Republic of the Philippines

SUPREME COURT
Manila
FIRST DIVISION
G.R. No. 72005 May 29, 1987
PHILIPPINE
BRITISH
ASSURANCE
CO.,
INC., petitioner,
vs.
HONORABLE INTERMEDIATE APPELLATE COURT; SYCWIN COATING & WIRES, INC., and
DOMINADOR CACPAL, CHIEF DEPUTY SHERRIF OF MANILA, respondents.

GANCAYCO, J.:
This is a Petition for Review on certiorari of the Resolution dated September 12, 1985 of the Intermediate
Appellate Court in AC-G.R. No. CR-05409 1 granting private respondent's motion for execution pending
appeal and ordering the issuance of the corresponding writ of execution on the counterbond to lift
attachment filed by petitioner. The focal issue that emerges is whether an order of execution pending
appeal of a judgment maybe enforced on the said bond. In the Resolution of September 25, 1985 2 this
Court as prayed for, without necessarily giving due course to the petition, issued a temporary restraining
order enjoining the respondents from enforcing the order complaint of.
The records disclose that private respondent Sycwin Coating & Wires, Inc., filed a complaint for collection
of a sum of money against Varian Industrial Corporation before the Regional Trial Court of Quezon City.
During the pendency of the suit, private respondent succeeded in attaching some of the properties of
Varian Industrial Corporation upon the posting of a supersedeas bond. 3 The latter in turn posted a
counterbond in the sum of P1,400, 000.00 4 thru petitioner Philippine British Assurance Co., Inc., so the
attached properties were released.
On December 28, 1984, the trial court rendered a Decision, the dispositive portion of which reads:
WHEREFORE, plaintiff's Motion for Summary Judgment is hereby GRANTED, and
judgment is rendered in favor of the plaintiff and against the defendant Varian Industrial
Corporation, and the latter is hereby ordered:
1. To pay plaintiff the amount of P1,401,468.00, the principal obligation with 12% interest
per annum from the date of default until fully paid;
2. To pay plaintiff 5% of the principal obligation as liquidated damages;
3. To pay plaintiff P30,000.00 as exemplary damages;
4. To pay plaintiff 15% of P1,401,468.00, the principal obligation, as and for attorney's
fees; and
5. To pay the costs of suit.
Accordingly, the counterclaim of the defendant is hereby DISMISSED for lack of merit.
SO ORDERED. 5
Varian Industrial Corporation appealed the decision to the respondent Court. Sycwin then filed a petition
for execution pending appeal against the properties of Varian in respondent Court. Varian was required to
file its comment but none was filed. In the Resolution of July 5, 1985, respondent Court ordered the
execution pending appeal as prayed for. 6 However, the writ of execution was returned unsatisfied as
Varian failed to deliver the previously attached personal properties upon demand. In a Petition dated
August 13, 1985 filed with respondent Court Sycwin prayed that the surety (herein petitioner) be ordered

to pay the value of its bond. 7 In compliance with the Resolution of August 23, 1985 of the respondent
Court herein petitioner filed its comment. 8 In the Resolution of September 12, 1985, 9 the respondent
Court granted the petition. Hence this action.
It is the submission of private respondent Sycwin that without a previous motion for reconsideration of the
questioned resolution, certiorari would not lie. While as a general rule a motion for reconsideration has
been considered a condition sine qua non for the granting of a writ of certiorari, this rule does not apply
when special circumstances warrant immediate or more direct action. 10 It has been held further that a
motion for reconsideration may be dispensed with in cases like this where execution had been ordered
and the need for relief was extremely urgent. 11
The counterbond provides:
WHEREAS, in the above-entitled case pending in the Regional Trial Court, National
Capital Judicial Region, Branch LXXXV, Quezon City, an order of Attachment was issued
against abovenamed Defendant;
WHEREAS, the Defendant, for the purpose of lifting and/or dissolving the order of
attachment issued against them in the above-en-titled case, have offered to file a
counterbond in the sum of PESOS ONE MILLION FOUR HUNDRED THOUSAND ONLY
(P1,400,000.00), Philippine Currency, as provided for in Section 5, Rule 57 of the
Revised Rules of Court.
NOW, THEREFORE, we, VARIAN INDUSTRIAL CORPORATION, as Principal and the
PHILIPPINE BRITISH ASSURANCE COMPANY, INC., a corporation duly organized and
existing under and by virtue of the laws of the Philippines, as Surety, in consideration of
the above and of the lifting or dissolution of the order of attachment, hereby jointly and
severally, bind ourselves in favor of the above Plaintiff in the sum of PESOS ONE
MILLION FOUR HUNDRED THOUSAND ONLY (P1,400,000.00), Philippine Currency,
under the condition that in case the Plaintiff recovers judgment in the action, and
Defendant will, on demand, re-deliver the attached property so released to the Officer of
the Court and the same shall be applied to the payment of the judgment, or in default
thereof, the defendant and Surety will, on demand, pay to the Plaintiff the full value of the
property released.
EXECUTED at Manila, Philippines, this 28th day of June, 1984. 12
Sections 5, 12, and 17 of Rule 57 of the Revised Rules of Court also provide:
SEC. 5. Manner of attaching property. The officer executing the order shall without
delay attach, to await judgment and execution in the action, all the properties of the party
against whom the order is issued in the province, not exempt from execution, or so much
thereof as may be sufficient to satisfy the applicant's demand, unless the former makes a
deposit with the clerk or judge of the court from which the order issued, or gives a
counter-bond executed to the applicant, in an amount sufficient to satisfy such demand
besides costs, or in an amount equal to the value of the property which is about to be
attached, to secure payment to the applicant of any judgement ment which he may
recover in the action. The officer shall also forthwith serve a copy of the applicant's
affidavit and bond, and of the order of attachment, on the adverse party, if he be found
within the province.
SEC. 12. Discharge of attachment upon giving counterbond. At any time after an order
of attachment has been granted, the party whose property has been attached, or the
person appearing on his behalf, may, upon reasonable notice to the applicant, apply to
the judge who granted the order, or to the judge of the court in which the action is
pending, for an order discharging the attachment wholly or in part on the security given.
The judge shall, after hearing, order the discharge of the attachment if a cash deposit is
made, or a counter-bond executed to the attaching creditor is filed, on behalf of the
adverse party, with the clerk or judge of the court where the application is made, in an
amount equal to the value of the property attached as determined by the judge, to secure

the payment of any judgment that the attaching creditor may recover in the action. Upon
the filing of such counter-bond, copy thereof shall forthwith be served on the attaching
creditor or his lawyer. Upon the discharge of an attachment in accordance with the
provisions of this section the property attached, or the proceeds of any sale thereof, shall
be delivered to the party making the deposit or giving the counterbond aforesaid standing
in place of the property so released. Should such counterbond for any reason be found to
be, or become, insufficient, and the party furnishing the same fail to file an additional
counterbond, the attaching creditor may apply for a new order of attachment.
SEC. 17. When execution returned unsatisfied, recovery had upon bond. If the
execution be returned unsatisfied in whole or in part, the surety or sureties on any
counter-bond given pursuant to the provisions of this rule to secure the payment of the
judgment shall become charged on such counter- bond, and bound to pay to the
judgement creditor upon demand, the amount due under the judgment, which amount
may be recovered from such surety or sureties after notice and summary hearing in the
same action. (Emphasis supplied.)
Under Sections 5 and 12, Rule 57 above reproduced it is provided that the counterbond is intended to
secure the payment of "any judgment" that the attaching creditor may recover in the action. Under Section
17 of same rule it provides that when "the execution be returned unsatisfied in whole or in part" it is only
then that "payment of the judgment shall become charged on such counterbond."
The counterbond was issued in accordance with the provisions of Section 5, Rule 57 of the Rules of Court
as provided in the second paragraph aforecited which is deemed reproduced as part of the counterbond.
In the third paragraph it is also stipulated that the counterbond is to be "applied for the payment of the
judgment." Neither the rules nor the provisions of the counterbond limited its application to a final and
executory judgment. Indeed, it is specified that it applies to the payment of any judgment that maybe
recovered by plaintiff. Thus, the only logical conclusion is that an execution of any judgment including one
pending appeal if returned unsatisfied maybe charged against such a counterbond.
It is well recognized rule that where the law does not distinguish, courts should not distinguish. Ubi lex
non distinguish nec nos distinguere debemos. 13 "The rule, founded on logic, is a corollary of the
principle that general words and phrases in a statute should ordinarily be accorded their natural and
general significance. 14 The rule requires that a general term or phrase should not be reduced into parts
and one part distinguished from the other so as to justify its exclusion from the operation of the law. 15 In
other words, there should be no distinction in the application of a statute where none is indicated.16 For
courts are not authorized to distinguish where the law makes no distinction. They should instead
administer the law not as they think it ought to be but as they find it and without regard to
consequences. 17
A corollary of the principle is the rule that where the law does not make any exception, courts may not
except something therefrom, unless there is compelling reason apparent in the law to justify it.18 Thus
where a statute grants a person against whom possession of "any land" is unlawfully withheld the right to
bring an action for unlawful detainer, this Court held that the phrase "any land" includes all kinds of land,
whether agricultural, residential, or mineral.19 Since the law in this case does not make any distinction
nor intended to make any exception, when it speaks of "any judgment" which maybe charged against the
counterbond, it should be interpreted to refer not only to a final and executory judgment in the case but
also a judgment pending appeal.
All that is required is that the conditions provided for by law are complied with, as outlined in the case
of Towers Assurance Corporation v. Ororama Supermart, 20
Under Section 17, in order that the judgment creditor might recover from the surety on
the counterbond, it is necessary (1) that the execution be first issued against the principal
debtor and that such execution was returned unsatisfied in whole or in part; (2) that the
creditor make a demand upon the surety for the satisfaction of the judgment, and (3) that
the surety be given notice and a summary hearing on the same action as to his liability
for the judgment under his counterbond.
The rule therefore, is that the counterbond to lift attachment that is issued in accordance with the
provisions of Section 5, Rule 57, of the Rules of Court, shall be charged with the payment of any

judgment that is returned unsatisfied. It covers not only a final and executory judgement but also the
execution of a judgment pending appeal.
WHEREFORE, the petition is hereby DISMISSED for lack of merit and the restraining order issued on
September 25, 1985 is hereby dissolved with costs against petitioner.
SO ORDERED.

Republic of the Philippines

SUPREME COURT
Manila
FIRST DIVISION
G.R. No. 74917 January 20, 1988
BANCO DE ORO SAVINGS AND MORTGAGE BANK, petitioner,
vs.
EQUITABLE BANKING CORPORATION, PHILIPPINE CLEARING HOUSE CORPORATION, AND
REGIONAL TRIAL COURT OF QUEZON CITY, BRANCH XCII (92), respondents.

GANCAYCO, J.:
This is a petition for review on certiorari of a decision of the Regional Trial Court of Quezon City
promulgated on March 24, 1986 in Civil Case No. Q-46517 entitled Banco de Oro Savings and Mortgage
Bank versus Equitable Banking Corporation and the Philippine Clearing House Corporation after a review
of the Decision of the Board of Directors of the Philippine Clearing House Corporation (PCHC) in the case
of Equitable Banking Corporation (EBC) vs. Banco de Oro Savings and Mortgage (BCO), ARBICOM
Case No. 84033.
The undisputed facts are as follows:
It appears that some time in March, April, May and August 1983, plaintiff through its Visa
Card Department, drew six crossed Manager's check (Exhibits "A" to "F", and herein
referred to as Checks) having an aggregate amount of Forty Five Thousand Nine
Hundred and Eighty Two & 23/100 (P45,982.23) Pesos and payable to certain member
establishments of Visa Card. Subsequently, the Checks were deposited with the
defendant to the credit of its depositor, a certain Aida Trencio.
Following normal procedures, and after stamping at the back of the Checks the usual
endorsements. All prior and/or lack of endorsement guaranteed the defendant sent the
checks for clearing through the Philippine Clearing House Corporation (PCHC).
Accordingly, plaintiff paid the Checks; its clearing account was debited for the value of the
Checks and defendant's clearing account was credited for the same amount,
Thereafter, plaintiff discovered that the endorsements appearing at the back of the
Checks and purporting to be that of the payees were forged and/or unauthorized or
otherwise belong to persons other than the payees.

Pursuant to the PCHC Clearing Rules and Regulations, plaintiff presented the Checks
directly to the defendant for the purpose of claiming reimbursement from the latter.
However, defendant refused to accept such direct presentation and to reimburse the
plaintiff for the value of the Checks; hence, this case.
In its Complaint, plaintiff prays for judgment to require the defendant to pay the plaintiff
the sum of P45,982.23 with interest at the rate of 12% per annum from the date of the
complaint plus attorney's fees in the amount of P10,000.00 as well as the cost of the suit.
In accordance with Section 38 of the Clearing House Rules and Regulations, the dispute
was presented for Arbitration; and Atty. Ceasar Querubin was designated as the
Arbitrator.
After an exhaustive investigation and hearing the Arbiter rendered a decision in favor of
the plaintiff and against the defendant ordering the PCHC to debit the clearing account of
the defendant, and to credit the clearing account of the plaintiff of the amount of
P45,982.23 with interest at the rate of 12% per annum from date of the complaint and
Attorney's fee in the amount of P5,000.00. No pronouncement as to cost was made. 1
In a motion for reconsideration filed by the petitioner, the Board of Directors of the PCHC affirmed the
decision of the said Arbiter in this wise:
In view of all the foregoing, the decision of the Arbiter is confirmed; and the Philippine
Clearing House Corporation is hereby ordered to debit the clearing account of the
defendant and credit the clearing account of plaintiff the amount of Forty Five Thousand
Nine Hundred Eighty Two & 23/100 (P45,982.23) Pesos with interest at the rate of 12%
per annum from date of the complaint, and the Attorney's fee in the amount of Five
Thousand (P5,000.00) Pesos.
Thus, a petition for review was filed with the Regional Trial Court of Quezon City, Branch XCII, wherein in
due course a decision was rendered affirming in toto the decision of the PCHC.
Hence this petition.
The petition is focused on the following issues:
1. Did the PCHC have any jurisdiction to give due course to and adjudicate Arbicom Case No. 84033?
2. Were the subject checks non-negotiable and if not, does it fall under the ambit of the power of the
PCHC?
3. Is the Negotiable Instrument Law, Act No. 2031 applicable in deciding controversies of this nature by
the PCHC?
4. What law should govern in resolving controversies of this nature?
5. Was the petitioner bank negligent and thus responsible for any undue payment?
Petitioner maintains that the PCHC is not clothed with jurisdiction because the Clearing House Rules and
Regulations of PCHC cover and apply only to checks that are genuinely negotiable. Emphasis is laid on
the primary purpose of the PCHC in the Articles of Incorporation, which states:
To provide, maintain and render an effective, convenient, efficient, economical and
relevant exchange and facilitate service limited to check processing and sorting by way of
assisting member banks, entities in clearing checks and other clearing items as defined
in existing and in future Central Bank of the Philippines circulars, memoranda, circular
letters, rules and regulations and policies in pursuance to the provisions of Section 107 of
R.A. 265. ...
and Section 107 of R.A. 265 which provides:

xxx xxx xxx

The deposit reserves maintained by the banks in the Central Bank, in accordance with
the provisions of Section 1000 shall serve as a basis for the clearing of checks, and the
settlement of interbank balances ...
Petitioner argues that by law and common sense, the term check should be interpreted as one that fits
the articles of incorporation of the PCHC, the Central Bank and the Clearing House Rules stating that it is
a negotiable instrument citing the definition of a "check" as basically a "bill of exchange" under Section
185 of the NIL and that it should be payable to "order" or to "bearer" under Section 126 of game law.
Petitioner alleges that with the cancellation of the printed words "or bearer from the face of the check, it
becomes non-negotiable so the PCHC has no jurisdiction over the case.
The Regional Trial Court took exception to this stand and conclusion put forth by the herein petitioner as it
held:
Petitioner's theory cannot be maintained. As will be noted, the PCHC makes no
distinction as to the character or nature of the checks subject of its jurisdiction. The
pertinent provisions quoted in petitioners memorandum simply refer to check(s). Where
the law does not distinguish, we shall not distinguish.
In the case of Reyes vs. Chuanico (CA-G.R. No. 20813 R, Feb. 5, 1962) the Appellate
Court categorically stated that there are four kinds of checks in this jurisdiction; the
regular check; the cashier's check; the traveller's check; and the crossed check. The
Court, further elucidated, that while the Negotiable Instruments Law does not contain any
provision on crossed checks, it is coon practice in commercial and banking operations to
issue checks of this character, obviously in accordance with Article 541 of the Code of
Commerce. Attention is likewise called to Section 185 of the Negotiable Instruments Law:
Sec. 185. Check defined. A check is a bill of exchange drawn on a
bank payable on demand. Except as herein otherwise provided, the
provisions of this act applicable to a bill of exchange payable on demand
apply to a check
and the provisions of Section 61 (supra) that the drawer may insert in the instrument an
express stipulation negating or limiting his own liability to the holder. Consequently, it
appears that the use of the term "check" in the Articles of Incorporation of PCHC is to be
perceived as not limited to negotiable checks only, but to checks as is generally known in
use in commercial or business transactions.
Anent Petitioner's liability on said instruments, this court is in full accord with the ruling of
the PCHC Board of Directors that:
In presenting the Checks for clearing and for payment, the defendant
made an express guarantee on the validity of "all prior endorsements."
Thus, stamped at the back of the checks are the defendant's clear
warranty; ALL PRIOR ENDORSEMENTS AND/OR LACK OF
ENDORSEMENTS GUARANTEED. With. out such warranty, plaintiff
would not have paid on the checks.
No amount of legal jargon can reverse the clear meaning of defendant's
warranty. As the warranty has proven to be false and inaccurate, the
defendant is liable for any damage arising out of the falsity of its
representation.
The principle of estoppel, effectively prevents the defendant from
denying liability for any damage sustained by the plaintiff which, relying
upon an action or declaration of the defendant, paid on the Checks. The
same principle of estoppel effectively prevents the defendant from

denying the existence of the Checks. (Pp. 1011 Decision; pp. 4344,
Rollo)
We agree.
As provided in the aforecited articles of incorporation of PCHC its operation extend to "clearing checks
and other clearing items." No doubt transactions on non-negotiable checks are within the ambit of its
jurisdiction.
In a previous case, this Court had occasion to rule: "Ubi lex non distinguish nec nos distinguere
debemos." 2 It was enunciated in Loc Cham v. Ocampo, 77 Phil. 636 (1946):
The rule, founded on logic is a corollary of the principle that general words and phrases in
a statute should ordinarily be accorded their natural and general significance. In other
words, there should be no distinction in the application of a statute where none is
indicated.
There should be no distinction in the application of a statute where none is indicated for courts are not
authorized to distinguish where the law makes no distinction. They should instead administer the law not
as they think it ought to be but as they find it and without regard to consequences. 3
The term check as used in the said Articles of Incorporation of PCHC can only connote checks in general
use in commercial and business activities. It cannot be conceived to be limited to negotiable checks only.
Checks are used between banks and bankers and their customers, and are designed to facilitate banking
operations. It is of the essence to be payable on demand, because the contract between the banker and
the customer is that the money is needed on demand. 4
The participation of the two banks, petitioner and private respondent, in the clearing operations of PCHC
is a manifestation of their submission to its jurisdiction. Sec. 3 and 36.6 of the PCHC-CHRR clearing rules
and regulations provide:
SEC. 3. AGREEMENT TO THESE RULES. It is the general agreement and
understanding that any participant in the Philippine Clearing House Corporation, MICR
clearing operations by the mere fact of their participation, thereby manifests its
agreement to these Rules and Regulations and its subsequent amendments."
Sec 36.6. (ARBITRATION) The fact that a bank participates in the clearing operations
of the PCHC shall be deemed its written and subscribed consent to the binding effect of
this arbitration agreement as if it had done so in accordance with section 4 of the
Republic Act No. 876, otherwise known as the Arbitration Law.
Further Section 2 of the Arbitration Law mandates:
Two or more persons or parties may submit to the arbitration of one or more arbitrators
any controversy existing between them at the time of the submission and which may be
the subject of an action, or the parties of any contract may in such contract agree to settle
by arbitration a controversy thereafter arising between them. Such submission or contract
shall be valid and irrevocable, save upon grounds as exist at law for the revocation of any
contract.
Such submission or contract may include question arising out of valuations, appraisals or
other controversies which may be collateral, incidental, precedent or subsequent to any
issue between the parties. ...
Sec. 21 of the same rules, says:
Items which have been the subject of material alteration or items bearing forged
endorsement when such endorsement is necessary for negotiation shall be returned by
direct presentation or demand to the Presenting Bank and not through the regular

clearing house facilities within the period prescribed by law for the filing of a legal action
by the returning bank/branch, institution or entity sending the same. (Emphasis supplied)
Viewing these provisions the conclusion is clear that the PCHC Rules and Regulations should not be
interpreted to be applicable only to checks which are negotiable instruments but also to non-negotiable
instruments and that the PCHC has jurisdiction over this case even as the checks subject of this litigation
are admittedly non-negotiable.
Moreover, petitioner is estopped from raising the defense of non-negotiability of the checks in question. It
stamped its guarantee on the back of the checks and subsequently presented these checks for clearing
and it was on the basis of these endorsements by the petitioner that the proceeds were credited in its
clearing account.
The petitioner by its own acts and representation can not now deny liability because it assumed the
liabilities of an endorser by stamping its guarantee at the back of the checks.
The petitioner having stamped its guarantee of "all prior endorsements and/or lack of endorsements"
(Exh. A-2 to F-2) is now estopped from claiming that the checks under consideration are not negotiable
instruments. The checks were accepted for deposit by the petitioner stamping thereon its guarantee, in
order that it can clear the said checks with the respondent bank. By such deliberate and positive attitude
of the petitioner it has for all legal intents and purposes treated the said cheeks as negotiable instruments
and accordingly assumed the warranty of the endorser when it stamped its guarantee of prior
endorsements at the back of the checks. It led the said respondent to believe that it was acting as
endorser of the checks and on the strength of this guarantee said respondent cleared the checks in
question and credited the account of the petitioner. Petitioner is now barred from taking an opposite
posture by claiming that the disputed checks are not negotiable instrument.
This Court enunciated in Philippine National Bank vs. Court of Appeals 5 a point relevant to the issue
when it stated the doctrine of estoppel is based upon the grounds of public policy, fair dealing, good faith
and justice and its purpose is to forbid one to speak against his own act, representations or commitments
to the injury of one to whom they were directed and who reasonably relied thereon.
A commercial bank cannot escape the liability of an endorser of a check and which may turn out to be a
forged endorsement. Whenever any bank treats the signature at the back of the checks as endorsements
and thus logically guarantees the same as such there can be no doubt said bank has considered the
checks as negotiable.
Apropos the matter of forgery in endorsements, this Court has succinctly emphasized that the collecting
bank or last endorser generally suffers the loss because it has the duty to ascertain the genuineness of all
prior endorsements considering that the act of presenting the check for payment to the drawee is an
assertion that the party making the presentment has done its duty to ascertain the genuineness of the
endorsements. This is laid down in the case of PNB vs. National City Bank. 6 In another case, this court
held that if the drawee-bank discovers that the signature of the payee was forged after it has paid the
amount of the check to the holder thereof, it can recover the amount paid from the collecting bank. 7
A truism stated by this Court is that "The doctrine of estoppel precludes a party from repudiating an
obligation voluntarily assumed after having accepted benefits therefrom. To countenance such repudiation
would be contrary to equity and put premium on fraud or misrepresentation". 8
We made clear in Our decision in Philippine National Bank vs. The National City Bank of NY & Motor
Service Co. that:
Where a check is accepted or certified by the bank on which it is drawn, the bank is
estopped to deny the genuineness of the drawers signature and his capacity to issue the
instrument.
If a drawee bank pays a forged check which was previously accepted or certified by the
said bank, it can not recover from a holder who did not participate in the forgery and did
not have actual notice thereof.

