action.
The city fiscal, considering that Yu Cong Eng had committed a
violation of the law, on March 7, 1923, caused an information to
be filed, subscribed, and sworn to before Judge of First Instance
Concepcion, thereby giving rise to criminal case No. 25551 of the
Court of First Instance of Manila. This information alleged in
substance that the accused merchant had kept his books of
account "only in Chinese, instead of keeping or causing them to
be kept in English, Spanish, or any local dialect, thus rendering it
difficult for the agents and authorized representatives of the
Government of the Philippine Islands and of the City of Manila, to
examine and inspect the aforementioned books of account,
thereby preventing and hindering the investigation and
determination of all the amount that said accused was, is, or will
be under obligation to pay for licenses, permits, and taxes." A
warrant of arrest was issued by the Judge of First Instance before
whom the information was filed, and in compliance therewith, the
accused merchant, now become the instant petitioner, was
arrested.
The antecedents of these proceedings, therefore, do not affect
directly any other person except the petitioner Yu Cong Eng who
says that he neither reads, writes, nor understands the English or
Spanish language or any local dialect, although inferentially
affecting all other merchants in a like situation.
To properly appreciate the situation, we must go back a little
further into the history of the case and must have before us the
applicable provisions of Philippine law.
The sales tax has been in force in the Philippines for a number of
years. Our law provides for privilege taxes to be levied on certain
businesses and occupations. These percentage taxes on
business are payable at the end of each calendar quarter in the
amount lawfully due on the business transacted during the past
quarter. It is made the duty of every person conducting a
business subject to such tax, within the same period as is allowed
for the payment of the quarterly installments of the fixed taxes
without penalty, to make a true and complete return of the amount
of the receipts or earnings of his business during the preceding
quarter and pay the tax due thereon. All merchants not
specifically exempted must pay a tax of one and one-half per cent
on the gross value in money of the commodities, goods, wares,
merchandise sold, bartered, exchanged, or consigned abroad by
them, such tax to be based on the actual selling price or value of
the things in question at the time they are disposed of or
consigned. (Administrative Code, secs. 1453 et seq.; Act No.
3065.)
The income tax has also been established here for sometime,
first pursuant to an Act of Congress and later pursuant to an Act
of the Philippine Legislature (Act No. 2833, as amended by Act
No. 2926). The customary returns are required from individuals
and corporations. The tax is computed and the assessments are
made by the Collector of Internal Revenue and his agents.
The sales tax and the income tax furnish a substantial part of the
revenue. Roughly speaking, about P10,000,000 from the sales
tax and about P2,000,000 from the income tax are secured
annually. (Exhibit 13.) Any appreciable leaks in these sources of
governmental revenue would be highly undesirable.
At the time the Internal Revenue Law of the Philippine Islands
was originally enacted, the Spanish Code of Commerce was in
force, and this Code still remains the centerpiece of our
commercial system, although considerably battered by
amendatory laws. The Code of Commerce provides that
merchants shall keep: (1) A book of inventories and balances; (2)
a daybook; (3) a ledger; (4) a copying book for letters and
telegrams; and (5) the other books required by special laws.

These books are supposed to be presented by merchants to a

justice of the peace for authentication. Merchants may
furthermore keep other books that they consider advisable,
according to the system of bookkeeping adopted. (Code of
Commerce, arts. 33 et seq.; Administrative Code, sec. 214;
Blanco, Derecho Mercantil, Tomo 1, pp. 561, 562.)
The Spanish Code of Commerce, it is thus seen, is silent as are
all the codes which follow the French system, regarding the
language in which books of account must be kept.
Under the provisions of the Code of Commerce and of the
Internal Revenue Law, the Collector of Internal Revenue had
authority "to require the keeping of a daily record of sales. No one
could say with any certainty what the amount of the tax would be
without such data." (Young vs. Rafferty, supra.) The collector of
Internal Revenue was also granted the power to make regulations
prescribing the manner in which the proper books, invoices, and
other papers shall be kept, and entries therein made by the
persons subject to the merchant's tax. (Act No. 2339, secs. 5,
6 [j]; Administrative Code, sec. 1424[j].)
Taking advantage of his supposed authority, pursuant to the
above cited provisions of law, the Collector of Internal Revenue
issued a circular letter on October 8, 1914, approved by the
Secretary of Finance and Justice, requiring every merchant and
the manufacturer with certain specified exceptions, who was
subject to the merchant's tax, to keep a record of their daily sales
either in the English or the Spanish language. The validity of this
regulation was challenged in the case of Young vs.
Rafferty, supra. The defense of the Collector of Internal Revenue
was that the regulation issued by him had for its object the
protection of the Government and to prevent the non-payment of
the merchant's and the percentage taxes. Following trial in the
lower court and appeal, the Supreme Court held that sections 5
and 6 of Act No. 2339 did not empower the Collector of Internal
Revenue to designate the language in which the entries in such
books are made by merchants subject to the percentage tax.
Omitting portions of the opinion handed down by Mr. Justice
Trent, some of which will be noticed in other connections, it is
only necessary for us to quote the portion which deals with the
subject at hand, namely:
It is also urge that the regulation is designed to protect the
Government against evasion of the percentage tax. If it be
necessary to impose such a burden upon so large a
number of the business community in order that the
Government may protect itself from such losses, we
apprehend that it was never intended that the initiative
should be taken by the Collector of Internal Revenue. The
condition complained of by the Collector has confronted
the Government ever since the present system of internal
revenue taxes was inaugurated in 1904. It is not for the
administrative head of a Government bureau to say that
such an obstacle to the collection of taxes shall be
removed by imposing burdens not specifically authorized
in the law itself.
In view of the fact that a particular language is not
essential to the recording of the information desired by
the Collector and the enforcement of the objectionable
provisions of his circular would be a very important step in
the solution of the language problem in this country,
amounting, we believe, to a question of public policy
which should not be dictated by any administrative
authority, we must conclude that the Collector has
exceeded his authority in this particular. In reaching this
conclusion, we have carefully avoided using any
language which would indicate our views upon the
plaintiffs' second proposition to the effect that if the
regulation were an Act of the Legislature itself, it would be
invalid as being in conflict with the paramount law of the
land and the treaties regulating certain relations with
foreigners. (Emphasis ours.)
Mr. Justice Carson, in a concurring opinion of some importance
as will hereafter be emphasize, said:

I concur, on the ground that under the order of the

Collector, if strictly enforced, the tens of thousand of
merchants, petty storekeepers and others affected by its
terms, both native and foreign, who have no adequate
knowledge of either English or Spanish, would be
required in effect not only to keep a record of the results
of their business transactions in English or Spanish, but
also to conduct such transactions in one or other of those
languages.
I do not question the authority of the Collector to prescribe
rules for the keeping of such records or transcripts of
records of the results of mercantile transactions as may
be reasonably necessary in order to eliminate fraud or
concealment, and to expedite the labors of those charged
with the collection of taxes: but I do not think that he was
any authority to require the keeping of the original record
of the vast number of these transactions in a tongue
unknown to the parties; and I think furthermore that his
authority to prescribe regulations intended to expedite the
collection of taxes of this nature, is necessarily limited to
the promulgation of regulations reasonably necessary to
the end.
As will at once be noticed, the Supreme Court limited its decision
to the annulment of the circular of the Collector of Internal
Revenue. It left for the Legislature to determine if a law on the
subject should be enacted, without expressing any opinion as to
the validity of such a law.
Following some agitation on the subject, the then GovernorGeneral, in a message to the Legislature on October 16, 1920,
recommended for consideration "Legislation as already approved
by the Senate should require that all business houses keep their
books in English or Spanish, or in any one of the local Philippine
dialects, in order to avoid wholesale frauds upon the Public
revenues." The bill was presented in the House of
Representatives by Representative Urgello with the following
explanatory note:
As all of the merchants doing business in the Philippines
are not of the same nationality, some of them keep their
books of account in their native language. The
examination of these books by the agents of the
Government for their proper verification, is made with
some difficulty, inasmuch as in many cases it requires the
help of a translator which constitutes an expense to the
public treasury.
Uniformity and facility in the examination and investigation
of these books require that the same be kept by the
merchants, whether individuals or corporations, in English
or Spanish.
This is the object of the attached bill.
After the Philippine Legislature had passed Act No. 2972, the
present Governor-General in a message asked for either the
repeal or a modification of the law. Hearings before committees of
the Legislature were permitted. According to the report prepared
and submitted by the Chairman of the Committee on Revision of
Laws of the House of Representatives, which we feel at liberty to
take into consideration, at the hearing before his committee the
representatives of the Chinese community advocated the repeal
of Act No. 2972, but this was strongly opposed by the
representatives of the Bureau of Audits, and the Bureau of
Internal Revenue. The representative of the Bureau of Internal
Revenue, Mr. Posadas, "gave repeated assurances before the
Committee that due to the unintelligibility of the books of Chinese
merchants, because of the language in which the same was
written, the public treasury was being defrauded annually in
several millions of pesos, and that in order to protect the
Government it is necessary to uphold Act No. 2972." (Exhibit 3.)
Eventually, the Philippine Legislature, with the exception that it
postponed the taking effect of the law, refused otherwise to
modify it.

There has next followed the instant proceedings, by means of

which an expression of opinion is sought to settle the conflict of
views as to the constitutionality of Act No. 2972. The law is
attacked by the petitioners as in violation of treaty and
constitutional rights of Chinese merchants, domiciled in the
Philippine Islands. It is contended with marked earnestness, that
the law is unreasonable and oppressive in nature, and repugnant
to the provisions of the Fourteenth Amendment to the Constitution
of the United States and of the corresponding provisions of the
Jones Law, the Act of Congress of August 29, 1916, guaranteeing
to all persons the equal protection of the laws. The law is
defended by the city fiscal of Manila as a proper and reasonable
exercise of the police power of the Philippine Government, and of
its power of taxation.
Four questions suggest themselves for discussion. What would
be the probable effect, if Act No. 2972 was put in operation? What
was the purpose of the Legislature in enacting Act No. 2972?
What are the respective legal rights of the Chinese and of the
Government? What is a logical construction of Act No. 2972? In
connection with the first question, it is, of course, undeniable that
we cannot declare a legislative Act void because it conflicts with
our opinion of what is just or expedient. Nevertheless, the effects
and consequences enter with more or less force into
consideration, whenever the validity of any law is in issue. (See 2
Lewis' Sutherland Statutory Construction, pp. 908 et seq.)
The pleadings, the evidence, and the decision in Young vs.
Rafferty, supra, disclose with regard to the mercantile life of the
Philippines, the following facts:
There are approximately 85,000 merchants of all nationalities in
the Philippines, to whom Act No. 2972 applies. Of this number,
71,000 are Filipinos who may use their own dialects, they prefer
English or Spanish. Approximately 1,500 are American, British, or
Spanish subjects, who are permitted to use their native
languages. Possibly 500 are foreign nationalities most of whom
know the English or Spanish language. Of the remainder,
between 10,000 and 12,000 are Chinese. The aggregate
commercial business transacted by the Chinese merchants
represents about sixty per cent of the total business done by all
the merchants in the Philippine Islands. According to Mr. H.B.
Pond, vice-president and general manager of the Pacific
Commercial Company, the Chinese "are the principal distributing
factors in the Philippine Islands of imported goods, and the
principal gatherers of goods for exportation in the more remote
places," and if the Chinese were driven out of the business,
"there would be no other system of distribution available
throughout the Islands." It is further claimed, on the one hand,
that not to exceed one per cent of the Chinese merchants in the
Philippine Islands understand English, Spanish, or a local dialect
sufficiently well to be able to keep or revise their own books of
account in any one of these languages, and that not to exceed
ten per cent have even a working knowledge of either English,
Spanish, or a local dialect, and on the other hand, that at least
two-thirds of the Chinese businessmen can easily comply with the
law.
Counsel for the petitioners is sponsor for the sweeping statement
that "the enforcement of Act 2972 would probably cause more
damage and less good than any other law which has been
enacted in the world." This strong stand is to a certain extent
corroborated by resolutions adopted and signed by the principal
business house in the City of Manila and by a number of
chambers of commerce (Exhibits C, D, E, F, G, H, I, and J,
attached to the petition); by the vigorous protest of the Chinese
foreign office (Exhibit K); by the opinions expressed by high
officials in the War Department "that the law is fundamentally
unwise" (Exhibit L), and "is obstructive of good understanding
with our neighbors" (Exhibit M); and by the testimony of a large
number of Chinese merchants and of other well qualified persons
to the effect that sufficient bookkeepers are not available, that it
would not be possible for many Chinese merchants, especially
the smaller ones, to comply with the law, and that if the Chinese
merchants were compelled to keep their books in any language
other than the Chinese language, it would bring serious

embarrassment to the great majority and might even drive many

of them out of business.
Mr. Dee C. Chuan, the President of the China Banking
Corporation and of the Chinese Chamber of Commerce, and
Honorable Chow Kwo Hsien, Chinese Consul General for the
Philippine Islands, testified that they, in collaboration with Chinese
merchants, had conducted an investigation from which they made
the following estimate of the distribution of sales among the
Chinese:
Of the wholesale merchants, 50 had average amount of sales of
over P1,000,000; 150, over P500,000; 400, over P100,000, and
2,735, over P40,000. Of the 8,445 retail merchants, the average
amount of sales was P5,446.40. Basing their calculations on the
above, it was found that the annual net income of the 8,445
Chinese retail merchants would not exceed P500 each, and of
2,000 of the 3,335 wholesale merchants, not to exceed P1,000.
(Exhibit G.) The same investigation disclosed that not to exceed
12 Chinese firms are actually keeping their books in a language
other than Chinese. The Chinese Consul General further testified
that from his inquiries, he had found that the great majority of the
Chinese merchants are utterly unable to comply with Act No.
2972.
Mr. William T. Nolting, President of the Bank of the Philippine
Islands and formerly Collector of Internal Revenue, testified to the
following salient facts: 1. Not over one per cent of the Chinese
merchants are qualified to transact their business in English,
Spanish, or a native dialect; 2. It would be impossible to obtain
accounts to assist them in keeping their books in English,
Spanish, or a local dialect, although this deficiency might be
overcome in the future; 3. If the merchant is unable to understand
his accounts and cannot impose extreme confidence; in his
bookkeeper, he is in a precarious position at all times; 4. An
attempt to enforce Act No. 2972 would not facilitate the collection
of taxes from the Chinese merchants but on the other hand might
prove prejudicial both to the interests of the Government and of
the Chinese; 5. When he was in charge of the Bureau of Internal
Revenue, he never experienced any difficulty in finding and
employing a sufficient number of competent and honest Chinese
accountants to make the necessary inspection of the books of
Chinese merchants; 6. The honesty of the Chinese merchants in
making the declarations of their sales compares favorably with
other nationalities in that respect; and 7. To permit the Chinese
merchants to keep two sets of books, one in Chinese and the
other in English, Spanish, or some local dialect, would be a most
dangerous practice because entries might be made in one set
that would not be made in the other.
The reply of the fiscal is to the effect that the oppressiveness of
the law has been considerably exaggerated, that it applies as well
to Japanese and other foreign merchants who do not complain,
that only a relatively small per cent of the Chinese merchants
seek to obstruct the enforcement of the law, that bookkeepers are
available if the Chinese wish to employ them, and that the new
law will facilitate governmental inspection of merchants' books.
Numerous witnesses have been called and numerous documents
have been offered to substantiate the stand taken by the
Government. We will here notice only an indorsement by
Wenceslao Trinidad, former Collector of Internal Revenue, and
the testimony of Juan Posadas, the present Collector of Internal
Revenue.
Former Collector Trinidad, in a communication addressed to the
Secretary to the Governor-General on September 22, 1921, said:
During the year 1920, internal revenue tax receipts were
issued to 95,363 merchants and manufacturers, 183
printers and publishers, 10,424 common carriers, 10,967
contractors and warehousemen, 58,942 peddlers of
merchandise and 1,001 brokers. All of the abovementioned persons are required to pay percentage taxes
on their gross sales or receipts. On account of the nature
of this tax, these persons are required to keep books of
accounts wherein they can enter the amounts of business
done by them.

This Bureau has no statistics to show the number of

Chinese engaged in different businesses subject to
percentage taxes but it is safe to say that they represent
fully sixty per cent of the numbers stated above. All of
these Chinese merchants keep their accounts in Chinese,
with the exception of a very few large business houses
which keep two sets of books of accounts, one in Chinese
and the other in Spanish. There are also other
businessmen who do not keep their books of accounts
either in English or Spanish. These are Germans,
Japanese, Syrians and Hindus. Their number cannot be
ascertained due to the lack of statistics but there are
many of them in the Islands, especially the Japanese.
The Bureau of Internal Revenue had up to this time
employed 17 Chinese accountants, two Hindus and one
Japanese. All of these accountants have been separated
from the service with the exception of four Chinese
accountants who are at present still employed in the
Bureau. Out of the seventeen Chinese accountants
employed, five were discharge for graft, seven resigned
or were forced to resign for their unsatisfactory services
rendered or for suspicion of graft, and one deceased. In
spite of this number of accountants employed, only very
little number of Chinese books have been investigated
and audited, and in the majority of them underdeclarations of sales or receipts have been found.
There are also a number of Chinese who are not subject
to percentage taxes, but who have books of accounts that
need to be audited for income-tax purposes.
It can be seen from the foregoing statements that the law
requiring merchants to keep their books in English,
Spanish or any of the local dialects, is necessary in order
to protect the revenues of the Government.
Collector Juan Posadas, in reply to question, and corroborated by
other witnesses, made among others the following interesting
statements:
Mr. FELIX. If the books of account, not only of the
Chinese merchants but of the other foreign merchants,
were kept in their own languages and not in English,
Spanish, or some local dialect, would it be possible to
have the books of accounts of these merchants audited
by the agents or employees of the Bureau of Internal
Revenue? ... Mr. POSADAS. It would be impossible,
unless our office had a personnel sufficiently numerous
and competent to make the audits of the books of account
in the different languages in which they were kept.
Mr. FELIX. Has the Bureau of Internal Revenue that
sufficient and competent personnel to audit the books of
account of merchants who do not keep their books in
Spanish, English, or some local dialect? Mr.
POSADAS. No, sir, we have only an insignificant number
of Chinese accountants to make examinations of the
books of the Chinese merchants.
xxx

xxx

xxx

Mr. FELIX. If the Bureau of Internal Revenue were not

able as according to you it is not able to examine
properly the books of accounts of merchants who do not
keep their books in English, Spanish, or some local
dialect, may the case arise wherein those merchants who
do not keep their books in the languages permitted by Act
No. 2972 would fail to pay the full amount of taxes due to
the internal revenue, even though they were acting in
good faith? ... Mr. POSADAS. Yes, sir, because judging
from the audits even of those books of accounts which
are intelligible to the office personnel, the office has found
many differences, or items not declared for the purpose of
taxation.
xxx

xxx

xxx

Mr. FELIX. Do you know how many returns of merchants

were examined in 1922 by the Chinese accountants of
the income tax division of your Bureau? ... Mr.
POSADAS. During that year, the Chinese accountants in
the income tax division inspected 477 returns of Chinese.
xxx

xxx

xxx

Mr. FELIX. Do you know whether there were any

undeclarations in those cases, that were inspected that
you have referred to? ... Mr. POSADAS. In the
comparison of these returns with the books of account of
the interested parties, differences were found which
amount to more than P600,000 which was not declared.
xxx

xxx

xxx

Mr. GIBBS. And, therefore, assuming that it would be

possible to employ a sufficient number of competent
Chinese inspectors of books of account, there would be
no advantage in the enforcement of Act No. 2972 except
in so far as it might aid the directors of the Bureau and the
chiefs of division in making the inspections incident to
deciding disputes between the inspectors and the
merchants that you have mentioned? Mr. POSADAS. The
advantage of the Accounting Law, which compels
merchants to keep their books in English, Spanish, or
some local dialect, lies precisely in the fact that it would
facilitate the inspection of these books of account by the
employees of the Bureau of Internal Revenue, and enable
them to check up the taxes which have been paid the
merchants and ascertain whether or not they agree with
the transactions actually had. This work is at present
being done so far as concerns the merchants who keep
their books in languages comprehensible to the Bureau,
and to a certain extent it means that these merchants are
penalized. On the other hand, it has been almost
impossible to do this with regard to those merchants who
keep their books entirely in languages not
comprehensible to the office, and the net result therefore
is that while we can collect differences in taxes due from
part of the merchants, it is almost impossible to do so with
regard to the other part.
xxx

xxx

xxx

Mr. GIBBS. But supposing that you had also Chinese

accountants competent to act as supervising agents in
the provinces, then what advantage would there be in
enforcing Act No. 2972? Mr. POSADAS. The
advantage would consist precisely in the fact that we
would avoid the duplication of personnel, because
otherwise we would have to duplicate the personnel in
each district by employing Filipinos and Chinese.
Mr. GIBBS. Could you not easily put in a Chinese district
inspector and a Filipino district inspector, leaving it to the
Chinese district inspector to inspect the books of the
Chinese and to the Filipino district inspector the books of
the Filipinos and others? Mr. POSADAS. It is physically
impossible to employ Chinese supervisors, in view of the
fact that up to this time I have never known of a Chinese
who has qualified himself in the civil service to occupy the
position.
xxx

xxx

xxx

Mr. GIBBS. Is it not true, Mr. POSADAS, that the practice

of inspecting the books of the account of the Chinese by
means of Chinese accountants has been followed by the
Bureau of Internal Revenue in the Philippines for the past
twenty years or more? Mr. POSADAS. To judge from
the results of the inspections made by my Bureau during
my incumbency therein, I am led to believe that the
inspections which were formerly made were superficial, in
view of the fact that the Bureau during these latter years,

he discovered large differences which were never

declared for the purposes of taxation.
xxx

xxx

other than their native languages and have now, through their
elective representatives, sought to require conformity with
governmental policy by a large class of foreign residents.

xxx

Mr. GIBBS. Let's put the question in another form, Mr.

Posadas: Is it not a fact that the only possible benefit
which the Bureau of Internal Revenue would derive from
the enforcement of Act No. 2972 would be in so far as it
might assist the Bureau in checking up the information
required by its regulations? Mr. POSADAS. Yes, sir,
and to determine whether any items subject to taxation
had been omitted.
Mr. GIBBS. Another question, Mr. Posadas: Don't you
think that by means of Chinese accountants, much more
satisfactory kept in Chinese than from books kept
abominably in English or Spanish? Mr. POSADAS.
Even though the books which are kept in a language
other than Chinese were abominably kept, as long as
they contain the entries of all the transactions are carried
out by a merchant or by a person subject to taxation, it
would always be better than a book which is
incomprehensible to the administrators of the Bureau.
Some slight consideration of the language question in general
and of the language question in the Philippines in particular, will
assist us in determining if the effect of enforcing Act No. 2972 will
cause as much hardship and will be so oppressive on one
particular nationality as to nullify the law, or whether the judiciary
can constitutionally enforce the law.
Language is the medium by which thoughts are conveyed from
one person to another. The law before us recognizes as
permissible mediums for business and taxation purposes, English
the language of the people of the British Empire and the
Republic of the United States; Spanish the language of the
people of Spain; and local dialects the language of the home in
the Philippines. Of these native dialects, as disclosed in a
statement prepared by Dr. T.H. Pardo de Tavera, Director of the
Philippine Library and Museum, there are a grand total of eightyseven, six with extensive literature, and the others with little or no
literature. (Exhibit F.) The law fails to take cognizance of the
Chinese language, one of the oldest and one of the most
extensively used languages in the world.
The Philippine Organic Act of Congress of August 29, 1916,
recognizes for electoral purposes, "Spanish, English, or a native
language." (Sec. 15.) It enumerates as a qualification for an
elective member of the Senate and the House of the Philippine
Legislature, ability "to read and write either the English or
Spanish language." (Sec. 13, 14.) The Municipal Law requires as
a qualification for an elective municipal officer, ability to read and
write intelligently either Spanish, English, or the local dialect.
(Administrative Code, sec. 2174.) The official language of the
courts and their records is at present either English or Spanish,
although in practice, Spanish is used more extensively in the
lower courts, and English in the appellate court. (Code of Civil
Procedure, sec. 12, as amended by Act No. 2830. ) The official
language of the legislative branch of the Government is either
English or Spanish, although in practice Spanish is more
extensively used, while exactly the reverse is true of the
executive branch of the Government. In compliance with the
President's Instructions to the Commission of April 7, 1900, full
opportunity has been given to all the people of the Island to
acquire the use of the English language, with the result that
English is made the basis of public and private school instruction.
(Administrative Code, sec. 922.) In the customs service, the law
provides that the cargo manifest and each copy thereof shall be
accompanied by a translation into English, if originally written in a
language other than English. (Administrative Code, sec. 1226.)
The above brief description of the language situation at least
discloses some of the difficulties which have beset the attempt to
hasten the adoption of a common language in the Philippines. Yet
it is evident, that the Filipino people have cheerfully imposed
upon themselves the burden of acquiring one more languages

In the United States during the months immediately following the

conclusion of the World War, a number of States passed statutes
in substantially the same form forbidding the teaching of any
modern language except English, to children below the eight
grade in any school. The United States Supreme Court held the
statutes unconstitutional on account of having no reasonable
relation to some purpose within the competency of the State to
effect, and on account of violating the constitutional guarantee of
liberty in the Federal Constitution. "The protection of the
Constitution extends to all," it was said, "to those who speak
other languages as well as to those born with English on the
tongue." (Meyer vs. Nebraska, Bartelsvs. Iowa, Pohl vs. Ohio,
Nebraska District of Evangelical Lutheran Synod vs. Mckelvie
[1923], 262 U.S., 390, 404; XII Michigan Law Review, Jan., 1924,
p. 248.)
In other countries, however, notably in the Republics in the
Americas, which have had their institutional law greatly influenced
by the United States Constitution, laws are on the statute books
which permit only Spanish to be used in commercial transactions.
This is the system found in Bolivia, Chile, Colombia, Ecuador,
Guatemala, Honduras, Mexico, Salvador, Uruguay, and
Venezuela. (Commercial Laws of the World, vols. 1, 2 3, 4, 5, 6,
10, and 20; Manzano, Bonilla y Miana, Codigos de Comercio,
Tomos II y III; Wheless, Compendium of the Laws of Mexico, vol.
I; Exhibit 12.)
The purpose of the Legislature in enacting Act No. 2972 is
disclosed by the decision of this court in Young vs. Rafferty,supra,
by the messages of the Governor-General, by the hearings
before the committees of the Philippine Legislature, and by other
sources. All these indicate that the Act is a fiscal measure
intended to facilitate the work of the government agents and to
prevent fraud in the returns of merchants, in conformity with the
sales tax and the income tax. For instance, in the decision in
Young vs. Rafferty, supra, it was stated: "... It need hardly be said
that the record which merchants are required to keep of their daily
sales under the provisions of the circular letter of the Collector set
out in the complaint is simplicity itself, and that it will, if honestly
and faithfully kept, enable the Government to collect the
percentage tax exactly due it. ..."
Conceded that the Chinese handle sixty per cent of the aggregate
business of the Philippines, approximate equality in taxation
demands that they pay something like the same proportion in
taxes for the support of the State.
In enacting Act No. 2972, the Philippine Legislature did so
pursuant to the wide authority which is delegated to it by Organic
law. The Organic Act, the Act of Congress of August 29, 1916,
provides "That general legislative power, except as otherwise
herein provided, is hereby granted the Philippine Legislature,
authorized by this Act." (Sec. 8, 12.)
The police power exists in the Philippine Islands in about the
same form and to the same extent as in a State of the American
Union. Under the general police power, persons and property in
the Philippines have been subjected to various kinds of
restrictions and burdens, in order to secure the general health,
comfort, and prosperity of all. As indicated by a quotation of
petitioners, the police power is not limited to regulations
necessary for the preservation of good order or the public health
and safety, but the prevention of fraud, cheating, and imposition is
equally within its scope.
The rule to follow in the application of the police power is that
announced in the leading case of Lawton vs. Steele ( [1894], 152
U.S., 133), oft quoted with approval by our Supreme Court,
namely:
. . . Large discretion is necessarily vested in the
legislature to determine, not only what the interests of the
public require, but what measures are necessary for the

protection of such interests. To justify the state in thus

interposing its authority in behalf of the public, it must
appear, first, that the interests of the public generally, as
distinguished from those of a particular class, require
such interference; and, second, that the means are
reasonably necessary for the accomplishment of the
purpose, and not unduly oppressive upon individuals. The
legislature may not, under the guise of protecting the
public interests, arbitrarily interfere with private business,
or impose unusual and unnecessary restrictions upon
lawful occupations. . . . (See further, U.S. vs. Toribio
[1910], 15 Phil., 85; Case vs. Board of Health and Heiser
[1913], 24 Phil., 250; U.S. vs. Gomez Jesus [1915], 31
Phil., 218; Churchill and Tait vs. Rafferty [1915], 32 Phil.,
580; and Rubi vs. Provincial Board of Mindoro [1919], 39
Phil., 660.)
The power of taxation is, likewise, in the Philippines as in the
United States, the strongest of all the powers of government,
practically absolute and unlimited. The familiar maxim early
announced by Mr. Chief Justice Marshall for the United States
Supreme Court and since frequently invoked by the courts is that
"the power to tax involves the power to destroy." (M'Culloch vs.
Maryland [1819], 4 Wheat., 316.) It is a legislative power. All its
incidents are within the control of the legislature. It is the
Legislature which must questions of state necessarily involved in
ordering a tax, which must make all the necessary rules and
regulations which are to be observed in order to produce the
desired results, and which must decide upon the agencies by
means of which collections shall be made. (1 Cooley on Taxation,
pp. 7, 43, 46, 54; Cowlesvs. Brittain [1822], 2 Hawks, 204;
Genet vs. City of Brooklyn {1885], 99 N.Y., 296; Felsenheld vs. U.
S. [1902], 186 U.S., Muoz & Co. vs. Hord [1909], 12 Phil., 624.)
It is equally manifest that the power to tax is not judicial power
and that a strong case is required for the judiciary to declare a
law relating to taxation invalid. If, of course, so great an abuse is
manifest as to destroy natural and fundamental rights, it is the
duty of the judiciary to hold such an Act unconstitutional.
Nevertheless, certain of the limitations are such that they must
address themselves exclusively to the legislative department, and
be subject only to review by the people who elect the members of
this department.
To use the language of Judge Cooley:
In order to bring taxation imposed by a state, or under its
authority, within the scope of the provision of the
fourteenth amendment which prohibits the deprivation of
property without due process of law, the case should be
so clearly and probably an illegal encroachment upon
private rights as to leave no doubt that such taxation by
its necessary operation is really spoliation under the
power to tax. ... The inhibition of the amendment was
designed to prevent any person or class of persons from
being singled out as a special subject for discriminating
and hostile legislation ... In the construction of the
revenue laws, special consideration is of course to be had
of the purpose for which they are enacted. That purpose
is to supply the government with revenue. But in the
proceedings to obtain this it is also intended that no
unnecessary injury shall be inflicted upon the individual
taxed. While this is secondary to the main object the
impelling occasion of the law it is none the less a
sacred duty. Care is taken in constitutions to insert
provisions to secure the citizen against injustice in
taxation, and all legislative action is entitled to the
presumption that this has been intended. . . . (1 Cooley on
Taxation, pp. 55, 56, 75, 452.)
The petitioners are Chinese subjects. The treaty rights accorded
the Chinese are those of the most favored nation. Their
constitutional rights are those accorded all aliens, which means
that the life, liberty, or property of these persons cannot be taken
without due process of law, and that they are entitled to the equal
protection of the laws, without regard to their race. (Yick Wo vs.
Hopkins [1885], 118 U.S., 356; Kwong Sing vs. City of

Manila, supra.) Our Code of Commerce and our Corporation Law

permit foreigners, and companies created in a foreign country, to
engage in commerce in the Philippine Islands. (Code of
Commerce, art. 15; Act No. 1459, sec. 73.) The rights of these
Chinese aliens are not less than the rights of American and
Philippine citizens. Nor more.
Six decisions bearing particularly on the rights of the Chinese,
three coming from the United States Supreme Court, two from the
Supreme Court of the Philippine Islands, and one from the
Supreme Court of Hawaii have at least persuasive application to
the instant proceedings. Two of the decisions of the United States
Supreme Court that we have in mind, Barbier vs. Connolly
( [1884], 113 U.S., 27) and Yick Wo vs. Hopkins ( [1885], 118
U.S., 356), are so well known as merely require citation, while a
recent series of cases on the language question have already
been mentioned. We only stop to quote one significant sentence
taken from Mr. Justice Field's opinion, pertaining to the
Fourteenth Amendment to the United States Constitution, in the
first cited case, namely:
. . .Class legislation, discriminating against some and
favoring others, is prohibited; but legislation which, in
carrying out a public purpose, is limited in its application,
if within the sphere of its operation it affects alike all
persons similarly situated, is not within the Amendment.
The case of Young vs. Rafferty, supra, of Philippine origin we
have heretofore noticed. But later in point of time, a question was
raised in the Philippine courts relative to the power of the
Municipal Board of the City of Manila to enact Ordinance No. 532,
requiring receipts in duplicate in English and Spanish duly signed,
showing the kind and number of articles delivered by laundries
and dyeing and cleaning establishments. (Kwong Sing vs. City of
Manila, supra.) It was held that as said ordinance was neither
oppressive, nor unequal, nor unjust, it was valid. It was said:
The purpose of the municipal authorities in adopting the
ordinance is fairly evident. Ordinance No. 532 was
enacted, it is said, to avoid disputes between laundrymen
and their patrons and to protect customers of laundries
who are not able to decipher Chinese characters from
being defrauded. The object of the ordinance was,
accordingly, the promotion of peace and good order and
the prevention of fraud, deceit, cheating, and imposition.
The convenience of the public would also presumably be
served in a community where there is a Babel of tongues
by having receipts made out in the two official languages.
Reasonable restraints of a lawful business for such
purposes are permissible under the police power. The
legislative body is the best judge of whether or not the
means adopted are adequate to accomplish the ends in
view.
xxx

xxx

xxx

Our view, after most thoughtful consideration, is, that the

ordinance invades no fundamental right, and impairs no
personal privilege. Under the guise of police regulation,
an attempt is not made to violate personal or property
rights. The ordinance is neither discriminatory nor
unreasonable in its operation. It applies to all public
laundries without distinction, whether they belong to
Americans, Filipinos, Chinese, or any other nationality. All,
without exception, and each and everyone of them
without distinction, must comply with the ordinance. There
is no privilege, no discrimination, no distinction. Equally
and uniformly the ordinance applies to all engaged in the
laundry business, and, as nearly as may be, the same
burdens are cast upon them.
xxx

xxx

xxx

There is no analogy between the instant case and the

former one of Young vs. Rafferty ( [1916], 33 Phil., 556).
The holding there was that the Internal Revenue Law did
not empower the Collector of Internal Revenue to

designate the language in which the entries in books shall

be made by merchants subject to the percentage tax. ...
There, the action was taken by means of administrative
regulation; here, by legislative enactment. There,
authority was rested on specific delegated powers; here,
on both specific power and the all-pervading police power.
There, governmental convenience was the aim; here, the
public welfare. We are convinced that the same justices
who participated in the decision in Young vs. Rafferty
(supra) would now agree with the conclusion toward
which we are tending.
The case most directly in line with the facts before us, is that of
the King vs. Lau Kiu ( [1888], 7 Hawaii, 489), decided by the
Supreme Court of the Hawaii Islands during the period of the
monarchial regime in those Islands. An Act of the Hawaii
Legislature prescribed, that no wholesale or retail license should
be granted to any person except upon the express condition that
the licensee shall at all times keep full, true, and correct books of
account of all business transacted by him in connection with such
license, in the English, Hawaii, or some European language. It
was contended among other things that this was legislation
against one certain class of subjects in the Kingdom, to wit,
against such subjects (and particularly the Chinese) as do not
speak or write the Hawaiian, English, or any European language,
and was not applicable to all citizens alike. It was held by the
Supreme Court that this Act was contrary to articles 1 and 14 of
the Constitution, which secure to all persons the enjoyment of life
and liberty and the right of acquiring, possessing, and protecting
property according to law. It was held, further, that the Act could
not be sustained as an exercise of the police power of the state,
as it had no relation to the health, comfort, safety, or welfare of
the public.
The presumption is always in favor of constitutionality. As the
United States Supreme Court in a case of Philippine origin said:
"... The function of the legislature is primary, its exercise fortified
by presumption of right and legality, and is not to be interfered
with lightly, nor by any judicial conception of its wisdom or
propriety. ..." (Weems vs. United States [1910], 217 U.S., 349.)
This presumption is especially strong in the case of statutes
enacted to promote a public purpose, such as statutes relating to
taxation. To doubt is to sustain.
Only the other day, the United States Supreme Court, speaking
through Mr. Justice Sutherland, said:
The judicial duty of passing upon the constitutionality of
an act of Congress is one of great gravity and delicacy.
The statute here in question has successfully borne the
scrutiny of the legislative branch of the government,
which, by enacting it, has affirmed its validity; and that
determination must be given great weight. This court, by
an unbroken line of decisions from Chief Justice Marshall
to the present day, has steadily adhered to the rule that
every possible presumption is in favor of the validity of an
act of Congress until overcome beyond rational doubt.
But if, by clear and indubitable demonstration, a statute
be opposed to the Constitution, we have no choice but to
say so. . . . (Adkinsvs. Children's Hospital of the District of
Columbia [1923], 261 U.S., 525; 67 Law. ed., 785.)
That the Supreme Court of the Philippine Islands has consistently
followed these rules is disclosed by the few laws held invalid.
During the twenty-three years of the Supreme Court's existence,
it has never held invalid one complete law, while portions of law
have been nullified on but few occasions. (Casanovas vs. Hord
[1907], 8 Phil., 125; Omo vs. Insular Government [1908], 11 Phil.,
67; Weigall vs. Morgan Shuster [1908], 11 Phil., 340;
Barrameda vs. Moir [1913], 25 Phil., 44; McGirr vs. Hamilton and
Abreu [1915], 30 Phil., 563; Central Capiz vs. Ramirez [1920], 40
Phil., 883; Concepcion vs. Paredes [1921], 42 Phil., 599;
McDaniel vs. Apacible and Cuisia [1922], 44 Phil., 248.)
It may be said to be an elementary, a fundamental, and a
universal rule of construction, applied when considering
constitutional questions, that when a law is susceptible of two

constructions one of which will maintain and the other destroy it,
the courts will always adopt the former. Whenever a law can be
so construed as to uphold it, it will be so construed although the
construction which is adopted does not appear to be as natural as
another construction. But where the meaning of the Act is plain,
words cannot be read into it or out of it in order to save the law. (1
Lewis' Sutherland Statutory Construction, pp. 135, 136; Cooley's
Constitutional Limitations, 184; 6 R.C.L., 78.)
In the early case of United States vs. Coombs ( [1838], 12 Peters,
72), Mr. Justice Story, speaking for the United States Supreme
Court, said:
Before we proceed to the direct consideration of the true
import and interpretation of this section, it seems highly
important, if not indispensable, to say a few words as to
the constitutional authority of Congress to pass the same.
For it, upon a just interpretation of the terms thereof,
Congress have exceeded their constitutional authority, it
will become our duty to say so, and to certify our opinion
on this points submitted to us in favor of the defendant.
On the other hand, if the section admits of two
interpretations, each of which is within the constitutional
authority of Congress, that ought to be adopted which
best conforms to the terms and the objects manifested in
the enactment, and the mischiefs which it was intended to
remedy. And again, if the section admits of two
interpretations, one of which brings it within, and the other
presses it beyond the constitutional authority of Congress,
it will become our duty to adopt the former construction;
because a presumption never ought to be indulged that
Congress meant to exercise or usurp any constitutional
authority, unless that conclusion is forced upon the court
by language altogether unambiguous. . . .
In the later case of Board of Supervisors of Grenada County vs.
Brown ( [1884], 112 U.S., 261), Mr. Justice Harlan, speaking for
the United States Supreme Court, said:
It certainly cannot be said that a different construction is
required by the obvious import of the words of the statute.
But if there were room for two constructions, both equally
obvious and reasonable, the court must, in deference to
the Legislature of the State, assume that it did not
overlook the provisions of the Constitution and designed
the Act of 1871 to take effect. Our duty, therefore, is to
adopt that construction which, without doing violence to
the fair meaning of the words used, brings the statute into
harmony with the provisions of the Constitution, Cooley
Constitutional Law, 184-5; Newland vs. Marsh, 19 Ill.,
384; People vs. Supervisors, 17 N.Y., 241; Colwell vs.
Water Power Co., 4 C.E. Green (19 N.J. Eq.), 249. And
such is the rule recognized by the Supreme Court of
Mississippi in Marshall vs. Grimes, 41 Miss., 31, in which
it was said: "General words in the Act should not be so
construed as to give an effect to it beyond the legislative
power, and thereby render the Act unconstitutional. But, if
possible, a construction should be given to it that will
render it free from constitutional objection; and the
presumption must be that the Legislature intended to
grant such rights as are legitimately within its power."
Again, in Sykes vs. Mayor, 55 Mississippi, 143: "It ought
never to be assumed that the lawmaking department of
the government intended to usurp or assume power
prohibited to it. And such construction, if the words will
admit of it, ought to be put on its legislation as will make it
consistent with the supreme law."
Identical canons of statutory construction have often been
invoked in the Philippines to enable the courts to avoid declaring
a law unconstitutional. For instance, the decision in the well
known case of In re Guaria ( [1913], 24 Phil., 37, 46), citing
Black on Interpretation of Laws, pp. 87, 93, and 94, is authority
for this statement of the rule: "It is the duty of the courts in
construing a statute enacted by the Philippine Commission
(Legislature), not to give it a construction which would be
repugnant to an Act of Congress, if the language of the statute is

fairly susceptible of another construction not in conflict with the

higher law; and in doing so, contentions touching the apparent
intention of the legislator will be disregarded which would lead to
the conclusion that the Commission intended to enact a law in
violation of an Act of Congress." Not long since, this court, in the
case of Fuentes vs. Director of Prisons, No. 22449,1 saved Act
No. 3104 relating to the death penalty, from a fate similar to its
subject by refusing to give a literal meaning to the phraseology of
the law.
We have been enveigled into a much more elaborate discussion
of this case than is at all essential, for two reasons: Firstly,
because of the earnestness of counsel who have impressed on
the court with marked ability the merits of their respective cases
and the dangers which lurk in a contrary holding; and secondly,
because of the effectiveness of the background as indicative of
executive purpose and legislative intent. Speaking frankly,
however, a majority of the court has all the time had a well
defined opinion which we will now state. We come to the last
question suggested, a construction of Act No. 2972 which allows
the court legally to approve it.
A literal application of the law would make it unlawful for any
Chinese merchant to keep his account books in any language
other than English, Spanish, or a local dialect. The petitioners say
the law is susceptible of that interpretation. But such
interpretation might, and probably would, cause us to hold the law
unconstitutional.
A second interpretation is that the Chinese merchant, while
permitted to keep his books of account in Chinese, must also
keep another set of books in either English, Spanish, or a native
dialect. The respondents claim the law is susceptible of such
construction. It occurs to us, however, that this construction might
prove as unsatisfactory as the first. Fraud is possible in any
language. An approximation to governmental convenience and an
approximation to equality in taxation is the most which may be
expected.
A third construction which is permissible in view of the history of
the legislation and the wording of the statute, is, that the law only
intended to require the keeping of such books as were necessary
in order to facilitate governmental inspection for tax purposes. It
has not escaped our notice that the law does not specify what
books shall be kept. It is stated by competent witnesses that a
cash book, a journal, and a ledger are indispensable books of
account for an efficient system of accounting, and that, in the
smaller shops, even simpler entries showing merely the daily
record of sales and record of purchases of merchandise would be
sufficient. The keeping of records of sales and possibly further
records of purchases, in English Spanish, or native dialect, and
the filling out of the necessary forms would serve the purpose of
the Government while not being oppressive. Actually, notations in
English, Spanish, or a dialect of all sales in sales books, and of
data in other specified forms are insisted upon by the Bureau of
Internal Revenue, although as appears from Exhibit 2, it is
doubtful is all Chinese merchants have complied with these
regulations. The faithful observance of such rules by the Chinese
is not far removed from the offer of cooperation oft made for them
by the petitioners or the "translation of the account books" oft
mentioned and explained by the respondents.
The law, in speaking of any person, company, partnership, or
corporation, makes use of the expression "its account books."
Does the phrase "its account books" mean that all the account
books of the person, company, partnership, or corporation must
be kept exclusively in English, Spanish, or any local dialect? The
petitioners argue that the law has this meaning. Or does the
phrase "its account books" mean that the persons, company,
partnership, or corporation shall keep duplicate sets of account
books, one set in Chinese and the other a translation into English,
Spanish, or any local dialect? Counsel for the respondents urge
this construction of the law upon the court. Or does the phrase
"its account books" mean that the person, company, partnership,
or corporation must keep such account books as are necessary
for taxation purposes? This latter interpretation occurs to us as a
reasonable one and as best safeguarding the rights of the

accused. And lastly, what effect has Act No. 2972 had upon the
provisions of the Code of Commerce on the subject of
merchants? Has the Act repealed or modified any article of the
Code of Commerce?
The interrogatories above made at least lead to the deduction
that the law is more or less ambiguous and that it will bear two or
more constructions.
Let us repeat: Act No. 2972 is a fiscal measure. It should be so
construed if possible as to effectuate legislative intent, as
collected from the occasion for the law, the circumstance under
which it was enacted, the mischief to be remedied, and the policy
which dictated its passage. It should be so construed if possible
as to avoid conflict with the constitution, although such
construction may not be the most obvious or natural one. Giving,
therefore, to the law a meaning which will carry out the main
governmental purpose and which will permit us to sanction its
constitutionality, it seeks to prohibit not only the Chinese but all
merchants of whatever nationality from making entries in the
books of account or forms subject to inspection for taxation
purposes in any other language than either the English or
Spanish language or a local dialect, although permitting all
merchants to execute their commercial transactions or operations
in any language or dialect they may prefer, and although
permitting them to keep such other books of account as their
personal convenience may dictate and in a language which will
come most easily to them. We would go so far as to hold that
circular No. 467 of the Bureau of Internal Revenue which this
court once held beyond the power of the Collector of Internal
Revenue to promulgate, and any other reasonable regulation of a
similar nature, as within the power of the Philippine Legislature to
sanction and entirely enforceable.
To any possible plaint by the Government, that this is tantamount
to "judicial legislation," we would say: It is not "judicial legislation"
as this phrase is commonly used in the spirit of antagonistic fault
finding. No words are written into the law. No words are taken out
of the law. It is merely a practical judicial construction of a law
where the validity of this law is in issue, which gives to the law a
meaning accomplishing everything needed by the Government
for tax purposes, without being unduly oppressive on the
individual, and which permits the courts to uphold the law.
To the petitioners, who by our decision do not obtain all they may
wish, we append this word of advice: Under such a construction
as is above indicated, the Chinese will not be singled out as a
special subject for discriminating and hostile legislation. There will
be no arbitrary deprivation of liberty or arbitrary spoliation of
property. There will be no unjust and illegal discrimination
between persons in similar circumstances. The law will prove
oppressive to the extent that all tax laws are oppressive, but not
oppressive to the extent of confiscation. The means to
accomplish a necessary interference with private business are no
more oppressive upon individuals than is necessary to maintain
the State. The law is not intended for the convenience of the
trader or the protection of the creditors, but has relation to the
public welfare, to the power of taxation, to the right of the
government to exist. The Chinese must bear their just proportion
of the tax burden, however unwelcome it may be, without
flinching.
A faint effort has been made by the petitioners to have the court
declare Act No. 2972 void because the subject thereof is not
expressed in its title. But legislation should not be embarrassed
by such strict construction as is urged by counsel. No
distinguishable variance between the title of the law and the body
of the law can be discovered after microscopic examination. The
law is brief in its terms, and neither the Legislature nor the public
need be misled by the title. (Government of the Philippine
Islands vs. Municipality of Binalonan and Roman Catholic Bishop
of Nueva Segovia [1915], 32 Phil., 634.)
We construe Act No. 2972 as meaning that any person, company,
partnership, or corporation, engaged in commerce, industry, or
any other activity for the purpose of profit in the Philippine
Islands, shall keep its account books, consisting of sales books

and other records and returns required for taxation purposes by

regulations of the Bureau of Internal Revenue, in effect when this
action was begun, in English, Spanish, or a local dialect.
Agreeable to such construction, we hold Act No. 2972 valid and
constitutional.
The temporary injunction heretofore issued is dissolved although
under the construction given to the law it may well be doubted if
the Government will care to proceed with the criminal
prosecution. If the Government should not dismiss the
information, this question may be raised by demurrer in the lower
court.
Petition denied without costs.
Avancea, Villamor, Ostrand, and Romualdez, JJ., concur.
Johnson, Acting Chief Justice, took no part.

