Republic of the Philippines

SUPREME COURT
Manila

EN BANC

G.R. No. 106719 September 21, 1993

DRA. BRIGIDA S. BUENASEDA, Lt. Col. ISABELO BANEZ, JR., ENGR. CONRADO REY MATIAS, Ms. CORA
S. SOLIS and Ms. ENYA N. LOPEZ, petitioners,
vs.
SECRETARY JUAN FLAVIER, Ombudsman CONRADO M. VASQUEZ, and NCMH NURSES ASSOCIATION,
represented by RAOULITO GAYUTIN, respondents.

Renato J. Dilag and Benjamin C. Santos for petitioners.

Danilo C. Cunanan for respondent Ombudsman.

Crispin T. Reyes and Florencio T. Domingo for private respondent.

QUIASON, J.:

This is a Petition for Certiorari, Prohibition and Mandamus, with Prayer for Preliminary Injunction or
Temporary Restraining Order, under Rule 65 of the Revised Rules of Court.

Principally, the petition seeks to nullify the Order of the Ombudsman dated January 7, 1992,
directing the preventive suspension of petitioners,
Dr. Brigida S. Buenaseda, Chief of Hospital III; Isabelo C. Banez, Jr., Administrative Officer III;
Conrado Rey Matias, Technical Assistant to the Chief of Hospital; Cora C. Solis, Accountant III; and
Enya N. Lopez, Supply Officer III, all of the National Center for Mental Health. The petition also asks
for an order directing the Ombudsman to disqualify Director Raul Arnaw and Investigator Amy de
Villa-Rosero, of the Office of the Ombudsman, from participation in the preliminary investigation of
the charges against petitioner (Rollo, pp. 2-17; Annexes to Petition, Rollo, pp. 19-21).

The questioned order was issued in connection with the administrative complaint filed with the
Ombudsman (OBM-ADM-0-91-0151) by the private respondents against the petitioners for violation
of the Anti-Graft and Corrupt Practices Act.

According to the petition, the said order was issued upon the recommendation of Director Raul
Arnaw and Investigator Amy de Villa-Rosero, without affording petitioners the opportunity to
controvert the charges filed against them. Petitioners had sought to disqualify Director Arnaw and
Investigator Villa-Rosero for manifest partiality and bias (Rollo, pp. 4-15).

On September 10, 1992, this Court required respondents' Comment on the petition.

On September 14 and September 22, 1992, petitioners filed a "Supplemental Petition (Rollo, pp.
124-130); Annexes to Supplemental Petition; Rollo pp. 140-163) and an "Urgent Supplemental
Manifestation" (Rollo,
pp. 164-172; Annexes to Urgent Supplemental Manifestation; Rollo, pp. 173-176), respectively,
averring developments that transpired after the filing of the petition and stressing the urgency for
the issuance of the writ of preliminary injunction or temporary restraining order.

On September 22, 1992, this Court ". . . Resolved to REQUIRE the respondents to MAINTAIN in the
meantime, the STATUS QUO pending filing of comments by said respondents on the original
supplemental manifestation" (Rollo, p. 177).
On September 29, 1992, petitioners filed a motion to direct respondent Secretary of Health to
comply with the Resolution dated September 22, 1992 (Rollo, pp. 182-192, Annexes, pp. 192-203).
In a Resolution dated October 1, 1992, this Court required respondent Secretary of Health to
comment on the said motion.

On September 29, 1992, in a pleading entitled "Omnibus Submission," respondent NCMH Nurses
Association submitted its Comment to the Petition, Supplemental Petition and Urgent Supplemental
Manifestation. Included in said pleadings were the motions to hold the lawyers of petitioners in
contempt and to disbar them (Rollo, pp. 210-267). Attached to the "Omnibus Submission" as
annexes were the orders and pleadings filed in Administrative Case No. OBM-ADM-0-91-1051
against petitioners (Rollo, pp. 268-480).

The Motion for Disbarment charges the lawyers of petitioners with:

(1) unlawfully advising or otherwise causing or inducing their clients petitioners Buenaseda, et
al., to openly defy, ignore, disregard, disobey or otherwise violate, maliciously evade their
preventive suspension by Order of July 7, 1992 of the Ombudsman . . ."; (2) "unlawfully interfering
with and obstructing the implementation of the said order (Omnibus Submission, pp. 50-52; Rollo,
pp. 259-260); and (3) violation of the Canons of the Code of Professional Responsibility and of
unprofessional and unethical conduct "by foisting blatant lies, malicious falsehood and outrageous
deception" and by committing subornation of perjury, falsification and fabrication in their pleadings
(Omnibus Submission, pp. 52-54; Rollo, pp. 261-263).

On November 11, 1992, petitioners filed a "Manifestation and Supplement to 'Motion to Direct
Respondent Secretary of Health to Comply with 22 September 1992 Resolution'" (Manifestation
attached to Rollo without pagination between pp. 613 and 614 thereof).

On November 13, 1992, the Solicitor General submitted its Comment dated November 10, 1992,
alleging that: (a) "despite the issuance of the September 22, 1992 Resolution directing respondents
to maintain the status quo, respondent Secretary refuses to hold in abeyance the implementation of
petitioners' preventive suspension; (b) the clear intent and spirit of the Resolution dated September
22, 1992 is to hold in abeyance the implementation of petitioners' preventive suspension, the
status quo obtaining the time of the filing of the instant petition; (c) respondent Secretary's acts in
refusing to hold in abeyance implementation of petitioners' preventive suspension and in tolerating
and approving the acts of Dr. Abueva, the OIC appointed to replace petitioner Buenaseda, are in
violation of the Resolution dated September 22, 1992; and
(d) therefore, respondent Secretary should be directed to comply with the Resolution dated
September 22, 1992 immediately, by restoring the status quo ante contemplated by the aforesaid
resolution" (Comment attached to Rollo without paginations between pp. 613-614 thereof).

In the Resolution dated November 25, 1992, this Court required respondent Secretary to comply
with the aforestated status quo order, stating inter alia, that:

It appearing that the status quo ante litem motam, or the last peaceable uncontested status which
preceded the present controversy was the situation obtaining at the time of the filing of the petition
at bar on September 7, 1992 wherein petitioners were then actually occupying their respective
positions, the Court hereby ORDERS that petitioners be allowed to perform the duties of their
respective positions and to receive such salaries and benefits as they may be lawfully entitled to,
and that respondents and/or any and all persons acting under their authority desist and refrain from
performing any act in violation of the aforementioned Resolution of September 22, 1992 until
further orders from the Court (Attached to Rollo after p. 615 thereof).

On December 9, 1992, the Solicitor General, commenting on the Petition, Supplemental Petition and
Supplemental Manifestation, stated that (a) "The authority of the Ombudsman is only to
recommend suspension and he has no direct power to suspend;" and (b) "Assuming the
Ombudsman has the power to directly suspend a government official or employee, there are
conditions required by law for the exercise of such powers; [and] said conditions have not been met
in the instant case" (Attached to Rollo without pagination).

In the pleading filed on January 25, 1993, petitioners adopted the position of the Solicitor General
that the Ombudsman can only suspend government officials or employees connected with his
office. Petitioners also refuted private respondents' motion to disbar petitioners' counsel and to cite
them for contempt (Attached to Rollo without pagination).

The crucial issue to resolve is whether the Ombudsman has the power to suspend government
officials and employees working in offices other than the Office of the Ombudsman, pending the
investigation of the administrative complaints filed against said officials and employees.

In upholding the power of the Ombudsman to preventively suspend petitioners, respondents

(Urgent Motion to Lift Status Quo, etc, dated January 11, 1993, pp. 10-11), invoke Section 24 of R.A.
No. 6770, which provides:

Sec. 24. Preventive Suspension. The Ombudsman or his Deputy may preventively suspend
any officer or employee under his authority pending an investigation, if in his judgment the
evidence of guilt is strong, and (a) the charge against such officer or employee involves dishonesty,
oppression or grave misconduct or neglect in the performance of duty; (b) the charge would
warrant removal from the service; or (c) the respondent's continued stay in office may prejudice the
case filed against him.

The preventive suspension shall continue until the case is terminated by the Office of Ombudsman
but not more than six months, without pay, except when the delay in the disposition of the case by
the Office of the Ombudsman is due to the fault, negligence or petition of the respondent, in which
case the period of such delay shall not be counted in computing the period of suspension herein
provided.

Respondents argue that the power of preventive suspension given the Ombudsman under Section
24 of R.A. No. 6770 was contemplated by Section 13 (8) of Article XI of the 1987 Constitution, which
provides that the Ombudsman shall exercise such other power or perform such functions or duties
as may be provided by law."

On the other hand, the Solicitor General and the petitioners claim that under the 1987 Constitution,
the Ombudsman can only recommend to the heads of the departments and other agencies the
preventive suspension of officials and employees facing administrative investigation conducted by
his office. Hence, he cannot order the preventive suspension himself.

They invoke Section 13(3) of the 1987 Constitution which provides that the Office of the
Ombudsman shall have inter alia the power, function, and duty to:

Direct the officer concerned to take appropriate action against a public official or employee at fault,
and recommend his removal, suspension, demotion, fine, censure or prosecution, and ensure
compliance therewith.

The Solicitor General argues that under said provision of the Constitutions, the Ombudsman has
three distinct powers, namely: (1) direct the officer concerned to take appropriate action against
public officials or employees at fault; (2) recommend their removal, suspension, demotion fine,
censure, or prosecution; and (3) compel compliance with the recommendation (Comment dated
December 3, 1992, pp. 9-10).

The line of argument of the Solicitor General is a siren call that can easily mislead, unless one bears
in mind that what the Ombudsman imposed on petitioners was not a punitive but only a preventive
suspension.

When the constitution vested on the Ombudsman the power "to recommend the suspension" of a
public official or employees (Sec. 13 [3]), it referred to "suspension," as a punitive measure. All the
words associated with the word "suspension" in said provision referred to penalties in
administrative cases, e.g. removal, demotion, fine, censure. Under the rule of Noscitor a sociis, the
word "suspension" should be given the same sense as the other words with which it is associated.
Where a particular word is equally susceptible of various meanings, its correct construction may be
made specific by considering the company of terms in which it is found or with which it is
associated (Co Kim Chan v. Valdez Tan Keh, 75 Phil. 371 [1945]; Caltex (Phils.) Inc. v. Palomar, 18
SCRA 247 [1966]).
Section 24 of R.A. No. 6770, which grants the Ombudsman the power to preventively suspend
public officials and employees facing administrative charges before him, is a procedural, not a penal
statute. The preventive suspension is imposed after compliance with the requisites therein set
forth, as an aid in the investigation of the administrative charges.

Under the Constitution, the Ombudsman is expressly authorized to recommend to the appropriate
official the discipline or prosecution of erring public officials or employees. In order to make an
intelligent determination whether to recommend such actions, the Ombudsman has to conduct an
investigation. In turn, in order for him to conduct such investigation in an expeditious and efficient
manner, he may need to suspend the respondent.

The need for the preventive suspension may arise from several causes, among them, the danger of
tampering or destruction of evidence in the possession of respondent; the intimidation of witnesses,
etc. The Ombudsman should be given the discretion to decide when the persons facing
administrative charges should be preventively suspended.

Penal statutes are strictly construed while procedural statutes are liberally construed (Crawford,
Statutory Construction, Interpretation of Laws, pp. 460-461; Lacson v. Romero, 92 Phil. 456 [1953]).
The test in determining if a statute is penal is whether a penalty is imposed for the punishment of a
wrong to the public or for the redress of an injury to an individual (59 Corpuz Juris, Sec. 658;
Crawford, Statutory Construction, pp. 496-497). A Code prescribing the procedure in criminal cases
is not a penal statute and is to be interpreted liberally (People v. Adler, 140 N.Y. 331; 35 N.E. 644).

The purpose of R.A. No. 6770 is to give the Ombudsman such powers as he may need to perform
efficiently the task committed to him by the Constitution. Such being the case, said statute,
particularly its provisions dealing with procedure, should be given such interpretation that will
effectuate the purposes and objectives of the Constitution. Any interpretation that will hamper the
work of the Ombudsman should be avoided.

A statute granting powers to an agency created by the Constitution should be liberally construed
for the advancement of the purposes and objectives for which it was created (Cf. Department of
Public Utilities v. Arkansas Louisiana Gas. Co., 200 Ark. 983, 142 S.W. (2d) 213 [1940]; Wallace v.
Feehan, 206 Ind. 522, 190 N.E., 438 [1934]).

In Nera v. Garcia, 106 Phil. 1031 [1960], this Court, holding that a preventive suspension is not a
penalty, said:

Suspension is a preliminary step in an administrative investigation. If after such investigation, the

charges are established and the person investigated is found guilty of acts warranting his removal,
then he is removed or dismissed. This is the penalty.

To support his theory that the Ombudsman can only preventively suspend respondents in
administrative cases who are employed in his office, the Solicitor General leans heavily on the
phrase "suspend any officer or employee under his authority" in Section 24 of R.A. No. 6770.

The origin of the phrase can be traced to Section 694 of the Revised Administrative Code, which
dealt with preventive suspension and which authorized the chief of a bureau or office to "suspend
any subordinate or employee in his bureau or under his authority pending an investigation . . . ."

Section 34 of the Civil Service Act of 1959 (R.A. No. 2266), which superseded Section 694 of the
Revised Administrative Code also authorized the chief of a bureau or office to "suspend any
subordinate officer or employees, in his bureau or under his authority."

However, when the power to discipline government officials and employees was extended to the
Civil Service Commission by the Civil Service Law of 1975 (P.D. No. 805), concurrently with the
President, the Department Secretaries and the heads of bureaus and offices, the phrase
"subordinate officer and employee in his bureau" was deleted, appropriately leaving the phrase
"under his authority." Therefore, Section 41 of said law only mentions that the proper disciplining
authority may preventively suspend "any subordinate officer or employee under his authority
pending an investigation . . ." (Sec. 41).
The Administrative Code of 1987 also empowered the proper disciplining authority to "preventively
suspend any subordinate officer or employee under his authority pending an investigation" (Sec.
51).

The Ombudsman Law advisedly deleted the words "subordinate" and "in his bureau," leaving the
phrase to read "suspend any officer or employee under his authority pending an investigation . . . ."
The conclusion that can be deduced from the deletion of the word "subordinate" before and the
words "in his bureau" after "officer or employee" is that the Congress intended to empower the
Ombudsman to preventively suspend all officials and employees under investigation by his office,
irrespective of whether they are employed "in his office" or in other offices of the government. The
moment a criminal or administrative complaint is filed with the Ombudsman, the respondent
therein is deemed to be "in his authority" and he can proceed to determine whether said
respondent should be placed under preventive suspension.

In their petition, petitioners also claim that the Ombudsman committed grave abuse of discretion
amounting to lack of jurisdiction when he issued the suspension order without affording petitioners
the opportunity to confront the charges against them during the preliminary conference and even
after petitioners had asked for the disqualification of Director Arnaw and Atty. Villa-Rosero (Rollo,
pp. 6-13). Joining petitioners, the Solicitor General contends that assuming arguendo that the
Ombudsman has the power to preventively suspend erring public officials and employees who are
working in other departments and offices, the questioned order remains null and void for his failure
to comply with the requisites in Section 24 of the Ombudsman Law (Comment dated December 3,
1992, pp. 11-19).

Being a mere order for preventive suspension, the questioned order of the Ombudsman was validly
issued even without a full-blown hearing and the formal presentation of evidence by the parties. In
Nera, supra, petitioner therein also claimed that the Secretary of Health could not preventively
suspend him before he could file his answer to the administrative complaint. The contention of
petitioners herein can be dismissed perfunctorily by holding that the suspension meted out was
merely preventive and therefore, as held in Nera, there was "nothing improper in suspending an
officer pending his investigation and before tho charges against him are heard . . . (Nera v. Garcia.,
supra).

There is no question that under Section 24 of R.A. No. 6770, the Ombudsman cannot order the
preventive suspension of a respondent unless the evidence of guilt is strong and (1) the charts
against such officer or employee involves dishonesty, oppression or grave misconduct or neglect in
the performance of duty; (2) the charge would warrant removal from the service; or (3) the
respondent's continued stay in office may prejudice the case filed against him.

The same conditions for the exercise of the power to preventively suspend officials or employees
under investigation were found in Section 34 of R.A. No. 2260.

The import of the Nera decision is that the disciplining authority is given the discretion to decide
when the evidence of guilt is strong. This fact is bolstered by Section 24 of R.A. No. 6770, which
expressly left such determination of guilt to the "judgment" of the Ombudsman on the basis of the
administrative complaint. In the case at bench, the Ombudsman issued the order of preventive
suspension only after: (a) petitioners had filed their answer to the administrative complaint and the
"Motion for the Preventive Suspension" of petitioners, which incorporated the charges in the
criminal complaint against them (Annex 3, Omnibus Submission, Rollo, pp. 288-289; Annex 4, Rollo,
pp. 290-296); (b) private respondent had filed a reply to the answer of petitioners, specifying 23
cases of harassment by petitioners of the members of the private respondent (Annex 6, Omnibus
Submission, Rollo, pp. 309-333); and (c) a preliminary conference wherein the complainant and the
respondents in the administrative case agreed to submit their list of witnesses and documentary
evidence.

Petitioners herein submitted on November 7, 1991 their list of exhibits (Annex 8 of Omnibus
Submission, Rollo, pp. 336-337) while private respondents submitted their list of exhibits (Annex 9
of Omnibus Submission, Rollo, pp. 338-348).

Under these circumstances, it can not be said that Director Raul Arnaw and Investigator Amy de
Villa-Rosero acted with manifest partiality and bias in recommending the suspension of petitioners.
Neither can it be said that the Ombudsman had acted with grave abuse of discretion in acting
favorably on their recommendation.

The Motion for Contempt, which charges the lawyers of petitioners with unlawfully causing or
otherwise inducing their clients to openly defy and disobey the preventive suspension as ordered by
the Ombudsman and the Secretary of Health can not prosper (Rollo, pp. 259-261). The Motion
should be filed, as in fact such a motion was filed, with the Ombudsman. At any rate, we find that
the acts alleged to constitute indirect contempt were legitimate measures taken by said lawyers to
question the validity and propriety of the preventive suspension of their clients.

On the other hand, we take cognizance of the intemperate language used by counsel for private
respondents hurled against petitioners and their counsel (Consolidated: (1) Comment on Private
Respondent" "Urgent Motions, etc.;
(2) Adoption of OSG's Comment; and (3) Reply to Private Respondent's Comment and Supplemental
Comment, pp. 4-5).

A lawyer should not be carried away in espousing his client's cause. The language of a lawyer, both
oral or written, must be respectful and restrained in keeping with the dignity of the legal profession
and with his behavioral attitude toward his brethren in the profession (Lubiano v. Gordolla, 115
SCRA 459 [1982]). The use of abusive language by counsel against the opposing counsel
constitutes at the same time a disrespect to the dignity of the court of justice. Besides, the use of
impassioned language in pleadings, more often than not, creates more heat than light.

The Motion for Disbarment (Rollo, p. 261) has no place in the instant special civil action, which is
confined to questions of jurisdiction or abuse of discretion for the purpose of relieving persons from
the arbitrary acts of judges and quasi-judicial officers. There is a set of procedure for the discipline
of members of the bar separate and apart from the present special civil action.

WHEREFORE, the petition is DISMISSED and the Status quo ordered to be maintained in the
Resolution dated September 22, 1992 is LIFTED and SET ASIDE.

SO ORDERED.

Narvasa, C.J., Cruz, Padilla, Bidin, Grio-Aquino, Regalado, Davide, Jr., Romero, Nocon, Melo, Puno
and Vitug, JJ., concur.

Feliciano, J., is on leave.

Separate Opinions

BELLOSILLO, J., concurring:

I agree that the Ombudsman has the authority, under Sec. 24 of R.A.
No. 6770, to preventively suspend any government official or employee administratively charged
before him pending the investigation of the complaint, the reason being that respondent's
continued stay in office may prejudice the prosecution of the case.

However, in the case before us, I am afraid that the facts thus far presented may not provide
adequate basis to reasonably place petitioners under preventive suspension. For, it is not enough to
rule that the Ombudsman has authority to suspend petitioners preventively while the case is in
progress before him. Equally important is the determination whether it is necessary to issue the
preventive suspension under the circumstances. Regretfully, I cannot see any sufficient basis to
justify the preventive suspension. That is why, I go for granting oral argument to the parties so that
we can truthfully determine whether the preventive suspension of respondents are warranted by
the facts. We may be suspending key government officials and employees on the basis merely of
speculations which may not serve the ends of justice but which, on the other hand, deprive them of
their right to due process. The simultaneous preventive suspension of top officials and employees
of the National Center for Mental Health may just disrupt, the hospital's normal operations, much to
the detriment of public service. We may safely assume that it is not easy to replace them in their
respective functions as those substituting them may be taking over for the first time. The proper
care of mental patients may thus be unduly jeopardized and their lives and limbs imperilled.

I would be amenable to holding oral argument to hear the parties if only to have enough factual and
legal bases to justify the preventive suspension of petitioners.

# Separate Opinions

BELLOSILLO, J., concurring:

I agree that the Ombudsman has the authority, under Sec. 24 of R.A.
No. 6770, to preventively suspend any government official or employee administratively charged
before him pending the investigation of the complaint, the reason being that respondent's
continued stay in office may prejudice the prosecution of the case.

