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EN BANC

HEIRS OF MARIO MALABANAN, G.R. No. 179987


Petitioner,
Present:
PUNO, C.J.,
QUISUMBING,
YNARES-SANTIAGO,
CARPIO,
- versus - AUSTRIA-MARTINEZ,
CORONA,
CARPIO MORALES,
TINGA,
CHICO-NAZARIO,
VELASCO, JR.,
NACHURA,
LEONARDO DE CASTRO,
BRION,
REPUBLIC OF THE PHILIPPINES, PERALTA, and
Respondent. BERSAMIN, JJ.

Promulgated:

April 29, 2009

x--------------------------------------------------------------------------- x

DECISION

TINGA, J.:

One main reason why the informal sector has not become formal is that
from Indonesia to Brazil, 90 percent of the informal lands are not titled and
registered. This is a generalized phenomenon in the so-called Third World. And it
has many consequences.

xxx
The question is: How is it that so many governments, from Suharto's
in Indonesia to Fujimori's in Peru, have wanted to title these people and have not
been able to do so effectively? One reason is that none of the state systems
in Asia or Latin America can gather proof of informal titles. In Peru, the informals
have means of proving property ownership to each other which are not the same
means developed by the Spanish legal system. The informals have their own
papers, their own forms of agreements, and their own systems of registration, all
of which are very clearly stated in the maps which they use for their own informal
business transactions.

If you take a walk through the countryside, from Indonesia to Peru, and
you walk by field after field--in each field a different dog is going to bark at you.
Even dogs know what private property is all about. The only one who does not
know it is the government. The issue is that there exists a "common law" and an
"informal law" which the Latin American formal legal system does not know how
to recognize.

- Hernando De Soto[1]

This decision inevitably affects all untitled lands currently in possession of persons and
entities other than the Philippine government. The petition, while unremarkable as to the facts,
was accepted by the Court en banc in order to provide definitive clarity to the applicability and
scope of original registration proceedings under Sections 14(1) and 14(2) of the Property
Registration Decree. In doing so, the Court confronts not only the relevant provisions of the
Public Land Act and the Civil Code, but also the reality on the ground. The countrywide
phenomenon of untitled lands, as well as the problem of informal settlement it has spawned,
has unfortunately been treated with benign neglect. Yet our current laws are hemmed in by
their own circumscriptions in addressing the phenomenon. Still, the duty on our part is
primarily to decide cases before us in accord with the Constitution and the legal principles that
have developed our public land law, though our social obligations dissuade us from casting a
blind eye on the endemic problems.

I.

On 20 February 1998, Mario Malabanan filed an application for land registration covering a
parcel of land identified as Lot 9864-A, Cad-452-D, Silang Cadastre,[2] situated in Barangay Tibig,
Silang Cavite, and consisting of 71,324 square meters. Malabanan claimed that he had
purchased the property from Eduardo Velazco,[3] and that he and his predecessors-in-interest
had been in open, notorious, and continuous adverse and peaceful possession of the land for
more than thirty (30) years.

The application was raffled to the Regional Trial Court of (RTC) Cavite-Tagaytay City, Branch 18.
The Office of the Solicitor General (OSG) duly designated the Assistant Provincial Prosecutor of
Cavite, Jose Velazco, Jr., to appear on behalf of the State.[4] Apart from presenting documentary
evidence, Malabanan himself and his witness, Aristedes Velazco, testified at the hearing.
Velazco testified that the property was originally belonged to a twenty-two hectare property
owned by his great-grandfather, Lino Velazco. Lino had four sons Benedicto, Gregorio, Eduardo
and Estebanthe fourth being Aristedess grandfather. Upon Linos death, his four sons inherited
the property and divided it among themselves. But by 1966, Estebans wife, Magdalena, had
become the administrator of all the properties inherited by the Velazco sons from their father,
Lino. After the death of Esteban and Magdalena, their son Virgilio succeeded them in
administering the properties, including Lot 9864-A, which originally belonged to his uncle,
Eduardo Velazco. It was this property that was sold by Eduardo Velazco to Malabanan.[5]

Assistant Provincial Prosecutor Jose Velazco, Jr. did not cross-examine Aristedes
Velazco. He further manifested that he also [knew] the property and I affirm the truth of the
testimony given by Mr. Velazco.[6] The Republic of the Philippines likewise did not present any
evidence to controvert the application.