The payment of a check does not include or imply its acceptance in the sense that this
word is used in Section 62 of the Negotiable Instruments Act. 9
The point that comes uppermost is whether the drawee bank was negligent in failing to discover the
alteration or the forgery. Very akin to the case at bar is one which involves a suit filed by the drawer of
checks against the collecting bank and this came about in Farmers State Bank 10 where it was held:
A cause of action against the (collecting bank) in favor of the appellee (the drawer)
accrued as a result of the bank breaching its implied warranty of the genuineness of the
indorsements of the name of the payee by bringing about the presentation of the checks
(to the drawee bank) and collecting the amounts thereof, the right to enforce that cause
of action was not destroyed by the circumstance that another cause of action for the
recovery of the amounts paid on the checks would have accrued in favor of the appellee
against another or to others than the bank if when the checks were paid they have been
indorsed by the payee. (United States vs. National Exchange Bank, 214 US, 302, 29 S
CT665, 53 L. Ed 1006, 16 Am. Cas. 11 84; Onondaga County Savings Bank vs. United
States (E.C.A.) 64 F 703)
Section 66 of the Negotiable Instruments ordains that:
Every indorser who indorsee without qualification, warrants to all subsequent holders in
due course' (a) that the instrument is genuine and in all respects what it purports to be;
(b) that he has good title to it; (c) that all prior parties have capacity to contract; and (d)
that the instrument is at the time of his indorsement valid and subsisting. 11
It has been enunciated in an American case particularly in American Exchange National Bank vs. Yorkville
Bank 12that: "the drawer owes no duty of diligence to the collecting bank (one who had accepted an
altered check and had paid over the proceeds to the depositor) except of seasonably discovering the
alteration by a comparison of its returned checks and check stubs or other equivalent record, and to
inform the drawee thereof." In this case it was further held that:
The real and underlying reasons why negligence of the drawer constitutes no defense to
the collecting bank are that there is no privity between the drawer and the collecting bank
(Corn Exchange Bank vs. Nassau Bank, 204 N.Y.S. 80) and the drawer owe to that bank
no duty of vigilance (New York Produce Exchange Bank vs. Twelfth Ward Bank, 204
N.Y.S. 54) and no act of the collecting bank is induced by any act or representation or
admission of the drawer (Seaboard National Bank vs. Bank of America (supra) and it
follows that negligence on the part of the drawer cannot create any liability from it to the
collecting bank, and the drawer thus is neither a necessary nor a proper party to an
action by the drawee bank against such bank. It is quite true that depositors in banks are
under the obligation of examining their passbooks and returned vouchers as a protection
against the payment by the depository bank against forged checks, and negligence in the
performance of that obligation may relieve that bank of liability for the repayment of
amounts paid out on forged checks, which but for such negligence it would be bound to
repay. A leading case on that subject is Morgan vs. United States Mortgage and Trust
Col. 208 N.Y. 218, 101 N.E. 871 Amn. Cas. 1914D, 462, L.R.A. 1915D, 74.
Thus We hold that while the drawer generally owes no duty of diligence to the collecting bank, the law
imposes a duty of diligence on the collecting bank to scrutinize checks deposited with it for the purpose of
determining their genuineness and regularity. The collecting bank being primarily engaged in banking
holds itself out to the public as the expert and the law holds it to a high standard of conduct.
And although the subject checks are non-negotiable the responsibility of petitioner as indorser thereof
remains.
To countenance a repudiation by the petitioner of its obligation would be contrary to equity and would deal
a negative blow to the whole banking system of this country.
The court reproduces with approval the following disquisition of the PCHC in its decision

II. Payments To Persons Other

Than The Payees Are Not Valid
And Give Rise To An Obligation
To Return Amounts Received
Nothing is more clear than that neither the defendant's depositor nor the defendant is
entitled to receive payment payable for the Checks. As the checks are not payable to
defendant's depositor, payments to persons other than payees named therein, their
successor-in-interest or any person authorized to receive payment are not valid. Article
1240, New Civil Code of the Philippines unequivocably provides that:
"Art. 1240. Payment shall be made to the person in whose favor the
obligation has been constituted, or his successo-in-interest, or any
person authorized to receive it. "
Considering that neither the defendant's depositor nor the defendant is entitled to receive
payments for the Checks, payments to any of them give rise to an obligation to return the
amounts received. Section 2154 of the New Civil Code mandates that:
Article 2154. If something is received when there is no right to demand it,
and it was unduly delivered through mistake, the obligation to return it
arises.
It is contended that plaintiff should be held responsible for issuing the Checks
notwithstanding that the underlying transactions were fictitious This contention has no
basis in our jurisprudence.
The nullity of the underlying transactions does not diminish, but in fact strengthens,
plaintiffs right to recover from the defendant. Such nullity clearly emphasizes the
obligation of the payees to return the proceeds of the Checks. If a failure of consideration
is sufficient to warrant a finding that a payee is not entitled to payment or must return
payment already made, with more reason the defendant, who is neither the payee nor the
person authorized by the payee, should be compelled to surrender the proceeds of the
Checks received by it. Defendant does not have any title to the Checks; neither can it
claim any derivative title to them.
III. Having Violated Its Warranty
On Validity Of All Endorsements,
Collecting Bank Cannot Deny
liability To Those Who Relied
On Its Warranty
In presenting the Checks for clearing and for payment, the defendant made an express
guarantee on the validity of "all prior endorsements." Thus, stamped at the bank of the
checks are the defendant's clear warranty: ALL PRIOR ENDORSEMENTS AND/OR
LACK OF ENDORSEMENTS GUARANTEED. Without such warranty, plaintiff would not
have paid on the checks.
No amount of legal jargon can reverse the clear meaning of defendant's warranty. As the
warranty has proven to be false and inaccurate, the defendant is liable for any damage
arising out of the falsity of its representation.

The principle of estoppel effectively prevents the defendant from denying liability for any
damages sustained by the plaintiff which, relying upon an action or declaration of the
defendant, paid on the Checks. The same principle of estoppel effectively prevents the
defendant from denying the existence of the Checks.
Whether the Checks have been issued for valuable considerations or not is of no serious
moment to this case. These Checks have been made the subject of contracts of
endorsement wherein the defendant made expressed warranties to induce payment by
the drawer of the Checks; and the defendant cannot now refuse liability for breach of
warranty as a consequence of such forged endorsements. The defendant has falsely
warranted in favor of plaintiff the validity of all endorsements and the genuineness of the
cheeks in all respects what they purport to be.
The damage that will result if judgment is not rendered for the plaintiff is irreparable. The
collecting bank has privity with the depositor who is the principal culprit in this case. The
defendant knows the depositor; her address and her history, Depositor is defendant's
client. It has taken a risk on its depositor when it allowed her to collect on the crossedchecks.
Having accepted the crossed checks from persons other than the payees, the defendant
is guilty of negligence; the risk of wrongful payment has to be assumed by the defendant.
On the matter of the award of the interest and attorney's fees, the Board of Directors finds
no reason to reverse the decision of the Arbiter. The defendant's failure to reimburse the
plaintiff has constrained the plaintiff to regular the services of counsel in order to protect
its interest notwithstanding that plaintiffs claim is plainly valid just and demandable. In
addition, defendant's clear obligation is to reimburse plaintiff upon direct presentation of
the checks; and it is undenied that up to this time the defendant has failed to make such
reimbursement.
WHEREFORE, the petition is DISMISSED for lack of merit without pronouncement as to costs. The
decision of the respondent court of 24 March 1986 and its order of 3 June 1986 are hereby declared to
be immediately executory.
SO ORDERED.

Republic of the Philippines

SUPREME COURT
Manila
SECOND DIVISION

G.R. No. L-53766 October 30, 1981

MARIA C. RAMOS, petitioner,
vs.
COURT OF APPEALS, Judge JESUS R. DE VEGA of the Court of First Instance of Bulacan Malolos
Branch II and the MUNICIPALITY OF HAGONOY Bulacan, respondents.

AQUINO, J.:
This case is about the legality of a municipality's hiring of private counsel to file a suit in its behalf. The
municipality of Hagonoy, Bulacan, through the law firm of Cruz Durian & Academia (now Cruz Durian
Agabin Atienza & Alday), sued in the Court of First Instance of Bulacan Marciano Domingo, Leonila
Guzman, Maria C. Ramos and Consorcio Cruz for the recovery of its 74-hectare fishpond (Civil Case No.
5095-M).
In paragraph 19 of the complaint it was alleged that the municipality had obligated itself to pay Cruz
Durian & Academia as attorney's fees not less than twenty percent of the amount to be recovered by the
plaintiff (p. 44, Rollo).
The provincial fiscal of Bulacan and the municipal attorney of Hagonoy entered their appearance as
counsel for the municipality with the manifestation that its private counsel would be under the control and
supervision of those officials. Notwithstanding that appearance, Domingo and Maria C. Ramos (lessee
and sublessee of the fishpond) moved to disqualify the Cruz law firm from serving as counsel of the
municipality.
The trial court denied the motion. It found that Angel Cruz, the head of the law firm, volunteered to act as
counsel for the municipality because he desired to serve his native town.
Ramos and Domingo assailed that order by means of certiorari in the Court of Appeals which in a
decision dated February 15, 1979 sustained the trial court (Ramos vs. Judge Jesus R. de Vega, et al.,
CA-G.R. No. SP-7728-R). Ramos brought the case to this Court.
We hold that the trial court and the Court of Appeals erred in allowing the Cruz law firm to act as counsel
for the municipality in collaboration with the fiscal and the municipal attorney.
That ruling constitutes a grave abuse of discretion because it is manifestly a transgression of section
1683 of the Revised Administrative Code which provides that "the provincial fiscal shall represent the
province and any municipality or municipal district thereof in any court, except in cases whereof original
jurisdiction is vested in the Supreme Court or in cases where the municipality or municipal district in
question is a party adverse to the provincial government or to some other municipality or municipal district
in the same province. When the interests of a provincial government and of any political division thereof
are opposed, the provincial fiscal shall act on behalf of the province. When the provincial fiscal is
disqualified to serve any municipality or other political subdivision of a province, a special attorney may be
employed by its council.
The legislative intent to prohibit a municipality from employing private counsel in its lawsuits is further
implemented by section 3 of the Local Autonomy Act, Republic Act No. 2264, which provides that the
municipal attorney, as the head of the legal division or office of a municipality, "shall act as legal counsel
of the municipality and perform such duties and exercise such powers as may be assigned to him by the
council" The municipal attorney is paid out of municipal funds (Sec. 4, Republic Act No. 5185,
Decentralization Act of 1967). He can represent the municipality even without the fiscal's collaboration
(Calleja vs. Court of Appeals, L-22501, July 31,1967,20 SCRA 895).
The questioned-ruling of the two courts also contravenes settled jurisprudence. Applying section 1683, it
was held that the municipality's authority to employ a private lawyer is expressly limited only to situations
where the provincial fiscal is disqualified to represent it (De Guia vs. Auditor General; L-29824, March 29,
197 2, 44 SCRA 169. See Reyes vs. Cornista, 92 Phil. 838, Municipality of Bocaue vs. Manotok, 93 Phil.
173; Enriquez vs. Gimenez, 107 Phil. 932).

Evidently, the lawmaker in requiring that the municipality should be represented in its court cases by a
government lawyer like its municipal attorney and the provincial fiscal intended that the municipality
should not be burdened with the expenses of hiring a private lawyer. The lawmaker also assumed that the
interests of the municipality would be best protected if a government lawyer handles its litigations.
It is to be expected that the municipal attorney and the fiscal would be faithful and dedicated to the
municipality's interests and that, as civil service employees, they could be held accountable for any
misconduct or dereliction of duty.
The Court of Appeals perceived nothing illegal in allowing the Cruz Law Office to represent the
municipality of Hagonoy because lawyer Cruz offered his legal services gratis. Petitioner Ramos in her
second motion for reconsideration called the Court's attention to paragraph 19 of the complaint wherein
the Cruz law firm alleged that the municipality had contracted to pay its lawyer a 20% contingent fee.
The Court of Appeals in a resolution dated December 6, 1979 said that there was no cogent reason to
reconsider, its decision but at the same time it gave the Cruz law firm fifteen days from notice within which
"to amend the answer (should be complaint) in the trail court by "deleting therefrom the claim for
attorney's fees" and to report such amendment to the Court of Appeals; otherwise, it would "motu
proprio reconsider its decision".
Obviously, the Appellate Court wanted the complaint to conform to its erroneous factual finding that the
Cruz law firm was serving as counsel without compensation. It did not notice that its resolution was
ambivalent because while it denied the second motion for reconsideration, in the same breath it
threatened to "reconsider its decision" if the complaint was not amended.
Following that directive, the Cruz law firm filed in the trial court an amended complaint dated December
31, 1979 containing the allegation in paragraph 19 thereof that the municipality was forced to retain the
Cruz law firm "as additional counsel under the control and supervision of plaintiff's principal attorneys
and/or the Provincial Fiscal without any obligation to pay attorney's fees". The prayer for the payment of
attorney's fees in the original complaint was eliminated in the amended complaint.
Ramos contended in the trial court and in the Court of Appeals that the trial court could not admit the
amended complaint because it was immobilized by the restraining order issued by the Court of Appeals.
The Court of Appeals did not resolve that contention.
On May 7, 1980, Ramos filed in this Court her petition for certiorari, mandamus and prohibition wherein
she prayed that the Court of Appeals be directed to resolve the issue raised in her second motion for
reconsideration and that the amended complaint should not be taken into consideration because it was
improperly admitted by the trial court.
Although the Court of Appeals was furnished on May 7, 1980 with a copy of that petition, it, nevertheless,
issued a resolution dated May 22, 1981 requiring the Cruz law firm to inform it of "the further development
on the matter" (p. 113, Rollo).
This Court treated Ramos' petition as an appeal from the Appellate Court's decision. Ramos was
confused as to when she would appeal from that decision because, as noted earlier, while the Appellate
Court denied her second motion for reconsideration, the denial was not final since it was accompanied by
the warning that it would "reconsider its decision" if the complaint was not amended to eliminate the claim
of the Cruz law firm for attorney's fees. Hence, the alleged tardiness of the petition was excusable.
The fact that the municipal attorney and the fiscal are supposed to collaborate with a private law firm does
not legalize the latter's representation of the municipality of Hagonoy in Civil Case No. 5095-M. While a
private prosecutor is allowed in criminal cases, an analogous arrangement is not allowed in civil cases
wherein a municipality is the plaintiff.
Section 1683 of the Revised Administrative Code, as complemented by section 3 of the Local Autonomy
Law is clear in providing that only the provincial fiscal and the municipal attorney can represent a
municipality in its lawsuits. That provision is mandatory.

The law being clear and unmistakable, there is no room for interpretation or for engrafting upon it
exceptions or qualifications not contemplated therein. As observed by Justice Moreland:
Where language is plain, subtle refinements which tinge words so as to give them the
color of a particular judicial theory are not only unnecessary but decidedly harmful. That
which has caused so much confusion in the law, which has made it so difficult for the
public to understand and know what the law is with respect to a given matter, is in
considerable measure the unwarranted interference by judicial tribunals with the English
language as found in statutes and contracts, cutting out words here and inserting them
there, making them fit personal Ideas of what the legislature ought to have done or what
parties should have agreed upon, giving them meanings which they do not ordinarily
have, cutting, trimming, fitting, changing and coloring until lawyers themselves are unable
to advise their clients as to the meaning of a given statute or contract until it has been
submitted to some court for its 'interpretation and construction (Yangco vs. Court of First
Instance of Manila, 29 Phil. 183,188).
Construction and interpretation come only after it has been demonstrated that application
is impossible or inadequate without them. They are the very last functions which a court
should exercise. The majority of the laws need no interpretation or construction. They
require only application, and if there were more application and less construction, there
would be more stability in the law, and more people would know what the law is.
(Lizarraga Hermanos vs. Yap Tico, 24 Phil. 504, 513).
WHEREFORE, the decision of the Court of Appeals is reversed and set aside. We hereby declare that the
appearance in the aforementioned case of Cruz Durian Agabin Atienza & Alday as counsel for the
municipality of Hagonoy is contrary to law. The municipality should be represented by its municipal
attorney and by the provincial fiscal of Bulacan. The restraining order is lifted. No costs.
SO ORDERED.

Republic of the Philippines

SUPREME COURT
Manila
EN BANC
G.R. No. L-44143 August 31, 1988
THE PEOPLE OF THE PHILIPPINES, plaintiff,
vs.
EUSEBIO NAZARIO, accused-appellant.
The Solicitor General for plaintiff-appellee.
Teofilo Ragodon for accused-appellant.

SARMIENTO, J.:
The petitioner was charged with violation of certain municipal ordinances of the municipal council of
Pagbilao, in Quezon province. By way of confession and avoidance, the petitioner would admit having
committed the acts charged but would claim that the ordinances are unconstitutional, or, assuming their
constitutionality, that they do not apply to him in any event.
The facts are not disputed:
This defendant is charged of the crime of Violation of Municipal Ordinance in an
information filed by the provincial Fiscal, dated October 9, 1968, as follows:
That in the years 1964, 1965 and 1966, in the Municipality of Pagbilao,
Province of Quezon, Philippines, and within the jurisdiction of this
Honorable Court, the above-named accused, being then the owner and
operator of a fishpond situated in the barrio of Pinagbayanan, of said
municipality, did then and there willfully, unlawfully and feloniously refuse
and fail to pay the municipal taxes in the total amount of THREE
HUNDRED SIXTY TWO PESOS AND SIXTY TWO CENTAVOS
(P362.62), required of him as fishpond operator as provided for under
Ordinance No. 4, series of 1955, as amended, inspite of repeated
demands made upon him by the Municipal Treasurer of Pagbilao,
Quezon, to pay the same.
Contrary to law.
For the prosecution the following witnesses testified in substance as follows;
MIGUEL FRANCIA, 39 years of age, married, farmer and resident of Lopez, Quezon
In 1962 to 1967, I resided at Pinagbayanan, Pagbilao, Quezon. I know the accused as I
worked in his fishpond in 1962 to 1964. The fishpond of Nazario is at Pinagbayanan,
Pagbilao, Quezon. I worked in the clearing of the fishpond, the construction of the dikes
and the catching of fish.

On cross-examination, this witness declared:

I worked with the accused up to March 1964.
NICOLAS MACAROLAY, 65 years of age, married, copra maker and resident of
Pinagbayanan, Pagbilao, Quezon
I resided at Pinagbayanan, Pagbilao, Quezon since 1959 up to the present. I know the
accused since 1959 when he opened a fishpond at Pinagbayanan, Pagbilao, Quezon. He
still operates the fishpond up to the present and I know this fact as I am the barrio captain
of Pinagbayanan.
On cross-examination, this witness declared:
I came to know the accused when he first operated his fishpond since 1959.
On re-direct examination, this witness declared:
I was present during the catching of fish in 1967 and the accused was there.
On re-cross examination, this witness declared:
I do not remember the month in 1962 when the accused caught fish.
RODOLFO R. ALVAREZ, 45 years old, municipal treasurer of Pagbilao, Quezon, married