However, in the case before us, I am afraid that the facts thus far presented may not provide
adequate basis to reasonably place petitioners under preventive suspension. For, it is not enough to
rule that the Ombudsman has authority to suspend petitioners preventively while the case is in
progress before him. Equally important is the determination whether it is necessary to issue the
preventive suspension under the circumstances. Regretfully, I cannot see any sufficient basis to
justify the preventive suspension. That is why, I go for granting oral argument to the parties so that
we can truthfully determine whether the preventive suspension of respondents are warranted by
the facts. We may be suspending key government officials and employees on the basis merely of
speculations which may not serve the ends of justice but which, on the other hand, deprive them of
their right to due process. The simultaneous preventive suspension of top officials and employees
of the National Center for Mental Health may just disrupt, the hospital's normal operations, much to
the detriment of public service. We may safely assume that it is not easy to replace them in their
respective functions as those substituting them may be taking over for the first time. The proper
care of mental patients may thus be unduly jeopardized and their lives and limbs imperilled.

I would be amenable to holding oral argument to hear the parties if only to have enough factual and
legal bases to justify the preventive suspension of petitioners.
Republic of the Philippines
SUPREME COURT
Manila

EN BANC

G.R. No. 88979 February 7, 1992

LYDIA O. CHUA, petitioner,

vs.
THE CIVIL SERVICE COMMISSION, THE NATIONAL IRRIGATION ADMINISTRATION and THE
DEPARTMENT OF BUDGET AND MANAGEMENT, respondents.

PADILLA, J.:

Pursuant to the policy of streamlining and trimming the bureaucracy, Republic Act No. 6683 was
approved on 2 December 1988 providing for benefits for early retirement and voluntary separation
from the government service as well as for involuntary separation due to reorganization. Deemed
qualified to avail of its benefits are those enumerated in Sec. 2 of the Act, as follows:

Sec. 2. Coverage. This Act shall cover all appointive officials and employees of the National
Government, including government-owned or controlled corporations with original charters, as well
as the personnel of all local government units. The benefits authorized under this Act shall apply to
all regular, temporary, casual and emergency employees, regardless of age, who have rendered at
least a total of two (2) consecutive years of government service as of the date of separation.
Uniformed personnel of the Armed Forces of the Philippines including those of the PC-INP are
excluded from the coverage of this Act.

Petitioner Lydia Chua believing that she is qualified to avail of the benefits of the program, filed an
application on 30 January 1989 with respondent National Irrigation Administration (NIA) which,
however, denied the same; instead, she was offered separation benefits equivalent to one half (1/2)
month basic pay for every year of service commencing from 1980. A recourse by petitioner to the
Civil Service Commission yielded negative results. 1 Her letter for reconsideration dated 25 April
1989 pleaded thus:

xxx xxx xxx

With due respect, I think the interpretation of the Honorable Commissioner of RA 6683 does not
conform with the beneficent purpose of the law. The law merely requires that a government
employee whether regular, temporary, emergency, or casual, should have two consecutive years of
government service in order to be entitled to its benefits. I more than meet the requirement.
Persons who are not entitled are consultants, experts and contractual(s). As to the budget needed,
the law provides that the Department of Budget and Management will shoulder a certain portion of
the benefits to be allotted to government corporations. Moreover, personnel of these NIA special
projects art entitled to the regular benefits, such (sic) leaves, compulsory retirement and the like.
There is no reason why we should not be entitled to RA 6683.

xxx xxx xxx 2

Denying the plea for reconsideration, the Civil Service Commission (CSC) emphasized:

xxx xxx xxx

We regret to inform you that your request cannot be granted. The provision of Section 3.1 of Joint
DBM-CSC Circular Letter No. 89-1 does not only require an applicant to have two years of
satisfactory service on the date of separation/retirement but further requires said applicant to be on
a casual, emergency, temporary or regular employment status as of December 2, 1988, the date of
enactment of R.A. 6683. The law does not contemplate contractual employees in the coverage.

Inasmuch as your employment as of December 31, 1988, the date of your separation from the
service, is co-terminous with the NIA project which is contractual in nature, this Commission shall
sustain its original decision.

xxx xxx xxx 3

In view of such denial, petitioner is before this Court by way of a special civil action for certiorari,
insisting that she is entitled to the benefits granted under Republic Act No. 6683. Her arguments:

It is submitted that R.A. 6683, as well as Section 3.1 of the Joint DBM-CSC Circular Letter No. 89-1
requires an applicant to be on a casual, emergency, temporary or regular employment status.
Likewise, the provisions of Section 23 (sic) of the Joint DBM-CSC Circular Letter No. 88-1,
implementing guidelines of R.A. No. 6683, provides:

"2.3 Excluded from the benefits under R.A. No. 6683 are the following:

a) Experts and Consultants hired by agencies for a limited period to perform specific activities
or services with a definite expected output: i.e. membership in Task Force, Part-Time,
Consultant/Employees.

b) Uniformed personnel of the Armed Forces of the Philippines including those of the Philippine
Constabulary and Integrated National Police (PC-INP).

c) Appointive officials and employees who retire or elect to be separated from the service for
optional retirement with gratuity under R.A. No. 1616, 4968 or with pension under R.A. No. 186, as
amended by R.A. No. 6680 or P.D. No. 1146, an amended, or vice- versa.

d) Officials and employees who retired voluntarily prior to the enactment of this law and have
received the corresponding benefits of that retirement/separation.

e) Officials and employees with pending cases punishable by mandatory separation from the
service under existing civil service laws, rules and regulations; provided that if such officials and
employees apply in writing within the prescriptive period for the availment of the benefits herein
authorized, shall be allowed only if acquitted or cleared of all charges and their application
accepted and approved by the head of office concerned."

Based on the above exclusions, herein petitioner does not belong to any one of them. Ms. Chua is a
full time employee of NIA entitled to all the regular benefits provided for by the Civil Service
Commission. She held a permanent status as Personnel Assistant A, a position which belongs to the
Administrative Service. . . . If casuals and emergency employees were given the benefit of R.A.
6683 with more reason that this petitioner who was holding a permanent status as Personnel
Assistant A and has rendered almost 15 years of faithful, continuous service in the government
should be similarly rewarded by the beneficient (sic) purpose of the law. 4

The NIA and the Civil Service Commission reiterate in their comment petitioner's exclusion from the
benefits of Republic Act No. 6683, because:

1. Petitioner's employment is co-terminous with the project per appointment papers kept by
the Administrative Service in the head office of NIA (the service record was issued by the Watershed
Management and Erosion Control Project (WMECP), Pantabangan, Nueva Ecija). The project, funded
by the World Bank, was completed as of 31 December 1988, after which petitioner's position
became functus officio.

2. Petitioner is not a regular and career employee of NIA her position is not included in its
regular plantilla. She belongs to the non-career service (Sec. 6, P.D. No. 807) which is inherently
short-lived, temporary and transient; on the other hand, retirement presupposes employment for a
long period. The most that a non-career personnel can expect upon the expiration of his
employment is financial assistance. Petitioner is not even qualified to retire under the GSIS law.
3. Assuming arguendo that petitioner's appointment is permanent, security of tenure is
available only for the term of office (i.e., duration of project).

4. The objective of Republic Act No. 6683 is not really to grant separation or retirement
benefits but reorganization 5 to streamline government functions. The application of the law must
be made consistent with the purpose for which it was enacted. Thus, as the expressed purpose of
the law is to reorganize the government, it will not have any application to special projects such as
the WMECP which exists only for a short and definite period. This being the nature of special
projects, there is no necessity for offering its personnel early retirement benefits just to induce
voluntary separation as a step to reorganization. In fact, there is even no need of reorganizing the
WMECP considering its short and limited life-span. 6

5. The law applies only to employees of the national government, government-owned or

controlled corporations with original charters and local government units.

Due to the impossibility of reconciling the conflicting interpretations of the parties, the Court is
called upon to define the different classes of employees in the public sector (i.e. government civil
servants).

Who are regular employees? The Labor Code in Art. 280 (P.D. No. 492, as amended) deems an
employment regular where the employee has been engaged to perform activities which are usually
necessary or desirable in the usual business or trade of the employer. No equivalent definition can
be found in P.D.No. 807 (promulgated on 6 October 1975, which superseded the Civil Service Act of
1965 R.A. No. 2260) or in the Administrative Code of 1987 (Executive Order No. 292 promulgated
on 25 July 1987). The Early Retirement Law itself (Rep. Act No. 6683) merely includes such class of
employees (regular employees) in its coverage, unmindful that no such specie is employed in the
public sector.

The appointment status of government employees in the career service is classified as follows:

1. permanent one issued to a person who has met the requirements of the position to which
appointment is made, in accordance with the provisions of the Civil Service Act and the Rules and
Standards promulgated in pursuance thereof; 7

2. temporary In the absence of appropriate eligibles and it becomes necessary in the public
interest to fill a vacancy, a temporary appointment should be issued to a person who meets all the
requirements for the position to which he is being appointed except the appropriate civil service
eligibility: Provided, That such temporary appointment shall not exceed twelve months, but the
appointee may be replaced sooner if a qualified civil service eligible becomes available. 8

The Administrative Code of 1987 characterizes the Career Service as:

(1) Open Career positions for appointment to which prior qualification in an appropriate
examination is required;

(2) Closed Career positions which are scientific, or highly technical in nature; these include the
faculty and academic staff of state colleges and universities, and scientific and technical positions
in scientific or research institutions which shall establish and maintain their own merit systems;

(3) Positions in the Career Executive Service; namely, Undersecretary, Assistant Secretary,
Bureau Director, Assistant Bureau Director, Regional Director, Assistant Regional Director, Chief of
Department Service and other officers of equivalent rank as may be identified by the Career
Executive Service Board, all of whom are appointed by the President.

(4) Career officers, other than those in the Career Executive Service, who are appointed by the
President, such as the Foreign Service Officers in the Department of Foreign Affairs;

(5) Commission officers and enlisted men of the Armed Forces which shall maintain a separate
merit system;
(6) Personnel of government-owned or controlled corporations, whether performing
governmental or proprietary functions, who do not fall under the non-career service; and

(7) Permanent laborers, whether skilled, semi-skilled, or unskilled. 9

The Non-Career Service, on the other hand, is characterized by:

. . . (1) entrance on bases other than those of the usual tests of merit and fitness utilized for the
career service; and (2) tenure which is limited to a period specified by law, or which is coterminous
with that of the appointing authority or subject to his pleasure, or which is limited to the duration of
a particular project for which purpose employment was made.

Included in the non-career service are:

1. elective officials and their personal or confidential staff;

2. secretaries and other officials of Cabinet rank who hold their positions at the pleasure of the
President and their personal confidential staff(s);

3. Chairman and Members of Commissions and boards with fixed terms of office and their
personal or confidential staff;

4. contractual personnel or those whose employment in the government is in accordance with

a special contract to undertake a specific work or job requiring special or technical skills not
available in the employing agency, to be accomplished within a specific period, which in no case
shall exceed one year and performs or accomplishes the specific work or job, under his own
responsibility with a minimum of direction and supervision from the hiring agency.

5. emergency and seasonal personnel. 10

There is another type of non-career employee:

Casual where and when employment is not permanent but occasional, unpredictable, sporadic
and brief in nature (Caro v. Rilloroza, 102 Phil. 70; Manuel v. P.P. Gocheco Lumber Co., 96 Phil. 945)

Consider petitioner's record of service:

Service with the government commenced on 2 December 1974 designated as a laborer holding
emergency status with the NIA Upper Pampanga River Project, R & R Division. 11 From 24 March
1975 to 31 August 1975, she was a research aide with temporary status on the same project. On 1
September 1975 to 31 December 1976, she was with the NIA-FES III; R & R Division, then on 1
January 1977 to 31 May 1980, she was with NIA UPR IIS (Upper Pampanga River Integrated
Irrigation Systems) DRD. On 1 June 1980, she went to NIA W.M.E.C.P. (Watershed Management &
Erosion Control Project) retaining the status of temporary employee. While with this project, her
designation was changed to personnel assistant on 5 November 1981; starting 9 July 1982, the
status became permanent until the completion of the project on 31 December 1988. The
appointment paper 12 attached to the OSG's comment lists her status as co-terminus with the
Project.

The employment status of personnel hired under foreign assisted projects is considered co-
terminous, that is, they are considered employees for the duration of the project or until the
completion or cessation of said project (CSC Memorandum Circular No. 39, S. 1990, 27 June 1990).

Republic Act No. 6683 seeks to cover and benefits regular, temporary, casual and emergency
employees who have rendered at least a total of two (2) consecutive years government service.

Resolution No. 87-104 of the CSC, 21 April 1987, provides:

WHEREAS, pursuant to Executive Order No. 966 dated June 22, 1984, the Civil Service Commission
is charged with the function of determining creditable services for retiring officers and employees of
the national government;
WHEREAS, Section 4 (b) of the same Executive Order No. 966 provides that all previous services by
an officer/employee pursuant to a duly approved appointment to a position in the Civil Service are
considered creditable services, while Section 6 (a) thereof states that services rendered on
contractual, emergency or casual status are non-creditable services;

WHEREAS, there is a need to clarify the aforesaid provisions inasmuch as some contractual,
emergency or casual employment are covered by contracts or appointments duly approved by the
Commission.

NOW, therefore, the Commission resolved that services rendered on contractual, emergency or
casual status, irrespective of the mode or manner of payment therefor shall be considered as
creditable for retirement purposes subject to the following conditions: (emphasis provided)

1. These services are supported by approved appointments, official records and/or other
competent evidence. Parties/agencies concerned shall submit the necessary proof of said services;

2. Said services are on full time basis and rendered prior to June 22, 1984, the effectivity date
of Executive Order No. 966; and

3. The services for the three (3) years period prior to retirement are continuous and fulfill the
service requirement for retirement.

What substantial differences exist, if any, between casual, emergency, seasonal, project, co-
terminous or contractual personnel? All are tenurial employees with no fixed term, non-career, and
temporary. The 12 May 1989 CSC letter of denial 13 characterized herein petitioner's employment
as co-terminous with the NIA project which in turn was contractual in nature. The OSG says
petitioner's status is co-terminous with the Project. CSC Memorandum Circular No. 11, series of
1991 (5 April 1991) characterizes the status of a co-terminous employee

(3) Co-terminous status shall be issued to a person whose entrance in the service is
characterized by confidentiality by the appointing authority or that which is subject to his pleasure
or co-existent with his tenure.

The foregoing status (co-terminous) may be further classified into the following:

a) co-terminous with the project When the appointment is co-existent with the duration of a
particular project for which purpose employment was made or subject to the availability of funds for
the same;

b) co-terminous with the appointing authority when appointment is co-existent with the
tenure of the appointing authority.

c) co-terminous with the incumbent when appointment is co-existent with the appointee, in
that after the resignation, separation or termination of the services of the incumbent the position
shall be deemed automatically abolished; and

d) co-terminous with a specific period, e.g. "co-terminous for a period of 3 years" the
appointment is for a specific period and upon expiration thereof, the position is deemed abolished.

It is stressed, however, that in the last two classifications (c) and (d), what is termed co-terminous
is the position, and not the appointee-employee. Further, in (c) the security of tenure of the
appointee is guaranteed during his incumbency; in (d) the security of tenure is limited to a specific
period.

A co-terminous employee is a non-career civil servant, like casual and emergency employees. We
see no solid reason why the latter are extended benefits under the Early Retirement Law but the
former are not. It will be noted that Rep. Act No. 6683 expressly extends its benefits for early
retirement to regular, temporary, casual and emergency employees. But specifically excluded from
the benefits are uniformed personnel of the AFP including those of the PC-INP. It can be argued that,
expressio unius est exclusio alterius. The legislature would not have made a specific enumeration in
a statute had not the intention been to restrict its meaning and confine its terms and benefits to
those expressly mentioned 14 or casus omissus pro omisso habendus est A person, object or
thing omitted from an enumeration must be held to have been omitted intentionally. 15 Yet
adherence to these legal maxims can result in incongruities and in a violation of the equal
protection clause of the Constitution.

The case of Fegurin, et al. v. NLRC, et al., 16 comes to mind where, workers belonging to a work
pool, hired and re-hired continuously from one project to another were considered non-project-
regular and permanent employees.

Petitioner Lydia Chua was hired and re-hired in four (4) successive projects during a span of fifteen
(15) years. Although no proof of the existence of a work pool can be assumed, her service record
cannot be disregarded.

Art. III, Sec. 1 of the 1987 Constitution guarantees: "No person shall be deprived of life, liberty, or
property without due process of law, nor shall any person be denied the equal protection of the
laws."

. . . In Felwa vs. Salas, L-26511, Oct. 29, 1966, We ruled that the equal protection clause applies
only to persons or things identically situated and does not bar a reasonable classification of the
subject of legislation, and a classification is reasonable where (1) it is based on substantial
distinctions which make real differences; (2) these are germane to the purpose of the law; (3) the
classification applies not only to present conditions but also to future conditions which are
substantially identical to those of the present; (4) the classification applies only to those who belong
to the same class. 17

Applying the criteria set forth above, the Early Retirement Law would violate the equal protection
clause were we to sustain respondents' submission that the benefits of said law are to be denied a
class of government employees who are similarly situated as those covered by said law. The maxim
of Expressio unius est exclusio alterius should not be the applicable maxim in this case but the
doctrine of necessary implication which holds that:

No statute can be enacted that can provide all the details involved in its application. There is
always an omission that may not meet a particular situation. What is thought, at the time of
enactment, to be an all-embracing legislation may be inadequate to provide for the unfolding
events of the future. So-called gaps in the law develop as the law is enforced. One of the rules of
statutory construction used to fill in the gap is the doctrine of necessary implication. The doctrine
states that what is implied in a statute is as much a part thereof as that which is expressed. Every
statute is understood, by implication, to contain all such provisions as may be necessary to
effectuate its object and purpose, or to make effective rights, powers, privileges or jurisdiction
which it grants, including all such collateral and subsidiary consequences as may be fairly and
logically inferred from its terms. Ex necessitate legis. And every statutory grant of power, right or
privilege is deemed to include all incidental power, right or privilege. This is so because the greater
includes the lesser, expressed in the Maxim, in eo plus sit, simper inest et minus. 18

During the sponsorship speech of Congressman Dragon (re: Early Retirement Law), in response to
Congressman Dimaporo's interpellation on coverage of state university employees who are
extended appointments for one (1) year, renewable for two (2) or three (3) years, 19 he explained:

This Bill covers only those who would like to go on early retirement and voluntary separation. It is
irrespective of the actual status or nature of the appointment one received, but if he opts to retire
under this, then he is covered.

It will be noted that, presently Pending in Congress, is House Bill No. 33399 (a proposal to extend
the scope of the Early Retirement Law). Its wording supports the submission that Rep. Act No. 6683
indeed overlooked a qualified group of civil servants. Sec. 3 of said House bill, on coverage of early
retirement, would provide:

Sec. 3. Coverage. It will cover all employees of the national government, including government-
owned or controlled corporations, as well as the personnel of all local government units. The
benefits authorized under this Act shall apply to all regular, temporary, casual, emergency and
contractual employees, regardless of age, who have rendered at least a total of two (2) consecutive
years government service as of the date of separation. The term "contractual employees" as used
in this Act does not include experts and consultants hired by agencies for a limited period to
perform specific activities or services with definite expected output.

Uniformed personnel of the Armed Forces of the Philippines, including those of the PC-INP are
excluded from the coverage of this Act. (emphasis supplied)

The objective of the Early Retirement or Voluntary Separation Law is to trim the bureaucracy,
hence, vacated positions are deemed abolished upon early/voluntary retirement of their occupants.
Will the inclusion of co-terminous personnel (like the petitioner) defeat such objective? In their case,
upon termination of the project and separation of the project personnel from the service, the term
of employment is considered expired, the office functus officio. Casual, temporary and contractual
personnel serve for shorter periods, and yet, they only have to establish two (2) years of continuous
service to qualify. This, incidentally, negates the OSG's argument that co-terminous or project
employment is inherently short-lived, temporary and transient, whereas, retirement presupposes
employment for a long period. Here, violation of the equal protection clause of the Constitution
becomes glaring because casuals are not even in the plantilla, and yet, they are entitled to the
benefits of early retirement. How can the objective of the Early Retirement Law of trimming the
bureaucracy be achieved by granting early retirement benefits to a group of employees (casual)
without plantilla positions? There would, in such a case, be no abolition of permanent positions or
streamlining of functions; it would merely be a removal of excess personnel; but the positions
remain, and future appointments can be made thereto.

Co-terminous or project personnel, on the other hand, who have rendered years of continuous
service should be included in the coverage of the Early Retirement Law, as long as they file their
application prior to the expiration of their term, and as long as they comply with CSC regulations
promulgated for such purpose. In this connection, Memorandum Circular No. 14, Series of 1990 (5
March 1990) implementing Rep. Act No. 6850, 20 requires, as a condition to qualify for the grant of
eligibility, an aggregate or total of seven (7) years of government service which need not be
continuous, in the career or non-career service, whether appointive, elective, casual, emergency,
seasonal, contractual or co-terminous including military and police service, as evaluated and
confirmed by the Civil Service Commission. 21 A similar regulation should be promulgated for the
inclusion in Rep. Act No. 6683 of co-terminous personnel who survive the test of time. This would be
in keeping with the coverage of "all social legislations enacted to promote the physical and mental
well-being of public servants" 22 After all, co-terminous personnel, are also obligated to the
government for GSIS contributions, medicare and income tax payments, with the general
disadvantage of transience.