Among the evidence presented by Malabanan during trial was a Certification dated 11
June 2001, issued by the Community Environment & Natural Resources Office, Department of
Environment and Natural Resources (CENRO-DENR), which stated that the subject property was
verified to be within the Alienable or Disposable land per Land Classification Map No. 3013
established under Project No. 20-A and approved as such under FAO 4-1656 on March 15,
1982.[7]

On 3 December 2002, the RTC rendered judgment in favor of Malabanan, the dispositive
portion of which reads:

WHEREFORE, this Court hereby approves this application for registration


and thus places under the operation of Act 141, Act 496 and/or P.D. 1529,
otherwise known as Property Registration Law, the lands described in Plan Csd-
04-0173123-D, Lot 9864-A and containing an area of Seventy One Thousand
Three Hundred Twenty Four (71,324) Square Meters, as supported by its
technical description now forming part of the record of this case, in addition to
other proofs adduced in the name of MARIO MALABANAN, who is of legal age,
Filipino, widower, and with residence at Munting Ilog, Silang, Cavite.

Once this Decision becomes final and executory, the corresponding decree
of registration shall forthwith issue.

SO ORDERED.

The Republic interposed an appeal to the Court of Appeals, arguing that Malabanan had
failed to prove that the property belonged to the alienable and disposable land of the public
domain, and that the RTC had erred in finding that he had been in possession of the property in
the manner and for the length of time required by law for confirmation of imperfect title.

On 23 February 2007, the Court of Appeals rendered a Decision [8] reversing the RTC and
dismissing the application of Malabanan. The appellate court held that under Section 14(1) of
the Property Registration Decree any period of possession prior to the classification of the lots
as alienable and disposable was inconsequential and should be excluded from the computation
of the period of possession. Thus, the appellate court noted that since the CENRO-DENR
certification had verified that the property was declared
alienable and disposable only on 15 March 1982, the Velazcos possession prior to that date
could not be factored in the computation of the period of possession. This interpretation of the
Court of Appeals of Section 14(1) of the Property Registration Decree was based on the Courts
ruling in Republic v. Herbieto.[9]

Malabanan died while the case was pending with the Court of Appeals;[10] hence, it was
his heirs who appealed the decision of the appellate court. Petitioners, before this Court, rely
on our ruling in Republic v. Naguit,[11] which was handed down just four months prior
to Herbieto. Petitioners suggest that the discussion in Herbieto cited by the Court of Appeals is
actually obiter dictum since the Metropolitan Trial Court therein which had directed the
registration of the property had no jurisdiction in the first place since the requisite notice of
hearing was published only after the hearing had already begun. Naguit, petitioners argue,
remains the controlling doctrine, especially when the property in question is agricultural land.
Therefore, with respect to agricultural lands, any possession prior to the declaration of the
alienable property as disposable may be counted in reckoning the period of possession to
perfect title under the Public Land Act and the Property Registration Decree.

The petition was referred to the Court en banc,[12] and on 11 November 2008, the case
was heard on oral arguments. The Court formulated the principal issues for the oral arguments,
to wit:

1. In order that an alienable and disposable land of the public domain may
be registered under Section 14(1) of Presidential Decree No. 1529, otherwise
known as the Property Registration Decree, should the land be classified as
alienable and disposable as of June 12, 1945 or is it sufficient that such
classification occur at any time prior to the filing of the applicant for registration
provided that it is established that the applicant has been in open, continuous,
exclusive and notorious possession of the land under a bona fide claim of
ownership since June 12, 1945 or earlier?

2. For purposes of Section 14(2) of the Property Registration Decree may a


parcel of land classified as alienable and disposable be deemed private land and
therefore susceptible to acquisition by prescription in accordance with the Civil
Code?