As Municipal Treasurer I am in charge of tax collection. I know the accused even before I
was Municipal Treasurer of Pagbilao. I have written the accused a letter asking him to
pay his taxes (Exhibit B). Said letter was received by the accused as per registry return
receipt, Exhibit B-1. The letter demanded for payment of P362.00, more or less, by way
of taxes which he did not pay up to the present. The former Treasurer, Ceferino Caparros,
also wrote a letter of demand to the accused (Exhibit C). On June 28, 1967, I sent a letter
to the Fishery Commission (Exhibit D), requesting information if accused paid taxes with
that office. The Commission sent me a certificate (Exhibits D-1, D-2 & D-3). The accused
had a fishpond lease agreement. The taxes unpaid were for the years 1964, 1965 and
1966.
On cross-examination, this witness declared:
I have demanded the taxes for 38.10 hectares.
On question of the court, this witness declared:
What I was collecting from the accused is the fee on fishpond operation, not rental.
The prosecution presented as part of their evidence Exhibits A, A-1, A-2, B, B-2, C, D, D1, D-2, D-3, E, F, F-1 and the same were admitted by the court, except Exhibits D, D-1,
D-2 and D-3 which were not admitted for being immaterial.
For the defense the accused EUSEBIO NAZARIO, 48 years of age, married, owner and
general manager of the ZIP Manufacturing Enterprises and resident of 4801 Old Sta.
Mesa, Sampaloc, Manila, declared in substance as follows:
I have lived in Sta. Mesa, Manila, since 1949. I buy my Residence Certificates at Manila
or at San Juan. In 1964, 1965 and 1966, I was living in Manila and my business is in
Manila and my family lives at Manila. I never resided at Pagbilao, Quezon. I do not own a
house at Pagbilao. I am a lessee of a fishpond located at Pagbilao, Quezon, and I have a
lease agreement to that effect with the Philippine Fisheries Commission marked as
Exhibit 1. In 1964, 1965 and 1966, the contract of lease, Exhibit 1, was still existing and

enforceable. The Ordinances Nos. 4, 15 and 12, series of 1955, 1965 and 1966, were
translated into English by the Institute of National Language to better understand the
ordinances. There were exchange of letters between me and the Municipal Treasurer of
Pagbilao regarding the payment of the taxes on my leased fishpond situated at Pagbilao.
There was a letter of demand for the payment of the taxes by the treasurer (Exhibit 3)
which I received by mail at my residence at Manila. I answered the letter of demand,
Exhibit 3, with Exhibit 3-A. I requested an inspection of my fishpond to determine its
condition as it was not then in operation. The Municipal Treasurer Alvarez went there
once in 1967 and he found that it was destroyed by the typhoon and there were pictures
taken marked as Exhibits 4, 4-A, 4-B and 4C. I received another letter of demand, Exhibit
5, and I answered the same (Exhibit 5-A). I copied my reference quoted in Exhibit 5-A
from Administrative Order No. 6, Exhibit 6. I received another letter of demand from
Tomas Ornedo, Acting Municipal Treasurer of Pagbilao, dated February 16, 1966, Exhibit
7, and I answered the same with the letter marked as Exhibit 7-A, dated February 26,
1966. I received another letter of demand from Treasurer Alvarez of Pagbilao, Exhibit 8,
and I answered the same (Exhibit 8-A). In 1964, I went to Treasurer Caparros to ask for
an application for license tax and he said none and he told me just to pay my taxes. I did
not pay because up to now I do not know whether I am covered by the Ordinance or not.
The letters of demand asked me to pay different amounts for taxes for the fishpond.
Because under Sec. 2309 of the Revised Administrative Code, municipal taxes lapse if
not paid and they are collecting on a lapsed ordinance. Because under the Tax Code,
fishermen are exempted from percentage tax and privilege tax. There is no law
empowering the municipality to pass ordinance taxing fishpond operators.
The defense presented as part of their evidence Exhibits 1, 2, 3, 3-A, 4, 4-B, 4-B, 4-C, 5,
5-A, 6, 6-A, 6-B, 6-C, 7, 7-A, 8 and 8-A and the same were admitted by the court.
From their evidence the prosecution would want to show to the court that the accused, as
lessee or operator of a fishpond in the municipality of Pagbilao, refused, and still refuses,
to pay the municipal taxes for the years 1964, 1965 and 1966, in violation of Municipal
Ordinance No. 4, series of 1955, as amended by Municipal Ordinance No. 15, series of
1965, and finally amended by Municipal Ordinance No. 12, series of 1966.
On the other hand, the accused, by his evidence, tends to show to the court that the
taxes sought to be collected have already lapsed and that there is no law empowering
municipalities to pass ordinances taxing fishpond operators. The defense, by their
evidence, tried to show further that, as lessee of a forest land to be converted into a
fishpond, he is not covered by said municipal ordinances; and finally that the accused
should not be taxed as fishpond operator because there is no fishpond yet being
operated by him, considering that the supposed fishpond was under construction during
the period covered by the taxes sought to be collected.
Finally, the defendant claims that the ordinance in question is ultra vires as it is outside of
the power of the municipal council of Pagbilao, Quezon, to enact; and that the defendant
claims that the ordinance in question is ambiguous and uncertain.
There is no question from the evidences presented that the accused is a lessee of a
parcel of forest land, with an area of 27.1998 hectares, for fishpond purposes, under
Fishpond Lease Agreement No. 1066, entered into by the accused and the government,
through the Secretary of Agriculture and Natural Resources on August 21, 1959.
There is no question from the evidences presented that the 27.1998 hectares of land
leased by the defendant from the government for fishpond purposes was actually
converted into fishpond and used as such, and therefore defendant is an operator of a
fishpond within the purview of the ordinance in question. 1
The trial Court 2 returned a verdict of guilty and disposed as follows:
VIEWED IN THE LIGHT OF ALL THE FOREGOING, the Court finds the accused guilty beyond
reasonable doubt of the crime of violation of Municipal Ordinance No. 4, series of 1955, as amended by
Ordinance No. 15, series of 1965 and further amended by Ordinance No. 12, series of 1966, of the

Municipal Council of Pagbilao, Quezon; and hereby sentences him to pay a fine of P50.00, with
subsidiary imprisonment in case of insolvency at the rate of P8.00 a day, and to pay the costs of this
proceeding.
SO ORDERED. 3
In this appeal, certified to this Court by the Court of Appeals, the petitioner alleges that:
I.
THE LOWER COURT ERRED IN NOT DECLARING THAT ORDINANCE NO. 4, SERIES OF 1955, AS
AMENDED BY ORDINANCE NO. 15, SERIES OF 1965, AND AS FURTHER AMENDED BY
ORDINANCE NO. 12, SERIES OF 1966, OF THE MUNICIPALITY OF PAGBILAO, QUEZON, IS NULL
AND VOID FOR BEING AMBIGUOUS AND UNCERTAIN.
II.
THE LOWER COURT ERRED IN NOT HOLDING THAT THE ORDINANCE IN QUESTION, AS
AMENDED, IS UNCONSTITUTIONAL FOR BEING EX POST FACTO.
III.
THE LOWER COURT ERRED IN NOT HOLDING THAT THE ORDINANCE IN QUESTION COVERS
ONLY OWNERS OR OVERSEER OF FISHPONDS OF PRIVATE OWNERSHIP AND NOT TO LESSEES
OF PUBLIC LANDS.
IV.
THE LOWER COURT ERRED IN NOT FINDING THAT THE QUESTIONED ORDINANCE, EVEN IF
VALID, CANNOT BE ENFORCED BEYOND THE TERRITORIAL LIMITS OF PAGBILAO AND DOES
NOT
COVER
NONRESIDENTS. 4
The ordinances in question are Ordinance No. 4, series of 1955, Ordinance No. 15, series of 1965, and
Ordinance No. 12, series of 1966, of the Municipal Council of Pagbilao. Insofar as pertinent to this appeal,
the salient portions thereof are hereinbelow quoted:
Section 1. Any owner or manager of fishponds in places within the territorial limits of
Pagbilao, Quezon, shall pay a municipal tax in the amount of P3.00 per hectare of
fishpond on part thereof per annum. 5
xxx xxx xxx
Sec. l (a). For the convenience of those who have or owners or managers of fishponds
within the territorial limits of this municipality, the date of payment of municipal tax relative
thereto, shall begin after the lapse of three (3) years starting from the date said fishpond
is approved by the Bureau of Fisheries. 6
xxx xxx xxx
Section 1. Any owner or manager of fishponds in places within the territorial limits of
Pagbilao shall pay a municipal tax in the amount of P3.00 per hectare or any fraction
thereof per annum beginning and taking effect from the year 1964, if the fishpond started
operating before the year 1964. 7
The first objection refers to the ordinances being allegedly "ambiguous and uncertain." 8 The petitioner
contends that being a mere lessee of the fishpond, he is not covered since the said ordinances speak of
"owner or manager." He likewise maintains that they are vague insofar as they reckon the date of
payment: Whereas Ordinance No. 4 provides that parties shall commence payment "after the lapse of
three (3) years starting from the date said fishpond is approved by the Bureau of Fisheries." 9 Ordinance

No. 12 states that liability for the tax accrues "beginning and taking effect from the year 1964 if the
fishpond started operating before the year 1964." 10
As a rule, a statute or act may be said to be vague when it lacks comprehensible standards that men "of
common intelligence must necessarily guess at its meaning and differ as to its application." 11 It is
repugnant to the Constitution in two respects: (1) it violates due process for failure to accord persons,
especially the parties targetted by it, fair notice of the conduct to avoid; and (2) it leaves law enforcers
unbridled discretion in carrying out its provisions and becomes an arbitrary flexing of the Government
muscle.
But the act must be utterly vague on its face, that is to say, it cannot be clarified by either a saving clause
or by construction. Thus, in Coates v. City of Cincinnati, 12 the U.S. Supreme Court struck down an
ordinance that had made it illegal for "three or more persons to assemble on any sidewalk and there
conduct themselves in a manner annoying to persons passing by." 13 Clearly, the ordinance imposed no
standard at all "because one may never know in advance what 'annoys some people but does not annoy
others.' " 14
Coates highlights what has been referred to as a "perfectly vague" 15 act whose obscurity is evident on its
face. It is to be distinguished, however, from legislation couched in imprecise language but which
nonetheless specifies a standard though defectively phrased in which case, it may be "saved" by
proper construction.
It must further be distinguished from statutes that are apparently ambiguous yet fairly applicable to certain
types of activities. In that event, such statutes may not be challenged whenever directed against such
activities. In Parker v. Levy, 16 a prosecution originally under the U.S. Uniform Code of Military Justice
(prohibiting, specifically, "conduct unbecoming an officer and gentleman"), the defendant, an army officer
who had urged his men not to go to Vietnam and called the Special Forces trained to fight there thieves
and murderers, was not allowed to invoke the void for vagueness doctrine on the premise that accepted
military interpretation and practice had provided enough standards, and consequently, a fair notice that
his conduct was impermissible.
It is interesting that in Gonzales v. Commission on Elections, 17 a divided Court sustained an act of
Congress (Republic Act No. 4880 penalizing "the too early nomination of candidates" 18 limiting the
election campaign period, and prohibiting "partisan political activities"), amid challenges of vagueness and
overbreadth on the ground that the law had included an "enumeration of the acts deemed included in the
terms 'election campaign' or 'partisan political activity" 19 that would supply the standards. "As thus limited,
the objection that may be raised as to vagueness has been minimized, if not totally set at rest." 20 In his
opinion, however, Justice Sanchez would stress that the conduct sought to be prohibited "is not clearly
defined at all." 21 "As worded in R.A 4880, prohibited discussion could cover the entire spectrum of
expression relating to candidates and political parties." 22 He was unimpressed with the "restrictions"
Fernando's opinion had relied on: " 'Simple expressions of opinions and thoughts concerning the election'
and expression of 'views on current political problems or issues' leave the reader conjecture, to
guesswork, upon the extent of protection offered, be it as to the nature of the utterance ('simple
expressions of opinion and thoughts') or the subject of the utterance ('current political problems or
issues')." 23
The Court likewise had occasion to apply the "balancing-of-interests" test, 24 insofar as the statute's ban
on early nomination of candidates was concerned: "The rational connection between the prohibition of
Section 50-A and its object, the indirect and modest scope of its restriction on the rights of speech and
assembly, and the embracing public interest which Congress has found in the moderation of partisan
political activity, lead us to the conclusion that the statute may stand consistently with and does not offend
the Constitution." 25 In that case, Castro would have the balance achieved in favor of State authority at the
"expense" of individual liberties.
In the United States, which had ample impact on Castro's separate opinion, the balancing test finds a
close kin, referred to as the "less restrictive alternative " 26 doctrine, under which the court searches for
alternatives available to the Government outside of statutory limits, or for "less drastic means" 27 open to
the State, that would render the statute unnecessary. In United States v. Robel, 28 legislation was
assailed, banning members of the (American) Communist Party from working in any defense facility. The
U.S. Supreme Court, in nullifying the statute, held that it impaired the right of association, and that in any
case, a screening process was available to the State that would have enabled it to Identify dangerous

elements holding defense positions.

individual liberties.

29

In that event, the balance would have been struck in favor of

It should be noted that it is in free expression cases that the result is usually close. It is said, however, that
the choice of the courts is usually narrowed where the controversy involves say, economic rights, 30 or as
in the Levycase, military affairs, in which less precision in analysis is required and in which the
competence of the legislature is presumed.
In no way may the ordinances at bar be said to be tainted with the vice of vagueness. It is unmistakable
from their very provisions that the appellant falls within its coverage. As the actual operator of the
fishponds, he comes within the term " manager." He does not deny the fact that he financed the
construction of the fishponds, introduced fish fries into the fishponds, and had employed laborers to
maintain them. 31 While it appears that it is the National Government which owns them, 32 the Government
never shared in the profits they had generated. It is therefore only logical that he shoulders the burden of
tax under the said ordinances.
We agree with the trial court that the ordinances are in the character of revenue measures 33 designed to
assist the coffers of the municipality of Pagbilao. And obviously, it cannot be the owner, the Government,
on whom liability should attach, for one thing, upon the ancient principle that the Government is immune
from taxes and for another, since it is not the Government that had been making money from the venture.
Suffice it to say that as the actual operator of the fishponds in question, and as the recipient of profits
brought about by the business, the appellant is clearly liable for the municipal taxes in question. He
cannot say that he did not have a fair notice of such a liability to make such ordinances vague.
Neither are the said ordinances vague as to dates of payment. There is no merit to the claim that "the
imposition of tax has to depend upon an uncertain date yet to be determined (three years after the
'approval of the fishpond' by the Bureau of Fisheries, and upon an uncertain event (if the fishpond started
operating before 1964), also to be determined by an uncertain individual or individuals." 34 Ordinance No.
15, in making the tax payable "after the lapse of three (3) years starting from the date said fishpond is
approved by the Bureau of Fisheries," 35 is unequivocal about the date of payment, and its amendment by
Ordinance No. 12, reckoning liability thereunder "beginning and taking effect from the year 1964 if the
fishpond started operating before the year 1964 ," 36 does not give rise to any ambiguity. In either case,
the dates of payment have been definitely established. The fact that the appellant has been allegedly
uncertain about the reckoning dates as far as his liability for the years 1964, 1965, and 1966 is
concerned presents a mere problem in computation, but it does not make the ordinances vague. In
addition, the same would have been at most a difficult piece of legislation, which is not unfamiliar in this
jurisdiction, but hardly a vague law.
As it stands, then, liability for the tax accrues on January 1, 1964 for fishponds in operation prior thereto
(Ordinance No. 12), and for new fishponds, three years after their approval by the Bureau of Fisheries
(Ordinance No. 15). This is so since the amendatory act (Ordinance No. 12) merely granted amnesty unto
old, delinquent fishpond operators. It did not repeal its mother ordinances (Nos. 4 and 15). With respect to
new operators, Ordinance No. 15 should still prevail.
To the Court, the ordinances in question set forth enough standards that clarify imagined ambiguities.
While such standards are not apparent from the face thereof, they are visible from the intent of the said
ordinances.
The next inquiry is whether or not they can be said to be ex post facto measures. The appellant argues
that they are: "Amendment No. 12 passed on September 19, 1966, clearly provides that the payment of
the imposed tax shall "beginning and taking effect from the year 1964, if the fishpond started operating
before the year 1964.' In other words, it penalizes acts or events occurring before its passage, that is to
say, 1964 and even prior thereto." 37
The Court finds no merit in this contention. As the Solicitor General notes, "Municipal Ordinance No. 4
was passed on May 14, 1955. 38 Hence, it cannot be said that the amendment (under Ordinance No. 12)
is being made to apply retroactively (to 1964) since the reckoning period is 1955 (date of enactment).
Essentially, Ordinances Nos. 12 and 15 are in the nature of curative measures intended to facilitate and
enhance the collection of revenues the originally act, Ordinance No. 4, had prescribed. 39 Moreover, the

act (of non-payment of the tax), had been, since 1955, made punishable, and it cannot be said that
Ordinance No. 12 imposes a retroactive penalty. As we have noted, it operates to grant amnesty to
operators who had been delinquent between 1955 and 1964. It does not mete out a penalty, much less, a
retrospective one.
The appellant assails, finally, the power of the municipal council of Pagbilao to tax "public forest
land." 40 In Golden Ribbon Lumber Co., Inc. v. City of Butuan 41 we held that local governments' taxing
power does not extend to forest products or concessions under Republic Act No. 2264, the Local
Autonomy Act then in force. (Republic Act No. 2264 likewise prohibited municipalities from imposing
percentage taxes on sales.)
First of all, the tax in question is not a tax on property, although the rate thereof is based on the area of
fishponds ("P3.00 per hectare" 42). Secondly, fishponds are not forest lands, although we have held them
to the agricultural lands. 43By definition, "forest" is "a large tract of land covered with a natural growth of
trees and underbush; a large wood." 44(Accordingly, even if the challenged taxes were directed on the
fishponds, they would not have been taxes on forest products.)
They are, more accurately, privilege taxes on the business of fishpond maintenance. They are not
charged against sales, which would have offended the doctrine enshrined by Golden Ribbon
Lumber, 45 but rather on occupation, which is allowed under Republic Act No. 2264. 46 They are what have
been classified as fixed annual taxes and this is obvious from the ordinances themselves.
There is, then, no merit in the last objection.
WHEREFORE, the appeal is DISMISSED. Costs against the appellant.

Republic of the Philippines

SUPREME COURT
Manila
FIRST DIVISION
G. R. No. L-41001 September 30, 1976
MANILA LODGE NO. 761, BENEVOLENT AND PROTECTIVE ORDER OF THE ELKS, INC., petitioner,
vs.
THE HONORABLE COURT OF APPEALS, CITY OF MANILA, and TARLAC DEVELOPMENT
CORPORATION,respondents.
No. L-41012 September 30, 1976
TARLAC DEVELOPMENT CORPORATION, petitioner,
vs.

HONORABLE COURT OF APPEALS, CITY OF MANILA, LODGE NO. 761, BENEVOLENT AND
PROTECTIVE ORDER OF ELKS, INC., respondents.

CASTRO, C.J.:t.hqw
STATEMENT OF THE CASE AND STATEMENTOF THE FACTS
These two cases are petitions on certiorari to review the decision dated June 30, 1975 of the Court of
Appeals in CA-G.R. No. 51590-R entitled "Tarlac Development Corporation vs. City of Manila, and Manila
Lodge No. 761, Benevolent and Protective Order of Elks, Inc.," affirming the trial court's finding in Civil
Case No. 83009 that the property subject of the decision a quo is a "public park or plaza."
On June 26, 1905 the Philippine Commission enacted Act No. l360 which authorized the City of Manila to
reclaim a portion of Manila Bay. The reclaimed area was to form part of the Luneta extension. The Act
provided that the reclaimed area "Shall be the property of the City of Manila" and that "the City of Manila
is hereby authorized to set aside a tract of the reclaimed land formed by the Luneta extension x x x at the
north end not to exceed five hundred feet by six hundred feet in size, for a hotel site, and to lease the
same, with the approval of the Governor General, to a responsible person or corporation for a term not
exceed ninety-nine years."
Subsequently, the Philippine Commission passed on May 18, 1907 Act No. 1657, amending Act No. 1360,
so as to authorize the City of' Manila either to lease or to sell the portion set aside as a hotel site.
The total area reclaimed was a little over 25 hectares. The City of Manila applied for the registration of the
reclaimed area, and on January 20, 1911, O.C.T. No. 1909 was issued in the name of the City of Manila.
The title described the registered land as "un terreno conocido con el nombre de Luneta Extension,
situato en el distrito de la Ermita x x x." The registration was "subject, however to such of the
incumbrances mentioned in Article 39 of said law (Land Registration Act) as may be subsisting" and
"sujeto a las disposiciones y condiciones impuestas en la Ley No. 1360; y sujeto tambein a los contratos
de venta, celebrados y otorgados por la Ciudad de Manila a favor del Army and Navy Club y la Manila
Lodge No. 761, Benevolent and Protective Order of Elks, fechados respectivamente, en 29 de Diciembre
de 1908 y 16 de Enero de 1909." 1
On July 13, 1911 the City of Manila, affirming a prior sale dated January 16, 1909 cancelled 5,543.07
square meters of the reclaimed area to the Manila Lodge No. 761, Benevolent and Protective Order of
Elks of the U.S.A. (BPOE, for short) on the basis of which TCT No. 2195 2 was issued to the latter over
the Marcela de terreno que es parte de la Luneta Extension, Situada en el Distrito le la Ermita ... ." At the
back of this title vas annotated document 4608/T-1635, which in part reads as follows: "que la citada
Ciusdad de Manila tendra derecho a su opcion, de recomparar la expresada propiedad para fines
publicos solamete in cualquier tiempo despues de cincuenta anos desde el 13 le Julio le 1911, precio de
la misma propiedad, mas el valor que entonces tengan las mejoras."
For the remainder of the Luneta Extension, that is, after segregating therefrom the portion sold to the
Manila Lodge No. 761, PBOE, a new Certificate of Title No. 2196 3 was issued on July 17, 1911 to the
City of Manila.
Manila Lodge No. 761, BPOE, subsequently sold the said 5,543.07 square meters to the Elks Club, Inc.,
to which was issued TCT No. 67488. 4 The registered owner, "The Elks Club, Inc.," was later changed by
court oder to "Manila Lodge No. 761, Benevolent and Protective Order of Elks, Inc."
In January 1963 the BPOE. petitioned the Court of First Instance of Manila, Branch IV, for the cancellation
of the right of the City of Manila to repurchase the property This petition was granted on February 15,
1963.
On November 19, 1963 the BPOE sold for the sum of P4,700,000 the land together with all the
improvements thereon to the Tarlac Development Corporation (TDC, for short) which paid P1,700.000 as
down payment and mortgaged to the vendor the same realty to secure the payment of the balance to be
paid in quarterly installments.5At the time of the sale,, there was no annotation of any subsisting lien on

the title to the property. On December 12, 1963 TCT No. 73444 was issued to TDC over the subject land
still described as "UNA PARCELA DE TERRENO, que es parte de la Luneta Extension, situada en el
Distrito de Ermita ... ."
In June 1964 the City of Manila filed with the Court of First Instance of Manila a petition for the
reannotation of its right to repurchase; the court, after haering, issued an order, dated November 19,
1964, directing the Register of Deeds of the City of Manila to reannotate in toto the entry regarind the right
of the City of Manila to repurchase the property after fifty years. From this order TDC and BPOE appealed
to this Court which on July 31, 1968 affirmed in G.R. Nos. L-24557 and L-24469 the trial court's order of
reannotation, but reserved to TDC the right to bring another action for the clarification of its rights.
As a consequence of such reservation, TDC filed on April 28, 1971 against the City of Manila and the
Manila Lodge No. 761, BPOE, a complaint, docketed as Civil Case No. 83009 of the Court of First
Instance of Manila, containing three causes of action and praying a) On the first cause of action, that the plaintiff TDC be declared to have purchased the parcel of land now
in question with the buildings and improvements thereon from the defendant BPOE for value and in good
faith, and accordingly ordering the cancellation of Entry No. 4608/T-1635 on Transfer Certificate of Title
No. 73444 in the name of the Plaintiff;
b) On the second cause of action, ordering the defendant City of Manila to pay the plaintiff TDC damages
in the sum of note less than one hundred thousand pesos (P100,000.00);
c) On the third cause of action, reserving to the plaintiff TDC the right to recover from the defendant
BPOE the amounts mentioned in par. XVI of the complaint in accordance with Art. 1555 of the Civil Code,
in the remote event that the final judgment in this case should be that the parcel of land now in question is
a public park; and
d) For costs, and for such other and further relief as the Court may deem just and equitable.