In fine, the Court believes, and so holds, that the denial by the respondents NIA and CSC of
petitioner's application for early retirement benefits under Rep. Act No. 6683 is unreasonable,
unjustified, and oppressive, as petitioner had filed an application for voluntary retirement within a
reasonable period and she is entitled to the benefits of said law. While the application was filed
after expiration of her term, we can give allowance for the fact that she originally filed the
application on her own without the assistance of counsel. In the interest of substantial justice, her
application must be granted; after all she served the government not only for two (2) years the
minimum requirement under the law but for almost fifteen (15) years in four (4) successive
governmental projects.

WHEREFORE, the petition is GRANTED.

Let this case be remanded to the CSC-NIA for a favorable disposition of petitioner's application for
early retirement benefits under Rep. Act No. 6683, in accordance with the pronouncements in this
decision.

SO ORDERED.

Narvasa, C.J., Melencio-Herrera, Cruz, Paras, Feliciano, Bidin, Grio-Aquino, Medialdea, Regalado,
Davide, Jr., Romero and Nocon, JJ., concur.
Separate Opinions

GUTIERREZ, JR., J., concurring:

I concur but only insofar as our rulings are applied to RA 6683 applicants.

Separate Opinions

GUTIERREZ, JR., J., concurring:

I concur but only insofar as our rulings are applied to RA 6683 applicants.
Republic of the Philippines
SUPREME COURT
Manila

FIRST DIVISION

G.R. No. L-36049 May 31, 1976

CITY OF NAGA, VICENTE P. SIBULO, as Mayor, and JOAQUIN C. CLEOPE, as Treasurer of the City of
Naga, petitioners,
vs.
CATALINO AGNA, FELIPE AGNA and SALUD VELASCO, respondents.

Ernesto A. Miguel for petitioners.

Bonot, Cledera & Associates for respondents.

MARTIN, J.:

Petition for review on certiorari, which We treat as special civil action, of the decision of the Court of
First Instance of Camarines Sur in Civil Case No. 7084, entitled Agna, et al. versus City of Naga, et
al., declaring Ordinance No. 360 of the City of Naga enforceable in 1971 the year following its
approval and requiring petitioners to pay to private respondents the amounts sought for in their
complaint plus attorney's fees and costs. Included in the present controversy as proper parties are
Vicente P. Sibulo and Joaquin C. Cleope, the City Mayor and City Treasurer of the City of Naga,
respectively.

On June 15, 1970, the City of Naga enacted Ordinance No. 360 changing and amending the
graduated tax on quarterly gross sales of merchants prescribed in Section 3 of Ordinance No. 4 of
the City of Naga to percentage tax on gross sales provided for in Section 2 thereof. Pursuant to said
ordinance, private respondents paid to the City of Naga the following taxes on their gross sales for
the quarter from July 1, 1970 to September 30, 1970, as follows:

Catalino Agna paid P1,805.17 as per Official Receipt No. 1826591;

Felipe Agna paid P625.00 as per Official Receipt No. 1826594; and

Salud Velasco paid P129.81 as per Official Receipt No. 1820339.

On February 13, 1971, private respondents filed with the City Treasurer of the City of Naga a claim
for refund of the following amounts, together with interests thereon from the date of payments: To
Catalino Agna, P1,555.17; to Felipe Agna, P560.00; and to Salud Velasco, P127.81, representing the
difference between the amounts they paid under Section 3, Ordinance No. 4 of the City of Naga,
i.e., P250.00; P65.00 and P12.00 respectively. They alleged that under existing law, Ordinance No.
360, which amended Section 3, Ordinance No. 4 of the City of Naga, did not take effect in 1970, the
year it was approved but in the next succeeding year after the year of its approval, or in 1971, and
that therefore, the taxes they paid in 1970 on their gross sales for the quarter from July 1, 1970 to
September 30, 1970 were illegal and should be refunded to them by the petitioners.

The City Treasurer denied the claim for refund of the amounts in question. So private respondents
filed a complaint with the Court of First Instance of Naga (Civil Case No. 7084), seeking to have
Ordinance No. 360 declared effective only in the year following the year of its approval, that is, in
1971; to have Sections 4, 6 and 8 of Ordinance No. 360 declared unjust, oppressive and arbitrary,
and therefore, null and void; and to require petitioners to refund the sums being claimed with
interests thereon from the date the taxes complained of were paid and to pay all legal costs and
attorney's fees in the sum of P1,000.00. Private respondents further prayed that the petitioners be
enjoined from enforcing Ordinance No. 360.
In their answer, the petitioners among other things, claimed that private respondents were not
"compelled" but voluntarily made the payments of their taxes under Ordinance No. 360; that the
said ordinance was published in accordance with law; that in accordance with Republic Act No. 305
(Charter of the City of Naga) an ordinance takes effect after the tenth day following its passage
unless otherwise stated in said ordinance; that under existing law the City of Naga is authorized to
impose certain conditions to secure and accomplish the collection of sales taxes in the most
effective manner. As special and affirmative defenses, the petitioners allege that the private
respondents have no cause of action against them; that granting that the collection of taxes can be
enjoined. the complaint does not allege facts sufficient to justify the issuance of a writ of
preliminary injunction; that the refund prayed for by the private respondents is untenable; that
petitioners Vicente P. Sibulo and Joaquin C. Cleope, the City Mayor and Treasurer of the City of
Naga, respectively are not proper parties in interest; that the private respondents are estopped
from questioning the validity and/or constitutionality of the provisions of Ordinance No. 360.
Petitioners counterclaimed for P20,000.00 as exemplary damages, for the alleged unlawful and
malicious filing of the claim against them, in such amount as the court may determine.

During the hearing of the petition for the issuance of a writ of preliminary injunction and at the pre-
trial conference as well as at the trial on the merits of the case, the parties agreed on the following
stipulation of facts: That on June 15, 1970, the City Board of the City of Naga enacted Ordinance No.
360 entitled "An ordinance repealing Ordinance No. 4, as amended, imposing a sales tax on the
quarterly sales or receipts on all businesses in the City of Naga," which ordinance was transmitted
to the City Mayor for approval or veto on June 25, 1970; that the ordinance was duly posted in the
designated places by the Secretary of the Municipal Board; that private respondents voluntarily
paid the gross sales tax, pursuant to Ordinance No. 360, but that on February 15, 1971, they filed a
claim for refund with the City Treasurer who denied the same.

On October 9, 1971, the respondent Judge rendered judgment holding that Ordinance No. 360,
series of 1970 of the City of Naga was enforceable in the year following the date of its approval,
that is, in 1971 and required the petitioners to reimburse the following sums, from the date they
paid their taxes to the City of Naga: to Catalino Agna, the sum of P1,555.17; to Felipe Agna,
P560.00; and to Salud Velasco, P127.81 and the corresponding interests from the filing of the
complaint up to the reimbursement of the amounts plus the sum of P500.00 as attorney's fees and
the costs of the proceedings.

Petitioners' submit that Ordinance No. 360, series of 1970 of the City of Naga, took effect in the
quarter of the year of its approval, that is in July 1970, invoking Section 14 of Republic Act No. 305,
1 as amended, otherwise known as the Charter of the City of Naga, which, among others, provides
that "Each approved ordinance ... shall take effect and be enforced on and after the 10th day
following its passage unless otherwise stated in said ordinance ... ". They contend that Ordinance
No. 360 was enacted by the Municipal Board of the City of Naga on June 15, 1970 2 and was
transmitted to the City Mayor for his approval or veto on June 25, 1970 3 but it was not acted upon
by the City Mayor until August 4, 1970. Ordinarily, pursuant to Section 14 of Republic Act No. 305,
said ordinance should have taken effect after the 10th day following its passage on June 15, 1970,
or on June 25, 1970. But because the ordinance itself provides that it shall take effect upon its
approval, it becomes necessary to determine when Ordinance No. 360 was deemed approved.
According to the same Section 14 of Republic Act No. 305, "if within 10 days after receipt of the
ordinance the Mayor does not return it with his veto or approval 4 the ordinance is deemed
approved." Since the ordinance in question was not returned by the City Mayor with his veto or
approval within 10 days after he received it on June 25, 1970, the same was deemed approved after
the lapse of ten (10) days from June 25, 1970 or on July 6, 1970. On this date, the petitioners claim
that Ordinance No. 360 became effective. They further contend that even under Section 2, of
Republic Act No. 2264 (Local Autonomy Acts) 5 which expressly provides: "A tax ordinance shall go
into effect on the fifteenth day after its passage unless the ordinance shall provide otherwise',
Ordinance No. 360 could have taken effect on June 30, 1970, which is the fifteenth day after its
passage by the Municipal Board of the City of Naga on June 15, 1970, or as earlier explained, it
could have taken effect on July 6, 1970, the date the ordinance was deemed approved because the
ordinance itself provides that it shall take effect upon its approval. Of the two provisions invoked by
petitioners to support their stand that the ordinance in question took effect in the year of its
approval, it is Section 2 of Republic Act No. 2264 (Local Autonomy Act) that is more relevant
because it is the provision that specifically refers to effectivity of a tax ordinance and being a
provision of much later law it is deemed to have superseded Section 14 of Republic Act No. 305
(Charter of the City of Naga) in so far as effectivity of a tax ordinance is concerned.

On the other hand, private respondents contend that Ordinance No. 360 became effective and
enforceable in 1971, the year following the year of its approval, invoking Section 2309 of the
Revised Administrative Code which provides:

Section 2309. Imposition of tax and duration of license.A municipal license tax already in
existence shall be subject to change only by ordinance enacted prior to the 15th day of December
of any year after the next succeeding year, but an entirely new tax may be created by any
ordinance enacted during the quarter year effective at the beginning of any subsequent quarter.

They submit that since Ordinance No. 360, series of 1970 of the City of Naga, is one which changes
the existing graduated sales tax on gross sales or receipts of dealers of merchandise and sari-sari
merchants provided for in Ordinance No. 4 of the City of Naga to a percentage tax on their gross
sales prescribed in the questioned ordinance, the same should take effect in the next succeeding
year after the year of its approval or in 1971.

Evidently, the divergence of opinion as to when Ordinance No. 360 took effect and became
enforceable is mainly due to the seemingly apparent conflict between Section 2309 of the Revised
Administrative Code and Section 2 of Republic Act No. 2264 (Local Autonomy Act). Is there really
such a conflict in the above-mentioned provisions? It will be easily noted that Section 2309 of the
Revised Administrative Code contemplates of two types of municipal ordinances, namely: (1) a
municipal ordinance which changes a municipal license tax already in existence and (2) an
ordinance which creates an entirely new tax. Under the first type, a municipal license tax already in
existence shall be subject to change only by an ordinance enacted prior to the 15th day of
December of any year after the next succeeding year. This means that the ordinance enacted prior
to the 15th day of December changing or repealing a municipal license tax already in existence will
have to take effect in next succeeding year. The evident purpose of the provision is to enable the
taxpayers to adjust themselves to the new charge or burden brought about by the new ordinance.
This is different from the second type of a municipal ordinance where an entirely new tax may be
created by any ordinance enacted during the quarter year to be effective at the beginning of any
subsequent quarter. We do not find any such distinction between an ordinance which changes a
municipal license tax already in existence and an ordinance creating an entirely new tax in Section
2 of Republic Act No. 2264 (Local Autonomy Act) which merely refers to a "tax ordinance" without
any qualification whatsoever.

Now to the meat of the problem in this petition. Is not Section 2309 of the Revised Administrative
Code deemed repealed or abrogated by Section 2 of Republic Act No. 2264 (Local Autonomy Act) in
so far as effectivity of a tax ordinance is concerned? An examination of Republic Act No. 2264 (Local
Autonomy Act) fails to show any provision expressly repealing Section 2309 of the Revised
Administrative Code. All that is mentioned therein is Section 9 which reads:

Section 9 All acts, executive orders, administrative orders, proclamations or parts thereof,
inconsistent with any of the provisions of this Act are hereby repealed and modified accordingly.

The foregoing provision does not amount to an express repeal of Section 2309 of the Revised
Administrative Code. It is a well established principle in statutory construction that a statute will not
be construed as repealing prior acts on the same subject in the absence of words to that effect
unless there is an irreconcilable repugnancy between them, or unless the new law is evidently
intended to supersede all prior acts on the matter in hand and to comprise itself the sole and
complete system of legislation on that subject. Every new statute should be construed in
connection with those already existing in relation to the same subject matter and all should be
made to harmonize and stand together, if they can be done by any fair and reasonable
interpretation ... . 6 It will also be noted that Section 2309 of the Revised Administrative Code and
Section 2 of Republic Act No. 2264 (Local Autonomy Act) refer to the same subject matter-
enactment and effectivity of a tax ordinance. In this respect they can be considered in pari materia.
Statutes are said to be in pari materia when they relate to the same person or thing, or to the same
class of persons or things, or have the same purpose or object. 7 When statutes are in pari materia,
the rule of statutory construction dictates that they should be construed together. This is because
enactments of the same legislature on the same subject matter are supposed to form part of one
uniform system; that later statutes are supplementary or complimentary to the earlier enactments
and in the passage of its acts the legislature is supposed to have in mind the existing legislation on
the same subject and to have enacted its new act with reference thereto. 8 Having thus in mind the
previous statutes relating to the same subject matter, whenever the legislature enacts a new law, it
is deemed to have enacted the new provision in accordance with the legislative policy embodied in
those prior statutes unless there is an express repeal of the old and they all should be construed
together. 9 In construing them the old statutes relating to the same subject matter should be
compared with the new provisions and if possible by reasonable construction, both should be so
construed that effect may be given to every provision of each. However, when the new provision
and the old relating to the same subject cannot be reconciled the former shall prevail as it is the
latter expression of the legislative will. 10 Actually we do not see any conflict between Section 2309
of the Revised Administrative Code and Section 2 of the Republic Act No. 2264 (Local Autonomy
Act). The conflict, if any, is more apparent than real. It is one that is not incapable of reconciliation.
And the two provisions can be reconciled by applying the first clause of Section 2309 of the Revised
Administrative Code when the problem refers to the effectivity of an ordinance changing or
repealing a municipal license tax already in existence. But where the problem refers to effectivity of
an ordinance creating an entirely new tax, let Section 2 of Republic Act No. 2264 (Local Autonomy
Act) govern.

In the case before Us, the ordinance in question is one which changes the graduated sales tax on
gross sales or receipts of dealers of merchandise and sari-sari merchants prescribed in Section 3 of
Ordinance No. 4 of the City of Naga to percentage tax on their gross sale-an ordinance which
definitely falls within the clause of Section 2309 of the Revised Administrative Code. Accordingly it
should be effective and enforceable in the next succeeding year after the year of its approval or in
1971 and private respondents should be refunded of the taxes they have paid to the petitioners on
their gross sales for the quarter from July 1, 1970 to September 30, 1970 plus the corresponding
interests from the filing of the complaint until reimbursement of the amount.

IN VIEW OF THE FOREGOING, the instant petition is hereby dismissed.

SO ORDERED.
EN BANC
[G.R. No. 141386. November 29, 2001]

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

May the salaries and personnel-related benefits of public school teachers appointed by local chief
executives in connection with the establishment and maintenance of extension classes; as well as
the expenses for college scholarship grants, be charged to the Special Education Fund (SEF) of the
local government unit concerned?

The instant petition for review, which raises a pure question of law, seeks to annul and set aside the
decision[1] of the Regional Trial Court of Cebu, Branch 20, in a petition for declaratory relief,
docketed as Civil Case No. CEB-24422.

The provincial governor of the province of Cebu, as chairman of the local school board, under
Section 98 of the Local Government Code, appointed classroom teachers who have no items in the
DECS plantilla to handle extension classes that would accommodate students in the public schools.

In the audit of accounts conducted by the Commission on Audit (COA) of the Province of Cebu, for
the period January to June 1998, it appeared that the salaries and personnel-related benefits of the
teachers appointed by the province for the extension classes were charged against the provincial
SEF. Likewise charged to the SEF were the college scholarship grants of the province. Consequently,
the COA issued Notices of Suspension to the province of Cebu,[2] saying that disbursements for the
salaries of teachers and scholarship grants are not chargeable to the provincial SEF.

Faced with the Notices of Suspension issued by the COA, the province of Cebu, represented by its
governor, filed a petition for declaratory relief with the trial court.

On December 13, 1999, the court a quo rendered a decision declaring the questioned expenses as
authorized expenditures of the SEF. The dispositive portion thereof reads:

WHEREFORE, in view of all the foregoing premises considered, judgment is hereby rendered giving
due course to this instant petition for declaratory relief declaring and confirming that petitioner is
vested with the authority to disburse the proceeds from the Special Educational Fund [SEF] for the
payment of salaries, allowances or honoraria for teachers and non-teaching personnel in the public
schools in the Province of Cebu and its component cities, and, municipalities, as well as the
expenses for scholarship grants of petitioners specially to poor but deserving students therein.

Declaring, further, respondent's audit findings on pages 36 and 37 in the Annual Audit Report on
the Province of Cebu for the year ending December 31, 1999 as null and void.[3]

Hence, the instant petition by the Commission on Audit.

The Special Education Fund was created by virtue of R. A. No. 5447, which is An act creating a
special education fund to be constituted from the proceeds of an additional real property tax and a
certain portion of the taxes on Virginia-type cigarettes and duties on imported leaf tobacco, defining
the activities to be financed, creating school boards for the purpose, and appropriating funds
therefrom, which took effect on January 1, 1969. Pursuant thereto, P.D. No. 464, also known as the
Real Property Tax Code of the Philippines, imposed an annual tax of 1% on real property which shall
accrue to the SEF.[4]

Under R. A. No. 5447, the SEF may be expended exclusively for the following activities of the DECS -

(a) the organization and operation of such number of extension classes as may be needed to
accommodate all children of school age desiring to enter Grade I, including the creation of positions
of classroom teachers, head teachers and principals for such extension classes x x x;
(b) the programming of the construction and repair of elementary school buildings, acquisition of
sites, and the construction and repair of workshops and similar buildings and accessories thereof to
house laboratory, technical and similar equipment and apparatus needed by public schools offering
practical arts, home economics and vocational courses, giving priority to elementary schools on the
basis of the actual needs and total requirements of the country x x x;

(c) the payment and adjustment of salaries of public school teachers under and by virtue of
Republic Act Numbered Five Thousand One Hundred Sixty-Eight and all the benefits in favor of
public school teachers provided under Republic Act Numbered Four Thousand Six Hundred Seventy;

(d) preparation, printing and/or purchase of textbooks, teacher's guides, forms and pamphlets x x x;

(e) the purchase and/or improvement, repair and refurbishing of machinery, laboratory, technical
and similar equipment and apparatus, including spare parts needed by the Bureau of Vocational
Education and secondary schools offering vocational courses;

(f) the establishment of printing plant to be used exclusively for the printing needs of the
Department of Education and the improvement of regional printing plants in the vocational schools;

(g) the purchase of teaching materials such as work books, atlases, flip charts, science and
mathematics teaching aids, and simple laboratory devices for elementary and secondary classes;

(h) the implementation of the existing program for citizenship development in barrio high schools,
folk schools and adult education classes;

(i) the undertaking of education research, including that of the Board of National Education;

(j) the granting of government scholarships to poor but deserving students under Republic Act
Numbered Four Thousand Ninety; and

(k) the promotion of physical education, such as athletic meets. (Emphasis supplied)

With the effectivity of the Local Government Code of 1991, petitioner contends that R.A. No. 5447
was repealed, leaving Sections 235, 272 and 100 (c) of the Code to govern the disposition of the
SEF, to wit:

SEC. 235. Additional Levy on Real Property for the Special Education Fund (SEF). A province or city
or a municipality within the Metropolitan Manila Area, may levy and collect an annual tax of one
percent (1%) on the assessed value of real property which shall be in addition to the basic real
property tax. The proceeds thereof shall exclusively accrue to the Special Education Fund (SEF).

SEC. 272. Application of Proceeds of the Additional One Percent SEF Tax. The proceeds from the
additional one percent (1%) tax on real property accruing to the SEF shall be automatically released
to the local school boards: Provided, That, in case of provinces, the proceeds shall be divided
equally between the provincial and municipal school boards: Provided, however, That the proceeds
shall be allocated for the operation and maintenance of public schools, construction and repair of
school buildings, facilities and equipment, educational research, purchase of books and periodicals,
and sports development as determined and approved by the local school board. (Emphasis
supplied)

SEC. 100. Meeting and Quorum; Budget

xxxxxxxxx

(c) The annual school board budget shall give priority to the following:

(1) Construction, repair, and maintenance of school buildings and other facilities of public
elementary and secondary schools;

(2) Establishment and maintenance of extension classes where necessary; and

(3) Sports activities at the division, district, municipal, and barangay levels. (Emphasis supplied)

Invoking the legal maxim expressio unius es exclusio alterius, petitioner alleges that since salaries,
personnel-related benefits and scholarship grants are not among those authorized as lawful
expenditures of the SEF under the Local Government Code, they should be deemed excluded
therefrom.