3. May a parcel of land established as agricultural in character either


because of its use or because its slope is below that of forest lands be registrable
under Section 14(2) of the Property Registration Decree in relation to the
provisions of the Civil Code on acquisitive prescription?

4. Are petitioners entitled to the registration of the subject land in their


names under Section 14(1) or Section 14(2) of the Property Registration Decree
or both?[13]

Based on these issues, the parties formulated their respective positions.

With respect to Section 14(1), petitioners reiterate that the analysis of the Court
in Naguit is the correct interpretation of the provision. The seemingly contradictory
pronouncement in Herbieto, it is submitted, should be considered obiter dictum, since the land
registration proceedings therein was void ab initio due to lack of publication of the notice of
initial hearing. Petitioners further point out that in Republic v. Bibonia,[14] promulgated in June
of 2007, the Court applied Naguit and adopted the same observation that the preferred
interpretation by the OSG of Section 14(1) was patently absurd. For its part, the OSG remains
insistent that for Section 14(1) to apply, the land should have been classified as alienable and
disposable as of 12 June 1945. Apart from Herbieto, the OSG also cites the subsequent rulings
in Buenaventura v. Republic,[15] Fieldman Agricultural Trading v. Republic[16] and Republic v.
Imperial Credit Corporation,[17] as well as the earlier case of Director of Lands v. Court of
Appeals.[18]

With respect to Section 14(2), petitioners submit that open, continuous, exclusive and
notorious possession of an alienable land of the public domain for more than 30 years ipso
jure converts the land into private property, thus placing it under the coverage of Section 14(2).
According to them, it would not matter whether the land sought to be registered was
previously classified as agricultural land of the public domain so long as, at the time of the
application, the property had already been converted into private property through
prescription. To bolster their argument, petitioners cite extensively from our 2008 ruling
in Republic v. T.A.N. Properties.[19]

The arguments submitted by the OSG with respect to Section 14(2) are more extensive.
The OSG notes that under Article 1113 of the Civil Code, the acquisitive prescription of
properties of the State refers to patrimonial property, while Section 14(2) speaks of private
lands. It observes that the Court has yet to decide a case that presented Section 14(2) as a
ground for application for registration, and that the 30-year possession period refers to the
period of possession under Section 48(b) of the Public Land Act, and not the concept of
prescription under the Civil Code. The OSG further submits that, assuming that the 30-year
prescriptive period can run against public lands, said period should be reckoned from the time
the public land was declared alienable and disposable.

Both sides likewise offer special arguments with respect to the particular factual
circumstances surrounding the subject property and the ownership thereof.

II.

First, we discuss Section 14(1) of the Property Registration Decree. For a full understanding of
the provision, reference has to be made to the Public Land Act.

A.

Commonwealth Act No. 141, also known as the Public Land Act, has, since its
enactment, governed the classification and disposition of lands of the public domain. The
President is authorized, from time to time, to classify the lands of the public domain into
alienable and disposable, timber, or mineral lands.[20] Alienable and disposable lands of the
public domain are further classified according to their uses into (a) agricultural; (b) residential,
commercial, industrial, or for similar productive purposes; (c) educational, charitable, or other
similar purposes; or (d) reservations for town sites and for public and quasi-public uses.[21]

May a private person validly seek the registration in his/her name of alienable and
disposable lands of the public domain? Section 11 of the Public Land Act acknowledges that
public lands suitable for agricultural purposes may be disposed of by confirmation of imperfect
or incomplete titles through judicial legalization.[22] Section 48(b) of the Public Land Act, as
amended by P.D. No. 1073, supplies the details and unmistakably grants that right, subject to
the requisites stated therein:

Sec. 48. The following described citizens of the Philippines, occupying


lands of the public domain or claiming to own any such land or an interest
therein, but whose titles have not been perfected or completed, may apply to
the Court of First Instance of the province where the land is located for
confirmation of their claims and the issuance of a certificate of title therefor,
under the Land Registration Act, to wit:

xxx

(b) Those who by themselves or through their predecessors in interest


have been in open, continuous, exclusive, and notorious possession and
occupation of alienable and disposable lands of the public domain, under a
bona fide claim of acquisition of ownership, since June 12, 1945, or earlier,
immediately preceding the filing of the application for confirmation of title
except when prevented by war or force majeure. These shall be conclusively
presumed to have performed all the conditions essential to a Government grant
and shall be entitled to a certificate of title under the provisions of this chapter.