Therein defendant City of Manila, in its answer dated May 19, 1971, admitted all the facts alleged in the
first cause of action except the allegation that TDC purchased said property "for value and in good faith,"
but denied for lack of knowledge or information the allegations in the second and third causes of action.
As, special and affirmative defense, the City of Manila claimed that TDC was not a purchaser in good faith
for it had actual notice of the City's right to repurchase which was annotated at the back of the title prior to
its cancellation, and that, assuming arguendo that TDC had no notice of the right to repurchase, it was,
nevertheless, under obligation to investigate inasmuch as its title recites that the property is a part of the
Luneta extension. 7
The Manila Lodge No. 761, BPOE, in its answer dated June 7, 1971, admitted having sold the land
together with the improvements thereon for value to therein plaintiff which was in good faith, but denied
for lack of knowledge as to their veracity the allegations under the second cause of action. It furthermore
admitted that TDC had paid the quarterly installments until October l5, 1964 but claimed that the latter
failed without justifiable cause to pay the subsequent installments. It also asserted that it was a seller for
value in good faith without having misrepresented or concealed tacts relative to the title on the property.
As counterclaim, Manila Lodge No. 761 (BPOE) sought to recover the balance of the purchase price plus
interest and costs. 8
On June 15, 1971 TDC answered the aforesaid counterclaim, alleging that its refusal to make further
payments was fully justified. 9
After due trial the court a quo rendered on July 14, 1972 its decision finding the subject land to be part of
the "public park or plaza" and, therefore, part of the public domain. The court consequently declared that
the sale of the subject land by the City of Manila to Manila Lodge No. 761, BPOE, was null and void; that
plaintiff TDC was a purchaser thereof in g faith and for value from BPOE and can enforce its rights
against the latter; and that BPOE is entitled to recover from the City of Manila whatever consideration it
had 'paid the latter. 'The dispositive part of the decision reads: +.wph!1
WHEREFORE, the Court hereby declares that the parcel of land formerly covered by
Transfer Certificate of Title Nos 2195 and 67488 in the name of BPOE and now by

Transfer Certificate of Title No. 73444 in the name of Tarlac Development Corporation is
a public' park or plaza, and, consequently, instant complaint is dimissed, without
pronouncement as to costs.
In view of the reservation made by plaintiff Tarlac Development Corporation to recover
from defendant BPOE the amounts mentioned in paragraph XVI of the complaint in
accordance with Article 1555 of the Civil Code, the Court makes no pronouncement on
this point. 10
From said decision the therein plaintiff TDC as well as the defendant Manila Lodge No. 761, BPOE,
appealed to the Court of Appeals.
In its appeal docketed as CA-G.R. No. 51590-R, the Manila Lodge No. 761, BPOE, avers that the trial
court committed the following errors, namely:
1. In holding that the property subject of the action is not patrimonial property of the City of Manila; and
2. In holding that the Tarlac Development Corporation may recover and enforce its right against the
defendant BPOE. 11
The Tarlac Development Corporation, on the other hand, asserts that the trial court erred:
(1) In finding that the property in question is or was a public park and in consequently nullifying the sale
thereof by the City of Manila to BPOE;
(2) In applying the cases of Municipality of Cavite vs. Rojas, 30 Phil. 602, and Government vs. Cabangis,
53 Phil. 112, to the case at bar; and
(3) In not holding that the plaintiff-appellant is entitled to ,recover damages from the defendant City of
Manila. 12
Furthermore, TDC as appellee regarding the second assignment of error raised by BPOE, maintained
that it can recover and enforce its rigth against BPOE in the event that the land in question is declared a
public park or part thereof. 13
In its decision promulgated on June 30, 1975, the Court of Appeals concur ed in the findings and
conclusions of the lower court upon the ground that they are supported by he evidence and are in
accordance with law, and accordingly affirmed the lower court's judgment.
Hence, the present petitions for review on certiorari.
G.R. No. L-41001
The Manila Lodge No. 761, BPOE, contends, in its petition for review on certiorari docketed as G.R. No.
L-41001, that the Court of Appeals erred in (1) disregarding the very enabling acts and/or statutes
according to which the subject property was, and still is, patrimonial property of the City of Manila and
could therefore be sold and/or disposed of like any other private property; and (2) in departing from the
accepted and usual course of judicial proceedings when it simply made a general affirmance of the
court a quo's findings and conclusions without bothering to discuss or resolve several vital points stressed
by the BPOE in its assigned errrors. 14
G.R. No. L-41012
The Tarlac Development Corporation, in its petition for review on certiorari docketed as G.R. No. L-41012,
relies on the following grounds for the allowance of its petition:
1. that the Court of Appeals did not correctly interpret Act No. 1360, as amended by Act No. 1657, of the
Philippine Commission; and

2. that the Court of Appeals has departed from the accepted and usual course of judicial proceedings in
that it did not make its own findings but simply recited those of the lower court. 15
ISSUES AND ARGUMENTS
FIRST ISSUE
Upon the first issue, both petitioners claim that the property subject of the action, pursuant to the
provisions of Act No. 1360, as amended by Act No. 1657, was patrimonial property of the City of Manila
and not a park or plaza.
Arguments of Petitioners
In G.R. No. L-41001, the Manila Lodge No. 761, BPOE, admits that "there appears to be some logic in
the conclusion" of the Court of Appeals that "neither Act No. 1360 nor Act No. 1657 could have meant to
supply the City of Manila the authority to sell the subject property which is located at the south end not the
north of the reclaimed area." 16 It argues, however, that when Act No. 1360, as amended, authorized
the City of Manila to undertake the construction of the Luneta extension by reclaimed land from the
Manila Bay, and declared that the reclaimed land shall be the "property of the City of Manila," the State
expressly granted the ownership thereof to the City of Manila which. consequently. could enter into
transactions involving it; that upon the issuance of O.C.T. No. 1909, there could he no doubt that the
reclaimed area owned by the City was its patrimonial property;" that the south end of the reclaimed area
could not be for public use for. as argued by TDC a street, park or promenade can be property for public
use pursuant to Article 344 of the Spanish Civil Code only when it has already been so constructed or laid
out, and the subject land, at the time it was sold to the Elk's Club, was neither actually constructed as a
street, park or promenade nor laid out as a street, park or promenade;" that even assuming that the
subject property was at the beginning property of public dominion, it was subsequently converted into
patrimonial property pursuant to Art. 422 of the Civil Code, inasmuch as it had never been used, red or
utilized since it was reclaimed in 1905 for purpose other than this of an ordinary real estate for sale or
lease; that the subject property had never been intended for public use, is further shown by the fact that it
was neither included as a part of the Luneta Park under Plan No. 30 of the National Planning Commission
nor considered a part of the Luneta National Park (now Rizal Park) by Proclamation No. 234 dated
December 19, 1955 of President Ramon Magsaysay or by Proclamation Order No. 274 dated October 4,
1967 of President Ferdinand E. Marcos;" 19 that, such being the case, there is no reason why the subject
property should -not be considered as having been converted into patrimonial property, pursuant to the
ruling in Municipality vs. Roa 7 Phil. 20, inasmuch as the City of Manila has considered it as its
patrimonial property not only bringing it under the operation of the Land Registration Act but also by
disposing of it; 20 and that to consider now the subject property as a public plaza or park would not only
impair the obligations of the parties to the contract of sale (rated July 13, 1911, but also authorize
deprivation of property without due process of law. 21
G.R. No. L-410112
In L-41012, the petitioner TDC stresses that the principal issue is the interpretation of Act No. 1360, as
amended by. Act No. 1657 of the Philippine Commission, 22 and avers that inasmuch as Section 6 of Act
No. 1360, as amended by Act 1657, provided that the reclamation of the Luneta extension was to be paid
for out of the funds of the City of Manila which was authorized to borrow P350,000 "to be expended in the
construction of Luneta Extension," the reclaimed area became "public land" belonging to the City of
Manila that spent for the reclamation, conformably to the holding in Cabangis, 23 and consequently, said
land was subject to sale and other disposition; that the Insular Government itself considered the
reclaimed Luneta extension as patrimonial property subject to disposition as evidenced by the fact that
See. 3 of Act 1360 declared that "the land hereby reclaimed shall be the property of the City of Manila;"
that this property cannot be property for public use for according to Article 344 of the Civil Code, the
character of property for public use can only attach to roads and squares that have already been
constructed or at least laid out as such, which conditions did not obtain regarding the subject land, that
Sec. 5 of Act 1360 authorized the City of Manila to lease the northern part of the reclaimed area for hotel
purposes; that Act No. 1657 furthermore authorized the City of Manila to sell the same; 24 that the express
statutory authority to lease or sell the northern part of the reclaimed area cannot be interpreted to mean
that the remaining area could not be sold inasmuch as the purpose of the statute was not merely to confer
authority to sell the northern portion but rather to limit the city's power of disposition thereof, to wit: to
prevent disposition of the northern portion for any purpose other than for a hotel site that the northern and

southern ends of the reclaimed area cannot be considered as extension of the Luneta for they lie beyond
the sides of the original Luneta when extended in the direction of the sea, and that is the reason why the
law authorized the sale of the northern portion for hotel purposes, and, for the same reason, it is implied
that the southern portion could likewise be disposed of. 26
TDC argues likewise that there are several items of uncontradicted circumstantial evidence which may
serve as aids in construing the legislative intent and which demonstrate that the subject property is
patrimonial in nature, to wit: (1) Exhibits "J" and "J-1", or Plan No. 30 of the National Planning
Commission showing the Luneta and its vicinity, do not include the subject property as part of the Luneta
Park; (2) Exhibit "K", which is the plan of the subject property covered by TCT No. 67488 of BPOE,
prepared on November 11, 1963, indicates that said property is not a public park; (3) Exhibit "T", which is
a certified copy of Proclamation No. 234 issued on December 15, 1955 is President Magsaysay, and
Exhibit "U" which is Proclamation Order No. 273 issued on October 4, 1967 by President Marcos, do not
include the subject property in the Luneta Park-, (4) Exhibit "W", which is the location plan of the Luneta
National Park under Proclamations Nos. 234 and 273, further confirms that the subject property is not a
public park; and (5) Exhibit "Y", which is a copy of O.C.T. No. 7333 in the name of the United States of
America covering the land now occupied by the America covering the land now occupied by the American
Embassy, the boundaries of which were delineated by the Philippine Legislature, states that the said land
is bounded on the northwest by properties of the Army and Navy Club (Block No. 321) and the Elks Club
(Block No. 321), and this circumstance shows that even the Philippine Legislature recognized the subject
property as private property of the Elks Club. 27
TDC furthermore contends that the City of Manila is estopped from questioning the validity of the sale of
the subject property that it executed on July 13, 1911 to the Manila Lodge No. 761, BPOE, for several
reasons, namely: (1) the City's petition for the reannotation of Entry No. 4608/T-1635 was predicated on
the validity of said sale; (2) when the property was bought by the petitioner TDC it was not a public plaza
or park as testified to by both Pedro Cojuanco, treasurer of TDC, and the surveyor, Manuel Aoneuvo,
according to whom the subject property was from all appearances private property as it was enclosed by
fences; (3) the property in question was cadastrally surveyed and registered as property of the Elks Club,
according to Manuel Anonuevo; (4) the property was never used as a public park, for, since the issuance
of T.C.T. No. 2165 on July 17, 1911 in the name of the Manila Lodge NO. 761, the latter used it as private
property, and as early as January 16, 1909 the City of Manila had already executed a deed of sale over
the property in favor of the Manila Lodge No. 761; and (5) the City of Manila has not presented any
evidence to show that the subject property has ever been proclaimed or used as a public park. 28
TDC, moreover, contends that Sec. 60 of Com. Act No. 141 cannot apply to the subject land, for Com. Act
No. 141 took effect on December 1, 1936 and at that time the subject land was no longer part of the part
of the public domain. 29
TDC also stresses that its rights as a purchaser in good faith cannot be disregarded, for the mere mention
in the certificate of title that the lot it purchased was "part of the Luneta extension" was not a sufficient
warning that tile title to the City of Manila was invalid; and that although the trial court, in its decision
affirmed by the Court of Appeals, found the TDC -to has been an innocent purchaser for value, the court
disregarded the petitioner's rights as such purchaser that relied on Torrens certificate of title. 30
The Court, continues the petitioner TDC erred in not holding that the latter is entitled to recover from the
City of Manila damages in the amount of P100,000 caused by the City's petition for- reannotation of its
right to repurchase.
DISCUSSION AND RESOLUTION OF FIRST ISSUE
It is a cardinal rule of statutory construction that courts must give effect to the general legislative intent
that can be discovered from or is unraveled by the four corners of the statute, 31 and in order to discover
said intent, the whole statute, and not only a particular provision thereof, should be considered. 32 It is,
therefore, necessary to analyze all the provisions of Act No. 1360, as amended, in order to unravel the
legislative intent.
Act No. 1360 which was enacted by the Philippine Commission on June 26, 1905, as amended by Act No.
1657 enacted on May 18, 1907, authorized the "construction of such rock and timber bulkheads or sea
walls as may be necessary for the making of an extension to the Luneta" (Sec. 1 [a]), and the placing of
the material dredged from the harbor of Manila "inside the bulkheads constructed to inclose the Luneta

extension above referred to" (Sec. 1 [a]). It likewise provided that the plan of Architect D. H. Burnham as
"a general outline for the extension and improvement of the Luneta in the City of Manila" be adopted; that
"the reclamation from the Bay of Manila of the land included in said projected Luneta extension... is
hereby authorized and the land thereby reclaimed shall be the property of the City of Manila" (Sec. 3);
that "the City of Manila is hereby authorized to set aside a tract of the reclaimed land formed by the
Luneta extension authorized by this Act at the worth end of said tract, not to exceed five hundred feet by
six hundred feet in size, for a hotel site, and to lease the same with the approval of the Governor General,
... for a term not exceeding ninety-nine years; that "should the Municipal Board ... deem it advisable it is
hereby authorized to advertise for sale to sell said tract of land ... ;" "that said tract shall be used for hotel
purposes as herein prescribed, and shall not be devoted to any other purpose or object whatever;" "that
should the grantee x x x fail to maintain on said tract a first-class hotel x x x then the title to said tract of
land sold, conveyed, and transferred, and shall not be devoted to any other purpose or object whatever;"
"that should the grantee x x x fail to maintain on said tract a first-class hotel x x x then the title to said tract
of land sold, conveyed, and transferred to the grantee shall revert to the City of Manila, and said City of
Manila shall thereupon become entitled to immediate possession of said tract of land" (Sec. 5); that the
construction of the rock and timber bulkheads or sea wall "shall be paid for out of the funds of the City of
Manila, but the area to be reclaimed by said proposed Luneta extension shall be filled, without cost to the
City of Manila, with material dredged from Manila Bay at the expense of the Insular Government" (Sec. 6);
and that "the City of Manila is hereby authorized to borrow from the Insular Government ... the sum of
three hundred thousand pesos, to be expended in the construction of Luneta extension provided for by
paragraph (a) of section one hereof" (Sec.7).
The grant made by Act No. 1360 of the reclaimed land to the City of Manila is a grant of "public" nature,
the same having been made to a local political subdivision. Such grants have always
been strictly construed against the grantee. 33 One compelling reason given for the strict interpretation of a
public grant is that there is in such grant a gratuitous donation of, public money or resources which results
in an unfair advantage to the grantee and for that reason, the grant should be narrowly restricted in favor
of the public. 34 This reason for strict interpretation obtains relative to the aforesaid grant, for, although the
City of Manila was to pay for the construction of such work and timber bulkheads or sea walls as may be
necessary for the making of the Luneta extension, the area to be reclaimed would be filled at the expense
of the Insular Government and without cost to the City of Manila, with material dredged from Manila Bay.
Hence, the letter of the statute should be narrowed to exclude maters which if included would defeat the
policy of the legislation.
The reclaimed area, an extension to the Luneta, is declared to be property of the City of Manila. Property,
however, is either of public ownership or of private ownership. 35 What kind of property of the City is the
reclaimed land? Is it of public ownership (dominion) or of private ownership?
We hold that it is of public dominion, intended for public use.
Firstly, if the reclaimed area was granted to the City of Manila as its patrimonial property, the City could,
by virtue of its ownership, dispose of the whole reclaimed area without need of authorization to do so from
the lawmaking body. Thus Article 348 of the Civil Code of Spain provides that "ownership is the right to
enjoy and dispose of a thing without further limitations than those established by law." 36 The right to
dispose (jus disponendi) of one's property is an attribute of ownership. Act No. 1360, as amended,
however, provides by necessary implication, that the City of Manila could not dispose of the reclaimed
area without being authorized by the lawmaking body. Thus the statute provides that "the City of Manila is
hereby authorized to set aside a tract ... at the north end, for a hotel site, and to lease the same ... should
the municipal board ... deem it advisable, it is hereby authorized ...to sell said tract of land ... " (Sec. 5). If
the reclaimed area were patrimonial property of the City, the latter could dispose of it without need of the
authorization provided by the statute, and the authorization to set aside ... lease ... or sell ... given by the
statute would indeed be superfluous. To so construe the statute s to render the term "authorize," which is
repeatedly used by the statute, superfluous would violate the elementary rule of legal hermeneutics that
effect must be given to every word, clause, and sentence of the statute and that a statute should be so
interpreted that no part thereof becomes inoperative or superfluous. 37 To authorize means to empower, to
give a right to act. 38 Act No. 1360 furthermore qualifies the verb it authorize" with the adverb "hereby,"
which means "by means of this statue or section," Hence without the authorization expressly given by Act
No. 1360, the City of Manila could not lease or sell even the northern portion; much less could it dispose
of the whole reclaimed area. Consequently, the reclaimed area was granted to the City of Manila, not as
its patrimonial property. At most, only the northern portion reserved as a hotel site could be said to be

patrimonial property for, by express statutory provision it could be disposed of, and the title thereto would
revert to the City should the grantee fail to comply with the terms provided by the statute.
TDC however, contends that the purpose of the authorization provided in Act No. 1360 to lease or sell
was really to limit the City's power of disposition. To sustain such contention is to beg the question. If the
purpose of the law was to limit the City's power of disposition then it is necessarily assumed that the City
had already the power to dispose, for if such power did not exist, how could it be limited? It was precisely
Act 1360 that gave the City the power to dispose for it was hereby authorized by lease of sale. Hence, the
City of Manila had no power to dispose of the reclaimed land had such power not been granted by Act No.
1360, and the purpose of the authorization was to empower the city to sell or lease the northern part and
not, as TDC claims, to limit only the power to dispose. Moreover, it is presumed that when the lawmaking
body enacted the statute, it had full knowledge of prior and existing laws and legislation on the subject of
the statute and acted in accordance or with respect thereto. 39 If by another previous law, the City of
Manila could already dispose of the reclaimed area, which it could do if such area were given to it as its
patrimonial property, would it then not be a superfluity for Act No. 1360 to authorize the City to dispose of
the reclaimed land? Neither has petitioner TDC pointed to any other law that authorized the City to do so,
nor have we come across any. What we do know is that if the reclaimed land were patrimonial property,
there would be no need of giving special authorization to the City to dispose of it. Said authorization was
given because the reclaimed land was not intended to be patrimonial property of the City of Manila, and
without the express authorization to dispose of the northern portion, the City could not dispose of even
that part.
Secondly, the reclaimed area is an "extension to the Luneta in the City of Manila." 40 If the reclaimed area
is an extension of the Luneta, then it is of the same nature or character as the old Luneta. Anent this
matter, it has been said that a power to extend (or continue an act or business) cannot authorize a
transaction that is totally distinct. 41 It is not disputed that the old Luneta is a public park or plaza and it is
so considered by Section 859 of the Revised Ordinances of the City of Manila. 42 Hence the "extension to
the Luneta" must be also a public park or plaza and for public use.
TDC, however, contends that the subject property cannot be considered an extension of the old Luneta
because it is outside of the limits of the old Luneta when extended to the sea. This is a strained
interpretation of the term "extension," for an "extension," it has been held, "signifies enlargement in any
direction in length, breadth, or circumstance." 43
Thirdly, the reclaimed area was formerly a part of the manila Bay. A bay is nothing more than an inlet of
the sea. Pursuant to Article 1 of the Law of Waters of 1866, bays, roadsteads, coast sea, inlets and
shores are parts of the national domain open to public use. These are also property of public ownership
devoted to public use, according to Article 339 of the Civil Code of Spain.
When the shore or part of the bay is reclaimed, it does not lose its character of being property for public
use, according to Government of the Philippine Islands vs. Cabangis. 44 The predecessor of the claimants
in this case was the owner of a big tract of land including the lots in question. From 1896 said land began
to wear away due to the action of the waters of Manila Bay. In 1901 the lots in question became
completely submerged in water in ordinary tides. It remained in such a state until 1912 when the
Government undertook the dredging of the Vitas estuary and dumped the Sand and - silt from estuary on
the low lands completely Submerged in water thereby gradually forming the lots in question. Tomas
Cabangis took possession thereof as soon as they were reclaimed hence, the claimants, his successors
in interest, claimed that the lots belonged to them. The trial court found for the claimants and the
Government appealed. This Court held that when the lots became a part of the shore. As they remained
in that condition until reclaimed by the filling done by the Government, they belonged to the public
domain. for public use .4' Hence, a part of the shore, and for that purpose a part of the bay, did not lose its
character of being for public use after it was reclaimed.
Fourthly, Act 1360, as amended, authorized the lease or sale of the northern portion of the reclaimed area
as a hotel sites. The subject property is not that northern portion authorized to be leased or sold; the
subject property is the southern portion. Hence, applying the rule of expresio unius est exlusio alterius,
the City of Manila was not authorized to sell the subject property. The application of this principle of
statutory construction becomes the more imperative in the case at bar inasmuch as not only must the
public grant of the reclaimed area to the City of Manila be, as above stated, strictly construed against the
City of Manila, but also because a grant of power to a municipal corporation, as happens in this case
where the city is author ized to lease or sell the northern portion of the Luneta extension, is strictly limited