Moreover, petitioner claims that since what is allowed for local school boards to determine under
Section 99[5] of the Local Government Code is only the annual supplementary budgetary needs for
the operation and maintenance of public schools, as well as the supplementary local cost to meet
such needs, the budget of the local school boards for the establishment and maintenance of
extension classes should be construed to refer only to the upkeep and maintenance of public school
buildings, facilities and similar expenses other than personnel-related benefits. This is because,
petitioner argued, the maintenance and operation of public schools pertain principally to the DECS.

The contentions are without merit. It is a basic precept in statutory construction that the intent of
the legislature is the controlling factor in the interpretation of a statute.[6] In this connection, the
following portions of the deliberations of the Senate on the second reading of the Local Government
Code on July 30, 1990 are significant:

Senator Guingona. Mr. President.

The President. Senator Guingona is recognized.

Senator Guingona. Just for clarification, Mr. President. In this transfer, will it include everything
eventually -- lock, stock and barrel, including curriculum?

Senator Pimentel. Mr. President, our stand in the Committee is to respect the decision of the
National Government in terms of curriculum.

Senator Guingona. But, supposing the Local Education Board wishes to adopt a certain curriculum
for that particular region?

Senator Pimentel. Mr. President, pursuant to the wording of the proposed transfer of this elementary
school system to local government units, what are specifically covered here are merely the
construction, repair, and maintenance of elementary school buildings and other structures
connected with public elementary school education, payment of salaries, emoluments, allowances
et cetera, procurement of books, other teaching materials and equipment needed for the proper
implementation of the program. There is nothing here that will indicate that the local government
will have any right to alter the curriculum. (Emphasis supplied)

Senator Guingona. Thank you, Mr. President.

Similarly instructive are the foregoing deliberations in the House of Representatives on August 16,
1990:

INTERPELLATION OF MS. RAYMUNDO

(Continuation)

Continuing her interpellation, Ms. Raymundo then adverted to subsection 4 of Section 101 [now
Section 100, paragraph (c)] and asked if the budget is limited only to the three priority areas
mentioned. She also asked what is meant by the phrase maintenance of extension classes.

In response, Mr. De Pedro clarified that the provision is not limited to the three activities, to which
may be added other sets of priorities at the proper time. As to extension classes, he pointed out
that the school boards may provide out of its own funds, for additional teachers or other
requirements if the national government cannot provide funding therefor. Upon Ms. Raymundos
query, Mr. de Pedro further explained that support for teacher tools could fall under the priorities
cited and is covered by certain circulars.
Undoubtedly, the aforecited exchange of views clearly demonstrates that the legislature intended
the SEF to answer for the compensation of teachers handling extension classes.

Furthermore, the pertinent portion of the repealing clause of the Local Government Code, provides:

SEC. 534. Repealing Clause. - x x x

(c) The provisions of . . . Sections 3, a (3) and b (2) of Republic Act No. 5447, regarding the Special
Education Fund are hereby repealed and rendered of no force and effect.

Evidently, what was expressly repealed by the Local Government Code was only Section 3, of R.A.
No. 5447, which deals with the Allocation of taxes on Virginia type cigarettes and duties on
imported leaf tobacco. The legislature is presumed to know the existing laws, such that whenever it
intends to repeal a particular or specific provision of law, it does so expressly. The failure to add a
specific repealing clause particularly mentioning the statute to be repealed indicates that the intent
was not to repeal any existing law on the matter, unless an irreconcilable inconsistency and
repugnancy exists in the terms of the new and the old laws.[7] Hence, the provisions allocating
funds for the salaries of teachers under Section 1, of R.A. No. 5447, which are not inconsistent with
Sections 272 and 100 (c) of the Local Government Code, remain in force and effect.

Even under the doctrine of necessary implication, the allocation of the SEF for the establishment
and maintenance of extension classes logically implies the hiring of teachers who should, as a
matter of course be compensated for their services. Every statute is understood, by implication, to
contain all such provisions as may be necessary to effectuate its object and purpose, or to make
effective rights, powers, privileges or jurisdiction which it grants, including all such collateral and
subsidiary consequences as may be fairly and logically inferred from its terms. Ex necessitate legis.
[8] Verily, the services and the corresponding compensation of these teachers are necessary and
indispensable to the establishment and maintenance of extension classes.

Indeed, the operation and maintenance of public schools is lodged principally with the DECS. This is
the reason why only salaries of public school teachers appointed in connection with the
establishment and maintenance of extension classes, inter alia, pertain to the supplementary
budget of the local school boards. Thus, it should be made clear that not every kind of personnel-
related benefits of public school teachers may be charged to the SEF. The SEF may be expended
only for the salaries and personnel-related benefits of teachers appointed by the local school boards
in connection with the establishment and maintenance of extension classes. Extension classes as
referred to mean additional classes needed to accommodate all children of school age desiring to
enter in public schools to acquire basic education.[9]

With respect, however, to college scholarship grants, a reading of the pertinent laws of the Local
Government Code reveals that said grants are not among the projects for which the proceeds of the
SEF may be appropriated. It should be noted that Sections 100 (c) and 272 of the Local Government
Code substantially reproduced Section 1, of R.A. No. 5447. But, unlike payment of salaries of
teachers which falls within the ambit of establishment and maintenance of extension classes and
operation and maintenance of public schools, the granting of government scholarship to poor but
deserving students was omitted in Sections 100 (c) and 272 of the Local Government Code. Casus
omissus pro omisso habendus est. A person, object, or thing omitted from an enumeration in a
statute must be held to have been omitted intentionally. It is not for this Court to supply such grant
of scholarship where the legislature has omitted it.[10]

In the same vein, however noble the intention of the province in extending said scholarship to
deserving students, we cannot apply the doctrine of necessary implication inasmuch as the grant of
scholarship is neither necessary nor indispensable to the operation and maintenance of public
schools. Instead, such scholarship grants may be charged to the General Funds of the province.

Pursuant to Section 1, Rule 63[11] of the 1997 Rules of Civil Procedure, a petition for declaratory
relief may be filed before there is a breach or violation. The Solicitor General claims that the Notices
of Suspension issued by the COA to the respondent province amounted to a breach or violation, and
therefore, the petition for declaratory relief should have been denied by the trial court.
We are not convinced. As held in Shell Company of the Philippines, Ltd. v. Municipality of Sipocot,
[12] any breach of the statute subject of the controversy will not affect the case; the action for
declaratory relief will prosper because the applicability of the statute in question to future
transactions still remains to be resolved. Absent a definite ruling in the instant case for declaratory
relief, doubts as to the disposition of the SEF will persist. Hence, the trial court did not err in giving
due course to the petition for declaratory relief filed by the province of Cebu.

WHEREFORE, in view of all the foregoing, the Decision of the Regional Trial Court of Cebu City,
Branch 20, in Civil Case No. CEB-24422, is AFFIRMED with MODIFICATION. The salaries and
personnel-related benefits of the teachers appointed by the provincial school board of Cebu in
connection with the establishment and maintenance of extension classes, are declared chargeable
against the Special Education Fund of the province. However, the expenses incurred by the
provincial government for the college scholarship grants should not be charged against the Special
Education Fund, but against the General Funds of the province of Cebu.

SO ORDERED.

Davide, Jr., C.J., Bellosillo, Melo, Puno, Vitug, Kapunan, Mendoza, Panganiban, Quisumbing, Pardo,
De Leon, Jr., Sandoval-Gutierrez, and Carpio, JJ., concur.
Buena, J., on official leave.
Republic of the Philippines
SUPREME COURT
Manila

EN BANC

G.R. No. L-14787 January 28, 1961

COLGATE-PALMOLIVE PHILIPPINE, INC., petitioner,

vs.
HON. PEDRO M. GIMENEZ as Auditor General and ISMAEL MATHAY as AUDITOR OF THE CENTRAL
BANK OF THE PHILIPPINES, respondents.

Ross, Selph and Carrascoso for petitioner.

Office of the Solicitor General for respondents.

GUTIERREZ DAVID, J.:

The petitioner Colgate-Palmolive Philippines, Inc. is a corporation duly organized and existing under
Philippine laws engaged in the manufacture of toilet preparations and household remedies. On
several occasions, it imported from abroad various materials such as irish moss extract, sodium
benzoate, sodium saccharinate precipitated calcium carbonate and dicalcium phosphate, for use as
stabilizers and flavoring of the dental cream it manufactures. For every importation made of these
materials, the petitioner paid to the Central Bank of the Philippines the 17% special excise tax on
the foreign exchange used for the payment of the cost, transportation and other charges incident
thereto, pursuant to Republic Act No. 601, as amended, commonly known as the Exchange Tax Law.

On March 14, 1956, the petitioner filed with the Central Bank three applications for refund of the
17% special excise tax it had paid in the aggregate sum of P113,343.99. The claim for refund was
based on section 2 of Republic Act 601, which provides that "foreign exchange used for the
payment of the cost, transportation and/or other charges incident to the importation into the
Philippines of . . . stabilizer and flavors . . . shall be refunded to any importer making application
therefor, upon satisfactory proof of actual importation under the rules and regulations to be
promulgated pursuant to section seven thereof." After the applications were processed by the
officer-in-charge of the Exchange Tax Administration of the Central Bank, that official advised, the
petitioner that of the total sum of P113,343.99 claimed by it for refund, the amount of P23,958.13
representing the 17% special excise tax on the foreign exchange used to import irish moss extract,
sodium benzoate and precipitated calcium carbonate had been approved. The auditor of the Central
Bank, however, refused to pass in audit its claims for refund even for the reduced amount fixed by
the Officer-in-Charge of the Exchange Tax Administration, on the theory that toothpaste stabilizers
and flavors are not exempt under section 2 of the Exchange Tax Law.

Petitioner appealed to the Auditor General, but the latter or, December 4, 1958 affirmed the ruling
of the auditor of the Central Bank, maintaining that the term "stabilizer and flavors" mentioned in
section 2 of the Exchange Tax Law refers only to those used in the preparation or manufacture of
food or food products. Not satisfied, the petitioner brought the case to this Court thru the present
petition for review.

The decisive issue to be resolved is whether or not the foreign exchange used by petitioner for the
importation of dental cream stabilizers and flavors is exempt from the 17% special excise tax
imposed by the Exchange Tax Law, (Republic Act No. 601) so as to entitle it to refund under section
2 thereof, which reads as follows:

SEC, 2. The tax collected under the preceding section on foreign exchange used for the payment of
the cost, transportation and/or other charges incident to importation into the Philippines of rice,
flour, canned milk, cattle and beef, canned fish, soya beans, butterfat, chocolate, malt syrup,
tapioca, stabilizer and flavors, vitamin concentrate, fertilizer, poultry feed; textbooks, reference
books, and supplementary readers approved by the Board of Textbooks and/or established public or
private educational institutions; newsprint imported by or for publishers for use in the publication of
books, pamphlets, magazines and newspapers; book paper, book cloth, chip board imported for the
printing of supplementary readers (approved by the Board of Textbooks) to be supplied to the
Government under contracts perfected before the approval of this Act, the quantity thereof to be
certified by the Director of Printing; anesthetics, anti-biotics, vitamins, hormones, x-ray films,
laboratory reagents, biologicals, dental supplies, and pharmaceutical drugs necessary for
compounding medicines; medical and hospital supplies listed in the appendix to this Act, in
quantities to be certified by the Director of Hospitals as actually needed by the hospitals applying
therefor; drugs and medicines listed in the said appendix; and such other drugs and medicines as
may be certified by the Secretary of Health from time to time to promote and protect the health of
the people of the Philippines shall be refunded to any importer making application therefor, upon
satisfactory proof of actual importation under the rules and regulations to be promulgated pursuant
to section seven thereof." (Emphasis supplied.)

The ruling of the Auditor General that the term "stabilizer and flavors" as used in the law refers only
to those materials actually used in the preparation or manufacture of food and food products is
based, apparently, on the principle of statutory construction that "general terms may be restricted
by specific words, with the result that the general language will be limited by the specific language
which indicates the statute's object and purpose." (Statutory Construction by Crawford, 1940 ed. p.
324-325.) The rule, however, is, in our opinion, applicable only to cases where, except for one
general term, all the items in an enumeration belong to or fall under one specific class. In the case
at bar, it is true that the term "stabilizer and flavors" is preceded by a number of articles that may
be classified as food or food products, but it is likewise true that the other items immediately
following it do not belong to the same classification. Thus "fertilizer" and "poultry feed" do not fall
under the category of food or food products because they are used in the farming and poultry
industries, respectively. "Vitamin concentrate" appears to be more of a medicine than food or food
product, for, as matter of fact, vitamins are among those enumerated in the list of medicines and
drugs appearing in the appendix to the law. It should also here be stated that "cattle", which is
among those listed preceding the term in question, includes not only those intended for slaughter
but also those for breeding purposes. Again, it is noteworthy that under, Republic Act No. 814
amending the above-quoted section of Republic Act No. 601, "industrial starch", which does not
always refer to food for human consumption, was added among the items grouped with "stabilizer
and flavors". Thus, on the basis of the grouping of the articles alone, it cannot validly be maintained
that the term "stabilizer and flavors" as used in the above-quoted provision of the Exchange Tax
Law refers only to those used in the manufacture of food and food products. This view is supported
by the principle "Ubi lex non distinguish nec nos distinguire debemos", or "where the law does not
distinguish, neither do we distinguish". (Ligget & Myers Tobacco Company vs. Collector of Internal
Revenue, 53 Off. Gaz. No. 15, page 4831). Since the law does not distinguish between "stabilizer
and flavors" used in the preparation of food and those used in the manufacture of toothpaste or
dental cream, we are not authorized to make any distinction and must construe the words in their
general sense. The rule of construction that general and unlimited terms are restrained and limited
by particular recitals when used in connection with them, does not require the rejection of general
terms entirely. It is intended merely as an aid in ascertaining the intention of the legislature and is
to be taken in connection with other rules of construction. (See Handbook of the Construction and
Interpretation of Laws by Black, p. 215.216, 2nd ed.)

Having arrived at the above conclusion, we deem it now idle to pass upon the other questions
raised by the parties.

WHEREFORE, the decision under review is reversed and the respondents are hereby ordered to
audit petitioners applications for refund which were approved by the Officer-in-Charge of the
Exchange Tax Administration in the total amount of P23,958.13.

Bengzon, Bautista Angelo, Concepcion, Reyes, J.B.L., Barrera, Paredes and Dizon, JJ., concur.
Labrador, J., reserves his vote.
Republic of the Philippines
SUPREME COURT
Manila

EN BANC

G.R. No. 104712 May 6, 1992

MANUEL T. DE GUIA, in his capacity as Councilor of the Municipality of Paraaque, Metro Manila,
petitioner,
vs.
HON. COMMISSION ON ELECTIONS, respondent.

BELLOSILLO, J.:

This is a petition for certiorari and prohibition assailing the validity and the enforcement by
respondent Commission on Elections (COMELEC) of its RESOLUTION NO. 2313, adopting rules and
guidelines in the apportionment, by district, of the number of elective members of the Sangguniang
Panlalawigan in provinces with only one (1) legislative district and the Sangguniang Bayan of
municipalities in the Metro Manila Area for the preparation of the Project of District Apportionment
by the Provincial Election Supervisors and Election Registrars (Annex "A", Petition), RESOLUTION
NO. 2379, approving the Project of District Apportionment submitted pursuant to Resolution No.
2313 (Annex "B", Petition), and RESOLUTION UND. 92-010 holding that pars. (a), (b) and (c), and the
first sentence of par. (d), all of Sec. 3, R.A. 7166, apply to the May 11, 1992 elections (Annex "C",
Petition).

Petitioner Manuel T. De Guia is an incumbent Member of the Sangguniang Bayan of the Municipality
of Paraaque, Metro Manila, having been elected in the January 1988 local elections. He prays,
more particularly, for reversal of the position of respondent insofar as it affects the municipality of
Paraaque and all the other municipalities in the Metro Manila Area. He claims that the second
proviso of par. (c), Sec. 3 of R.A. 7166, which requires the apportionment into districts of said
municipalities does not specify when the members of their Sangguniang Bayan will be elected by
district. He would consequently lean on par. (d) of Sec. 3, which immediately succeeds par. (c), to
support his view that the elected members of these municipalities mentioned in par. (c) should
continue to be elected at large in the May 11, 1992 elections.

Paragraph (d) states that "[F]or purposes of the regular elections on May 11, 1992, elective
members of the Sangguniang Panlunsod and Sangguniang Bayan shall be elected at large in
accordance with existing laws. However, beginning with the regular elections in 1995, they shall be
elected by district." Petitioner therefore insists that the elected members of the Sangguniang Bayan
of Paraaque fall under this category so that they should continue to be elected at large until the
1995 regular elections.

Before addressing the crux of the controversy, the Court observes that petitioner does not allege
that he is running for reelection, much less, that he is prejudiced by the election, by district, in
Paraaque. As such, he does
not appear to have a locus standi, a standing in law, personal or substantial interest. 1 He does not
also allege any legal right that has been violated by respondent. If for this alone, petitioner does not
appear to have any cause of action.

However, considering the importance of the issue involved, concerning as it does the political
exercise of qualified voters affected by the apportionment, and petitioner alleging abuse of
discretion and violation of the Constitution by respondent, We resolve to brush aside the question of
procedural infirmity, even as We perceive the petition to be one of declaratory relief. We so held
similarly through Mr. Justice Edgardo L. Paras in Osmea v. Commission on Elections. 2

Now on the meat of the dispute.

On November 18, 1991, Congress passed R.A. 7166, signed into law by the President on November
26, 1991. It is "An Act Providing for Synchronized National and Local Elections and for Electoral
Reforms, Authorizing Appropriations Therefor, and for Other Purposes." At issue in this case is the
proper interpretation of Sec. 3 thereof which provides:

Sec. 3. Elections of Members of the Sangguniang Panlalawigan, Sangguniang Panlungsod and

Sangguniang Bayan. The elective members of the Sangguniang Panlalawigan, Sangguniang
Panlungsod and Sangguniang Bayan shall be elected as follows:

(a) For provinces with two (2) or more legislative districts, the elective members of the
Sangguniang Panlalawigan shall be elected by legislative districts . . .

(b) For provinces with only one (1) legislative district, the Commission shall divide them into two
(2) districts for purposes of electing the members of the Sangguniang Panlalawigan . . .

(c) The number and election of elective members of the Sangguniang Panlungsod and
Sangguniang Bayan in the Metro Manila Area, City of Cebu, City of Davao and any other city with
two (2) or more legislative districts shall continue to be governed by the provisions of Sections 2
and 3 of Republic Act No. 6636 . . . Provided, further, That, the Commission shall divide each of the
municipalities in Metro Manila Area into two (2) districts by barangay for purposes of representation
in the Sangguniang Bayan
. . . . and,

(d) For purposes of the regular elections on May 11, 1992, elective members of the
Sangguniang Panlungsod and Sangguniang Bayan shall be elected at large in accordance with
existing laws. However, beginning with the regular elections in 1995, they shall be elected by
district . . . .

On November 20, 1991, respondent COMELEC, invoking authority of the Constitution, the Omnibus
Election Code, R.A. 6636, R.A. 6646 and R.A. 7166, 3 issued Resolution No. 2313 and the
subsequent resolutions in question.

On February 20, 1992, in view of the perceived ambiguity in the meaning of par. (d), particularly in
relation to par. (c), Sec. 3, R.A. 7166, petitioner filed with COMELEC a Motion for Clarification of its
Resolution No. 2313 inquiring whether the members of the Sangguniang Bayan of Paraaque and
the other municipalities of Metro Manila enumerated therein, which are all single-district
municipalities, would be elected by district in May 11, 1992 or in the 1995 regular elections.

Meanwhile, on March 3, 1992 COMELEC issued Resolution No. 2379 approving the guidelines
submitted by the Provincial Election Supervisors and Municipal Election Registrars concerned
pursuant to Resolution No. 2313, and stating therein its purpose in recommending to Congress the
districting/apportionment of Sangguniang Panlungsod and Sangguniang Bayan seats, i.e., to reduce
the number of candidates to be voted for in the May 11, 1992 synchronized elections. In this Project
of Apportionment, Paraaque together with the other twelve (12) municipalities in the Metro Manila
Area was divided into two (2) districts with six (6) elective councilors for each district.

On March 10, 1992, COMELEC resolved petitioner's Motion for Clarification by interpreting Sec. 3,
R.A. 7166, to mean that the election of elective members of the Sangguniang Bayan, by district, of
the thirteen (13) municipalities in the Metro Manila Area shall apply in the May 11, 1992 elections
(Resolution UND. 92-010, prom. March 10, 1992). Petitioner says that he received copy of
Resolution UND. 92-010 on March 13, 1992.

On April 7, 1992, apparently not satisfied with this third Resolution of COMELEC, petitioner filed the
instant petition asserting that under par. (d), Sec. 3 of R.A. 7166 the elective members of the
Sangguniang Panlungsod and the Sangguniang Bayan, for purposes of the May 11, 1992 regular
elections, shall be elected at large in accordance with existing laws. He would include in this class
of sanggunian members to be elected at large those of the municipality of Paraaque.