Republic of the Philippines

SUPREME COURT
Manila
EN BANC
G.R. No. L-7995

May 31, 1957

LAO H. ICHONG, in his own behalf and in behalf of other

alien residents, corporations and partnerships adversely
affected. by Republic Act No. 1180, petitioner,
vs.
JAIME HERNANDEZ, Secretary of Finance, and MARCELINO
SARMIENTO, City Treasurer of Manila, respondents.
Ozaeta, Lichauco and Picazo and Sycip, Quisumbing, Salazar
and Associates for petitioner.
Office of the Solicitor General Ambrosio Padilla and Solicitor
Pacifico P. de Castro for respondent Secretary of Finance.
City Fiscal Eugenio Angeles and Assistant City Fiscal Eulogio S.
Serrano for respondent City Treasurer.
Dionisio Reyes as Amicus Curiae.
Marcial G. Mendiola as Amicus Curiae.
Emiliano R. Navarro as Amicus Curiae.
LABRADOR, J.:
I. The case and issue, in general
This Court has before it the delicate task of passing upon the
validity and constitutionality of a legislative enactment,
fundamental and far-reaching in significance. The enactment
poses questions of due process, police power and equal
protection of the laws. It also poses an important issue of fact,
that is whether the conditions which the disputed law purports to
remedy really or actually exist. Admittedly springing from a deep,
militant, and positive nationalistic impulse, the law purports to
protect citizen and country from the alien retailer. Through it, and
within the field of economy it regulates, Congress attempts to
translate national aspirations for economic independence and
national security, rooted in the drive and urge for national survival
and welfare, into a concrete and tangible measures designed to
free the national retailer from the competing dominance of the
alien, so that the country and the nation may be free from a
supposed economic dependence and bondage. Do the facts and
circumstances justify the enactment?
II. Pertinent provisions of Republic Act No. 1180
Republic Act No. 1180 is entitled "An Act to Regulate the Retail
Business." In effect it nationalizes the retail trade business. The
main provisions of the Act are: (1) a prohibition against persons,
not citizens of the Philippines, and against associations,
partnerships, or corporations the capital of which are not wholly
owned by citizens of the Philippines, from engaging directly or
indirectly in the retail trade; (2) an exception from the above
prohibition in favor of aliens actually engaged in said business on
May 15, 1954, who are allowed to continue to engaged therein,
unless their licenses are forfeited in accordance with the law, until
their death or voluntary retirement in case of natural persons, and
for ten years after the approval of the Act or until the expiration of
term in case of juridical persons; (3) an exception therefrom in
favor of citizens and juridical entities of the United States; (4) a
provision for the forfeiture of licenses (to engage in the retail

business) for violation of the laws on nationalization, control

weights and measures and labor and other laws relating to trade,
commerce and industry; (5) a prohibition against the
establishment or opening by aliens actually engaged in the retail
business of additional stores or branches of retail business, (6) a
provision requiring aliens actually engaged in the retail business
to present for registration with the proper authorities a verified
statement concerning their businesses, giving, among other
matters, the nature of the business, their assets and liabilities and
their offices and principal offices of judicial entities; and (7) a
provision allowing the heirs of aliens now engaged in the retail
business who die, to continue such business for a period of six
months for purposes of liquidation.
III. Grounds upon which petition is based-Answer thereto
Petitioner, for and in his own behalf and on behalf of other alien
residents corporations and partnerships adversely affected by the
provisions of Republic Act. No. 1180, brought this action to obtain
a judicial declaration that said Act is unconstitutional, and to
enjoin the Secretary of Finance and all other persons acting
under him, particularly city and municipal treasurers, from
enforcing its provisions. Petitioner attacks the constitutionality of
the Act, contending that: (1) it denies to alien residents the equal
protection of the laws and deprives of their liberty and property
without due process of law ; (2) the subject of the Act is not
expressed or comprehended in the title thereof; (3) the Act
violates international and treaty obligations of the Republic of the
Philippines; (4) the provisions of the Act against the transmission
by aliens of their retail business thru hereditary succession, and
those requiring 100% Filipino capitalization for a corporation or
entity to entitle it to engage in the retail business, violate the spirit
of Sections 1 and 5, Article XIII and Section 8 of Article XIV of the
Constitution.
In answer, the Solicitor-General and the Fiscal of the City of
Manila contend that: (1) the Act was passed in the valid exercise
of the police power of the State, which exercise is authorized in
the Constitution in the interest of national economic survival; (2)
the Act has only one subject embraced in the title; (3) no treaty or
international obligations are infringed; (4) as regards hereditary
succession, only the form is affected but the value of the property
is not impaired, and the institution of inheritance is only of
statutory origin.
IV. Preliminary consideration of legal principles involved
a. The police power.
There is no question that the Act was approved in the exercise of
the police power, but petitioner claims that its exercise in this
instance is attended by a violation of the constitutional
requirements of due process and equal protection of the laws. But
before proceeding to the consideration and resolution of the
ultimate issue involved, it would be well to bear in mind certain
basic and fundamental, albeit preliminary, considerations in the
determination of the ever recurrent conflict between police power
and the guarantees of due process and equal protection of the
laws. What is the scope of police power, and how are the due
process and equal protection clauses related to it? What is the
province and power of the legislature, and what is the function
and duty of the courts? These consideration must be clearly and
correctly understood that their application to the facts of the case
may be brought forth with clarity and the issue accordingly
resolved.
It has been said the police power is so far - reaching in scope,
that it has become almost impossible to limit its sweep. As it
derives its existence from the very existence of the State itself, it
does not need to be expressed or defined in its scope; it is said to
be co-extensive with self-protection and survival, and as such it is
the most positive and active of all governmental processes, the
most essential, insistent and illimitable. Especially is it so under a
modern democratic framework where the demands of society and
of nations have multiplied to almost unimaginable proportions; the
field and scope of police power has become almost boundless,
just as the fields of public interest and public welfare have
become almost all-embracing and have transcended human
foresight. Otherwise stated, as we cannot foresee the needs and
demands of public interest and welfare in this constantly changing
and progressive world, so we cannot delimit beforehand the
extent or scope of police power by which and through which the
State seeks to attain or achieve interest or welfare. So it is that
Constitutions do not define the scope or extent of the police
power of the State; what they do is to set forth the limitations
thereof. The most important of these are the due process clause
and the equal protection clause.

b. Limitations on police power.

The basic limitations of due process and equal protection are
found in the following provisions of our Constitution:
SECTION 1.(1) No person shall be deprived of life, liberty
or property without due process of law, nor any person be
denied the equal protection of the laws. (Article III, Phil.
Constitution)
These constitutional guarantees which embody the essence of
individual liberty and freedom in democracies, are not limited to
citizens alone but are admittedly universal in their application,
without regard to any differences of race, of color, or of
nationality. (Yick Wo vs. Hopkins, 30, L. ed. 220, 226.)
c. The, equal protection clause.
The equal protection of the law clause is against undue favor and
individual or class privilege, as well as hostile discrimination or
the oppression of inequality. It is not intended to prohibit
legislation, which is limited either in the object to which it is
directed or by territory within which is to operate. It does not
demand absolute equality among residents; it merely requires
that all persons shall be treated alike, under like circumstances
and conditions both as to privileges conferred and liabilities
enforced. The equal protection clause is not infringed by
legislation which applies only to those persons falling within a
specified class, if it applies alike to all persons within such class,
and reasonable grounds exists for making a distinction between
those who fall within such class and those who do not. (2 Cooley,
Constitutional Limitations, 824-825.)
d. The due process clause.
The due process clause has to do with the reasonableness of
legislation enacted in pursuance of the police power. Is there
public interest, a public purpose; is public welfare involved? Is the
Act reasonably necessary for the accomplishment of the
legislature's purpose; is it not unreasonable, arbitrary or
oppressive? Is there sufficient foundation or reason in connection
with the matter involved; or has there not been a capricious use
of the legislative power? Can the aims conceived be achieved by
the means used, or is it not merely an unjustified interference with
private interest? These are the questions that we ask when the
due process test is applied.
The conflict, therefore, between police power and the guarantees
of due process and equal protection of the laws is more apparent
than real. Properly related, the power and the guarantees are
supposed to coexist. The balancing is the essence or, shall it be
said, the indispensable means for the attainment of legitimate
aspirations of any democratic society. There can be no absolute
power, whoever exercise it, for that would be tyranny. Yet there
can neither be absolute liberty, for that would mean license and
anarchy. So the State can deprive persons of life, liberty and
property, provided there is due process of law; and persons may
be classified into classes and groups, provided everyone is given
the equal protection of the law. The test or standard, as always, is
reason. The police power legislation must be firmly grounded on
public interest and welfare, and a reasonable relation must exist
between purposes and means. And if distinction and classification
has been made, there must be a reasonable basis for said
distinction.
e. Legislative discretion not subject to judicial review.
Now, in this matter of equitable balancing, what is the proper
place and role of the courts? It must not be overlooked, in the first
place, that the legislature, which is the constitutional repository of
police power and exercises the prerogative of determining the
policy of the State, is by force of circumstances primarily the
judge of necessity, adequacy or reasonableness and wisdom, of
any law promulgated in the exercise of the police power, or of the
measures adopted to implement the public policy or to achieve
public interest. On the other hand, courts, although zealous
guardians of individual liberty and right, have nevertheless
evinced a reluctance to interfere with the exercise of the
legislative prerogative. They have done so early where there has
been a clear, patent or palpable arbitrary and unreasonable
abuse of the legislative prerogative. Moreover, courts are not
supposed to override legitimate policy, and courts never inquire
into the wisdom of the law.
V. Economic problems sought to be remedied

With the above considerations in mind, we will now proceed to

delve directly into the issue involved. If the disputed legislation
were merely a regulation, as its title indicates, there would be no
question that it falls within the legitimate scope of legislative
power. But it goes further and prohibits a group of residents, the
aliens, from engaging therein. The problem becomes more
complex because its subject is a common, trade or occupation,
as old as society itself, which from the immemorial has always
been open to residents, irrespective of race, color or citizenship.
a. Importance of retail trade in the economy of the nation.
In a primitive economy where families produce all that they
consume and consume all that they produce, the dealer, of
course, is unknown. But as group life develops and families begin
to live in communities producing more than what they consume
and needing an infinite number of things they do not produce, the
dealer comes into existence. As villages develop into big
communities and specialization in production begins, the dealer's
importance is enhanced. Under modern conditions and standards
of living, in which man's needs have multiplied and diversified to
unlimited extents and proportions, the retailer comes as essential
as the producer, because thru him the infinite variety of articles,
goods and needed for daily life are placed within the easy reach
of consumers. Retail dealers perform the functions of capillaries
in the human body, thru which all the needed food and supplies
are ministered to members of the communities comprising the
nation.
There cannot be any question about the importance of the retailer
in the life of the community. He ministers to the resident's daily
needs, food in all its increasing forms, and the various little
gadgets and things needed for home and daily life. He provides
his customers around his store with the rice or corn, the fish, the
salt, the vinegar, the spices needed for the daily cooking. He has
cloths to sell, even the needle and the thread to sew them or darn
the clothes that wear out. The retailer, therefore, from the lowly
peddler, the owner of a small sari-sari store, to the operator of a
department store or, a supermarket is so much a part of day-today existence.
b. The alien retailer's trait.
The alien retailer must have started plying his trades in this
country in the bigger centers of population (Time there was when
he was unknown in provincial towns and villages). Slowly but
gradually be invaded towns and villages; now he predominates in
the cities and big centers of population. He even pioneers, in far
away nooks where the beginnings of community life appear,
ministering to the daily needs of the residents and purchasing
their agricultural produce for sale in the towns. It is an undeniable
fact that in many communities the alien has replaced the native
retailer. He has shown in this trade, industry without limit, and the
patience and forbearance of a slave.
Derogatory epithets are hurled at him, but he laughs these off
without murmur; insults of ill-bred and insolent neighbors and
customers are made in his face, but he heeds them not, and he
forgets and forgives. The community takes note of him, as he
appears to be harmless and extremely useful.
c. Alleged alien control and dominance.
There is a general feeling on the part of the public, which appears
to be true to fact, about the controlling and dominant position that
the alien retailer holds in the nation's economy. Food and other
essentials, clothing, almost all articles of daily life reach the
residents mostly through him. In big cities and centers of
population he has acquired not only predominance, but apparent
control over distribution of almost all kinds of goods, such as
lumber, hardware, textiles, groceries, drugs, sugar, flour, garlic,
and scores of other goods and articles. And were it not for some
national corporations like the Naric, the Namarco, the Facomas
and the Acefa, his control over principal foods and products would
easily become full and complete.
Petitioner denies that there is alien predominance and control in
the retail trade. In one breath it is said that the fear is unfounded
and the threat is imagined; in another, it is charged that the law is
merely the result of radicalism and pure and unabashed
nationalism. Alienage, it is said, is not an element of control; also
so many unmanageable factors in the retail business make
control virtually impossible. The first argument which brings up an
issue of fact merits serious consideration. The others are matters
of opinion within the exclusive competence of the legislature and
beyond our prerogative to pass upon and decide.

The best evidence are the statistics on the retail trade, which put
down the figures in black and white. Between the constitutional
convention year (1935), when the fear of alien domination and
control of the retail trade already filled the minds of our leaders
with fears and misgivings, and the year of the enactment of the
nationalization of the retail trade act (1954), official statistics
unmistakably point out to the ever-increasing dominance and
control by the alien of the retail trade, as witness the following
tables:

No.Establishment
s

Pesos

Others ..
........

486 12,056,365

3.39 10,078,364

Filipino ..
.......

119,352 224,053,62
0

61.09 466,058,05
2

Chinese
..........

17,429 134,325,30
3

36.60 404,481,38
4

1951
:

Assets

Year and
Retailers
Nationality

Per cent
Distributio
n

Pesos

1941
:

Filipino ..
........

106,671 200,323,13
8

55.82 174,181,92

Chinese
...........

15,356 118,348,692

32.98 148,813,23

Others ..
..........

1,646 40,187,090

Others ..
........

347

8,614,025

11.20 13,630,239

1947
:

Chinese
...........

Others ..
.........

111,107 208,658,94
6

13,774 106,156,21
8

354

8,761,260

65.05 279,583,33

Chinese
..........

Others ..
........

113,631 213,342,26
4

12,087 93,155,459

422 10,514,675

Item
Assets
(Pesos)

Gross
Sales
(Pesos)

1941:

Filipino .............................................

1,878

1,633

Chinese ............................................
..

7,707

9,691

Others ..............................................
.

24,415

8,281

Filipino .............................................

1,878

2,516

Chinese ...........................................

7,707

14,934

Others ..............................................

24,749

13,919

Filipino .............................................

1,878

4,111

Chinese ............................................

7,707

24,398

33.56 205,701,13

.49

4,927,168

1948 (Census
:
)

Filipino ..
........

7,645,327

AVERAGE
ASSETS AND GROSS SALES PER ESTABLISHMENT

Year and Retailer's

Nationality

Filipino ..
........

2.31

67.30 467,161,66

1947:

29.38 294,894,22

3.32

9,995,402

1949
:

1948:
Filipino ..
........

113,659 213,451,60
2

60.89 462,532,90

Chinese
..........

16,248 125,223,33

35.72 392,414,87

(Census)

Others ..............................................

24,916

1949:

Filipino .............................................

1,878

Chinese ............................................
..

7,707

Others ..............................................

24,807

1951:

Filipino .............................................

1,877

Chinese ............................................
.

7,707

Others ..............................................
.

24,824

the fathers of our Constitution were merely translating the general

preoccupation of Filipinos "of the dangers from alien interests that
had already brought under their control the commercial and other
economic activities of the country" (Sinco, Phil. Political Law, 10th
ed., p. 114); and analyzing the concern of the members of the
constitutional convention for the economic life of the citizens, in
connection with the nationalistic provisions of the Constitution, he
says:
But there has been a general feeling that alien dominance
over the economic life of the country is not desirable and
that if such a situation should remain, political
independence alone is no guarantee to national stability
and strength. Filipino private capital is not big enough to
wrest from alien hands the control of the national
economy. Moreover, it is but of recent formation and
hence, largely inexperienced, timid and hesitant. Under
such conditions, the government as the instrumentality of
the national will, has to step in and assume the initiative, if
not the leadership, in the struggle for the economic
freedom of the nation in somewhat the same way that it
did in the crusade for political freedom. Thus . . . it (the
Constitution) envisages an organized movement for the
protection of the nation not only against the possibilities of
armed invasion but also against its economic subjugation
by alien interests in the economic field. (Phil. Political Law
by Sinco, 10th ed., p. 476.)
Belief in the existence of alien control and predominance is felt in
other quarters. Filipino businessmen, manufacturers and
producers believe so; they fear the dangers coming from alien
control, and they express sentiments of economic independence.
Witness thereto is Resolution No. 1, approved on July 18, 1953,
of the Fifth National convention of Filipino Businessmen, and a
similar resolution, approved on March 20, 1954, of the Second
National Convention of Manufacturers and Producers. The man in
the street also believes, and fears, alien predominance and
control; so our newspapers, which have editorially pointed out not
only to control but to alien stranglehold. We, therefore, find alien
domination and control to be a fact, a reality proved by official
statistics, and felt by all the sections and groups that compose the
Filipino community.
e. Dangers of alien control and dominance in retail.

(Estimated Assets and Gross Sales of Retail

Establishments, By Year and Nationality of Owners,
Benchmark: 1948 Census, issued by the Bureau of
Census and Statistics, Department of Commerce and
Industry; pp. 18-19 of Answer.)
The above statistics do not include corporations and partnerships,
while the figures on Filipino establishments already include mere
market vendors, whose capital is necessarily small..
The above figures reveal that in percentage distribution of
assests and gross sales, alien participation has steadily
increased during the years. It is true, of course, that Filipinos
have the edge in the number of retailers, but aliens more than
make up for the numerical gap through their assests and gross
sales which average between six and seven times those of the
very many Filipino retailers. Numbers in retailers, here, do not
imply superiority; the alien invests more capital, buys and sells six
to seven times more, and gains much more. The same official
report, pointing out to the known predominance of foreign
elements in the retail trade, remarks that the Filipino retailers
were largely engaged in minor retailer enterprises. As observed
by respondents, the native investment is thinly spread, and the
Filipino retailer is practically helpless in matters of capital, credit,
price and supply.
d. Alien control and threat, subject of apprehension in
Constitutional convention.
It is this domination and control, which we believe has been
sufficiently shown to exist, that is the legislature's target in the
enactment of the disputed nationalization would never have been
adopted. The framers of our Constitution also believed in the
existence of this alien dominance and control when they
approved a resolution categorically declaring among other things,
that "it is the sense of the Convention that the public interest
requires the nationalization of the retail trade; . . . ." (II Aruego,
The Framing of the Philippine Constitution, 662-663, quoted on
page 67 of Petitioner.) That was twenty-two years ago; and the
events since then have not been either pleasant or comforting.
Dean Sinco of the University of the Philippines College of Law,
commenting on the patrimony clause of the Preamble opines that

But the dangers arising from alien participation in the retail trade
does not seem to lie in the predominance alone; there is a
prevailing feeling that such predominance may truly endanger the
national interest. With ample capital, unity of purpose and action
and thorough organization, alien retailers and merchants can act
in such complete unison and concert on such vital matters as the
fixing of prices, the determination of the amount of goods or
articles to be made available in the market, and even the choice
of the goods or articles they would or would not patronize or
distribute, that fears of dislocation of the national economy and of
the complete subservience of national economy and of the
consuming public are not entirely unfounded. Nationals,
producers and consumers alike can be placed completely at their
mercy. This is easily illustrated. Suppose an article of daily use is
desired to be prescribed by the aliens, because the producer or
importer does not offer them sufficient profits, or because a new
competing article offers bigger profits for its introduction. All that
aliens would do is to agree to refuse to sell the first article,
eliminating it from their stocks, offering the new one as a
substitute. Hence, the producers or importers of the prescribed
article, or its consumers, find the article suddenly out of the
prescribed article, or its consumers, find the article suddenly out
of circulation. Freedom of trade is thus curtailed and free
enterprise correspondingly suppressed.
We can even go farther than theoretical illustrations to show the
pernicious influences of alien domination. Grave abuses have
characterized the exercise of the retail trade by aliens. It is a fact
within judicial notice, which courts of justice may not properly
overlook or ignore in the interests of truth and justice, that there
exists a general feeling on the part of the public that alien
participation in the retail trade has been attended by a pernicious
and intolerable practices, the mention of a few of which would
suffice for our purposes; that at some time or other they have
cornered the market of essential commodities, like corn and rice,
creating artificial scarcities to justify and enhance profits to
unreasonable proportions; that they have hoarded essential foods
to the inconvenience and prejudice of the consuming public, so
much so that the Government has had to establish the National
Rice and Corn Corporation to save the public from their
continuous hoarding practices and tendencies; that they have
violated price control laws, especially on foods and essential
commodities, such that the legislature had to enact a law (Sec. 9,

Republic Act No. 1168), authorizing their immediate and

automatic deportation for price control convictions; that they have
secret combinations among themselves to control prices,
cheating the operation of the law of supply and demand; that they
have connived to boycott honest merchants and traders who
would not cater or yield to their demands, in unlawful restraint of
freedom of trade and enterprise. They are believed by the public
to have evaded tax laws, smuggled goods and money into and
out of the land, violated import and export prohibitions, control
laws and the like, in derision and contempt of lawful authority. It is
also believed that they have engaged in corrupting public officials
with fabulous bribes, indirectly causing the prevalence of graft
and corruption in the Government. As a matter of fact appeals to
unscrupulous aliens have been made both by the Government
and by their own lawful diplomatic representatives, action which
impliedly admits a prevailing feeling about the existence of many
of the above practices.
The circumstances above set forth create well founded fears that
worse things may come in the future. The present dominance of
the alien retailer, especially in the big centers of population,
therefore, becomes a potential source of danger on occasions of
war or other calamity. We do not have here in this country
isolated groups of harmless aliens retailing goods among
nationals; what we have are well organized and powerful groups
that dominate the distribution of goods and commodities in the
communities and big centers of population. They owe no
allegiance or loyalty to the State, and the State cannot rely upon
them in times of crisis or emergency. While the national holds his
life, his person and his property subject to the needs of his
country, the alien may even become the potential enemy of the
State.
f. Law enacted in interest of national economic survival and
security.
We are fully satisfied upon a consideration of all the facts and
circumstances that the disputed law is not the product of racial
hostility, prejudice or discrimination, but the expression of the
legitimate desire and determination of the people, thru their
authorized representatives, to free the nation from the economic
situation that has unfortunately been saddled upon it rightly or
wrongly, to its disadvantage. The law is clearly in the interest of
the public, nay of the national security itself, and indisputably falls
within the scope of police power, thru which and by which the
State insures its existence and security and the supreme welfare
of its citizens.
VI. The Equal Protection Limitation
a. Objections to alien participation in retail trade. The next
question that now poses solution is, Does the law deny the equal
protection of the laws? As pointed out above, the mere fact of
alienage is the root and cause of the distinction between the alien
and the national as a trader. The alien resident owes allegiance to
the country of his birth or his adopted country; his stay here is for
personal convenience; he is attracted by the lure of gain and
profit. His aim or purpose of stay, we admit, is neither illegitimate
nor immoral, but he is naturally lacking in that spirit of loyalty and
enthusiasm for this country where he temporarily stays and
makes his living, or of that spirit of regard, sympathy and
consideration for his Filipino customers as would prevent him
from taking advantage of their weakness and exploiting them.
The faster he makes his pile, the earlier can the alien go back to
his beloved country and his beloved kin and countrymen. The
experience of the country is that the alien retailer has shown such
utter disregard for his customers and the people on whom he
makes his profit, that it has been found necessary to adopt the
legislation, radical as it may seem.
Another objection to the alien retailer in this country is that he
never really makes a genuine contribution to national income and
wealth. He undoubtedly contributes to general distribution, but the
gains and profits he makes are not invested in industries that
would help the country's economy and increase national wealth.
The alien's interest in this country being merely transient and
temporary, it would indeed be ill-advised to continue entrusting
the very important function of retail distribution to his hands.
The practices resorted to by aliens in the control of distribution, as
already pointed out above, their secret manipulations of stocks of
commodities and prices, their utter disregard of the welfare of
their customers and of the ultimate happiness of the people of the
nation of which they are mere guests, which practices,
manipulations and disregard do not attend the exercise of the
trade by the nationals, show the existence of real and actual,
positive and fundamental differences between an alien and a
national which fully justify the legislative classification adopted in

the retail trade measure. These differences are certainly a valid

reason for the State to prefer the national over the alien in the
retail trade. We would be doing violence to fact and reality were
we to hold that no reason or ground for a legitimate distinction
can be found between one and the other.
b. Difference in alien aims and purposes sufficient basis for
distinction.
The above objectionable characteristics of the exercise of the
retail trade by the aliens, which are actual and real, furnish
sufficient grounds for legislative classification of retail traders into
nationals and aliens. Some may disagree with the wisdom of the
legislature's classification. To this we answer, that this is the
prerogative of the law-making power. Since the Court finds that
the classification is actual, real and reasonable, and all persons of
one class are treated alike, and as it cannot be said that the
classification is patently unreasonable and unfounded, it is in duty
bound to declare that the legislature acted within its legitimate
prerogative and it can not declare that the act transcends the limit
of equal protection established by the Constitution.
Broadly speaking, the power of the legislature to make
distinctions and classifications among persons is not curtailed or
denied by the equal protection of the laws clause. The legislative
power admits of a wide scope of discretion, and a law can be
violative of the constitutional limitation only when the classification
is without reasonable basis. In addition to the authorities we have
earlier cited, we can also refer to the case of Linsey vs. Natural
Carbonic Fas Co. (1911), 55 L. ed., 369, which clearly and
succinctly defined the application of equal protection clause to a
law sought to be voided as contrary thereto:
. . . . "1. The equal protection clause of the Fourteenth
Amendment does not take from the state the power to
classify in the adoption of police laws, but admits of the
exercise of the wide scope of discretion in that regard,
and avoids what is done only when it is without any
reasonable basis, and therefore is purely arbitrary. 2. A
classification having some reasonable basis does not
offend against that clause merely because it is not made
with mathematical nicety, or because in practice it results
in some inequality. 3. When the classification in such a
law is called in question, if any state of facts reasonably
can be conceived that would sustain it, the existence of
that state of facts at the time the law was enacted must
be assumed. 4. One who assails the classification in such
a law must carry the burden of showing that it does not
rest upon any reasonable basis but is essentially
arbitrary."
c. Authorities recognizing citizenship as basis for classification.
The question as to whether or not citizenship is a legal and valid
ground for classification has already been affirmatively decided in
this jurisdiction as well as in various courts in the United States.
In the case of Smith Bell & Co. vs. Natividad, 40 Phil. 136, where
the validity of Act No. 2761 of the Philippine Legislature was in
issue, because of a condition therein limiting the ownership of
vessels engaged in coastwise trade to corporations formed by
citizens of the Philippine Islands or the United States, thus
denying the right to aliens, it was held that the Philippine
Legislature did not violate the equal protection clause of the
Philippine Bill of Rights. The legislature in enacting the law had as
ultimate purpose the encouragement of Philippine shipbuilding
and the safety for these Islands from foreign interlopers. We held
that this was a valid exercise of the police power, and all
presumptions are in favor of its constitutionality. In substance, we
held that the limitation of domestic ownership of vessels engaged
in coastwise trade to citizens of the Philippines does not violate
the equal protection of the law and due process or law clauses of
the Philippine Bill of Rights. In rendering said decision we quoted
with approval the concurring opinion of Justice Johnson in the
case of Gibbons vs. Ogden, 9 Wheat., I, as follows:
"Licensing acts, in fact, in legislation, are universally
restraining acts; as, for example, acts licensing gaming
houses, retailers of spirituous liquors, etc. The act, in this
instance, is distinctly of that character, and forms part of
an extensive system, the object of which is to encourage
American shipping, and place them on an equal footing
with the shipping of other nations. Almost every
commercial nation reserves to its own subjects a
monopoly of its coasting trade; and a countervailing
privilege in favor of American shipping is contemplated, in
the whole legislation of the United States on this subject.
It is not to give the vessel an American character, that the
license is granted; that effect has been correctly attributed

to the act of her enrollment. But it is to confer on her

American privileges, as contra distinguished from foreign;
and to preserve the Government from fraud by foreigners;
in surreptitiously intruding themselves into the American
commercial marine, as well as frauds upon the revenue in
the trade coastwise, that this whole system is projected."
The rule in general is as follows:
Aliens are under no special constitutional protection which
forbids a classification otherwise justified simply because
the limitation of the class falls along the lines of
nationality. That would be requiring a higher degree of
protection for aliens as a class than for similar classes
than for similar classes of American citizens. Broadly
speaking, the difference in status between citizens and
aliens constitutes a basis for reasonable classification in
the exercise of police power. (2 Am., Jur. 468-469.)
In Commonwealth vs. Hana, 81 N. E. 149 (Massachusetts, 1907),
a statute on the licensing of hawkers and peddlers, which
provided that no one can obtain a license unless he is, or has
declared his intention, to become a citizen of the United States,
was held valid, for the following reason: It may seem wise to the
legislature to limit the business of those who are supposed to
have regard for the welfare, good order and happiness of the
community, and the court cannot question this judgment and
conclusion. In Bloomfield vs. State, 99 N. E. 309 (Ohio, 1912), a
statute which prevented certain persons, among them aliens,
from engaging in the traffic of liquors, was found not to be the
result of race hatred, or in hospitality, or a deliberate purpose to
discriminate, but was based on the belief that an alien cannot be
sufficiently acquainted with "our institutions and our life as to
enable him to appreciate the relation of this particular business to
our entire social fabric", and was not, therefore, invalid. In Ohio
ex rel. Clarke vs. Deckebach, 274 U. S. 392, 71 L. ed. 115
(1926), the U.S. Supreme Court had under consideration an
ordinance of the city of Cincinnati prohibiting the issuance of
licenses (pools and billiard rooms) to aliens. It held that plainly
irrational discrimination against aliens is prohibited, but it does not
follow that alien race and allegiance may not bear in some
instances such a relation to a legitimate object of legislation as to
be made the basis of permitted classification, and that it could not
state that the legislation is clearly wrong; and that latitude must
be allowed for the legislative appraisement of local conditions and
for the legislative choice of methods for controlling an
apprehended evil. The case of State vs. Carrol, 124 N. E. 129
(Ohio, 1919) is a parallel case to the one at bar. In Asakura vs.
City of Seattle, 210 P. 30 (Washington, 1922), the business of
pawn brooking was considered as having tendencies injuring
public interest, and limiting it to citizens is within the scope of
police power. A similar statute denying aliens the right to engage
in auctioneering was also sustained in Wright vs. May, L.R.A.,
1915 P. 151 (Minnesota, 1914). So also in Anton vs. Van Winkle,
297 F. 340 (Oregon, 1924), the court said that aliens are judicially
known to have different interests, knowledge, attitude, psychology
and loyalty, hence the prohibitions of issuance of licenses to them
for the business of pawnbroker, pool, billiard, card room, dance
hall, is not an infringement of constitutional rights. In Templar vs.
Michigan State Board of Examiners, 90 N.W. 1058 (Michigan,
1902), a law prohibiting the licensing of aliens as barbers was
held void, but the reason for the decision was the court's findings
that the exercise of the business by the aliens does not in any
way affect the morals, the health, or even the convenience of the
community. In Takahashi vs. Fish and Game Commission, 92 L.
ed. 1479 (1947), a California statute banning the issuance of
commercial fishing licenses to person ineligible to citizenship was
held void, because the law conflicts with Federal power over
immigration, and because there is no public interest in the mere
claim of ownership of the waters and the fish in them, so there
was no adequate justification for the discrimination. It further
added that the law was the outgrowth of antagonism toward the
persons of Japanese ancestry. However, two Justices dissented
on the theory that fishing rights have been treated traditionally as
natural resources. In Fraser vs. McConway & Tarley Co., 82 Fed.
257 (Pennsylvania, 1897), a state law which imposed a tax on
every employer of foreign-born unnaturalized male persons over
21 years of age, was declared void because the court found that
there was no reason for the classification and the tax was an
arbitrary deduction from the daily wage of an employee.
d. Authorities contra explained.
It is true that some decisions of the Federal court and of the State
courts in the United States hold that the distinction between
aliens and citizens is not a valid ground for classification. But in
this decision the laws declared invalid were found to be either
arbitrary, unreasonable or capricious, or were the result or

product of racial antagonism and hostility, and there was no

question of public interest involved or pursued. In Yu Cong Eng
vs. Trinidad, 70 L. ed. 1059 (1925), the United States Supreme
Court declared invalid a Philippine law making unlawful the
keeping of books of account in any language other than English,
Spanish or any other local dialect, but the main reasons for the
decisions are: (1) that if Chinese were driven out of business
there would be no other system of distribution, and (2) that the
Chinese would fall prey to all kinds of fraud, because they would
be deprived of their right to be advised of their business and to
direct its conduct. The real reason for the decision, therefore, is
the court's belief that no public benefit would be derived from the
operations of the law and on the other hand it would deprive
Chinese of something indispensable for carrying on their
business. In Yick Wo vs. Hopkins, 30 L. ed 220 (1885) an
ordinance conferring powers on officials to withhold consent in
the operation of laundries both as to persons and place, was
declared invalid, but the court said that the power granted was
arbitrary, that there was no reason for the discrimination which
attended the administration and implementation of the law, and
that the motive thereof was mere racial hostility. In State vs.
Montgomery, 47 A. 165 (Maine, 1900), a law prohibiting aliens to
engage as hawkers and peddlers was declared void, because the
discrimination bore no reasonable and just relation to the act in
respect to which the classification was proposed.
The case at bar is radically different, and the facts make them so.
As we already have said, aliens do not naturally possess the
sympathetic consideration and regard for the customers with
whom they come in daily contact, nor the patriotic desire to help
bolster the nation's economy, except in so far as it enhances their
profit, nor the loyalty and allegiance which the national owes to
the land. These limitations on the qualifications of the aliens have
been shown on many occasions and instances, especially in
times of crisis and emergency. We can do no better than borrow
the language of Anton vs. Van Winkle, 297 F. 340, 342, to drive
home the reality and significance of the distinction between the
alien and the national, thus:
. . . . It may be judicially known, however, that alien
coming into this country are without the intimate
knowledge of our laws, customs, and usages that our own
people have. So it is likewise known that certain classes
of aliens are of different psychology from our fellow
countrymen. Furthermore, it is natural and reasonable to
suppose that the foreign born, whose allegiance is first to
their own country, and whose ideals of governmental
environment and control have been engendered and
formed under entirely different regimes and political
systems, have not the same inspiration for the public
weal, nor are they as well disposed toward the United
States, as those who by citizenship, are a part of the
government itself. Further enlargement, is unnecessary. I
have said enough so that obviously it cannot be affirmed
with absolute confidence that the Legislature was without
plausible reason for making the classification, and
therefore appropriate discriminations against aliens as it
relates to the subject of legislation. . . . .
VII. The Due Process of Law Limitation.
a. Reasonability, the test of the limitation; determination by
legislature decisive.
We now come to due process as a limitation on the exercise of
the police power. It has been stated by the highest authority in the
United States that:
. . . . And the guaranty of due process, as has often been
held, demands only that the law shall not be
unreasonable, arbitrary or capricious, and that the means
selected shall have a real and substantial relation to the
subject sought to be attained. . . . .
xxx

xxx

xxx

So far as the requirement of due process is concerned

and in the absence of other constitutional restriction a
state is free to adopt whatever economic policy may
reasonably be deemed to promote public welfare, and to
enforce that policy by legislation adapted to its purpose.
The courts are without authority either to declare such
policy, or, when it is declared by the legislature, to
override it. If the laws passed are seen to have a
reasonable relation to a proper legislative purpose, and
are neither arbitrary nor discriminatory, the requirements
of due process are satisfied, and judicial determination to

that effect renders a court functus officio. . . . (Nebbia vs.

New York, 78 L. ed. 940, 950, 957.)
Another authority states the principle thus:
. . . . Too much significance cannot be given to the word
"reasonable" in considering the scope of the police power
in a constitutional sense, for the test used to determine
the constitutionality of the means employed by the
legislature is to inquire whether the restriction it imposes
on rights secured to individuals by the Bill of Rights are
unreasonable, and not whether it imposes any restrictions
on such rights. . . .
xxx

xxx

xxx

. . . . A statute to be within this power must also be

reasonable in its operation upon the persons whom it
affects, must not be for the annoyance of a particular
class, and must not be unduly oppressive. (11 Am. Jur.
Sec. 302., 1:1)- 1074-1075.)
In the case of Lawton vs. Steele, 38 L. ed. 385, 388. it was also
held:
. . . . To justify the state in thus interposing its authority in
behalf of the public, it must appear, first, that the interests
of the public generally, as distinguished from those of a
particular class, require such interference; and second,
that the means are reasonably necessary for the
accomplishment of the purpose, and not unduly
oppressive upon individuals. . . .
Prata Undertaking Co. vs. State Board of Embalming, 104 ALR,
389, 395, fixes this test of constitutionality:
In determining whether a given act of the Legislature,
passed in the exercise of the police power to regulate the
operation of a business, is or is not constitutional, one of
the first questions to be considered by the court is
whether the power as exercised has a sufficient
foundation in reason in connection with the matter
involved, or is an arbitrary, oppressive, and capricious use
of that power, without substantial relation to the health,
safety, morals, comfort, and general welfare of the public.
b. Petitioner's argument considered.
Petitioner's main argument is that retail is a common, ordinary
occupation, one of those privileges long ago recognized as
essential to the orderly pursuant of happiness by free men; that it
is a gainful and honest occupation and therefore beyond the
power of the legislature to prohibit and penalized. This arguments
overlooks fact and reality and rests on an incorrect assumption
and premise, i.e., that in this country where the occupation is
engaged in by petitioner, it has been so engaged by him, by the
alien in an honest creditable and unimpeachable manner, without
harm or injury to the citizens and without ultimate danger to their
economic peace, tranquility and welfare. But the Legislature has
found, as we have also found and indicated, that the privilege has
been so grossly abused by the alien, thru the illegitimate use of
pernicious designs and practices, that he now enjoys a
monopolistic control of the occupation and threatens a deadly
stranglehold on the nation's economy endangering the national
security in times of crisis and emergency.
The real question at issue, therefore, is not that posed by
petitioner, which overlooks and ignores the facts and
circumstances, but this, Is the exclusion in the future of aliens
from the retail trade unreasonable. Arbitrary capricious, taking
into account the illegitimate and pernicious form and manner in
which the aliens have heretofore engaged therein? As thus
correctly stated the answer is clear. The law in question is
deemed absolutely necessary to bring about the desired
legislative objective, i.e., to free national economy from alien
control and dominance. It is not necessarily unreasonable
because it affects private rights and privileges (11 Am. Jur. pp.
1080-1081.) The test of reasonableness of a law is the
appropriateness or adequacy under all circumstances of the
means adopted to carry out its purpose into effect (Id.) Judged by
this test, disputed legislation, which is not merely reasonable but
actually necessary, must be considered not to have infringed the
constitutional limitation of reasonableness.
The necessity of the law in question is explained in the
explanatory note that accompanied the bill, which later was
enacted into law:

This bill proposes to regulate the retail business. Its

purpose is to prevent persons who are not citizens of the
Philippines from having a strangle hold upon our
economic life. If the persons who control this vital artery of
our economic life are the ones who owe no allegiance to
this Republic, who have no profound devotion to our free
institutions, and who have no permanent stake in our
people's welfare, we are not really the masters of our
destiny. All aspects of our life, even our national security,
will be at the mercy of other people.
In seeking to accomplish the foregoing purpose, we do
not propose to deprive persons who are not citizens of the
Philippines of their means of livelihood. While this bill
seeks to take away from the hands of persons who are
not citizens of the Philippines a power that can be wielded
to paralyze all aspects of our national life and endanger
our national security it respects existing rights.
The approval of this bill is necessary for our national
survival.
If political independence is a legitimate aspiration of a people,
then economic independence is none the less legitimate.
Freedom and liberty are not real and positive if the people are
subject to the economic control and domination of others,
especially if not of their own race or country. The removal and
eradication of the shackles of foreign economic control and
domination, is one of the noblest motives that a national
legislature may pursue. It is impossible to conceive that
legislation that seeks to bring it about can infringe the
constitutional limitation of due process. The attainment of a
legitimate aspiration of a people can never be beyond the limits of
legislative authority.
c. Law expressly held by Constitutional Convention to be within
the sphere of legislative action.
The framers of the Constitution could not have intended to
impose the constitutional restrictions of due process on the
attainment of such a noble motive as freedom from economic
control and domination, thru the exercise of the police power. The
fathers of the Constitution must have given to the legislature full
authority and power to enact legislation that would promote the
supreme happiness of the people, their freedom and liberty. On
the precise issue now before us, they expressly made their voice
clear; they adopted a resolution expressing their belief that the
legislation in question is within the scope of the legislative power.
Thus they declared the their Resolution:
That it is the sense of the Convention that the public
interest requires the nationalization of retail trade; but it
abstain from approving the amendment introduced by the
Delegate for Manila, Mr. Araneta, and others on this
matter because it is convinced that the National Assembly
is authorized to promulgate a law which limits to Filipino
and American citizens the privilege to engage in the retail
trade. (11 Aruego, The Framing of the Philippine
Constitution, quoted on pages 66 and 67 of the
Memorandum for the Petitioner.)
It would do well to refer to the nationalistic tendency manifested in
various provisions of the Constitution. Thus in the preamble, a
principle objective is the conservation of the patrimony of the
nation and as corollary the provision limiting to citizens of the
Philippines the exploitation, development and utilization of its
natural resources. And in Section 8 of Article XIV, it is provided
that "no franchise, certificate, or any other form of authorization
for the operation of the public utility shall be granted except to
citizens of the Philippines." The nationalization of the retail trade
is only a continuance of the nationalistic protective policy laid
down as a primary objective of the Constitution. Can it be said
that a law imbued with the same purpose and spirit underlying
many of the provisions of the Constitution is unreasonable, invalid
and unconstitutional?
The seriousness of the Legislature's concern for the plight of the
nationals as manifested in the approval of the radical measures
is, therefore, fully justified. It would have been recreant to its
duties towards the country and its people would it view the sorry
plight of the nationals with the complacency and refuse or neglect
to adopt a remedy commensurate with the demands of public
interest and national survival. As the repository of the sovereign
power of legislation, the Legislature was in duty bound to face the
problem and meet, through adequate measures, the danger and
threat that alien domination of retail trade poses to national
economy.

d. Provisions of law not unreasonable.

A cursory study of the provisions of the law immediately reveals
how tolerant, how reasonable the Legislature has been. The law
is made prospective and recognizes the right and privilege of
those already engaged in the occupation to continue therein
during the rest of their lives; and similar recognition of the right to
continue is accorded associations of aliens. The right or privilege
is denied to those only upon conviction of certain offenses. In the
deliberations of the Court on this case, attention was called to the
fact that the privilege should not have been denied to children
and heirs of aliens now engaged in the retail trade. Such
provision would defeat the law itself, its aims and purposes.
Beside, the exercise of legislative discretion is not subject to
judicial review. It is well settled that the Court will not inquire into
the motives of the Legislature, nor pass upon general matters of
legislative judgment. The Legislature is primarily the judge of the
necessity of an enactment or of any of its provisions, and every
presumption is in favor of its validity, and though the Court may
hold views inconsistent with the wisdom of the law, it may not
annul the legislation if not palpably in excess of the legislative
power. Furthermore, the test of the validity of a law attacked as a
violation of due process, is not its reasonableness, but its
unreasonableness, and we find the provisions are not
unreasonable. These principles also answer various other
arguments raised against the law, some of which are: that the law
does not promote general welfare; that thousands of aliens would
be thrown out of employment; that prices will increase because of
the elimination of competition; that there is no need for the
legislation; that adequate replacement is problematical; that there
may be general breakdown; that there would be repercussions
from foreigners; etc. Many of these arguments are directed
against the supposed wisdom of the law which lies solely within
the legislative prerogative; they do not import invalidity.
VIII. Alleged defect in the title of the law
A subordinate ground or reason for the alleged invalidity of the
law is the claim that the title thereof is misleading or deceptive, as
it conceals the real purpose of the bill which is to nationalize the
retail business and prohibit aliens from engaging therein. The
constitutional provision which is claimed to be violated in Section
21 (1) of Article VI, which reads:
No bill which may be enacted in the law shall embrace
more than one subject which shall be expressed in the
title of the bill.
What the above provision prohibits is duplicity, that is, if its title
completely fails to appraise the legislators or the public of the
nature, scope and consequences of the law or its operation (I
Sutherland, Statutory Construction, Sec. 1707, p. 297.) A cursory
consideration of the title and the provisions of the bill fails to show
the presence of duplicity. It is true that the term "regulate" does
not and may not readily and at first glance convey the idea of
"nationalization" and "prohibition", which terms express the two
main purposes and objectives of the law. But "regulate" is a
broader term than either prohibition or nationalization. Both of
these have always been included within the term regulation.
Under the title of an act to "regulate", the sale of
intoxicating liquors, the Legislature may prohibit the sale
of intoxicating liquors. (Sweet vs. City of Wabash, 41 Ind.,
7; quoted in page 41 of Answer.)
Within the meaning of the Constitution requiring that the
subject of every act of the Legislature shall be stated in
the tale, the title to regulate the sale of intoxicating
liquors, etc." sufficiently expresses the subject of an
act prohibitingthe sale of such liquors to minors and to
persons in the habit of getting intoxicated; such matters
being properly included within the subject of regulating
the sale. (Williams vs. State, 48 Ind. 306, 308, quoted in
p. 42 of Answer.)
The word "regulate" is of broad import, and
necessarily implies some degree of restraint and
prohibition of acts usually done in connection with the
thing to be regulated. While word regulate does not
ordinarily convey meaning of prohibit, there is no absolute
reason why it should not have such meaning when used
in delegating police power in connection with a thing the
best or only efficacious regulation of which involves
suppression. (State vs. Morton, 162 So. 718, 182 La. 887,
quoted in p. 42 of Answer.)