to such as are expressly or impliedly authorized or necessarily incidental to the objectives of the
corporation.
Fifthly, Article 344 of the Civil Code of Spain provides that to property of public use, in provinces and in
towns, comprises the provincial and town roads, the squares streets fountains, and public waters the
promenades, and public works of general service paid for by such towns or provinces." A park or plaza,
such as the extension to the Luneta, is undoubtedly comprised in said article.
The petitioners, however, argue that, according to said Article 344, in order that the character of property
for public use may be so attached to a plaza, the latter must be actually constructed or at least laid out as
such, and since the subject property was not yet constructed as a plaza or at least laid out as a plaza
when it was sold by the City, it could not be property for public use. It should be noted, however, that
properties of provinces and towns for public use are governed by the same principles as properties of the
same character belonging to the public domain. 46 In order to be property of public domain an intention to
devote it to public use is sufficient. 47 The, petitioners' contention is refuted by Manresa himself who said,
in his comments", on Article 344, that: +.wph!1
Las plazas, calles y paseos publicos correspondent sin duda aiguna aldominio publico
municipal ), porque se hallan establecidos sobre suelo municipal y estan destinadas al
uso de todos Laurent presenta tratando de las plazas, una question relativa a si deben
conceptuarse como de dominio publico los lugares vacios libres, que se encuenttan en
los Municipios rurales ... Laurent opina contra Pioudhon que toda vez que estan al
servicio de todos pesos lugares, deben considerable publicos y de dominion publico.
Realmente, pala decidir el punto, bastara siempre fijarse en el destino real y efectivo de
los citados lugares, y si este destino entraa un uso comun de todos, no hay duda que
son de dominio publico municipal si no patrimoniales.
It is not necessary, therefore, that a plaza be already constructed of- laid out as a plaza in order that it be
considered property for public use. It is sufficient that it be intended to be such In the case at bar, it has
been shown that the intention of the lawmaking body in giving to the City of Manila the extension to the
Luneta was not a grant to it of patrimonial property but a grant for public use as a plaza.
We have demonstrated ad satietatem that the Luneta extension as intended to be property of the City of
Manila for public use. But, could not said property-later on be converted, as the petitioners contend, to
patrimonial property? It could be. But this Court has already said, in Ignacio vs. The Director of
Lands, 49 the executive and possibly the legislation department that has the authority and the power to
make the declaration that said property, is no longer required for public use, and until such declaration i
made the property must continue to form paint of the public domain. In the case at bar, there has been no
such explicit or unequivocal declaration It should be noted, furthermore, anent this matter, that courts are
undoubted v not. primarily called upon, and are not in a position, to determine whether any public land is
still needed for the purposes specified in Article 4 of the Law of Waters . 50
Having disposed of the petitioners' principal arguments relative to the main issue, we now pass to the
items of circumstantial evidence which TDC claims may serve as aids in construing the legislative intent
in the enactment of Act No. 1360, as amended. It is noteworthy that all these items of alleged
circumstantial evidence are acts far removed in time from the date of the enactment of Act No.1360 such
that they cannot be considered contemporaneous with its enactment. Moreover, it is not farfetched that
this mass of circumstantial evidence might have been influenced by the antecedent series of invalid acts,
to wit: the City's having obtained over the reclaimed area OCT No. 1909 on January 20,1911; the sale
made by the City of the subject property to Manila Lodge No. 761; and the issuance to the latter of T.C.T.
No. 2195. It cannot gainsaid that if the subsequent acts constituting the circumstantial evidence have
been base on, or at least influenced, by those antecedent invalid acts and Torrens titles S they can hardly
be indicative of the intent of the lawmaking body in enacting Act No. 1360 and its amendatory act.
TDC claims that Exhs. "J," "J-l" "K," "T," "U," "W" and "Y" show that the subject property is not a park.
Exhibits "J" and "J-1," the "Luneta and vicinity showing proposed development" dated May 14, 1949, were
prepared by the National Urban Planning Commission of the Office of the President. It cannot be
reasonably expected that this plan for development of the Luneta should show that the subject property
occupied by the ElksClub is a public park, for it was made 38 years after the sale to the Elks, and after
T.C.T. No. 2195 had been issued to Elks. It is to be assumed that the Office of the President was

cognizant of the Torrens title of BPOE. That the subject property was not included as a part of the Luneta
only indicated that the National Urban Planning Commission that made the plan knew that the subject
property was occupied by Elks and that Elks had a Torrens title thereto. But this in no way proves that the
subject property was originally intended to be patrimonial property of the City of Manila or that the sale to
Elks or that the Torrens-title of the latter is valid.
Exhibit "K" is the "Plan of land covered by T.C.T . No ----, as prepared for Tarlac Development Company."
It was made on November 11, 1963 by Felipe F. Cruz, private land surveyor. This surveyor is admittedly a
surveyor for TDC. 51 This plan cannot be expected to show that the subject property is a part of the Luneta
Park, for he plan was made to show the lot that "was to be sold to petitioner." This plan must have also
assumed the existence of a valid title to the land in favor of Elks.
Exhibits "T" and "U" are copies of Presidential Proclamations No. 234 issued on November 15, 1955 and
No. 273 issued on October 4, 1967, respectively. The purpose of the said Proclamations was to reserve
certain parcels of land situated in the District of Ermita, City of Manila, for park site purposes. Assuming
that the subject property is not within the boundaries of the reservation, this cannot be interpreted to
mean that the subject property was not originally intended to be for public use or that it has ceased to be
such. Conversely, had the subject property been included in the reservation, it would mean, if it really
were private property, that the rights of the owners thereof would be extinguished, for the reservations
was "subject to private rights, if any there be." That the subject property was not included in the
reservation only indicates that the President knew of the existence of the Torrens titles mentioned above.
The failure of the Proclamations to include the subject property in the reservation for park site could not
change the character of the subject property as originally for public use and to form part of the Luneta
Park. What has been said here applies to Exhibits "V", "V-1" to "V-3," and "W" which also refer to the area
and location of the reservation for the Luneta Park.
Exhibit "Y" is a copy of O.C.T. No. 7333 dated November 13, 1935, covering the lot where now stands the
American Embassy [Chancery]. It states that the property is "bounded ... on the Northwest by properties
of Army and Navy Club (Block No.321) and Elks Club (Block No. 321)." Inasmuch as the said bounderies
delineated by the Philippine Legislature in Act No. 4269, the petitioners contend that the Legislature
recognized and conceded the existence of the Elks Club property as a primate property (the property in
question) and not as a public park or plaza. This argument is non sequitur plain and simple Said Original
Certificate of Title cannot be considered as an incontrovertible declaration that the Elks Club was in truth
and in fact the owner of such boundary lot. Such mention as boundary owner is not a means of acquiring
title nor can it validate a title that is null and void.
TDC finally claims that the City of Manila is estopped from questioning the validity of the sale it executed
on July 13,'1911 conconveying the subject property to the Manila Lodge No. 761, BPOE. This contention
cannot be seriously defended in the light of the doctrine repeatedly enunciated by this Court that the
Government is never estopped by mistakes or errors on the pan of its agents, and estoppel does not
apply to a municipal corporation to validate a contract that is prohibited by law or its against Republic
policy, and the sale of July 13, 1911 executed by the City of Manila to Manila Lodge was certainly a
contract prohibited by law. Moreover, estoppel cannot be urged even if the City of Manila accepted the
benefits of such contract of sale and the Manila Lodge No. 761 had performed its part of the agreement,
for to apply the doctrine of estoppel against the City of Manila in this case would be tantamount to
enabling it to do indirectly what it could not do directly. 52
The sale of the subject property executed by the City of Manila to the Manila Lodge No. 761, BPOE, was
void and inexistent for lack of subject matter. 53 It suffered from an incurable defect that could not be
ratified either by lapse of time or by express ratification. The Manila Lodge No. 761 therefore acquired no
right by virtue of the said sale. Hence to consider now the contract inexistent as it always has seen,
cannot be, as claimed by the Manila Lodge No. 761, an impairment of the obligations of contracts, for
there was it, contemplation of law, no contract at all.
The inexistence of said sale can be set up against anyone who asserts a right arising from it, not only
against the first vendee, the Manila Lodge No. 761, BPOE, but also against all its suceessors, including
the TDC which are not protected the doctrine of bona fide ii purchaser without notice, being claimed by
the TDC does not apply where there is a total absence of title in the vendor, and the good faith of the
purchaser TDC cannot create title where none exists. 55

The so-called sale of the subject property having been executed, the restoration or restitution of what has
been given is order 56
SECOND ISSUE
The second ground alleged in support of the instant petitions for review on certiorari is that the Court of
Appeals has departed from the accepted and usual course of judicial proceedings as to call for an
exercise of the power of supervision. TDC in L-41012, argues that the respondent Court did not make its
own findings but simply recited those of the lower court and made a general affirmance, contrary to the
requirements of the Constitution; that the respondent Court made glaring and patent mistakes in
recounting even the copied findings, palpably showing lack of deliberate consideration of the matters
involved, as, for example, when said court said that Act No. 1657 authorized the City of Manila to set
aside a portion of the reclaimed land "formed by the Luneta Extension of- to lease or sell the same for
park purposes;" and that respondent Court. further more, did not resolve or dispose of any of the
assigned errors contrary to the mandate of the Judiciary Act.. 57
The Manila Lodge No. 761, in L-41001, likewise alleges, as one of the reasons warranting review, that the
Court of Appeals departed from the accepted and usual course of Judicial proceedings by simply making
a general affirmance of the court a quo findings without bothering to resolve several vital points
mentioned by the BPOE in its assigned errors. 58
COMMENTS ON SECOND ISSUE
We have shown in our discussion of the first issue that the decision of the trial court is fully in accordance
with law. To follows that when such decision was affirmed by the Court of Appeals, the affirmance was
likewise in accordance with law. Hence, no useful purpose will be served in further discussing the second
issue.
CONCLUSION
ACCORDINGLY, the petitions in both G.R. Nos. L-41001 and L-41012 are denied for lack of merit, and
the decision of the Court of Appeals of June 30, 1975, is hereby affirmed, at petitioner's cost.

Republic of the Philippines

SUPREME COURT
Manila
THIRD DIVISION
G.R. No. 81163 September 26, 1988
EDUARDO S. BARANDA and ALFONSO HITALIA, petitioners,
vs.
HONORABLE JUDGE TITO GUSTILO, ACTING REGISTER OF DEEDS AVITO SACLAUSO,
HONORABLE COURT OF APPEALS, and ATTY. HECTOR P. TEODOSIO, respondents.
Eduardo S. Baranda for petitioners.

Rico & Associates for private respondents.

GUTIERREZ, JR., J.:

Eduardo S. Baranda and Alfonso Hitalia were the petitioners in G.R. No. 64432 and the private
respondents in G.R. No. 62042. The subject matter of these two (2) cases and the instant case is the
same a parcel of land designated as Lot No. 4517 of the Cadastral Survey of Sta. Barbara, Iloilo
covered by Original Certificate of Title No. 6406.
The present petition arose from the same facts and events which triggered the filing of the earlier
petitions. These facts and events are cited in our resolution dated December 29, 1983 in G.R. No. 64432,
as follows:
. . . This case has its origins in a petition for reconstitution of title filed with the Court of
First Instance of Iloilo involving a parcel of land known as Lot No. 4517 of the Sta.
Barbara Cadastre covered by Original Certificate of Title No. 6406 in the name of
Romana Hitalia. Eventually, Original Certificate of Title No. 6406 was cancelled and
Transfer Certificate of Title No. 106098 was issued in the names of Alfonso Hitalia and
Eduardo S. Baranda The Court issued a writ of possession which Gregorio Perez, Maria
P. Gotera and Susana Silao refused to honor on the ground that they also have TCT No.
25772 over the same Lot No. 4517. The Court, after considering the private respondents'
opposition and finding TCT No. 25772 fraudulently acquired, ordered that the writ of
possession be carried out. A motion for reconsideration having been denied, a writ of
demolition was issued on March 29, 1982. Perez and Gotera filed a petition for certiorari
and prohibition with the Court of Appeals. On August 6, 1982, the Court of Appeals
denied the petition. Perez and Gotera filed the petition for review on certiorari
denominated as G.R. No. 62042 before the Supreme Court. As earlier stated the petition
was denied in a resolution dated January 7,1983. The motion for reconsideration was
denied in another resolution dated March 25, 1983, which also stated that the denial is
final. This decision in G.R. No. 62042, in accordance with the entry of judgment, became
final on March 25, 1983. The petitioners in the instant case G.R. No. 64432--contend that
the writs of possession and demolition issued in the respondent court should now be
implemented; that Civil Case No. 00827 before the Intermediate Appellate Court was filed
only to delay the implementation of the writ; that counsel for the respondent should be
held in contempt of court for engaging in a concerted but futile effort to delay the
execution of the writs of possession and demolition and that petitioners are entitled to
damages because of prejudice caused by the filing of this petition before the Intermediate
Appellate Court. On September 26, 1983, this Court issued a Temporary Restraining
Order ' to maintain the status quo, both in the Intermediate Appellate Court and in the
Regional Trial Court of Iloilo. Considering that (l)there is merit in the instant petition for
indeed the issues discussed in G.R. No. 64432 as raised in Civil Case No. 00827 before
the respondent court have already been passed upon in G.R. No. 62042; and (2) the
Temporary Restraining Order issued by the Intermediate Appellate Court was only
intended not to render the petition moot and academic pending the Court's consideration
of the issues, the Court RESOLVED to DIRECT the respondent Intermediate Appellate
Court not to take cognizance of issues already resolved by this Court and accordingly
DISMISS the petition in Civil Case No. 00827. Immediate implementation of the writs of
possession and demolition is likewise ordered. (pp. 107-108, Rollo G.R. No. 64432)
On May 9, 1984, the Court issued a resolution denying with finality a motion for reconsideration of the
December 29, 1983 resolution in G.R. No. 64432. On this same date, another resolution was issued, this
time in G.R. No. 62042, referring to the Regional Trial Court of Iloilo the ex-parte motion of the private
respondents (Baranda and Hitalia) for execution of the judgment in the resolutions dated January 7, 1983
and March 9, 1983. In the meantime, the then Intermediate Appellate Court issued a resolution dated
February 10, 1984, dismissing Civil Case No. 00827 which covered the same subject matter as the
Resolutions above cited pursuant to our Resolution dated December 29, 1983. The resolution dated
December 29, 1983 in G.R. No. 64432 became final on May 20, 1984.

Upon motions of the petitioners, the Regional Trial Court of Iloilo, Branch 23 presided by Judge Tito G.
Gustilo issued the following order:
Submitted are the following motions filed by movants Eduardo S. Baranda and Alfonso
Hitalia through counsel dated August 28, 1984:
(a) Reiterating Motion for Execution of Judgment of Resolutions dated January 7, 1983
and March 9, 1983 Promulgated by Honorable Supreme Court (First Division) in G.R. No.
62042;
(b) Motion for Execution of Judgment of Resolution dated December 29, 1983
Promulgated by Honorable Supreme Court (First Division) in G.R. No. 64432;
(c) The Duties of the Register of Deeds are purely ministerial under Act 496, therefore
she must register all orders, judgment, resolutions of this Court and that of Honorable
Supreme Court.
Finding the said motions meritorious and there being no opposition thereto, the same is
hereby GRANTED.
WHEREFORE, Transfer Certificate of Title No. T-25772 is hereby declared null and void
and Transfer Certificate of Title No. T-106098 is hereby declared valid and subsisting title
concerning the ownership of Eduardo S. Baranda and Alfonso Hitalia, all of Sta. Barbara
Cadastre.
The Acting Register of Deeds of Iloilo is further ordered to register the Subdivision
Agreement of Eduardo S. Baranda and Alfonso Hitalia as prayed for." (p. 466, Rollo--G.R.
No. 64432)
The above order was set aside on October 8, 1984 upon a motion for reconsideration and manifestation
filed by the Acting Registrar of Deeds of Iloilo, Atty. Helen P. Sornito, on the ground that there was a
pending case before this Court, an Action for Mandamus, Prohibition, Injunction under G.R. No. 67661
filed by Atty. Eduardo Baranda, against the former which remained unresolved.
In view of this development, the petitioners filed in G.R. No. 62042 and G.R. No. 64432 ex-parte motions
for issuance of an order directing the Regional Trial Court and Acting Register of Deeds to execute and
implement the judgments of this Court. They prayed that an order be issued:
1. Ordering both the Regional Trial Court of Iloilo Branch XXIII, under Hon. Judge Tito G.
Gustilo and the acting Register of Deeds Helen P. Sornito to register the Order dated
September 5, 1984 of the lower court;
2. To cancel No.T-25772. Likewise to cancel No.T-106098 and once cancelled to issue
new certificates of title to each of Eduardo S. Baranda and Alfonso Hitalia;
Plus other relief and remedies equitable under the premises. (p. 473, 64432 Rollo)
Acting on these motions, we issued on September 17,1986 a Resolution in G.R. No. 62042 and G.R. No.
64432 granting the motions as prayed for. Acting on another motion of the same nature filed by the
petitioners, we issued another Resolution dated October 8, 1986 referring the same to the Court
Administrator for implementation by the judge below.
In compliance with our resolutions, the Regional Trial Court of Iloilo, Branch 23 presided by Judge Tito G.
Gustilo issued two (2) orders dated November 6,1986 and January 6,1987 respectively, to wit:
ORDER
This is an Ex-parte Motion and Manifestation submitted by the movants through counsel
on October 20, 1986; the Manifestation of Atty. Helen Sornito, Register of Deeds of the
City of Iloilo, and formerly acting register of deeds for the Province of Iloilo dated October

23, 1986 and the Manifestation of Atty. Avito S. Saclauso, Acting Register of Deeds,
Province of Iloilo dated November 5, 1986.
Considering that the motion of movants Atty. Eduardo S. Baranda and Alfonso Hitalia
dated August 12, 1986 seeking the full implementation of the writ of possession was
granted by the Honorable Supreme Court, Second Division per its Resolution dated
September 17,1986, the present motion is hereby GRANTED.
WHEREFORE, the Acting Register of Deeds, Province of Iloilo, is hereby ordered to
register the Order of this Court dated September 5, 1984 as prayed for.
xxx xxx xxx
ORDER
This is a Manifestation and Urgent Petition for the Surrender of Transfer Certificate of
Title No. T-25772 submitted by the petitioners Atty. Eduardo S. Baranda and Alfonso
Hitalia on December 2, 1986, in compliance with the order of this Court dated November
25, 1 986, a Motion for Extension of Time to File Opposition filed by Maria Provido Gotera
through counsel on December 4, 1986 which was granted by the Court pursuant to its
order dated December 15, 1986. Considering that no Opposition was filed within the thirty
(30) days period granted by the Court finding the petition tenable, the same is hereby
GRANTED.
WHEREFORE, Maria Provido Gotera is hereby ordered to surrender Transfer Certificate
of Title No. T-25772 to this Court within ten (10) days from the date of this order, after
which period, Transfer Certificate of Title No. T-25772 is hereby declared annulled and
the Register of Deeds of Iloilo is ordered to issue a new Certificate of Title in lieu thereof
in the name of petitioners Atty. Eduardo S. Baranda and Alfonso Hitalia, which certificate
shall contain a memorandum of the annulment of the outstanding duplicate. (pp. 286-287,
Rollo 64432)
On February 9, 1987, Atty. Hector Teodosio, the counsel of Gregorio Perez, private respondent in G.R.
No. 64432 and petitioner in G.R. No. 62042, filed a motion for explanation in relation to the resolution
dated September 17, 1986 and manifestation asking for clarification on the following points:
a. As to the prayer of Atty. Eduardo Baranda for the cancellation of TCT T-25772, should
the same be referred to the Court of Appeals (as mentioned in the Resolution of
November 27, 1985) or is it already deemed granted by implication (by virtue of the
Resolution dated September 17, 1986)?
b. Does the Resolution dated September 17, 1986 include not only the implementation of
the writ of possession but also the cancellation of TCT T-25772 and the subdivision of Lot
4517? (p. 536, Rollo 4432)
Acting on this motion and the other motions filed by the parties, we issued a resolution dated May 25,
1987 noting all these motions and stating therein:
xxx xxx xxx
Since entry of judgment in G.R. No. 62042 was made on January 7, 1983 and in G.R.
No. 64432 on May 30, 1984, and all that remains is the implementation of our resolutions,
this COURT RESOLVED to refer the matters concerning the execution of the decisions to
the Regional Trial Court of Iloilo City for appropriate action and to apply disciplinary
sanctions upon whoever attempts to trifle with the implementation of the resolutions of
this Court. No further motions in these cases will be entertained by this Court. (p. 615,
Rollo-64432)
In the meantime, in compliance with the Regional Trial Court's orders dated November 6, 1986 and
January 6, 1987, Acting Register of Deeds AvitoSaclauso annotated the order declaring Transfer

Certificate of Title No. T-25772 as null and void, cancelled the same and issued new certificates of titles
numbers T-111560, T-111561 and T-111562 in the name of petitioners Eduardo S. Baranda and Alfonso
Hitalia in lieu of Transfer Certificate of TItle No. T-106098.
However, a notice of lis pendens "on account of or by reason of a separate case (Civil Case No. 15871)
still pending in the Court of Appeals" was carried out and annotated in the new certificates of titles issued
to the petitioners. This was upheld by the trial court after setting aside its earlier order dated February 12,
1987 ordering the cancellation of lis pendens.
This prompted the petitioners to file another motion in G.R, No. 62042 and G.R. No. 64432 to order the
trial court to reinstate its order dated February 12, 1987 directing the Acting Register of Deeds to cancel
the notice of lis pendensin the new certificates of titles.
In a resolution dated August 17, 1987, we resolved to refer the said motion to the Regional Trial Court of
Iloilo City, Branch 23 for appropriate action.
Since respondent Judge Tito Gustilo of the Regional Trial Court of Iloilo, Branch 23 denied the petitioners'
motion to reinstate the February 12, 1987 order in another order dated September 17, 1987, the
petitioners filed this petition for certiorari, prohibition and mandamus with preliminary injunction to compel
the respondent judge to reinstate his order dated February l2, 1987 directing the Acting Register of Deeds
to cancel the notice of lis pendens annotated in the new certificates of titles issued in the name of the
petitioners.
The records show that after the Acting Register of Deeds annotated a notice of is pendens on the new
certificates of titles issued in the name of the petitioners, the petitioners filed in the reconstitution case an
urgent ex-parte motion to immediately cancel notice of lis pendens annotated thereon.
In his order dated February 12, 1987, respondent Judge Gustilo granted the motion and directed the
Acting Register of Deeds of Iloilo to cancel the lis pendens found on Transfer Certificate of Title Nos. T106098; T-111560; T-111561 and T-111562.
Respondent Acting Register of Deeds Avito Saclauso filed a motion for reconsideration of the February
12, 1987 order stating therein:
That the undersigned hereby asks for a reconsideration of the said order based on the
second paragraph of Section 77 of P.D. 1529, to wit:
"At any time after final judgment in favor of the defendant or other
disposition of the action such as to terminate finally all rights of the
plaintiff in and to the land and/or buildings involved, in any case in which
a memorandum or notice of Lis Pendens has been registered as
provided in the preceding section, the notice of Lis Pendens shall be
deemed cancelled upon the registration of a certificate of the clerk of
court in which the action or proceeding was pending stating the manner
of disposal thereof."
That the lis pendens under Entry No. 427183 was annotated on T-106098, T-111560, T111561 and T-111562 by virtue of a case docketed as Civil Case No. 15871, now pending
with the Intermediate Court of Appeals, entitled, "Calixta Provido, Ricardo Provido, Sr.,
Maria Provido and Perfecto Provido, Plaintiffs, versus Eduardo Baranda and Alfonso
Hitalia, Respondents."
That under the above-quoted provisions of P.D. 152, the cancellation of subject Notice of
Lis Pendens can only be made or deemed cancelled upon the registration of the
certificate of the Clerk of Court in which the action or proceeding was pending, stating the
manner of disposal thereof.
Considering that Civil Case No. 1587, upon which the Notice of Lis Pendens was based
is still pending with the Intermediate Court of Appeals, only the Intermediate Court of

Appeals and not this Honorable Court in a mere cadastral proceedings can order the
cancellation of the Notice of Lis Pendens. (pp. 68-69, Rollo)
Adopting these arguments and on the ground that some if not all of the plaintiffs in Civil Case No. 15871
were not privies to the case affected by the Supreme Court resolutions, respondent Judge Tito Gustilo set
aside his February 12, 1987 order and granted the Acting Register of Deeds' motion for reconsideration.
The issue hinges on whether or not the pendency of the appeal in Civil Case No. 15871 with the Court of
Appeals prevents the court from cancelling the notice of lis pendens in the certificates of titles of the
petitioners which were earlier declared valid and subsisting by this Court in G.R. No. 62042 and G.R. No.
64432. A corollary issue is on the nature of the duty of a Register of Deeds to annotate or annul a notice
of lis pendens in a torrens certificate of title.
Civil Case No. 15871 was a complaint to seek recovery of Lot No. 4517 of Sta. Barbara Cadastre Iloilo,
(the same subject matter of G.R. No 62042 and G.R. No. 64432) from petitioners Baranda and Hitalia
filed by Calixta Provido, Ricardo Provido, Maxima Provido and Perfecta Provido before the Regional Trial
Court of Iloilo, Branch 23. At the instance of Atty. Hector P. Teodosio, the Provides' counsel, a notice of is
pendens was annotated on petitioners' Certificate of Title No. T-106098 covering Lot No. 4517, Sta.
Barbara Cadastre.
Acting on a motion to dismiss filed by the petitioners, the court issued an order dated October 24, 1984
dismissing Civil Case No. 15871.
The order was then appealed to the Court of Appeals. This appeal is the reason why respondent Judge
Gustilo recalled the February 12, 1987 order directing the Acting Register of Deeds to cancel the notice of
lis pendens annotated on the certificates of titles of the petitioners.
This petition is impressed with merit.
Maria Provido Gotera was one of the petitioners in G.R. No. 62042. Although Calixta Provido, Ricardo
Provido, Maxima Provido and Perfecta Provido, the plaintiffs in Civil Case No. 15871 were not impleaded
as parties, it is very clear in the petition that Maria Provido was acting on behalf of the Providos who
allegedly are her co-owners in Lot No. 4517, Sta. Barbara Cadastre as shown by Transfer Certificate of
Title No. T-25772 issued in her name and the names of the plaintiffs in Civil Case No. 15871, among
others. (Annex "E" G.R. No. 62042, p. 51, Rollo) In fact, one of the issues raised by petitioners Maria
Provido Gotera and Gregoria Perez in G.R. No. 62042 was as follows:
xxx xxx xxx
2. Whether or not, in the same reconstitution proceedings, respondent Judge Midpantao
L. Adil had the authority to declare as null and void the transfer certificate of title in the
name of petitioner Maria Provido Gotera and her other co-owners. (p. 3, Rollo; Emphasis
supplied)
It thus appears that the plaintiffs in Civil Case No. 15871 were privies to G.R. No. 62042 contrary to the
trial court's findings that they were not.
G.R. No. 62042 affirmed the order of the then Court of First Instance of Iloilo in the reconstitution
proceedings declaring TCT No. 25772 in the name of Providos over Lot No. 4517, Sta. Barbara Cadastre
null and void for being fraudulently obtained and declaring TCT No. 106098 over the same parcel Lot No.
4517, Sta. Barbara Cadastre in the name of petitioners Eduardo Baranda and Alfonso Hitalia valid and
subsisting.
The decision in G.R. No. 62042 became final and executory on March 25,1983 long before Civil Case No.
15871 was filed.
Under these circumstances, it is crystal clear that the Providos, private respondents herein, in filing Civil
Case No. 15871 were trying to delay the full implementation of the final decisions in G.R. No. 62042 as
well as G.R. No. 64432 wherein this Court ordered immediate implementation of the writs of possession
and demolition in the reconstitution proceedings involving Lot No. 4517, Sta. Barbara Cadastre.