Petitioner therefore imputes grave abuse of discretion to COMELEC in promulgating Resolution No.
2313, Resolution No. 2379 and Resolution UND. 92-010 which clarifies, contrary to his view, that the
district apportionment of the municipalities in the Metro Manila Area is applicable to the May 11,
1992 regular elections.

We have carefully examined pars. (a), (b), (c) and (d) of Sec. 3, R.A. 7166, and its precursor bills on
synchronized elections, Senate Bill No. 1861 and House Bill No. 34811, and We realize the web of
confusion generated by the seeming abstruseness in the language of the law. Some framers of the
law were even fazed at the empirical implications of some of its provisions, particularly Sec. 3
thereof, and they admitted in fact that said provisions were susceptible of varied interpretations, as
borne by the sponsorship and explanatory speeches now spread in the Journals of Congress. Hence,
We can understand why petitioner would interpret Sec. 3 as he would. But if we pursue his course,
we may conclude in absurdity because then there would have been no reason for R.A. 7166 to
single out the single-district provinces referred to in par. (b), and the municipalities in the Metro
Manila Area mentioned in the second proviso of par. (c), to be apportioned at once into two (2)
districts each if the members of their respective sanggunian after all would still be elected at large
as they were in the 1988 elections.

No law is ever enacted that is intended to be meaningless, much less inutile. We must therefore, as
far as we can, divine its meaning, its significance, its reason for being. As it has oft been held, the
key to open the door to what the legislature intended which is vaguely expressed in the language of
a statute is its purpose or the reason which induced it to enact the statute. If the statute needs
construction, as it does in the present case, the most dominant in that process is the purpose of the
act. 4 Statutes should be construed in the light of the object to be achieved and the evil or mischief
to be suppressed, 5 and they should be given such construction as will advance the object,
suppress the mischief, and secure the benefits intended. 6 A construction should be rejected that
gives to the language used in a statute a meaning that does not accomplish the purpose for which
the statute was enacted, and that tends to defeat the ends which are sought to be attained by the
enactment. 7

The reason for the promulgation of R.A. 7166 is shown in the explanatory note of Senate Bill No.
1861 which states in part:

This bill proposes to set the national and local elections for May 11, 1992, and provide for the
necessary implementing details. It also endorses reforms and measures to ensure the conduct of
free, orderly, honest, peaceful and credible elections. Specifically, it seeks to: (1) Reduce the
number of positions to be voted for by providing therein that the members of the Sangguniang
Panlalawigan, Sangguniang Panlungsod and Sangguniang Bayan be elected not at large, but by
district . . . .

That respondent COMELEC is cognizant of this legislative intent of R.A. 7166 is reflected in the
"WHEREAS" clauses constituting the preamble to Resolution No. 2379. Thus

WHEREAS, the Commission on Elections, in order to reduce the number of candidates to be voted
for in the May 11, 1992 synchronized elections recommended, among others, to the Congress of
the Philippines, the districting/apportionment of sangguniang panlungsod and sangguniang bayan
seats;

WHEREAS, the Congress of the Philippines passed Republic Act 7166, and approved by the
President of the Philippines on November 26, 1991, adopting among others, the recommendation of
the Commission on Elections aforestated;

WHEREAS, pursuant to, and in implementation of Republic Act 7166, particularly Section 3 thereof,
the Commission promulgated Resolution No. 2313, directing the Provincial Election Supervisors and
Election Registrars concerned to submit, after consultation, public hearings, and consensus-taking
with the different sectors in the community, the Project of District Apportionment of single
legislative-district provinces and municipalities in the Metro Manila area;

WHEREAS, the established criteria/guidelines in the determination of the district apportionment are
as follows: a. compactness, contiguity and adjacentness of territory; b. apportionment shall be
based on the 1990 census of population; c. no municipality, in the case of provinces, and no
barangay, in the case of cities and municipalities, shall be fragmented or apportioned into different
districts.
This avowed policy of having sanggunian members elected by district is also manifest from the four
corners of Sec. 3 of R.A. 7166. 8 Thus, a careful analysis of the provisions of Sec. 3 shows that the
purpose of districting/apportionment of the sanggunian seats is to reduce the number of positions
to be voted for in the May 11, 1992, synchronized elections and ensure the efficiency of electoral
process. Considering that the single-district provinces and the municipalities in the Metro Manila
Area, which are all single-districts, and under pars. (b) and (c) have already been apportioned into
two (2) districts, they will henceforth be electing the members of their Sangguniang Panlalawigan
and Sangguniang Bayan by district in the coming May 11, 1992, elections, although under par. (d),
the single-district cities and all the municipalities outside the Metro Manila Area which are all
likewise single-districts, will have to continue electing at large the members of their Sangguniang
Panlungsod and Sangguniang Bayan as they have yet to be apportioned. But beginning the regular
elections of 1995, they will all have to be elected by district. By then, COMELEC would have had
enough time to apportion the single-district cities and the municipalities outside the Metro Manila
Area.

As they now stand in relation to the districting/apportionment of local government units for
purposes of election under Sec. 3 of R.A. 7166, it is clear that: (1) for provinces with two (2) or more
legislative districts contemplated in par. (a), they shall continue to be elected by district; (2) for
provinces with single legislative districts, as they have already been apportioned into two (2)
districts each under par. (b), they shall henceforth be elected likewise by district; (3) for cities with
two (2) or more legislative districts, e.g., the cities of Manila, Cebu and Davao, they shall also
continue to be elected by district under the first part of par. (c); and (4) for the thirteen (13)
municipalities in the Metro Manila Area, which have already been apportioned into two (2) districts
each under the second proviso of par. (c), they shall likewise be elected by district in the regular
elections of May 11, 1992.

Then, that should leave us the Sangguniang Panlungsod of the single-district cities and the
Sangguniang Bayan of the municipalities outside Metro Manila, which remain single-districts not
having been ordered apportioned under Sec. 3 of R.A. 7166. They will have to continue to be
elected at large in the May 11, 1992, elections, although starting 1995 they shall all be elected by
district to effect the full implementation of the letter and spirit of R.A. 7166. That is the true import
of par. (d). Consequently, as We view it, where he stands, petitioner must fall.

WHEREFORE, finding no abuse of discretion, much less grave, on the part of respondent, and for
lack of merit, the instant petition is DISMISSED. No costs.

SO ORDERED.

Narvasa, C.J., Melencio-Herrera, Gutierrez, Jr., Cruz, Paras, Feliciano, Padilla, Bidin, Grio-Aquino,
Medialdea, Regalado, Davide, Jr., Romero and Nocon, JJ., concur.
Republic of the Philippines
SUPREME COURT
Manila

EN BANC

G.R. No. 79094 June 22, 1988

MANOLO P. FULE, petitioner,

vs.
THE HONORABLE COURT OF APPEALS, respondent.

Balagtas P. Ilagan for petitioner.

The Solicitor General for respondent.

MELENCIO-HERRERA, J.:

This is a Petition for Review on certiorari of the Decision of respondent Appellate Court, which
affirmed the judgment of the Regional Trial Court, Lucena City, Branch LIV, convicting petitioner (the
accused-appellant) of Violation of Batas Pambansa Blg. 22 (The Bouncing Checks Law) on the basis
of the Stipulation of Facts entered into between the prosecution and the defense during the pre-trial
conference in the Trial Court. The facts stipulated upon read:

a) That this Court has jurisdiction over the person and subject matter of this case;

b) That the accused was an agent of the Towers Assurance Corporation on or before January
21, 1981;

c) That on January 21, 1981, the accused issued and made out check No. 26741, dated January
24, 1981 in the sum of P2,541.05;

d) That the said check was drawn in favor of the complaining witness, Roy Nadera;

e) That the check was drawn in favor of the complaining witness in remittance of collection;

f) That the said check was presented for payment on January 24, 1981 but the same was
dishonored for the reason that the said checking account was already closed;

g) That the accused Manolo Fule has been properly Identified as the accused party in this case.

At the hearing of August 23, 1985, only the prosecution presented its evidence consisting of
Exhibits "A," "B" and "C." At the subsequent hearing on September 17, 1985, petitioner-appellant
waived the right to present evidence and, in lieu thereof, submitted a Memorandum confirming the
Stipulation of Facts. The Trial Court convicted petitioner-appellant.

On appeal, respondent Appellate Court upheld the Stipulation of Facts and affirmed the judgment of
conviction. 1

Hence, this recourse, with petitioner-appellant contending that:

The Honorable Respondent Court of Appeals erred in the decision of the Regional Trial Court
convicting the petitioner of the offense charged, despite the cold fact that the basis of the
conviction was based solely on the stipulation of facts made during the pre-trial on August 8, 1985,
which was not signed by the petitioner, nor by his counsel.

Finding the petition meritorious, we resolved to give due course.

The 1985 Rules on Criminal Procedure, which became effective on January 1, 1985, applicable to
this case since the pre-trial was held on August 8, 1985, provides:

SEC. 4. Pre-trial agreements must be signed. No agreement or admission made or entered during
the pre-trial conference shall be used in evidence against the accused unless reduced to writing
and signed by him and his counsel. (Rule 118) [Emphasis supplied]

By its very language, the Rule is mandatory. Under the rule of statutory construction, negative
words and phrases are to be regarded as mandatory while those in the affirmative are merely
directory (McGee vs. Republic, 94 Phil. 820 [1954]). The use of the term "shall" further emphasizes
its mandatory character and means that it is imperative, operating to impose a duty which may be
enforced (Bersabal vs. Salvador, No. L-35910, July 21, 1978, 84 SCRA 176). And more importantly,
penal statutes whether substantive and remedial or procedural are, by consecrated rule, to be
strictly applied against the government and liberally in favor of the accused (People vs. Terrado No.
L-23625, November 25, 1983, 125 SCRA 648).

The conclusion is inevitable, therefore, that the omission of the signature of the accused and his
counsel, as mandatorily required by the Rules, renders the Stipulation of Facts inadmissible in
evidence. The fact that the lawyer of the accused, in his memorandum, confirmed the Stipulation of
Facts does not cure the defect because Rule 118 requires both the accused and his counsel to sign
the Stipulation of Facts. What the prosecution should have done, upon discovering that the accused
did not sign the Stipulation of Facts, as required by Rule 118, was to submit evidence to establish
the elements of the crime, instead of relying solely on the supposed admission of the accused in
the Stipulation of Facts. Without said evidence independent of the admission, the guilt of the
accused cannot be deemed established beyond reasonable doubt.

Consequently, under the circumstances obtaining in this case, the ends of justice require that
evidence be presented to determine the culpability of the accused. When a judgment has been
entered by consent of an attorney without special authority, it will sometimes be set aside or
reopened (Natividad vs. Natividad, 51 Phil. 613 [1928]).

WHEREFORE, the judgment of respondent Appellate Court is REVERSED and this case is hereby
ordered RE-OPENED and REMANDED to the appropriate Branch of the Regional Trial Court of Lucena
City, for further reception of evidence.

SO ORDERED.

Yap, C.J., Fernan, Narvasa, Cruz, Feliciano, Gancayco, Padilla, Bidin, Sarmiento, Cortes, Grio-Aquino
and Medialdea, JJ., concur.

Paras, J., took no part.

Gutierrez, Jr., J., is on leave.

Republic of the Philippines
SUPREME COURT
Manila

FIRST DIVISION

G.R. No. 109835 November 22, 1993

JMM PROMOTIONS & MANAGEMENT, INC., petitioner,

vs.
NATIONAL LABOR RELATIONS COMMISSION and ULPIANO L. DE LOS SANTOS, respondent.

Don P. Porciuncula for petitioner.

Eulogio Nones, Jr. for private respondent.

CRUZ, J.:

The sole issue submitted in this case is the validity of the order of respondent National Labor
Relations Commission dated October 30, 1992, dismissing the petitioner's appeal from a decision of
the Philippine Overseas Employment Administration on the ground of failure to post the required
appeal bond. 1

The respondent cited the second paragraph of Article 223 of the Labor Code as amended, providing
that:

In the case of a judgment involving a monetary award, an appeal by the employer may be
perfected only upon the posting of a cash or surety bond issued by a reputable bonding company
duly accredited by the Commission in an amount equivalent to the monetary award in the judgment
appealed from.

and Rule VI, Section 6 of the new Rules of Procedure of the NLRC, as amended, reading as follows:

Sec. 6. Bond In case the decision of a Labor Arbiter involves a monetary award, an appeal by the
employer shall be perfected only upon the posting of a cash or surety bond issued by a reputable
bonding company duly accredited by the Commission or the Supreme Court in an amount
equivalent to the monetary award.

The petitioner contends that the NLRC committed grave abuse of discretion in applying these rules
to decisions rendered by the POEA. It insists that the appeal bond is not necessary in the case of
licensed recruiters for overseas employment because they are already required under Section 4,
Rule II, Book II of the POEA Rules not only to pay a license fee of P30,000 but also to post a cash
bond of P100,000 and a surety bond of P50,000, thus:

Upon approval of the application, the applicant shall pay a license fee of P30,000. It shall also post
a cash bond of P100,000 and surety bond of P50,000 from a bonding company acceptable to the
Administration and duly accredited by the Insurance Commission. The bonds shall answer for all
valid and legal claims arising from violations of the conditions for the grant and use of the license,
and/or accreditation and contracts of employment. The bonds shall likewise guarantee compliance
with the provisions of the Code and its implementing rules and regulations relating to recruitment
and placement, the Rules of the Administration and relevant issuances of the Department and all
liabilities which the Administration may impose. The surety bonds shall include the condition that
the notice to the principal is notice to the surety and that any judgment against the principal in
connection with matters falling under POEA's jurisdiction shall be binding and conclusive on the
surety. The surety bonds shall be co-terminus with the validity period of license. (Emphasis
supplied)
In addition, the petitioner claims it has placed in escrow the sum of P200,000 with the Philippine
National Bank in compliance with Section 17, Rule II, Book II of the same Rule, "to primarily answer
for valid and legal claims of recruited workers as a result of recruitment violations or money
claims."

Required to comment, the Solicitor General sustains the appeal bond requirement but suggest that
the rules cited by the NLRC are applicable only to decisions of the Labor Arbiters and not of the
POEA. Appeals from decisions of the POEA, he says, are governed by the following provisions of Rule
V, Book VII of the POEA Rules:

Sec. 5. Requisites for Perfection of Appeal. The appeal shall be filed within the reglementary period
as provided in Section 1 of this Rule; shall be under oath with proof of payment of the required
appeal fee and the posting of a cash or surety bond as provided in Section 6 of this Rule; shall be
accompanied by a memorandum of appeal which shall state the grounds relied upon and the
arguments in support thereof; the relief prayed for; and a statement of the date when the appellant
received the appealed decision and/or award and proof of service on the other party of such appeal.

A mere notice of appeal without complying with the other requisites aforestated shall not stop the
running of the period for perfecting an appeal.

Sec. 6. Bond. In case the decision of the Administration involves a monetary award, an appeal by
the employer shall be perfected only upon the posting of a cash or surety bond issued by a
reputable bonding company duly accredited by the Commission in an amount equivalent to the
monetary award. (Emphasis supplied)

The question is, having posted the total bond of P150,000 and placed in escrow the amount of
P200,000 as required by the POEA Rules, was the petitioner still required to post an appeal bond to
perfect its appeal from a decision of the POEA to the NLRC?

It was.

The POEA Rules are clear. A reading thereof readily shows that in addition to the cash and surety
bonds and the escrow money, an appeal bond in an amount equivalent to the monetary award is
required to perfect an appeal from a decision of the POEA. Obviously, the appeal bond is intended
to further insure the payment of the monetary award in favor of the employee if it is eventually
affirmed on appeal to the NLRC.

It is true that the cash and surety bonds and the money placed in escrow are supposed to
guarantee the payment of all valid and legal claims against the employer, but these claims are not
limited to monetary awards to employees whose contracts of employment have been violated. The
POEA can go against these bonds also for violations by the recruiter of the conditions of its license,
the provisions of the Labor Code and its implementing rules, E.O. 247 (reorganizing POEA) and the
POEA Rules, as well as the settlement of other liabilities the recruiter may incur.

As for the escrow agreement, it was presumably intended to provide for a standing fund, as it were,
to be used only as a last resort and not to be reduced with the enforcement against it of every
claim of recruited workers that may be adjudged against the employer. This amount may not even
be enough to cover such claims and, even if it could initially, may eventually be exhausted after
satisfying other subsequent claims.

As it happens, the decision sought to be appealed grants a monetary award of about P170,000 to
the dismissed employee, the herein private respondent. The standby guarantees required by the
POEA Rules would be depleted if this award were to be enforced not against the appeal bond but
against the bonds and the escrow money, making them inadequate for the satisfaction of the other
obligations the recruiter may incur.

Indeed, it is possible for the monetary award in favor of the employee to exceed the amount of
P350,000, which is the sum of the bonds and escrow money required of the recruiter.

It is true that these standby guarantees are not imposed on local employers, as the petitioner
observes, but there is a simple explanation for this distinction. Overseas recruiters are subject to
more stringent requirement because of the special risks to which our workers abroad are subjected
by their foreign employers, against whom there is usually no direct or effective recourse. The
overseas recruiter is solidarily liable with a foreign employer. The bonds and the escrow money are
intended to insure more care on the part of the local agent in its choice of the foreign principal to
whom our overseas workers are to be sent.

It is a principle of legal hermeneutics that in interpreting a statute (or a set of rules as in this case),
care should be taken that every part thereof be given effect, on the theory that it was enacted as
an integrated measure and not as a hodge-podge of conflicting provisions. Ut res magis valeat
quam pereat. 2 Under the petitioner's interpretation, the appeal bond required by Section 6 of the
aforementioned POEA Rule should be disregarded because of the earlier bonds and escrow money it
has posted. The petitioner would in effect nullify Section 6 as a superfluity but we do not see any
such redundancy; on the contrary, we find that Section 6 complements Section 4 and Section 17.
The rule is that a construction that would render a provision inoperative should be avoided; instead,
apparently inconsistent provisions should be reconciled whenever possible as parts of a coordinated
and harmonious whole.

Accordingly, we hold that in addition to the monetary obligations of the overseas recruiter
prescribed in Section 4, Rule II, Book II of the POEA Rules and the escrow agreement under Section
17 of the same Rule, it is necessary to post the appeal bond required under Section 6, Rule V, Book
VII of the POEA Rules, as a condition for perfecting an appeal from a decision of the POEA.

Every intendment of the law must be interpreted in favor of the working class, conformably to the
mandate of the Constitution. By sustaining rather than annulling the appeal bond as a further
protection to the claimant employee, this Court affirms once again its commitment to the interest of
labor.

WHEREFORE, the petition is DISMISSED, with costs against the petitioner. It is so ordered.

Davide and Quiason, JJ., concur.

Bellosillo, J, is on leave.
Republic of the Philippines
SUPREME COURT
Manila

EN BANC

G.R. No. 111097 July 20, 1994

MAYOR PABLO P. MAGTAJAS & THE CITY OF CAGAYAN DE ORO, petitioners,

vs.
PRYCE PROPERTIES CORPORATION, INC. & PHILIPPINE AMUSEMENT AND GAMING CORPORATION,
respondents.

Aquilino G. Pimentel, Jr. and Associates for petitioners.

R.R. Torralba & Associates for private respondent.

CRUZ, J.:

There was instant opposition when PAGCOR announced the opening of a casino in Cagayan de Oro
City. Civic organizations angrily denounced the project. The religious elements echoed the objection
and so did the women's groups and the youth. Demonstrations were led by the mayor and the city
legislators. The media trumpeted the protest, describing the casino as an affront to the welfare of
the city.

The trouble arose when in 1992, flush with its tremendous success in several cities, PAGCOR
decided to expand its operations to Cagayan de Oro City. To this end, it leased a portion of a
building belonging to Pryce Properties Corporation, Inc., one of the herein private respondents,
renovated and equipped the same, and prepared to inaugurate its casino there during the
Christmas season.

The reaction of the Sangguniang Panlungsod of Cagayan de Oro City was swift and hostile. On
December 7, 1992, it enacted Ordinance No. 3353 reading as follows:

ORDINANCE NO. 3353

AN ORDINANCE PROHIBITING THE ISSUANCE OF BUSINESS PERMIT AND CANCELLING EXISTING

BUSINESS PERMIT TO ANY ESTABLISHMENT FOR THE USING AND ALLOWING TO BE USED ITS
PREMISES OR PORTION THEREOF FOR THE OPERATION OF CASINO.

BE IT ORDAINED by the Sangguniang Panlungsod of the City of Cagayan de Oro, in session

assembled that:

Sec. 1. That pursuant to the policy of the city banning the operation of casino within its territorial
jurisdiction, no business permit shall be issued to any person, partnership or corporation for the
operation of casino within the city limits.

Sec. 2. That it shall be a violation of existing business permit by any persons, partnership or
corporation to use its business establishment or portion thereof, or allow the use thereof by others
for casino operation and other gambling activities.

Sec. 3. PENALTIES. Any violation of such existing business permit as defined in the preceding
section shall suffer the following penalties, to wit:

a) Suspension of the business permit for sixty (60) days for the first offense and a fine of
P1,000.00/day
b) Suspension of the business permit for Six (6) months for the second offense, and a fine of
P3,000.00/day

c) Permanent revocation of the business permit and imprisonment of One (1) year, for the third
and subsequent offenses.

Sec. 4. This Ordinance shall take effect ten (10) days from publication thereof.