The general rule is for the use of general terms in the title of a bill;
it has also been said that the title need not be an index to the
entire contents of the law (I Sutherland, Statutory Construction,
See. 4803, p. 345.) The above rule was followed the title of the
Act in question adopted the more general term "regulate" instead
of "nationalize" or "prohibit". Furthermore, the law also contains
other rules for the regulation of the retail trade which may not be
included in the terms "nationalization" or "prohibition"; so were the
title changed from "regulate" to "nationalize" or "prohibit", there
would have been many provisions not falling within the scope of
the title which would have made the Act invalid. The use of the
term "regulate", therefore, is in accord with the principle
governing the drafting of statutes, under which a simple or
general term should be adopted in the title, which would include
all other provisions found in the body of the Act.
One purpose of the constitutional directive that the subject of a
bill should be embraced in its title is to apprise the legislators of
the purposes, the nature and scope of its provisions, and prevent
the enactment into law of matters which have received the notice,
action and study of the legislators or of the public. In the case at
bar it cannot be claimed that the legislators have been appraised
of the nature of the law, especially the nationalization and the
prohibition provisions. The legislators took active interest in the
discussion of the law, and a great many of the persons affected
by the prohibitions in the law conducted a campaign against its
approval. It cannot be claimed, therefore, that the reasons for
declaring the law invalid ever existed. The objection must
therefore, be overruled.
IX. Alleged violation of international treaties and obligations
Another subordinate argument against the validity of the law is
the supposed violation thereby of the Charter of the United
Nations and of the Declaration of the Human Rights adopted by
the United Nations General Assembly. We find no merit in the
Nations Charter imposes no strict or legal obligations regarding
the rights and freedom of their subjects (Hans Kelsen, The Law of
the United Nations, 1951 ed. pp. 29-32), and the Declaration of
Human Rights contains nothing more than a mere
recommendation or a common standard of achievement for all
peoples and all nations (Id. p. 39.) That such is the import of the
United Nations Charter aid of the Declaration of Human Rights
can be inferred the fact that members of the United Nations
Organizations, such as Norway and Denmark, prohibit foreigners
from engaging in retail trade, and in most nations of the world
laws against foreigners engaged in domestic trade are adopted.
The Treaty of Amity between the Republic of the Philippines and
the Republic of China of April 18, 1947 is also claimed to be
violated by the law in question. All that the treaty guarantees is
equality of treatment to the Chinese nationals "upon the same
terms as the nationals of any other country." But the nationals of
China are not discriminating against because nationals of all
other countries, except those of the United States, who are
granted special rights by the Constitution, are all prohibited from
engaging in the retail trade. But even supposing that the law
infringes upon the said treaty, the treaty is always subject to
qualification or amendment by a subsequent law (U. S. vs.
Thompson, 258, Fed. 257, 260), and the same may never curtail
or restrict the scope of the police power of the State (plaston vs.
Pennsylvania, 58 L. ed. 539.)
X. Conclusion
Resuming what we have set forth above we hold that the
disputed law was enacted to remedy a real actual threat and
danger to national economy posed by alien dominance and
control of the retail business and free citizens and country from
dominance and control; that the enactment clearly falls within the
scope of the police power of the State, thru which and by which it
protects its own personality and insures its security and future;
that the law does not violate the equal protection clause of the
Constitution because sufficient grounds exist for the distinction
between alien and citizen in the exercise of the occupation
regulated, nor the due process of law clause, because the law is
prospective in operation and recognizes the privilege of aliens
already engaged in the occupation and reasonably protects their
privilege; that the wisdom and efficacy of the law to carry out its
objectives appear to us to be plainly evident as a matter of fact
it seems not only appropriate but actually necessary and that
in any case such matter falls within the prerogative of the
Legislature, with whose power and discretion the Judicial
department of the Government may not interfere; that the
provisions of the law are clearly embraced in the title, and this
suffers from no duplicity and has not misled the legislators or the
segment of the population affected; and that it cannot be said to
be void for supposed conflict with treaty obligations because no

treaty has actually been entered into on the subject and the police
power may not be curtailed or surrendered by any treaty or any
other conventional agreement.
Some members of the Court are of the opinion that the radical
effects of the law could have been made less harsh in its impact
on the aliens. Thus it is stated that the more time should have
been given in the law for the liquidation of existing businesses
when the time comes for them to close. Our legal duty, however,
is merely to determine if the law falls within the scope of
legislative authority and does not transcend the limitations of due
process and equal protection guaranteed in the Constitution.
Remedies against the harshness of the law should be addressed
to the Legislature; they are beyond our power and jurisdiction.
The petition is hereby denied, with costs against petitioner.
Paras, C.J., Bengzon, Reyes, A., Bautista Angelo, Concepcion,
Reyes, J.B.L., Endencia and Felix, JJ., concur.

THIRD DIVISION
[G.R. No. 113911. January 23, 1998]

VINTA MARITIME CO., INC. and ELKANO

SHIP
MANAGEMENT,
INC., petitioners, vs. NATIONAL LABOR
RELATIONS
COMMISSION
and
LEONIDES
C.
BASCONCILLO, respondents.
DECISION
PANGANIBAN, J.:

To justify an employees dismissal, the employer has

the burden of proving the presence of just cause and due
process. An
illegally
dismissed
worker
whose
employment is for a fixed period is entitled to payment of
his salaries corresponding to the unexpired portion of his
contract.
The Case
These rules of long standing are invoked by the
Court in resolving this special civil action for certiorari
under Rule 65 of the Rules of Court seeking the reversal
of the Decision dated September 13, 1993 and the
Resolution dated November 23, 1993 of the National
Labor Relations Commission in NLRC CA No. 000309
[POEA Case No. (M) 87-05-327].
On April 20, 1987, Leonides C. Basconcillo, herein
private respondent, filed a complaint with the Philippine
Overseas Employment Administration (POEA) Workers
Assistance and Adjudication Office for illegal dismissal
against Vinta Maritime Co., Inc. and Elkano Ship
Management, Inc., herein petitioners. In their answer,
petitioners alleged that private respondent was
dismissed for his gross negligence and incompetent
performance as chief engineer of the M/V Boracay, as
exemplified by the following recorded incidents:
[1]

[2]

3.1.a. During a maneuver of the Vessel, [private

respondent] closed off the operating air valve to
the bridge control system despite the large sign on
the valve itself-DO NOT CLOSE.
3.1.b. During a standby period, there was a loss of
the main sea water pressure because the suction
strainer was blocked by ice. [Private respondents]

failure to change over the sea suctions resulted in

the overheating of the main engine and the
auxiliaries, which forced the Vessel to stop.
3.1.c. In another instance, complainant assured
that the fuel situation of the Vessel was in
order. But when the fuel figures were verified, it
was discovered that there were only five (5) tons of
fuel left before the next bunkering, leaving thus, no
margin for safety. Because of this, an unscheduled
bunkering operation in Oslo had to be done,
contrary to instructions.
3.1.d. As part of the safety procedures in the
Vessel, it is necessary that all items of safety
equipment be tested every week and a report
entered in the engine room logbook. [Private
respondent] was instructed and under duty to test
the engine room fire alarms by activating each one
individually with a heat or smoke source depending
on its type. It was, however, discovered later that
[private respondent] miserably failed to do this xxx.
3.1.e. [Private respondent] as [c]hief [e]ngineer
miserably failed to instill discipline among the
engine room personnel who are under his direct
supervision, causing unrest among them and lack
of respect for him and resulting in the disruption of
the smooth operations of the Vessel.
3.2. Contrary to [private respondents] allegations,
he was given fair warning and enough opportunity
to explain his side in the foregoing incidents, not to
mention all the chances given to him to improve
his substandard work performance before he was
dismissed. Because of his gross negligence and
his failure to perform the duties for which he was
hired, [petitioners] had no other choice than to
terminate his services for cause pursuant to
managements prerogative to terminate an
employee because of gross and habitual neglectof
his duties (Article 283, Labor Code).
Private respondent rebutted these allegations in his
position paper, stating: (1) it would be childish for an
experienced chief engineer to close the operating air
valve to the bridge; a low level of starting air is caused by
excessive and continuous use thereof during
maneuvering, and such malfunction is due to the pilots
error; (2) the loss of main water pressure due to the
formation of ice on the suction strainer occurred because
the sea water inlet was clogged; private respondent, who
was at the engine room, contacted the master of the
vessel, who was then asleep, to stop the engine and
change the sea valve to activate the sea water pressure;
during the same incident, it was also found that the other
valve did not fully open by remote control; (3) private
respondent denied that the fuel figures reached only five
tons as demonstrated by the low-level alarm which, while
set at ten cubic meters, did not set off even until the next
bunkering of the ship; it was Peter Robinson, the ship
superintendent, who panicked and caused the
unscheduled bunkering operation in Oslo; (4) private
respondent
conducted
safety
equipment-testing

religiously, but admitted that in one instance he did not

test the equipment with a heat or smoke source, upon
Robinsons advice that the alarm would upset the pilot
and the crew who were then resting; (5) private
respondent denied that there was unrest among the
engine personnel, averring that on the contrary, they
cooperated and signed the guidelines which the former
issued to them; and (6) he denied having been given a
chance to explain his side regarding the mentioned
incidents, the truth being that he was surprised when he
was told of his dismissal. Petitioners filed their position
paper and supporting documents which however failed to
rebut private respondents allegations.

Kano Ship Management Incorporated, before the

POEA Adjudication Office.
On February 13, 1987, private respondent, a
licensed Marine Engineer since 1970, was hired as
Chief Engineer for M.V. Boracay by the shipping
company, xxx Vinta Maritime Company,
Incorporated, thru its accredited manning agent,
the Elkano Ship Management, Inc.

[3]

[4]

Despite an unopposed motion for hearing filed by

private respondent, the POEA considered the case
submitted for resolution by mutual agreement of the
parties after submission of their respective position
papers and supporting documents. In his decision dated
March 9, 1990, POEA Administrator Tomas D. Achacoso
ruled that private respondent was illegally dismissed. The
dispositive portion of the decision reads as follows:
[5]

[6]

WHEREFORE, in view of the foregoing,

respondents are hereby ordered to pay, jointly and
severally, herein complainant the amount of
SEVENTEEN THOUSAND EIGHT HUNDRED
SEVENTY FIVE US DOLLARS (US$17,875.00) or
its peso equivalent at the time of actual payment,
representing his salaries for the unexpired portion
of his employment contract at US$1,787.50 per
month.
All other claims are hereby DISMISSED.
On appeal, the National Labor Relations
Commission (Respondent Commission, for brevity)
affirmed the POEA:
[7]

[8]

Accordingly, the decision of the POEA

Administrator is hereby AFFIRMED en toto.
Respondent Commission denied the motion for
reconsideration in the challenged Resolution:
[9]

After due consideration of the Motion for

Reconsideration filed by respondents-appellants
Vinta Maritime Co., Inc/ Elkano Ship Management,
Inc. on October 22, 1993, from the Decision of
September 13, 1993, the Commission (Second
Division) RESOLVED to deny the same for lack of
merit.

The crew contract for his employment was

effective for a fixed duration of one (1) year, with a
stipulated monthly basic pay of $1,375.00 U.S.
Dollars, and fixed overtime pay of $402.50 U.S.
Dollars a month, or a total of $1,787.50 U.S.
Dollars per month, with an additional 2 days leave
a month. So on February 18, 1987, private
respondent joined the vessel at the port of
Rotterdam, the Netherlands, and assumed his
duties and responsibilities as Chief Engineer.
On April 2, 1987, or barely three (3) months after
boarding the vessel, private respondent was
informed by Captain Jose B. Orquinaza, the ships
Master, that he was relieved of his duties per
recommendation of the Marine Superintendent, Mr.
Peter Robinson, due to his poor performance
(Annex G, Petition). He was in effect terminated
from the service. This came after private
respondent had a verbal altercation with Robinson,
a British national, regarding the discipline or lack
thereof of the Filipino crew under private
respondents supervision. No inquiry or
investigation, however, regarding his supposed
incompetence or negligence was ever conducted;
neither was private respondent furnished with a
notice or memorandum regarding the cause of his
dismissal.
Private respondent was made to disembark at the
port of Oslo, Norway, and immediately repatriated
to the country. Contrary to his perceived
incompetence, private respondents Seamens Book
contained the following entries:
Conduct - Very good
Ability - Very good
Remarks - Highly Recommended

Hence, this petition.

[10]

The Facts
The facts of this case are undisputed. The solicitor
general relates the following circumstances leading to the
complaint:
[11]

(Annex F, p. 5, Petition)
Assignment of Errors
In their memorandum, petitioners submit that
Respondent Commission gravely abused its discretion
by:
[12]

This case arose from a complaint for illegal

dismissal by private respondent herein, Leonides
O. Basconcillo, against petitioner companies, xxx
Vinta Maritime Company, Incorporation and the El

a. Rendering the assailed resolution and decisions

without a full-blown trial on the merits, and

b. Disregarding the evidence for the petitioners

and ruling that the company illegally dismissed
Basconcillo.
The Courts Ruling
The petition is bereft of merit. The petitioners failed to
prove the elements of a valid dismissal, namely: (1) just
cause and (2) due process.
First Issue: Trial is Not Indispensable in
Administrative Due Process
Petitioners claim that Respondent Commission
gravely abused its discretion in upholding the POEAs
decision, which was based on the position papers and
documents submitted by the parties in view of a motion
for trial which remained unacted upon. They insist that a
hearing was an indispensable condition before a
judgment could be rendered in this case. We do not
agree.Although bound by law and practice to observe
due process, administrative agencies exercising quasijudicial powers are nonetheless free from the rigidity of
certain procedural requirements. As applied to these
proceedings, due process requires only an opportunity to
explain ones side.
[13]

In labor cases, this Court has consistently held that

due process does not necessarily mean or require a
hearing, but simply an opportunity or a right to be
heard. The requirements of due process are deemed to
have been satisfied when parties are given the
opportunity to submit position papers. The holding of an
adversarial trial is discretionary on the labor arbiter and
the parties cannot demand it as a matter of right. More
often than not, a litigant may be heard more creditably
through pleadings than through oral arguments. In
administrative proceedings, technical rules of procedure
and evidence are not strictly applied; administrative due
process cannot be fully equated with due process in its
strict judicial sense. Due process was designed to
afford an opportunity to be heard, and an actual verbal
hearing need not always be held. The necessity of
conducting a hearing is addressed to the sound
discretion of the labor arbiter.
[14]

become parts of the records and were considered

accordingly by the POEA administrator and by the
Respondent Commission in rendering their respective
decisions.
Furthermore, petitioners did not deem it necessary to
ask the POEA Adjudication Office to conduct a hearing. It
was the private respondent who moved for a full-blown
trial. Although they did not oppose the motion, they did
not concur with it either. Their silence was not an assent
to the motion or an argument showing its
necessity. Rather, it was an eloquent statement that the
position paper they submitted sufficiently covered all the
issues. On the other hand, private respondents Motion
for Decision, dated November 10, 1989, indubitably
shows his waiver of his earlier requested hearing. This
motion was similarly unopposed by petitioners. So too,
petitioners present insistence on the necessity of a
hearing is weakened by the fact that their memorandum
before this Court failed to specify the matters which
would have required a hearing.
[24]

In all, the Court concurs with the POEA administrator

and Respondent Commission that a verbal hearing was
dispensable. Petitioners belated insistence is a veiled
attempt to reopen an otherwise decided case. Aside from
being late, this attempt is purely dilatory, designed to
unnecessarily prolong the resolution of the case. The
Court holds that petitioners were not denied due
process. No grave abuse of discretion was committed by
Respondent Commission.
Second Issue: Private Respondent Was Illegally
Dismissed

[15]

[16]

[17]

These rules equally apply to cases filed with the

Philippine
Overseas
Employment
Administration
Adjudication Office. Section 6 of Rule III, Book VII of the
POEA Rules and Regulations of 1991 categorically
states that proceedings before a POEA hearing officer is
non-litigious, although they are still subject to the
requirements of due process. Under the POEA Rules in
force at the time the complaint was filed, summary
judgments in which the pleadings, affidavits and evidence
submitted are sufficient to render a decision -- are
allowed under Section 4. Where the parties fail to agree
on an amicable settlement and summary judgment is not
appropriate, a judgment based on position papers may
be resorted to under Section 5. Where there are
complicated factual issues involved which cannot be
resolved through such means, the hearing officer may
direct the parties to submit suggested written clarificatory
questions to be propounded to the party concerned.
[18]

[19]

[20]

[21]

[22]

[23]

Applied to this particular case, it is undeniable that

petitioners were given their chance to be heard. Their
answer, position paper and supporting documents had

Where there is no showing of a clear, valid, and legal

cause for the termination of employment, the law
considers the matter a case of illegal dismissal. Verily, the
burden is on the employer to prove that the termination
was for a valid or authorized cause. For an employees
dismissal to be valid, (1) the dismissal must be for a valid
cause and (2) the employee must be afforded due
process. Article 282 of the Labor Code lists the
following causes for termination of employment by the
employer: (1) serious misconduct or willful disobedience
of lawful orders in connection with his or her work, (2)
gross and habitual neglect of duties, (3) fraud or willful
breach of trust, (4) commission of a crime or an offense
against the person of the employer or his immediate
family member or representative, and (5) analogous
cases.
[25]

[26]

[27]

The absence of a valid cause for termination in this

case is patent. Petitioners allege that private respondent
was dismissed because of his incompetence,
enumerating incidents in proof thereof. However, this is
contradicted by private respondents seamans book which
states that his discharge was due to an emergency
leave. Moreover, his alleged incompetence is belied by
the remarks made by petitioners in the same book that
private respondents services were highly recommended
and that his conduct and ability were rated very
good. Petitioners allegation that such remark and ratings
were given to private respondent as an accommodation
for future employment fails to persuade. The Court
cannot consent to such an accommodation, even if the
allegation were true, as it is a blatant misrepresentation.
It cannot exculpate petitioners based on such

(mis)representation. When
petitioners
issued
the
accommodation, they must have known its possible
repercussions. They cannot be allowed to turn against
their representation.
As correctly argued by the solicitor general in his
comment, it was incumbent upon the petitioners to clearly
establish that the discharge was for a just cause before
they could legitimately terminate the private respondents
services. However, they miserably failed in this respect.
The alleged incidents of incompetence were
unsupported
by
relevant
and
convincing evidence. Theaffidavits of Robinson and Capt.
Jose B. Orquinaza, who caused private respondents
dismissal and recommendation, are highly suspicious
and do not in any way prove that the alleged incidents
showing private respondents incompetence were ever
investigated and proven, as they were sufficiently
rebutted by the entries in the seamans book. Mere
allegations are not synonymous with proof.
[28]

[29]

[30]

Further, the POEA administrator and the Respondent

Commission have cleared the private respondent of such
charges,
noting
that
he
sufficiently
rebutted
them. Petitioners, on the other hand, presented no
adequate evidence or argument to tilt the weight of the
evidence in their favor. Without factual basis are their
contentions which are as follows: (1) private respondent
had been inactive and unemployed for five years prior to
his employment with petitioners; and (2) developments in
ship technology, equipment and damage control
measures, during the five years he was unemployed,
gravely affected his expertise. Petitioners failed to specify
these
alleged
advanced
equipment
and
measures. Neither did they explain that the instances
where private respondent allegedly endangered the ship
and its crew involved any of these advanced equipment
and measures. The Court sees no justification to depart
from the well-settled rule that the factual findings of
quasi-judicial agencies like the Respondent Commission,
which have acquired expertise in the matters entrusted to
their jurisdiction, are accorded by the Supreme Court not
only respect but even finality if they are supported by
substantial evidence, or that amount of relevant evidence
which a reasonable mind would accept as adequate to
justify a conclusion.
[31]

Petitioners, in our view, failed to rebut the following

observations of the Respondent Commission:
[32]

After perusing the records of this case, we arrived

at the conclusion that the Honorable POEA
Administrator committed no reversible error in
finding that the dismissal of the complainant herein
was illegal and violative of the contract of
employment. [Petitioners] allegation that [private
respondent] was validly terminated because of
inefficiency on the basis of their consultants report
would not merit [o]ur judicial approval because of
the following reasons:
First, it was [petitioners] themselves who hired and
contracted the services of [private respondent],
presumably after considering his years of
experience and records of performance, otherwise,
it would not have entered into a one year contract

of employment with [private respondent]. It is

highly unthinkable that [a] company like them
would be so naive as to be hoodwink[ed] into hiring
somebody who is not an expert and does not know
anything. Not if [w]e are to consider that they ply
international routes and capable of offering such
princely benefits as they did to [private
respondent].
Second, the report of their British consultant is
suspect to being one made out of vengeance, what
with the altercation that transpired between them
immediately prior to the preparation of the
report. xxxx But more importantly, the detailed
report (See, p. 125 of Rollo), said consultant[s
report] was to [o]ur mind substantially rebutted by
complainant one after the other in his position
paper dated October 2, 1987 (See, pp. 109 to 112
of Rollo). As such, the same could not have carried
much weight. There is no question therefore that
complainant was dismissed without any justifiable
cause.
Due process, the second element for a valid
dismissal, requires notice and hearing. Before the
employee can be dismissed under Article 282, the Code
requires the service of a written notice containing a
statement of the cause(s) of termination and giving said
employee ample opportunity to be heard and to defend
himself. A notice of termination in writing is further
required if the employees dismissal is decided upon.
The employer must furnish the worker with two written
notices before termination of employment can be legally
effected: (1) notice which apprises the employee of the
particular acts or omissions for which his dismissal is
sought and (2) subsequent notice which informs the
employee of the employers decision to dismiss him. The
twin requirements of notice and hearing constitute the
essential elements of due process, and neither of these
elements can be eliminated without running afoul of the
constitutional guaranty.
[33]

[34]

[35]

Using these legal criteria, we hold that private

respondent was illegally dismissed. No notice was ever
given to him prior to his dismissal. This fact alone
disproves petitioners allegation that private respondent
was given fair warning and enough opportunity to explain
his side [regarding] the incidents that led to his
dismissal. These requisites cannot be replaced as they
are not mere technicalities, but requirements of due
process to which every employee is entitled to ensure
that the employers prerogative to dismiss is not exercised
arbitrarily.
[36]

Illegally dismissed workers are entitled to the

payment of their salaries corresponding to the unexpired
portion of their employment where the employment is for
a definite period. Conformably, the administrator and the
Respondent Commission properly awarded private
respondent salaries for the period beginning April 9,
1987, the date of his illegal dismissal, until February 18,
1988, the expiration of his contract.
[37]

WHEREFORE,
the
petition
is
hereby DISMISSED. The challenged Decision and
Resolution are AFFIRMED. Costs against petitioners.

D E.
MARCOS

SO ORDERED.
Narvasa,
C.J.,
(Chairman),
Melo, and Francisco, JJ., concur.

Romero,

President
Republic of
the
Philippines

Republic of the Philippines

SUPREME COURT
Manila
EN BANC
G.R. No. 74457 March 20, 1987
RESTITUTO YNOT, petitioner,
vs.
INTERMEDIATE APPELLATE COURT, THE STATION
COMMANDER, INTEGRATED NATIONAL POLICE, BAROTAC
NUEVO, ILOILO and THE REGIONAL DIRECTOR, BUREAU
OF ANIMAL INDUSTRY, REGION IV, ILOILO CITY, respondents.
Ramon A. Gonzales for petitioner.

CRUZ, J.:
The essence of due process is distilled in the immortal cry of
Themistocles to Alcibiades "Strike but hear me first!" It is this
cry that the petitioner in effect repeats here as he challenges the
constitutionality of Executive Order No. 626-A.
The said executive order reads in full as follows:
WHEREAS, the President has given orders
prohibiting the interprovincial movement of
carabaos and the slaughtering of carabaos not
complying with the requirements of Executive
Order No. 626 particularly with respect to age;
WHEREAS, it has been observed that despite
such orders the violators still manage to
circumvent the prohibition against inter-provincial
movement of carabaos by transporting carabeef
instead; and
WHEREAS, in order to achieve the purposes and
objectives of Executive Order No. 626 and the
prohibition against interprovincial movement of
carabaos, it is necessary to strengthen the said
Executive Order and provide for the disposition of
the carabaos and carabeef subject of the
violation;
NOW, THEREFORE, I, FERDINAND E.
MARCOS, President of the Philippines, by virtue
of the powers vested in me by the Constitution, do
hereby promulgate the following:
SECTION 1. Executive Order No. 626 is hereby
amended such that henceforth, no carabao
regardless of age, sex, physical condition or
purpose and no carabeef shall be transported
from one province to another. The carabao or
carabeef transported in violation of this Executive
Order as amended shall be subject to confiscation
and forfeiture by the government, to be distributed
to charitable institutions and other similar
institutions as the Chairman of the National Meat
Inspection Commission may ay see fit, in the case
of carabeef, and to deserving farmers through
dispersal as the Director of Animal Industry may
see fit, in the case of carabaos.
SECTION 2. This Executive Order shall take
effect immediately.
Done in the City of Manila, this 25th day of
October, in the year of Our Lord, nineteen
hundred and eighty.

The petitioner had transported six carabaos in a pump boat from

Masbate to Iloilo on January 13, 1984, when they were
confiscated by the police station commander of Barotac Nuevo,
Iloilo, for violation of the above measure. 1 The petitioner sued for recovery,
and the Regional Trial Court of Iloilo City issued a writ of replevin upon his filing of
a supersedeas bond of P12,000.00. After considering the merits of the case, the court
sustained the confiscation of the carabaos and, since they could no longer be produced,
ordered the confiscation of the bond. The court also declined to rule on the constitutionality
of the executive order, as raise by the petitioner, for lack of authority and also for its
presumed validity. 2

The petitioner appealed the decision to the Intermediate Appellate

Court,* 3 which upheld the trial court, ** and he has now come before us in this
petition for review on certiorari.

The thrust of his petition is that the executive order is

unconstitutional insofar as it authorizes outright confiscation of
the carabao or carabeef being transported across provincial
boundaries. His claim is that the penalty is invalid because it is
imposed without according the owner a right to be heard before a
competent and impartial court as guaranteed by due process. He
complains that the measure should not have been presumed, and
so sustained, as constitutional. There is also a challenge to the
improper exercise of the legislative power by the former President
under Amendment No. 6 of the 1973 Constitution. 4
While also involving the same executive order, the case
of Pesigan v. Angeles 5 is not applicable here. The question raised
there was the necessity of the previous publication of the measure in
the Official Gazette before it could be considered enforceable. We
imposed the requirement then on the basis of due process of law. In
doing so, however, this Court did not, as contended by the Solicitor
General, impliedly affirm the constitutionality of Executive Order No.
626-A. That is an entirely different matter.
This Court has declared that while lower courts should observe a
becoming modesty in examining constitutional questions, they are
nonetheless not prevented from resolving the same whenever
warranted, subject only to review by the highest tribunal. 6 We
have jurisdiction under the Constitution to "review, revise, reverse,
modify or affirm on appeal orcertiorari, as the law or rules of court
may provide," final judgments and orders of lower courts in, among
others, all cases involving the constitutionality of certain
measures. 7 This simply means that the resolution of such cases may
be made in the first instance by these lower courts.
And while it is true that laws are presumed to be constitutional,
that presumption is not by any means conclusive and in fact may
be rebutted. Indeed, if there be a clear showing of their invalidity,
and of the need to declare them so, then "will be the time to make
the hammer fall, and heavily," 8 to recall Justice Laurel's trenchant
warning. Stated otherwise, courts should not follow the path of least
resistance by simply presuming the constitutionality of a law when it
is questioned. On the contrary, they should probe the issue more
deeply, to relieve the abscess, paraphrasing another distinguished
jurist, 9 and so heal the wound or excise the affliction.
Judicial power authorizes this; and when the exercise is
demanded, there should be no shirking of the task for fear of
retaliation, or loss of favor, or popular censure, or any other
similar inhibition unworthy of the bench, especially this Court.
The challenged measure is denominated an executive order but it
is really presidential decree, promulgating a new rule instead of
merely implementing an existing law. It was issued by President
Marcos not for the purpose of taking care that the laws were
faithfully executed but in the exercise of his legislative authority
under Amendment No. 6. It was provided thereunder that
whenever in his judgment there existed a grave emergency or a
threat or imminence thereof or whenever the legislature failed or
was unable to act adequately on any matter that in his judgment
required immediate action, he could, in order to meet the
exigency, issue decrees, orders or letters of instruction that were
to have the force and effect of law. As there is no showing of any
exigency to justify the exercise of that extraordinary power then,
the petitioner has reason, indeed, to question the validity of the
executive order. Nevertheless, since the determination of the
grounds was supposed to have been made by the President "in
(SGD.) his judgment, " a phrase that will lead to protracted discussion not
really necessary at this time, we reserve resolution of this matter
FERDINAN

until a more appropriate occasion. For the nonce, we confine

ourselves to the more fundamental question of due process.
It is part of the art of constitution-making that the provisions of the
charter be cast in precise and unmistakable language to avoid
controversies that might arise on their correct interpretation. That
is the Ideal. In the case of the due process clause, however, this
rule was deliberately not followed and the wording was purposely
kept ambiguous. In fact, a proposal to delineate it more clearly
was submitted in the Constitutional Convention of 1934, but it
was rejected by Delegate Jose P. Laurel, Chairman of the
Committee on the Bill of Rights, who forcefully argued against it.
He was sustained by the body. 10
The due process clause was kept intentionally vague so it would
remain also conveniently resilient. This was felt necessary
because due process is not, like some provisions of the
fundamental law, an "iron rule" laying down an implacable and
immutable command for all seasons and all persons. Flexibility
must be the best virtue of the guaranty. The very elasticity of the
due process clause was meant to make it adapt easily to every
situation, enlarging or constricting its protection as the changing
times and circumstances may require.
Aware of this, the courts have also hesitated to adopt their own
specific description of due process lest they confine themselves
in a legal straitjacket that will deprive them of the elbow room they
may need to vary the meaning of the clause whenever indicated.
Instead, they have preferred to leave the import of the protection
open-ended, as it were, to be "gradually ascertained by the
process of inclusion and exclusion in the course of the decision of
cases as they arise." 11Thus, Justice Felix Frankfurter of the U.S. Supreme Court,
for example, would go no farther than to define due process and in so doing sums it all
up as nothing more and nothing less than "the embodiment of the sporting Idea of fair
play." 12

When the barons of England extracted from their sovereign liege

the reluctant promise that that Crown would thenceforth not
proceed against the life liberty or property of any of its subjects
except by the lawful judgment of his peers or the law of the land,
they thereby won for themselves and their progeny that splendid
guaranty of fairness that is now the hallmark of the free society.
The solemn vow that King John made at Runnymede in 1215 has
since then resounded through the ages, as a ringing reminder to
all rulers, benevolent or base, that every person, when confronted
by the stern visage of the law, is entitled to have his say in a fair
and open hearing of his cause.
The closed mind has no place in the open society. It is part of the
sporting Idea of fair play to hear "the other side" before an opinion
is formed or a decision is made by those who sit in judgment.
Obviously, one side is only one-half of the question; the other half
must also be considered if an impartial verdict is to be reached
based on an informed appreciation of the issues in contention. It
is indispensable that the two sides complement each other, as
unto the bow the arrow, in leading to the correct ruling after
examination of the problem not from one or the other perspective
only but in its totality. A judgment based on less that this full
appraisal, on the pretext that a hearing is unnecessary or
useless, is tainted with the vice of bias or intolerance or
ignorance, or worst of all, in repressive regimes, the insolence of
power.
The minimum requirements of due process are notice and
hearing 13 which, generally speaking, may not be dispensed with because they are
intended as a safeguard against official arbitrariness. It is a gratifying commentary on our
judicial system that the jurisprudence of this country is rich with applications of this guaranty
as proof of our fealty to the rule of law and the ancient rudiments of fair play. We have
consistently declared that every person, faced by the awesome power of the State, is
entitled to "the law of the land," which Daniel Webster described almost two hundred years
ago in the famous Dartmouth College Case, 14 as "the law which hears before it condemns,
which proceeds upon inquiry and renders judgment only after trial." It has to be so if the
rights of every person are to be secured beyond the reach of officials who, out of mistaken
zeal or plain arrogance, would degrade the due process clause into a worn and empty
catchword.

This is not to say that notice and hearing are imperative in every
case for, to be sure, there are a number of admitted exceptions.
The conclusive presumption, for example, bars the admission of
contrary evidence as long as such presumption is based on
human experience or there is a rational connection between the
fact proved and the fact ultimately presumed therefrom. 15 There are
instances when the need for expeditions action will justify omission of these requisites, as in
the summary abatement of a nuisance per se, like a mad dog on the loose, which may be
killed on sight because of the immediate danger it poses to the safety and lives of the
people. Pornographic materials, contaminated meat and narcotic drugs are inherently
pernicious and may be summarily destroyed. The passport of a person sought for a criminal
offense may be cancelled without hearing, to compel his return to the country he has
fled. 16 Filthy restaurants may be summarily padlocked in the interest of the public health
and bawdy houses to protect the public morals. 17 In such instances, previous judicial
hearing may be omitted without violation of due process in view of the nature of the property
involved or the urgency of the need to protect the general welfare from a clear and present
danger.

The protection of the general welfare is the particular function of

the police power which both restraints and is restrained by due
process. The police power is simply defined as the power
inherent in the State to regulate liberty and property for the
promotion of the general welfare. 18 By reason of its function, it extends to all
the great public needs and is described as the most pervasive, the least limitable and the
most demanding of the three inherent powers of the State, far outpacing taxation and
eminent domain. The individual, as a member of society, is hemmed in by the police power,
which affects him even before he is born and follows him still after he is dead from the
womb to beyond the tomb in practically everything he does or owns. Its reach is virtually
limitless. It is a ubiquitous and often unwelcome intrusion. Even so, as long as the activity or
the property has some relevance to the public welfare, its regulation under the police power
is not only proper but necessary. And the justification is found in the venerable Latin
maxims, Salus populi est suprema lex and Sic utere tuo ut alienum non laedas, which call
for the subordination of individual interests to the benefit of the greater number.

It is this power that is now invoked by the government to justify

Executive Order No. 626-A, amending the basic rule in Executive
Order No. 626, prohibiting the slaughter of carabaos except under
certain conditions. The original measure was issued for the
reason, as expressed in one of its Whereases, that "present
conditions demand that the carabaos and the buffaloes be
conserved for the benefit of the small farmers who rely on them
for energy needs." We affirm at the outset the need for such a
measure. In the face of the worsening energy crisis and the
increased dependence of our farms on these traditional beasts of
burden, the government would have been remiss, indeed, if it had
not taken steps to protect and preserve them.
A similar prohibition was challenged in United States v.
Toribio, 19 where a law regulating the registration, branding and slaughter of large cattle
was claimed to be a deprivation of property without due process of law. The defendant had
been convicted thereunder for having slaughtered his own carabao without the required
permit, and he appealed to the Supreme Court. The conviction was affirmed. The law was
sustained as a valid police measure to prevent the indiscriminate killing of carabaos, which
were then badly needed by farmers. An epidemic had stricken many of these animals and
the reduction of their number had resulted in an acute decline in agricultural output, which in
turn had caused an incipient famine. Furthermore, because of the scarcity of the animals
and the consequent increase in their price, cattle-rustling had spread alarmingly,
necessitating more effective measures for the registration and branding of these animals.
The Court held that the questioned statute was a valid exercise of the police power and
declared in part as follows:

To justify the State in thus interposing its authority

in behalf of the public, it must appear, first, that
the interests of the public generally, as
distinguished from those of a particular class,
require such interference; and second, that the
means are reasonably necessary for the
accomplishment of the purpose, and not unduly
oppressive upon individuals. ...
From what has been said, we think it is clear that
the enactment of the provisions of the statute
under consideration was required by "the interests
of the public generally, as distinguished from
those of a particular class" and that the prohibition
of the slaughter of carabaos for human
consumption, so long as these animals are fit for
agricultural work or draft purposes was a
"reasonably necessary" limitation on private
ownership, to protect the community from the loss
of the services of such animals by their slaughter
by improvident owners, tempted either by greed of
momentary gain, or by a desire to enjoy the luxury
of animal food, even when by so doing the
productive power of the community may be
measurably and dangerously affected.
In the light of the tests mentioned above, we hold with the Toribio
Case that the carabao, as the poor man's tractor, so to speak,
has a direct relevance to the public welfare and so is a lawful
subject of Executive Order No. 626. The method chosen in the
basic measure is also reasonably necessary for the purpose
sought to be achieved and not unduly oppressive upon
individuals, again following the above-cited doctrine. There is no
doubt that by banning the slaughter of these animals except
where they are at least seven years old if male and eleven years
old if female upon issuance of the necessary permit, the
executive order will be conserving those still fit for farm work or
breeding and preventing their improvident depletion.
But while conceding that the amendatory measure has the same
lawful subject as the original executive order, we cannot say with
equal certainty that it complies with the second
requirement, viz., that there be a lawful method. We note that to
strengthen the original measure, Executive Order No. 626-A
imposes an absolute ban not on the slaughter of the carabaos but
on their movement, providing that "no carabao regardless of age,
sex, physical condition or purpose (sic) and no carabeef shall be
transported from one province to another." The object of the
prohibition escapes us. The reasonable connection between the
means employed and the purpose sought to be achieved by the
questioned measure is missing

We do not see how the prohibition of the inter-provincial transport

of carabaos can prevent their indiscriminate slaughter,
considering that they can be killed anywhere, with no less
difficulty in one province than in another. Obviously, retaining the
carabaos in one province will not prevent their slaughter there,
any more than moving them to another province will make it
easier to kill them there. As for the carabeef, the prohibition is
made to apply to it as otherwise, so says executive order, it could
be easily circumvented by simply killing the animal. Perhaps so.
However, if the movement of the live animals for the purpose of
preventing their slaughter cannot be prohibited, it should follow
that there is no reason either to prohibit their transfer as, not to be
flippant dead meat.
Even if a reasonable relation between the means and the end
were to be assumed, we would still have to reckon with the
sanction that the measure applies for violation of the prohibition.
The penalty is outright confiscation of the carabao or carabeef
being transported, to be meted out by the executive authorities,
usually the police only. In the Toribio Case, the statute was
sustained because the penalty prescribed was fine and
imprisonment, to be imposed by the court after trial and
conviction of the accused. Under the challenged measure,
significantly, no such trial is prescribed, and the property being
transported is immediately impounded by the police and declared,
by the measure itself, as forfeited to the government.
In the instant case, the carabaos were arbitrarily confiscated by
the police station commander, were returned to the petitioner only
after he had filed a complaint for recovery and given
a supersedeas bond of P12,000.00, which was ordered
confiscated upon his failure to produce the carabaos when
ordered by the trial court. The executive order defined the
prohibition, convicted the petitioner and immediately imposed
punishment, which was carried out forthright. The measure struck
at once and pounced upon the petitioner without giving him a
chance to be heard, thus denying him the centuries-old guaranty
of elementary fair play.
Exceptions
It has already been remarked that there are occasions when
notice and hearing may be validly dispensed with notwithstanding
the usual requirement for these minimum guarantees of due
process. It is also conceded that summary action may be validly
taken in administrative proceedings as procedural due process is
not necessarily judicial only. 20 In the exceptional cases accepted,
however. there is a justification for the omission of the right to a
previous hearing, to wit, theimmediacy of the problem sought to be
corrected and the urgency of the need to correct it.
In the case before us, there was no such pressure of time or
action calling for the petitioner's peremptory treatment. The
properties involved were not even inimical per se as to require
their instant destruction. There certainly was no reason why the
offense prohibited by the executive order should not have been
proved first in a court of justice, with the accused being accorded
all the rights safeguarded to him under the Constitution.
Considering that, as we held in Pesigan v. Angeles, 21Executive
Order No. 626-A is penal in nature, the violation thereof should have
been pronounced not by the police only but by a court of justice,
which alone would have had the authority to impose the prescribed
penalty, and only after trial and conviction of the accused.
We also mark, on top of all this, the questionable manner of the
disposition of the confiscated property as prescribed in the
questioned executive order. It is there authorized that the seized
property shall "be distributed to charitable institutions and other
similar institutions as the Chairman of the National Meat
Inspection Commission may see fit, in the case of carabeef, and
to deserving farmers through dispersal as the Director of Animal
Industry may see fit, in the case of carabaos." (Emphasis
supplied.) The phrase "may see fit" is an extremely generous and
dangerous condition, if condition it is. It is laden with perilous
opportunities for partiality and abuse, and even corruption. One
searches in vain for the usual standard and the reasonable
guidelines, or better still, the limitations that the said officers must
observe when they make their distribution. There is none. Their
options are apparently boundless. Who shall be the fortunate
beneficiaries of their generosity and by what criteria shall they be
chosen? Only the officers named can supply the answer, they
and they alone may choose the grantee as they see fit, and in
their own exclusive discretion. Definitely, there is here a "roving
commission," a wide and sweeping authority that is not "canalized
within banks that keep it from overflowing," in short, a clearly
profligate and therefore invalid delegation of legislative powers.

To sum up then, we find that the challenged measure is an invalid

exercise of the police power because the method employed to
conserve the carabaos is not reasonably necessary to the
purpose of the law and, worse, is unduly oppressive. Due process
is violated because the owner of the property confiscated is
denied the right to be heard in his defense and is immediately
condemned and punished. The conferment on the administrative
authorities of the power to adjudge the guilt of the supposed
offender is a clear encroachment on judicial functions and
militates against the doctrine of separation of powers. There is,
finally, also an invalid delegation of legislative powers to the
officers mentioned therein who are granted unlimited discretion in
the distribution of the properties arbitrarily taken. For these
reasons, we hereby declare Executive Order No. 626-A
unconstitutional.
We agree with the respondent court, however, that the police
station commander who confiscated the petitioner's carabaos is
not liable in damages for enforcing the executive order in
accordance with its mandate. The law was at that time
presumptively valid, and it was his obligation, as a member of the
police, to enforce it. It would have been impertinent of him, being
a mere subordinate of the President, to declare the executive
order unconstitutional and, on his own responsibility alone, refuse
to execute it. Even the trial court, in fact, and the Court of Appeals
itself did not feel they had the competence, for all their superior
authority, to question the order we now annul.
The Court notes that if the petitioner had not seen fit to assert and
protect his rights as he saw them, this case would never have
reached us and the taking of his property under the challenged
measure would have become a fait accompli despite its invalidity.
We commend him for his spirit. Without the present challenge,
the matter would have ended in that pump boat in Masbate and
another violation of the Constitution, for all its obviousness, would
have been perpetrated, allowed without protest, and soon
forgotten in the limbo of relinquished rights.
The strength of democracy lies not in the rights it guarantees but
in the courage of the people to invoke them whenever they are
ignored or violated. Rights are but weapons on the wall if, like
expensive tapestry, all they do is embellish and impress. Rights,
as weapons, must be a promise of protection. They become truly
meaningful, and fulfill the role assigned to them in the free
society, if they are kept bright and sharp with use by those who
are not afraid to assert them.
WHEREFORE, Executive Order No. 626-A is hereby declared
unconstitutional. Except as affirmed above, the decision of the
Court of Appeals is reversed. The supersedeas bond is cancelled
and the amount thereof is ordered restored to the petitioner. No
costs.
SO ORDERED.
Teehankee, C.J., Yap, Fernan, Narvasa, Gutierrez, Jr., Paras,
Gancayco, Padilla Bidin Sarmiento and Cortes, JJ., concur.
Melencio-Herrera and Feliciano, JJ., are on leave.

Republic of the Philippines

SUPREME COURT
Manila
G.R. Nos. L-69640-45 April 30, 1985
MIGUEL P. PADERANGA, AS CITY MAYOR OF GINGOOG
CITY, petitioner,
vs.
HON. JUDGE CESAR R. AZURA, AS PRESIDING JUDGE OF
THE REGIONAL TRIAL COURT, BRANCH XXVI, 10th
JUDICIAL REGION MEDINA, MISAMIS ORIENTAL, respondent.
RESOLUTION
MELENCIO-HERRERA, J.:
FIRST DIVISION

In this Petition for Certiorari, petitioner, as City Mayor of Gingoog

City, seeks to annul respondent Judge's Order denying the
Motion for Inhibition which he (petitioner) had filed.