Section 48(b) of Com. Act No. 141 received its present wording in 1977 when the law was
amended by P.D. No. 1073. Two significant amendments were introduced by P.D. No.
1073. First, the term agricultural lands was changed to alienable and disposable lands of the
public domain. The OSG submits that this amendment restricted the scope of the lands that
may be registered.[23] This is not actually the case. Under Section 9 of the Public Land Act,
agricultural lands are a mere subset of lands of the public domain alienable or open to
disposition. Evidently, alienable and disposable lands of the public domain are a larger class
than only agricultural lands.

Second, the length of the requisite possession was changed from possession for thirty (30)
years immediately preceding the filing of the application to possession since June 12, 1945 or
earlier. The Court in Naguit explained:

When the Public Land Act was first promulgated in 1936, the period of
possession deemed necessary to vest the right to register their title to agricultural
lands of the public domain commenced from July 26, 1894. However, this period
was amended by R.A. No. 1942, which provided that the bona fide claim of
ownership must have been for at least thirty (30) years. Then in 1977, Section
48(b) of the Public Land Act was again amended, this time by P.D. No. 1073,
which pegged the reckoning date at June 12, 1945. xxx

It bears further observation that Section 48(b) of Com. Act No, 141 is virtually the same as
Section 14(1) of the Property Registration Decree. Said Decree codified the various laws relative
to the registration of property, including lands of the public domain. It is Section 14(1) that
operationalizes the registration of such lands of the public domain. The provision reads:

SECTION 14. Who may apply. The following persons may file in the proper
Court of First Instance an application for registration of title to land, whether
personally or through their duly authorized representatives:

(1) those who by themselves or through their predecessors-in-


interest have been in open, continuous, exclusive and
notorious possession and occupation of alienable and
disposable lands of the public domain under a bona fide claim
of ownership since June 12, 1945, or earlier.
Notwithstanding the passage of the Property Registration Decree and the inclusion of
Section 14(1) therein, the Public Land Act has remained in effect. Both laws commonly refer to
persons or their predecessors-in-interest who have been in open, continuous, exclusive and
notorious possession and occupation of alienable and disposable lands of the public domain
under a bona fide claim of ownership since June 12, 1945, or earlier. That circumstance may
have led to the impression that one or the other is a redundancy, or that Section 48(b) of the
Public Land Act has somehow been repealed or mooted. That is not the case.

The opening clauses of Section 48 of the Public Land Act and Section 14 of the Property
Registration Decree warrant comparison:

Sec. 48 [of the Public Land Act]. The following described citizens of the
Philippines, occupying lands of the public domain or claiming to own any such
land or an interest therein, but whose titles have not been perfected or
completed, may apply to the Court of First Instance of the province where the
land is located for confirmation of their claims and the issuance of a certificate
of title therefor, under the Land Registration Act, to wit:

xxx

Sec. 14 [of the Property Registration Decree]. Who may apply. The
following persons may file in the proper Court of First Instance an application for
registration of title to land, whether personally or through their duly authorized
representatives:

xxx

It is clear that Section 48 of the Public Land Act is more descriptive of the nature of the
right enjoyed by the possessor than Section 14 of the Property Registration Decree, which
seems to presume the pre-existence of the right, rather than establishing the right itself for the
first time. It is proper to assert that it is the Public Land Act, as amended by P.D. No. 1073
effective 25 January 1977, that has primarily established the right of a Filipino citizen who has
been in open, continuous, exclusive, and notorious possession and occupation of alienable and
disposable lands of the public domain, under a bona fide claim of acquisition of ownership,
since June 12, 1945 to perfect or complete his title by applying with the proper court for the
confirmation of his ownership claim and the issuance of the corresponding certificate of title.