Nor was this all. On January 4, 1993, it adopted a sterner Ordinance No. 3375-93 reading as follows:

ORDINANCE NO. 3375-93

AN ORDINANCE PROHIBITING THE OPERATION OF CASINO AND PROVIDING PENALTY FOR VIOLATION
THEREFOR.

WHEREAS, the City Council established a policy as early as 1990 against CASINO under its
Resolution No. 2295;

WHEREAS, on October 14, 1992, the City Council passed another Resolution No. 2673, reiterating
its policy against the establishment of CASINO;

WHEREAS, subsequently, thereafter, it likewise passed Ordinance No. 3353, prohibiting the issuance
of Business Permit and to cancel existing Business Permit to any establishment for the using and
allowing to be used its premises or portion thereof for the operation of CASINO;

WHEREAS, under Art. 3, section 458, No. (4), sub paragraph VI of the Local Government Code of
1991 (Rep. Act 7160) and under Art. 99, No. (4), Paragraph VI of the implementing rules of the Local
Government Code, the City Council as the Legislative Body shall enact measure to suppress any
activity inimical to public morals and general welfare of the people and/or regulate or prohibit such
activity pertaining to amusement or entertainment in order to protect social and moral welfare of
the community;

NOW THEREFORE,

BE IT ORDAINED by the City Council in session duly assembled that:

Sec. 1. The operation of gambling CASINO in the City of Cagayan de Oro is hereby prohibited.

Sec. 2. Any violation of this Ordinance shall be subject to the following penalties:

a) Administrative fine of P5,000.00 shall be imposed against the proprietor, partnership or

corporation undertaking the operation, conduct, maintenance of gambling CASINO in the City and
closure thereof;

b) Imprisonment of not less than six (6) months nor more than one (1) year or a fine in the
amount of P5,000.00 or both at the discretion of the court against the manager, supervisor, and/or
any person responsible in the establishment, conduct and maintenance of gambling CASINO.

Sec. 3. This Ordinance shall take effect ten (10) days after its publication in a local newspaper of
general circulation.

Pryce assailed the ordinances before the Court of Appeals, where it was joined by PAGCOR as
intervenor and supplemental petitioner. Their challenge succeeded. On March 31, 1993, the Court
of Appeals declared the ordinances invalid and issued the writ prayed for to prohibit their
enforcement. 1 Reconsideration of this decision was denied on July 13, 1993. 2

Cagayan de Oro City and its mayor are now before us in this petition for review under Rule 45 of the
Rules of Court. 3 They aver that the respondent Court of Appeals erred in holding that:
1. Under existing laws, the Sangguniang Panlungsod of the City of Cagayan de Oro does not
have the power and authority to prohibit the establishment and operation of a PAGCOR gambling
casino within the City's territorial limits.

2. The phrase "gambling and other prohibited games of chance" found in Sec. 458, par. (a),
sub-par. (1) (v) of R.A. 7160 could only mean "illegal gambling."

3. The questioned Ordinances in effect annul P.D. 1869 and are therefore invalid on that point.

4. The questioned Ordinances are discriminatory to casino and partial to cockfighting and are
therefore invalid on that point.

5. The questioned Ordinances are not reasonable, not consonant with the general powers and
purposes of the instrumentality concerned and inconsistent with the laws or policy of the State.

6. It had no option but to follow the ruling in the case of Basco, et al. v. PAGCOR, G.R. No.
91649, May 14, 1991, 197 SCRA 53 in disposing of the issues presented in this present case.

PAGCOR is a corporation created directly by P.D. 1869 to help centralize and regulate all games of
chance, including casinos on land and sea within the territorial jurisdiction of the Philippines. In
Basco v. Philippine Amusements and Gaming Corporation, 4 this Court sustained the
constitutionality of the decree and even cited the benefits of the entity to the national economy as
the third highest revenue-earner in the government, next only to the BIR and the Bureau of
Customs.

Cagayan de Oro City, like other local political subdivisions, is empowered to enact ordinances for
the purposes indicated in the Local Government Code. It is expressly vested with the police power
under what is known as the General Welfare Clause now embodied in Section 16 as follows:

Sec. 16. General Welfare. Every local government unit shall exercise the powers
expressly granted, those necessarily implied therefrom, as well as powers necessary, appropriate,
or incidental for its efficient and effective governance, and those which are essential to the
promotion of the general welfare. Within their respective territorial jurisdictions, local government
units shall ensure and support, among other things, the preservation and enrichment of culture,
promote health and safety, enhance the right of the people to a balanced ecology, encourage and
support the development of appropriate and self-reliant scientific and technological capabilities,
improve public morals, enhance economic prosperity and social justice, promote full employment
among their residents, maintain peace and order, and preserve the comfort and convenience of
their inhabitants.

In addition, Section 458 of the said Code specifically declares that:

Sec. 458. Powers, Duties, Functions and Compensation. (a) The Sangguniang Panlungsod,
as the legislative body of the city, shall enact ordinances, approve resolutions and appropriate
funds for the general welfare of the city and its inhabitants pursuant to Section 16 of this Code and
in the proper exercise of the corporate powers of the city as provided for under Section 22 of this
Code, and shall:

(1) Approve ordinances and pass resolutions necessary for an efficient and effective city
government, and in this connection, shall:

xxx xxx xxx

(v) Enact ordinances intended to prevent, suppress and impose appropriate penalties for
habitual drunkenness in public places, vagrancy, mendicancy, prostitution, establishment and
maintenance of houses of ill repute, gambling and other prohibited games of chance, fraudulent
devices and ways to obtain money or property, drug addiction, maintenance of drug dens, drug
pushing, juvenile delinquency, the printing, distribution or exhibition of obscene or pornographic
materials or publications, and such other activities inimical to the welfare and morals of the
inhabitants of the city;
This section also authorizes the local government units to regulate properties and businesses within
their territorial limits in the interest of the general welfare. 5

The petitioners argue that by virtue of these provisions, the Sangguniang Panlungsod may prohibit
the operation of casinos because they involve games of chance, which are detrimental to the
people. Gambling is not allowed by general law and even by the Constitution itself. The legislative
power conferred upon local government units may be exercised over all kinds of gambling and not
only over "illegal gambling" as the respondents erroneously argue. Even if the operation of casinos
may have been permitted under P.D. 1869, the government of Cagayan de Oro City has the
authority to prohibit them within its territory pursuant to the authority entrusted to it by the Local
Government Code.

It is submitted that this interpretation is consonant with the policy of local autonomy as mandated
in Article II, Section 25, and Article X of the Constitution, as well as various other provisions therein
seeking to strengthen the character of the nation. In giving the local government units the power to
prevent or suppress gambling and other social problems, the Local Government Code has
recognized the competence of such communities to determine and adopt the measures best
expected to promote the general welfare of their inhabitants in line with the policies of the State.

The petitioners also stress that when the Code expressly authorized the local government units to
prevent and suppress gambling and other prohibited games of chance, like craps, baccarat,
blackjack and roulette, it meant all forms of gambling without distinction. Ubi lex non distinguit, nec
nos distinguere debemos. 6 Otherwise, it would have expressly excluded from the scope of their
power casinos and other forms of gambling authorized by special law, as it could have easily done.
The fact that it did not do so simply means that the local government units are permitted to prohibit
all kinds of gambling within their territories, including the operation of casinos.

The adoption of the Local Government Code, it is pointed out, had the effect of modifying the
charter of the PAGCOR. The Code is not only a later enactment than P.D. 1869 and so is deemed to
prevail in case of inconsistencies between them. More than this, the powers of the PAGCOR under
the decree are expressly discontinued by the Code insofar as they do not conform to its philosophy
and provisions, pursuant to Par. (f) of its repealing clause reading as follows:

(f) All general and special laws, acts, city charters, decrees, executive orders, proclamations
and administrative regulations, or part or parts thereof which are inconsistent with any of the
provisions of this Code are hereby repealed or modified accordingly.

It is also maintained that assuming there is doubt regarding the effect of the Local Government
Code on P.D. 1869, the doubt must be resolved in favor of the petitioners, in accordance with the
direction in the Code calling for its liberal interpretation in favor of the local government units.
Section 5 of the Code specifically provides:

Sec. 5. Rules of Interpretation. In the interpretation of the provisions of this Code, the following
rules shall apply:

(a) Any provision on a power of a local government unit shall be liberally interpreted in its favor,
and in case of doubt, any question thereon shall be resolved in favor of devolution of powers and of
the lower local government unit. Any fair and reasonable doubt as to the existence of the power
shall be interpreted in favor of the local government unit concerned;

xxx xxx xxx

(c) The general welfare provisions in this Code shall be liberally interpreted to give more powers
to local government units in accelerating economic development and upgrading the quality of life
for the people in the community; . . . (Emphasis supplied.)

Finally, the petitioners also attack gambling as intrinsically harmful and cite various provisions of
the Constitution and several decisions of this Court expressive of the general and official
disapprobation of the vice. They invoke the State policies on the family and the proper upbringing
of the youth and, as might be expected, call attention to the old case of U.S. v. Salaveria, 7 which
sustained a municipal ordinance prohibiting the playing of panguingue. The petitioners decry the
immorality of gambling. They also impugn the wisdom of P.D. 1869 (which they describe as "a
martial law instrument") in creating PAGCOR and authorizing it to operate casinos "on land and sea
within the territorial jurisdiction of the Philippines."

This is the opportune time to stress an important point.

The morality of gambling is not a justiciable issue. Gambling is not illegal per se. While it is
generally considered inimical to the interests of the people, there is nothing in the Constitution
categorically proscribing or penalizing gambling or, for that matter, even mentioning it at all. It is
left to Congress to deal with the activity as it sees fit. In the exercise of its own discretion, the
legislature may prohibit gambling altogether or allow it without limitation or it may prohibit some
forms of gambling and allow others for whatever reasons it may consider sufficient. Thus, it has
prohibited jueteng and monte but permits lotteries, cockfighting and horse-racing. In making such
choices, Congress has consulted its own wisdom, which this Court has no authority to review, much
less reverse. Well has it been said that courts do not sit to resolve the merits of conflicting theories.
8 That is the prerogative of the political departments. It is settled that questions regarding the
wisdom, morality, or practicibility of statutes are not addressed to the judiciary but may be resolved
only by the legislative and executive departments, to which the function belongs in our scheme of
government. That function is exclusive. Whichever way these branches decide, they are answerable
only to their own conscience and the constituents who will ultimately judge their acts, and not to
the courts of justice.

The only question we can and shall resolve in this petition is the validity of Ordinance No. 3355 and
Ordinance No. 3375-93 as enacted by the Sangguniang Panlungsod of Cagayan de Oro City. And we
shall do so only by the criteria laid down by law and not by our own convictions on the propriety of
gambling.

The tests of a valid ordinance are well established. A long line of decisions 9 has held that to be
valid, an ordinance must conform to the following substantive requirements:

1) It must not contravene the constitution or any statute.

2) It must not be unfair or oppressive.

3) It must not be partial or discriminatory.

4) It must not prohibit but may regulate trade.

5) It must be general and consistent with public policy.

6) It must not be unreasonable.

We begin by observing that under Sec. 458 of the Local Government Code, local government units
are authorized to prevent or suppress, among others, "gambling and other prohibited games of
chance." Obviously, this provision excludes games of chance which are not prohibited but are in
fact permitted by law. The petitioners are less than accurate in claiming that the Code could have
excluded such games of chance but did not. In fact it does. The language of the section is clear and
unmistakable. Under the rule of noscitur a sociis, a word or phrase should be interpreted in relation
to, or given the same meaning of, words with which it is associated. Accordingly, we conclude that
since the word "gambling" is associated with "and other prohibited games of chance," the word
should be read as referring to only illegal gambling which, like the other prohibited games of
chance, must be prevented or suppressed.

We could stop here as this interpretation should settle the problem quite conclusively. But we will
not. The vigorous efforts of the petitioners on behalf of the inhabitants of Cagayan de Oro City, and
the earnestness of their advocacy, deserve more than short shrift from this Court.

The apparent flaw in the ordinances in question is that they contravene P.D. 1869 and the public
policy embodied therein insofar as they prevent PAGCOR from exercising the power conferred on it
to operate a casino in Cagayan de Oro City. The petitioners have an ingenious answer to this
misgiving. They deny that it is the ordinances that have changed P.D. 1869 for an ordinance
admittedly cannot prevail against a statute. Their theory is that the change has been made by the
Local Government Code itself, which was also enacted by the national lawmaking authority. In their
view, the decree has been, not really repealed by the Code, but merely "modified pro tanto" in the
sense that PAGCOR cannot now operate a casino over the objection of the local government unit
concerned. This modification of P.D. 1869 by the Local Government Code is permissible because
one law can change or repeal another law.

It seems to us that the petitioners are playing with words. While insisting that the decree has only
been "modified pro tanto," they are actually arguing that it is already dead, repealed and useless
for all intents and purposes because the Code has shorn PAGCOR of all power to centralize and
regulate casinos. Strictly speaking, its operations may now be not only prohibited by the local
government unit; in fact, the prohibition is not only discretionary but mandated by Section 458 of
the Code if the word "shall" as used therein is to be given its accepted meaning. Local government
units have now no choice but to prevent and suppress gambling, which in the petitioners' view
includes both legal and illegal gambling. Under this construction, PAGCOR will have no more games
of chance to regulate or centralize as they must all be prohibited by the local government units
pursuant to the mandatory duty imposed upon them by the Code. In this situation, PAGCOR cannot
continue to exist except only as a toothless tiger or a white elephant and will no longer be able to
exercise its powers as a prime source of government revenue through the operation of casinos.

It is noteworthy that the petitioners have cited only Par. (f) of the repealing clause, conveniently
discarding the rest of the provision which painstakingly mentions the specific laws or the parts
thereof which are repealed (or modified) by the Code. Significantly, P.D. 1869 is not one of them. A
reading of the entire repealing clause, which is reproduced below, will disclose the omission:

Sec. 534. Repealing Clause. (a) Batas Pambansa Blg. 337, otherwise known as the "Local
Government Code," Executive Order No. 112 (1987), and Executive Order No. 319 (1988) are
hereby repealed.

(b) Presidential Decree Nos. 684, 1191, 1508 and such other decrees, orders, instructions,
memoranda and issuances related to or concerning the barangay are hereby repealed.

(c) The provisions of Sections 2, 3, and 4 of Republic Act No. 1939 regarding hospital fund;
Section 3, a (3) and b (2) of Republic Act. No. 5447 regarding the Special Education Fund;
Presidential Decree No. 144 as amended by Presidential Decree Nos. 559 and 1741; Presidential
Decree No. 231 as amended; Presidential Decree No. 436 as amended by Presidential Decree No.
558; and Presidential Decree Nos. 381, 436, 464, 477, 526, 632, 752, and 1136 are hereby repealed
and rendered of no force and effect.

(d) Presidential Decree No. 1594 is hereby repealed insofar as it governs locally-funded projects.

(e) The following provisions are hereby repealed or amended insofar as they are inconsistent
with the provisions of this Code: Sections 2, 16, and 29 of Presidential Decree No. 704; Sections 12
of Presidential Decree No. 87, as amended; Sections 52, 53, 66, 67, 68, 69, 70, 71, 72, 73, and 74 of
Presidential Decree No. 463, as amended; and Section 16 of Presidential Decree No. 972, as
amended, and

(f) All general and special laws, acts, city charters, decrees, executive orders, proclamations
and administrative regulations, or part or parts thereof which are inconsistent with any of the
provisions of this Code are hereby repealed or modified accordingly.

Furthermore, it is a familiar rule that implied repeals are not lightly presumed in the absence of a
clear and unmistakable showing of such intention. In Lichauco & Co. v. Apostol, 10 this Court
explained:

The cases relating to the subject of repeal by implication all proceed on the assumption that if the
act of later date clearly reveals an intention on the part of the lawmaking power to abrogate the
prior law, this intention must be given effect; but there must always be a sufficient revelation of this
intention, and it has become an unbending rule of statutory construction that the intention to
repeal a former law will not be imputed to the Legislature when it appears that the two statutes, or
provisions, with reference to which the question arises bear to each other the relation of general to
special.

There is no sufficient indication of an implied repeal of P.D. 1869. On the contrary, as the private
respondent points out, PAGCOR is mentioned as the source of funding in two later enactments of
Congress, to wit, R.A. 7309, creating a Board of Claims under the Department of Justice for the
benefit of victims of unjust punishment or detention or of violent crimes, and R.A. 7648, providing
for measures for the solution of the power crisis. PAGCOR revenues are tapped by these two
statutes. This would show that the PAGCOR charter has not been repealed by the Local Government
Code but has in fact been improved as it were to make the entity more responsive to the fiscal
problems of the government.

It is a canon of legal hermeneutics that instead of pitting one statute against another in an
inevitably destructive confrontation, courts must exert every effort to reconcile them, remembering
that both laws deserve a becoming respect as the handiwork of a coordinate branch of the
government. On the assumption of a conflict between P.D. 1869 and the Code, the proper action is
not to uphold one and annul the other but to give effect to both by harmonizing them if possible.
This is possible in the case before us. The proper resolution of the problem at hand is to hold that
under the Local Government Code, local government units may (and indeed must) prevent and
suppress all kinds of gambling within their territories except only those allowed by statutes like P.D.
1869. The exception reserved in such laws must be read into the Code, to make both the Code and
such laws equally effective and mutually complementary.

This approach would also affirm that there are indeed two kinds of gambling, to wit, the illegal and
those authorized by law. Legalized gambling is not a modern concept; it is probably as old as illegal
gambling, if not indeed more so. The petitioners' suggestion that the Code authorizes them to
prohibit all kinds of gambling would erase the distinction between these two forms of gambling
without a clear indication that this is the will of the legislature. Plausibly, following this theory, the
City of Manila could, by mere ordinance, prohibit the Philippine Charity Sweepstakes Office from
conducting a lottery as authorized by R.A. 1169 and B.P. 42 or stop the races at the San Lazaro
Hippodrome as authorized by R.A. 309 and R.A. 983.

In light of all the above considerations, we see no way of arriving at the conclusion urged on us by
the petitioners that the ordinances in question are valid. On the contrary, we find that the
ordinances violate P.D. 1869, which has the character and force of a statute, as well as the public
policy expressed in the decree allowing the playing of certain games of chance despite the
prohibition of gambling in general.

The rationale of the requirement that the ordinances should not contravene a statute is obvious.
Municipal governments are only agents of the national government. Local councils exercise only
delegated legislative powers conferred on them by Congress as the national lawmaking body. The
delegate cannot be superior to the principal or exercise powers higher than those of the latter. It is
a heresy to suggest that the local government units can undo the acts of Congress, from which they
have derived their power in the first place, and negate by mere ordinance the mandate of the
statute.

Municipal corporations owe their origin to, and derive their powers and rights wholly from the
legislature. It breathes into them the breath of life, without which they cannot exist. As it creates, so
it may destroy. As it may destroy, it may abridge and control. Unless there is some constitutional
limitation on the right, the legislature might, by a single act, and if we can suppose it capable of so
great a folly and so great a wrong, sweep from existence all of the municipal corporations in the
State, and the corporation could not prevent it. We know of no limitation on the right so far as to
the corporation themselves are concerned. They are, so to phrase it, the mere tenants at will of the
legislature. 11

This basic relationship between the national legislature and the local government units has not
been enfeebled by the new provisions in the Constitution strengthening the policy of local
autonomy. Without meaning to detract from that policy, we here confirm that Congress retains
control of the local government units although in significantly reduced degree now than under our
previous Constitutions. The power to create still includes the power to destroy. The power to grant
still includes the power to withhold or recall. True, there are certain notable innovations in the
Constitution, like the direct conferment on the local government units of the power to tax, 12 which
cannot now be withdrawn by mere statute. By and large, however, the national legislature is still
the principal of the local government units, which cannot defy its will or modify or violate it.

The Court understands and admires the concern of the petitioners for the welfare of their
constituents and their apprehensions that the welfare of Cagayan de Oro City will be endangered by
the opening of the casino. We share the view that "the hope of large or easy gain, obtained without
special effort, turns the head of the workman" 13 and that "habitual gambling is a cause of laziness
and ruin." 14 In People v. Gorostiza, 15 we declared: "The social scourge of gambling must be
stamped out. The laws against gambling must be enforced to the limit." George Washington called
gambling "the child of avarice, the brother of iniquity and the father of mischief." Nevertheless, we
must recognize the power of the legislature to decide, in its own wisdom, to legalize certain forms
of gambling, as was done in P.D. 1869 and impliedly affirmed in the Local Government Code. That
decision can be revoked by this Court only if it contravenes the Constitution as the touchstone of all
official acts. We do not find such contravention here.

We hold that the power of PAGCOR to centralize and regulate all games of chance, including casinos
on land and sea within the territorial jurisdiction of the Philippines, remains unimpaired. P.D. 1869
has not been modified by the Local Government Code, which empowers the local government units
to prevent or suppress only those forms of gambling prohibited by law.

Casino gambling is authorized by P.D. 1869. This decree has the status of a statute that cannot be
amended or nullified by a mere ordinance. Hence, it was not competent for the Sangguniang
Panlungsod of Cagayan de Oro City to enact Ordinance No. 3353 prohibiting the use of buildings for
the operation of a casino and Ordinance No. 3375-93 prohibiting the operation of casinos. For all
their praiseworthy motives, these ordinances are contrary to P.D. 1869 and the public policy
announced therein and are therefore ultra vires and void.