The grounds advanced for the inhibition of respondent Judge

from hearing, deciding and issuing Orders in any of the seven
pending cases 1 in his Court wherein the City of Gingoog, its
officials, including petitioner, are parties, may be summarized as
follows:

Pimentel vs. Salanga, L-27934, 21 SCRA 160 [1967], prescribing

as follows:
All the foregoing notwithstanding, this should be a
good occasion as any to draw attention of all
judges to appropriate guidelines in a situation
where their capacity to try and decide fairly and
judiciously comes to the fore by way of challenge
from any one of the parties. A judge may not be
legally prohibited from sitting in a litigation But
when suggestion is made of record that he might
be induced to act in favor of one party or with bias
or prejudice against a litigant arising out of
circumstances reasonably capable of inciting
such a state of mind, he should conduct a careful
self- examination. He should exercise his
discretion in a way that the people's faith in the
courts of justice is not impaired. ... (Emphasis
supplied)

1. Loss of trust and confidence in the competence

and impartiality of respondent Judge, particularly
in view of the administrative complaints filed
against him by petitioner and others before this
Court.
2. Entertaining suits assailing the validity of
auction sales of tax delinquent properties by
issuing restraining orders enjoining the City
Treasurer of Gingoog City from proceeding with
the auction sales of said properties when under
Sec. 64 and 83 of P.D. 464, the remedy to stay
execution of auction sales of tax delinquent
properties is by paying the tax, pursuant to Sec.
74 of P.D. 464, supra, and not by issuance of
restraining orders;
3. Bias, oppressive dispensation of justice, and
abuse of his power of contempt in ordering the
arrest of petitioner and the members of the
Sangguniang Panglunsod of Gingoog City and
imposing upon them an excessive fine of
P10,000.00 and an excessive bond of P50,000.00
when the claim for salary was only for P5,000.00,
and by sensationalizing their arrest with the aid of
the Provincial Commander at Campa Alagar,
Cagayan de Oro City, as if they were hardened
criminals and fugitives from justice, for the
purpose of embarrassing them before the public.
4. Issuing of Orders against the interests of the
City of Gingoog.

The reminder is also apropos that next in importance to the duty

of rendering a righteous judgment is that of doing it in such a
manner as will beget no suspicion of the fairness and integrity of
the judge ... 2
ACCORDINGLY, respondent Judge is hereby ordered to inhibit
himself from hearing the cases enumerated in paragraph 4 of the
Petition involving the City of Gingoog or its officials, including
petitioner. The venue of said cases is hereby transferred to
Cagayan de Oro City each to be assigned by raffle to the
Regional Trial Courts thereat.
SO ORDERED.
Teehankee, (Chairman), Plana, Relova, Gutierrez, Jr., De la
Fuente and Alampay JJ., concur.

Respondent Judge denied the Petition for Inhibition on the ground

that loss of trust and confidence by petitioner in his neutrality is
unfounded, notwithstanding the administrative charges filed
against him, and that the plea for inhibition was prompted more
because the "City Attorney (petitioner's counsel) appears to have
persisted in his grotesque arguments and haughty conduct in his
subsequent pleadings which already constitute direct contempt
for which he may be cognizant of his inevitable punishment, and
for which reason he now entertains the resultant fears from his
own indiscretions, to appear before this presiding judge."
Petitioner assails said Order denying inhibition for having been
issued despotically, whimsically, and with grave abuse of
discretion amounting to lack of or in excess of jurisdiction. On the
other hand, respondent Judge, in his Comment filed pursuant to
this Court's requirement, states:
1. He merely followed the provisions of Sec. 1,
Rule 137, Rules of Court, in resolving petitioner's
Motion for Inhibition, there being no legal ground
for him to inhibit himself from proceeding to hear
any of the several cases therein enumerated;
2. In regard to the tax cases, he submits that if,
indeed, he has no jurisdiction, the proper remedy
is not a petition for inhibition but an action for
prohibition in accordance with Sec. 2, Rule 65;
As regards the cases of Barro v. City of Gingoog
and Rafael Rodriguez v. City of Gingoog, he had
rendered the corresponding decisions which had
already attained finality for lack of appeal;
although in the Barro case, a petition for review is
pending before the IAC;
In the case of Ayensa v. Paderanga involving a
public high school teacher, who was not paid his
salaries although he was continually rendering
services, he had ordered petitioner to pay the
aforesaid salaries, but since the Order was defied,
petitioner and other officials were cited for
contempt pursuant to the Rules.
Considering the antagonistic positions taken by the parties in their
respective pleadings, and, particularly, the seriousness of the
imputations made by petitioner, which prompted him and others
to file administrative charges against respondent Judge, we
advert to this Court's guidelines on the matter of inhibition in

Republic of the Philippines

SUPREME COURT
Manila
EN BANC

G.R. Nos. L-68379-81 September 22, 1986

EVELIO B. JAVIER, petitioner,
vs.
THE COMMISSION ON ELECTIONS, and ARTURO F.
PACIFICADOR, respondents.
Raul S. Roco and Lorna Patajo-Kapunan for petitioner.

CRUZ, J.:
The new Solicitor General has moved to dismiss this petition on
the ground that as a result of supervening events it has become
moot and academic. It is not as simple as that. Several lives have
been lost in connection with this case, including that of the
petitioner himself. The private respondent is now in hiding. The
purity of suffrage has been defiled and the popular will scorned
through a confabulation of those in authority. This Court cannot
keep silent in the face of these terrible facts. The motion is
denied.
The petitioner and the private respondent were candidates in
Antique for the Batasang Pambansa in the May 1984 elections.
The former appeared to enjoy more popular support but the latter
had the advantage of being the nominee of the KBL with all its
perquisites of power. On May 13, 1984, the eve of the elections,
the bitter contest between the two came to a head when several
followers of the petitioner were ambushed and killed, allegedly by
the latter's men. Seven suspects, including respondent
Pacificador, are now facing trial for these murders. The incident

naturally heightened tension in the province and sharpened the

climate of fear among the electorate. Conceivably, it intimidated
voters against supporting the Opposition candidate or into
supporting the candidate of the ruling party.
It was in this atmosphere that the voting was held, and the postelection developments were to run true to form. Owing to what he
claimed were attempts to railroad the private respondent's
proclamation, the petitioner went to the Commission on Elections
to question the canvass of the election returns. His complaints
were dismissed and the private respondent was proclaimed
winner by the Second Division of the said body. The petitioner
thereupon came to this Court, arguing that the proclamation was
void because made only by a division and not by the Commission
on Elections en banc as required by the Constitution. Meanwhile,
on the strength of his proclamation, the private respondent took
his oath as a member of the Batasang Pambansa.
The case was still being considered by this Court when on
February 11, 1986, the petitioner was gunned down in cold blood
and in broad daylight. The nation, already indignant over the
obvious manipulation of the presidential elections in favor of
Marcos, was revolted by the killing, which flaunted a scornful
disregard for the law by the assailants who apparently believed
they were above the law. This ruthless murder was possibly one
of the factors that strengthened the cause of the Opposition in the
February revolution that toppled the Marcos regime and installed
the present government under President Corazon C. Aquino.
The abolition of the Batasang Pambansa and the disappearance
of the office in dispute between the petitioner and the private
respondent-both of whom have gone their separate ways-could
be a convenient justification for dismissing this case. But there
are larger issues involved that must be resolved now, once and
for all, not only to dispel the legal ambiguities here raised. The
more important purpose is to manifest in the clearest possible
terms that this Court will not disregard and in effect condone
wrong on the simplistic and tolerant pretext that the case has
become moot and academic.
The Supreme Court is not only the highest arbiter of legal
questions but also the conscience of the government. The citizen
comes to us in quest of law but we must also give him justice.
The two are not always the same. There are times when we
cannot grant the latter because the issue has been settled and
decision is no longer possible according to the law. But there are
also times when although the dispute has disappeared, as in this
case, it nevertheless cries out to be resolved. Justice demands
that we act then, not only for the vindication of the outraged right,
though gone, but also for the guidance of and as a restraint upon
the future.
It is a notorious fact decried by many people and even by the
foreign press that elections during the period of the Marcos
dictatorship were in the main a desecration of the right of
suffrage. Vote-buying, intimidation and violence, illegal listing of
voters, falsified returns, and other elections anomalies
misrepresented and vitiated the popular will and led to the
induction in office of persons who did not enjoy the confidence of
the sovereign electorate. Genuine elections were a rarity. The
price at times was human lives. The rule was chicanery and
irregularity, and on all levels of the polls, from the barangay to the
presidential. This included the rigged plebiscites and referenda
that also elicited the derision and provoked the resentments of
the people.

anomalies being committed. It is a matter of record that the

petitioner complained against the terroristic acts of his opponents.
All the electoral body did was refer the matter to the Armed
Forces without taking a more active step as befitted its
constitutional role as the guardian of free, orderly and honest
elections. A more assertive stance could have averted the
Sibalom election eve massacre and saved the lives of the nine
victims of the tragedy.
Public confidence in the Commission on Elections was practically
nil because of its transparent bias in favor of the administration.
This prejudice left many opposition candidates without recourse
except only to this Court.
Alleging serious anomalies in the conduct of the elections and the
canvass of the election returns, the petitioner went to the
Commission on Elections to prevent the impending proclamation
of his rival, the private respondent herein. 1 Specifically, the
petitioner charged that the elections were marred by "massive
terrorism, intimidation, duress, vote-buying, fraud, tampering and
falsification of election returns under duress, threat and intimidation,
snatching of ballot boxes perpetrated by the armed men of
respondent Pacificador." 2 Particular mention was made of the
municipalities of Caluya, Cabate, Tibiao, Barbaza, Laua-an, and also
of San Remigio, where the petitioner claimed the election returns
were not placed in the ballot boxes but merely wrapped in cement
bags or Manila paper.
On May 18, 1984, the Second Division of the Commission on
Elections directed the provincial board of canvassers of Antique
to proceed with the canvass but to suspend the proclamation of
the winning candidate until further orders. 3 On June 7, 1984, the
same Second Division ordered the board to immediately convene
and to proclaim the winner without prejudice to the outcome of the
case before the Commission. 4 On certiorari before this Court, the
proclamation made by the board of canvassers was set aside as
premature, having been made before the lapse of the 5-day period of
appeal, which the petitioner had seasonably made. 5 Finally, on July
23, 1984, the Second Division promulgated the decision now subject
of this petition which inter alia proclaimed Arturo F. Pacificador the
elected assemblyman of the province of Antique. 6
This decision was signed by Chairman Victoriano Savellano and
Commissioners Jaime Opinion and Froilan M. Bacungan.
Previously asked to inhibit himself on the ground that he was a
former law partner of private respondent Pacificador, Opinion had
refused. 7
The petitioner then came to this Court, asking us to annul the said
decision.
The core question in this case is one of jurisdiction, to wit: Was
the Second Division of the Commission on Elections authorized
to promulgate its decision of July 23, 1984, proclaiming the
private respondent the winner in the election?
The applicable provisions are found in Article XII-C, Sections 2
and 3, of the 1973 Constitution.
Section 2 confers on the Commission on Elections the power to:
(2) Be the sole judge of all contests relating to the
election, returns and qualifications of all member of the
Batasang Pambansa and elective provincial and city
officials.
Section 3 provides:

Antique in 1984 hewed to the line and equaled if it did not

surpass the viciousness of elections in other provinces dominated
by the KBL. Terrorism was a special feature, as demonstrated by
the killings previously mentioned, which victimized no less than
one of the main protagonists and implicated his rival as a
principal perpetrator. Opposition leaders were in constant peril of
their lives even as their supporters were gripped with fear of
violence at the hands of the party in power.
What made the situation especially deplorable was the apparently
indifferent attitude of the Commission on Elections toward the

The Commission on Elections may sit en banc or in three

divisions. All election cases may be heard and decided by
divisions except contests involving members of the
Batasang Pambansa, which shall be heard and
decided en banc. Unless otherwise provided by law, all
election cases shall be decided within ninety days from
the date of their submission for decision.
While both invoking the above provisions, the petitioner and the
respondents have arrived at opposite conclusions. The records

are voluminous and some of the pleadings are exhaustive and in

part even erudite. And well they might be, for the noble profession
of the law-despite all the canards that have been flung against itexerts all efforts and considers all possible viewpoints in its
earnest search of the truth.
The petitioner complains that the Proclamation made by the
Second Division is invalid because all contests involving the
members of the Batasang Pambansa come under the jurisdiction
of the Commission on Elections en banc. This is as it should be,
he says, to insure a more careful decision, considering the
importance of the offices involved. The respondents, for their part,
argue that only contests need to be heard and decided en
banc and all other cases can be-in fact, should be-filed with and
decided only by any of the three divisions.
The former Solicitor General makes much of this argument and
lays a plausible distinction between the terms "contests" and
"cases" to prove his point. 8 Simply put, his contention is that the
pre-proclamation controversy between the petitioner and the private
respondent was not yet a contest at that time and therefore could be
validly heard by a mere division of the Commission on Elections,
consonant with Section 3. The issue was at this stage still
administrative and so was resoluble by the Commission under its
power to administer all laws relative to the conduct of elections, 9 not
its authority as sole judge of the election contest.
A contest, according to him, should involve a contention between
the parties for the same office "in which the contestant seeks not
only to oust the intruder but also to have himself inducted into the
office." 10 No proclamation had as yet been made when the petition
was filed and later decided. Hence, since neither the petitioner nor
the private respondent had at that time assumed office, there was no
Member of the Batasang Pambansa from Antique whose election,
returns or qualifications could be examined by the Commission on
Elections en banc.
In providing that the Commission on Elections could act in
division when deciding election cases, according to this theory,
the Constitution was laying down the general rule. The exception
was the election contest involving the members of the Batasang
Pambansa, which had to be heard and decided en banc. 11 The en
banc requirement would apply only from the time a candidate for the
Batasang Pambansa was proclaimed as winner, for it was only then
that a contest could be permitted under the law. All matters arising
before such time were, necessarily, subject to decision only by
division of the Commission as these would come under the general
heading of "election cases."
As the Court sees it, the effect of this interpretation would be to
divide the jurisdiction of the Commission on Elections into two,
viz.: (1) over matters arising before the proclamation, which
should be heard and decided by division in the exercise of its
administrative power; and (2) over matters arising after the
proclamation, which could be heard and decided only en banc in
the exercise of its judicial power. Stated otherwise, the
Commission as a whole could not act as sole judge as long as
one of its divisions was hearing a pre-proclamation matter
affecting the candidates for the Batasang Pambansa because
there was as yet no contest; or to put it still another way, the
Commission en banc could not do what one of its divisions was
competent to do, i.e., decide a pre-proclamation controversy.
Moreover, a mere division of the Commission on Elections could
hear and decide, save only those involving the election, returns
and qualifications of the members of the Batasang Pambansa, all
cases involving elective provincial and city officials from start to
finish, including pre-proclamation controversies and up to the
election protest. In doing so, it would exercise first administrative
and then judicial powers. But in the case of the Commission en
banc, its jurisdiction would begin only after the proclamation was
made and a contest was filed and not at any time and on any
matter before that, and always in the exercise only of judicial
power.
This interpretation would give to the part more powers than were
enjoyed by the whole, granting to the division while denying to
the banc. We do not think this was the intention of the

Constitution. The framers could not have intended such an

irrational rule.
We believe that in making the Commission on Elections the sole
judge of all contests involving the election, returns and
qualifications of the members of the Batasang Pambansa and
elective provincial and city officials, the Constitution intended to
give it full authority to hear and decide these cases from
beginning to end and on all matters related thereto, including
those arising before the proclamation of the winners.
It is worth observing that the special procedure for the settlement
of what are now called "pre-proclamation controversies" is a
relatively recent innovation in our laws, having been introduced
only in 1978, through P.D. No. 1296, otherwise known as the
1978 Election Code. Section 175 thereof provided:
Sec. 175. Suspension and annulment of proclamation.The Commission shall be the sole judge of all preproclamation controversies and any of its decisions,
orders or rulings shall be final and executory. It may, motu
proprio or upon written petition, and after due notice and
hearing order the suspension of the proclamation of a
candidate-elect or annul any proclamation, if one has
been made, on any of the grounds mentioned in Sections
172, 173 and 174 thereof.
Before that time all proceedings affecting the election, returns and
qualifications of public officers came under the complete
jurisdiction of the competent court or tribunal from beginning to
end and in the exercise of judicial power only. It therefore could
not have been the intention of the framers in 1935, when the
Commonwealth Charter was adopted, and even in 1973, when
the past Constitution was imposed, to divide the electoral process
into the pre-proclamation stage and the post-proclamation stage
and to provide for a separate jurisdiction for each stage,
considering the first administrative and the second judicial.
Besides, the term "contest" as it was understood at the time
Article XII-C. Section 2(2) was incorporated in the 1973
Constitution did not follow the strict definition of a contention
between the parties for the same office. Under the Election Code
of 1971, which presumably was taken into consideration when the
1973 Constitution was being drafted, election contests included
the quo warranto petition that could be filed by any voter on the
ground of disloyalty or ineligibility of the contestee although such
voter was himself not claiming the office involved. 12
The word "contests" should not be given a restrictive meaning; on
the contrary, it should receive the widest possible scope
conformably to the rule that the words used in the Constitution
should be interpreted liberally. As employed in the 1973
Constitution, the term should be understood as referring to any
matter involving the title or claim of title to an elective office, made
before or after proclamation of the winner, whether or not the
contestant is claiming the office in dispute. Needless to stress,
the term should be given a consistent meaning and understood in
the same sense under both Section 2(2) and Section 3 of Article
XII-C of the Constitution.
The phrase "election, returns and qualifications" should be
interpreted in its totality as referring to all matters affecting the
validity of the contestee's title. But if it is necessary to specify, we
can say that "election" referred to the conduct of the polls,
including the listing of voters, the holding of the electoral
campaign, and the casting and counting of the votes; "returns" to
the canvass of the returns and the proclamation of the winners,
including questions concerning the composition of the board of
canvassers and the authenticity of the election returns and
"qualifications" to matters that could be raised in a quo
warranto proceeding against the proclaimed winner, such as his
disloyalty or ineligibility or the inadequacy of his certificate of
candidacy.
All these came under the exclusive jurisdiction of the Commission
on Elections insofar as they applied to the members of the
defunct Batasang Pambansa and, under Article XII-C, Section 3,

of the 1973 Constitution, could be heard and decided by it

only en banc.
We interpret "cases" as the generic term denoting the actions that
might be heard and decided by the Commission on Elections,
only by division as a general rule except where the case was a
"contest" involving members of the Batasang Pambansa, which
had to be heard and decided en banc.
As correctly observed by the petitioner, the purpose of Section 3
in requiring that cases involving members of the Batasang
Pambansa be heard and decided by the Commission en banc
was to insure the most careful consideration of such cases.
Obviously, that objective could not be achieved if the Commission
could act en banc only after the proclamation had been made, for
it might then be too late already. We are all-too-familiar with the
grab-the-proclamation-and-delay-the-protest strategy of many
unscrupulous candidates which has resulted in the frustration of
the popular will and the virtual defeat of the real winners in the
election. The respondent's theory would make this gambit
possible for the pre- proclamation proceedings, being summary in
nature, could be hastily decided by only three members in
division, without the care and deliberation that would have
otherwise been observed by the Commission en banc.
After that, the delay. The Commission en banc might then no
longer be able to rectify in time the proclamation summarily and
not very judiciously made by the division. While in the end the
protestant might be sustained, he might find himself with only a
Phyrric victory because the term of his office would have already
expired.
It may be argued that in conferring the initial power to decide the
pre- proclamation question upon the division, the Constitution did
not intend to prevent the Commission en banc from exercising the
power directly, on the theory that the greater power embraces the
lesser. It could if it wanted to but then it could also allow the
division to act for it. That argument would militate against the
purpose of the provision, which precisely limited all questions
affecting the election contest, as distinguished from election
cases in general, to the jurisdiction of the Commission en banc as
sole judge thereof. "Sole judge" excluded not only all other
tribunals but also and even the division of the Commission A
decision made on the contest by less than the Commission en
banc would not meet the exacting standard of care and
deliberation ordained by the Constitution
Incidentally, in making the Commission the "sole judge" of preproclamation controversies in Section 175, supra, the law was
obviously referring to the body sitting en banc. In fact, the preproclamation controversies involved in Aratuc vs. Commission on
Elections, 13 where the said provision was applied, were heard and
decided en banc.
Another matter deserving the highest consideration of this Court
but accorded cavalier attention by the respondent Commission on
Elections is due process of law, that ancient guaranty of justice
and fair play which is the hallmark of the free society.
Commissioner Opinion ignored it. Asked to inhibit himself on the
ground that he was formerly a law partner of the private
respondent, he obstinately insisted on participating in the case,
denying he was biased. 14
Given the general attitude of the Commission on Elections toward
the party in power at the time, and the particular relationship
between Commissioner Opinion and MP Pacificador, one could
not be at least apprehensive, if not certain, that the decision of
the body would be adverse to the petitioner. As in fact it was.
Commissioner Opinion's refusal to inhibit himself and his
objection to the transfer of the case to another division cannot be
justified by any criterion of propriety. His conduct on this matter
belied his wounded protestations of innocence and proved the
motives of the Second Division when it rendered its decision.
This Court has repeatedly and consistently demanded "the cold
neutrality of an impartial judge" as the indispensable imperative of
due process. 15 To bolster that requirement, we have held that the

judge must not only be impartial but must also appear to be impartial
as an added assurance to the parties that his decision will be
just. 16 The litigants are entitled to no less than that. They should be
sure that when their rights are violated they can go to a judge who
shall give them justice. They must trust the judge, otherwise they will
not go to him at all. They must believe in his sense of fairness,
otherwise they will not seek his judgment. Without such confidence,
there would be no point in invoking his action for the justice they
expect.

Due process is intended to insure that confidence by requiring

compliance with what Justice Frankfurter calls the rudiments of
fair play. Fair play cans for equal justice. There cannot be equal
justice where a suitor approaches a court already committed to
the other party and with a judgment already made and waiting
only to be formalized after the litigants shall have undergone the
charade of a formal hearing. Judicial (and also extra-judicial)
proceedings are not orchestrated plays in which the parties are
supposed to make the motions and reach the denouement
according to a prepared script. There is no writer to foreordain the
ending. The judge will reach his conclusions only after all the
evidence is in and all the arguments are filed, on the basis of the
established facts and the pertinent law.
The relationship of the judge with one of the parties may color the
facts and distort the law to the prejudice of a just decision. Where
this is probable or even only posssible, due process demands
that the judge inhibit himself, if only out of a sense of delicadeza.
For like Caesar's wife, he must be above suspicion.
Commissioner Opinion, being a lawyer, should have recognized
his duty and abided by this well-known rule of judicial conduct.
For refusing to do so, he divested the Second Division of the
necessary vote for the questioned decision, assuming it could act,
and rendered the proceeding null and void. 17
Since this case began in 1984, many significant developments
have taken place, not the least significant of which was the
February revolution of "people power" that dislodged the past
regime and ended well nigh twenty years of travail for this captive
nation. The petitioner is gone, felled by a hail of bullets sprayed
with deadly purpose by assassins whose motive is yet to be
disclosed. The private respondent has disappeared with the
"pomp of power" he had before enjoyed. Even the Batasang
Pambansa itself has been abolished, "an iniquitous vestige of the
previous regime" discontinued by the Freedom Constitution. It is
so easy now, as has been suggested not without reason, to send
the recrds of this case to the archives and say the case is
finished and the book is closed.
But not yet.
Let us first say these meager words in tribute to a fallen hero who
was struck down in the vigor of his youth because he dared to
speak against tyranny. Where many kept a meekly silence for
fear of retaliation, and still others feigned and fawned in hopes of
safety and even reward, he chose to fight. He was not afraid.
Money did not tempt him. Threats did not daunt him. Power did
not awe him. His was a singular and all-exacting obsession: the
return of freedom to his country. And though he fought not in the
barricades of war amid the sound and smoke of shot and shell,
he was a soldier nonetheless, fighting valiantly for the liberties of
his people against the enemies of his race, unfortunately of his
race too, who would impose upon the land a perpetual night of
dark enslavement. He did not see the breaking of the dawn, sad
to say, but in a very real sense Evelio B. Javier made that dawn
draw nearer because he was, like Saul and Jonathan, "swifter
than eagles and stronger than lions."
A year ago this Court received a letter which began: "I am the
sister of the late Justice Calixto Zaldivar. I am the mother of
Rhium Z. Sanchez, the grandmother of Plaridel Sanchez IV and
Aldrich Sanchez, the aunt of Mamerta Zaldivar. I lost all four of
them in the election eve ambush in Antique last year." She
pleaded, as so did hundreds of others of her provincemates in
separate signed petitions sent us, for the early resolution of that
horrible crime, saying: "I am 82 years old now. I am sick. May I
convey to you my prayer in church and my plea to you, 'Before I
die, I would like to see justice to my son and grandsons.' May I

also add that the people of Antique have not stopped praying that
the true winner of the last elections will be decided upon by the
Supreme Court soon."
That was a year ago and since then a new government has taken
over in the wake of the February revolution. The despot has
escaped, and with him, let us pray, all the oppressions and
repressions of the past have also been banished forever. A new
spirit is now upon our land. A new vision limns the horizon. Now
we can look forward with new hope that under the Constitution of
the future every Filipino shall be truly sovereign in his own
country, able to express his will through the pristine ballow with
only his conscience as his counsel.
This is not an impossible dream. Indeed, it is an approachable
goal. It can and will be won if we are able at last, after our long
ordeal, to say never again to tyranny. If we can do this with
courage and conviction, then and only then, and not until then,
can we truly say that the case is finished and the book is closed.
WHEREFORE, let it be spread in the records of this case that
were it not for the supervening events that have legally rendered
it moot and academic, this petition would have been granted and
the decision of the Commission on Elections dated July 23, 1984,
set aside as violative of the Constitution.
SO ORDERED.
Feria, Yap, Narvasa, Alampay and Paras, JJ., concur.
Fernan and Gutierrez, Jr., JJ., concur in the result.

In herein petitioner's answer, as respondent below, he denied that

herein private respondents were his tenants. He claimed that "...
Ricardo David (should be Jugar) who was then the tractor driver
of respondent (now petitioner herein) was given additional
incentive to work on a one hectare portion of respondent's land
which he surrendered after resigning as tractor driver and after he
worked with the Dolefil and as a farm tenant of his father;
Felomeno Jugar truly worked with the respondent (herein
petitioner) on share basis until the petitioner Felomeno Jugar
(now private respondent) sold his working animals and resumed
his faith-healing and later worked, as in fact to the present is
working, with his father ..." 6 He further averred that the average
harvest per hectare is not only 60 to 70 sacks of corn on cobs but if
properly cultivated the land would easily yield no less than 120 sacks
of corn on cobs at 4 cans each sack; that the truth is that private
respondents voluntarily surrendered their landholdings as follows:
"...Ricardo, in September, 1972, after he resigned as tractor driver of
respondent (now petitioner), due to ill health; and later on as farm
tenant of his father; Felomeno Jugar voluntarily surrendered his
landholdings after he sold his working animals, and later, he
continued his religious faith healing occupation and as farm tenant of
his father." 7
As affirmative defense, petitioner alleged that private respondents
lodged their petition with the DAR, now Ministry of Agrarian
Reform (MAR), and after a thorough investigation, the Hearing
Officer of said Department, Guillermo Tanawit, rendered a Report
(DAR ARDO # 11-38-000, Koronadal, South Cotabato) on April
12, 1976 containing the following findings and recommendation,
to wit:

Republic of the Philippines

SUPREME COURT
Manila
SECOND DIVISION

There was no dispute that Ricardo was installed

on a 1.0 hectare land, so also there was no
dispute that Felomeno Jugar was installed on 2.0
hectare land.

G.R. No. L-49360 December 14, 1979

FILEMON DAVID, petitioner,
vs.
HON. GREGORIO U. AQUILIZAN, FELOMENO JUGAR and
RICARDO JUGAR, respondents.
Arturo P. Aponesto for petitioner.
Dominador Mortera for private respondents.

SANTOS, J.:
Petition for certiorari with prayer for a writ of preliminary injunction
filed November 27, 1978 to set aside the decision dated
September 29, 1978 of the Court of Agrarian Relations (CAR),
16th Regional District, Branch II at Cotabato City, presided by
Judge Gregorio U. Aquilizan. 1
We resolved on April 10, 1979, finding the verified petition
sufficient in form and substance, to require respondents to
answer, not to move to dismiss. 2 On June 9, 1979, respondent
Judge after an extension of 20 days, filed an answer. 3Private
respondents did not answer notwithstanding due and proper notice.

or less, their sharing agreement being 50-50% of the net produce;

that the parcels they were cultivating are devoted to the
production of corn crops, the produce per hectare being 60 to 70
cavans in corn cobs; that sometime in the middle part of 1973,
private respondents were no longer allowed to continue their
cultivation of the subject lots as petitioner-landholder prohibited
them from doing so and took possession of said lots for no
reason at all; that the Department of Agrarian Reform (DAR)
Team Office at General Santos intervened for the immediate
reinstatement of private respondents to their respective portions,
but such intervention was to no avail as petitioner-landholder
refused and still refuses to reinstate them, and that because of
such unlawful act, private respondents suffered and will continue
to suffer damages and litigation expenses. 5

The factual and procedural antecedents which gave rise to this

petition follow.
Earlier or on February 17, 1976, the herein private respondents,
Felomeno and Ricardo Jugar brothers, filed against Felimon C.
David, herein petitioner, a "Petition for Reinstatement" in the
CAR, 15th Regional District, Branch II, Cotabato City.
They alleged, inter alia, that sometime in 1971, they were
installed as share tenants by petitioner over separate portions of
the latter's landholding situated at Polomolok, South Cotabato,
each portion having a seeding capacity of two (2) hectares, more

The allegation however, that both were "illegally

ejected" is belied by the admission in their
position paper termed as memorandum that the
landowner ONLY BORROWED their land for a
short period to time, Noted with all aspect that
Ricardo even employed himself with the DOLE
which only but confirm the stand of voluntary
surrender by his landlord. Not only that he even
worked on his father's land He claimed that he
resigned as a tractor driver because he was sick
and then later claimed that he was reinstalled on
another 2.0 hectare augmenting his 1.0 hectare
into 2.0 hectare as claimed. But the fact remain
thereafter he relinquished his fights thereat
because of sickness and work on his father's
land.
So also with his brother Felomeno Jugar he
claimed that his lot of 2.0 hectare was only
borrowed by his landlord the latter part of 1975
because of their (David) debt with the bank, and
work with his father.
Taken as a whole, there could not be unlawful
ejectment contrary to PD No. 316 dated October
26, 1973, because during that particular time,
Ricardo is either working with the Dole,
supplemented by his farming with his father and
Felomeno Jugar with his laymen (religious)
activities supplemented with his farming with his
father's land.
The above foregoing, the undersigned
observation (sic), when the conducted this
hearing, can not but penned this dictum that there
was no unlawful ejectment but indeed petitioners
had summarily surrendered their landholdings

separately, on their own will and without any

duress (unlawful),
Accordingly, for want of merit, the case is hereby
dropped from the undersigned roster of legal
(mediation) case. 8 (Emphasis supplied.)
On June 29, 1978, after the issues were joined, the respondent
Judge issued an order directing the Department (now Ministry) of
Agrarian Reform "... to cover the land in area under operation
Land Transfer (sic) ..." This order is worded as follows.
When CAR Case No. 43-South Cot. '76 was
called, plaintiffs and counsel appeared as well as
the defendant and counsels.
In view of the recent ruling of the Court of Appeals
with respect to land devoted primarily to rice
and/or corn and as of October 21, 1972, said land
is automatically covered by operation Land
Transfer.
WHEREFORE, in view of the revelation gathered
in open court, the Department of Agrarian Reform
is hereby directed to cover the land in area under
operation Land Transfer. 9
Three months later, or on September 29, 1979, respondent
Judge without conducting any hearing rendered judgment for
private respondents and against herein petitioner finding that
"...plaintiffs Ricardo and Felomeno, both surnamed Jugar (now
private respondents) were tenants of defendant Filemon C. David
(petitioner herein) at the time PD 27 was promulgated on October
21, 1972," 10 and thereafter declared them "owners" thereof. Thus
WHEREFORE, premises considered judgment is
rendered:
1. Plaintiffs (private respondents herein) are
hereby 'deemed owners' of the land they were
cultivating when P.D. 27 was decreed;
2. The Ministry of Agrarian Reform is hereby
directed to cover the land point of controversy
under Operation Land Transfer;

This petition is quite obviously invested with merit. In the light of

the foregoing factual. and procedural milieu and since, admittedly,
respondent judge did not conduct any hearing in the case prior to
issuance of the challenged decision, the ineluctible conclusion is
that the challenged decision is null and void for want of due
process. The following requisites, as set forth in a leading case
before the 1935 Constitution took effect, must concur for
procedural due process in civil cases: "(1) There must be a court
or tribunal clothed with judicial power to hear and determine the
matter before it; (2) jurisdiction must be lawfully acquired over the
person of the defendant or over the property which is the subject
of the proceeding; (3)the defendant must be given an opportunity
to be heard; and (4) judgment must be rendered upon lawful
hearing." 15 Thus, it is well-settled rule that "no one shall be
personally bound until he has had a day in court", by which is meant,
until he has been duly cited to appear, and has been afforded an
opportunity to be heard. Judgment without such citation and
opportunity lacks all the attributes of a judicial determination; it is a
judicial usurpation and oppression, and can never be upheld where
justice is justly administered. (Ong Su Han vs. Gutierrez David, 76
Phil. 546, etc.; Moran Comments on the Rules of Court, Vol. 1, 1957
ed., p. 476). And it has been held that a final and executory judgment
may be set aside with a view to the renewal of the litigation when the
judgment is void for lack of due process of law. (Moran, Comments
on the Rules of Court, supra, p. 523; Banco Espaol-Filipino vs.
Palanca, 37 Phil. 921 ). 16 Being null and void from its inception, the
decision sought to be set aside does not exist in the eyes of the law
because it is "as though it had not been done. 17 In legal
contemplation, it is no judgment at all. 18 "By it, no rights are divested.
From it, no rights can be obtained. Being worthless in itself, all
proceedings founded upon it are equally worthless. It neither binds
nor bars anyone. All acts performed under it and all claims flowing
out of it are void. ..." 19 It may be attacked directly or collaterally, and
the action therefor may be brought even after the time for appeal or
review has lapsed. The judgment is vulnerable to attack even when
no appeal has. 20 Hence, such judgment does not become final in
sense of depriving a party of his right to question its validity. 21
WHEREFORE, petition is GRANTED and the challenged order
and decision are hereby SET ASIDE. Respondent judge is hereby
directed to conduct appropriate proceedings in the case. This
decision is immediately executory. No costs.
SO ORDERED.
Barredo (Chairman), Antonio, Aquino, Concepcion, Jr. and Abad
Santos, JJ., concur.

3. Directing the the provincial Commander,

Philippine Constabular of South Cotabato to
install peacefully plaintiffs to the land covered by
operations land 'Transfer after the Ministry of
Agrarian Reform shall have Identified and
sketched them, in conformity with the DND/DAR
Memorandum Agreement of September 18, 1975.
4. Let a copy of this Decision be furnished the
Hon. Secretary, Ministry of Agrarian Reform for his
guidance and easy reference for similar case.
No pronouncement as to cost or damages.

EN BANC
G.R. No. L-21362

November 29, 1968

11

On the bases of the foregoing tactual and procedural antecedent

petitioners seek to annul and set aside the aforesaid order and
decision of respondent Judge Aquilizan on the grounds that: (a)
he was denied due process of law; (b) the respondent Judge has
no jurisdiction over the instant case, jurisdiction being legally
lodged with the Ministry of Agrarian Reform: (c) assuming
respondent Judge has jurisdiction thereof, the order of June 29,
1978 has already become final and no new decision novating the
same may be rendered; and (d) the findings of facts, arrived at
without hearing, are contrary to the evidence (sic). 12
In his Answer, respondent Judge Aquilizan did not deny the lack
of hearings alleged in the petition, but interposed the defense that
the subject decision has already become "... final and executory
after the lapse of the period for the perfection of an appeal ..."
and "... there is no showing that an appeal was brought to the
Appellate Court in accordance with provisions of PD 946 and the
Uniform Rules of Procedure of the Court of Agrarian
Relations." 13 That instead, the respondent (should be petitioner)
filed the instant "Certiorari with Preliminary Injunction' to review the
"Decisions of the Honorable Court of Agrarian Relations dated
September 29, 1978", and "...that certiorari cannot be substituted for
an appeal ..." 14
On June 22, 1979, We considered the case submitted for
decision.

Republic of the Philippines

SUPREME COURT
Manila

DEVELOPMENT BANK OF THE PHILIPPINES, plaintiffappellant,

vs.
LOURDES GASPAR BAUTISTA, THE DIRECTOR OF THE
LANDS and THE NATIONAL TREASURER OF THE
PHILIPPINES, defendants-appellees.
Jesus A. Avancea for plaintiff-appellant.
Lourdes Gaspar Bautista in her own behalf as defendantappellee.
Assistant Solicitor General Antonio Torres, Solicitor Francisco J.
Bautista and Special Attorney Daniel G. Florida for defendantsappelles Director of Lands, et al.
FERNANDO, J.:
The question this appeal from a judgment of a lower court
presents is one that possesses both novelty and significance. It is
this: What is the right, if any, of a creditor which previously
satisfied its claim by foreclosing extrajudicially on a mortgage
executed by the debtor, whose title was thereafter nullified in a
judicial proceeding where she was not brought in as a party?
As creditor, the Development Bank of the Philippines now
appellant, filed a complaint against one of its debtors, Lourdes
Gaspar Bautista, now appellee, for the recovery of a sum of
money representing the unpaid mortgage indebtedness, which

previously had been wiped out with the creditor bank acquiring
the title of the mortgaged property in an extrajudicial sale.
Thereafter, the title was nullified in a judicial proceeding, the land
in question being adjudged as belonging to another claimant,
without, however, such debtor, as above noted, having been cited
to appear in such court action.
The Development Bank was unsuccessful, the lower court being
of the view that with the due process requirement thus flagrantly
disregarded, since she was not a party in such action where her
title was set aside, such a judgment could in no wise be binding
on her and be the source of a claim by the appellant bank. The
complaint was thus dismissed by the lower court, then presided
by Judge, now Justice, Magno Gatmaitan of the Court of Appeals.
Hence, this appeal by appellant bank.
Such dismissal is in accordance with law. There is no occasion
for us to repudiate the lower court.
From the very statement of facts in the brief for appellant bank,
the following appears: "On or before May 31, 1949, the
defendant-appellee, Lourdes Gaspar Bautista, who shall
hereafter be referred to as Bautista, applied to the Government
for the sale favor of a parcel of land with an area of 12 has., 44
ares, and 22 centares, located at Bo. Barbara, San Jose, Nueva
Ecija. After proper investigation, Sales Patent no. V-132 covering
said property was issued in her favor on June 1, 1949 (Exh. A-1)
by the Director of Lands. Sales Patent No. V-132 was registered
in the office of the Register of Deeds of Nueva Ecija pursuant to
Section 122 of Act 496 on June 3, 1949 (Exh. A), as a result of
which Original Certificate of Title No. P-389 was issued in her
favor."1
How the loan was contracted by now appellee Bautista was
therein set forth. Thus: "On July 16, 1949, Bautista applied for a
loan with the Rehabilitation Finance Corporation (RFC),
predecessor in interest of the plaintiff-appellee Development
Bank of the Philippines (DBP), offering as security the parcel of
land covered by O.C.T. No. P-389. Aside from her certificate of
title, Bautista also submitted to the RFC other documents to show
her ownership and possession of the land in question, namely,
Tax Declaration No. 5153 (Exh. A-4) in her name and the
blueprint plan of the land. On the basis of the documents
mentioned and the appraisal of the property by its appraiser, the
RFC approved a loan of P4,000.00 in favor of Bautista. On July
16, 1949, Bautista executed the mortgage contract over the
property covered by O.C.T. No. P-389 and the promissory note
for P4,000.00 in favor of RFC (Exhs. C and C-1), after which the
proceeds of the loan were released."2
The satisfaction of the mortgage debt with the acquisition of the
title to such property by appellant Bank, by virtue of an
extrajudicial foreclosure sale, and such title losing its validity in
view of a court proceeding, where however, appellee Bautista,
was not made a party, was next taken up in the brief of plaintiffappellant. Thus: "Bautista failed to pay the amortization on the
loan so that the RFC took steps to foreclose the mortgage extrajudicially under Act 3135, as amended. In the ensuing auction
sale conducted by the sheriff of Nueva Ecija on June 27, 1951,
the RFC acquired the mortgaged property as the highest bidder
(Exh. D). On the date of the sale, the total obligation of Bautista
with the RFC was P4,858.48 (Exh. I). On July 21, 1952, upon
failure of Bautista to redeem the property within the one (1) year
period as provided bylaw, plaintiff-appellant RFC consolidated its
ownership thereon (Exhs. E and E-I). On July 26, 1952, the
Register of Deeds of Nueva Ecija cancelled O.C.T. No. P-389 and
replaced it with T.C.T. No. NT-12108 in the name of the RFC
(Exhs. F and F-1). On or about this time, however, an action (Civil
Case No. 870) was filed by Rufino Ramos and Juan Ramos in the
Court of First Instance of Nueva Ecija against the Government of
the Republic of the Philippines and the RFC (as successor in
interest of Bautista) claiming ownership of the land in question
and seeking the annulment of T.C.T. No. 2336 in the name of the
Government, O.C.T. No. P-389 in the name of Bautista and
T.C.TG. No. NT-12108 in the name of the RFC. A decision
thereon was rendered on June 27, 1955 (Exhs. G, G-1, and G-3)
whereby the aformentioned certificates of title were declared null
and void."3
Why the complaint had to be dismissed was explained thus in the
decision now on appeal: "The Court after examining the proofs, is
constrained to sustain her on that; it will really appear that she
had never been placed within the jurisdiction of the Nueva Ecija
Court; as the action there was one to annual the title, it was an
action strictly in personam, if that was the case as it was, the
judgment there could not in any way bind Lourdes who had not
acquired in said decision in any way for what only happened is
that as to the mortgage, the Bank foreclosed, and then sold unto

Conrada and when the title had been annulled, the Bank
reimbursed Conrada; stated otherwise, the annulment of Lourdes'
title was a proceeding ex parte as far as she was concerned and
could not bind her at all; and her mortgage was foreclosed an the
Bank realized on it, when the Bank afterwards acquiesced in the
annulment of the title and took it upon itself to reimburse
Conrada, the Bank was acting on its own peril because it could
not have by that, bound Lourdes at all."4
As stated at the outset, the decision must be affirmed. The
fundamental due process requirement having been disregarded,
appellee Bautista could not in any wise be made to suffer,
whether directly or indirectly, from the effects of such decision.
After appellant bank had acquired her title by such extrajudicial
foreclosure sale and thus, through its own act, seen to it that her
obligation had been satisfied, it could not thereafter, seek to
revive the same on the allegation that the title in question was
subsequently annulled, considering that she was not made a
party on the occasion of such nullification.
If it were otherwise, then the cardinal requirement that no party
should be made to suffer in person or property without being
given a hearing would be brushed aside. The doctrine
consistently adhered to by this Court whenever such a question
arises in a series of decisions is that a denial of due process
suffices to cast on the official act taken by whatever branch of the
government the impress of nullity.5
A recent decision, Macabingkil v. Yatco,6 possesses relevance. "A
1957 decision, Cruzcosa v. Concepcion, is even more illuminating
in so far as the availability of the remedy sought is concerned. In
the language of this Court, speaking through Justice J.B.L.
Reyes: 'The petition is clearly meritorious. Petitioners were
conclusively found by the Court of Appeals to be co-owners of the
building in question. Having an interest therein, they should have
been made parties to the ejectment proceedings to give them a
chance to protect their rights: and not having been made parties
thereto, they are not bound and can not be affected by the
judgment rendered therein against their co-owner Catalino
Cruzcosa. Jr. ....' Two due process cases deal specifically with a
writ of execution that could not validly be enforced against a party
who was not given his day in court, Sicat v. Reyes, and Hamoy v.
Batingoplo. According to the former: 'The above agreement,
which served as basis for the ejectment of Alipio Sicat, cannot be
binding and conclusive upon the latter, who is not a party to the
case. Indeed, that order, as well as the writ of execution, cannot
legally be enforced against Alipio Sicat for the simple reason that
he was not given his day in court.' From the latter: 'The issue
raised in the motion of Rangar is not involved in the appeal for it
concerns a right which he claims over the property which has not
so far been litigated for the reason that he was not made a party
to the case either as plaintiff for a defendant. He only came to
know of the litigation when he was forced out of the property by
the sheriff, and so he filed the present motion to be heard and
prove his title to the property. This he has the right to do as the
most expeditious manner to protect his interest instead of filing a
separate action which generally is long, tedious and protracted.'"
Reinforcement to the above conclusion comes from a codal
provision. According to the Civil Code:7 "The vendor shall not be
obliged to make good the proper warranty, unless he is
summoned in the suit for eviction at the instance of the vendee.
"While not directly in point, the principle on which the above
requirement is based sustains the decision of the lower court. In
effect, appellant bank would hold appellee Bautista liable for the
warranty on her title, its annullment having the same effect as that
of an eviction. In such a case, it is wisely provided by the Civil
Code that appellee Bautista, as vendor, should have been
summoned and given the opportunity to defend herself. In view of
her being denied her day in court, it would to be respected, that
she is not "obliged to made good the proper warranty."
In the suit before the lower court, the Director of Lands and the
National Treasurer of the Philippines were likewise made
defendants by appellant bank because of its belief that if no right
existed as against appellee Bautista, recovery could be had from
the Assurance Fund. Such a belief finds no support in the
applicable, law, which allows recovery only upon a showing that
there be no negligence on the part of the party sustaining any
loss or damage or being deprived of any land or interest therein
by the operation of the Land Registration Act.8 This certainly is not
the case here, plaintiff-appellant being solely responsible for the
light in which it now finds itself. Accordingly, the Director of Lands
and the National Treasurer of the Philippines are likewise exempt
from any liability.
WHEREFORE, the judgment appealed from is affirmed, with
costs against the Development Bank of the Philippines.

Concepcion, C.J., Reyes, J.B.L., Dizon, Makalintal, Zaldivar,

Sanchez, Castro and Capistrano, JJ., concur.

Republic of the Philippines

SUPREME COURT
Manila
FIRST DIVISION
G.R. No. L-37051 August 3l, 1977
ANITA U. LORENZANA, petitioner,
vs.
POLLY CAYETANO and COURT OF APPEALS, respondents.
Desiderio P. Jurado for petitioner.
Vicente L. Santiago for private respondent.