Section 48 can be viewed in conjunction with the afore-quoted Section 11 of the Public
Land Act, which provides that public lands suitable for agricultural purposes may be disposed of
by confirmation of imperfect or incomplete titles, and given the notion that both provisions
declare that it is indeed the Public Land Act that primarily establishes the substantive ownership
of the possessor who has been in possession of the property since 12 June 1945. In turn, Section
14(a) of the Property Registration Decree recognizes the substantive right granted under
Section 48(b) of the Public Land Act, as well provides the corresponding original registration
procedure for the judicial confirmation of an imperfect or incomplete title.

There is another limitation to the right granted under Section 48(b). Section 47 of the Public
Land Act limits the period within which one may exercise the right to seek registration under
Section 48. The provision has been amended several times, most recently by Rep. Act No. 9176
in 2002. It currently reads thus:

Section 47. The persons specified in the next following section are hereby
granted time, not to extend beyond December 31, 2020 within which to avail of
the benefits of this Chapter: Provided, That this period shall apply only where the
area applied for does not exceed twelve (12) hectares: Provided, further, That the
several periods of time designated by the President in accordance with Section
Forty-Five of this Act shall apply also to the lands comprised in the provisions of
this Chapter, but this Section shall not be construed as prohibiting any said
persons from acting under this Chapter at any time prior to the period fixed by
the President.[24]

Accordingly under the current state of the law, the substantive right granted under Section
48(b) may be availed of only until 31 December 2020.

B.

Despite the clear text of Section 48(b) of the Public Land Act, as amended and Section
14(a) of the Property Registration Decree, the OSG has adopted the position that for one to
acquire the right to seek registration of an alienable and disposable land of the public domain, it
is not enough that the applicant and his/her predecessors-in-interest be in possession under
a bona fide claim of ownership since 12 June 1945; the alienable and disposable character of the
property must have been declared also as of 12 June 1945. Following the OSGs approach, all
lands certified as alienable and disposable after 12 June 1945 cannot be registered either under
Section 14(1) of the Property Registration Decree or Section 48(b) of the Public Land Act as
amended. The absurdity of such an implication was discussed in Naguit.

Petitioner suggests an interpretation that the alienable and disposable


character of the land should have already been established since June 12, 1945 or
earlier. This is not borne out by the plain meaning of Section 14(1). Since June 12,
1945, as used in the provision, qualifies its antecedent phrase under a bonafide
claim of ownership. Generally speaking, qualifying words restrict or modify only
the words or phrases to which they are immediately associated, and not those
distantly or remotely located.[25] Ad proximum antecedents fiat relation nisi
impediatur sentencia.

Besides, we are mindful of the absurdity that would result if we adopt petitioners
position. Absent a legislative amendment, the rule would be, adopting the OSGs
view, that all lands of the public domain which were not declared alienable or
disposable before June 12, 1945 would not be susceptible to original registration,
no matter the length of unchallenged possession by the occupant. Such
interpretation renders paragraph (1) of Section 14 virtually inoperative and even
precludes the government from giving it effect even as it decides to reclassify
public agricultural lands as alienable and disposable. The unreasonableness of the
situation would even be aggravated considering that before June 12, 1945,
the Philippines was not yet even considered an independent state.

Accordingly, the Court in Naguit explained:

[T]he more reasonable interpretation of Section 14(1) is that it merely


requires the property sought to be registered as already alienable and disposable
at the time the application for registration of title is filed. If the State, at the time
the application is made, has not yet deemed it proper to release the property for
alienation or disposition, the presumption is that the government is still reserving
the right to utilize the property; hence, the need to preserve its ownership in the
State irrespective of the length of adverse possession even if in good faith.
However, if the property has already been classified as alienable and disposable,
as it is in this case, then there is already an intention on the part of the State to
abdicate its exclusive prerogative over the property.