The purpose of a notice of lis pendens is defined in the following manner:

Lis pendens has been conceived to protect the real rights of the party causing the
registration thereof With the lis pendens duly recorded, he could rest secure that he
would not lose the property or any part of it. For, notice of lis pendens serves as a
warning to a prospective purchaser or incumbrancer that the particular property is in
litigation; and that he should keep his hands off the same, unless of course he intends to
gamble on the results of the litigation. (Section 24, Rule 14, RuIes of Court; Jamora v.
Duran, et al., 69 Phil. 3, 11; I Martin, Rules of Court, p. 415, footnote 3, citing cases.)
(Natanov. Esteban, 18 SCRA 481, 485-486)
The private respondents are not entitled to this protection. The facts obtaining in this case necessitate the
application of the rule enunciated in the cases of Victoriano v. Rovila (55 Phil. 1000), Municipal Council of
Paranaque v. Court of First Instance of Rizal (70 Phil., 363) and Sarmiento v. Ortiz (10 SCRA 158), to the
effect that:
We have once held that while ordinarily a notice of pendency which has been filed in a
proper case, cannot be cancelled while the action is pending and undetermined, the
proper court has the discretionary power to cancel it under peculiar circumstances, as for
instance, where the evidence so far presented by the plaintiff does not bear out the main
allegations of his complaint, and where the continuances of the trial, for which the plaintiff
is responsible, are unnecessarily delaying the determination of the case to the prejudice
of the defendant. (Victoriano v. Rovira, supra; The Municipal Council of Paranaque v.
Court of First Instance of Rizal, supra)
The facts of this case in relation to the earlier cases brought all the way to the Supreme Court illustrate
how the private respondents tried to block but unsuccessfuly the already final decisions in G.R. No. 62042
and G.R. No. 64432.
Parenthetically, respondent Judge Tito Gustilo abused his discretion in sustaining the respondent Acting
Register of Deeds' stand that, the notice of lis pendens in the certificates of titles of the petitioners over
Lot No. 4571, Barbara Cadastre cannot be cancelled on the ground of pendency of Civil Case No. 15871
with the Court of Appeals. In upholding the position of the Acting Register of Deeds based on Section 77
of Presidential Decree No. 1529, he conveniently forgot the first paragraph thereof which provides:
Cancellation of lis pendens. Before final judgment, a notice of lis pendens may be
cancelled upon Order of the Court after proper showing that the notice is for the purpose
of molesting the adverse party, or that it is not necessary to protect the rights of the party
who caused it to be registered. It may also be cancelled by the Register of Deeds upon
verified petition of the party who caused the registration thereof.
This Court cannot understand how respondent Judge Gustilo could have been misled by the respondent
Acting Register of Deeds on this matter when in fact he was the same Judge who issued the order
dismissing Civil Case No. 15871 prompting the private respondents to appeal said order dated October
10, 1984 to the Court of Appeals. The records of the main case are still with the court below but based on
the order, it can be safely assumed that the various pleadings filed by the parties subsequent to the
motion to dismiss filed by the petitioners (the defendants therein) touched on the issue of the validity of
TCT No. 25772 in the name of the Providos over Lot Number 4571, Sta. Barbara Cadastre in the light of
the final decisions in G.R. No. 62042 and G.R. No. 64432.
The next question to be determined is on the nature of the duty of the Register of Deeds to annotate
and/or cancel the notice of lis pendens in a torrens certificate of title.
Section 10, Presidential Decree No. 1529 states that "It shall be the duty of the Register of Deeds to
immediately register an instrument presented for registration dealing with real or personal property which
complies with all the requisites for registration. ... . If the instrument is not registrable, he shall forthwith
deny registration thereof and inform the presentor of such denial in writing, stating the ground or reasons
therefore, and advising him of his right to appeal by consulta in accordance with Section 117 of this
Decree."

Section 117 provides that "When the Register of Deeds is in doubt with regard to the proper step to be
taken or memoranda to be made in pursuance of any deed, mortgage or other instrument presented to
him for registration or where any party in interest does not agree with the action taken by the Register of
Deeds with reference to any such instrument, the question shall be submitted to the Commission of Land
Registration by the Register of Deeds, or by the party in interest thru the Register of Deeds. ... ."
The elementary rule in statutory construction is that when the words and phrases of the statute are clear
and unequivocal, their meaning must be determined from the language employed and the statute must be
taken to mean exactly what it says. (Aparri v. Court of Appeals, 127 SCRA 231; Insular Bank of Asia and
America Employees' Union [IBAAEU] v. Inciong, 132 SCRA 663) The statute concerning the function of
the Register of Deeds to register instruments in a torrens certificate of title is clear and leaves no room for
construction. According to Webster's Third International Dictionary of the English Language the
word shall means "ought to, must, ...obligation used to express a command or exhortation, used in laws,
regulations or directives to express what is mandatory." Hence, the function of a Register of Deeds with
reference to the registration of deeds encumbrances, instruments and the like is ministerial in nature. The
respondent Acting Register of Deeds did not have any legal standing to file a motion for reconsideration of
the respondent Judge's Order directing him to cancel the notice of lis pendens annotated in the
certificates of titles of the petitioners over the subject parcel of land. In case of doubt as to the proper step
to be taken in pursuance of any deed ... or other instrument presented to him, he should have asked the
opinion of the Commissioner of Land Registration now, the Administrator of the National Land Title and
Deeds Registration Administration in accordance with Section 117 of Presidential Decree No. 1529.
In the ultimate analysis, however, the responsibility for the delays in the full implementation of this Court's
already final resolutions in G.R. No. 62042 and G.R. No. 64432 which includes the cancellation of the
notice of lis pendensannotated in the certificates of titles of the petitioners over Lot No. 4517 of the Sta.
Barbara Cadastre falls on the respondent Judge. He should never have allowed himself to become part of
dilatory tactics, giving as excuse the wrong impression that Civil Case No. 15871 filed by the private
respondents involves another set of parties claiming Lot No. 4517 under their own Torrens Certificate of
Title.
WHEREFORE, the instant petition is GRANTED. The February 12, 1987 order of the Regional Trial Court
of Iloilo, Branch 23 is REINSTATED. All subsequent orders issued by the trial court which annulled the
February 12, 1987 order are SET ASIDE. Costs against the private respondents.
SO ORDERED.

Taada vs. Tuvera, Dec. 29, 1988

EN BANC
[G.R. No. L-63915. December 29, 1986.]
LORENZO M. TAADA, ABRAHAM F. SARMIENTO, and MOVEMENT OF ATTORNEYS
FOR BROTHERHOOD, INTEGRITY AND NATIONALISM, INC. (MABINI), Petitioners,
v. HON. JUAN C. TUVERA. in his capacity as Executive Assistant to the President,
HON. JOAQUIN VENUS, in his capacity as Deputy Executive Assistant to the
President, MELQUIADES P. DE LA CRUZ, ETC., ET AL., Respondents.
SYLLABUS
FERNAN, J., concurring:chanrob1es virtual 1aw library
1. CIVIL LAW; EFFECT AND APPLICATION OF LAWS; ARTICLE 2, CIVIL CODE; PUBLICATION
OF LAWS MADE TO ENSURE CONSTITUTIONAL RIGHT TO DUE PROCESS AND TO
INFORMATION. The categorical statement by this Court on the need for publication before
any law be made effective seeks to prevent abuses on the part if the lawmakers and, at the
time, ensure to the people their constitutional right to due process and to information on
matter of public concern.chanroblesvirtuallawlibrary:red
RESOLUTION
CRUZ, J.:
Due process was invoked by the petitioners in demanding the disclosure or a number of
presidential decrees which they claimed had not been published as required by law. The
government argued that while publication was necessary as a rule, it was not so when it
was "otherwise provided," as when the decrees themselves declared that they were to
become effective immediately upon their approval. In the decision of this case on April 24,
1985, the Court affirmed the necessity for the publication of some of these decrees,

declaring in the dispositive portion as follows:jgc:chanrobles.com.ph

"WHEREFORE, the Court hereby orders respondents to publish to the Official Gazette all
unpublished presidential issuances which are of general application, and unless so
published, they shall have no binding force and effect."cralaw virtua1aw library
The petitioners are now before us again, this time to move for reconsideration/clarification
of that decision. 1 Specifically, they ask the following questions:chanrob1es virtual 1aw
library
1. What is meant by "law of public nature" or "general applicability" ?
2. Must a distinction be made between laws of general applicability and laws which are not?
3. What is meant by "publication" ?
4. Where is the publication to be made?
5. When is the publication to be made?
Resolving their own doubts, the petitioners suggest that there should be no distinction
between laws of general applicability and those which are not; that publication means
complete publication; and that the publication must be made forthwith in the Official
Gazette. 2
In the Comment 3 required of the then Solicitor General, he claimed first that the motion
was a request for an advisory opinion and should therefore be dismissed, and, on the
merits, that the clause "unless it is otherwise provided" in Article 2 of the Civil Code meant
that the publication required therein was not always imperative; that publication, when
necessary, did not have to be made in the Official Gazette; and that in any case the subject
decision was concurred in only by three justices and consequently not binding. This elicited
a Reply 4 refuting these arguments. Came next the February Revolution and the Court
required the new Solicitor General to file a Rejoinder in view of the supervening events,
under Rule 3, Section 18, of the Rules of Court. Responding, he submitted that issuances
intended only for the interval administration of a government agency or for particular
persons did not have to be published; that publication when necessary must be in full and in
the Official Gazette; and that, however, the decision under reconsideration was not binding
because it was not supported by eight members of this Court. 5
The subject of contention is Article 2 of the Civil Code providing as
follows:jgc:chanrobles.com.ph
"ART. 2. Laws shall take effect after fifteen days following the completion of their publication
in the Official Gazette, unless it is otherwise provided. This Code shall take effect one year
after such publication."cralaw virtua1aw library
After a careful study of this provision and of the arguments of the parties, both on the
original petition and on the instant motion, we have come to the conclusion, and so hold,
that the clause "unless it is otherwise provided" refers to the date of effectivity and not to
the requirement of publication itself, which cannot in any event be omitted. This clause does
not mean that the legislature may make the law effective immediately upon approval, or on
any other date, without its previous publication.chanrobles virtual lawlibrary
Publication is indispensable in every case, but the legislature may in its discretion provide
that the usual fifteen-day period shall be shortened or extended. An example, as pointed
out by the present Chief Justice in his separate concurrence in the original decision, 6 is the
Civil Code which did not become effective after fifteen days from its publication in the
Official Gazette but "one year after such publication." The general rule did not apply because
it was "otherwise provided."cralaw virtua1aw library
It is not correct to say that under the disputed clause publication may be dispensed with
altogether. The reason is that such omission would offend due process insofar as it would
deny the public knowledge of the laws that are supposed to govern it. Surely, if the
legislature could validly provide that a law shall become effective immediately upon its
approval notwithstanding the lack of publication (or after an unreasonably short period after
publication), it is not unlikely that persons not aware of it would be prejudiced as a result;

and they would be so not because of a failure to comply with it but simply because they did
not know of its existence. Significantly, this is not true only of penal laws as is commonly
supposed. One can think of many non-penal measures, like a law on prescription, which
must also be communicated to the persons they may affect before they can begin to
operate.cralawnad
We note at this point the conclusive presumption that every person knows the law, which of
course presupposes that the law has been published if the presumption is to have any legal
justification at all. It is no less important to remember that Section 6 of the Bill of Rights
recognizes "the right of the people to information on matters of public concern," and this
certainly applies to, among others, and indeed especially, the legislative enactments of the
government.
The term "laws" should refer to all laws and not only to those of general application, for
strictly speaking all laws relate to the people in general albeit there are some that do not
apply to them directly. An example is a law granting citizenship to a particular individual,
like a relative of President Marcos who was decreed instant naturalization. It surely cannot
be said that such a law does not affect the public although it unquestionably does not apply
directly to all the people. The subject of such law is a matter of public interest which any
member of the body politic may question in the political forums or, if he is a proper party,
even in the courts of justice. In fact, a law without any bearing on the public would be
invalid as an intrusion of privacy or as class legislation or as an ultra vires act of the
legislature. To be valid, the law must invariably affect the public interest even if it might be
directly applicable only to one individual, or some of the people only, and not to the public
as a whole.
We hold therefore that all statutes, including those of local application and private laws,
shall be published as a condition for their effectivity, which shall begin fifteen days after
publication unless a different effectivity date is fixed by the
legislature.chanrobles.com:cralaw:red
Covered by this rule are presidential decrees and executive orders promulgated by the
President in the exercise of legislative powers whenever the same are validly delegated by
the legislature or, at present, directly conferred by the Constitution. Administrative rules and
regulations must also be published if their purpose is to enforce or implement existing law
pursuant also to a valid delegation.
Interpretative regulations and those merely internal in nature, that is, regulating only the
personnel of the administrative agency and not the public, need not be published. Neither is
publication required of the so-called letters of instructions issued by administrative superiors
concerning the rules or guidelines to be followed by their subordinates in the performance of
their duties.chanroblesvirtuallawlibrary
Accordingly, even the charter of a city must be published notwithstanding that it applies to
only a portion of the national territory and directly affects only the inhabitants of that place.
All presidential decrees must be published, including even, say, those naming a public place
after a favored individual or exempting him from certain prohibitions or requirements. The
circulars issued by the Monetary Board must be published if they are meant not merely to
interpret but to "fill in the details" of the Central Bank Act which that body is supposed to
enforce.
However, no publication is required of the instructions issued by, say, the Minister of Social
Welfare on the case studies to be made in petitions for adoption or the rules laid down by
the head of a government agency on the assignments or workload of his personnel or the
wearing of office uniforms. Parenthetically, municipal ordinances are not covered by this rule
but by the Local Government Code.
We agree that the publication must be in full or it is no publication at all since its purpose is
to inform the public of the contents of the laws. As correctly pointed out by the petitioners,
the mere mention of the number of the presidential decree, the title of such decree, its
whereabouts (e.g., "with Secretary Tuvera"), the supposed date of effectivity, and in a mere
supplement of the Official Gazette cannot satisfy the publication requirement. This is not
even substantial compliance. This was the manner, incidentally, in which the General
Appropriations Act for FY 1975, a presidential decree undeniably of general applicability and
interest, was "published" by the Marcos administration. 7 The evident purpose was to
withhold rather than disclose information on this vital law.

Coming now to the original decision, it is true that only four justices were categorically for
publication in the Official Gazette 8 and that six others felt that publication could be made
elsewhere as long as the people were sufficiently informed. 9 One reserved his vote 10 and
another merely acknowledged the need for due publication without indicating where it
should be made, 11 It is therefore necessary for the present membership of this Court to
arrive at a clear consensus on this matter and to lay down a binding decision supported by
the necessary vote.
There is much to be said of the view that the publication need not be made in the Official
Gazette, considering its erratic releases and limited readership. Undoubtedly, newspapers of
general circulation could better perform the function of communicating the laws to the
people as such periodicals are more easily available, have a wider readership, and come out
regularly. The trouble, though, is that this kind of publication is not the one required or
authorized by existing law. As far as we know, no amendment has been made of Article 2 of
the Civil Code. The Solicitor General has not pointed to such a law, and we have no
information that it exists. If it does, it obviously has not yet been published.
At any rate, this Court is not called upon to rule upon the wisdom of a law or to repeal or
modify it if we find it impractical. That is not our function. That function belongs to the
legislature. Our task is merely to interpret and apply the law as conceived and approved by
the political departments of the government in accordance with the prescribed procedure.
Consequently, we have no choice but to pronounce that under Article 2 of the Civil Code, the
publication of laws must be made in the Official Gazette, and not elsewhere, as a
requirement for their effectivity after fifteen days from such publication or after a different
period provided by the legislature.chanrobles law library
We also hold that the publication must be made forthwith, or at least as soon as possible, to
give effect to the law pursuant to the said Article 2. There is that possibility, of course,
although not suggested by the parties that a law could be rendered unenforceable by a
mere refusal of the executive, for whatever reason, to cause its publication as required. This
is a matter, however, that we do not need to examine at this time.
Finally, the claim of the former Solicitor General that the instant motion is a request for an
advisory opinion is untenable, to say the least, and deserves no further comment.
The days of the secret laws and the unpublished decrees are over. This is once again an
open society, with all the acts of the government subject to public scrutiny and available
always to public cognizance. This has to be so if our country is to remain democratic, with
sovereignty residing in the people and all government authority emanating from them.
Although they have delegated the power of legislation, they retain the authority to review
the work of their delegates and to ratify or reject it according to their lights, through their
freedom of expression and their right of suffrage. This they cannot do if the acts of the
legislature are concealed.
Laws must come out in the open in the clear light of the sun instead of skulking in the
shadows with their dark, deep secrets. Mysterious pronouncements and rumored rules
cannot be recognized as binding unless their existence and contents are confirmed by a
valid publication intended to make full disclosure and give proper notice to the people. The
furtive law is like a scabbarded saber that cannot feint, parry or cut unless the naked blade
is drawn.
WHEREFORE, it is hereby declared that all laws as above defined shall immediately upon
their approval, or as soon thereafter as possible, be published in full in the Official Gazette,
to become effective only after fifteen days from their publication, or on another date
specified by the legislature, in accordance with Article 2 of the Civil Code.chanroblesvirtual|
awlibrary
SO ORDERED.
Teehankee, C.J., Feria, Yap, Narvasa, Melencio-Herrera, Alampay, Gutierrez, Jr ., and
Paras, JJ., concur.
Separate Opinions

FERNAN, J., concurring:chanrob1es virtual 1aw library

While concurring in the Courts opinion penned by my distinguished colleague, Mr. Justice
Isagani A. Cruz, I would like to add a few observations. Even as a Member of the defunct
Batasang Pambansa, I took a strong stand against the insidious manner by which the
previous dispensation had promulgated and made effective thousands of decrees, executive
orders, letters of instructions, etc. Never has the law-making power which traditionally
belongs to the legislature been used and abused to satisfy the whims and caprices of a oneman legislative mill as it happened in the past regime. Thus, in those days, it was not
surprising to witness the sad spectacle of two presidential decrees bearing the same
number, although covering two different subject matters. In point is the case of two
presidential decrees bearing number 1686 issued on March 19, 1980, one granting
Philippine citizenship to Michael M. Keon, the then Presidents nephew and the other
imposing a tax on every motor vehicle equipped with air-conditioner. This was further
exacerbated by the issuance of PD No. 1686-A also on March 19, 1980 granting Philippine
citizenship to basketball players Jeffrey Moore and Dennis George
Still.chanroblesvirtualawlibrary
The categorical statement by this Court on the need for publication before any law may be
made effective seeks to prevent abuses on the part of the lawmakers and, at the same
time, ensures to the people their constitutional right to due process and to information on
matters of public concern.
FELICIANO, J., concurring:chanrob1es virtual 1aw library
I agree entirely with the opinion of the court so eloquently written by Mr. Justice Isagani A.
Cruz. At the same time, I wish to add a few statements to reflect my understanding of what
the Court is saying.chanrobles virtual lawlibrary
A statute which by its terms provides for its coming into effect immediately upon approval
thereof, is properly interpreted as coming into effect immediately upon publication thereof in
the Official Gazette as provided in Article 2 of the Civil Code. Such statute, in other words,
should not be regarded as purporting literally to come into effect immediately upon its
approval or enactment and without need of publication. For so to interpret such statute
would be to collide with the constitutional obstacle posed by the due process clause. The
enforcement of prescriptions which are both unknown to and unknowable by those
subjected to the statute, has been throughout history a common tool of tyrannical
governments. Such application and enforcement constitutes at bottom a negation of the
fundamental principle of legality in the relations between a government and its people.
At the same time, it is clear that the requirement of publication of a statute in the Official
Gazette, as distinguished from any other medium such as a newspaper of general
circulation, is embodied in a statutory norm and is not a constitutional command. The
statutory norm is set out in Article 2 of the Civil Code and is supported and reinforced by
Section 1 of Commonwealth Act No. 638 and Section 35 of the Revised Administrative Code.
A specification of the Official Gazette as the prescribed medium of publication may therefore
be changed. Article 2 of the Civil Code could, without creating a constitutional problem, be
amended by a subsequent statute providing, for instance, for publication either in the
Official Gazette or in a newspaper of general circulation in the country. Until such an
amendatory statute is in fact enacted, Article 2 of the Civil Code must be obeyed and
publication effected in the Official Gazette and not in any other medium.chanrobles
virtualawlibrary chanrobles.com:chanrobles.com.ph

Republic of the Philippines

SUPREME COURT
Manila
EN BANC
G.R. No. L-19650

September 29, 1966

CALTEX (PHILIPPINES), INC., petitioner-appellee,

vs.
ENRICO PALOMAR, in his capacity as THE POSTMASTER GENERAL, respondent-appellant.
Office of the Solicitor General for respondent and appellant.
Ross, Selph and Carrascoso for petitioner and appellee.