GUERRERO, J.:
Appeal by certiorari from the judgment of the Court of Appeals in
CA-G.R. No. 31082-R entitled "Polly Cayetano, Plaintiff-Appellant
vs. Anita U. Lorenzana, et al., Defendants-Appellees" and from
the resolution of the Court denying petitioner's motion for
reconsideration.
We find in this case a perfect example that proves the -validity of
that classic legal dictum that a man's house is his castle where
the wind may enter, the rain may enter but neither the King nor
the King's men may enter without the consent of the owner.
The records show that 'In 1958, petitioner filled n the Municipal
Court of Manila ejectment cases for non-payment of rentals
against her tenants occupying different stalls in that quonset hut
situated in the San Lazaro Estate (corner of C.M. Recto St. and
Quezpn Blvd., Manila, adjacent to the Bilibid Compound) with a
floor area of 360 square meters. leased by her (which she
afterwards purchased) from the Manila Railroad Company and
later from the Bureau of Lands together with the use of the land
north and wouth of the quonset hut with an area of 340 square
meters. The private respondent, on the other hand, occupied the
area north of the quonset hut which area was also leased by her
from the Manila Railroad Company and subsequently from the
Bureau of Lands, and on which her house stood. Hence, the
areas occupied by the two principal protagonists are adjacent to
each other.
The ejectment. cases having been decided by the Municipal
Court in favor of the petitioner, the same were appealed to the
Court of First Instance of Manila, Branch I. The Court affirmed the
decision of the municipal court and ordered the defendantstenants to vacate the premises leased. Upon refusal of the
tenants to vacate the premises, the court granted a partial
execution of the judgment and on July 20, 1959, a writ of
demolition was issued, specifically commanding the Sheriff of
Manila "to demolish the premises subject of the above-name
cases" (Record on Appeal, p. 4).
Thereupon on July 27, 1959, Petitioner together with her counsel,
Atty. Nereo Paculdo and Deputy Sheriff Jose L. Cruz proceeded
and entered the premises of the respondent and in spite of her
protests that she was not a party to the ejectment cases in which
the demolition order was secured and that her premises was not
subject of said ejectment cases, they destroyed the latter's fence
including flower pots trellises and electric installations and carted
away the materials thereof and built another fence 5 meters into
the premises of the respondent, boring holes into the cemented
garden or patio of her house.
On August 3, 1959, respondent presented to the court a motion to
declare petitioner, her counsel and the sheriff guilty of contempt;
that they be punished and held liable in damages to the petitioner.
The presiding judge held the motion in abeyance until the
decision of the court in the ejectment cases shall have been
rendered.
Acting upon the petitioner's ex-parte motion and urgent motion for
demolition in the two appealed ejectment cases, Civil Case No.
29664 and Civil Case No. 29665, the court on September 28,
1959 ordered that "a writ of demolition be issued ordering the
Sheriff of Manila or any of his deputies to demolish any or all

improvements erected and existing on the parcel of land subject

of the above- entitled cases. which consists of an area of about
700 square meters." (Record on Appeal, p. 55). The writ of
demolition was issued by the Sheriff on September 30, 1959.
Upon procurement of this order or demolition, petitioner, together
with her counsel and the deputy sheriff proceeded once more to
respondent's premises on October 1, 1959 and moved the fence
where it was illegally placed by them on July 27, 1959. On the
same day, October 1, 1959, respondent filed an urgent motion for
the suspension of the execution of the writ of demolition, which
motion was denied by the court the next day, October 2, 1959.
The records further establish that on November 27, 1959,
petitioner, her lawyer, Atty. Paculdo, and Sheriff Cruz went back
and moved the fence 1 Meter more into the premises of the
respondent; that on February 19, 1960, the respondent filed
anex-parte motion to withdraw the petition for contempt on the
ground that "conferring with Judge Bayona after this petition was
heard, the petitioner was informed that not being a party to the
above-numbered cases, she is like an intruder to act on her
petition." (Record on Appeal, p. 80).
On October 1, 1959, the respondent Polly Cayetano filed in the
Court of First Instance of Manila, Civil Case No. 42001 against
the petitioner Anita U. Lorenzana, Atty. Nereo J. Paculdo and
Deputy Sheriff Jose L. Cruz for damages with mandatory
injunction. The defendants therein filed a motion to dismiss, which
was opposed by the plaintiff, and the Court, Branch XVII, denied
on December 19, 1959 the motion to dismiss and the petition for
issuance of the writ of preliminary injunction. The defendants filed
their answers.
Under date of March 9, 1962, the Court issued the Decision
dismissing the complaint of the plaintiff as well as the
counterclaim of the defendants Anita U. Lorenzana and Atty.
Nereo J. Paculdo for lack of sufficient evidence. A motion for
reconsideration was filed by the plaintiff but denied by the Court.
Not satisfied with the Decision of the Court, Polly Cayetano
appealed to the Court of Appeals. The Court of Appeals reversed
the decision appealed from, and ordered "defendant-appellee
Lorenzana to restore to appellant the possession of the property
invaded and occupied by her as shown in Exh. L-1 to L-4; to put
back appellant's fence and other valuable improvements in their
place before the writ of demolition was served; ordering
defendants, Lorenzana and Cruz, to pay jointly and severally to
the plaintiff-appellant the sum of P5,500.00 as actual and moral
damages, and pay the costs, except defendant, Paculdo."
ISSUES
The above Decision is now sought to be reviewed in the instant
petition for certiorari upon the following assignment of errors: 1.
That the Court of Appeals erred in holding that the writ of
demolition issued by Branch I of the Court of First Instance of
Manila presided over by Judge Bayona could not be legally
effected against respondent Polly Cayetano; II. That the Court of
Appeals erred in holding that the private respondent's failure to
pursue her remedy before a higher court did not to amount a
waiver of her rights; III. The Court of Appeals erred in holding in
effect that a writ of execution and an order of demolition can be
collaterally attacked in an action specifically brought for recovery
of damages; and IV. The Court of Appeals erred in holding that
the issuance of the writ of demolition by Judge Bayona was in
violation of Section 14, Rule 39.
This case hinges on the legal effects of the writs of demolition
issued in the ejectment cases wherein the respondent was not a
party thereto . The writs were issued by virtue of the judgment
rendered by the Court of First Instance of Manila (Branch I), the
dispositive portion of which states, as follows: "WHEREFORE,
judgment is rendered condemning the defendants ... to vacate the
premises; ordering herein defendants... to pay rent to plaintiff ...
plus attorney's fees and costs."
The petitioner contends that the respondent having voluntarily
appeared before the court and invoked its jurisdiction seeking
affirmative relief by filing on August 3, 1959, a petition to declare
Lorenzana, Atty. Paculdo and Sheriff Cruz in contempt and
holding them liable in damages, and by filing on October 1, 1959,
an urgent petition for the suspension of the execution of the writ
of demolition, she could no longer contest the efficacy of the writ.
There is no merit to this contention and We find no error in the
ruling of the Court of Appeals that the writ of demolition could not
be legally effected against the respondent.

It must be noted that respondent was not a party to any of the 12

ejectment cases wherein the writs of demolition had been issued;
she did not make her appearance in and during the pendency of
these ejectment cases. Respondent only went to court to protect
her property from demolition after the judgment in the ejectment
cases had become final and executory. Hence, with respect to the
judgment in said ejectment cases, respondent remains a third
person to such judgement, which does not bind her; 1 nor can its
writ of execution be enforced against her since she was not afforded
her day in court in said ejectment cases. 2
The vital legal point here is that respondent did not derive her
right or interest from the defendants-tenants nor from the plaintifflandlord (the herein petitioner) but from the Bureau of Lands from
which she had leased the property. She is neither a party nor
successor in interest to any of the litigants in the ejectment cases.
We also find no merit in the contention of the petitioner that
respondent having been duly heard by the Court, she was not
deprived of her day in court and was accorded the due process of
law.
It cannot be said that the constitutional requirements of due
process were sufficiently complied with because the
respondent had been duly heard. Indeed, respondent was
heard but simply hearing her did not fulfill the basic
conditions of procedural due process in courts. When
respondent appeared before the court to protect and preserve her
property, the Court had not lawfully acquired jurisdiction over the
property of the respondent because the premises of the
respondent was not included in the ejectment cases and the
judgment in said cases could not affect her property, much less
demolish the same. In the leading case of El Banco-Espa;olFilipino v. Palanca 3 cited in Macabingkil v. Yatco, et al., 4 We laid
down the court's constitutional requirements of due process, thus As applied to judicial proceedings. . . it may be
laid down with certainty that the requirements of
due process is satisfied if the following conditions
are present namely: (1) There must be a court or
tribunal clothed with judicial power to hear and
determine the matter before it; (2) jurisdiction
must be lawfully acquired over the person of the
defendant or over the property which is the
subject of the proceedings: (3) the defendant
must be given an opportunity to be heard; and (4)
judgment must be rendered upon lawful hearing.
Respondent pursued various steps to protect her property from
the invasion and encroachment of the petitioner, abetted by her
counsel and the deputy Sheriff. She filed a motion for contempt;
she protested to the Sheriff of Manila; she appealed to the
Director of the Bureau of Lands; she filed an urgent motion to
suspend the writ of demolition. Although the motions for contempt
and for suspension wer heard by the court, such action s taken af
ter the jugdgment had become final and executory did not make
the respondent a party litigant in the ejectment cases. The
respondent remained a stranger to the case and she cannot be
bound by the judgment rendered therein, nor by the writs of
execution and demolition issued in pursuance to said judgment.
Intervening as a prejudiced owner of improvements being wrongly
demolished merely to oppose such order of demolition upon
learning that the said order was directed against premises not her
own, is not the same as being a party to the suit to the extent of
being bound by the judgment in the case where such order of
demolition was issued. 5 Furthermore, it must be noted that said
petitions were filed after the promulgation of the decision in the
ejectment cases and while in the process of execution. lt. is not
proper to speak of an intention in a case already terminated by final
judgment .6
Respondent, not being bound thereby, may avail herself of the
proper action afforded by Section 17, Rule 39 of the Revised
Rules of Court which provides the proceedings where property
levied upon is claimed by a third person, stating as follows:
...Tile officer is not liable for damages, for the taking or keeping of
the property to any third-party claimant unless a claim is made by
the latter- and unless an action for damages is brought by him
against the officer within one hundred twenty (120) days from the
date of the filing of the bond. But nothing herein contained shall
prevent such claimant o any third person ffrom windicating his
claim to the property by any proper action... (Emphasis supplied)
Respondent acted within and exercised her right when she filed
the proper action to vindicate her claim afforded to her by Sec.
17, Rule 39 of the Revised Rules of Court, against the instruders
or trespassers before the Court of First Instance of Manila,

Branch XVII, in Civil Case No. 42001 for dam with mandatory
injunction. If she did not insist on her motion for contempt which
the court held in abeyance and was later withdrawn by her, if she
did not appeal from the order of the court denying her motion to
suspend the writ of demolition, such failure did not amount to a
waiver of her right to pursue the proper action or remedy provided
to her by the Rules of Court. It is of no moment that the
respondent did not file a motion to quash the writ of execution or
file a petition for relief under Rule 38 of the Revised Rules of
Court or file a petition for certiorari and prohibition with a higher
court after her petition to suspend the writ of demolition had been
denied as suggested by petitioner. The law has specifically given
her the remedies to vindicate her claim to the property. When the
property of one person is unlawfully taken by another, the former
has a right of action against the latter for the recovery of the
property or for damages for the taking or retention, and he is
entitled to his choice of these two remedies. 7
We find no legal compulsion for respondent to pursue the
remedies suggested by the petitioner, for the rights of a third party
claimant should not be decided in the action where the third-party
claim has been presented, but in a separate action to be
instituted by the third person. 8 In Queblar v. Gardu;o 9 this Court
held that:
Strictly speaking, the appeal interposed by the
third-party claimant- appellant is improper,
because she was not one of the parties in the
action who were exclusively Venancio Queblar as
plaintiff and Leonardo Gardu;o as defendant.
Considering the provisions of said section 451 of
the Code of Civil Procedure, as amended by Act
No. 4108, the appealed order was not appealable.
The appeal that should have been interposed by
her, if the term "appeal" may properly be
employed, is a separate reivindicatory action
against the execution creditor or the purchaser of
her property after the sale at public auction, or a
complaint for damages to be charged against the
bond filed by the judgment creditor in favor of the
sheriff.
In Potenciano v. Dineros, 10 We ruled that:
We see no merit in the claim that the denial or
dismissal of Potenciano's claim in the court below
constitutes a bar to the present action.
Potenciano, it is true, did not appeal, from the
disapproval of his claim. But it should be borne in
mind that appeal is not proper in such cases.
(Queblar v. Gardu;o supra). As was said in that
case, the appeal that should be interposed "if the
term 'appeal' may properly be employed, is a
separate reivindicatory action against the
execution creditor or the purchaser of the property
after the sale at public auction, or complaint for
damages to be charged against the bond filed by
the judgment creditor in favor of the sheriff." Such
reivindicatory action is resurged to the third-party
claimant by Section 15 (now 17) of Rule 39
despite disapproval of his claim by the court itself.
(Planas v. Madrigal & Co., supra; Lara v. Bayona,
L-7920, May 10, 1955), and it is the action availed
by Potenciano in this case.
The petitioner contends that a writ of execution and an order of
demolition cannot be collaterally attacked in an action specifically
brought for recovery of damages, and that said action for
damages and mandatory injunction (Civil Case No. 42001) filed
by the respondent with Branch XVII was nothing less than an
action to review the validity of the order of demolition issued by
Branch I in the ejectment cases which have long become final.
We are not in accord with this contention. The civil case filed by
the respondent for damages and the restoration of the property
destroyed aid her premises taken unlawfully under the writ of
demolition was not brought to reverse, impugn or set aside the
judgment in the ejectment cases but to declare that the writ of
demolition should not have been applied to that portion of the
land and the building occupied by her, as correctly stated by the
Court of Appeals. To put it succinctly the judgment and the
demolition orders were valid and binding to the tenants but not to
the respondent and her property. Fundamentally, it is the wrongful
execution of the judgment and the writ that is the basis of the
claim for damages.
If the judgment and the writs of execution and demolition were
alleged in the complaint for damages, this was not necessarily a

collateral attack on said processes of another branch of the Court

but averments to prove the wrongful, illegal and unauthorized
exercise of the writs; it is merely a statement of the legal basis
which the sheriff exceeded, abetted by the petitioner.
The contention of the petitioner that a branch of a Court of First
Instance cannot interfere with or nullify decisions, orders or
proceedings of another branch of the same court and therefore
the writs of execution and demolition cannot be impugned is not
exactly on all fours with and hence not applicable to the case at
bar. The settled rule has been clearly laid down inAbiera v. Court
of Appeals, 11 wherein the Court, after a review of the doctrines
in Cabigao v. Del Rosario & Lim, 44 Phil. 192; Manila Herald
Publishing Co., Inc., v. Ramos, 88 Phil. 94; Hacbang, et al. v. Hon.
Clementino Diez, 8 SCRA 103 (May 30,1963) and National Power
Corporation v. Hon. Jesus de Veyra 3 SCRA 646 (Dec. 22,1961),
held that
No court has power to interfere by injunction with
the judgments or decrees of a court of concurrent
or coordinate jurisdiction having equal power to
grant the relief sought by injunction.
For this doctrine to apply, the injunction issued by
one court must interfere with the judgment or
decree issued by another court of equal or
coordinate jurisdiction and the relief sought by
such injunction must be one which could be
granted by the court which rendered the judgment
or issued the decree.
Under Section 17 of Rule 39 a third person who
claims property levied upon on execution may
vindicate such claim by action. A judgment
rendered in his favor - declaring him to be the
owner of' the property would not constitute
interference with the powers or processes of the
court which rendered the judgment to enforce
which the execution was levied. If that be so
and it is so because the property, being that of a
stranger, is not subject to levy then an
interlocutory order, such as injunction, upon a
claim and prima facie showing of ownership by
the claimant, cannot be considered as such
interference either
The right of a person who claims to be the owner
of property levied upon on execution to file a thirdparty claim with the sheriff is not exclusive, and he
may file an action to vindicate his claim even if the
judgment creditor files an indemnity bond in favor
of the sheriff to answer for any damages that may
be suffered by the third-party claimant. By
"action," as stated in the Rule, what is meant is a
separate and independent action.
With respect to the fourth assignment of error, petitioner's
contention appears to be quite tenable in that under See. 14,
Rule 39 of the Revised Rules of Court which the Court of Appeals
applied, the notice required before demolition of the
improvements on the property subject of the execution, is notice
to the judgment debtor, and not to a stranger or third party to the
case like the private respondent herein. Nonetheless, the claim
that the Court of Appeals misconstrued the aforecited Rule is as
immaterial and inconsequential as the application of this legal
provision is superflous and unnecessary for the affirmance of the
Court's decision.
The Manifestation filed by petitioner in the records dated June 1,
1977 with Annexes A, B, C and D, is Noted.
IN VIEW OF ALL THE FOREGOING, the petition herein is
dismissed, and the appealed judgment is affirmed, with costs
against petitioner.
SO ORDERED.
Makasiar, Martin and Fernandez, JJ., concur.

Republic of the Philippines

SUPREME COURT
Manila
SECOND DIVISION

G.R. No. L-39962 April 7, 1976

THE PEOPLE OF THE PHILIPPINES, plaintiff-appellee,
vs.
RICARDO BERIALES, BENEDICTO CUSTODIO and PABLITO
CUSTODIO, accused-appellants.
Francisco D. Abas for appellants.
Solicitor General Estelito P. Mendoza, Assistant Solicitor General
Alicia V. Sempio-Diy and Solicitor Amado D. Aquino for appellee.

CONCEPCION JR., J.:

Appeal from the decision of the Court of First Instance of Leyte,
Branch V, Ormoc City, in Criminal Case No. 562-0, convicting the
accused Ricardo Beriales Benedicto Custodio and Pablito
Custodio of the crime of murder, sentencing each one of them to
the penalty of reclusion perpetua, and to jointly and severally pay
the heirs of Saturnina Gonzales Porcadilla the sum of P12,000.00
and to pay the costs. 1
It appears that in Criminal Case No. 562-0 the herein appellants
were charged with the crime of murder in an information filed by
the City Fiscal of Ormoc City on November 22, 1974, allegedly
committed as follows:
That on or about the 13th of September, 1974, at
around 9:00 o'clock in the morning at Barrio
Mahayahay, this city, and within the jurisdiction of
this Honorable Court, the above-named accused,
RICARDO BERIALES BENEDICTO CUSTODIO
and PABLITO CUSTODIO, conspiring together,
confederating with and mutually helping and
aiding one another, with treachery and evident
premeditation and with intent to kill, did then and
there wilfully, unlawfully and feloniously attack,
assault, strike and stab the person of
SATURNINA PORCADILLA, without giving the
latter sufficient time to defend herself, thereby
inflicting upon the latter mortal wounds which
caused her death. ... 2
At the hearing of November 26, 1974, appellants' counsel moved
for a reinvestigation of said ease, along with two other related
cases 3 which the court a quo granted, in its Order reading as
follows:
On motion of Atty. Abas counsel for the accused
and without objection on the part of Fiscal Ramon
So Jr., let the reinvestigation of this case
immediately take place at the Office of the City
Fiscal and let the arraignment and trial be
postponed until December 5 and 6, 1974 at 7:30
a.m. of each day, if and when the Fiscal shall
recommend that the case shall proceed after it
shall have been reinvestigated, with notice to
Attys. Abas and Cornejos as well as Fiscal Solis
in open court. 4
On December 3, 1974, the trial court postponed the hearing of
the case to December 17 and 18, 1974. 5 in view of the City
Fiscal's motion "for a deferment of the hearing or trial set for
December 5 and 6, 1974 until such time the REINVESTIGATION
shall have been terminated for which the result of said
reinvestigation will be submitted to this Honorable Court for its
resolution in the premises." 6
On December 6, 1974, however, the trial court, motu
proprio cancelled the aforesaid hearings on December 17, and
18, 1974, and, instead, reset the arraignment and trial of the case
to December 10 and 11, 1974. 7
At the hearing of December 10, 1974, appellants counsel
manifested to the court that pursuant to its approval of his motion
for reinvestigation, the City Fiscal had set the reinvestigation for
December 12, 1974 and had already issued the corresponding
subpoena to secure the attendance of the
witnesses. 8 Nevertheless, the court a quo, issued an order setting
the hearing of the case to the next day, December 11, 1974, 9 at
which hearing, appellants' counsel reiterated his manifestation that
since the City Fiscal had already ordered the reinvestigation on
December 12, 1974, the said reinvestigation should first be finished
and the corresponding resolution rendered thereon and submitted to
the court before any trial of the case should take place. 10

The trial court, however, relying on the mandate of the New

Constitution that "All persons shall have the right to a speedy
disposition of their cases before all judicial, quasi-judicial, or
administrative bodies" 11 re-scheduled the hearing to December 13,
1974. 12 Immediately thereafter, Special Counsel Rosario R. Polines,
in representation of the City Fiscal, manifested that the private
prosecutor, Atty. Procadilla, be authorized to conduct the case for the
prosecution.
When the case was called for hearing on December 13, 1974,
counsel for the appellant asked the court to wait for the City
Fiscal to appear, since the reinvestigation of the case had already
been terminated and the Fiscal, if given a chance, might be able
to report on said reinvestigation. 14 The trial court, however, insisted
in arraigning the appellants. 15 When arraigned, the three appellants
declined to plead, saying: "I am not going to answer the question
because the Fiscal is not yet around."16 Thereupon, the trial court
entered a plea of "Not Guilty" for each of them. 17
Thereafter, appellants' counsel again manifested that the City
Fiscal was absent and that they could not go to trial without the
fiscal and his report on the reinvestigation conducted by
him. 18 Nonetheless, the trial court, ordered the presentation of
evidence by the private prosecutor since he had been previously
authorized by the City Fiscal to handle the case. 19
After the direct examination of the witnesses presented by the
private prosecutor, the trial court asked the counsel for the
defense if he desired to cross-examine the witnesses. Appellants'
counsel, however, reiterated his manifestation that they would not
go to trial until the City Fiscal shall have submitted the result of
the reinvestigation to the court, and the court each time ruled that
it considered such manifestation as a waiver on the part of the
appellants to cross-examine the witnesses. 20
Thereafter, the private prosecutor rested the case for the
prosecution and the court called for the evidence of the defense.
Again, appellants' counsel manifested that the appellants were
not agreeing to the trial of the case unless they first received the
result of the reinvestigation conducted by the City
Fiscal. 21 Whereupon, the court considered the case submitted for
decision and announced the promulgation of the decision on
December 17, 1974. 22
When the case was called on December 17, 1974, appellants'
counsel manifested that the accused were not in conformity with
the promulgation of the decision on the ground that they did not
agree to the trial of the case. 23 Nonetheless, the trial court
promulgated its judgment on the same day. 24
Hence, the appellants interpose this appeal, upon the principal
ground that they were denied due process of law. 25 The Solicitor
General agrees with such contention and recommends that the
judgment under review be set aside and the case remanded to the
lower court for another arraignment and trial. 26
We sustain the appellants. After the trial court granted the
appellants' motion for reinvestigation, it became incumbent upon
the court to hold in abeyance the arraignment and trial of the case
until the City Fiscal shall have conducted and made his report on
the result of such reinvestigation. That was a matter of duty on its
part, not only to be consistent with its own order but also to do
justice aid at the same time to avoid a possible miscarriage of
justice. It should be borne in mind, that the appellants herein were
charged with the serious crime of murder, and considering that
their motion for reinvestigation is based upon the ground that it
was Felipe Porcadilla (husband and father, respectively, of the
two deceased, Saturnina Porcadilla and Quirino Porcadilla) who
was the aggressor for having attacked and seriously wounded
appellant Pablito Custodio 27 it was entirely possible for the City
Fiscal to modify or change his conclusion after conducting the
reinvestigation. When the trial court, therefore, ignored the
appellants' manifestations objecting to the arraignment and the trial
of the case, until after the City Fiscal shall have rendered a
resolution on his reinvestigation, but instead considered such
manifestations on their part as a plea of riot guilty and proceeded to
try the case, received the evidence for the prosecution, and then
rendered judgment against them on the basis thereof, it committed a
serious irregularity which nullifies the proceedings below because
such a procedure is repugnant to the due process clause of the
Constitution. 28
Besides, as correctly pointed out by the Solicitor General, "what
is more deplorable and which renders patently irregular all the
proceedings taken in this case, was the total absence of the City
Fiscal and/or any of his assistants or special counsel on
December 13, 1974, when the appellants were arraigned and
when the private prosecutor presented evidence and rested the
case supposedly for the People.

Under the Rules of Court, "All criminal actions either commenced

by complaint or by information shall be prosecuted under the
direction and control of the fiscal." 29 In the trial of criminal cases, it
is the duty of the public prosecutor to appeal for the
government. 30 As stated by this Court, "once a public prosecutor has
been entrusted with the investigation of a case and has acted
thereon by filing the necessary information in court he is b law in duty
bound to take charge thereof until its finally termination, for under the
law he assumes full responsibility for his failure or success since he
is the one more adequately prepared to pursue it to its
termination." 31 While there is nothing in the rule of practice and
procedure in criminal cases which denies the right of the fiscal, in the
exercise of a sound discretion, to turn over the active conduct of the
trial to a private prosecutor, 32 nevertheless, his duty to direct and
control the prosecution of criminal cases requires that he must be
present during the proceedings. Thus, in the case of People vs.
Munar 33 this Court upheld the right of the private prosecutor therein
to conduct the examination of the witnesses because the
government prosecutors were present at the hearing; hence, the
prosecution of the case remained under their direct supervision and
control.
In the present case, although the private prosecutor had
previously been authorized by the special counsel Rosario R.
Polines to present the evidence for the prosecution, nevertheless,
in view of the absence of the City Fiscal at the hearing on
December 13, 1974, it cannot be said that the prosecution of the
case was under the control of the City Fiscal. It follows that the
evidence presented by the private prosecutor at said hearing
could not be considered as evidence for the plaintiff, the People
of the Philippines. There was, therefore, no evidence at all to
speak of which could have been the basis of the decision of the
trial court.
Moreover, as aptly observed by the Solicitor General, "to permit
such prosecution of a criminal case by the private prosecutor with
the fiscal in absentia can set an obnoxious precedent that can be
taken advantage of by some indolent members of the prosecuting
arm of the government as well as those who are oblivious of their
bounden duty to see to it not only that the guilty should be
convicted, but that the innocent should be acquitted a duty that
can only be effectively and sincerely performed if they actively
participate in the conduct of the case, especially in the
examination of the witnesses and the presentation of
documentary evidence for both parties." 34
WHEREFORE, the decision appealed from is hereby set aside
and the case remanded to the trial court for another arraignment
and trial. Costs de oficio.
SO ORDERED.
Barredo, Antonio, Aquino and Martin

EN BANC
[G.R. No. 104768. July 21, 2003]

Republic of the Philippines, petitioner, vs.

Sandiganbayan,
Major
General
Josephus Q. Ramas and Elizabeth
Dimaano, respondents.
DECISION
CARPIO, J.:

The Case
Before this Court is a petition for review
on certiorari seeking to set aside the Resolutions
of the Sandiganbayan (First Division) dated 18
November 1991 and 25 March 1992 in Civil Case
No. 0037. The first Resolution dismissed
petitioners Amended Complaint and ordered the
return of the confiscated items to respondent
[1]

Elizabeth Dimaano, while the second Resolution

denied
petitioners
Motion
for
Reconsideration. Petitioner prays for the grant of
the reliefs sought in its Amended Complaint, or in
the alternative, for the remand of this case to the
Sandiganbayan (First Division) for further
proceedings allowing petitioner to complete the
presentation of its evidence.
Antecedent Facts
Immediately upon her assumption to office
following the successful EDSA Revolution, then
President Corazon C. Aquino issued Executive
Order No. 1 (EO No. 1) creating the Presidential
Commission on Good Government (PCGG). EO
No. 1 primarily tasked the PCGG to recover all illgotten wealth of former President Ferdinand E.
Marcos,
his
immediate
family,
relatives,
subordinates and close associates. EO No. 1
vested the PCGG with the power (a) to conduct
investigation as may be necessary in order to
accomplish and carry out the purposes of this
order and the power (h) to promulgate such rules
and regulations as may be necessary to carry out
the purpose of this order. Accordingly, the PCGG,
through its then Chairman Jovito R. Salonga,
created an AFP Anti-Graft Board (AFP Board)
tasked to investigate reports of unexplained wealth
and corrupt practices by AFP personnel, whether in
the active service or retired.
[2]

Based on its mandate, the AFP Board

investigated various reports of alleged unexplained
wealth of respondent Major General Josephus Q.
Ramas (Ramas). On 27 July 1987, the AFP Board
issued a Resolution on its findings and
recommendation on the reported unexplained
wealth of Ramas. The relevant part of the
Resolution reads:
III. FINDINGS and EVALUATION:
Evidence in the record showed that respondent is the
owner of a house and lot located at 15-Yakan St., La
Vista, Quezon City. He is also the owner of a house and
lot located in Cebu City. The lot has an area of 3,327
square meters.
The value of the property located in Quezon City may
be estimated modestly at P700,000.00.
The equipment/items and communication facilities
which were found in the premises of Elizabeth Dimaano
and were confiscated by elements of the PC Command
of Batangas were all covered by invoice receipt in the
name of CAPT. EFREN SALIDO, RSO Command Coy,
MSC, PA. These items could not have been in the
possession of Elizabeth Dimaano if not given for her
use by respondent Commanding General of the
Philippine Army.

Aside from the military equipment/items and

communications equipment, the raiding team was also
able to confiscate money in the amount
of P2,870,000.00 and $50,000 US Dollars in the house
of Elizabeth Dimaano on 3 March 1986.
Affidavits of members of the Military Security Unit,
Military Security Command, Philippine Army, stationed
at Camp Eldridge, Los Baos, Laguna, disclosed that
Elizabeth Dimaano is the mistress of respondent. That
respondent usually goes and stays and sleeps in the
alleged house of Elizabeth Dimaano in Barangay
Tengga, Itaas, Batangas City and when he arrives,
Elizabeth Dimaano embraces and kisses
respondent. That on February 25, 1986, a person who
rode in a car went to the residence of Elizabeth
Dimaano with four (4) attache cases filled with money
and owned by MGen Ramas.
Sworn statement in the record disclosed also that
Elizabeth Dimaano had no visible means of income and
is supported by respondent for she was formerly a mere
secretary.
Taking in toto the evidence, Elizabeth Dimaano could
not have used the military equipment/items seized in her
house on March 3, 1986 without the consent of
respondent, he being the Commanding General of the
Philippine Army. It is also impossible for Elizabeth
Dimaano to claim that she owns the P2,870,000.00 and
$50,000 US Dollars for she had no visible source of
income.
This money was never declared in the Statement of
Assets and Liabilities of respondent. There was an
intention to cover the existence of these money because
these are all ill-gotten and unexplained wealth. Were it
not for the affidavits of the members of the Military
Security Unit assigned at Camp Eldridge, Los Baos,
Laguna, the existence and ownership of these money
would have never been known.
The Statement of Assets and Liabilities of respondent
were also submitted for scrutiny and analysis by the
Boards consultant. Although the amount
of P2,870,000.00 and $50,000 US Dollars were not
included, still it was disclosed that respondent has an
unexplained wealth of P104,134. 60.
IV. CONCLUSION:
In view of the foregoing, the Board finds that a prima
facie case exists against respondent for ill-gotten and
unexplained wealth in the amount of P2,974,134.00 and
$50,000 US Dollars.
V. RECOMMENDATION:
Wherefore it is recommended that Maj. Gen. Josephus
Q. Ramas (ret.) be prosecuted and tried for violation of
RA 3019, as amended, otherwise known as Anti-Graft
and Corrupt Practices Act and RA 1379, as amended,

otherwise known as The Act for the Forfeiture of

Unlawfully Acquired Property.
[3]

Thus, on 1 August 1987, the PCGG filed a

petition for forfeiture under Republic Act No. 1379
(RA No. 1379) against Ramas.
[4]

Before Ramas could answer the petition, then

Solicitor General Francisco I. Chavez filed an
Amended Complaint naming the Republic of the
Philippines (petitioner), represented by the PCGG,
as plaintiff and Ramas as defendant. The
Amended Complaint also impleaded Elizabeth
Dimaano (Dimaano) as co-defendant.

After termination of the pre-trial, the court set

the case for trial on the merits on 9-11 November
1988.
[7]

On 9 November 1988, petitioner asked for a

deferment of the hearing due to its lack of
preparation for trial and the absence of witnesses
and vital documents to support its case. The court
reset the hearing to 17 and 18 April 1989.
On 13 April 1989, petitioner filed a motion for
leave to amend the complaint in order to charge
the delinquent properties with being subject to
forfeiture as having been unlawfully acquired by
defendant Dimaano alone x x x.
[8]

The Amended Complaint alleged that Ramas

was the Commanding General of the Philippine
Army until 1986. On the other hand, Dimaano was
a confidential agent of the Military Security Unit,
Philippine Army, assigned as a clerk-typist at the
office of Ramas from 1 January 1978 to February
1979. The Amended Complaint further alleged that
Ramas acquired funds, assets and properties
manifestly out of proportion to his salary as an
army officer and his other income from legitimately
acquired property by taking undue advantage of
his public office and/or using his power, authority
and influence as such officer of the Armed Forces
of the Philippines and as a subordinate and close
associate of the deposed President Ferdinand
Marcos.
[5]

The Amended Complaint also alleged that the

AFP Board, after a previous inquiry, found
reasonable ground to believe that respondents
have violated RA No. 1379. The Amended
Complaint prayed for, among others, the forfeiture
of respondents properties, funds and equipment in
favor of the State.
[6]

Ramas filed an Answer with Special and/or

Affirmative
Defenses
and
Compulsory
Counterclaim to the Amended Complaint. In his
Answer, Ramas contended that his property
consisted only of a residential house at La Vista
Subdivision, Quezon City, valued at P700,000,
which was not out of proportion to his salary and
other legitimate income. He denied ownership of
any mansion in Cebu City and the cash,
communications equipment and other items
confiscated from the house of Dimaano.
Dimaano filed her own Answer to the Amended
Complaint. Admitting her employment as a clerktypist in the office of Ramas from JanuaryNovember 1978 only, Dimaano claimed ownership
of the monies, communications equipment, jewelry
and land titles taken from her house by the
Philippine Constabulary raiding team.

Nevertheless, in an order dated 17 April 1989,

the Sandiganbayan proceeded with petitioners
presentation of evidence on the ground that the
motion for leave to amend complaint did not state
when petitioner would file the amended
complaint. The Sandiganbayan further stated that
the subject matter of the amended complaint was
on its face vague and not related to the existing
complaint. The Sandiganbayan also held that due
to the time that the case had been pending in
court, petitioner should proceed to present its
evidence.
After presenting only three witnesses, petitioner
asked for a postponement of the trial.
On 28 September 1989, during the
continuation of the trial, petitioner manifested its
inability to proceed to trial because of the absence
of other witnesses or lack of further evidence to
present. Instead, petitioner reiterated its motion to
amend the complaint to conform to the evidence
already presented or to change the averments to
show that Dimaano alone unlawfully acquired the
monies or properties subject of the forfeiture.
The Sandiganbayan noted that petitioner had
already delayed the case for over a year mainly
because of its many postponements. Moreover,
petitioner would want the case to revert to its
preliminary stage when in fact the case had long
been ready for trial. The Sandiganbayan ordered
petitioner to prepare for presentation of its
additional evidence, if any.
During the trial on 23 March 1990, petitioner
again admitted its inability to present further
evidence. Giving petitioner one more chance to
present further evidence or to amend the complaint
to conform to its evidence, the Sandiganbayan
reset
the
trial
to
18
May
1990. The
Sandiganbayan, however, hinted that the re-setting
was without prejudice to any action that private
respondents might take under the circumstances.

However, on 18 May 1990, petitioner again

expressed its inability to proceed to trial because it
had no further evidence to present. Again, in the
interest of justice, the Sandiganbayan granted
petitioner 60 days within which to file an
appropriate
pleading. The
Sandiganbayan,
however, warned petitioner that failure to act would
constrain the court to take drastic action.
Private respondents then filed their motions to
dismiss based on Republic v. Migrino. The Court
held in Migrino that the PCGG does not have
jurisdiction to investigate and prosecute military
officers by reason of mere position held without a
showing that they are subordinates of former
President Marcos.
[9]

On 18 November 1991, the Sandiganbayan

rendered a resolution, the dispositive portion of
which states:
WHEREFORE, judgment is hereby rendered dismissing
the Amended Complaint, without pronouncement as to
costs. The counterclaims are likewise dismissed for lack
of merit, but the confiscated sum of money,
communications equipment, jewelry and land titles are
ordered returned to Elizabeth Dimaano.
The records of this case are hereby remanded and
referred to the Hon. Ombudsman, who has primary
jurisdiction over the forfeiture cases under R.A. No.
1379, for such appropriate action as the evidence
warrants. This case is also referred to the Commissioner
of the Bureau of Internal Revenue for a determination of
any tax liability of respondent Elizabeth Dimaano in
connection herewith.
SO ORDERED.
On 4 December 1991, petitioner filed its Motion
for Reconsideration.
In answer to the Motion for Reconsideration,
private
respondents
filed
a
Joint
Comment/Opposition to which petitioner filed its
Reply on 10 January 1992.
On 25 March 1992, the Sandiganbayan
rendered a Resolution denying the Motion for
Reconsideration.
Ruling of the Sandiganbayan
The Sandiganbayan dismissed the Amended
Complaint on the following grounds:
(1.) The actions taken by the PCGG are not in
accordance with the rulings of the Supreme
Court in Cruz, Jr. v.
Sandiganbayan and Republic v.
Migrino which involve the same issues.
[10]

[11]

(2.) No previous inquiry similar to preliminary

investigations in criminal cases was
conducted against Ramas and Dimaano.
(3.) The evidence adduced against Ramas does not
constitute a prima facie case against him.
(4.) There was an illegal search and seizure of the
items confiscated.
The Issues
Petitioner raises the following issues:
A. RESPONDENT COURT SERIOUSLY
ERRED IN CONCLUDING THAT
PETITIONERS
EVIDENCE
CANNOT MAKE A CASE FOR
FORFEITURE AND THAT THERE
WAS
NO
SHOWING
OF
CONSPIRACY, COLLUSION OR
RELATIONSHIP
BY
CONSANGUINITY OR AFFINITY
BY
AND
BETWEEN
RESPONDENT
RAMAS
AND
RESPONDENT
DIMAANO
NOTWITHSTANDING THE FACT
THAT
SUCH
CONCLUSIONS
WERE CLEARLY UNFOUNDED
AND PREMATURE, HAVING BEEN
RENDERED PRIOR TO THE
COMPLETION
OF
THE
PRESENTATION
OF
THE
EVIDENCE OF THE PETITIONER.
B. RESPONDENT COURT SERIOUSLY
ERRED IN HOLDING THAT THE
ACTIONS
TAKEN
BY
THE
PETITIONER, INCLUDING THE
FILING
OF
THE
ORIGINAL
COMPLAINT AND THE AMENDED
COMPLAINT,
SHOULD
BE
STRUCK OUT IN LINE WITH THE
RULINGS OF THE SUPREME
COURT
IN
CRUZ,
JR.
v.
SANDIGANBAYAN, 194 SCRA 474
AND REPUBLIC v. MIGRINO, 189
SCRA 289, NOTWITHSTANDING
THE FACT THAT:

1. The cases of Cruz, Jr. v.

Sandiganbayan, supra, and
Republic v. Migrino, supra,
are clearly not applicable to
this case;
2. Any procedural defect in the
institution of the complaint in
Civil Case No. 0037 was
cured and/or waived by
respondents with the filing of
their respective answers with
counterclaim; and
3. The separate motions to dismiss
were evidently improper
considering that they were
filed after commencement of
the presentation of the

evidence of the petitioner and

even before the latter was
allowed to formally offer its
evidence and rest its case;
C. RESPONDENT COURT SERIOUSLY
ERRED IN HOLDING THAT THE
ARTICLES AND THINGS SUCH AS
SUMS
OF
MONEY,
COMMUNICATIONS EQUIPMENT,
JEWELRY AND LAND TITLES
CONFISCATED
FROM
THE
HOUSE
OF
RESPONDENT
DIMAANO
WERE
ILLEGALLY
SEIZED
AND
THEREFORE
EXCLUDED AS EVIDENCE.[12]

The Courts Ruling

First Issue: PCGGs Jurisdiction to Investigate
Private Respondents

powers, authority, influence, connections

or relationship.
(b) The investigation of such cases of graft and
corruption as the President may assign to
the Commission from time to time.
x x x.
The PCGG, through the AFP Board, can only
investigate the unexplained wealth and corrupt
practices of AFP personnel who fall under either of
the two categories mentioned in Section 2 of EO
No. 1. These are: (1) AFP personnel who have
accumulated
ill-gotten
wealth
during
the
administration of former President Marcos by being
the latters immediate family, relative, subordinate
or close associate, taking undue advantage of their
public office or using their powers, influence x x x;
or (2) AFP personnel involved in other cases of
graft and corruption provided the President assigns
their cases to the PCGG.
[17]

This case involves a revisiting of an old issue

already decided by this Court in Cruz, Jr. v.
Sandiganbayan and Republic v. Migrino.
[13]

[18]

[14]

The primary issue for resolution is whether the

PCGG has the jurisdiction to investigate and cause
the filing of a forfeiture petition against Ramas and
Dimaano for unexplained wealth under RA No.
1379.
We hold that PCGG has no such jurisdiction.
The PCGG created the AFP Board to
investigate the unexplained wealth and corrupt
practices of AFP personnel, whether in the active
service or retired. The PCGG tasked the AFP
Board to make the necessary recommendations to
appropriate government agencies on the action to
be taken based on its findings. The PCGG gave
this task to the AFP Board pursuant to the PCGGs
power under Section 3 of EO No. 1 to conduct
investigation as may be necessary in order to
accomplish and to carry out the purposes of this
order. EO No. 1 gave the PCGG specific
responsibilities, to wit:
[15]

[16]

SEC. 2. The Commission shall be charged with the task

of assisting the President in regard to the following
matters:
(a) The recovery of all ill-gotten wealth
accumulated by former President
Ferdinand E. Marcos, his immediate
family, relatives, subordinates and close
associates, whether located in the
Philippines or abroad, including the
takeover and sequestration of all business
enterprises and entities owned or
controlled by them, during his
administration, directly or through
nominees, by taking undue advantage of
their public office and/ or using their

Petitioner, however, does not claim that the

President assigned Ramas case to the
PCGG. Therefore, Ramas case should fall under
the first category of AFP personnel before the
PCGG could exercise its jurisdiction over
him. Petitioner
argues
that
Ramas
was
undoubtedly a subordinate of former President
Marcos because of his position as the
Commanding
General
of
the
Philippine
Army. Petitioner claims that Ramas position
enabled him to receive orders directly from his
commander-in-chief, undeniably making him a
subordinate of former President Marcos.
We hold that Ramas was not a subordinate of
former President Marcos in the sense
contemplated under EO No. 1 and its
amendments.
Mere position held by a military officer does not
automatically make him a subordinate as this term
is used in EO Nos. 1, 2, 14 and 14-A absent a
showing that he enjoyed close association with
former President Marcos. Migrino discussed this
issue in this wise:
A close reading of EO No. 1 and related executive
orders will readily show what is contemplated within
the term subordinate. The Whereas Clauses of EO No. 1
express the urgent need to recover the ill-gotten wealth
amassed by former President Ferdinand E. Marcos, his
immediate family, relatives, and close associates both
here and abroad.
EO No. 2 freezes all assets and properties in the
Philippines in which former President Marcos and/or his
wife, Mrs. Imelda Marcos, their close relatives,
subordinates, business associates, dummies, agents, or
nominees have any interest or participation.

Applying the rule in statutory construction known

as ejusdem generis that is-

such statement,
recommendation:

[W]here general words follow an enumeration of

persons or things by words of a particular and specific
meaning, such general words are not to be construed in
their widest extent, but are to be held as applying only
to persons or things of the same kind or class as those
specifically mentioned [Smith, Bell & Co, Ltd. vs.
Register of Deeds of Davao, 96 Phil. 53, 58, citing
Black on Interpretation of Laws, 2nd Ed., 203].

V. RECOMMENDATION:

[T]he term subordinate as used in EO Nos. 1 & 2 refers

to one who enjoys a close association with former
President Marcos and/or his wife, similar to the
immediate family member, relative, and close associate
in EO No. 1 and the close relative, business associate,
dummy, agent, or nominee in EO No. 2.
xxx
It does not suffice, as in this case, that the respondent is
or was a government official or employee during the
administration of former President Marcos. There must
be a prima facie showing that the respondent
unlawfully accumulated wealth by virtue of his close
association or relation with former Pres. Marcos
and/or his wife. (Emphasis supplied)
Ramas position alone as Commanding General
of the Philippine Army with the rank of Major
General does not suffice to make him a
subordinate of former President Marcos for
purposes of EO No. 1 and its amendments. The
PCGG has to provide a prima facie showing that
Ramas was a close associate of former President
Marcos, in the same manner that business
associates, dummies, agents or nominees of
former President Marcos were close to him. Such
close association is manifested either by Ramas
complicity with former President Marcos in the
accumulation of ill-gotten wealth by the deposed
President or by former President Marcos
acquiescence in Ramas own accumulation of illgotten wealth if any.
[19]

This, the PCGG failed to do.