WHEREFORE, the petition is DENIED and the challenged decision of the respondent Court of Appeals
is AFFIRMED, with costs against the petitioners. It is so ordered.

Narvasa, C.J., Feliciano, Bidin, Regalado, Romero, Bellosillo, Melo, Quiason, Puno, Vitug, Kapunan
and Mendoza, JJ., concur.

Separate Opinions

PADILLA, J., concurring:

I concur with the majority holding that the city ordinances in question cannot modify much less
repeal PAGCOR's general authority to establish and maintain gambling casinos anywhere in the
Philippines under Presidential Decree No. 1869.

In Basco v. Philippine Amusement and Gaming Corporation (PAGCOR), 197 SCRA 52, I stated in a
separate opinion that:

. . . I agree with the decision insofar as it holds that the prohibition, control, and regulation of the
entire activity known as gambling properly pertain to "state policy". It is, therefore, the political
departments of government, namely, the legislative and the executive that should decide on what
government should do in the entire area of gambling, and assume full responsibility to the people
for such policy." (Emphasis supplied)

However, despite the legality of the opening and operation of a casino in Cagayan de Oro City by
respondent PAGCOR, I wish to reiterate my view that gambling in any form runs counter to the
government's own efforts to re-establish and resurrect the Filipino moral character which is
generally perceived to be in a state of continuing erosion.

It is in the light of this alarming perspective that I call upon government to carefully weigh the
advantages and disadvantages of setting up more gambling facilities in the country.

That the PAGCOR contributes greatly to the coffers of the government is not enough reason for
setting up more gambling casinos because, undoubtedly, this will not help improve, but will cause a
further deterioration in the Filipino moral character.

It is worth remembering in this regard that, 1) what is legal is not always moral and 2) the ends do
not always justify the means.

As in Basco, I can easily visualize prostitution at par with gambling. And yet, legalization of the
former will not render it any less reprehensible even if substantial revenue for the government can
be realized from it. The same is true of gambling.

In the present case, it is my considered view that the national government (through PAGCOR)
should re-examine and re-evaluate its decision of imposing the gambling casino on the residents of
Cagayan de Oro City; for it is abundantly clear that public opinion in the city is very much against it,
and again the question must be seriously deliberated: will the prospects of revenue to be realized
from the casino outweigh the further destruction of the Filipino sense of values?

DAVIDE, JR., J., concurring:

While I concur in part with the majority, I wish, however, to express my views on certain aspects of
this case.

I.

It must at once be noted that private respondent Pryce Properties Corporation (PRYCE) directly filed
with the Court of Appeals its so-called petition for prohibition, thereby invoking the said court's
original jurisdiction to issue writs of prohibition under Section 9(1) of B.P. Blg. 129. As I see it,
however, the principal cause of action therein is one for declaratory relief: to declare null and
unconstitutional for, inter alia, having been enacted without or in excess of jurisdiction, for
impairing the obligation of contracts, and for being inconsistent with public policy the challenged
ordinances enacted by the Sangguniang Panglungsod of the City of Cagayan de Oro. The
intervention therein of public respondent Philippine Amusement and Gaming Corporation (PAGCOR)
further underscores the "declaratory relief" nature of the action. PAGCOR assails the ordinances for
being contrary to the non-impairment and equal protection clauses of the Constitution, violative of
the Local Government Code, and against the State's national policy declared in P.D. No. 1869.
Accordingly, the Court of Appeals does not have jurisdiction over the nature of the action. Even
assuming arguendo that the case is one for prohibition, then, under this Court's established policy
relative to the hierarchy of courts, the petition should have been filed with the Regional Trial Court
of Cagayan de Oro City. I find no special or compelling reason why it was not filed with the said
court. I do not wish to entertain the thought that PRYCE doubted a favorable verdict therefrom, in
which case the filing of the petition with the Court of Appeals may have been impelled by tactical
considerations. A dismissal of the petition by the Court of Appeals would have been in order
pursuant to our decisions in People vs. Cuaresma (172 SCRA 415, [1989]) and Defensor-Santiago vs.
Vasquez (217 SCRA 633 [1993]). In Cuaresma, this Court stated:

A last word. This court's original jurisdiction to issue writs of certiorari (as well as prohibition,
mandamus, quo warranto, habeas corpus and injunction) is not exclusive. It is shared by this Court
with Regional Trial Courts (formerly Courts of First Instance), which may issue the writ, enforceable
in any part of their respective regions. It is also shared by this court, and by the Regional Trial Court,
with the Court of Appeals (formerly, Intermediate Appellate Court), although prior to the effectivity
of Batas Pambansa Bilang 129 on August 14, 1981, the latter's competence to issue the
extraordinary writs was restricted by those "in aid of its appellate jurisdiction." This concurrence of
jurisdiction is not, however, to be taken as according to parties seeking any of the writs an
absolute, unrestrained freedom of choice of the court to which application therefor will be directed.
There is after all a hierarchy of courts. That hierarchy is determinative of the revenue of appeals,
and should also serve as a general determinant of the appropriate forum for petitions for the
extraordinary writs. A becoming regard for that judicial hierarchy most certainly indicates that
petitions for the issuance of extraordinary writs against first level ("inferior") courts should be filed
with the Regional Trial Court, and those against the latter, with the Court of Appeals. A direct
invocation of the Supreme Court's original jurisdiction to issue these writs should be allowed only
when there are special and important reasons therefor, clearly and specifically set out in the
petition. This is established policy. It is a policy that is necessary to prevent inordinate demands
upon the Court's time and attention which are better devoted to those matters within its exclusive
jurisdiction, and to prevent further over-crowding of the Court's docket. Indeed, the removal of the
restriction of the jurisdiction of the Court of Appeals in this regard, supra resulting from the
deletion of the qualifying phrase, "in aid of its appellate jurisdiction" was evidently intended
precisely to relieve this Court pro tanto of the burden of dealing with applications for extraordinary
writs which, but for the expansion of the Appellate Court's corresponding jurisdiction, would have
had to be filed with it. (citations omitted)

And in Vasquez, this Court said:

One final observation. We discern in the proceedings in this case a propensity on the part of
petitioner, and, for that matter, the same may be said of a number of litigants who initiate
recourses before us, to disregard the hierarchy of courts in our judicial system by seeking relief
directly from this Court despite the fact that the same is available in the lower courts in the exercise
of their original or concurrent jurisdiction, or is even mandated by law to be sought therein. This
practice must be stopped, not only because of the imposition upon the previous time of this Court
but also because of the inevitable and resultant delay, intended or otherwise, in the adjudication of
the case which often has to be remanded or referred to the lower court as the proper forum under
the rules of procedure, or as better equipped to resolve the issues since this Court is not a trier of
facts. We, therefore, reiterate the judicial policy that this Court will not entertain direct resort to it
unless the redress desired cannot be obtained in the appropriate courts or where exceptional and
compelling circumstances justify availment of a remedy within and calling for the exercise of our
primary jurisdiction.

II.

The challenged ordinances are (a) Ordinance No. 3353 entitled, "An Ordinance Prohibiting the
Issuance of Business Permit and Canceling Existing Business Permit To Any Establishment for the
Using and Allowing to be Used Its Premises or Portion Thereof for the Operation of Casino," and (b)
Ordinance No. 3375-93 entitled, "An Ordinance Prohibiting the Operation of Casino and Providing
Penalty for Violation Therefor." They were enacted to implement Resolution No. 2295 entitled,
"Resolution Declaring As a Matter of Policy to Prohibit and/or Not to Allow the Establishment of the
Gambling Casino in the City of Cagayan de Oro," which was promulgated on 19 November 1990
nearly two years before PRYCE and PAGCOR entered into a contract of lease under which the latter
leased a portion of the former's Pryce Plaza Hotel for the operation of a gambling casino which
resolution was vigorously reiterated in Resolution No. 2673 of 19 October 1992.

The challenged ordinances were enacted pursuant to the Sangguniang Panglungsod's express
powers conferred by Section 458, paragraph (a), subparagraphs (1)-(v), (3)-(ii), and (4)-(i), (iv), and
(vii), Local Government Code, and pursuant to its implied power under Section 16 thereof (the
general welfare clause) which reads:

Sec. 16. General Welfare. Every local government unit shall exercise the powers expressly
granted, those necessarily implied therefrom, as well as powers necessary, appropriate, or
incidental for its efficient and effective governance, and those which are essential to the promotion
of the general welfare. Within their respective territorial jurisdictions, local government units shall
ensure and support, among other things, the preservation and enrichment of culture, promote
health and safety, enhance the right of the people to a balanced ecology, encourage and support
the development of appropriate and self-reliant scientific and technological capabilities, improve
public morals, enhance economic prosperity and social justice, promote full employment among
their residents, maintain peace and order, and preserve the comfort and convenience of their
inhabitants.
The issue that necessarily arises is whether in granting local governments (such as the City of
Cagayan de Oro) the above powers and functions, the Local Government Code has, pro tanto,
repealed P.D. No. 1869 insofar as PAGCOR's general authority to establish and maintain gambling
casinos anywhere in the Philippines is concerned.

I join the majority in holding that the ordinances cannot repeal P.D. No. 1869.

III.

The nullification by the Court of Appeals of the challenged ordinances as unconstitutional primarily
because it is in contravention to P.D. No. 1869 is unwarranted. A contravention of a law is not
necessarily a contravention of the constitution. In any case, the ordinances can still stand even if
they be conceded as offending P.D. No. 1869. They can be reconciled, which is not impossible to do.
So reconciled, the ordinances should be construed as not applying to PAGCOR.

IV.

From the pleadings, it is obvious that the government and the people of Cagayan de Oro City are,
for obvious reasons, strongly against the opening of the gambling casino in their city. Gambling,
even if legalized, would be inimical to the general welfare of the inhabitants of the City, or of any
place for that matter. The PAGCOR, as a government-owned corporation, must consider the valid
concerns of the people of the City of Cagayan de Oro and should not impose its will upon them in
an arbitrary, if not despotic, manner.

# Separate Opinions

PADILLA, J., concurring:

I concur with the majority holding that the city ordinances in question cannot modify much less
repeal PAGCOR's general authority to establish and maintain gambling casinos anywhere in the
Philippines under Presidential Decree No. 1869.

In Basco v. Philippine Amusement and Gaming Corporation (PAGCOR), 197 SCRA 52, I stated in a
separate opinion that:

. . . I agree with the decision insofar as it holds that the prohibition, control, and regulation of the
entire activity known as gambling properly pertain to "state policy". It is, therefore, the political
departments of government, namely, the legislative and the executive that should decide on what
government should do in the entire area of gambling, and assume full responsibility to the people
for such policy. (emphasis supplied)

However, despite the legality of the opening and operation of a casino in Cagayan de Oro City by
respondent PAGCOR, I wish to reiterate my view that gambling in any form runs counter to the
government's own efforts to re-establish and resurrect the Filipino moral character which is
generally perceived to be in a state of continuing erosion.

It is in the light of this alarming perspective that I call upon government to carefully weigh the
advantages and disadvantages of setting up more gambling facilities in the country.

That the PAGCOR contributes greatly to the coffers of the government is not enough reason for
setting up more gambling casinos because, undoubtedly, this will not help improve, but will cause a
further deterioration in the Filipino moral character.

It is worth remembering in this regard that, 1) what is legal is not always moral and 2) the ends do
not always justify the means.
As in Basco, I can easily visualize prostitution at par with gambling. And yet, legalization of the
former will not render it any less reprehensible even if substantial revenue for the government can
be realized from it. The same is true of gambling.

In the present case, it is my considered view that the national government (through PAGCOR)
should re-examine and re-evaluate its decision of imposing the gambling casino on the residents of
Cagayan de Oro City; for it is abundantly clear that public opinion in the city is very much against it,
and again the question must be seriously deliberated: will the prospects of revenue to be realized
from the casino outweigh the further destruction of the Filipino sense of values?

DAVIDE, JR., J., concurring:

While I concur in part with the majority, I wish, however, to express my views on certain aspects of
this case.

I.

It must at once be noted that private respondent Pryce Properties Corporation (PRYCE) directly filed
with the Court of Appeals its so-called petition for prohibition, thereby invoking the said court's
original jurisdiction to issue writs of prohibition under Section 9(1) of B.P. Blg. 129. As I see it,
however, the principal cause of action therein is one for declaratory relief: to declare null and
unconstitutional for, inter alia, having been enacted without or in excess of jurisdiction, for
impairing the obligation of contracts, and for being inconsistent with public policy the challenged
ordinances enacted by the Sangguniang Panglungsod of the City of Cagayan de Oro. The
intervention therein of public respondent Philippine Amusement and Gaming Corporation (PAGCOR)
further underscores the "declaratory relief" nature of the action. PAGCOR assails the ordinances for
being contrary to the non-impairment and equal protection clauses of the Constitution, violative of
the Local Government Code, and against the State's national policy declared in P.D. No. 1869.
Accordingly, the Court of Appeals does not have jurisdiction over the nature of the action. Even
assuming arguendo that the case is one for prohibition, then, under this Court's established policy
relative to the hierarchy of courts, the petition should have been filed with the Regional Trial Court
of Cagayan de Oro City. I find no special or compelling reason why it was not filed with the said
court. I do not wish to entertain the thought that PRYCE doubted a favorable verdict therefrom, in
which case the filing of the petition with the Court of Appeals may have been impelled by tactical
considerations. A dismissal of the petition by the Court of Appeals would have been in order
pursuant to our decisions in People vs. Cuaresma (172 SCRA 415, [1989]) and Defensor-Santiago vs.
Vasquez (217 SCRA 633 [1993]). In Cuaresma, this Court stated:

A last word. This court's original jurisdiction to issue writs of certiorari (as well as prohibition,
mandamus, quo warranto, habeas corpus and injunction) is not exclusive. It is shared by this Court
with Regional Trial Courts (formerly Courts of First Instance), which may issue the writ, enforceable
in any part of their respective regions. It is also shared by this court, and by the Regional Trial Court,
with the Court of Appeals (formerly, Intermediate Appellate Court), although prior to the effectivity
of Batas Pambansa Bilang 129 on August 14, 1981, the latter's competence to issue the
extraordinary writs was restricted by those "in aid of its appellate jurisdiction." This concurrence of
jurisdiction is not, however, to be taken as according to parties seeking any of the writs an
absolute, unrestrained freedom of choice of the court to which application therefor will be directed.
There is after all a hierarchy of courts. That hierarchy is determinative of the revenue of appeals,
and should also serve as a general determinant of the appropriate forum for petitions for the
extraordinary writs. A becoming regard for that judicial hierarchy most certainly indicates that
petitions for the issuance of extraordinary writs against first level ("inferior") courts should be filed
with the Regional Trial Court, and those against the latter, with the Court of Appeals. A direct
invocation of the Supreme Court's original jurisdiction to issue these writs should be allowed only
when there are special and important reasons therefor, clearly and specifically set out in the
petition. This is established policy. It is a policy that is necessary to prevent inordinate demands
upon the Court's time and attention which are better devoted to those matters within its exclusive
jurisdiction, and to prevent further over-crowding of the Court's docket. Indeed, the removal of the
restriction of the jurisdiction of the Court of Appeals in this regard, supra resulting from the
deletion of the qualifying phrase, "in aid of its appellate jurisdiction" was evidently intended
precisely to relieve this Court pro tanto of the burden of dealing with applications for extraordinary
writs which, but for the expansion of the Appellate Court's corresponding jurisdiction, would have
had to be filed with it. (citations omitted)

And in Vasquez, this Court said:

One final observation. We discern in the proceedings in this case a propensity on the part of
petitioner, and, for that matter, the same may be said of a number of litigants who initiate
recourses before us, to disregard the hierarchy of courts in our judicial system by seeking relief
directly from this Court despite the fact that the same is available in the lower courts in the exercise
of their original or concurrent jurisdiction, or is even mandated by law to be sought therein. This
practice must be stopped, not only because of the imposition upon the previous time of this Court
but also because of the inevitable and resultant delay, intended or otherwise, in the adjudication of
the case which often has to be remanded or referred to the lower court as the proper forum under
the rules of procedure, or as better equipped to resolve the issues since this Court is not a trier of
facts. We, therefore, reiterate the judicial policy that this Court will not entertain direct resort to it
unless the redress desired cannot be obtained in the appropriate courts or where exceptional and
compelling circumstances justify availment of a remedy within and calling for the exercise of our
primary jurisdiction.

II.

The challenged ordinances are (a) Ordinance No. 3353 entitled, "An Ordinance Prohibiting the
Issuance of Business Permit and Canceling Existing Business Permit To Any Establishment for the
Using and Allowing to be Used Its Premises or Portion Thereof for the Operation of Casino," and (b)
Ordinance No. 3375-93 entitled, "An Ordinance Prohibiting the Operation of Casino and Providing
Penalty for Violation Therefor." They were enacted to implement Resolution No. 2295 entitled,
"Resolution Declaring As a Matter of Policy to Prohibit and/or Not to Allow the Establishment of the
Gambling Casino in the City of Cagayan de Oro," which was promulgated on 19 November 1990
nearly two years before PRYCE and PAGCOR entered into a contract of lease under which the latter
leased a portion of the former's Pryce Plaza Hotel for the operation of a gambling casino which
resolution was vigorously reiterated in Resolution No. 2673 of 19 October 1992.

The challenged ordinances were enacted pursuant to the Sangguniang Panglungsod's express
powers conferred by Section 458, paragraph (a), subparagraphs (1)-(v), (3)-(ii), and (4)-(i), (iv), and
(vii), Local Government Code, and pursuant to its implied power under Section 16 thereof (the
general welfare clause) which reads:

Sec. 16. General Welfare. Every local government unit shall exercise the powers expressly
granted, those necessarily implied therefrom, as well as powers necessary, appropriate, or
incidental for its efficient and effective governance, and those which are essential to the promotion
of the general welfare. Within their respective territorial jurisdictions, local government units shall
ensure and support, among other things, the preservation and enrichment of culture, promote
health and safety, enhance the right of the people to a balanced ecology, encourage and support
the development of appropriate and self-reliant scientific and technological capabilities, improve
public morals, enhance economic prosperity and social justice, promote full employment among
their residents, maintain peace and order, and preserve the comfort and convenience of their
inhabitants.

The issue that necessarily arises is whether in granting local governments (such as the City of
Cagayan de Oro) the above powers and functions, the Local Government Code has, pro tanto,
repealed P.D. No. 1869 insofar as PAGCOR's general authority to establish and maintain gambling
casinos anywhere in the Philippines is concerned.

I join the majority in holding that the ordinances cannot repeal P.D. No. 1869.

III.

The nullification by the Court of Appeals of the challenged ordinances as unconstitutional primarily
because it is in contravention to P.D. No. 1869 is unwarranted. A contravention of a law is not
necessarily a contravention of the constitution. In any case, the ordinances can still stand even if
they be conceded as offending P.D. No. 1869. They can be reconciled, which is not impossible to do.
So reconciled, the ordinances should be construed as not applying to PAGCOR.

IV.

From the pleadings, it is obvious that the government and the people of Cagayan de Oro City are,
for obvious reasons, strongly against the opening of the gambling casino in their city. Gambling,
even if legalized, would be inimical to the general welfare of the inhabitants of the City, or of any
place for that matter. The PAGCOR, as a government-owned corporation, must consider the valid
concerns of the people of the City of Cagayan de Oro and should not impose its will upon them in
an arbitrary, if not despotic, manner.
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.

Yap (Chairman), Narvasa, Melencio-Herrera, Cruz and Sarmiento, JJ., concur.

Feliciano, J., is on leave.

EN BANC

[G.R. No. 89483. August 30, 1990.]

REPUBLIC OF THE PHILIPPINES THRU: THE PRESIDENTIAL COMMISSION ON GOOD GOVERNMENT

(PCGG), AFP ANTI-GRAFT BOARD, COL. ERNESTO A. PUNSALANG and PETER T. TABANG, Petitioners,
v. HON. EUTROPIO MIGRINO, as Presiding Judge, Regional Trial Court, NCJR, Branch 151, Pasig, Metro
Manila and TROADIO TECSON, Respondents.

The Solicitor General, for Petitioners.

Pacifico B. Advincula for Private Respondent.

DECISION

CORTES, J.:

This case puts in issue the authority of the Presidential Commission on Good Government (PCGG),
through the New Armed Forces of the Philippines Anti-Graft Board (hereinafter referred to as the
"Board"), to investigate and cause the prosecution of petitioner, a retired military officer, for
violation of Republic Acts Nos. 3019 and 1379.

Assailed by the Republic in this petition for certiorari, prohibition and/or mandamus with prayer for
the issuance of a writ of preliminary injunction and/or temporary restraining order are the orders of
respondent judge in Civil Case No. 57092 Branch 151 of the Regional Trial Court of Pasig, Metro
Manila: (1) dated June 23, 1989, denying petitioners Motion to Dismiss and Opposition, and (2)
dated June 26, 1989, granting private respondents application for the issuance of a writ of
preliminary injunction. Thus, the petition seeks the annulment of the two orders, the issuance of an
injunction to enjoin respondent judge from proceeding with Civil Case No. 57092 and, finally, the
dismissal of the case before the trial court.