CASTRO, J.:
In the year 1960 the Caltex (Philippines) Inc. (hereinafter referred to as Caltex) conceived and laid the
groundwork for a promotional scheme calculated to drum up patronage for its oil products. Denominated
"Caltex Hooded Pump Contest", it calls for participants therein to estimate the actual number of liters a
hooded gas pump at each Caltex station will dispense during a specified period. Employees of the Caltex
(Philippines) Inc., its dealers and its advertising agency, and their immediate families excepted,
participation is to be open indiscriminately to all "motor vehicle owners and/or licensed drivers". For the
privilege to participate, no fee or consideration is required to be paid, no purchase of Caltex products
required to be made. Entry forms are to be made available upon request at each Caltex station where a
sealed can will be provided for the deposit of accomplished entry stubs.
A three-staged winner selection system is envisioned. At the station level, called "Dealer Contest", the
contestant whose estimate is closest to the actual number of liters dispensed by the hooded pump thereat
is to be awarded the first prize; the next closest, the second; and the next, the third. Prizes at this level
consist of a 3-burner kerosene stove for first; a thermos bottle and a Ray-O-Vac hunter lantern for
second; and an Everready Magnet-lite flashlight with batteries and a screwdriver set for third. The first-

prize winner in each station will then be qualified to join in the "Regional Contest" in seven different
regions. The winning stubs of the qualified contestants in each region will be deposited in a sealed can
from which the first-prize, second-prize and third-prize winners of that region will be drawn. The regional
first-prize winners will be entitled to make a three-day all-expenses-paid round trip to Manila,
accompanied by their respective Caltex dealers, in order to take part in the "National Contest". The
regional second-prize and third-prize winners will receive cash prizes of P500 and P300, respectively. At
the national level, the stubs of the seven regional first-prize winners will be placed inside a sealed can
from which the drawing for the final first-prize, second-prize and third-prize winners will be made. Cash
prizes in store for winners at this final stage are: P3,000 for first; P2,000 for second; Pl,500 for third; and
P650 as consolation prize for each of the remaining four participants.
Foreseeing the extensive use of the mails not only as amongst the media for publicizing the contest but
also for the transmission of communications relative thereto, representations were made by Caltex with
the postal authorities for the contest to be cleared in advance for mailing, having in view sections 1954(a),
1982 and 1983 of the Revised Administrative Code, the pertinent provisions of which read as follows:
SECTION 1954. Absolutely non-mailable matter. No matter belonging to any of the following
classes, whether sealed as first-class matter or not, shall be imported into the Philippines through
the mails, or to be deposited in or carried by the mails of the Philippines, or be delivered to its
addressee by any officer or employee of the Bureau of Posts:
Written or printed matter in any form advertising, describing, or in any manner pertaining to, or
conveying or purporting to convey any information concerning any lottery, gift enterprise, or
similar scheme depending in whole or in part upon lot or chance, or any scheme, device, or
enterprise for obtaining any money or property of any kind by means of false or fraudulent
pretenses, representations, or promises.
"SECTION 1982. Fraud orders.Upon satisfactory evidence that any person or company is
engaged in conducting any lottery, gift enterprise, or scheme for the distribution of money, or of
any real or personal property by lot, chance, or drawing of any kind, or that any person or
company is conducting any scheme, device, or enterprise for obtaining money or property of any
kind through the mails by means of false or fraudulent pretenses, representations, or promises,
the Director of Posts may instruct any postmaster or other officer or employee of the Bureau to
return to the person, depositing the same in the mails, with the word "fraudulent" plainly written or
stamped upon the outside cover thereof, any mail matter of whatever class mailed by or
addressed to such person or company or the representative or agent of such person or company.
SECTION 1983. Deprivation of use of money order system and telegraphic transfer service.
The Director of Posts may, upon evidence satisfactory to him that any person or company is
engaged in conducting any lottery, gift enterprise or scheme for the distribution of money, or of
any real or personal property by lot, chance, or drawing of any kind, or that any person or
company is conducting any scheme, device, or enterprise for obtaining money or property of any
kind through the mails by means of false or fraudulent pretenses, representations, or promise,
forbid the issue or payment by any postmaster of any postal money order or telegraphic transfer
to said person or company or to the agent of any such person or company, whether such agent is
acting as an individual or as a firm, bank, corporation, or association of any kind, and may provide
by regulation for the return to the remitters of the sums named in money orders or telegraphic
transfers drawn in favor of such person or company or its agent.
The overtures were later formalized in a letter to the Postmaster General, dated October 31, 1960, in
which the Caltex, thru counsel, enclosed a copy of the contest rules and endeavored to justify its position
that the contest does not violate the anti-lottery provisions of the Postal Law. Unimpressed, the then
Acting Postmaster General opined that the scheme falls within the purview of the provisions aforesaid and
declined to grant the requested clearance. In its counsel's letter of December 7, 1960, Caltex sought a
reconsideration of the foregoing stand, stressing that there being involved no consideration in the part of
any contestant, the contest was not, under controlling authorities, condemnable as a lottery. Relying,
however, on an opinion rendered by the Secretary of Justice on an unrelated case seven years before
(Opinion 217, Series of 1953), the Postmaster General maintained his view that the contest involves
consideration, or that, if it does not, it is nevertheless a "gift enterprise" which is equally banned by the
Postal Law, and in his letter of December 10, 1960 not only denied the use of the mails for purposes of

the proposed contest but as well threatened that if the contest was conducted, "a fraud order will have to
be issued against it (Caltex) and all its representatives".
Caltex thereupon invoked judicial intervention by filing the present petition for declaratory relief against
Postmaster General Enrico Palomar, praying "that judgment be rendered declaring its 'Caltex Hooded
Pump Contest' not to be violative of the Postal Law, and ordering respondent to allow petitioner the use of
the mails to bring the contest to the attention of the public". After issues were joined and upon the
respective memoranda of the parties, the trial court rendered judgment as follows:
In view of the foregoing considerations, the Court holds that the proposed 'Caltex Hooded Pump
Contest' announced to be conducted by the petitioner under the rules marked as Annex B of the
petitioner does not violate the Postal Law and the respondent has no right to bar the public
distribution of said rules by the mails.
The respondent appealed.
The parties are now before us, arrayed against each other upon two basic issues: first, whether the
petition states a sufficient cause of action for declaratory relief; and second, whether the proposed "Caltex
Hooded Pump Contest" violates the Postal Law. We shall take these up in seriatim.
1. By express mandate of section 1 of Rule 66 of the old Rules of Court, which was the applicable legal
basis for the remedy at the time it was invoked, declaratory relief is available to any person "whose rights
are affected by a statute . . . to determine any question of construction or validity arising under the . . .
statute and for a declaration of his rights thereunder" (now section 1, Rule 64, Revised Rules of Court). In
amplification, this Court, conformably to established jurisprudence on the matter, laid down certain
conditions sine qua non therefor, to wit: (1) there must be a justiciable controversy; (2) the controversy
must be between persons whose interests are adverse; (3) the party seeking declaratory relief must have
a legal interest in the controversy; and (4) the issue involved must be ripe for judicial determination
(Tolentino vs. The Board of Accountancy, et al., G.R. No. L-3062, September 28, 1951; Delumen, et al.
vs. Republic of the Philippines, 50 O.G., No. 2, pp. 576, 578-579; Edades vs. Edades, et al., G.R. No. L8964, July 31, 1956). The gravamen of the appellant's stand being that the petition herein states no
sufficient cause of action for declaratory relief, our duty is to assay the factual bases thereof upon the
foregoing crucible.
As we look in retrospect at the incidents that generated the present controversy, a number of significant
points stand out in bold relief. The appellee (Caltex), as a business enterprise of some consequence,
concededly has the unquestioned right to exploit every legitimate means, and to avail of all appropriate
media to advertise and stimulate increased patronage for its products. In contrast, the appellant, as the
authority charged with the enforcement of the Postal Law, admittedly has the power and the duty to
suppress transgressions thereof particularly thru the issuance of fraud orders, under Sections 1982
and 1983 of the Revised Administrative Code, against legally non-mailable schemes. Obviously pursuing
its right aforesaid, the appellee laid out plans for the sales promotion scheme hereinbefore detailed. To
forestall possible difficulties in the dissemination of information thereon thru the mails, amongst other
media, it was found expedient to request the appellant for an advance clearance therefor. However,
likewise by virtue of his jurisdiction in the premises and construing the pertinent provisions of the Postal
Law, the appellant saw a violation thereof in the proposed scheme and accordingly declined the request.
A point of difference as to the correct construction to be given to the applicable statute was thus reached.
Communications in which the parties expounded on their respective theories were exchanged. The
confidence with which the appellee insisted upon its position was matched only by the obstinacy with
which the appellant stood his ground. And this impasse was climaxed by the appellant's open warning to
the appellee that if the proposed contest was "conducted, a fraud order will have to be issued against it
and all its representatives."
Against this backdrop, the stage was indeed set for the remedy prayed for. The appellee's insistent
assertion of its claim to the use of the mails for its proposed contest, and the challenge thereto and
consequent denial by the appellant of the privilege demanded, undoubtedly spawned a live controversy.
The justiciability of the dispute cannot be gainsaid. There is an active antagonistic assertion of a legal
right on one side and a denial thereof on the other, concerning a real not a mere theoretical
question or issue. The contenders are as real as their interests are substantial. To the appellee, the
uncertainty occasioned by the divergence of views on the issue of construction hampers or disturbs its
freedom to enhance its business. To the appellant, the suppression of the appellee's proposed contest

believed to transgress a law he has sworn to uphold and enforce is an unavoidable duty. With the
appellee's bent to hold the contest and the appellant's threat to issue a fraud order therefor if carried out,
the contenders are confronted by the ominous shadow of an imminent and inevitable litigation unless their
differences are settled and stabilized by a tranquilizing declaration (Pablo y Sen, et al. vs. Republic of the
Philippines, G.R. No. L-6868, April 30, 1955). And, contrary to the insinuation of the appellant, the time is
long past when it can rightly be said that merely the appellee's "desires are thwarted by its own doubts, or
by the fears of others" which admittedly does not confer a cause of action. Doubt, if any there was, has
ripened into a justiciable controversy when, as in the case at bar, it was translated into a positive claim of
right which is actually contested (III Moran, Comments on the Rules of Court, 1963 ed., pp. 132-133,
citing: Woodward vs. Fox West Coast Theaters, 36 Ariz., 251, 284 Pac. 350).
We cannot hospitably entertain the appellant's pretense that there is here no question of construction
because the said appellant "simply applied the clear provisions of the law to a given set of facts as
embodied in the rules of the contest", hence, there is no room for declaratory relief. The infirmity of this
pose lies in the fact that it proceeds from the assumption that, if the circumstances here presented, the
construction of the legal provisions can be divorced from the matter of their application to the appellee's
contest. This is not feasible. Construction, verily, is the art or process of discovering and expounding the
meaning and intention of the authors of the law with respect to its application to a given case, where that
intention is rendered doubtful, amongst others, by reason of the fact that the given case is not explicitly
provided for in the law (Black, Interpretation of Laws, p. 1). This is precisely the case here. Whether or not
the scheme proposed by the appellee is within the coverage of the prohibitive provisions of the Postal
Law inescapably requires an inquiry into the intended meaning of the words used therein. To our mind,
this is as much a question of construction or interpretation as any other.
Nor is it accurate to say, as the appellant intimates, that a pronouncement on the matter at hand can
amount to nothing more than an advisory opinion the handing down of which is anathema to a declaratory
relief action. Of course, no breach of the Postal Law has as yet been committed. Yet, the disagreement
over the construction thereof is no longer nebulous or contingent. It has taken a fixed and final shape,
presenting clearly defined legal issues susceptible of immediate resolution. With the battle lines drawn, in
a manner of speaking, the propriety nay, the necessity of setting the dispute at rest before it
accumulates the asperity distemper, animosity, passion and violence of a full-blown battle which looms
ahead (III Moran, Comments on the Rules of Court, 1963 ed., p. 132 and cases cited), cannot but be
conceded. Paraphrasing the language in Zeitlin vs. Arnebergh 59 Cal., 2d., 901, 31 Cal. Rptr., 800, 383 P.
2d., 152, cited in 22 Am. Jur., 2d., p. 869, to deny declaratory relief to the appellee in the situation into
which it has been cast, would be to force it to choose between undesirable alternatives. If it cannot obtain
a final and definitive pronouncement as to whether the anti-lottery provisions of the Postal Law apply to its
proposed contest, it would be faced with these choices: If it launches the contest and uses the mails for
purposes thereof, it not only incurs the risk, but is also actually threatened with the certain imposition, of a
fraud order with its concomitant stigma which may attach even if the appellee will eventually be
vindicated; if it abandons the contest, it becomes a self-appointed censor, or permits the appellant to put
into effect a virtual fiat of previous censorship which is constitutionally unwarranted. As we weigh these
considerations in one equation and in the spirit of liberality with which the Rules of Court are to be
interpreted in order to promote their object (section 1, Rule 1, Revised Rules of Court) which, in the
instant case, is to settle, and afford relief from uncertainty and insecurity with respect to, rights and duties
under a law we can see in the present case any imposition upon our jurisdiction or any futility or
prematurity in our intervention.
The appellant, we apprehend, underrates the force and binding effect of the ruling we hand down in this
case if he believes that it will not have the final and pacifying function that a declaratory judgment is
calculated to subserve. At the very least, the appellant will be bound. But more than this, he obviously
overlooks that in this jurisdiction, "Judicial decisions applying or interpreting the law shall form a part of
the legal system" (Article 8, Civil Code of the Philippines). In effect, judicial decisions assume the same
authority as the statute itself and, until authoritatively abandoned, necessarily become, to the extent that
they are applicable, the criteria which must control the actuations not only of those called upon to abide
thereby but also of those in duty bound to enforce obedience thereto. Accordingly, we entertain no
misgivings that our resolution of this case will terminate the controversy at hand.
It is not amiss to point out at this juncture that the conclusion we have herein just reached is not without
precedent. In Liberty Calendar Co. vs. Cohen, 19 N.J., 399, 117 A. 2d., 487, where a corporation engaged
in promotional advertising was advised by the county prosecutor that its proposed sales promotion plan
had the characteristics of a lottery, and that if such sales promotion were conducted, the corporation

would be subject to criminal prosecution, it was held that the corporation was entitled to maintain a
declaratory relief action against the county prosecutor to determine the legality of its sales promotion
plan. In pari materia, see also: Bunis vs. Conway, 17 App. Div. 2d., 207, 234 N.Y.S. 2d., 435; Zeitlin vs.
Arnebergh, supra; Thrillo, Inc. vs. Scott, 15 N.J. Super. 124, 82 A. 2d., 903.
In fine, we hold that the appellee has made out a case for declaratory relief.
2. The Postal Law, chapter 52 of the Revised Administrative Code, using almost identical terminology in
sections 1954(a), 1982 and 1983 thereof, supra, condemns as absolutely non-mailable, and empowers
the Postmaster General to issue fraud orders against, or otherwise deny the use of the facilities of the
postal service to, any information concerning "any lottery, gift enterprise, or scheme for the distribution of
money, or of any real or personal property by lot, chance, or drawing of any kind". Upon these words
hinges the resolution of the second issue posed in this appeal.
Happily, this is not an altogether untrodden judicial path. As early as in 1922, in "El Debate", Inc. vs.
Topacio, 44 Phil., 278, 283-284, which significantly dwelt on the power of the postal authorities under the
abovementioned provisions of the Postal Law, this Court declared that
While countless definitions of lottery have been attempted, the authoritative one for this
jurisdiction is that of the United States Supreme Court, in analogous cases having to do with the
power of the United States Postmaster General, viz.: The term "lottery" extends to all schemes for
the distribution of prizes by chance, such as policy playing, gift exhibitions, prize concerts, raffles
at fairs, etc., and various forms of gambling. The three essential elements of a lottery are: First,
consideration; second, prize; and third, chance. (Horner vs. States [1892], 147 U.S. 449; Public
Clearing House vs. Coyne [1903], 194 U.S., 497; U.S. vs. Filart and Singson [1915], 30 Phil., 80;
U.S. vs. Olsen and Marker [1917], 36 Phil., 395; U.S. vs. Baguio [1919], 39 Phil., 962; Valhalla
Hotel Construction Company vs. Carmona, p. 233, ante.)
Unanimity there is in all quarters, and we agree, that the elements of prize and chance are too obvious in
the disputed scheme to be the subject of contention. Consequently as the appellant himself concedes, the
field of inquiry is narrowed down to the existence of the element of consideration therein. Respecting this
matter, our task is considerably lightened inasmuch as in the same case just cited, this Court has laid
down a definitive yard-stick in the following terms
In respect to the last element of consideration, the law does not condemn the gratuitous
distribution of property by chance, if no consideration is derived directly or indirectly from the
party receiving the chance, but does condemn as criminal schemes in which a valuable
consideration of some kind is paid directly or indirectly for the chance to draw a prize.
Reverting to the rules of the proposed contest, we are struck by the clarity of the language in which the
invitation to participate therein is couched. Thus
No puzzles, no rhymes? You don't need wrappers, labels or boxtops? You don't have to buy
anything? Simply estimate the actual number of liter the Caltex gas pump with the hood at your
favorite Caltex dealer will dispense from to , and win valuable prizes . . . ." .
Nowhere in the said rules is any requirement that any fee be paid, any merchandise be bought, any
service be rendered, or any value whatsoever be given for the privilege to participate. A prospective
contestant has but to go to a Caltex station, request for the entry form which is available on demand, and
accomplish and submit the same for the drawing of the winner. Viewed from all angles or turned inside
out, the contest fails to exhibit any discernible consideration which would brand it as a lottery. Indeed,
even as we head the stern injunction, "look beyond the fair exterior, to the substance, in order to unmask
the real element and pernicious tendencies which the law is seeking to prevent" ("El Debate", Inc. vs.
Topacio, supra, p. 291), we find none. In our appraisal, the scheme does not only appear to be, but
actually is, a gratuitous distribution of property by chance.
There is no point to the appellant's insistence that non-Caltex customers who may buy Caltex products
simply to win a prize would actually be indirectly paying a consideration for the privilege to join the
contest. Perhaps this would be tenable if the purchase of any Caltex product or the use of any Caltex

service were a pre-requisite to participation. But it is not. A contestant, it hardly needs reiterating, does not
have to buy anything or to give anything of value.1awphl.nt
Off-tangent, too, is the suggestion that the scheme, being admittedly for sales promotion, would naturally
benefit the sponsor in the way of increased patronage by those who will be encouraged to prefer Caltex
products "if only to get the chance to draw a prize by securing entry blanks". The required element of
consideration does not consist of the benefit derived by the proponent of the contest. The true test, as laid
down in People vs. Cardas, 28 P. 2d., 99, 137 Cal. App. (Supp.) 788, is whether the participant pays a
valuable consideration for the chance, and not whether those conducting the enterprise receive
something of value in return for the distribution of the prize. Perspective properly oriented, the standpoint
of the contestant is all that matters, not that of the sponsor. The following, culled from Corpus Juris
Secundum, should set the matter at rest:
The fact that the holder of the drawing expects thereby to receive, or in fact does receive, some
benefit in the way of patronage or otherwise, as a result of the drawing; does not supply the
element of consideration. Griffith Amusement Co. vs. Morgan, Tex. Civ. App., 98 S.W., 2d., 844"
(54 C.J.S., p. 849).
Thus enlightened, we join the trial court in declaring that the "Caltex Hooded Pump Contest" proposed by
the appellee is not a lottery that may be administratively and adversely dealt with under the Postal Law.
But it may be asked: Is it not at least a "gift enterprise, or scheme for the distribution of money, or of any
real or personal property by lot, chance, or drawing of any kind", which is equally prescribed? Incidentally,
while the appellant's brief appears to have concentrated on the issue of consideration, this aspect of the
case cannot be avoided if the remedy here invoked is to achieve its tranquilizing effect as an instrument
of both curative and preventive justice. Recalling that the appellant's action was predicated, amongst
other bases, upon Opinion 217, Series 1953, of the Secretary of Justice, which opined in effect that a
scheme, though not a lottery for want of consideration, may nevertheless be a gift enterprise in which that
element is not essential, the determination of whether or not the proposed contest wanting in
consideration as we have found it to be is a prohibited gift enterprise, cannot be passed over sub
silencio.
While an all-embracing concept of the term "gift enterprise" is yet to be spelled out in explicit words, there
appears to be a consensus among lexicographers and standard authorities that the term is commonly
applied to a sporting artifice of under which goods are sold for their market value but by way of
inducement each purchaser is given a chance to win a prize (54 C.J.S., 850; 34 Am. Jur., 654; Black, Law
Dictionary, 4th ed., p. 817; Ballantine, Law Dictionary with Pronunciations, 2nd ed., p. 55; Retail Section
of Chamber of Commerce of Plattsmouth vs. Kieck, 257 N.W., 493, 128 Neb. 13; Barker vs. State, 193
S.E., 605, 56 Ga. App., 705; Bell vs. State, 37 Tenn. 507, 509, 5 Sneed, 507, 509). As thus conceived, the
term clearly cannot embrace the scheme at bar. As already noted, there is no sale of anything to which
the chance offered is attached as an inducement to the purchaser. The contest is open to all qualified
contestants irrespective of whether or not they buy the appellee's products.
Going a step farther, however, and assuming that the appellee's contest can be encompassed within the
broadest sweep that the term "gift enterprise" is capable of being extended, we think that the appellant's
pose will gain no added comfort. As stated in the opinion relied upon, rulings there are indeed holding that
a gift enterprise involving an award by chance, even in default of the element of consideration necessary
to constitute a lottery, is prohibited (E.g.: Crimes vs. States, 235 Ala 192, 178 So. 73; Russell vs.
Equitable Loan & Sec. Co., 129 Ga. 154, 58 S.E., 88; State ex rel. Stafford vs. Fox-Great Falls Theater
Corporation, 132 P. 2d., 689, 694, 698, 114 Mont. 52). But this is only one side of the coin. Equally
impressive authorities declare that, like a lottery, a gift enterprise comes within the prohibitive statutes
only if it exhibits the tripartite elements of prize, chance and consideration (E.g.: Bills vs. People, 157 P.
2d., 139, 142, 113 Colo., 326; D'Orio vs. Jacobs, 275 P. 563, 565, 151 Wash., 297; People vs. Psallis, 12
N.Y.S., 2d., 796; City and County of Denver vs. Frueauff, 88 P., 389, 394, 39 Colo., 20, 7 L.R.A., N.S.,
1131, 12 Ann. Cas., 521; 54 C.J.S., 851, citing: Barker vs. State, 193 S.E., 605, 607, 56 Ga. App., 705; 18
Words and Phrases, perm. ed., pp. 590-594). The apparent conflict of opinions is explained by the fact
that the specific statutory provisions relied upon are not identical. In some cases, as pointed out in 54
C.J.S., 851, the terms "lottery" and "gift enterprise" are used interchangeably (Bills vs. People, supra); in
others, the necessity for the element of consideration or chance has been specifically eliminated by
statute. (54 C.J.S., 351-352, citing Barker vs. State, supra; State ex rel. Stafford vs. Fox-Great Falls
Theater Corporation, supra). The lesson that we derive from this state of the pertinent jurisprudence is,