Petitioners attempt to differentiate the instant
case
from Migrino does
not
convince
us. Petitioner argues that unlike in Migrino, the
AFP Board Resolution in the instant case states
that the AFP Board conducted the investigation
pursuant to EO Nos. 1, 2, 14 and 14-A in relation
to RA No. 1379. Petitioner asserts that there is a
presumption that the PCGG was acting within its
jurisdiction of investigating crony-related cases of
graft and corruption and that Ramas was truly a
subordinate of the former President. However, the
same AFP Board Resolution belies this
contention. Although the Resolution begins with

it

ends

with

the

following

Wherefore it is recommended that Maj. Gen. Josephus

Q. Ramas (ret.) be prosecuted and tried for violation of
RA 3019, as amended, otherwise known as Anti-Graft
and Corrupt Practices Act and RA 1379, as amended,
otherwise known as The Act for the Forfeiture of
Unlawfully Acquired Property.
[20]

Thus, although the PCGG sought to investigate

and prosecute private respondents under EO Nos.
1, 2, 14 and 14-A, the result yielded a finding of
violation of Republic Acts Nos. 3019 and 1379
without any relation to EO Nos. 1, 2, 14 and 14A. This absence of relation to EO No. 1 and its
amendments proves fatal to petitioners case. EO
No. 1 created the PCGG for a specific and limited
purpose, and necessarily its powers must be
construed to address such specific and limited
purpose.
Moreover, the resolution of the AFP Board and
even the Amended Complaint do not show that the
properties Ramas allegedly owned
were
accumulated by him in his capacity as a
subordinate of his commander-in-chief. Petitioner
merely enumerated the properties Ramas
allegedly owned and suggested that these
properties were disproportionate to his salary and
other legitimate income without showing that
Ramas amassed them because of his close
association
with
former
President
Marcos. Petitioner, in fact, admits that the AFP
Board resolution does not contain a finding that
Ramas accumulated his wealth because of his
close association with former President Marcos,
thus:
10. While it is true that the resolution of the AntiGraft Board of the New Armed Forces of the
Philippines did not categorically find a prima
facie evidence showing that respondent Ramas
unlawfully accumulated wealth by virtue of his close
association or relation with former President Marcos
and/or his wife, it is submitted that such omission
was not fatal. The resolution of the Anti-Graft Board
should be read in the context of the law creating the
same and the objective of the investigation which was,
as stated in the above, pursuant to Republic Act Nos.
3019 and 1379 in relation to Executive Order Nos. 1, 2,
14 and 14-a; (Emphasis supplied)
[21]

Such omission is fatal. Petitioner forgets that it

is precisely a prima facie showing that the ill-gotten
wealth was accumulated by a subordinate of
former President Marcos that vests jurisdiction on
PCGG. EO No. 1 clearly premises the creation of
the PCGG on the urgent need to recover all ill[22]

gotten wealth amassed by former President

Marcos,
his
immediate
family,
relatives,
subordinates and close associates. Therefore, to
say that such omission was not fatal is clearly
contrary to the intent behind the creation of the
PCGG.
In Cruz, Jr. v. Sandiganbayan, the Court
outlined the cases that fall under the jurisdiction of
the PCGG pursuant to EO Nos. 1, 2, 14, 14-A:
[23]

[24]

[25]

[26]

A careful reading of Sections 2(a) and 3 of Executive

Order No. 1 in relation with Sections 1, 2 and 3 of
Executive Order No. 14, shows what the authority of the
respondent PCGG to investigate and prosecute covers:
(a) the investigation and prosecution of the civil
action for the recovery of ill-gotten wealth
under Republic Act No.
1379, accumulated by former President
Marcos, his immediate family, relatives,
subordinates and close associates,
whether located in the Philippines or
abroad, including the take-over or
sequestration of all business enterprises
and entities owned or controlled by them,
during his administration, directly or
through his nominees, by taking undue
advantage of their public office and/or
using their powers, authority and
influence, connections or relationships;
and
(b) the investigation and prosecution of such
offenses committed in the acquisition of
said ill-gotten wealth as contemplated
under Section 2(a) of Executive Order No.
1.
However, other violations of the Anti-Graft and
Corrupt Practices Act not otherwise falling under
the foregoing categories, require a previous
authority of the President for the respondent PCGG
to investigate and prosecute in accordance with
Section 2 (b) of Executive Order No. 1. Otherwise,
jurisdiction over such cases is vested in the
Ombudsman and other duly authorized investigating
agencies such as the provincial and city prosecutors,
their assistants, the Chief State Prosecutor and his
assistants and the state prosecutors. (Emphasis
supplied)
The proper government agencies, and not the
PCGG, should investigate and prosecute forfeiture
petitions not falling under EO No. 1 and its
amendments. The preliminary investigation of
unexplained wealth amassed on or before 25
February 1986 falls under the jurisdiction of the
Ombudsman, while the authority to file the
corresponding forfeiture petition rests with the
Solicitor General. The Ombudsman Act or
Republic Act No. 6770 (RA No. 6770) vests in the
[27]

Ombudsman the power to conduct preliminary

investigation and to file forfeiture proceedings
involving unexplained wealth amassed after 25
February 1986.
[28]

After the pronouncements of the Court in Cruz,

the PCGG still pursued this case despite the
absence of a prima facie finding that Ramas was a
subordinate of former President Marcos. The
petition for forfeiture filed with the Sandiganbayan
should be dismissed for lack of authority by the
PCGG to investigate respondents since there is
no prima facie showing that EO No. 1 and its
amendments apply to respondents. The AFP
Board Resolution and even the Amended
Complaint state that there are violations of RA
Nos. 3019 and 1379. Thus, the PCGG should have
recommended Ramas case to the Ombudsman
who has jurisdiction to conduct the preliminary
investigation of ordinary unexplained wealth and
graft cases. As stated in Migrino:
[But] in view of the patent lack of authority of the
PCGG to investigate and cause the prosecution of
private respondent for violation of Rep. Acts Nos. 3019
and 1379, the PCGG must also be enjoined from
proceeding with the case, without prejudice to any
action that may be taken by the proper prosecutory
agency. The rule of law mandates that an agency of
government be allowed to exercise only the powers
granted to it.
Petitioners argument that private respondents
have waived any defect in the filing of the forfeiture
petition by submitting their respective Answers with
counterclaim deserves no merit as well.
Petitioner has no jurisdiction over private
respondents. Thus, there is no jurisdiction to waive
in the first place. The PCGG cannot exercise
investigative or prosecutorial powers never granted
to
it. PCGGs
powers
are
specific
and
limited. Unless given additional assignment by the
President, PCGGs sole task is only to recover the
ill-gotten wealth of the Marcoses, their relatives
and cronies. Without these elements, the PCGG
cannot claim jurisdiction over a case.
[29]

Private respondents questioned the authority

and jurisdiction of the PCGG to investigate and
prosecute their cases by filing their Motion to
Dismiss as soon as they learned of the
pronouncement of the Court in Migrino. This case
was decided on 30 August 1990, which explains
why private respondents only filed their Motion to
Dismiss on 8 October 1990. Nevertheless, we
have held that the parties may raise lack of
jurisdiction at any stage of the proceeding. Thus,
we hold that there was no waiver of jurisdiction in
this case. Jurisdiction is vested by law and not by
the parties to an action.
[30]

[31]

Consequently, the petition should be dismissed

for lack of jurisdiction by the PCGG to conduct the
preliminary investigation. The Ombudsman may
still conduct the proper preliminary investigation for
violation of RA No. 1379, and if warranted, the
Solicitor General may file the forfeiture petition with
the Sandiganbayan. The right of the State to
forfeit unexplained wealth under RA No. 1379 is
not subject to prescription, laches or estoppel.
[32]

[33]

the military to supply them for the preparation of the

presentation of evidence thereon. Of equal interest is the
fact that this Court has been held to task in public about
its alleged failure to move cases such as this one beyond
the preliminary stage, when, in view of the
developments such as those of today, this Court is now
faced with a situation where a case already in progress
will revert back to the preliminary stage, despite a fivemonth pause where appropriate action could have been
undertaken by the plaintiff Republic.
[35]

Second Issue: Propriety of Dismissal of Case

Before Completion of Presentation of Evidence
Petitioner
also
contends
that
the
Sandiganbayan erred in dismissing the case
before completion of the presentation of petitioners
evidence.
We disagree.
Based on the findings of the Sandiganbayan
and the records of this case, we find that petitioner
has only itself to blame for non-completion of the
presentation of its evidence. First, this case has
been pending for four years before the
Sandiganbayan dismissed it. Petitioner filed its
Amended Complaint on 11
August 1987, and only began to
present its evidence on 17 April 1989.Petitioner
had almost two years to prepare its evidence.
However, despite this sufficient time, petitioner still
delayed the presentation of the rest of its evidence
by filing numerous motions for postponements and
extensions. Even before the date set for the
presentation of its evidence, petitioner filed, on 13
April 1989, a Motion for Leave to Amend the
Complaint. The motion sought to charge the
delinquent properties (which comprise most of
petitioners evidence) with being subject to
forfeiture as having been unlawfully acquired by
defendant Dimaano alone x x x.
[34]

The Sandiganbayan, however, refused to defer

the presentation of petitioners evidence since
petitioner did not state when it would file the
amended complaint. On 18 April 1989, the
Sandiganbayan set the continuation of the
presentation of evidence on 28-29 September and
9-11 October 1989, giving petitioner ample time to
prepare its evidence. Still, on 28 September 1989,
petitioner manifested its inability to proceed with
the
presentation
of
its
evidence. The
Sandiganbayan issued an Order expressing its
view on the matter, to wit:
The Court has gone through extended inquiry and a
narration of the above events because this case has been
ready for trial for over a year and much of the delay
hereon has been due to the inability of the government
to produce on scheduled dates for pre-trial and for trial
documents and witnesses, allegedly upon the failure of

On 9 October 1989, the PCGG manifested in

court that it was conducting a preliminary
investigation on the unexplained wealth of private
respondents as mandated by RA No. 1379. The
PCGG prayed for an additional four months to
conduct the preliminary investigation. The
Sandiganbayan granted this request and
scheduled the presentation of evidence on 26-29
March 1990.However, on the scheduled date,
petitioner failed to inform the court of the result of
the preliminary investigation the PCGG supposedly
conducted. Again, the Sandiganbayan gave
petitioner until 18 May 1990 to continue with the
presentation of its evidence and to inform the court
of what lies ahead insofar as the status of the case
is concerned x x x. Still on the date set, petitioner
failed to present its evidence. Finally, on 11 July
1990, petitioner filed its Re-Amended Complaint.
The Sandiganbayan correctly observed that a
case already pending for years would revert to its
preliminary stage if the court were to accept the
Re-Amended Complaint.
[36]

[37]

[38]

Based on these circumstances, obviously

petitioner has only itself to blame for failure to
complete the presentation of its evidence. The
Sandiganbayan gave petitioner more than
sufficient time to finish the presentation of its
evidence.
The
Sandiganbayan
overlooked
petitioners delays and yet petitioner ended the
long-string of delays with the filing of a ReAmended Complaint, which would only prolong
even more the disposition of the case.
Moreover, the pronouncements of the Court
in Migrino and Cruz prompted the Sandiganbayan
to dismiss the case since the PCGG has no
jurisdiction to investigate and prosecute the case
against private respondents. This alone would
have been sufficient legal basis for the
Sandiganbayan to dismiss the forfeiture case
against private respondents.
Thus, we hold that the Sandiganbayan did not
err in dismissing the case before completion of the
presentation of petitioners evidence.
Third Issue: Legality of the Search and Seizure

Petitioner claims that the Sandiganbayan erred

in declaring the properties confiscated from
Dimaanos house as illegally seized and therefore
inadmissible in evidence. This issue bears a
significant effect on petitioners case since these
properties comprise most of petitioners evidence
against private respondents. Petitioner will not
have much evidence to support its case against
private respondents if these properties are
inadmissible in evidence.
On 3 March 1986, the Constabulary raiding
team served at Dimaanos residence a search
warrant captioned Illegal Possession of Firearms
and Ammunition. Dimaano was not present during
the raid but Dimaanos cousins witnessed the raid.
The raiding team seized the items detailed in the
seizure
receipt
together
with
other
items not included in the search warrant. The
raiding team seized these items: one baby armalite
rifle with two magazines; 40 rounds of 5.56
ammunition;
one
pistol,
caliber
.45;
communications equipment, cash consisting
of P2,870,000 and US$50,000, jewelry, and land
titles.
Petitioner wants the Court to take judicial notice
that the raiding team conducted the search and
seizure on March 3, 1986 or five days after the
successful EDSA revolution. Petitioner argues
that a revolutionary government was operative at
that time by virtue of Proclamation No. 1
announcing that President Aquino and Vice
President Laurel were taking power in the name
and by the will of the Filipino people. Petitioner
asserts that the revolutionary government
effectively withheld the operation of the 1973
Constitution which guaranteed private respondents
exclusionary right.
[39]

[40]

or legal limitations except treaty obligations that

the
revolutionary
government,
as
the de
jure government in the Philippines, assumed under
international law.
The correct issues are: (1) whether the
revolutionary government was bound by the Bill of
Rights of the 1973 Constitution during
the interregnum, that is, after the actual and
effective take-over of power by the revolutionary
government following the cessation of resistance
by loyalist forces up to 24 March 1986
(immediately before the adoption of the Provisional
Constitution); and (2) whether the protection
accorded to individuals under the International
Covenant on Civil and Political Rights (Covenant)
and the Universal Declaration of Human Rights
(Declaration) remained in effect during the
interregnum.
We hold that the Bill of Rights under the 1973
Constitution was not operative during the
interregnum. However, we rule that the protection
accorded to individuals under the Covenant and
the Declaration remained in effect during the
interregnum.
During the interregnum, the directives and
orders of the revolutionary government were the
supreme law because no constitution limited the
extent and scope of such directives and
orders.With the abrogation of the 1973 Constitution
by the successful revolution, there was no
municipal law higher than the directives and orders
of the revolutionary government. Thus, during the
interregnum, a person could not invoke any
exclusionary right under a Bill of Rights because
there was neither a constitution nor a Bill of Rights
during the interregnum. As the Court explained
inLetter of Associate Justice Reynato S. Puno:
[42]

Moreover,
petitioner
argues
that
the
exclusionary right arising from an illegal search
applies only beginning 2 February 1987, the date
of ratification of the 1987 Constitution. Petitioner
contends that all rights under the Bill of Rights had
already reverted to its embryonic stage at the time
of the search. Therefore, the government may
confiscate the monies and items taken from
Dimaano and use the same in evidence against
her since at the time of their seizure, private
respondents did not enjoy any constitutional right.
Petitioner is partly right in its arguments.
The EDSA Revolution took place on 23-25
February 1986. As succinctly stated in President
Aquinos Proclamation No. 3 dated 25 March 1986,
the EDSA Revolution was done in defiance of the
provisions of the 1973 Constitution. The
resulting
government was
indisputably a
revolutionary government bound by no constitution

A revolution has been defined as the complete

overthrow of the established government in any country
or state by those who were previously subject to it or as
a sudden, radical and fundamental change in the
government or political system, usually effected with
violence or at least some acts of violence. In Kelsen's
book, General Theory of Law and State, it is defined as
that which occurs whenever the legal order of a
community is nullified and replaced by a new order . . .
a way not prescribed by the first order itself.
It was through the February 1986 revolution, a
relatively peaceful one, and more popularly known as
the people power revolution that the Filipino people tore
themselves away from an existing regime. This
revolution also saw the unprecedented rise to power of
the Aquino government.

[41]

From the natural law point of view, the right of

revolution has been defined as an inherent right of a

people to cast out their rulers, change their policy or

effect radical reforms in their system of government or
institutions by force or a general uprising when the legal
and constitutional methods of making such change have
proved inadequate or are so obstructed as to be
unavailable. It has been said that the locus of positive
law-making power lies with the people of the state and
from there is derived the right of the people to abolish,
to reform and to alter any existing form of government
without regard to the existing constitution.
xxx
It is widely known that Mrs. Aquinos rise to the
presidency was not due to constitutional processes; in
fact, it was achieved in violation of the provisions of
the 1973 Constitution as a Batasang Pambansa
resolution had earlier declared Mr. Marcos as the
winner in the 1986 presidential election. Thus it can be
said that the organization of Mrs. Aquinos Government
which was met by little resistance and her control of the
state evidenced by the appointment of the Cabinet and
other key officers of the administration, the departure of
the Marcos Cabinet officials, revamp of the Judiciary
and the Military signaled the pointwhere the legal
system then in effect, had ceased to be obeyed by the
Filipino. (Emphasis supplied)
To hold that the Bill of Rights under the 1973
Constitution remained operative during the
interregnum would render void all sequestration
orders issued by the Philippine Commission on
Good Government (PCGG) before the adoption of
the Freedom Constitution. The sequestration
orders, which direct the freezing and even the
take-over of private property by mere executive
issuance without judicial action, would violate the
due process and search and seizure clauses of the
Bill of Rights.
During the interregnum, the government in
power was concededly a revolutionary government
bound by no constitution. No one could validly
question the sequestration orders as violative of
the Bill of Rights because there was no Bill of
Rights during the interregnum. However, upon the
adoption of the Freedom Constitution, the
sequestered companies assailed the sequestration
orders as contrary to the Bill of Rights of the
Freedom Constitution.
In Bataan Shipyard & Engineering Co. Inc.
vs. Presidential Commission on Good
Government, petitioner Baseco, while conceding
there was no Bill of Rights during the interregnum,
questioned the continued validity of the
sequestration orders upon adoption of the
Freedom Constitution in view of the due process
clause in its Bill of Rights. The Court ruled that the
Freedom Constitution, and later the 1987
[43]

Constitution, expressly recognized the validity of

sequestration orders, thus:
If any doubt should still persist in the face of the
foregoing considerations as to the validity and propriety
of sequestration, freeze and takeover orders, it should be
dispelled by the fact that these particular remedies and
the authority of the PCGG to issue them have received
constitutional approbation and sanction. As already
mentioned, the Provisional or Freedom Constitution
recognizes the power and duty of the President to enact
measures to achieve the mandate of the people to . . .
(r)ecover ill-gotten properties amassed by the leaders
and supporters of the previous regime and protect the
interest of the people through orders of sequestration or
freezing of assets or accounts. And as also already
adverted to, Section 26, Article XVIII of the 1987
Constitution treats of, and ratifies the authority to issue
sequestration or freeze orders under Proclamation No. 3
dated March 25, 1986.
The framers of both the Freedom Constitution
and the 1987 Constitution were fully aware that the
sequestration orders would clash with the Bill of
Rights. Thus, the framers of both constitutions had
to include specific language recognizing the
validity of the sequestration orders. The following
discourse by Commissioner Joaquin G. Bernas
during the deliberations of the Constitutional
Commission is instructive:
FR. BERNAS: Madam President, there is something
schizophrenic about the arguments in defense of the
present amendment.
For instance, I have carefully studied Minister
Salongas lecture in the Gregorio Araneta
University Foundation, of which all of us have
been given a copy. On the one hand, he argues
that everything the Commission is doing is
traditionally legal. This is repeated by
Commissioner Romulo also. Minister Salonga
spends a major portion of his lecture developing
that argument. On the other hand, almost as an
afterthought, he says that in the end what
matters are the results and not the legal niceties,
thus suggesting that the PCGG should be
allowed to make some legal shortcuts, another
word for niceties or exceptions.
Now, if everything the PCGG is doing is legal,
why is it asking the CONCOM for special
protection? The answer is clear. What they are
doing will not stand the test of ordinary due
process, hence they are asking for protection,
for exceptions. Grandes malos, grandes
remedios, fine, as the saying stands, but let us
not say grandes malos, grande y malos
remedios. That is not an allowable
extrapolation. Hence, we should not give the

exceptions asked for, and let me elaborate and

give three reasons:
First, the whole point of the February
Revolution and of the work of the CONCOM is
to hasten constitutional normalization. Very
much at the heart of the constitutional
normalization is the full effectivity of the Bill of
Rights. We cannot, in one breath, ask for
constitutional normalization and at the same
time ask for a temporary halt to the full
functioning of what is at the heart of
constitutionalism. That would be hypocritical;
that would be a repetition of Marcosian
protestation of due process and rule of law. The
New Society word for that is backsliding. It is
tragic when we begin to backslide even before
we get there.
Second, this is really a corollary of the first.
Habits tend to become ingrained. The
committee report asks for extraordinary
exceptions from the Bill of Rights for six
months after the convening of Congress, and
Congress may even extend this longer.
Good deeds repeated ripen into virtue; bad
deeds repeated become vice. What the
committee report is asking for is that we should
allow the new government to acquire the vice of
disregarding the Bill of Rights.
Vices, once they become ingrained, become
difficult to shed. The practitioners of the vice
begin to think that they have a vested right to its
practice, and they will fight tooth and nail to
keep the franchise. That would be an unhealthy
way of consolidating the gains of a democratic
revolution.
Third, the argument that what matters are the
results and not the legal niceties is an argument
that is very disturbing. When it comes from a
staunch Christian like Commissioner Salonga, a
Minister, and repeated verbatim by another
staunch Christian like Commissioner Tingson, it
becomes doubly disturbing and even
discombobulating. The argument makes the
PCGG an auctioneer, placing the Bill of Rights
on the auction block. If the price is right, the
search and seizure clause will be sold. Open
your Swiss bank account to us and we will
award you the search and seizure clause. You
can keep it in your private safe.
Alternatively, the argument looks on the present
government as hostage to the hoarders of hidden
wealth. The hoarders will release the hidden
health if the ransom price is paid and the ransom
price is the Bill of Rights, specifically the due
process in the search and seizure clauses. So,
there is something positively revolving about

either argument. The Bill of Rights is not for

sale to the highest bidder nor can it be used to
ransom captive dollars. This nation will survive
and grow strong, only if it would become
convinced of the values enshrined in the
Constitution of a price that is beyond monetary
estimation.
For these reasons, the honorable course for the
Constitutional Commission is to delete all of
Section 8 of the committee report and allow the
new Constitution to take effect in full vigor. If
Section 8 is deleted, the PCGG has two options.
First, it can pursue the Salonga and the Romulo
argument that what the PCGG has been doing
has been completely within the pale of the law.
If sustained, the PCGG can go on and should be
able to go on, even without the support of
Section 8. If not sustained, however, the PCGG
has only one honorable option, it must bow to
the majesty of the Bill of Rights.
The PCGG extrapolation of the law is defended
by staunch Christians. Let me conclude with
what another Christian replied when asked to
toy around with the law. From his prison cell,
Thomas More said, "I'll give the devil benefit of
law for my nations safety sake. I ask the
Commission to give the devil benefit of law for
our nations sake. And we should delete Section
8.
Thank you, Madam President. (Emphasis supplied)
Despite
the
impassioned
plea
by
Commissioner Bernas against the amendment
excepting sequestration orders from the Bill of Rig
hts, the Constitutional Commission still adopted
the amendment as Section 26, Article XVIII of the
1987 Constitution. The framers of the Constitution
were fully aware that absent Section 26,
sequestration orders would not stand the test of
due process under the Bill of Rights.
[44]

Thus, to rule that the Bill of Rights of the 1973

Constitution remained in force during the
interregnum, absent a constitutional provision
excepting sequestration orders from such Bill of
Rights, would clearly render all sequestration
orders void during the interregnum. Nevertheless,
even during the interregnum the Filipino people
continued to enjoy, under the Covenant and the
Declaration, almost the same rights found in the
Bill of Rights of the 1973 Constitution.
The revolutionary government, after installing
itself as the de jure government, assumed
responsibility for the States good faith compliance
with the Covenant to which the Philippines is a
signatory. Article 2(1) of the Covenant requires
each signatory State to respect and to ensure to all
individuals within its territory and subject to its

jurisdiction the rights recognized in the present

Covenant. Under Article 17(1) of the Covenant, the
revolutionary government had the duty to insure
that [n]o one shall be subjected to arbitrary or
unlawful interference with his privacy, family, home
or correspondence.
[45]

The Declaration, to which the Philippines is

also a signatory, provides in its Article 17(2) that
[n]o one shall be arbitrarily deprived of his
property. Although
the
signatories
to
the
Declaration did not intend it as a legally binding
document, being only a declaration, the Court has
interpreted the Declaration as part of the generally
accepted principles of international law and binding
on the State. Thus, the revolutionary government
was also obligated under international law to
observe the rights of individuals under the
Declaration.

specified the items to be searched and seized. The

warrant is thus valid with respect to the items
specifically described in the warrant.
However, the Constabulary raiding team seized
items not included in the warrant. As admitted by
petitioners witnesses, the raiding team confiscated
items not included in the warrant, thus:
Direct Examination of Capt. Rodolfo Sebastian
AJ AMORES
Q. According to the search warrant, you are
supposed to seize only for weapons. What
else, aside from the weapons, were seized
from the house of Miss Elizabeth
Dimaano?

[46]

A. The communications equipment, money in

Philippine currency and US dollars, some
jewelries, land titles, sir.

[47]

The revolutionary government did not repudiate

the Covenant or the Declaration during the
interregnum.
Whether
the
revolutionary
government could have repudiated all its
obligations under the Covenant or the Declaration
is another matter and is not the issue here. Suffice
it to say that the Court considers the Declaration
as part of customary international law, and that
Filipinos as human beings are proper subjects of
the rules of international law laid down in the
Covenant. The
fact
is
the
revolutionary
government did not repudiate the Covenant or the
Declaration in the same way it repudiated the 1973
Constitution. As the de jure government, the
revolutionary government could not escape
responsibility for the States good faith compliance
with its treaty obligations under international law.
It was only upon the adoption of the Provisional
Constitution on 25 March 1986 that the directives
and orders of the revolutionary government
became subject to a higher municipal law that, if
contravened, rendered such directives and orders
void. The
Provisional
Constitution
adopted
verbatim the Bill of Rights of the 1973 Constitution.
The Provisional Constitution served as a selflimitation by the revolutionary government to avoid
abuses of the absolute powers entrusted to it by
the people.
[48]

During the interregnum when no constitution or

Bill of Rights existed, directives and orders issued
by government officers were valid so long as these
officers did not exceed the authority granted them
by the revolutionary government. The directives
and orders should not have also violated the
Covenant or the Declaration. In this case, the
revolutionary
government
presumptively
sanctioned the warrant since the revolutionary
government did not repudiate it. The warrant,
issued by a judge upon proper application,

Q. Now, the search warrant speaks only of

weapons to be seized from the house of
Elizabeth Dimaano. Do you know the
reason why your team also seized other
properties not mentioned in said search
warrant?
A. During the conversation right after the
conduct of said raid, I was informed that
the reason why they also brought the other
items not included in the search warrant
was because the money and other
jewelries were contained in attach cases
and cartons with markings Sony Trinitron,
and I think three (3) vaults or steel
safes. Believing that the attach cases and
the steel safes were containing firearms,
they forced open these containers only to
find out that they contained money.

xxx
Q. You said you found money instead of
weapons, do you know the reason why
your team seized this money instead of
weapons?
A. I think the overall team leader and the other
two officers assisting him decided to bring
along also the money because at that time
it was already dark and they felt most
secured if they will bring that because they
might be suspected also of taking money
out of those items, your Honor.[49]

Cross-examination
Atty. Banaag
Q. Were you present when the search warrant in
connection with this case was applied
before the Municipal Trial Court of
Batangas, Branch 1?
A. Yes, sir.
Q. And the search warrant applied for by you
was for the search and seizure of five (5)

baby armalite rifles M-16 and five (5) boxes

of ammunition?

Memorandum Receipt in the name of

Felino Melegrito, is that not correct?

A. Yes, sir.

A. I think that was the reason, sir.

Q. There were other articles seized which were
not included in the search warrant, like for
instance, jewelries. Why did you seize the
jewelries?

xxx
AJ AMORES
Q. Before you applied for a search warrant, did
you conduct surveillance in the house of
Miss Elizabeth Dimaano?

A. I think it was the decision of the overall team

leader and his assistant to bring along also
the jewelries and other items, sir. I do not
really know where it was taken but they
brought along also these articles. I do not
really know their reason for bringing the
same, but I just learned that these were
taken because they might get lost if they
will just leave this behind.

A. The Intelligence Operatives conducted

surveillance together with the MSU
elements, your Honor.
Q. And this party believed there were weapons
deposited in the house of Miss Elizabeth
Dimaano?

xxx

A. Yes, your Honor.

Q. How about the money seized by your raiding

team, they were not also included in the
search warrant?

Q. And they so swore before the Municipal Trial

Judge?

A. Yes sir, but I believe they were also taken

considering that the money was discovered
to be contained in attach cases. These
attach cases were suspected to be
containing pistols or other high powered
firearms, but in the course of the search the
contents turned out to be money. So the
team leader also decided to take this
considering that they believed that if they
will just leave the money behind, it might
get lost also.

A. Yes, your Honor.

Q. But they did not mention to you, the applicant
for the search warrant, any other properties
or contraband which could be found in
the residence of Miss Elizabeth Dimaano?
A. They just gave us still unconfirmed report
about some hidden items, for instance, the
communications equipment and
money. However, I did not include that in
the application for search warrant
considering that we have not established
concrete evidence about that. So when

Q. That holds true also with respect to the other

articles that were seized by your raiding
team, like Transfer Certificates of Title of
lands?

Q. So that when you applied for search warrant,

you had reason to believe that only
weapons were in the house of Miss
Elizabeth Dimaano?
A. Yes, your Honor.[50]

xxx
Q. You stated that a .45 caliber pistol was seized
along with one armalite rifle M-16 and how
many ammunition?
A. Forty, sir.
Q. And this became the subject of your
complaint with the issuing Court, with the
fiscals office who charged Elizabeth
Dimaano for Illegal Possession of Firearms
and Ammunition?
A. Yes, sir.

A. Yes, sir. I think they were contained in one of

the vaults that were opened.[51]

It is obvious from the testimony of Captain

Sebastian that the warrant did not include the
monies, communications equipment, jewelry and
land titles that the raiding team confiscated. The
search warrant did not particularly describe these
items and the raiding team confiscated them on its
own authority. The raiding team had no legal basis
to seize these items without showing that these
items could be the subject of warrantless search
and seizure. Clearly, the raiding team exceeded
its authority when it seized these items.
[52]

The seizure of these items was therefore void,

and unless these items are contraband per se,
and they are not, they must be returned to the
person
from
whom
the
raiding
seized
them.However, we do not declare that such person
is the lawful owner of these items, merely that the
search and seizure warrant could not be used as
basis to seize and withhold these items from the
possessor. We thus hold that these items should
be returned immediately to Dimaano.
[53]

Q. Do you know what happened to that case?

A. I think it was dismissed, sir.
Q. In the fiscals office?
A. Yes, sir.
Q. Because the armalite rifle you seized, as well
as the .45 caliber pistol had a

WHEREFORE, the petition for certiorari

is DISMISSED. The questioned Resolutions of the
Sandiganbayan dated 18 November 1991 and 25
March 1992 in Civil Case No. 0037, remanding the
records of this case to the Ombudsman for such
appropriate action as the evidence may warrant,
and referring this case to the Commissioner of the
Bureau of Internal Revenue for a determination of
any tax liability of respondent Elizabeth Dimaano,
are AFFIRMED.

3. Que el recurrente era candidato a concejal del

municipio de Orion, Bataan con el certificado de
candidatura dedidamente presentado, y registrado asi
como tambien fue votado y elegido para dicho cargo, en
la eleccion del 13 de noviembre de 1951. (Emphasis
supplied)
were conclusions of law and not statement of facts.
The trial court sustained the second motion to dismiss in its order
of September 30, 1952, on the ground that the petition failed to
state a sufficient cause of action. Again petitioner has appealed
from that order to this court.

SO ORDERED.
ISSUES

Republic of the Philippines

SUPREME COURT
Manila
EN BANC
G.R. No. L-6404

January 12, 1954

PEDRO CALANO, petitioner-appellant,

vs.
PEDRO CRUZ, respondent-appellee.
J. R. Nuguid for appellant.
Emilio A. Gangcayco for appellee.
MONTEMAYOR, J.:
For purposes of the present appeal the following facts, not
disputed, may be briefly stated. As a result of the 1951 elections
respondent Pedro Cruz was proclaimed a councilor-elect in the
municipality of Orion, Bataan, by the Municipal Board of
Canvasser. Petitioner Pedro Calano filed a complaint or petition
for quo warranto under section 173 of the Revised election code
(Republic Act No. 180), contesting the right of Cruz to the office
on the ground that Cruz was not eligible for the office of municipal
councilor. In his prayer petitioner besides asking for other
remedies which in law and equity he is entitled to, asked that after
declaring null and void the proclamation made by the Municipal
Board of Canvasser in November, 1951, to the effect that Cruz
was councilor-elect, he (Calano) be declared the councilor
elected in respondent's place.
Acting upon a motion to dismiss the petition, the Court of First
Instance of Bataan issued the order of December 27, 1951,
dismissing the petition for quo warranto on the ground that it was
filed out of time, and also because petitioner had no legal
capacity to sue as contended by respondent. On appeal to this
Court by petitioner from the order of dismissal, in a decision
promulgated on may 7, 1952, we held that the petition was filed
within the period prescribed by law; and that although the petition
might be regarded as somewhat defective for failure to state a
sufficient cause of action, said question was not raised in the
motion to dismiss because the ground relied upon, namely, that
petitioner had no legal capacity to sue, did not refer to the failure
to state a sufficient cause of action but rather to minority, insanity,
coverture, lack of juridical personality, or nay other disqualification
of a party. As a result, the order of dismissal was reversed and
the case was remanded to the court of origin for further
proceedings.
Upon the return of the case to the trial court, respondent again
moved for dismissal on the ground that the petition failed to state
a sufficient cause of action, presumably relying upon the
observation made by us in our decision. Further elaborating on
our observation that the petition did not state a sufficient cause of
action, we said that paragraphs 3 and 8 of the petition which
reads thus
8. Que el recurrente tenia y tiene derecho a ocupar el
cargo de concejal de Orion, Bataan, si no habia sido
proclamado electo concejal de Orion, Bataan, al aqui
recurrido.

Appellant urges that the trial court erred not only in not holding
that the motion to dismiss was filed out of time but also in
declaring that the complaint failed to state a sufficient cause of
action. In answer respondent-appellee contends that the appeal
should not have been given due course by the trial court because
under the law there is no appeal from a decision of a court of First
Instance in protests against the eligibility or election of a
municipal councilor, the appeal being limited to election contests
involving the offices of Provincial governor, Members of the
Provincial Board, City Councilors and City Mayors, this under
section 178 of the Revised Election Code.
In the past we had occasion to rule upon a similar point of law. In
the case of Marquez vs. Prodigalidad, 46 Off. Gaz., Supp. No. 11,
p. 204, we held that section 178 of the Revised election code
limiting appeals from decisions of Courts of First Instance in
election contests over the offices of Provincial Governor,
members of the Provincial Board, City Councilors and City
Mayors, did not intend to prohibit or prevent the appeal to the
Supreme Court in protests involving purely questions of law, that
is to say, that protests involving other officers such as municipal
councilor may be appealed provided that only legal questions are
involved in the appeal. Consequently, the appeal in the present
case involving as it does purely questions of law is proper.
Going to the question of sufficiency of cause of action, it should
be stated that our observation when the case came up for the first
time on appeal was neither meant nor intended as a rule or
doctrine. We were merely considering the main prayer contained
in appellant's petition, namely, that he be declared councilor-elect
in the place of the respondent-appellee. In other words, we only
observed that petitioner could not properly ask for his
proclamation as councilor-elect without alleging and stating not
mere conclusions of law but facts showing that he had the right
and was entitled to the granting of his main prayer.
Considering the subject of cause of action in its entirety, it will be
noticed that section 173 of the Revised Election Code provides
that when a person who is not eligible is elected, any registered
candidate for the same office like the petitioner-appellant in this
case, may contest his right to the office by filing a petition for quo
warranto. To legalize the contest this section just mentioned does
not require that the contestant prove that he is entitled to the
office. In the case Llamoso vs. Ferrer, 47 Off. Gaz., No. 2, p. 727,
wherein petitioner Llamoso who claimed to have received the
next highest number of votes for the post of Mayor, contested the
right of respondent Ferrer to the office for which he was
proclaimed elected, on the ground of ineligibility, we held that
section 173 of the Revised election Code while providing that any
registered candidate may contest the right of one elected to any
provincial or municipal office on the ground of ineligibility, it does
not provide that if the contestee is later declared ineligible, the
contestant will be proclaimed elected. In other words, in that
case, we practically declared that under section 173, any
registered candidate may file a petition for quo warranto on the
ground of ineligibility, and that would constitute a sufficient cause
of action. It is not necessary for the contestant to claim that if the
contestee is declared ineligible, he (contestant) be declared
entitled to the office. As a matter of fact, in case ofLlamoso vs.
Ferrer, we declared the office vacant.
In view of the foregoing, the failure of Calano to allege that he is
entitled to the office of councilor now occupied by the respondent
Cruz does not effect the sufficiency of his cause of action.
Reversing the order of dismissal, the case is hereby remanded to
the trial court for further proceedings. No costs.

Paras, C.J., Pablo, Bengzon, Padilla, Reyes, Jugo, Bautista

Angelo and Labrador, JJ., concur.

responsive pleadings. Thus, upon motion of the petitioner, the

RTC declared them in default and allowed petitioner to present
her evidence ex parte.10
Ruling of the RTC sought to be annulled.
In a Decision11 dated October 17, 2000, the RTC granted
petitioners Complaint. The dispositive portion of said Decision
reads:

Republic of the Philippines

SUPREME COURT
Manila
SECOND DIVISION
G.R. No. 173559

January 7, 2013

LETICIA DIONA, represented by her Attorney-in-Fact,

MARCELINA DIONA, Petitioner,
vs.
ROMEO A. BALANGUE, SONNY A. BALANGUE, REYNALDO
A. BALANGUE, and ESTEBAN A. BALANGUE,
JR.,Respondents.
DECISION
DEL CASTILLO, J.:
The great of a relief neither sought by the party in whose favor it
was given not supported by the evidence presented violates the
opposing partys right to due process and may be declared void
ab initio in a proper proceeding.
This Petition for Review on Certiorari1 assails the November 24,
2005 Resolution2 of the Court of Appeals (CA) issued in G.R. SP
No. 85541 which granted the Petition for Annulment of
Judgment3 filed by the respondents seeking to nullify that portion
of the October 17, 2000 Decision4 of the Regional Trial Court
(RTC), Branch 75, Valenzuela City awarding petitioner 5%
monthly interest rate for the principal amount of the loan
respondent obtained from her.
This Petition likewise assails the CAs June 26, 2006
Resolution5 denying petitioners Motion for Reconsideration.
Factual Antecedents
The facts of this case are simple and undisputed.
On March 2, 1991, respondents obtained a loan of P45,000.00
from petitioner payable in six months and secured by a Real
Estate Mortgage6 over their 202-square meter property located in
Marulas, Valenzuela and covered by Transfer Certificate of Title
(TCT) No. V-12296.7 When the debt became due, respondents
failed to pay notwithstanding demand. Thus, on September 17,
1999, petitioner filed with the RTC a Complaint8 praying that
respondents be ordered:
(a) To pay petitioner the principal obligation
of P45,000.00, with interest thereon at the rate of 12% per
annum, from 02 March 1991 until the full obligation is
paid.
(b) To pay petitioner actual damages as may be proven
during the trial but shall in no case be less
than P10,000.00;P25,000.00 by way of attorneys fee,
plus P2,000.00 per hearing as appearance fee.
(c) To issue a decree of foreclosure for the sale at public
auction of the aforementioned parcel of land, and for the
disposition of the proceeds thereof in accordance with
law, upon failure of the respondents to fully pay petitioner
within the period set by law the sums set forth in this
complaint.
(d) Costs of this suit.
Other reliefs and remedies just and equitable under the premises
are likewise prayed for.9 (Emphasis supplied)
Respondents were served with summons thru respondent Sonny
A. Balangue (Sonny). On October 15, 1999, with the assistance
of Atty. Arthur C. Coroza (Atty. Coroza) of the Public Attorneys
Office, they filed a Motion to Extend Period to Answer. Despite
the requested extension, however, respondents failed to file any

WHEREFORE, judgment is hereby rendered in favor of the

petitioner, ordering the respondents to pay the petitioner as
follows:
a) the sum of FORTY FIVE THOUSAND (P45,000.00)
PESOS, representing the unpaid principal loan obligation
plus interest at 5% per month [sic] reckoned from March
2, 1991, until the same is fully paid;
b) P20,000.00 as attorneys fees plus cost of suit;
c) in the event the [respondents] fail to satisfy the
aforesaid obligation, an order of foreclosure shall be
issued accordingly for the sale at public auction of the
subject property covered by Transfer Certificate of Title
No. V-12296 and the improvements thereon for the
satisfaction of the petitioners claim.
SO ORDERED.12 (Emphasis supplied)
Subsequently, petitioner filed a Motion for Execution,13 alleging
that respondents did not interpose a timely appeal despite receipt
by their former counsel of the RTCs Decision on November 13,
2000. Before it could be resolved, however, respondents filed a
Motion to Set Aside Judgment14 dated January 26, 2001, claiming
that not all of them were duly served with summons. According to
the other respondents, they had no knowledge of the case
because their co-respondent Sonny did not inform them about it.
They prayed that the RTCs October 17, 2000 Decision be set
aside and a new trial be conducted.
But on March 16, 2001, the RTC ordered15 the issuance of a Writ
of Execution to implement its October 17, 2000 Decision.
However, since the writ could not be satisfied, petitioner moved
for the public auction of the mortgaged property,16 which the RTC
granted.17 In an auction sale conducted on November 7, 2001,
petitioner was the only bidder in the amount of P420,000.00.
Thus, a Certificate of Sale18 was issued in her favor and
accordingly annotated at the back of TCT No. V-12296.
Respondents then filed a Motion to Correct/Amend Judgment and
To Set Aside Execution Sale19 dated December 17, 2001, claiming
that the parties did not agree in writing on any rate of interest and
that petitioner merely sought for a 12% per annum interest in her
Complaint. Surprisingly, the RTC awarded 5% monthly interest
(or 60% per annum) from March 2, 1991 until full payment.
Resultantly, their indebtedness inclusive of the exorbitant interest
from March 2, 1991 to May 22, 2001 ballooned from P124,400.00
to P652,000.00.
In an Order20 dated May 7, 2002, the RTC granted respondents
motion and accordingly modified the interest rate awarded from
5% monthly to 12% per annum. Then on August 2, 2002,
respondents filed a Motion for Leave To Deposit/Consign
Judgment Obligation21 in the total amount of P126,650.00.22
Displeased with the RTCs May 7, 2002 Order, petitioner elevated
the matter to the CA via a Petition for Certiorari23 under Rule 65 of
the Rules of Court. On August 5, 2003, the CA rendered a
Decision24 declaring that the RTC exceeded its jurisdiction in
awarding the 5% monthly interest but at the same time
pronouncing that the RTC gravely abused its discretion in
subsequently reducing the rate of interest to 12% per annum. In
so ruling, the CA ratiocinated:
Indeed, We are convinced that the Trial Court exceeded its
jurisdiction when it granted 5% monthly interest instead of the
12% per annum prayed for in the complaint. However, the proper
remedy is not to amend the judgment but to declare that portion
as a nullity. Void judgment for want of jurisdiction is no judgment
at all. It cannot be the source of any right nor the creator of any
obligation (Leonor vs. CA, 256 SCRA 69). No legal rights can
emanate from a resolution that is null and void (Fortich vs.
Corona, 312 SCRA 751).
From the foregoing, the remedy of the respondents is to have the
Court declare the portion of the judgment providing for a higher

interest than that prayed for as null and void for want of or in
excess of jurisdiction. A void judgment never acquire[s] finality
and any action to declare its nullity does not prescribe (Heirs of
Mayor Nemencio Galvez vs. CA, 255 SCRA 672).
WHEREFORE, foregoing premises considered, the Petition
having merit, is hereby GIVEN DUE COURSE. Resultantly, the
challenged May 7, 2002 and September 5, 2000 orders of Public
Respondent Court are hereby ANNULLED and SET ASIDE for
having been issued with grave abuse of discretion amounting to
lack or in excess of jurisdiction. No costs.
SO ORDERED.25 (Emphases in the original; italics supplied.)
Proceedings before the Court of Appeals
Taking their cue from the Decision of the CA in the special civil
action for certiorari, respondents filed with the same court a
Petition for Annulment of Judgment and Execution Sale with
Damages.26 They contended that the portion of the RTC Decision
granting petitioner 5% monthly interest rate is in gross violation of
Section 3(d) of Rule 9 of the Rules of Court and of their right to
due process. According to respondents, the loan did not carry any
interest as it was the verbal agreement of the parties that in lieu
thereof petitioners family can continue occupying respondents
residential building located in Marulas, Valenzuela for free until
said loan is fully paid.
Ruling of the Court of Appeals
Initially, the CA denied due course to the Petition.27 Upon
respondents motion, however, it reinstated and granted the
Petition. In setting aside portions of the RTCs October 17, 2000
Decision, the CA ruled that aside from being unconscionably
excessive, the monthly interest rate of 5% was not agreed upon
by the parties and that petitioners Complaint clearly sought only
the legal rate of 12% per annum. Following the mandate of
Section 3(d) of Rule 9 of the Rules of Court, the CA concluded
that the awarded rate of interest is void for being in excess of the
relief sought in the Complaint. It ruled thus:
WHEREFORE, respondents motion for reconsideration is
GRANTED and our resolution dated October 13, 2004 is,
accordingly, REVERSED and SET ASIDE. In lieu thereof, another
is entered ordering the ANNULMENT OF:
(a) public respondents impugned October 17, 2000
judgment, insofar as it awarded 5% monthly interest in
favor of petitioner; and
(b) all proceedings relative to the sale at public auction of
the property titled in respondents names under Transfer
Certificate of Title No. V-12296 of the Valenzuela registry.
The judgment debt adjudicated in public respondents impugned
October 17, 2000 judgment is, likewise, ordered RECOMPUTED
at the rate of 12% per annum from March 2, 1991. No costs.
SO ORDERED.28 (Emphases in the original.)
Petitioner sought reconsideration, which was denied by the CA in
its June 26, 2006 Resolution.29
Issues
Hence, this Petition anchored on the following grounds:
I. THE HONORABLE COURT OF APPEALS
COMMITTED GRAVE AND SERIOUS ERROR OF LAW
WHEN IT GRANTED RESPONDENTS PETITION FOR
ANNULMENT OF JUDGMENT AS A SUBSTITUTE OR
ALTERNATIVE REMEDY OF A LOST APPEAL.
II. THE HONORABLE COURT OF APPEALS
COMMITTED GRAVE AND SERIOUS ERROR AND
MISAPPREHENSION OF LAW AND THE FACTS WHEN
IT GRANTED RESPONDENTS PETITION FOR
ANNULMENT OF JUDGMENT OF THE DECISION OF
THE REGIONAL TRIAL COURT OF VALENZUELA,
BRANCH 75 DATED OCTOBER 17, 2000 IN CIVIL CASE
NO. 241-V-99, DESPITE THE FACT THAT SAID
DECISION HAS BECOME FINAL AND ALREADY
EXECUTED CONTRARY TO THE DOCTRINE OF
IMMUTABILITY OF JUDGMENT.30
Petitioners Arguments

Petitioner claims that the CA erred in partially annulling the RTCs

October 17, 2000 Decision. She contends that a Petition for
Annulment of Judgment may be availed of only when the ordinary
remedies of new trial, appeal, petition for relief or other
appropriate remedies are no longer available through no fault of
the claimant. In the present case, however, respondents had all
the opportunity to question the October 17, 2000 Decision of the
RTC, but because of their own inaction or negligence they failed
to avail of the remedies sanctioned by the rules. Instead, they
contented themselves with the filing of a Motion to Set Aside
Judgment and then a Motion to Correct/Amend Judgment and to
Set Aside Execution Sale.
Petitioner likewise argues that for a Rule 47 petition to prosper,
the same must either be based on extrinsic fraud or lack of
jurisdiction. However, the allegations in respondents Rule 47
petition do not constitute extrinsic fraud because they simply pass
the blame to the negligence of their former counsel. In addition, it
is too late for respondents to pass the buck to their erstwhile
counsel considering that when they filed their Motion to
Correct/Amend Judgment and To Set Aside Execution Sale they
were already assisted by their new lawyer, Atty. Reynaldo A. Ruiz,
who did not also avail of the remedies of new trial, appeal, etc. As
to the ground of lack of jurisdiction, petitioner posits that there is
no reason to doubt that the RTC had jurisdiction over the subject
matter of the case and over the persons of the respondents.
While conceding that the RTC patently made a mistake in
awarding 5% monthly interest, petitioner nonetheless invokes the
doctrine of immutability of final judgment and contends that the
RTC Decision can no longer be corrected or modified since it had
long become final and executory. She likewise points out that
respondents received a copy of said Decision on November 13,
2000 but did nothing to correct the same. They did not even
question the award of 5% monthly interest when they filed their
Motion to Set Aside Judgment which they anchored on the sole
ground of the RTCs lack of jurisdiction over the persons of some
of the respondents.
Respondents Arguments
Respondents do not contest the existence of their obligation and
the principal amount thereof. They only seek quittance from the
5% monthly interest or 60% per annum imposed by the RTC.
Respondents contend that Section (3)d of Rule 9 of the Rules of
Court is clear that when the defendant is declared in default, the
court cannot grant a relief more than what is being prayed for in
the Complaint. A judgment which transgresses said rule,
according to the respondents, is void for having been issued
without jurisdiction and for being violative of due process of law.
Respondents maintain that it was through no fault of their own,
but through the gross negligence of their former counsel, Atty.
Coroza, that the remedies of new trial, appeal or petition for relief
from judgment were lost. They allege that after filing a Motion to
Extend Period to Answer, Atty. Coroza did not file any pleading
resulting to their being declared in default. While the said lawyer
filed on their behalf a Motion to Set Aside Judgment dated
January 26, 2001, he however took no steps to appeal from the
Decision of the RTC, thereby allowing said judgment to lapse into
finality. Citing Legarda v. Court of Appeals,31 respondents aver
that clients are not always bound by the actions of their counsel,
as in the present case where the clients are to lose their property
due to the gross negligence of their counsel.
With regard to petitioners invocation of immutability of judgment,
respondents argue that said doctrine applies only to valid and not
to void judgments.
Our Ruling
The petition must fail.
We agree with respondents that the award of 5% monthly interest
violated their right to due process and, hence, the same may be
set aside in a Petition for Annulment of Judgment filed under Rule
47 of the Rules of Court.
Annulment of judgment under Rule 47; an exception to the final
judgment rule; grounds therefor.
A Petition for Annulment of Judgment under Rule 47 of the Rules
of Court is a remedy granted only under exceptional
circumstances where a party, without fault on his part, has failed
to avail of the ordinary remedies of new trial, appeal, petition for
relief or other appropriate remedies. Said rule explicitly provides
that it is not available as a substitute for a remedy which was lost

due to the partys own neglect in promptly availing of the same.