The controversy traces its roots to the order of then PCGG Chairman Jovito R. Salonga, dated May
13, 1986, which created the New Armed Forces of the Philippines Anti-Graft Board. The Board was
created to "investigate the unexplained wealth and corrupt practices of AFP personnel, both retired
and in active service." The order further stated that" [t]he Board shall be primarily charged with the
task of investigating cases of alleged violations of the Anti-Graft and Corrupt Practices Act (Republic
Act No. 3019, as amended) and shall make the necessary recommendations to appropriate
government agencies and instrumentalities with respect to the action to be taken thereon based on
its findings."cralaw virtua1aw library

Acting on information received by the Board, which indicated the acquisition of wealth beyond his
lawful income, private respondent Lt. Col. Troadio Tecson (ret.) was required by the Board to submit
his explanation/comment together with his supporting evidence by October 31, 1987 [Annex "B",
Petition]. Private respondent requested, and was granted, several postponements, but was unable
to produce his supporting evidence because they were allegedly in the custody of his bookkeeper
who had gone abroad.

Just the same, the Board proceeded with its investigation and submitted its resolution, dated June
30, 1988, recommending that private respondent be prosecuted and tried for violation of Rep. Act
No. 3019, as amended, and Rep. Act No. 1379, as amended.chanrobles lawlibrary : rednad

The case was set for preliminary investigation by the PCGG. Private respondent moved to dismiss
the case on the following grounds: (1) that the PCGG has no jurisdiction over his person; (2) that
the action against him under Rep. Act No. 1379 has already prescribed; (3) that E.O. No. 14, insofar
as it suspended the provisions of Rep. Act No. 1379 on prescription of actions, was inapplicable to
his case; and (4) that having retired from the AFP on May 9, 1984, he was now beyond the reach of
Rep. Act No. 3019. The Board opposed the motion to dismiss.
In a resolution dated February 8, 1989, the PCGG denied the motion to dismiss for lack of merit.
Private respondent moved for reconsideration but this was denied by the PCGG in a resolution
dated March 8, 1989. Private respondent was directed to submit his counter-affidavit and other
controverting evidence on March 20, 1989 at 2:00 p.m.

On March 13, 1989, private respondent filed a petition for prohibition with preliminary injunction
with the Regional Trial Court in Pasig, Metro Manila. The case was docketed as Case No. 57092 and
raffled to Branch 151, respondent judges court. Petitioner filed a motion to dismiss and opposed
the application for the issuance of a writ of preliminary injunction on the principal ground that the
Regional Trial Court had no jurisdiction over the Board, citing the case of PCGG v. Pea, G.R. No.
77663, April 12, 1988, 159 SCRA 556. Private respondent opposed the motion to dismiss. Petitioner
replied to the opposition.

On June 23, 1989, respondent judge denied petitioners motion to dismiss. On June 26, 1989,
respondent judge granted the application for the issuance of a writ of preliminary injunction,
enjoining petitioners from investigating or prosecuting private respondent under Rep. Acts Nos.
3019 and 1379 upon the filing of a bond in the amount of Twenty Thousand Pesos (P20,000.00).

Hence, the instant petition.

On August 29, 1989, the Court issued a restraining order enjoining respondent judge from enforcing
his orders dated June 23, 1989 and June 26, 1989 and from proceeding with Civil Case No. 57092.

Private respondent filed his comment, to which petitioners filed a reply. A rejoinder to the reply was
filed by private Respondent. The Court gave due course to the petition and the parties filed their
memoranda. Thereafter, the case was deemed submitted.

The issues raised in the petition are as follows:chanrob1es virtual 1aw library

I.

WHETHER OR NOT RESPONDENT JUDGE GRAVELY ABUSED HIS DISCRETION OR ACTED WITHOUT OR
IN EXCESS OF JURISDICTION IN ASSUMING JURISDICTION OVER AND INTERFERING WITH THE
ORDERS AND FUNCTIONS OF THE PRESIDENTIAL COMMISSION ON GOOD GOVERNMENT.

II.

WHETHER, OR NOT RESPONDENT JUDGE GRAVELY ABUSED HIS DISCRETION OR ACTED WITHOUT OR
IN EXCESS OF JURISDICTION IN ISSUING THE ASSAILED ORDER DATED JUNE 26, 1989 ENJOINING
PETITIONERS FROM INVESTIGATING AND PROSECUTING PRIVATE RESPONDENT FOR VIOLATION OF
REPUBLIC ACT NO. 3019, OTHERWISE KNOWN AS ANTI-GRAFT AND CORRUPT PRACTICES ACT AND
REPUBLIC ACT NO. 1379, OTHERWISE KNOWN AS AN ACT FOR THE FORFEITURE OF UNLAWFULLY
ACQUIRED PROPERTY [Rollo, p. 19].

As to the first issue, petitioner contends that following the ruling of the Court in PCGG v. Pea the
Board, being a creation and/or extension of the PCGG, is beyond the jurisdiction of the Regional Trial
Court. On the second issue, petitioner strongly argues that the private respondents case falls
within the jurisdiction of the PCGG.

The pivotal issue is the second one. On this point, private respondents position is as
follows:chanrob1es virtual 1aw library

1. . . . he is not one of the subordinates contemplated in Executive Orders 1 , 2 , 14 and 14-A

as the alleged illegal acts being imputed to him, that of alleged amassing wealth beyond his legal
means while Finance Officer of the Philippine Constabulary, are acts of his own alone, not
connected with his being a crony, business associate, etc. or subordinate as the petition does not
allege so. Hence the PCGG has no jurisdiction to investigate him.
If indeed private respondent amassed wealth beyond his legal means, the procedure laid down by
Rep. Act 1379 as already pointed out before be applied. And since, he has been separated from the
government more than four years ago, the action against him under Republic Act 1379 has already
prescribed.

2. . . . no action can be filed anymore against him now under Republic Act 1379 for recovery of
unexplained wealth for the reason that he has retired more than four years ago.

3. . . . The order creating the AFP Anti-Graft Board (Annex "A", Petition) is null and void.
Nowhere in Executive Orders 1, 2, 14 and 14-A is there any authority given to the commission, its
chairman and members, to create Boards or bodies to be invested with powers similar to the
powers invested with the commission .. [Comment, pp. 6-7; Rollo, pp. 117-118].

1. The most important question to be resolved in this case is whether or not private respondent
may be investigated and caused to be prosecuted by the Board, an agency of the PCGG, for
violation of Rep. Acts Nos. 3019 and 1379. According to petitioners, the PCGG has the power to
investigate and cause the prosecution of private respondent because he is a "subordinate" of
former President Marcos. They cite the PCGGs jurisdiction over

(a) The recovery of all ill-gotten wealth accumulated by former President Ferdinand E. Marcos,
his immediate family, relatives, subordinates and close associates, whether located in the
Philippines or abroad, including the takeover or sequestration of all business enterprises and
entities owned or controlled by them, during his administration, directly or through nominees, by
taking undue advantage of their public office and/or using their powers, authority, influence,
connections or relationship. [E.O. No. 1, sec. 2.].

Undoubtedly, the alleged unlawful accumulation of wealth was done during the administration of
Pres. Marcos. However, what has to be inquired into is whether or not private respondent acted as a
"subordinate" of Pres. Marcos within the contemplation of E.O. No. 1, the law creating the PCGG,
when he allegedly unlawfully acquired the properties.

A close reading of E. O. No. 1 and related executive orders will readily show what is contemplated
within the term "subordinate."cralaw virtua1aw library

The Whereas Clauses of E. O. No. 1 express the urgent need to recover the ill-gotten wealth
amassed by former President Ferdinand E. Marcos, his immediate family, relatives, and close
associates both here and abroad.

E.O. No. 2 freezes "all assets and properties in the Philippines in which former President Marcos
and/or his wife, Mrs. Imelda Romualdez Marcos, their close relatives, subordinates, business
associates, dummies, agents, or nominees have any interest or participation."cralaw virtua1aw
library

Applying the rule in statutory construction known as ejusdem generis, that is

[W]here general words follow an enumeration of persons or things, by words of a particular and
specific meaning, such general words are not to be construed in their widest extent, but are to be
held as applying only to persons or things of the same kind or class as those specifically mentioned
[Smith, Bell & Co., Ltd. v. Register of Deeds of Davao, 96 Phil. 53, 58 (1954), citing Black on
Interpretation of Laws, 2nd Ed., 203].

the term "subordinate" as used in E.O. Nos. 1 and 2 would refer to one who enjoys a close
association or relation with former Pres. Marcos and/or his wife, similar to the immediate family
member, relative, and close associate in E.O. No. 1 and the close relative, business associate,
dummy, agent, or nominee in E.O. No. 2.

Thus, as stated by the Court in Bataan Shipyard & Engineering Co., Inc. v. PCGG, G.R. No. 75885,
May 27, 1987, 150 SCRA 181, 205-206.

The situations envisaged and sought to be governed [by Proclamation No. 3 and E.O. Nos. 1, 2 and
14] are self-evident, these being:chanrob1es virtual 1aw library
1) that" (i)ll gotten properties (were) amassed by the leaders and supporters of the previous
regime" ;

a) more particularly, that" (i)ll-gotten wealth (was) accumulated by former President Ferdinand
E. Marcos, his immediate family, relatives, subordinates, and close associates, . . . located in the
Philippines or abroad, xx (and) business enterprises and entities (came to be) owned or controlled
by them, during . . . (the Marcos) administration, directly or through nominees, by taking undue
advantage of their public office and/or using their powers, authority, influence, connections or
relationship;"

b) otherwise stated, that "there are assets and properties pertaining to former President
Ferdinand E. Marcos, and/or his wife Mrs. Imelda Romualdez Marcos, their close relatives,
subordinates, business associates, dummies, agents or nominees which had been or were acquired
by them directly or indirectly, through or as a result of the improper or illegal use of funds or
properties owned by the Government of the Philippines or any of its branches, instrumentalities,
enterprises, banks or financial institutions, or by taking undue advantage of their office, authority,
influence, connections or relationship, resulting in their unjust enrichment and causing grave
damage and prejudice to the Filipino people and the Republic of the Philippines" ;

c) that "said assets and properties are in the form of bank accounts, deposits, trust accounts,
shares of stocks, buildings, shopping centers, condominiums, mansions, residences, estates, and
other kinds of real and personal properties in the Philippines and in various countries of the world;"
and.

2) that certain "business enterprises and properties (were) taken over by the government of
the Marcos Administration or by entities or persons close to former President Marcos." [Footnotes
deleted].

It does not suffice, as in this case, that the respondent is or was a government official or employee
during the administration of former Pres. Marcos. There must be a prima facie showing that the
respondent unlawfully accumulated wealth by virtue of his close association or relation with former
Pres. Marcos and/or his wife. This is so because otherwise the respondents case will fall under
existing general laws and procedures on the matter. Rep. Act No. 3019, the Anti-Graft and Corrupt
Practices Act, penalizes the corrupt practices of any public officer. Under Rep. Act No. 1379 (An Act
Declaring Forfeited in Favor of the State Any Property Found to Have Been Unlawfully Acquired By
Any Public Officer or Employee and Providing for the Procedure Therefor), whenever any public
officer or employee has acquired during his incumbency an amount of property which is manifestly
out of proportion to his salary as such public officer or employee and to his other lawful income and
the income from legitimately acquired property, said property shall be presumed prima facie to
have been unlawfully acquired [Sec. 2]. The Solicitor General shall file the petition and prosecute
the case in behalf of the Republic, after preliminary investigation by the provincial or city prosecutor
[Ibid].

Moreover, the record shows that private respondent was being investigated for unlawfully acquired
wealth under Rep. Acts Nos. 3019 and 1379, and not under E.O. Nos. 1, 2, 14 and 14-A.

Since private respondent was being investigated by the PCGG through the AFP Anti-Graft Board it
would have been presumed that this was under Rep. Acts Nos. 3019 and 1379 in relation to E.O.
Nos. 1, 2, 14 and 14-A. But the record itself belies this presumption:chanrob1es virtual 1aw library

(a) The letter of the chairman of the AFP Anti-Graft Board to private respondent, dated October
16, 1987, states: "This letter is in connection with the alleged information received by the AFP Anti-
Graft Board indicating your acquisition of wealth beyond legal means of income in violation of Rep.
Act No. 3019 known as the Anti-Graft and Corrupt Practices Act." [Rollo, p. 39].

(b) The Resolution dated June 30, 1988 of the Board categorically states:chanrob1es virtual 1aw
library

I. PRELIMINARY STATEMENT:chanrob1es virtual 1aw library

This refers to the case against Col Troadio B. Tecson PC (Ret) for alleged unexplained wealth
pursuant to R.A. 3019, as amended, otherwise known as Anti-Graft and Corrupt Practices Act and
R.A. 1379, as amended, otherwise known as the "Act for Forfeiture of Unlawfully Acquired Property."
[Rollo, p. 43].

The resolution alleges that private respondent unlawfully accumulated wealth by taking advantage
of his office as Finance Officer of the Philippine Constabulary. No attempt is made in the Boards
resolution to link him or his accumulation of wealth to former Pres. Marcos and/or his wife.

(c) The letter of the Board chairman to the chairman of the PCGG, dated July 28, 1988, is
clear:chanrob1es virtual 1aw library

Respectfully transmitted herewith for the prosecution before the Sandiganbayan is the case folder
of COLONEL TROADIO TECSON (Ret) who after preliminary investigation of the case by the Board,
found a prima facie evidence against subject officer for violating Section 8, R.A. 3019, as amended
by BP 195, otherwise known as the Anti-Graft and Corrupt Practices Act and R.A. 1379, otherwise
known as an Act for the Forfeiture of Unlawfully Acquired Property." [Rollo, p. 46].

Moreover, from the allegations of petitioner in its memorandum, it would appear that private
respondent accumulated his wealth for his own account. Petitioner quoted the letter of Ignacio
Datahan, a retired PC sergeant, to General Fidel Ramos, the material portion of which
reads:chanrob1es virtual 1aw library

. . . After an official in the military unit received an Allotment Advice the same signed a cash
advance voucher, let us say in the amount of P5,000.00. Without much ado, outright, Col. Tecson
paid the amount. The official concerned was also made to sign the receipt portion on the voucher
the amount of which was left blank. Before the voucher is passed for routine processing by Mrs.
Leonor Cagas, clerk of Col. Tecson and its facilitator, the maneuver began. The amount on the face
of the cash advance voucher is altered or superimposed. The original amount of P5,000.00 was now
made say, P95,000.00. So it was actually the amount of P95,000.00 that appeared on the records.
The difference of P90,000.00 went to the syndicate.

. . . Boy Tanyag, bookkeeper in Col. Tecsons office took care of the work.

. . . In the liquidation of the altered cash advance amount, names of persons found in the
Metropolitan Manila Telephone Directory with fictitious addresses appeared as recipients or payees.
Leonor and Boy got their shares on commission basis of the looted amount while the greater part
went to Col. Tecson. [Rollo, pp. 184-185.].

Clearly, this alleged unlawful accumulation of wealth is not that contemplated in E.O. Nos. 1, 2, 14
and 14-A.

2. It will not do to cite the order of the PCGG Chairman, dated May 13, 1986, creating the Board
and authorizing it to investigate the unexplained wealth and corrupt practices of AFP personnel,
both retired and in active service, to support the contention that PCGG has jurisdiction over the
case of private Respondent. The PCGG cannot do more than what it was empowered to do. Its
powers are limited. Its task is limited to the recovery of the ill-gotten wealth of the Marcoses, their
relatives and cronies. The PCGG cannot, through an order of its chairman, grant itself additional
powers powers not contemplated in its enabling law.

3. Petitioner assails the trial courts cognizance of the petition filed by private Respondent.
Particularly, petitioner argues that the trial court cannot acquire jurisdiction over the PCGG. This
matter has already been settled in Pea, supra, where the Court ruled that those who wish to
question or challenge the PCGGs acts or orders must seek recourse in the Sandiganbayan, which is
vested with exclusive and original jurisdiction. The Sandiganbayans decisions and final orders are
in turn subject to review on certiorari exclusively by this Court. [Ibid, at pp. 564-565].

The ruling in Pea was applied in PCGG v. Aquino, G.R. No. 77816, June 30, 1988, 163 SCRA 363,
Soriano III v. Yuson, G.R. No. 74910 (and five other cases), August 10, 1988, 164 SCRA 226 and
Olaguer v. RTC, NCJR, Br. 48, G.R. No. 81385, February 21, 1989, 170 SCRA 478, among others, to
enjoin the regional trial courts from interfering with the actions of the PCGG.
Respondent judge clearly acted without or in excess of his jurisdiction when he took cognizance of
Civil Case No. 57092 and issued the writ of preliminary injunction against the PCGG.

4. Thus, we are confronted with a situation wherein the PCGG acted in excess of its jurisdiction
and, hence, may be enjoined from doing so, but the court that issued the injunction against the
PCGG has not been vested by law with jurisdiction over it and, thus, the injunction issued was null
and void.

The nullification of the assailed order of respondent judge issuing the writ of preliminary injunction
is therefore in order. Likewise, respondent judge must be enjoined from proceeding with Civil Case
No. 57092.

But in view of the patent lack of authority of the PCGG to investigate and cause the prosecution of
private respondent for violation of Rep. Acts Nos. 3019 and 1379, the PCGG must also be enjoined
from proceeding with the case, without prejudice to any action that may be taken by the proper
prosecutory agency. The rule of law mandates that an agency of government be allowed to exercise
only the powers granted it.

5. The pronouncements made above should not be taken to mean that the PCGGs creation of
the AFP Anti-Graft Board is a nullity and that the PCGG has no authority to investigate and cause
the prosecution of members and former members of the Armed Forces of the Philippines for
violations of Rep. Acts Nos. 3019 and 1379. The PCGG may investigate and cause the prosecution
of active and retired members of the AFP for violations of Rep. Acts Nos. 3019 and 1379 only in
relation to E.O. Nos. 1, 2, 14 and 14-A, i.e., insofar as they involve the recovery of the ill-gotten
wealth of former Pres. Marcos and his family and "cronies." But the PCGG would not have
jurisdiction over an ordinary case falling under Rep. Acts Nos. 3019 and 1379, as in the case at bar.
E.O. Nos. 1, 2, 14 and 14-A did not envision the PCGG as the investigator and prosecutor of all
unlawful accumulations of wealth. The PCGG was created for a specific and limited purpose, as we
have explained earlier, and necessarily its powers must be construed with this in mind.

6. n his pleadings, private respondent contends that he may no longer be prosecuted because
of prescription. He relies on section 2 of Rep. Act No. 1379 which provides that" [t]he right to file
such petition [for forfeiture of unlawfully acquired wealth] shall prescribe within four years from the
date of resignation, dismissal or separation or expiration of the term of the officer or employee
concerned." He retired on May 9, 1984, or more than six (6) years ago. However, it must be pointed
out that section 2 of Rep. Act No. 1379 should be deemed amended or repealed by Article XI,
section 15 of the 1987 Constitution which provides that" [t]he right of the State to recover
properties unlawfully acquired by public officials or employees, from them or from their nominees or
transferees, shall not be barred by prescription, laches, or estoppel." Considering that sec. 2 of Rep.
Act No. 1379 was deemed amended or repealed before the prescriptive period provided therein had
lapsed insofar as private respondent is concerned, we cannot say that he had already acquired a
vested right that may not be prejudiced by a subsequent enactment.

Moreover, to bar the Government from recovering ill-gotten wealth would result in the validation or
legitimization of the unlawful acquisition, a consequence at variance with the clear intent of Rep.
Act No. 1379, which provides:chanrobles virtual lawlibrary

SEC. 11. Laws on prescription. The laws concerning acquisitive prescription and limitation of
actions cannot be invoked by, nor shall they benefit the respondent, in respect to any property
unlawfully acquired by him.

Thus, we hold that the appropriate prosecutory agencies, i.e., the city or provincial prosecutor and
the Solicitor General under sec. 2 of Rep. Act No. 1379, may still investigate the case and file the
petition for the forfeiture of unlawfully acquired wealth against private respondent, now a private
citizen. (On the other hand, as regards respondents for violations of Rep. Acts Nos. 3019 and 1379
who are still in the government service, the agency granted the power to investigate and prosecute
them is the Office of the Ombudsman [Rep. Act No. 6770]). Under Presidential Decree No. 1606, as
amended, and Batas Pambansa Blg. 195 violations of Rep. Acts Nos. 3019 and 1379 shall be tried
by the Sandiganbayan.
7. The Court hastens to add that this decision is without prejudice to the prosecution of private
respondent under the pertinent provisions of the Revised Penal Code and other related penal laws.

WHEREFORE, the order of respondent judge dated June 26, 1989 in Civil Case No. 57092 is
NULLIFIED and SET ASIDE. Respondent judge is ORDERED to dismiss Civil Case No. 57092. The
temporary restraining order issued by the Court on August 29, 1989 is MADE PERMANENT. The
PCGG is ENJOINED from proceeding with the investigation and prosecution of private respondent in
I.S. No. 37, without prejudice to his investigation and prosecution by the appropriate prosecutory
agency.

SO ORDERED.

Fernan, C.J., Narvasa, Melencio-Herrera, Gutierrez, Jr., Cruz, Paras, Feliciano, Gancayco, Padilla,
Bidin, Grio-Aquino, Medialdea and Regalado, JJ.