therefore, that every case must be resolved upon the particular phraseology of the applicable statutory
provision.
Taking this cue, we note that in the Postal Law, the term in question is used in association with the word
"lottery". With the meaning of lottery settled, and consonant to the well-known principle of legal
hermeneutics noscitur a sociis which Opinion 217 aforesaid also relied upon although only insofar as
the element of chance is concerned it is only logical that the term under a construction should be
accorded no other meaning than that which is consistent with the nature of the word associated therewith.
Hence, if lottery is prohibited only if it involves a consideration, so also must the term "gift enterprise" be
so construed. Significantly, there is not in the law the slightest indicium of any intent to eliminate that
element of consideration from the "gift enterprise" therein included.
This conclusion firms up in the light of the mischief sought to be remedied by the law, resort to the
determination thereof being an accepted extrinsic aid in statutory construction. Mail fraud orders, it is
axiomatic, are designed to prevent the use of the mails as a medium for disseminating printed matters
which on grounds of public policy are declared non-mailable. As applied to lotteries, gift enterprises and
similar schemes, justification lies in the recognized necessity to suppress their tendency to inflame the
gambling spirit and to corrupt public morals (Com. vs. Lund, 15 A. 2d., 839, 143 Pa. Super. 208). Since in
gambling it is inherent that something of value be hazarded for a chance to gain a larger amount, it
follows ineluctably that where no consideration is paid by the contestant to participate, the reason behind
the law can hardly be said to obtain. If, as it has been held
Gratuitous distribution of property by lot or chance does not constitute "lottery", if it is not resorted
to as a device to evade the law and no consideration is derived, directly or indirectly, from the
party receiving the chance, gambling spirit not being cultivated or stimulated thereby. City of
Roswell vs. Jones, 67 P. 2d., 286, 41 N.M., 258." (25 Words and Phrases, perm. ed., p. 695,
emphasis supplied).
we find no obstacle in saying the same respecting a gift enterprise. In the end, we are persuaded to hold
that, under the prohibitive provisions of the Postal Law which we have heretofore examined, gift
enterprises and similar schemes therein contemplated are condemnable only if, like lotteries, they involve
the element of consideration. Finding none in the contest here in question, we rule that the appellee may
not be denied the use of the mails for purposes thereof.
Recapitulating, we hold that the petition herein states a sufficient cause of action for declaratory relief,
and that the "Caltex Hooded Pump Contest" as described in the rules submitted by the appellee does not
transgress the provisions of the Postal Law.
ACCORDINGLY, the judgment appealed from is affirmed. No costs.

Republic of the Philippines

SUPREME COURT
Manila
EN BANC
G.R. No. L-32717 November 26, 1970
AMELITO R. MUTUC, petitioner,
vs.
COMMISSION ON ELECTIONS, respondent.
Amelito R. Mutuc in his own behalf.
Romulo C. Felizmena for respondent.

FERNANDO, J.:
The invocation of his right to free speech by petitioner Amelito Mutuc, then a candidate for delegate to the
Constitutional Convention, in this special civil action for prohibition to assail the validity of a ruling of
respondent Commission on Elections enjoining the use of a taped jingle for campaign purposes, was not
in vain. Nor could it be considering the conceded absence of any express power granted to respondent by
the Constitutional Convention Act to so require and the bar to any such implication arising from any
provision found therein, if deference be paid to the principle that a statute is to be construed consistently
with the fundamental law, which accords the utmost priority to freedom of expression, much more so
when utilized for electoral purposes. On November 3, 1970, the very same day the case was orally
argued, five days after its filing, with the election barely a week away, we issued a minute resolution
granting the writ of prohibition prayed for. This opinion is intended to explain more fully our decision.
In this special civil action for prohibition filed on October 29, 1970, petitioner, after setting forth his being a
resident of Arayat, Pampanga, and his candidacy for the position of delegate to the Constitutional
Convention, alleged that respondent Commission on Elections, by a telegram sent to him five days
previously, informed him that his certificate of candidacy was given due course but prohibited him from
using jingles in his mobile units equipped with sound systems and loud speakers, an order which,
according to him, is "violative of [his] constitutional right ... to freedom of speech." 1 There being no plain,
speedy and adequate remedy, according to petitioner, he would seek a writ of prohibition, at the same
time praying for a preliminary injunction. On the very next day, this Court adopted a resolution requiring
respondent Commission on Elections to file an answer not later than November 2, 1970, at the same time
setting the case for hearing for Tuesday November 3, 1970. No preliminary injunction was issued. There
was no denial in the answer filed by respondent on November 2, 1970, of the factual allegations set forth
in the petition, but the justification for the prohibition was premised on a provision of the Constitutional
Convention Act, 2which made it unlawful for candidates "to purchase, produce, request or distribute
sample ballots, or electoral propaganda gadgets such as pens, lighters, fans (of whatever nature),
flashlights, athletic goods or materials, wallets, bandanas, shirts, hats, matches, cigarettes, and the like,
whether of domestic or foreign origin." 3It was its contention that the jingle proposed to be used by
petitioner is the recorded or taped voice of a singer and therefore a tangible propaganda material, under
the above statute subject to confiscation. It prayed that the petition be denied for lack of merit. The case
was argued, on November 3, 1970, with petitioner appearing in his behalf and Attorney Romulo C.
Felizmena arguing in behalf of respondent.
This Court, after deliberation and taking into account the need for urgency, the election being barely a
week away, issued on the afternoon of the same day, a minute resolution granting the writ of prohibition,
setting forth the absence of statutory authority on the part of respondent to impose such a ban in the light
of the doctrine of ejusdem generis as well as the principle that the construction placed on the statute by
respondent Commission on Elections would raise serious doubts about its validity, considering the

infringement of the right of free speech of petitioner. Its concluding portion was worded thus: "Accordingly,
as prayed for, respondent Commission on Elections is permanently restrained and prohibited from
enforcing or implementing or demanding compliance with its aforesaid order banning the use of political
jingles by candidates. This resolution is immediately executory." 4
1. As made clear in our resolution of November 3, 1970, the question before us was one of power.
Respondent Commission on Elections was called upon to justify such a prohibition imposed on petitioner.
To repeat, no such authority was granted by the Constitutional Convention Act. It did contend, however,
that one of its provisions referred to above makes unlawful the distribution of electoral propaganda
gadgets, mention being made of pens, lighters, fans, flashlights, athletic goods or materials, wallets,
bandanas, shirts, hats, matches, and cigarettes, and concluding with the words "and the like." 5 For
respondent Commission, the last three words sufficed to justify such an order. We view the matter
differently. What was done cannot merit our approval under the well-known principle of ejusdem generis,
the general words following any enumeration being applicable only to things of the same kind or class as
those specifically referred to. 6 It is quite apparent that what was contemplated in the Act was the
distribution of gadgets of the kind referred to as a means of inducement to obtain a favorable vote for the
candidate responsible for its distribution.
The more serious objection, however, to the ruling of respondent Commission was its failure to manifest
fealty to a cardinal principle of construction that a statute should be interpreted to assure its being in
consonance with, rather than repugnant to, any constitutional command or prescription. 7 Thus, certain
Administrative Code provisions were given a "construction which should be more in harmony with the
tenets of the fundamental law." 8 The desirability of removing in that fashion the taint of constitutional
infirmity from legislative enactments has always commended itself. The judiciary may even strain the
ordinary meaning of words to avert any collision between what a statute provides and what the
Constitution requires. The objective is to reach an interpretation rendering it free from constitutional
defects. To paraphrase Justice Cardozo, if at all possible, the conclusion reached must avoid not only that
it is unconstitutional, but also grave doubts upon that score. 9
2. Petitioner's submission of his side of the controversy, then, has in its favor obeisance to such a cardinal
precept. The view advanced by him that if the above provision of the Constitutional Convention Act were
to lend itself to the view that the use of the taped jingle could be prohibited, then the challenge of
unconstitutionality would be difficult to meet. For, in unequivocal language, the Constitution prohibits an
abridgment of free speech or a free press. It has been our constant holding that this preferred freedom
calls all the more for the utmost respect when what may be curtailed is the dissemination of information to
make more meaningful the equally vital right of suffrage. What respondent Commission did, in effect, was
to impose censorship on petitioner, an evil against which this constitutional right is directed. Nor could
respondent Commission justify its action by the assertion that petitioner, if he would not resort to taped
jingle, would be free, either by himself or through others, to use his mobile loudspeakers. Precisely, the
constitutional guarantee is not to be emasculated by confining it to a speaker having his say, but not
perpetuating what is uttered by him through tape or other mechanical contrivances. If this Court were to
sustain respondent Commission, then the effect would hardly be distinguishable from a previous restraint.
That cannot be validly done. It would negate indirectly what the Constitution in express terms assures. 10
3. Nor is this all. The concept of the Constitution as the fundamental law, setting forth the criterion for the
validity of any public act whether proceeding from the highest official or the lowest functionary, is a
postulate of our system of government. That is to manifest fealty to the rule of law, with priority accorded
to that which occupies the topmost rung in the legal hierarchy. The three departments of government in
the discharge of the functions with which it is entrusted have no choice but to yield obedience to its
commands. Whatever limits it imposes must be observed. Congress in the enactment of statutes must
ever be on guard lest the restrictions on its authority, whether substantive or formal, be transcended. The
Presidency in the execution of the laws cannot ignore or disregard what it ordains. In its task of applying
the law to the facts as found in deciding cases, the judiciary is called upon to maintain inviolate what is
decreed by the fundamental law. Even its power of judicial review to pass upon the validity of the acts of
the coordinate branches in the course of adjudication is a logical corollary of this basic principle that the
Constitution is paramount. It overrides any governmental measure that fails to live up to its mandates.
Thereby there is a recognition of its being the supreme law.
To be more specific, the competence entrusted to respondent Commission was aptly summed up by the
present Chief Justice thus: "Lastly, as the branch of the executive department although independent of
the President to which the Constitution has given the 'exclusive charge' of the 'enforcement and

administration of all laws relative to the conduct of elections,' the power of decision of the Commission is
limited to purely 'administrative questions.'" 11It has been the constant holding of this Court, as it could not
have been otherwise, that respondent Commission cannot exercise any authority in conflict with or
outside of the law, and there is no higher law than the Constitution. 12 Our decisions which liberally
construe its powers are precisely inspired by the thought that only thus may its responsibility under the
Constitution to insure free, orderly and honest elections be adequately fulfilled. 13 There could be no
justification then for lending approval to any ruling or order issuing from respondent Commission, the
effect of which would be to nullify so vital a constitutional right as free speech. Petitioner's case, as was
obvious from the time of its filing, stood on solid footing.
WHEREFORE, as set forth in our resolution of November 3, 1970, respondent Commission is
permanently restrained and prohibited from enforcing or implementing or demanding compliance with its
aforesaid order banning the use of political taped jingles. Without pronouncement as to costs.
Concepcion, C.J., Reyes, J.B.L., Makalintal, Zaldivar, Castro, Barredo and Villamor, JJ., concur.
Dizon and Makasiar, JJ., are on leave.

Separate Opinions

TEEHANKEE, J., concurring:

In line with my separate opinion in Badoy vs. Ferrer 1 on the unconstitutionality of the challenged
provisions of the 1971 Constitutional Convention Act, I concur with the views of Mr. Justice Fernando in
the main opinion that "there could be no justification .... for lending approval to any ruling or order issuing
from respondent Commission, the effect of which would be to nullify so vital a constitutional right as free
speech." I would only add the following observations:
This case once again calls for application of the constitutional test of reasonableness required by the due
process clause of our Constitution. Originally, respondent Commission in its guidelines prescribed
summarily that the use by a candidate of a "mobile unit roaming around and announcing a meeting
and the name of the candidate ... is prohibited. If it is used only for a certain place for a meeting and he
uses his sound system at the meeting itself, there is no violation." 2Acting upon petitioner's application,
however, respondent Commission ruled that "the use of a sound system by anyone be he a candidate or
not whether stationary or part of a mobile unit is not prohibited by the 1971 Constitutional Convention Act"
but imposed the condition "provided that there are no jingles and no streamers or posters placed in
carriers."
Respondent Commission's narrow view is that "the use of a 'jingle,' a verbally recorded form of election
propaganda, is no different from the use of a 'streamer' or 'poster,' a printed form of election propaganda,
and both forms of election advertisement fall under the prohibition contained in sec. 12 of R.A. 6132," and
"the record disc or tape where said 'jingle' has been recorded can be subject of confiscation by the
respondent Commission under par. (E) of sec. 12 of R.A. 6132." In this modern day and age of the
electronically recorded or taped voice which may be easily and inexpensively disseminated through a
mobile sound system throughout the candidate's district, respondent Commission would outlaw "recorded
or taped voices" and would exact of the candidate that he make use of the mobile sound system only
by personal transmission and repeatedly personally sing his "jingle" or deliver his spoken message to the
voters even if he loses his voice in the process or employ another person to do so personally even if this
should prove more expensive and less effective than using a recorded or taped voice.
Respondent Commission's strictures clearly violate, therefore, petitioner's basic freedom of speech and
expression. They cannot pass the constitutional test of reasonableness in that they go far beyond a
reasonable relation to the proper governmental object and are manifestly unreasonable, oppressive and
arbitrary.

Insofar as the placing of the candidate's "streamers" or posters on the mobile unit or carrier is concerned,
respondent Commission's adverse ruling that the same falls within the prohibition of section 12,
paragraphs (C) and (E) has not been appealed by petitioner. I would note that respondent Commission's
premise that "the use of a 'jingle' ... is no different from the use of a 'streamer' or 'poster' "in that these
both represent forms of election advertisements to make the candidate and the fact of his candidacy
known to the voters is correct, but its conclusion is not. The campaign appeal of the "jingle" is through
the voters' ears while that of the "streamers" is through the voters' eyes. But if it be held that the
Commission's ban on "jingles" abridges unreasonably, oppressively and arbitrarily the candidate's right of
free expression, even though such "jingles" may occasionally offend some sensitive ears, the
Commission's ban on "streamers" being placed on the candidate's mobile unit or carrier, which
"streamers" are less likely to offend the voters' sense of sight should likewise be held to be an
unreasonable, oppressive and arbitrary curtailment of the candidate's same constitutional right.
The intent of the law to minimize election expenses as invoked by respondent Commission, laudable as it
may be, should not be sought at the cost of the candidate's constitutional rights in the earnest pursuit of
his candidacy, but is to be fulfilled in the strict and effective implementation of the Act's limitation in section
12(G) on the total expenditures that may be made by a candidate or by another person with his
knowledge and consent.

Republic of the Philippines

SUPREME COURT
Manila
EN BANC
G.R. No. L-15045

January 20, 1961

IN RE: PETITION FOR EXEMPTION FROM COVERAGE BY THE SOCIAL SECURITY SYSTEM.
ROMAN CATHOLIC ARCHBISHOP OF MANILA, petitioner-appellant,
vs.
SOCIAL SECURITY COMMISSION, respondent-appellee.
Feria, Manglapus and Associates for petitioner-appellant.
Legal Staff, Social Security System and Solicitor General for respondent-appellee.
GUTIERREZ DAVID, J.:
On September 1, 1958, the Roman Catholic Archbishop of Manila, thru counsel, filed with the Social
Security Commission a request that "Catholic Charities, and all religious and charitable institutions and/or
organizations, which are directly or indirectly, wholly or partially, operated by the Roman Catholic
Archbishop of Manila," be exempted from compulsory coverage of Republic Act No. 1161, as amended,
otherwise known as the Social Security Law of 1954. The request was based on the claim that the said
Act is a labor law and does not cover religious and charitable institutions but is limited to businesses and
activities organized for profit. Acting upon the recommendation of its Legal Staff, the Social Security
Commission in its Resolution No. 572, series of 1958, denied the request. The Roman Catholic
Archbishop of Manila, reiterating its arguments and raising constitutional objections, requested for
reconsideration of the resolution. The request, however, was denied by the Commission in its Resolution
No. 767, series of 1958; hence, this appeal taken in pursuance of section 5(c) of Republic Act No. 1161,
as amended.
Section 9 of the Social Security Law, as amended, provides that coverage "in the System shall be
compulsory upon all members between the age of sixteen and sixty rears inclusive, if they have been for

at least six months a the service of an employer who is a member of the System, Provided, that the
Commission may not compel any employer to become member of the System unless he shall have been
in operation for at least two years and has at the time of admission, if admitted for membership during the
first year of the System's operation at least fifty employees, and if admitted for membership the following
year of operation and thereafter, at least six employees x x x." The term employer" as used in the law is
defined as any person, natural or juridical, domestic or foreign, who carries in the Philippines any trade,
business, industry, undertaking, or activity of any kind and uses the services of another person who is
under his orders as regards the employment, except the Government and any of its political subdivisions,
branches or instrumentalities, including corporations owned or controlled by the Government" (par. [c],
see. 8), while an "employee" refers to "any person who performs services for an 'employer' in which either
or both mental and physical efforts are used and who receives compensation for such services" (par. [d],
see. 8). "Employment", according to paragraph [i] of said section 8, covers any service performed by an
employer except those expressly enumerated thereunder, like employment under the Government, or any
of its political subdivisions, branches or instrumentalities including corporations owned and controlled by
the Government, domestic service in a private home, employment purely casual, etc.
From the above legal provisions, it is apparent that the coverage of the Social Security Law is predicated
on the existence of an employer-employee relationship of more or less permanent nature and extends to
employment of all kinds except those expressly excluded.
Appellant contends that the term "employer" as defined in the law should following the principle
of ejusdem generis be limited to those who carry on "undertakings or activities which have the element
of profit or gain, or which are pursued for profit or gain," because the phrase ,activity of any kind" in the
definition is preceded by the words "any trade, business, industry, undertaking." The contention cannot be
sustained. The rule ejusdem generisapplies only where there is uncertainty. It is not controlling where the
plain purpose and intent of the Legislature would thereby be hindered and defeated. (Grosjean vs.
American Paints Works [La], 160 So. 449). In the case at bar, the definition of the term "employer" is, we
think, sufficiently comprehensive as to include religious and charitable institutions or entities not organized
for profit, like herein appellant, within its meaning. This is made more evident by the fact that it contains
an exception in which said institutions or entities are not included. And, certainly, had the Legislature
really intended to limit the operation of the law to entities organized for profit or gain, it would not have
defined an "employer" in such a way as to include the Government and yet make an express exception of
it.
It is significant to note that when Republic Act No. 1161 was enacted, services performed in the employ of
institutions organized for religious or charitable purposes were by express provisions of said Act excluded
from coverage thereof (sec. 8, par. [j] subpars. 7 and 8). That portion of the law, however, has been
deleted by express provision of Republic Act No. 1792, which took effect in 1957. This is clear indication
that the Legislature intended to include charitable and religious institutions within the scope of the law.
In support of its contention that the Social Security Law was intended to cover only employment for profit
or gain, appellant also cites the discussions of the Senate, portions of which were quoted in its brief.
There is, however, nothing whatsoever in those discussions touching upon the question of whether the
law should be limited to organizations for profit or gain. Of course, the said discussions dwelt at length
upon the need of a law to meet the problems of industrializing society and upon the plight of an employer
who fails to make a profit. But this is readily explained by the fact that the majority of those to be affected
by the operation of the law are corporations and industries which are established primarily for profit or
gain.
Appellant further argues that the Social Security Law is a labor law and, consequently, following the rule
laid down in the case of Boy Scouts of the Philippines vs. Araos (G.R. No. L-10091, January 29, 1958)
and other cases1, applies only to industry and occupation for purposes of profit and gain. The cases cited,
however, are not in point, for the reason that the law therein involved expressly limits its application either
to commercial, industrial, or agricultural establishments, or enterprises. .
Upon the other hand, the Social Security Law was enacted pursuant to the "policy of the Republic of the
Philippines to develop, establish gradually and perfect a social security system which shall be suitable to
the needs of the people throughout the Philippines and shall provide protection to employees against the
hazards of disability, sickness, old age and death." (See. 2, Republic Act No. 1161, as amended.) Such
enactment is a legitimate exercise of the police power. It affords protection to labor, especially to working
women and minors, and is in full accord with the constitutional provisions on the "promotion of social

justice to insure the well-being and economic security of all the people." Being in fact a social legislation,
compatible with the policy of the Church to ameliorate living conditions of the working class, appellant
cannot arbitrarily delimit the extent of its provisions to relations between capital and labor in industry and
agriculture.
There is no merit in the claim that the inclusion of religious organizations under the coverage of the Social
Security Law violates the constitutional prohibition against the application of public funds for the use,
benefit or support of any priest who might be employed by appellant. The funds contributed to the System
created by the law are not public funds, but funds belonging to the members which are merely held in
trust by the Government. At any rate, assuming that said funds are impressed with the character of public
funds, their payment as retirement death or disability benefits would not constitute a violation of the cited
provisions of the Constitution, since such payment shall be made to the priest not because he is a priest
but because he is an employee.
Neither may it be validly argued that the enforcement of the Social Security Law impairs appellant's right
to disseminate religious information. All that is required of appellant is to make monthly contributions to
the System for covered employees in its employ. These contributions, contrary to appellant's contention,
are not in the nature of taxes on employment." Together with the contributions imposed upon the
employees and the Government, they are intended for the protection of said employees against the
hazards of disability, sickness, old age and death in line with the constitutional mandate to promote social
justice to insure the well-being and economic security of all the people.
IN VIEW OF THE FOREGOING, Resolutions Nos. 572 kind 767, series of 1958, of the Social Security
Commission are hereby affirmed. So ordered with costs against appellant.