"The underlying reason is traceable to the notion that annulling
final judgments goes against the grain of finality of judgment.
Litigation must end and terminate sometime and somewhere, and
it is essential to an effective administration of justice that once a
judgment has become final, the issue or cause involved therein
should be laid to rest."32
While under Section 2, Rule 4733 of the Rules of Court a Petition
for Annulment of Judgment may be based only on the grounds of
extrinsic fraud and lack of jurisdiction, jurisprudence recognizes
lack of due process as additional ground to annul a judgment.34 In
Arcelona v. Court of Appeals,35 this Court declared that a final and
executory judgment may still be set aside if, upon mere
inspection thereof, its patent nullity can be shown for having been
issued without jurisdiction or for lack of due process of law.
Grant of 5% monthly interest is way beyond the 12% per annum
interest sought in the Complaint and smacks of violation of due
process.
It is settled that courts cannot grant a relief not prayed for in the
pleadings or in excess of what is being sought by the party. They
cannot also grant a relief without first ascertaining the evidence
presented in support thereof. Due process considerations require
that judgments must conform to and be supported by the
pleadings and evidence presented in court. In Development Bank
of the Philippines v. Teston,36 this Court expounded that:
Due process considerations justify this requirement. It is improper
to enter an order which exceeds the scope of relief sought by the
pleadings, absent notice which affords the opposing party an
opportunity to be heard with respect to the proposed relief. The
fundamental purpose of the requirement that allegations of a
complaint must provide the measure of recovery is to prevent
surprise to the defendant.
Notably, the Rules is even more strict in safeguarding the right to
due process of a defendant who was declared in default than of a
defendant who participated in trial. For instance, amendment to
conform to the evidence presented during trial is allowed the
parties under the Rules.37 But the same is not feasible when the
defendant is declared in default because Section 3(d), Rule 9 of
the Rules of Court comes into play and limits the relief that may
be granted by the courts to what has been prayed for in the
Complaint. It provides:
(d) Extent of relief to be awarded. A judgment rendered against
a party in default shall not exceed the amount or be different in
kind from that prayed for nor award unliquidated damages.
The raison dtre in limiting the extent of relief that may be
granted is that it cannot be presumed that the defendant would
not file an Answer and allow himself to be declared in default had
he known that the plaintiff will be accorded a relief greater than or
different in kind from that sought in the Complaint.38 No doubt, the
reason behind Section 3(d), Rule 9 of the Rules of Court is to
safeguard defendants right to due process against unforeseen
and arbitrarily issued judgment. This, to the mind of this Court, is
akin to the very essence of due process. It embodies "the
sporting idea of fair play"39 and forbids the grant of relief on
matters where the defendant was not given the opportunity to be
heard thereon.
Minor Premise
In the case at bench, the award of 5% monthly interest rate is not
supported both by the allegations in the pleadings and the
evidence on record. The Real Estate Mortgage40 executed by the
parties does not include any provision on interest. When
petitioner filed her Complaint before the RTC, she alleged that
respondents borrowed from her "the sum of FORTY-FIVE
THOUSAND PESOS (P45,000.00), with interest thereon at the
rate of 12% per annum"41 and sought payment thereof. She did
not allege or pray for the disputed 5% monthly interest. Neither
did she present evidence nor testified thereon. Clearly, the RTCs
award of 5% monthly interest or 60% per annum lacks basis and
disregards due process. It violated the due process requirement
because respondents were not informed of the possibility that the
RTC may award 5% monthly interest. They were deprived of
reasonable opportunity to refute and present controverting
evidence as they were made to believe that the complainant
petitioner was seeking for what she merely stated in her
Complaint.
Neither can the grant of the 5% monthly interest be considered
subsumed by petitioners general prayer for "other reliefs and

remedies just and equitable under the premises x x x."42 To

repeat, the courts grant of relief is limited only to what has been
prayed for in the Complaint or related thereto, supported by
evidence, and covered by the partys cause of action. 43Besides,
even assuming that the awarded 5% monthly or 60% per annum
interest was properly alleged and proven during trial, the same
remains unconscionably excessive and ought to be equitably
reduced in accordance with applicable jurisprudence. In Bulos, Jr.
v. Yasuma,44 this Court held:
In the case of Ruiz v. Court of Appeals, citing the cases of Medel
v. Court of Appeals, Garcia v. Court of Appeals, Spouses Bautista
v. Pilar Development Corporation and the recent case of Spouses
Solangon v. Salazar, this Court considered the 3% interest per
month or 36% interest per annum as excessive and
unconscionable. Thereby, the Court, in the said case, equitably
reduced the rate of interest to 1% interest per month or 12%
interest per annum. (Citations omitted)
It is understandable for the respondents not to contest the default
order for, as alleged in their Comment, "it is not their intention to
impugn or run away from their just and valid
obligation."45 Nonetheless, their waiver to present evidence
should never be construed as waiver to contest patently
erroneous award which already transgresses their right to due
process, as well as applicable jurisprudence.
Respondents former counsel was grossly negligent in handling
the case of his clients; respondents did not lose ordinary
remedies of new trial, petition for relief, etc. through their own
fault.
Ordinarily, the mistake, negligence or lack of competence of
counsel binds the client. This is based on the rule that any act
performed by a counsel within the scope of his general or implied
authority is regarded as an act of his client. A recognized
exception to the rule is when the lawyers were grossly negligent
in their duty to maintain their clients cause and such amounted to
a deprivation of their clients property without due process of
law.46 In which case, the courts must step in and accord relief to a
client who suffered thereby.47
1wphi1

The manifest indifference of respondents former counsel in

handling the cause of his client was already present even from
the beginning. It should be recalled that after filing in behalf of his
clients a Motion to Extend Period to Answer, said counsel allowed
the requested extension to pass without filing an Answer, which
resulted to respondents being declared in default. His negligence
was aggravated by the fact that he did not question the awarded
5% monthly interest despite receipt of the RTC Decision on
November 13, 2000.48 A simple reading of the dispositive portion
of the RTC Decision readily reveals that it awarded exorbitant and
unconscionable rate of interest. Its difference from what is being
prayed for by the petitioner in her Complaint is so blatant and
very patent. It also defies elementary jurisprudence on legal rate
of interests. Had the counsel carefully read the judgment it would
have caught his attention and compelled him to take the
necessary steps to protect the interest of his client. But he did
not. Instead, he filed in behalf of his clients a Motion to Set Aside
Judgment49dated January 26, 2001 based on the sole ground of
lack of jurisdiction, oblivious to the fact that the erroneous award
of 5% monthly interest would result to his clients deprivation of
property without due process of law. Worse, he even allowed the
RTC Decision to become final by not perfecting an appeal.
Neither did he file a petition for relief therefrom. It was only a year
later that the patently erroneous award of 5% monthly interest
was brought to the attention of the RTC when respondents, thru
their new counsel, filed a Motion to Correct/Amend Judgment and
To Set Aside Execution Sale. Even the RTC candidly admitted
that it "made a glaring mistake in directing the defendants to pay
interest on the principal loan at 5% per month which is very
different from what was prayed for by the plaintiff."50
"A lawyer owes entire devotion to the interest of his client, warmth
and zeal in the maintenance and defense of his rights and the
exertion of his utmost learning and ability, to the end that nothing
can be taken or withheld from his client except in accordance with
the law."51 Judging from how respondents former counsel
handled the cause of his clients, there is no doubt that he was
grossly negligent in protecting their rights, to the extent that they
were deprived of their property without due process of law.
In fine, respondents did not lose the remedies of new trial,
appeal, petition for relief and other remedies through their own
fault. It can only be attributed to the gross negligence of their
erstwhile counsel which prevented them from pursuing such
remedies. We cannot also blame respondents for relying too
much on their former counsel. Clients have reasonable

expectations that their lawyer would amply protect their interest

during the trial of the case.52 Here,
"respondents are plain and ordinary people x x x who are totally
ignorant of the intricacies and technicalities of law and legal
procedures. Being so, they completely relied upon and trusted
their former counsel to appropriately act as their interest may
lawfully warrant and require."53
As a final word, it is worth noting that respondents principal
obligation was only P45,000.00. Due to their former counsels
gross negligence in handling their cause, coupled with the RTCs
erroneous, baseless, and illegal award of 5% monthly interest,
they now stand to lose their property and still owe petitioner a
large amount of money. As aptly observed by the CA:
x x x If the impugned judgment is not, therefore, rightfully nullified,
petitioners will not only end up losing their property but will
additionally owe private respondent the sum of P232,000.00 plus
the legal interest said balance had, in the meantime, earned. As a
court of justice and equity, we cannot, in good conscience, allow
this unconscionable situation to prevail.54
Indeed, this Court is appalled by petitioners invocation of the
doctrine of immutability of judgment. Petitioner does not contest
as she even admits that the RTC made a glaring mistake in
awarding 5% monthly interest.55 Amazingly, she wants to benefit
from such erroneous award. This Court cannot allow this injustice
to happen.
WHEREFORE, the instant Petition is hereby DENIED and the
assailed November 24, 2005 and June 26, 2006 Resolution of the
Court of Appeals in CA-G.R. SP No. 85541 are AFFIRMED.
SO ORDERED.
MARIANO C. DEL CASTILLO
Associate Justice
WE CONCUR:
MARIA LOURDES P. A. SERENO

Republic of the Philippines

SUPREME COURT
Manila
EN BANC
G.R. No. L-46496

February 27, 1940

ANG TIBAY, represented by TORIBIO TEODORO, manager

and propietor, and
NATIONAL WORKERS BROTHERHOOD, petitioners,
vs.
THE COURT OF INDUSTRIAL RELATIONS and NATIONAL
LABOR UNION, INC., respondents.
Office of the Solicitor-General Ozaeta and Assistant Attorney
Barcelona for the Court of Industrial Relations.
Antonio D. Paguia for National Labor Unon.
Claro M. Recto for petitioner "Ang Tibay".
Jose M. Casal for National Workers' Brotherhood.
LAUREL, J.:
The Solicitor-General in behalf of the respondent Court of
Industrial Relations in the above-entitled case has filed a motion
for reconsideration and moves that, for the reasons stated in his
motion, we reconsider the following legal conclusions of the
majority opinion of this Court:
1. Que un contrato de trabajo, asi individual como
colectivo, sin termino fijo de duracion o que no sea para
una determinada, termina o bien por voluntad de
cualquiera de las partes o cada vez que ilega el plazo
fijado para el pago de los salarios segun costumbre en la
localidad o cunado se termine la obra;

2. Que los obreros de una empresa fabril, que han

celebrado contrato, ya individual ya colectivamente, con
ell, sin tiempo fijo, y que se han visto obligados a cesar
en sus tarbajos por haberse declarando paro forzoso en
la fabrica en la cual tarbajan, dejan de ser empleados u
obreros de la misma;
3. Que un patrono o sociedad que ha celebrado un
contrato colectivo de trabajo con sus osbreros sin tiempo
fijo de duracion y sin ser para una obra determiminada y
que se niega a readmitir a dichos obreros que cesaron
como consecuencia de un paro forzoso, no es culpable
de practica injusta in incurre en la sancion penal del
articulo 5 de la Ley No. 213 del Commonwealth, aunque
su negativa a readmitir se deba a que dichos obreros
pertenecen a un determinado organismo obrero, puesto
que tales ya han dejado deser empleados suyos por
terminacion del contrato en virtud del paro.
The respondent National Labor Union, Inc., on the other hand,
prays for the vacation of the judgement rendered by the majority
of this Court and the remanding of the case to the Court of
Industrial Relations for a new trial, and avers:
1. That Toribio Teodoro's claim that on September 26,
1938, there was shortage of leather soles in ANG TIBAY
making it necessary for him to temporarily lay off the
members of the National Labor Union Inc., is entirely false
and unsupported by the records of the Bureau of
Customs and the Books of Accounts of native dealers in
leather.
2. That the supposed lack of leather materials claimed by
Toribio Teodoro was but a scheme to systematically
prevent the forfeiture of this bond despite the breach of
his CONTRACT with the Philippine Army.
3. That Toribio Teodoro's letter to the Philippine Army
dated September 29, 1938, (re supposed delay of leather
soles from the States) was but a scheme to systematically
prevent the forfeiture of this bond despite the breach of
his CONTRACT with the Philippine Army.
4. That the National Worker's Brotherhood of ANG TIBAY
is a company or employer union dominated by Toribio
Teodoro, the existence and functions of which are illegal.
(281 U.S., 548, petitioner's printed memorandum, p. 25.)
5. That in the exercise by the laborers of their rights to
collective bargaining, majority rule and elective
representation are highly essential and indispensable.
(Sections 2 and 5, Commonwealth Act No. 213.)
6. That the century provisions of the Civil Code which had
been (the) principal source of dissensions and continuous
civil war in Spain cannot and should not be made
applicable in interpreting and applying the salutary
provisions of a modern labor legislation of American origin
where the industrial peace has always been the rule.
7. That the employer Toribio Teodoro was guilty of unfair
labor practice for discriminating against the National
Labor Union, Inc., and unjustly favoring the National
Workers' Brotherhood.
8. That the exhibits hereto attached are so inaccessible to
the respondents that even with the exercise of due
diligence they could not be expected to have obtained
them and offered as evidence in the Court of Industrial
Relations.
9. That the attached documents and exhibits are of such
far-reaching importance and effect that their admission
would necessarily mean the modification and reversal of
the judgment rendered herein.
The petitioner, Ang Tibay, has filed an opposition both to the
motion for reconsideration of the respondent National Labor
Union, Inc.
In view of the conclusion reached by us and to be herein after
stead with reference to the motion for a new trial of the
respondent National Labor Union, Inc., we are of the opinion that
it is not necessary to pass upon the motion for reconsideration of
the Solicitor-General. We shall proceed to dispose of the motion
for new trial of the respondent labor union. Before doing this,
however, we deem it necessary, in the interest of orderly

procedure in cases of this nature, in interest of orderly procedure

in cases of this nature, to make several observations regarding
the nature of the powers of the Court of Industrial Relations and
emphasize certain guiding principles which should be observed in
the trial of cases brought before it. We have re-examined the
entire record of the proceedings had before the Court of Industrial
Relations in this case, and we have found no substantial
evidence that the exclusion of the 89 laborers here was due to
their union affiliation or activity. The whole transcript taken
contains what transpired during the hearing and is more of a
record of contradictory and conflicting statements of opposing
counsel, with sporadic conclusion drawn to suit their own views. It
is evident that these statements and expressions of views of
counsel have no evidentiary value.
The Court of Industrial Relations is a special court whose
functions are specifically stated in the law of its creation
(Commonwealth Act No. 103). It is more an administrative than a
part of the integrated judicial system of the nation. It is not
intended to be a mere receptive organ of the Government. Unlike
a court of justice which is essentially passive, acting only when its
jurisdiction is invoked and deciding only cases that are presented
to it by the parties litigant, the function of the Court of Industrial
Relations, as will appear from perusal of its organic law, is more
active, affirmative and dynamic. It not only exercises judicial or
quasi-judicial functions in the determination of disputes between
employers and employees but its functions in the determination of
disputes between employers and employees but its functions are
far more comprehensive and expensive. It has jurisdiction over
the entire Philippines, to consider, investigate, decide, and settle
any question, matter controversy or dispute arising between,
and/or affecting employers and employees or laborers, and
regulate the relations between them, subject to, and in
accordance with, the provisions of Commonwealth Act No. 103
(section 1). It shall take cognizance or purposes of prevention,
arbitration, decision and settlement, of any industrial or
agricultural dispute causing or likely to cause a strike or lockout,
arising from differences as regards wages, shares or
compensation, hours of labor or conditions of tenancy or
employment, between landlords and tenants or farm-laborers,
provided that the number of employees, laborers or tenants of
farm-laborers involved exceeds thirty, and such industrial or
agricultural dispute is submitted to the Court by the Secretary of
Labor or by any or both of the parties to the controversy and
certified by the Secretary of labor as existing and proper to be by
the Secretary of Labor as existing and proper to be dealth with by
the Court for the sake of public interest. (Section 4, ibid.) It shall,
before hearing the dispute and in the course of such hearing,
endeavor to reconcile the parties and induce them to settle the
dispute by amicable agreement. (Paragraph 2, section 4, ibid.)
When directed by the President of the Philippines, it shall
investigate and study all industries established in a designated
locality, with a view to determinating the necessity and fairness of
fixing and adopting for such industry or locality a minimum wage
or share of laborers or tenants, or a maximum "canon" or rental to
be paid by the "inquilinos" or tenants or less to landowners.
(Section 5, ibid.) In fine, it may appeal to voluntary arbitration in
the settlement of industrial disputes; may employ mediation or
conciliation for that purpose, or recur to the more effective system
of official investigation and compulsory arbitration in order to
determine specific controversies between labor and capital
industry and in agriculture. There is in reality here a mingling of
executive and judicial functions, which is a departure from the
rigid doctrine of the separation of governmental powers.
In the case of Goseco vs. Court of Industrial Relations et al., G.R.
No. 46673, promulgated September 13, 1939, we had occasion
to joint out that the Court of Industrial Relations et al., G. R. No.
46673, promulgated September 13, 1939, we had occasion to
point out that the Court of Industrial Relations is not narrowly
constrained by technical rules of procedure, and the Act requires
it to "act according to justice and equity and substantial merits of
the case, without regard to technicalities or legal forms and shall
not be bound by any technicalities or legal forms and shall not be
bound by any technical rules of legal evidence but may inform its
mind in such manner as it may deem just and equitable." (Section
20, Commonwealth Act No. 103.) It shall not be restricted to the
specific relief claimed or demands made by the parties to the
industrial or agricultural dispute, but may include in the award,
order or decision any matter or determination which may be
deemed necessary or expedient for the purpose of settling the
dispute or of preventing further industrial or agricultural disputes.
(section 13, ibid.) And in the light of this legislative policy, appeals
to this Court have been especially regulated by the rules recently
promulgated by the rules recently promulgated by this Court to
carry into the effect the avowed legislative purpose. The fact,
however, that the Court of Industrial Relations may be said to be
free from the rigidity of certain procedural requirements does not

mean that it can, in justifiable cases before it, entirely ignore or

disregard the fundamental and essential requirements of due
process in trials and investigations of an administrative character.
There are primary rights which must be respected even in
proceedings of this character:
(1) The first of these rights is the right to a hearing, which
includes the right of the party interested or affected to
present his own case and submit evidence in support
thereof. In the language of Chief Hughes, in Morgan v.
U.S., 304 U.S. 1, 58 S. Ct. 773, 999, 82 Law. ed. 1129,
"the liberty and property of the citizen shall be protected
by the rudimentary requirements of fair play.
(2) Not only must the party be given an opportunity to
present his case and to adduce evidence tending to
establish the rights which he asserts but the tribunal must
consider the evidence presented. (Chief Justice Hughes
in Morgan v. U.S. 298 U.S. 468, 56 S. Ct. 906, 80 law. ed.
1288.) In the language of this court in Edwards vs.
McCoy, 22 Phil., 598, "the right to adduce evidence,
without the corresponding duty on the part of the board to
consider it, is vain. Such right is conspicuously futile if the
person or persons to whom the evidence is presented can
thrust it aside without notice or consideration."
(3) "While the duty to deliberate does not impose the
obligation to decide right, it does imply a necessity which
cannot be disregarded, namely, that of having something
to support it is a nullity, a place when directly attached."
(Edwards vs. McCoy, supra.) This principle emanates
from the more fundamental is contrary to the vesting of
unlimited power anywhere. Law is both a grant and a
limitation upon power.
(4) Not only must there be some evidence to support a
finding or conclusion (City of Manila vs. Agustin, G.R. No.
45844, promulgated November 29, 1937, XXXVI O. G.
1335), but the evidence must be "substantial."
(Washington, Virginia and Maryland Coach Co. v. national
labor Relations Board, 301 U.S. 142, 147, 57 S. Ct. 648,
650, 81 Law. ed. 965.) It means such relevant evidence
as a reasonable mind accept as adequate to support a
conclusion." (Appalachian Electric Power v. National
Labor Relations Board, 4 Cir., 93 F. 2d 985, 989; National
Labor Relations Board v. Thompson Products, 6 Cir., 97
F. 2d 13, 15; Ballston-Stillwater Knitting Co. v. National
Labor Relations Board, 2 Cir., 98 F. 2d 758, 760.) . . . The
statute provides that "the rules of evidence prevailing in
courts of law and equity shall not be controlling.' The
obvious purpose of this and similar provisions is to free
administrative boards from the compulsion of technical
rules so that the mere admission of matter which would
be deemed incompetent inn judicial proceedings would
not invalidate the administrative order. (Interstate
Commerce Commission v. Baird, 194 U.S. 25, 44, 24 S.
Ct. 563, 568, 48 Law. ed. 860; Interstate Commerce
Commission v. Louisville and Nashville R. Co., 227 U.S.
88, 93 33 S. Ct. 185, 187, 57 Law. ed. 431; United States
v. Abilene and Southern Ry. Co. S. Ct. 220, 225, 74 Law.
ed. 624.) But this assurance of a desirable flexibility in
administrative procedure does not go far as to justify
orders without a basis in evidence having rational
probative force. Mere uncorroborated hearsay or rumor
does not constitute substantial evidence. (Consolidated
Edison Co. v. National Labor Relations Board, 59 S. Ct.
206, 83 Law. ed. No. 4, Adv. Op., p. 131.)"
(5) The decision must be rendered on the evidence
presented at the hearing, or at least contained in the
record and disclosed to the parties affected. (Interstate
Commence Commission vs. L. & N. R. Co., 227 U.S. 88,
33 S. Ct. 185, 57 Law. ed. 431.) Only by confining the
administrative tribunal to the evidence disclosed to the
parties, can the latter be protected in their right to know
and meet the case against them. It should not, however,
detract from their duty actively to see that the law is
enforced, and for that purpose, to use the authorized legal
methods of securing evidence and informing itself of facts
material and relevant to the controversy. Boards of inquiry
may be appointed for the purpose of investigating and
determining the facts in any given case, but their report
and decision are only advisory. (Section 9,
Commonwealth Act No. 103.) The Court of Industrial
Relations may refer any industrial or agricultural dispute
or any matter under its consideration or advisement to a
local board of inquiry, a provincial fiscal. a justice of the
peace or any public official in any part of the Philippines

for investigation, report and recommendation, and may

delegate to such board or public official such powers and
functions as the said Court of Industrial Relations may
deem necessary, but such delegation shall not affect the
exercise of the Court itself of any of its powers. (Section
10, ibid.)
(6) The Court of Industrial Relations or any of its judges,
therefore, must act on its or his own independent
consideration of the law and facts of the controversy, and
not simply accept the views of a subordinate in arriving at
a decision. It may be that the volume of work is such that
it is literally Relations personally to decide all
controversies coming before them. In the United States
the difficulty is solved with the enactment of statutory
authority authorizing examiners or other subordinates to
render final decision, with the right to appeal to board or
commission, but in our case there is no such statutory
authority.
(7) The Court of Industrial Relations should, in all
controversial questions, render its decision in such a
manner that the parties to the proceeding can know the
various issues involved, and the reasons for the decision
rendered. The performance of this duty is inseparable
from the authority conferred upon it.
In the right of the foregoing fundamental principles, it is sufficient
to observe here that, except as to the alleged agreement between
the Ang Tibay and the National Worker's Brotherhood (appendix
A), the record is barren and does not satisfy the thirst for a factual
basis upon which to predicate, in a national way, a conclusion of
law.
This result, however, does not now preclude the concession of a
new trial prayed for the by respondent National Labor Union, Inc.,
it is alleged that "the supposed lack of material claimed by Toribio
Teodoro was but a scheme adopted to systematically discharged
all the members of the National Labor Union Inc., from work" and
this avernment is desired to be proved by the petitioner with the
"records of the Bureau of Customs and the Books of Accounts of
native dealers in leather"; that "the National Workers Brotherhood
Union of Ang Tibay is a company or employer union dominated by
Toribio Teodoro, the existence and functions of which are illegal."
Petitioner further alleges under oath that the exhibits attached to
the petition to prove his substantial avernments" are so
inaccessible to the respondents that even within the exercise of
due diligence they could not be expected to have obtained them
and offered as evidence in the Court of Industrial Relations", and
that the documents attached to the petition "are of such far
reaching importance and effect that their admission would
necessarily mean the modification and reversal of the judgment
rendered herein." We have considered the reply of Ang Tibay and
its arguments against the petition. By and large, after
considerable discussions, we have come to the conclusion that
the interest of justice would be better served if the movant is
given opportunity to present at the hearing the documents
referred to in his motion and such other evidence as may be
relevant to the main issue involved. The legislation which created
the Court of Industrial Relations and under which it acts is new.
The failure to grasp the fundamental issue involved is not entirely
attributable to the parties adversely affected by the result.
Accordingly, the motion for a new trial should be and the same is
hereby granted, and the entire record of this case shall be
remanded to the Court of Industrial Relations, with instruction that
it reopen the case, receive all such evidence as may be relevant
and otherwise proceed in accordance with the requirements set
forth hereinabove. So ordered.
Avancea, C. J., Villa-Real, Imperial, Diaz, Concepcion and
Moran, JJ., concur.

Republic of the Philippines

SUPREME COURT
Manila
SECOND DIVISION
G.R. No. L-49711 November 7, 1979
ZAMBALES CHROMITE MINING CO., GONZALO P. NAVA,
VIOLA S. NAVA, FEDERICO S. NAVA, PERLA NAVA,
HONORATO P. NAVA, ALEJANDRO S. NAVA, PURIFICACION

SISON, A. TORDESILLAS, GUIDO ADVINCULA, PEDRO

ANGULO and TOMAS MARAMBA, petitioners-appellants,
vs.
COURT OF APPEALS, SECRETARY OF AGRICULTURE AND
NATURAL RESOURCES, DIRECTOR OF MINES, GREGORIO
E. MARTINEZ, ALEJANDRO MENDEZ, NICANOR MARTY,
VICENTE MISOLES, GUILLERMO YABUT, ANDRES R.
FIAGOY, MIGUEL A. MANIAGO, CASIMIRO N. EBIDO,
ENRIQUE RIVERA, SEVERINO MIVA, ELENITO B. MARTINEZ,
LUCAS EDURAIN, FELIMON ENCIO, EMILIO ILOCO,
DIOSDADO MISOLA, ERNESTO VALVERDE, PABLO
PABILONA, ARMANDO MINAS, BARTOLOME MARAVE and
CECILIO OOVILLA, respondents-appellees.
Tordesilla & Advincula for petitioners-appellants.
Mariano M. Lozada for private respondents-appellees.

AQUINO, J.:
This is a mining case. The petitioners appealed from the second
decision of the Court of Appeals, reversing its first decision and
holding that it was improper from Benjamin M. Gozon, as
Secretary of Agriculture and Natural Resources, to affirm his own
decision as Director of Mines.
The Court of Appeals further held that the trial court's judgment,
confirming the Secretary's decision, should be set aside and that
the Minister of Natural Resources should review anew the
decision of the Director of Mines "and, thereafter, further
proceedings will be taken in the trial court". The antecedental
proceedings are as follows:
(1) In Mines Administrative Case No. V-227, Director Gozon
issued an order dated October 5, 1960 wherein he dismissed the
case filed by the petitioners or protestants (Zambales Chromite
Mining Co., Inc. or the group of Gonzalo P. Nava). In that case,
they sought to be declared the rightful and prior locators and
possessors of sixty-nine mining claims located in Santa Cruz,
Zambales.
On the basis of petitioners' evidence (the private respondents did
not present any evidence and they filed a demurrer to the
evidence or motion to dismiss the protest), Director Gozon found
that the petitioners did not discover any mineral nor staked and
located mining claims in accordance with law.
In that same order, Director Gozon ruled that the mining claims of
the groups of Gregorio Martinez and Pablo Pabilona, now the
private respondents-appellees, were duly located and registered
(pp. 224-231, Record on Appeal).
(2) The petitioners appealed from that order to the Secretary of
Agriculture and Natural Resources. While the appeal was
pending, Director Gozon was appointed Secretary of Agriculture
and Natural Resources. Instead of inhibiting himself, he decided
the appeal, DANR Case No. 2151, on August 16, 1963 as it he
was adjudicating the case for the first time. 'Thus, Secretary
Gozon exercised appellate jurisdiction over a case which he had
decided as Director of Mines. He acted as reviewing authority in
the appeal from his own decision. Or, to use another analogy, he
acted as trial judge and appellate judge in the same case.
He ruled that the petitioners had abandoned the disputed mining
claims, while, on the other hand, the Martinez and Pabilona
groups had validly located the said claims. Hence, he dismissed
the appeal from his own decision (pp. 340-341, Record on
Appeal).
(3) On September 20, 1963, the petitioners filed a complaint in
the Court of First Instance of Zambales, assailing Secretary
Gozon's decision and praying that they be declared the prior
locators and possessors of the sixty-nine mineral claims in
question. Impleaded as defendants in the case were the
Secretary of Agriculture and Natural Resources, the Director of
Mines and the members of the Martinez and Pabilona groups.
After hearing, the lower court sustained Secretary Gozon's
decision and dismissed the case. It held that the disqualification
petition of a judge to review his own decision or ruling (Sec. 1,
Rule 137, Rules of Court) does not apply to administrative bodies;
that there is no provision in the Mining Law, disqualifying the
Secretary of Agriculture and Natural Resources from deciding an
appeal from a case which he had decided as Director of Mines;
that delicadeza is not a ground for disqualification; that the

petitioners did not seasonably seek to disqualify Secretary Gozon

from deciding their appeal, and that there was no evidence that
the Secretary acted arbitrarily and with bias, prejudice, animosity
or hostility to the petitioners (pp. 386-9, Record on Appeal).
(4) The petitioners appealed to the Court of Appeals. The Sixth
Division of that Court (Pascual, Agcaoili and Climaco, JJ.) in its
decision dated February 15, 1978 reversed the judgment of the
trial court and declared that the petitioners were the rightful
locators and possessors of the said sixty-nine mining claims and
held as invalid the mining claims overlapping the same.
That Division found that the petitioners (Nava group) had
discovered minerals and had validly located the said sixty-nine
mining claims and that there was no sufficient basis for Secretary
Gozon's finding that the mining claims of the Martinez and
Pabilona groups were validly located.
(5) The defendants, now the private respondents-appellees, filed
a motion for reconsideration based principally on the ground that
the Court of Appeals should have respected the factual findings of
the Director of Mines and the Secretary of Agriculture and Natural
Resources on the theory that the facts found in administrative
decisions cannot be disturbed on appeal to the courts, citing
Republic Act No. 4388 which amended section 61 of the Mining
Law effective June 19, 1965; Pajo vs. Ago, 108 Phil. 905;
Palanan Lumber & Plywood Co., Inc. vs. Arranz 65 O.G. 8473;
Timbancaya vs. Vicente, 119 Phil. 169, Ortua vs. Singson
Encarnacion, 59 Phil. 440.
The defendants-movants prayed that the appeal be dismissed,
meaning that the decisions of the lower court and of Director and
Secretary Gozon be affirmed.
The petitioners opposed that motion for reconsideration. In their
opposition, they reiterated the contention in their brief
thatSecretary Gozon's decision was void and, therefore, the
factual findings therein are not binding on the courts.
As already stated, the same Sixth Division (composed of Pascula,
Agrava and Maco, JJ.) in its second decision of October 13,
1978, set aside its first decision and granted the motion for
curiously enough, the first decision was reconsidered not on the
ground advanced by the movants-defendants, now the private
respondents (Martinez and Pabilona groups), which was that the
factual findings of the administrative officials should be upheld,
but on the ground raised in petitioners' opposition, namely, that
Secretary Gozon's decision was void because he was
disqualified to review his own decision as Director of Mines.
So, as already noted, the Court of Appeals in its second decision
remanded the case to the Minister of Natural Resources for
another review of Director Gozon's decision. This was the prayer
of the petitioners in their brief but in their opposition to the motion
for reconsideration, they prayed that the first decision of the Court
of Appeals in their favor be maintained.
(6) The second decision did not satisfy the parties. They filed
motions for reconsideration. The petitioners in their motion
reiterated their prayer that the first decision be reinstated. They
abandoned their prayer that the case be returned to the Minister
of Natural Resources. On the other hand, the private respondents
in their motion insisted that the trial court's decision be affirmed
on the basis of the factual findings of the Director of Mines and
the Secretary of Agriculture and Natural Resources. The Court of
Appeals denied both motions in its resolutions of December 27,
1978 and January 15, 1979.
Only the petitioners appealed from the second decision of the
Court of Appeals. There is an arresting and noteworthy peculiarity
in the present posture of this case now on appeal to this Court (as
arresting and noteworthy as the peculiarity that Secretary Gozon
reviewed his own decision as Director of Mines),
That twist or peculiarity is that while the petitioners (Nava group)
in their appellants' brief in the Court of Appeals prayed that
Secretary Gozon's decision, alleged to be biased, be declared
void and that the case be returned to the Secretary of Agriculture
and Natural Resources for another review of Director Gozon's
order, in their appellants' brief in this Court, they changed that
relief and they now pray that the second decision of the Court of
Appeals, referring this case to the Minister of Natural Resources
for another review, be declared void and that its first decision be
affirmed.
In contrast, the private respondents, who did not appeal from the
second decision of the Court of Appeals, instead of sustaining its

holding that this case be referred to the Minister of Natural

Resources or instead of defending that second decision, they
being appellees, pray for the affirmance of the trial court's
judgment sustaining the decisions of Director and Secretary
Gozon.
The inconsistent positions of the parties, which were induced by
the contradictory decisions of the Court of Appeals, constitute the
peculiar twist of this case in this Court.
We hold that Secretary Gozon acted with grave abuse of
discretion in reviewing his decision as Director of Mines. The
palpably flagrant anomaly of a Secretary of Agriculture and
Natural Resources reviewing his own decision as Director of
Mines is a mockery of administrative justice. The Mining Law,
Commonwealth Act No. 13-i, provides:
SEC. 61. Conflicts and disputes arising out of
mining locations shall be submitted to the Director
of Mines for decision:
Provided, That the decision or order of the
Director of Mines may be appealed to the
Secretary of Agriculture and Natural Resources
within thirty days from the date of its receipt.
In case any one of the parties should disagree
from the decision or order of the Director of Mines
or of the Secretary of Agriculture and Natural
Resources, the matter may be taken to the court
of competent jurisdiction within thirty days from
the receipt of such decision or order; otherwise
the said decision or order shag be final and
binding upon the parties concerned. (As amended
by Republic Act No. 746 approved on June
18,1952).*
Undoubtedly, the provision of section 61 that the decision of the
Director of Mines may be appealed to the Secretary of Agriculture
and Natural Resources contemplates that the Secretary should
be a person different from the Director of Mines.
In order that the review of the decision of a subordinate officer
might not turn out to be a farce the reviewing officer must
perforce be other than the officer whose decision is under review;
otherwise, there could be no different view or there would be no
real review of the case. The decision of the reviewing officer
would be a biased view; inevitably, it would be thesame
view since being human, he would not admit that he was
mistaken in his first view of the case.
That is the obvious, elementary reason behind the disqualification
of a trial judge, who is promoted to the appellate court, to sit in
any case wherein his decision or ruling is the subject of review
(Sec. 1, Rule 137, Rules of Court: secs. 9 and 27, Judiciary Law).
A sense of proportion and consideration for the fitness of things
should have deterred Secretary Gozon from reviewing his own
decision as Director of Mines. He should have asked his
undersecretary to undertake the review.
Petitioners-appellants were deprived of due process, meaning
fundamental fairness, when Secretary Gozon reviewed his own
decision as Director of Mines. (See Amos Treat & Co. vs.
Securities and Exchange Commission, 306 F. 2nd 260, 267.)
WHEREFORE, we set aside the order of the Secretary of
Agriculture and Natural Resources dated August 16, 1963 as
affirmed by the trial court as well as the first decision of the Court
of Appeals.
We affirm its second decision, returning the case to the Minister
of Natural Resources, with the directive that petitioners' appeal to
the Minister be resolved de novo with the least delay as provided
for in Presidential Decree No. 309, "establishing rules and
procedures for the speedy disposition or settlement of conflicting
mining claims".
We reverse the second part of that second decision stating that
"thereafter, further proceedings will be taken in the trial court".
That portion is unwarranted because the trial court does not
retain any jurisdiction over the case once it is remanded to the
Minister of Natural Resources. No costs.
SO ORDERED.

"before deciding a contested appointment, the Office of the

President shall consult the Civil Service Commission."
Republic of the Philippines
SUPREME COURT
Manila
SECOND DIVISION
G.R. No. L-54597 December 15, 1982
FELICIDAD ANZALDO, petitioner,
vs.
JACOBO C. CLAVE as Chairman of the Civil Service
Commission and as Presidential Executive Assistant; JOSE
A. R. MELO, as Commissioner of the Civil Service
Commission, and EULALIA L. VENZON, respondents.
Antonio P. Amistad for petitioner.
Artemio E. Valenton for private respondent.
Madamba, Deza & Almario Law Offices for respondent .
Demegildo Laborte & Lazano Law Offices for respondent public
officials.

AQUINO, J.:
This is a controversy over the position of Science Research
Supervisor II, whose occupant heads the Medical Research
Department in the Biological Research Center of the National
Institute of Science and Technology (NIST).
Doctor Felicidad Estores-Anzaldo 55, seeks to annul the decision
of Presidential Executive Assistant Jacobo C. Clave dated March
20, 1980, revoking her appointment dated January 5,
1978 as Science Research Supervisor II and directing the
appointment to that position of Doctor Eulalia L. Venzon, 48.
The contested position became vacant in 1974 when its
incumbent, Doctor Quintin Kintanar, became Director of the
Biological Research Center. Doctor Kintanar recommended that
Doctor Venzon be appointed to that position. Doctor Anzaldo
protested against that recommendation. The NIST
Reorganization Committee found her protest to be valid and
meritorious (p. 34, Rollo). Because of that impasse, which the
NIST Commissioner did not resolve, the position was not filled up.
At the time the vacancy occurred, or on June 30, 1974, both
Doctors Anzaldo and Venzon were holding similar positions in the
Medical Research Department: that of Scientist Research
Associate IV with an annual compensation of P12,013 per
annum. Both were next-in-rank to the vacant position.
Later, Doctor Pedro G. Afable, Vice-Chairman, became the
Officer-in-Charge of the NIST. Effective January 5, 1978, he
appointed Doctor Anzaldo to the contested position with
compensation at P18,384 per annum. The appointment was
approved by the Civil Service Commission.
Doctor Afable, in his letter dated January 20, 1978, explained that
the appointment was made after a thorough study and screening
of the qualifications of Doctors Anzaldo and Venzon and upon the
recommendation of the NIST Staff Evaluation Committee that
gave 88 points to Doctor Anzaldo and 61 points to Doctor
Venzon (p. 78, Rollo).
Doctor Venzon in a letter dated January 23, 1978, addressed to
Jacobo C. Clave, appealed to the Office of the President of the
Philippines (pp. 139-40). The appeal was forwarded to the NIST
Anzaldo to the contested position (p. 63, Rollo). The appealprotest was later sent to the Civil Service Commission.
Chairman Clave of the Civil Service Commission and
Commissioner Jose A. R. Melo recommended in Resolution No.
1178 dated August 23, 1979 that Doctor Venzon be appointed to
the contested position, a recommendation which is in conflict with
the 1978 appointment of Doctor Anzaldo which was duly attested
and approved by the Civil Service Commission (pp. 30 and 48,
Rollo).
The resolution was made pursuant to section 19(6) of the Civil
Service Decree of the Philippines, Presidential Decree No. 807
(which took effect on October 6, 1975) and which provides that

After the denial of her motion for the reconsideration of that

resolution, or on January 5, 1980, Doctor Anzaldo appealed to the
Office of the President of the Philippines. As stated earlier,
Presidential Executive Assistant Clave (who was concurrently
Chairman of the Civil Service Commission) in his decision of
March 20, 1980 revoked Doctor Anzaldo's appointment and ruled
that, "as recommended by the Civil Service Commission"
(meaning Chairman Clave himself and Commissioner Melo),
Doctor Venzon should be appointed to the contested position but
that Doctor Anzaldo's appointment to the said position should be
considered "valid and effective during the pendency" of Doctor
Venzon's protest (p. 36, Rollo).
In a resolution dated August 14, 1980, Presidential Executive
Assistant Clave denied Doctor Anzaldo's motion for
reconsideration. On August 25, 1980, she filed in this Court the
instant special civil action of certiorari.
What is manifestly anomalous and questionable about that
decision of Presidential Executive Assistant Clave is that it is an
implementation of Resolution No. 1178 dated August 23,
1979 signed by Jacobo C. Clave, as Chairman of the Civil
Service Commission and concurred in by Commissioner Jose A.
Melo.
In that resolution, Commissioner Clave and Melo, acting for the
Civil Service Commission, recommended that Doctor Venzon be
appointed Science Research Supervisor II in place of Doctor
Anzaldo.
When Presidential Executive Assistant Clave said in his decision
that he was "inclined to concur in the recommendation of the Civil
Service Commission", what he meant was that he was concurring
with Chairman Clave's recommendation: he was concurring with
himself (p. 35, Rollo).
It is evident that Doctor Anzaldo was denied due process of law
when Presidential Executive Assistant Clave concurred with the
recommendation of Chairman Clave of the Civil Service
Commission. The case is analogous to Zambales Chromite
Mining Co. vs. Court of Appeals, L-49711, November 7, 1979, 94
SCRA 261, where it was held that the decision of Secretary of
Agriculture and Natural Resources Benjamin M. Gozon, affirming
his own decision in a mining case asDirector of Mines was void
because it was rendered with grave abuse of discretion and was
a mockery of administrative justice.
Due process of law means fundamental fairness. It is not fair to
Doctor Anzaldo that Presidential Executive Assistant Clave
should decide whether his own recommendation as Chairman of
the Civil Service Commission, as to who between Doctor Anzaldo
and Doctor Venzon should be appointed Science Research
Supervisor II, should be adopted by the President of the
Philippines.
Common sense and propriety dictate that the commissioner in the
Civil Service Commission, who should be consulted by the Office
of the President, should be a person different from the person in
the Office of the President who would decide the appeal of the
protestant in a contested appointment.
In this case, the person who acted for the Office of the President
is the same person in the Civil Service Commission who was
consulted by the Office of the President: Jacobo C. Clave. The
Civil Service Decree could not have contemplated that absurd
situation for, as held in the Zambales Chromite case, that would
not be fair to the appellant.
We hold that respondent Clave committed a grave abuse of
discretion in deciding the appeal in favor of Doctor Venzon. The
appointing authority, Doctor Afable, acted in accordance with law
and properly exercised his discretion in appointing Doctor
Anzaldo to the contested position.
Doctor Anzaldo finished the pharmacy course in 1950 in the
College of Pharmacy, University of the Philippines. She obtained
from the Centro Escolar University the degree of Master of
Science in Pharmacy in 1962 and in 1965 the degree of Doctor of
Pharmacy.
Aside from her civil service eligibility as a pharmacist, she is a
registered medical technologist and supervisor (unassembled).

She started working in the NIST in 1954 and has served in that
agency for about twenty-eight (28) years now. As already stated,
in January, 1978, she was appointed to the contested Position of
Science Research Supervisor II. Her present salary as Science
Research Supervisor II, now known as Senior Science Research
Specialist, is P 30,624 per annumafter she was given a merit
increase by Doctor Kintanar, effective July 1, 1981 (p. 259, Rollo).
On the other hand, Doctor Venzon finished the medical course in
the University of Santo Tomas in 1957. She started working in the
NIST in 1960. She has been working in that agency for more than
twenty-one (21) years. Doctor Anzaldo is senior to her in point of
service.
Considering that Doctor Anzaldo has competently and
satisfactorily discharged the duties of the contested position for
more than four (4) years now and that she is qualified for that
position, her appointment should be upheld. Doctor Venzon's
protest should be dismissed.
WHEREFORE, the decision of respondent Clave dated March 20,
1980 is set aside, and petitioner Anzaldo's promotional
appointment to the contested position is declared valid. No costs.
SO ORDERED.

FROM : The Asst. General Manager

DATE : May 03, 1988
SUBJECT : TERMINATION OF EMPLOYMENT OF
MR. HALIM YSMAEL &
MR. ELISEO FELICIANO
----------------------------------------------Please be advised that Mr. Halim Ysmael and
Mr. Eliseo Feliciano have been terminated
from their employment with our company as
of the end of office hours today May 3, 1988.
For the above reason they are not allowed to enter our
premises.
For your strict compliance.
LEDA A. BEVERFORD

[G.R. No. 109714. December 15, 1997]

BETTER BUILDINGS, INC., WILLIAM WARNE

and LEDA BEAVERFORD, petitioners,
vs. THE NATIONAL LABOR RELATIONS
COMMISSION, HALIN YSMAEL and
ELISEO FELICIANO, respondents.
DECISION
ROMERO, J.:

This petition for certiorari with prayer for the

issuance of a temporary restraining order and/or
injunction seeks to annul the decision of public
respondent National Labor Relations Commission
(NLRC) dated March 3, 1989 and resolution dated
December 18, 1992, directing petitioner Better
Building, Inc. to reinstate private respondents
Halim Ysmael and Eliseo Feliciano to their former
positions without loss of seniority rights and
benefits and to pay them backwages.
[1]

Private respondent Halim Ysmael (Ysmael)

was hired as a Sales Manager by petitioner Better
Building, Inc. (BBI) on March 16, 1985. In addition
to his monthly salary, he was given the free use of
the company car, free gasoline and commission
from sales. Private respondent Eliseo Feliciano
(Feliciano), on the other hand, was employed as
Chief Supervisor by the petitioner since January
1966.
On May 3, 1988, petitioner, through its
Assistant General Manager, Leda A. Beverford,
showed to private respondents a memorandum
regarding their termination from employment
effective the same day, to wit:

Unable to accept petitioners drastic action, on

May 6, 1988, private respondents filed a complaint
against BBI for illegal dismissal.
3

On March 3, 1989, Labor Arbiter Daisy G.

Cauton-Barcelona rendered a decision, the
dispositive portion of which reads:
WHEREFORE, judgment is hereby ordered declaring
that the complainants dismissal is illegal as discussed
above hence, ordering the respondents to reinstate them
to their former positions with full backwages and
without loss of seniority and other benefits.
Ordering further to pay the complainants their salary
differentials computed from November 1, 1986 up to
the time of actual reinstatement.
And, to pay complainant Halim Ysmael moral and
exemplary damages in the amount of P100,000
and P50,000 respectively.
With costs and attorneys fees against the respondents.
SO ORDERED.

Except for the reduction of the damages

awarded by the Labor Arbiter, the said decision
was affirmed by the NLRC, to wit:
5

WHEREFORE, premises considered, the decision

appealed from is hereby modified insofar as the awards
of moral and exemplary damages are concerned which
are reduced to P50,000 and P20,000 respectively.
In all other respects, the decision of the Labor Arbiter
below is affirmed.
SO ORDERED.

MEMO TO : Guard On Duty

Petitioner, not satisfied with the decision, has

filed the instant petition for certiorari alleging that
the NLRC gravely abused its discretion amounting
to lack or excess of jurisdiction when it rendered
the decision of March 3, 1989 and the resolution of
December 11, 1992.
On September 4, 1996, this Court resolved to
dismiss the case against private respondent
Ysmael by virtue of the compromise agreement
entered
into
between
him
and
the
petitioner. Hence, the resolution of this case will
only affect private respondent Feliciano.
6

Petitioner argues that the private respondent

was validly dismissed for engaging in the same
line of business as that of his employer
(petitioner). Thus, his act of engaging in a business
in direct competition with his employer was, not
only an act of disloyalty, but more specifically a
willful breach of trust and confidence.
In termination of employment cases, we have
consistently held that two requisites must concur to
constitute a valid dismissal: (a) the dismissal must
be for any of the causes expressed in Art. 282 of
the Labor Code, and (b) the employee must be
accorded due process, the elements of which are
the opportunity to be heard and defend himself.
7

First, on the substantive aspect, petitioner

contends that private respondent was dismissed
from his employment for engaging in business in
direct competition with its line of service. Hence,
said conduct constitutes a willful breach of trust
which is justifiable cause for termination of
employment.
8

services of his own company to various clients, to

the detriment of the petitioner. Notably, private
respondent even had the temerity to induce two of
BBIs prominent clients, namely the United States
Embassy and San Miguel Corporation, to transfer
their respective service contracts to Reachout
General Services, his own corporation.
Third, private respondents disloyalty became
more conspicuous when he hired as the
employees of Reachout General Services the
former employees of the petitioner. Clearly, this act
has undercut petitioners business.
Finally, we cannot help but notice that in all the
pleadings submitted by the private respondent, he
never discussed nor refuted the charge against
him by the petitioner. By his silence, we conclude
that he was indeed guilty of disloyalty to his
employer. In fact, the records are devoid of any
evidence to controvert the evidence presented by
the petitioner regarding his alleged disloyalty. Such
omission only strengthens the petitioners claim.
While we find that private respondent was
dismissed for cause, the same was, however,
effected without the requirements of due process.
In this jurisdiction, we have consistently ruled
that in terminating an employee, it is essential that
the twin requirements of notice and hearing must
be observed. The written notice apprises the
employee of the particular acts or omissions for
which his dismissal is sought and at the same
informs the employee concerned of the employers
decision to dismiss him.
12

We sustain BBI.
Deeply entrenched in our jurisprudence is the
doctrine that an employer can terminate the
services of an employee only for valid and just
causes which must be supported by clear and
convincing evidence. The employer has the
burden of proving that the dismissal was indeed for
a valid and just cause.
10

In the case at bar, the record is bereft of any

showing that private respondent was given notice
of the charge against him. Nor was he ever given
the opportunity under the circumstances to answer
the charge; his termination was quick, swift and
sudden.
Interestingly, when this issue was brought up,
all the petitioner could state in its Reply was:

11

In the case at bar, petitioner has clearly

established private respondents culpability by
convincing evidence. First, it was never disputed
that private respondent established another
corporation, Reachout General Services, engaged
in the maintenance/janitorial service, the same line
of business as that of petitioner. In this regard,
private respondent failed to adduce substantial
evidence to disprove this allegation.
Second, as Chief Supervisor of the petitioner, it
was his duty to promote and offer the services of
the petitioner to prospective clients; however,
instead of so doing, private respondent offered the

Even if there was a notice to explain and

notice of termination given to the private
respondents, the petitioner was already
convinced at that time that the private
respondents were already engaged in disloyal
acts. The result would be the same - dismissal.

13

Evidently, the decision to dismiss respondent

was merely based on the fact that petitioner was
already convinced at the time that the private
respondents were engaged in disloyal acts. As
regards the procedural aspect, the failure to
observe the twin requirements of notice and
hearing taints the dismissal with illegality.

In fine, we find that there was basis for

petitioners loss of trust and confidence in private
respondent. For an employer cannot be compelled
to retain in his service an employee who is guilty of
acts inimical to its interest. A company has the
right to dismiss its employees as a measure of
protection. Corollarily, proof beyond reasonable
doubt of an employees misconduct is not required
in dismissing an employee on the ground of loss of
trust and confidence. The quantum of proof
required, being only substantial evidence, we are
convinced that there was an actual breach of trust
committed by private respondent which was ample
basis for petitioners loss of trust and confidence in
him. We, therefore, hold that private respondents
dismissal was for a just and valid cause. However,
the manner of terminating his employment was
done in complete disregard of the necessary
procedural safeguards. A mans job being a
property right duly protected by our laws, for
depriving private respondent the right to defend
himself, petitioner is liable for damages consistent
with Article 32 of the Civil Code, which provides:
14

15

16

EN BANC
G.R. No. 147590

April 2, 2007

ANTONIO C. CARAG, Petitioner,

vs.
NATIONAL LABOR RELATIONS COMMISSION, ISABEL G.
PANGANIBAN-ORTIGUERRA, as Executive Labor Arbiter,
NAFLU, and MARIVELES APPAREL CORPORATION LABOR
UNION, Respondents.
DECISION
CARPIO, J.:

17

ART. 32. Any public officer or employee, or any private

individual, who directly or indirectly obstructs, defeats,
violates or in any manner impedes or impairs any of the
following rights and liberties of another person shall be
liable to the latter for damages:
xxxxxxxxx
(6) The right against deprivation of property without
due process of law;
x x x x x x x x x.
In this regard, the damages shall be in the form
of nominal damages for the award is not for the
purpose of penalizing the petitioner but to vindicate
or recognize private respondents right to
procedural due process which was violated by the
petitioner.
18

WHEREFORE, in view of the foregoing, the

assailed decision of the NLRC and its
accompanying
resolution
are
hereby SET
ASIDE and ANNULLED. However, for failure to
observe procedural due process in effecting the
dismissal, petitioner shall pay to the private
respondent P5,000.00 as nominal damages. No
costs.
SO ORDERED.
Narvasa, C.J., (Cha

Republic of the Philippines

SUPREME COURT
Manila

The Case
This is a petition for review on certiorari1 assailing the Decision
dated 29 February 20002 and the Resolution dated 27 March
20013 of the Court of Appeals (appellate court) in CA-G.R. SP
Nos. 54404-06. The appellate court affirmed the decision dated
17 June 19944 of Labor Arbiter Isabel Panganiban-Ortiguerra
(Arbiter Ortiguerra) in RAB-III-08-5198-93 and the resolution
dated 5 January 19955 of the National Labor Relations
Commission (NLRC) in NLRC CA No. L-007731-94.
Arbiter Ortiguerra held that Mariveles Apparel Corporation (MAC),
MAC's Chairman of the Board Antonio Carag (Carag), and MAC's
President Armando David (David) (collectively, respondents) are
guilty of illegal closure and are solidarily liable for the separation
pay of MAC's rank and file employees. The NLRC denied the
motion to reduce bond filed by MAC and Carag.
The Facts
National Federation of Labor Unions (NAFLU) and Mariveles
Apparel Corporation Labor Union (MACLU) (collectively,
complainants), on behalf of all of MAC's rank and file employees,
filed a complaint against MAC for illegal dismissal brought about
by its illegal closure of business. In their complaint dated 12
August 1993, complainants alleged the following:
2. Complainant NAFLU is the sole and exclusive
bargaining agent representing all rank and file employees
of [MAC]. That there is an existing valid Collective
Bargaining Agreement (CBA) executed by the parties and
that at the time of the cause of action herein below
discussed happened there was no labor dispute between
the Union and Management except cases pending in
courts filed by one against the other.
3. That on July 8, 1993, without notice of any kind filed in
accordance with pertinent provisions of the Labor Code,
[MAC], for reasons known only by herself [sic] ceased
operations with the intention of completely closing its
shop or factory. Such intentions [sic] was manifested in a
letter, allegedly claimed by [MAC] as its notice filed only
on the same day that the operations closed.
4. That at the time of closure, employees who have
rendered one to two weeks work were not paid their
corresponding salaries/wages, which remain unpaid until
time [sic] of this writing.
5. That there are other benefits than those abovementioned which have been unpaid by [MAC] at the time
it decided to cease operations, benefits gained by the
workers both by and under the CBA and by operations
[sic] of law.
6. That the closure made by [MAC] in the manner and
style done is perce [sic] illegal, and had caused
tremendous prejudice to all of the employees, who
suffered both mental and financial anguish and who in
view thereof merits [sic] award of all damages (actual,
exemplary and moral), [illegible] to set [an] example to
firms who in the future will [illegible] the idea of simply
prematurely closing without complying [with] the basic
requirement of Notice of Closure.6 (Emphasis supplied)
Upon receipt of the records of the case, Arbiter Ortiguerra
summoned the parties to explore options for possible settlement.
The non-appearance of respondents prompted Arbiter Ortiguerra
to declare the case submitted for resolution "based on the extant
pleadings."

In their position paper dated 3 January 1994, complainants

moved to implead Carag and David, as follows:
x x x x In the present case, it is unfortunate for respondents that
the records and evidence clearly demonstrate that the individual
complainants are entitled to the reliefs prayed for in their
complaint. However, any favorable judgment the Honorable Labor
Arbiter may render in favor of herein complainants will go to
naught should the Office fails [sic] to appreciate the glaring fact
that the respondents [sic] corporation is no longer existing as it
suddenly stopped business operation since [sic] 8 July 1993.
Under this given circumstance, the complainants have no option
left but to implead Atty. ANTONIO CARAG, in his official capacity
as Chairman of the Board along with MR. ARMANDO DAVID as
President. Both are also owners of the respondent corporation
with office address at 10th Floor, Gamon Centre, Alfaro Street,
Salcedo Village[,] Makati[,] Metro Manila although they may be
collectively served with summons and other legal processes
through counsel of record Atty. Joshua Pastores of 8th Floor,
Hanston Bldg., Emerald Avenue, Ortigas[,] Pasig, Metro Manila.
This inclusion of individual respondents as party respondents in
the present case is to guarantee the satisfaction of any judgment
award on the basis of Article 212(c) of the Philippine Labor Code,
as amended, which says:
"Employer includes any person acting in the interest of an
employer, directly or indirectly. It does not, however, include any
labor organization or any of its officers or agents except when
acting as employer."
The provision was culled from Section 2, Republic Act 602, the
Minimum Wage Act. If the employer is an artificial person, it must
have an officer who can be presumed to be the employer, being
"the person acting in the interest of the employer." The
corporation is the employer, only in the technical sense. (A.C.
Ransom Labor Union CCLU VS. NLRC, G.R. 69494, June 10,
1986). Where the employer-corporation, AS IN THE PRESENT
CASE, is no longer existing and unable to satisfy the judgment in
favor of the employee, the officer should be held liable for acting
on behalf of the corporation. (Gudez vs. NLRC, G.R. 83023,
March 22, 1990). Also in the recent celebrated case of Camelcraft
Corporation vs. NLRC, G.R. 90634-35 (June 6, 1990), Carmen
contends that she is not liable for the acts of the company,
assuming it had [acted] illegally, because Camelcraft in a distinct
and separate entity with a legal personality of its own. She claims
that she is only an agent of the company carrying out the
decisions of its board of directors, "We do not agree," said the
Supreme Court. "She is, in fact and legal effect, the corporation,
being not only its president and general manager but also its
owner." The responsible officer of an employer can be held
personally liable not to say even criminally liable for nonpayment
of backwages. This is the policy of the law. If it were otherwise,
corporate employers would have devious ways to evade paying
backwages. (A.C. Ransom Labor Union-CCLU V. NLRC, G.R.
69494, June 10, 1986). If no definite proof exists as to who is the
responsible officer, the president of the corporation who can be
deemed to be its chief operation officer shall be presumed to be
the responsible officer. In Republic Act 602, for example, criminal
responsibility is with the "manager" or in his default, the person
acting as such (Ibid.)7 (Emphasis supplied)
Atty. Joshua L. Pastores (Atty. Pastores), as counsel for
respondents, submitted a position paper dated 21 February 1994
and stated that complainants should not have impleaded Carag
and David because MAC is actually owned by a consortium of
banks. Carag and David own shares in MAC only to qualify them
to serve as MAC's officers.
Without any further proceedings, Arbiter Ortiguerra rendered her
Decision dated 17 June 1994 granting the motion to implead
Carag and David. In the same Decision, Arbiter Ortiguerra
declared Carag and David solidarily liable with MAC to
complainants.
The Ruling of the Labor Arbiter
In her Decision dated 17 June 1994, Arbiter Ortiguerra ruled as
follows:
This is a complaint for illegal dismissal brought about by the
illegal closure and cessation of business filed by NAFLU and
Mariveles Apparel Corporation Labor Union for and in behalf of all
rank and file employees against respondents Mariveles Apparel
Corporation, Antonio Carag and Armando David [who are] its
owners, Chairman of the Board and President, respectively.

This case was originally raffled to the sala of Labor Arbiter Adolfo
V. Creencia. When the latter went on sick leave, his cases were
re-raffled and the instant case was assigned to the sala of the
undersigned. Upon receipt of the record of the case, the parties
were summoned for them to be able to explore options for
settlement. The respondents however did not appear prompting
this Office to submit the case for resolution based on extant
pleadings, thus this decision.
The complainants claim that on July 8, 1993 without notice of any
kind the company ceased its operation as a prelude to a final
closing of the firm. The complainants allege that up to the present
the company has remained closed.
The complainants bewail that at the time of the closure,
employees who have rendered one to two weeks of work were
not given their salaries and the same have remained unpaid.
The complainants aver that respondent company prior to its
closure did not even bother to serve written notice to employees
and to the Department of Labor and Employment at least one
month before the intended date of closure. The respondents did
not even establish that its closure was done in good faith.
Moreover, the respondents did not pay the affected employees
separation pay, the amount of which is provided in the existing
Collective Bargaining Agreement between the complainants and
the respondents.
The complainants pray that they be allowed to implead Atty.
Antonio Carag and Mr. Armando David[,] owners and responsible
officer[s] of respondent company to assure the satisfaction of the
judgment, should a decision favorable to them be rendered. In
support of their claims, the complainants invoked the ruling laid
down by the Supreme Court in the case of A.C. Ransom Labor
Union CCLU vs. NLRC, G.R. No. 69494, June 10, 1986 where it
was held that [a] corporate officer can be held liable for acting on
behalf of the corporation when the latter is no longer in existence
and there are valid claims of workers that must be satisfied.
The complainants pray for the declaration of the illegality of the
closure of respondents' business. Consequently, their
reinstatement must be ordered and their backwages must be
paid. Should reinstatement be not feasible, the complainants pray
that they be paid their separation pay in accordance with the
computation provided for in the CBA. Computations of separation
pay due to individual complainants were adduced in evidence
(Annexes "C" to "C-44", Complainants' Position Paper). The
complainants also pray for the award to them of attorney's fee[s].
The respondents on the other hand by way of controversion
maintain that the present complaint was filed prematurely. The
respondents deny having totally closed and insist that respondent
company is only on a temporary shut-down occasioned by the
pending labor unrest. There being no permanent closure any
claim for separation pay must not be given due course.
Respondents opposed the impleader of Atty. Antonio C. Carag
and Mr. Armando David saying that they are not the owners of
Mariveles Apparel Corporation and they are only minority
stockholders holding qualifying shares. Piercing the veil of
corporate fiction cannot be done in the present case for such
remedy can only be availed of in case of closed or family owned
corporations.
Respondents pray for the dismissal of the present complaint and
the denial of complainants' motion to implead Atty. Antonio C.
Carag and Mr. Armando David as party respondents.
This Office is now called upon to resolve the following issues:
1. Whether or not the respondents are guilty of illegal
closure;
2. Whether or not individual respondents could be held
personally liable; and
3. Whether or not the complainants are entitled to an
award of attorney's fees.
After a judicious and impartial consideration of the record, this
Office is of the firm belief that the complainants must prevail.
The respondents described the cessation of operations in its
premises as a temporary shut-down. While such posturing may
have been initially true, it is not so anymore. The cessation of
operations has clearly exceeded the six months period fixed in
Article 286 of the Labor Code. The temporary shutdown has

ripened into a closure or cessation of operations for causes not

due to serious business losses or financial reverses.
Consequently, the respondents must pay the displaced
employees separation pay in accordance with the computation
prescribed in the CBA, to wit, one month pay for every year of
service. It must be stressed that respondents did not controvert
the verity of the CBA provided computation.
The complainants claim that Atty. Antonio Carag and Mr. Armando
David should be held jointly and severally liable with respondent
corporation. This bid is premised on the belief that the impleader
of the aforesaid officers will guarantee payment of whatever may
be adjudged in complainants' favor by virtue of this case. It is a
basic principle in law that corporations have personality distinct
and separate from the stockholders. This concept is known as
corporate fiction. Normally, officers acting for and in behalf of a
corporation are not held personally liable for the obligation of the
corporation. In instances where corporate officers dismissed
employees in bad faith or wantonly violate labor standard laws or
when the company had already ceased operations and there is
no way by which a judgment in favor of employees could be
satisfied, corporate officers can be held jointly and severally liable
with the company. This Office after a careful consideration of the
factual backdrop of the case is inclined to grant complainants'
prayer for the impleader of Atty. Antonio Carag and Mr. Armando
David, to assure that valid claims of employees would not be
defeated by the closure of respondent company.
The complainants pray for the award to them of moral and
exemplary damages, suffice it to state that they failed to establish
their entitlement to aforesaid reliefs when they did not adduce
persuasive evidence on the matter.
The claim for attorney's fee[s] will be as it is hereby resolved in
complainants' favor. As a consequence of the illegal closure of
respondent company, the complainants were compelled to litigate
to secure benefits due them under pertinent laws. For this
purpose, they secured the services of a counsel to assist them in
the course of the litigation. It is but just and proper to order the
respondents who are responsible for the closure and subsequent
filing of the case to pay attorney's fee[s].
WHEREFORE, premises considered, judgment is hereby
rendered declaring respondents jointly and severally guilty of
illegal closure and they are hereby ordered as follows:
1. To pay complainants separation pay computed on the
basis of one (1) month for every year of service, a fraction
of six (6) months to be considered as one (1) year in the
total amount of P49,101,621.00; and
2. To pay complainants attorney's fee in an amount
equivalent to 10% of the judgment award.
The claims for moral, actual and exemplary damages are
dismissed for lack of evidence.
SO ORDERED.8 (Emphasis supplied)
MAC, Carag, and David, through Atty. Pastores, filed their
Memorandum before the NLRC on 26 August 1994. Carag,
through a separate counsel, filed an appeal dated 30 August
1994 before the NLRC. Carag reiterated the arguments in
respondents' position paper filed before Arbiter Ortiguerra, stating
that:
2.1 While Atty. Antonio C. Carag is the Chairman of the
Board of MAC and Mr. Armando David is the President,
they are not the owners of MAC;
2.2 MAC is owned by a consortium of banks, as
stockholders, and Atty. Antonio C. Carag and Mr.
Armando David are only minority stockholders of the
corporation, owning only qualifying shares;
2.3 MAC is not a family[-]owned corporation, that in case
of a close [sic] corporation, piercing the corporate veil its
[sic] possible to hold the stockholders liable for the
corporation's liabilities;
2.4 MAC is a corporation with a distinct and separate
personality from that of the stockholders; piercing the
corporate veil to hold the stockholders liable for corporate
liabilities is only true [for] close corporations (family
corporations); this is not the prevailing situation in MAC;

2.5 Atty. Antonio Carag and Mr. Armando David are

professional managers and the extension of shares to
them are just qualifying shares to enable them to occupy
subject position.9
Respondents also filed separate motions to reduce bond.
The Ruling of the NLRC
In a Resolution promulgated on 5 January 1995, the NLRC Third
Division denied the motions to reduce bond. The NLRC stated
that to grant a reduction of bond on the ground that the appeal is
meritorious would be tantamount to ruling on the merits of the
appeal. The dispositive portion of the Resolution of the NLRC
Third Division reads, thus:
PREMISES CONSIDERED, Motions to Reduce Bond for both
respondents are hereby DISMISSED for lack of merit.
Respondents are directed to post cash or surety bond in the
amount of forty eight million one hundred one thousand six
hundred twenty one pesos (P48,101,621.00) within an
unextendible period of fifteen (15) days from receipt hereof.
No further Motions for Reconsideration shall be entertained.
SO ORDERED.10
Respondents filed separate petitions for certiorari before this
Court under Rule 65 of the 1964 Rules of Court. Carag filed his
petition, docketed as G.R. No. 118820, on 13 February 1995. In
the meantime, we granted MAC's prayer for the issuance of a
temporary restraining order to enjoin the NLRC from enforcing
Arbiter Ortiguerra's Decision. On 31 May 1995, we granted
complainants' motion for consolidation of G.R. No. 118820 with
G.R. No. 118839 (MAC v. NLRC, et al.) and G.R. No. 118880
(David v. Arbiter Ortiguerra, et al.). On 12 July 1999, after all the
parties had filed their memoranda, we referred the consolidated
cases to the appellate court in accordance with our decision in St.
Martin Funeral Home v. NLRC.11 Respondents filed separate
petitions before the appellate court.
The Ruling of the Appellate Court
On 29 February 2000, the appellate court issued a joint decision
on the separate petitions. The appellate court identified two
issues as essential: (1) whether Arbiter Ortiguerra properly held
Carag and David, in their capacities as corporate officers, jointly
and severally liable with MAC for the money claims of the
employees; and (2) whether the NLRC abused its discretion in
denying the separate motions to reduce bond filed by MAC and
Carag.
The appellate court held that the absence of a formal hearing
before the Labor Arbiter is not a cause for Carag and David to
impute grave abuse of discretion. The appellate court found that
Carag and David, as the most ranking officers of MAC, had a
direct hand at the time in the illegal dismissal of MAC's
employees. The failure of Carag and David to observe the notice
requirement in closing the company shows malice and bad faith,
which justifies their solidary liability with MAC. The appellate court
also found that the circumstances of the present case do not
warrant a reduction of the appeal bond. Thus:
IN VIEW WHEREOF, the petitions are DISMISSED. The decision
of Labor Arbiter Isabel Panganiban-Ortiguerra dated June 17,
1994, and the Resolution dated January 5, 1995, issued by the
National Labor Relations Commission are hereby AFFIRMED. As
a consequence of dismissal, the temporary restraining order
issued on March 2, 1995, by the Third Division of the Supreme
Court is LIFTED. Costs against petitioners.
SO ORDERED.12 (Emphasis in the original)
The appellate court denied respondents' separate motions for
reconsideration.13
In a resolution dated 20 June 2001, this Court's First Division
denied the petition for Carag's failure to show sufficiently that the
appellate court committed any reversible error to warrant the
exercise of our discretionary appellate jurisdiction. Carag filed a
motion for reconsideration of our resolution denying his petition.
In a resolution dated 13 August 2001, this Court's First Division
denied Carag's reconsideration with finality.
Despite our 13 August 2001 resolution, Carag filed a second
motion for reconsideration with an omnibus motion for leave to file

a second motion for reconsideration. This Court's First Division

referred the motion to the Court En Banc. In a resolution dated 25
June 2002, the Court En Banc resolved to grant the omnibus
motion for leave to file a second motion for reconsideration,
reinstated the petition, and required respondents to comment on
the petition. On 25 November 2003, the Court En Banc resolved
to suspend the rules to allow the second motion for
reconsideration. This Court's First Division referred the petition to
the Court En Banc on 14 July 2004, and the Court En Banc
accepted the referral on 15 March 2005.
The Issues
Carag questions the appellate court's decision of 29 February
2000 by raising the following issues before this Court:
1. Has petitioner Carag's right to due process been
blatantly violated by holding him personally liable for
over P50 million of the corporation's liability, merely as
board chairman and solely on the basis of the motion to
implead him in midstream of the proceedings as
additional respondent, without affording him the right to
present evidence and in violation of the accepted
procedure prescribed by Rule V of the NLRC Rules of
Procedure, as to render the ruling null and void?
2. Assuming, arguendo, that he had been accorded due
process, is the decision holding him solidarily liable
supported by evidence when the only pleadings (not
evidence) before the Labor Arbiter and that of the Court of
Appeals are the labor union's motion to implead him as
respondent and his opposition thereto, without position
papers, without evidence submitted, and without hearing
on the issue of personal liability, and even when bad faith
or malice, as the only legal basis for personal liability, was
expressly found absent and wanting by [the] Labor
Arbiter, as to render said decision null and void?
3. Did the NLRC commit grave abuse of discretion in
denying petitioner's motion to reduce appeal bond?14
The Ruling of the Court
We find the petition meritorious.
On Denial of Due Process to Carag and David
Carag asserts that Arbiter Ortiguerra rendered her Decision of 17
June 1994 without issuing summons on him, without requiring
him to submit his position paper, without setting any hearing,
without giving him notice to present his evidence, and without
informing him that the case had been submitted for decision - in
violation of Sections 2,15 3,16 4,17 5(b),18 and 11(c) 19 of Rule V of
The New Rules of Procedure of the NLRC.20
It is clear from the narration in Arbiter Ortiguerra's Decision that
she only summoned complainants and MAC, and not Carag, to a
conference for possible settlement. In her Decision, Arbiter
Ortiguerra stated that she scheduled the conference "upon
receipt of the record of the case." At the time of the conference,
complainants had not yet submitted their position paper which
contained the motion to implead Carag. Complainants could not
have submitted their position paper before the conference since
procedurally the Arbiter directs the submission of position papers
only after the conference.21 Complainants submitted their position
paper only on 10 January 1994, five months after filing the
complaint. In short, at the time of the conference, Carag was not
yet a party to the case. Thus, Arbiter Ortiguerra could not have
possibly summoned Carag to the conference.
Carag vigorously denied receiving summons to the conference,
and complainants have not produced any order of Arbiter
Ortiguerra summoning Carag to the conference. A thorough
search of the records of this case fails to show any order of
Arbiter Ortiguerra directing Carag to attend the conference.
Clearly, Arbiter Ortiguerra did not summon Carag to the
conference.
When MAC failed to appear at the conference, Arbiter Ortiguerra
declared the case submitted for resolution. In her Decision,
Arbiter Ortiguerra granted complainants' motion to implead Carag
and at the same time, in the same Decision, found Carag
personally liable for the debts of MAC consisting ofP49,101,621
in separation pay to complainants. Arbiter Ortiguerra never issued
summons to Carag, never called him to a conference for possible
settlement, never required him to submit a position paper, never
set the case for hearing, never notified him to present his

evidence, and never informed him that the case was submitted
for decision - all in violation of Sections 2, 3, 4, 5(b), and 11(c) of
Rule V of The New Rules of Procedure of the NLRC.
Indisputably, there was utter absence of due process to Carag at
the arbitration level. The procedure adopted by Arbiter Ortiguerra
completely prevented Carag from explaining his side and
presenting his evidence. This alone renders Arbiter Ortiguerra's
Decision a nullity insofar as Carag is concerned. While labor
arbiters are not required to conduct a formal hearing or trial, they
have no license to dispense with the basic requirements of due
process such as affording respondents the opportunity to be
heard. In Habana v. NLRC,22 we held:
The sole issue to be resolved is whether private respondents
OMANFIL and HYUNDAI were denied due process when the
Labor Arbiter decided the case solely on the basis of the position
paper and supporting documents submitted in evidence by
Habana and De Guzman.
We rule in the affirmative. The manner in which this case was
decided by the Labor Arbiter left much to be desired in terms of
respect for the right of private respondents to due process First, there was only one conciliatory conference held in
this case. This was on 10 May 1996. During the
conference, the parties did not discuss at all the
possibility of amicable settlement due to petitioner's
stubborn insistence that private respondents be declared
in default.
Second, the parties agreed to submit their respective
motions - petitioner's motion to declare respondents in
default and private respondents' motion for bill of
particulars - for the consideration of the Labor Arbiter. The
Labor Arbitration Associate, one Ms. Gloria Vivar, then
informed the parties that they would be notified of the
action of the Labor Arbiter on the pending motions.
xxx
Third, since the conference on 10 May 1996 no order or
notice as to what action was taken by the Labor Arbiter in
disposing the pending motions was ever received by
private respondents. They were not declared in default by
the Labor Arbiter nor was petitioner required to submit a
bill of particulars.
Fourth, neither was there any order or notice requiring
private respondents to file their position paper, nor an
order informing the parties that the case was already
submitted for decision. What private respondents
received was the assailed decision adverse to them.
It is clear from the foregoing that there was an utter absence of
opportunity to be heard at the arbitration level, as the procedure
adopted by the Labor Arbiter virtually prevented private
respondents from explaining matters fully and presenting their
side of the controversy. They had no chance whatsoever to at
least acquaint the Labor Arbiter with whatever defenses they
might have to the charge that they illegally dismissed petitioner. In
fact, private respondents presented their position paper and
documentary evidence only for the first time on appeal to the
NLRC.
The essence of due process is that a party be afforded a
reasonable opportunity to be heard and to submit any evidence
he may have in support of his defense. Where, as in this case,
sufficient opportunity to be heard either through oral arguments or
position paper and other pleadings is not accorded a party to a
case, there is undoubtedly a denial of due process.
It is true that Labor Arbiters are not bound by strict rules of
evidence and of procedure. The manner by which Arbiters
dispose of cases before them is concededly a matter of
discretion. However, that discretion must be exercised regularly,
legally and within the confines of due process. They are
mandated to use every reasonable means to ascertain the facts
of each case, speedily, objectively and without regard to
technicalities of law or procedure, all in the interest of justice and
for the purpose of accuracy and correctness in adjudicating the
monetary awards.
In this case, Carag was in a far worse situation. Here, Carag was
not issued summons, not accorded a conciliatory conference, not
ordered to submit a position paper, not accorded a hearing, not
given an opportunity to present his evidence, and not notified that

the case was submitted for resolution. Thus, we hold that Arbiter
Ortiguerra's Decision is void as against Carag for utter absence
of due process. It was error for the NLRC and the Court of
Appeals to uphold Arbiter Ortiguerra's decision as against Carag.

unlawful or criminal act. Such procedural defect is called illegal

dismissal because it fails to comply with mandatory procedural
requirements, but it is not illegal in the sense that it constitutes an
unlawful or criminal act.

On the Liability of Directors for Corporate Debts

For a wrongdoing to make a director personally liable for debts of

the corporation, the wrongdoing approved or assented to by the
director must be a patently unlawful act. Mere failure to comply
with the notice requirement of labor laws on company closure or
dismissal of employees does not amount to a patently unlawful
act. Patently unlawful acts are those declared unlawful by law
which imposes penalties for commission of such unlawful acts.
There must be a law declaring the act unlawful and penalizing the
act.

This case also raises this issue: when is a director personally

liable for the debts of the corporation? The rule is that a director is
not personally liable for the debts of the corporation, which has a
separate legal personality of its own. Section 31 of the
Corporation Code lays down the exceptions to the rule, as
follows:
Liability of directors, trustees or officers. - Directors or trustees
who wilfully and knowingly vote for or assent to patently unlawful
acts of the corporation or who are guilty of gross negligence or
bad faith in directing the affairs of the corporation or acquire any
personal or pecuniary interest in conflict with their duty as such
directors or trustees shall be liable jointly and severally for all
damages resulting therefrom suffered by the corporation, its
stockholders or members and other persons.
xxxx
Section 31 makes a director personally liable for corporate debts
if he wilfully and knowingly votes for or assents to patently
unlawful acts of the corporation. Section 31 also makes a director
personally liable if he is guilty of gross negligence or bad faith in
directing the affairs of the corporation.
Complainants did not allege in their complaint that Carag wilfully
and knowingly voted for or assented to any patently unlawful act
of MAC. Complainants did not present any evidence showing that
Carag wilfully and knowingly voted for or assented to any patently
unlawful act of MAC. Neither did Arbiter Ortiguerra make any
finding to this effect in her Decision.
Complainants did not also allege that Carag is guilty of gross
negligence or bad faith in directing the affairs of MAC.
Complainants did not present any evidence showing that Carag is
guilty of gross negligence or bad faith in directing the affairs of
MAC. Neither did Arbiter Ortiguerra make any finding to this effect
in her Decision.
Arbiter Ortiguerra stated in her Decision that:
In instances where corporate officers dismissed employees in
bad faith or wantonly violate labor standard laws or when the
company had already ceased operations and there is no way by
which a judgment in favor of employees could be satisfied,
corporate officers can be held jointly and severally liable with the
company.23
After stating what she believed is the law on the matter, Arbiter
Ortiguerra stopped there and did not make any finding that Carag
is guilty of bad faith or of wanton violation of labor standard laws.
Arbiter Ortiguerra did not specify what act of bad faith Carag
committed, or what particular labor standard laws he violated.
To hold a director personally liable for debts of the corporation,
and thus pierce the veil of corporate fiction, the bad faith or
wrongdoing of the director must be established clearly and
convincingly.24 Bad faith is never presumed.25 Bad faith does not
connote bad judgment or negligence. Bad faith imports a
dishonest purpose. Bad faith means breach of a known duty
through some ill motive or interest. Bad faith partakes of the
nature of fraud.26 In Businessday Information Systems and
Services, Inc. v. NLRC,27 we held:
There is merit in the contention of petitioner Raul Locsin that the
complaint against him should be dismissed. A corporate officer is
not personally liable for the money claims of discharged corporate
employees unless he acted with evident malice and bad faith in
terminating their employment. There is no evidence in this case
that Locsin acted in bad faith or with malice in carrying out the
retrenchment and eventual closure of the company (Garcia vs.
NLRC, 153 SCRA 640), hence, he may not be held personally
and solidarily liable with the company for the satisfaction of the
judgment in favor of the retrenched employees.
Neither does bad faith arise automatically just because a
corporation fails to comply with the notice requirement of labor
laws on company closure or dismissal of employees. The failure
to give notice is not an unlawful act because the law does not
define such failure as unlawful. Such failure to give notice is a
violation of procedural due process but does not amount to an

An example of a patently unlawful act is violation of Article 287 of

the Labor Code, which states that "[V]iolation of this provision is
hereby declared unlawful and subject to the penal provisions
provided under Article 288 of this Code." Likewise, Article 288 of
the Labor Code on Penal Provisions and Liabilities, provides that
"any violation of the provision of this Code declared unlawful or
penal in nature shall be punished with a fine of not less than One
Thousand Pesos (P1,000.00) nor more than Ten Thousand
Pesos (P10,000.00), or imprisonment of not less than three
months nor more than three years, or both such fine and
imprisonment at the discretion of the court."
In this case, Article 28328 of the Labor Code, requiring a onemonth prior notice to employees and the Department of Labor
and Employment before any permanent closure of a company,
does not state that non-compliance with the notice is an unlawful
act punishable under the Code. There is no provision in any other
Article of the Labor Code declaring failure to give such notice an
unlawful act and providing for its penalty.
Complainants did not allege or prove, and Arbiter Ortiguerra did
not make any finding, that Carag approved or assented to any
patently unlawful act to which the law attaches a penalty for its
commission. On this score alone, Carag cannot be held
personally liable for the separation pay of complainants.
This leaves us with Arbiter Ortiguerra's assertion that "when the
company had already ceased operations and there is no way by
which a judgment in favor of employees could be satisfied,
corporate officers can be held jointly and severally liable with the
company." This assertion echoes the complainants' claim that
Carag is personally liable for MAC's debts to complainants "on
the basis of Article 212(e) of the Labor Code, as amended," which
says:
'Employer' includes any person acting in the interest of an
employer, directly or indirectly. The term shall not include any
labor organization or any of its officers or agents except when
acting as employer. (Emphasis supplied)
Indeed, complainants seek to hold Carag personally liable for the
debts of MAC based solely on Article 212(e) of the Labor Code.
This is the specific legal ground cited by complainants, and used
by Arbiter Ortiguerra, in holding Carag personally liable for the
debts of MAC.
We have already ruled in McLeod v. NLRC29 and Spouses Santos
v. NLRC30 that Article 212(e) of the Labor Code, by itself, does not
make a corporate officer personally liable for the debts of the
corporation. The governing law on personal liability of directors
for debts of the corporation is still Section 31 of the Corporation
Code. Thus, we explained in McLeod:
Personal liability of corporate directors, trustees or officers
attaches only when (1) they assent to a patently unlawful act of
the corporation, or when they are guilty of bad faith or gross
negligence in directing its affairs, or when there is a conflict of
interest resulting in damages to the corporation, its stockholders
or other persons; (2) they consent to the issuance of watered
down stocks or when, having knowledge of such issuance, do not
forthwith file with the corporate secretary their written objection;
(3) they agree to hold themselves personally and solidarily liable
with the corporation; or (4) they are made by specific provision of
law personally answerable for their corporate action.
http://elibrary.supremecourt.gov.ph/DOCUMENTS/SUPREME_C
OURT/Decisions/2007/jan2007.zip%3E9,df
%7C2007/jan2007/146667.htm xxx
The ruling in A.C. Ransom Labor Union-CCLU v.
NLRC,http://elibrary.supremecourt.gov.ph/DOCUMENTS/SUPRE

ME_COURT/Decisions/2007/jan2007.zip%3E9,df
%7C2007/jan2007/146667.htm - which the Court of Appeals
cited, does not apply to this case. We quote pertinent portions of
the ruling, thus:

and this time the conflict was between two brothers occupying the
highest ranking positions in the company. There were
incontrovertible facts which pointed to extreme personal
animosity that resulted, evidently in bad faith, in the easing out
from the company of one of the brothers by the other.

(a) Article 265 of the Labor Code, in part, expressly provides:

"Any worker whose employment has been terminated as a
consequence of an unlawful lockout shall be entitled to
reinstatement with full backwages."
Article 273 of the Code provides that:
"Any person violating any of the provisions of Article 265 of this
Code shall be punished by a fine of not exceeding five
hundred pesos and/or imprisonment for not less than one (1)
day nor more than six (6) months."
(b) How can the foregoing provisions be implemented when the
employer is a corporation? The answer is found in Article 212 (c)
of the Labor Code which provides:
"(c) 'Employer' includes any person acting in the interest of an
employer, directly or indirectly. The term shall not include any
labor organization or any of its officers or agents except when
acting as employer."
The foregoing was culled from Section 2 of RA 602, the Minimum
Wage Law. Since RANSOM is an artificial person, it must have an
officer who can be presumed to be the employer, being the
"person acting in the interest of (the) employer" RANSOM. The
corporation, only in the technical sense, is the employer.
The responsible officer of an employer corporation can be held
personally, not to say even criminally, liable for non-payment of
back wages. That is the policy of the law.
xxxx
(c) If the policy of the law were otherwise, the corporation
employer can have devious ways for evading payment of back
wages. In the instant case, it would appear that RANSOM, in
1969, foreseeing the possibility or probability of payment of
back wages to the 22 strikers, organized ROSARIO to replace
RANSOM, with the latter to be eventually phased out if the 22
strikers win their case. RANSOM actually ceased operations on
May 1, 1973, after the December 19, 1972 Decision of the Court
of Industrial Relations was promulgated against RANSOM.
http://elibrary.supremecourt.gov.ph/DOCUMENTS/SUPREME_C
OURT/Decisions/2007/jan2007.zip%3E9,df
%7C2007/jan2007/146667.htm - (Emphasis supplied)
Clearly, in A.C. Ransom, RANSOM, through its President,
organized ROSARIO to evade payment of backwages to the 22
strikers. This situation, or anything similar showing malice or bad
faith on the part of Patricio, does not obtain in the present case.
In Santos v. NLRC,
http://elibrary.supremecourt.gov.ph/DOCUMENTS/SUPREME_C
OURT/Decisions/2007/jan2007.zip%3E9,df
%7C2007/jan2007/146667.htm - the Court held, thus:
It is true, there were various cases when corporate officers were
themselves held by the Court to be personally accountable for the
payment of wages and money claims to its employees. In A.C.
Ransom Labor Union-CCLU vs. NLRC, for instance, the Court
ruled that under the Minimum Wage Law, the responsible officer
of an employer corporation could be held personally liable for
nonpayment of backwages for "(i)f the policy of the law were
otherwise, the corporation employer (would) have devious ways
for evading payment of backwages." In the absence of a clear
identification of the officer directly responsible for failure to pay
the backwages, the Court considered the President of the
corporation as such officer. The case was cited in Chua vs.
NLRC in holding personally liable the vice-president of the
company, being the highest and most ranking official of the
corporation next to the President who was dismissed for the
latter's claim for unpaid wages.
A review of the above exceptional cases would readily disclose
the attendance of facts and circumstances that could rightly
sanction personal liability on the part of the company officer.
In A.C. Ransom, the corporate entity was a family corporation
and execution against it could not be implemented because
of the disposition posthaste of its leviable assets evidently in
order to evade its just and due obligations. The doctrine of
"piercing the veil of corporate fiction" was thus clearly
appropriate. Chua likewise involved another family corporation,

The basic rule is still that which can be deduced from the Court's
pronouncement in Sunio vs. National Labor Relations
Commission, thus:
We come now to the personal liability of petitioner, Sunio, who
was made jointly and severally responsible with petitioner
company and CIPI for the payment of the backwages of private
respondents. This is reversible error. The Assistant Regional
Director's Decision failed to disclose the reason why he was
made personally liable. Respondents, however, alleged as
grounds thereof, his being the owner of one-half () interest of
said corporation, and his alleged arbitrary dismissal of private
respondents.
Petitioner Sunio was impleaded in the Complaint in his capacity
as General Manager of petitioner corporation. There appears to
be no evidence on record that he acted maliciously or in bad faith
in terminating the services of private respondents. His act,
therefore, was within the scope of his authority and was a
corporate act.
It is basic that a corporation is invested by law with a personality
separate and distinct from those of the persons composing it as
well as from that of any other legal entity to which it may be
related. Mere ownership by a single stockholder or by another
corporation of all or nearly all of the capital stock of a corporation
is not of itself sufficient ground for disregarding the separate
corporate personality. Petitioner Sunio, therefore, should not have
been made personally answerable for the payment of private
respondents' back
salaries.http://elibrary.supremecourt.gov.ph/DOCUMENTS/SUPR
EME_COURT/Decisions/2007/jan2007.zip%3E9,df
%7C2007/jan2007/146667.htm Thus, the rule is still that the doctrine of piercing the corporate veil
applies only when the corporate fiction is used to defeat public
convenience, justify wrong, protect fraud, or defend crime. In the
absence of malice, bad faith, or a specific provision of law making
a corporate officer liable, such corporate officer cannot be made
personally liable for corporate liabilities. Neither Article 212[e] nor
Article 273 (now 272) of the Labor Code expressly makes any
corporate officer personally liable for the debts of the corporation.
As this Court ruled in H.L. Carlos Construction, Inc. v. Marina
Properties
Corporation:http://elibrary.supremecourt.gov.ph/DOCUMENTS/S
UPREME_COURT/Decisions/2007/jan2007.zip%3E9,df
%7C2007/jan2007/146667.htm We concur with the CA that these two respondents are not liable.
Section 31 of the Corporation Code (Batas Pambansa Blg. 68)
provides:
"Section 31. Liability of directors, trustees or officers. - Directors
or trustees who willfully and knowingly vote for or assent to
patently unlawful acts of the corporation or who are guilty of gross
negligence or bad faith ... shall be liable jointly and severally for
all damages resulting therefrom suffered by the corporation, its
stockholders and other persons."
The personal liability of corporate officers validly attaches only
when (a) they assent to a patently unlawful act of the corporation;
or (b) they are guilty of bad faith or gross negligence in directing
its affairs; or (c) they incur conflict of interest, resulting in
damages to the corporation, its stockholders or other
persons.31 (Boldfacing in the original; boldfacing with underscoring
supplied)
Thus, it was error for Arbiter Ortiguerra, the NLRC, and the Court
of Appeals to hold Carag personally liable for the separation pay
owed by MAC to complainants based alone on Article 212(e) of
the Labor Code. Article 212(e) does not state that corporate
officers are personally liable for the unpaid salaries or separation
pay of employees of the corporation. The liability of corporate
officers for corporate debts remains governed by Section 31 of
the Corporation Code.
WHEREFORE, we GRANT the petition. We SET ASIDE the
Decision dated 29 February 2000 and the Resolution dated 27
March 2001 of the Court of Appeals in CA-G.R. SP Nos. 5440406 insofar as petitioner Antonio Carag is concerned.

SO ORDERED.
ANTONIO T. CARPIO
Associate Justice