The Court declares that the correct interpretation of Section 14(1) is that which was
adopted in Naguit. The contrary pronouncement in Herbieto, as pointed out in Naguit, absurdly
limits the application of the provision to the point of virtual inutility since it would only cover
lands actually declared alienable and disposable prior to 12 June 1945, even if the current
possessor is able to establish open, continuous, exclusive and notorious possession under
a bona fide claim of ownership long before that date.

Moreover, the Naguit interpretation allows more possessors under a bona fide claim of
ownership to avail of judicial confirmation of their imperfect titles than what would be feasible
under Herbieto. This balancing fact is significant, especially considering our forthcoming
discussion on the scope and reach of Section 14(2) of the Property Registration Decree.

Petitioners make the salient observation that the contradictory passages


from Herbieto are obiter dicta since the land registration proceedings therein is void ab initio in
the first place due to lack of the requisite publication of the notice of initial hearing. There is no
need to explicitly overturn Herbieto, as it suffices that the Courts acknowledgment that the
particular line of argument used therein concerning Section 14(1) is indeed obiter.

It may be noted that in the subsequent case of Buenaventura,[26] the Court,


citing Herbieto, again stated that [a]ny period of possession prior to the date when the [s]ubject
[property was] classified as alienable and disposable is inconsequential and should be excluded
from the computation of the period of possession That statement, in the context of Section
14(1), is certainly erroneous. Nonetheless, the passage as cited in Buenaventura should again
be considered as obiter. The application therein was ultimately granted, citing Section 14(2).
The evidence submitted by petitioners therein did not establish any mode of possession on
their part prior to 1948, thereby precluding the application of Section 14(1). It is not even
apparent from the decision whether petitioners therein had claimed entitlement to original
registration following Section 14(1), their position being that they had been in exclusive
possession under a bona fide claim of ownership for over fifty (50) years, but not before 12
June 1945.

Thus, neither Herbieto nor its principal discipular ruling Buenaventura has any
precedental value with respect to Section 14(1). On the other hand, the ratio of Naguit is
embedded in Section 14(1), since it precisely involved situation wherein the applicant had been
in exclusive possession under a bona fide claim of ownership prior to 12 June 1945. The Courts
interpretation of Section 14(1) therein was decisive to the resolution of the case. Any doubt as
to which between Naguit or Herbieto provides the final word of the Court on Section 14(1) is
now settled in favor of Naguit.

We noted in Naguit that it should be distinguished from Bracewell v. Court of Appeals[27] since
in the latter, the application for registration had been filed before the land was declared
alienable or disposable. The dissent though pronounces Bracewell as the better rule between
the two. Yet two years after Bracewell, its ponente, the esteemed Justice Consuelo Ynares-
Santiago, penned the ruling in Republic v. Ceniza,[28] which involved a claim of possession that
extended back to 1927 over a public domain land that was declared alienable and disposable
only in 1980. Ceniza cited Bracewell, quoted extensively from it, and following the mindset of
the dissent, the attempt at registration in Cenizashould have failed. Not so.

To prove that the land subject of an application for registration is


alienable, an applicant must establish the existence of a positive act of the
government such as a presidential proclamation or an executive order; an
administrative action; investigation reports of Bureau of Lands investigators; and
a legislative act or a statute.

In this case, private respondents presented a certification dated


November 25, 1994, issued by Eduardo M. Inting, the Community Environment
and Natural Resources Officer in the Department of Environment and Natural
Resources Office in Cebu City, stating that the lots involved were "found to be
within the alienable and disposable (sic) Block-I, Land Classification Project No.
32-A, per map 2962 4-I555 dated December 9, 1980." This is sufficient evidence
to show the real character of the land subject of private respondents application.
Further, the certification enjoys a presumption of regularity in the absence of
contradictory evidence, which is true in this case. Worth noting also was the
observation of the Court of Appeals stating that:
[n]o opposition was filed by the Bureaus of Lands and
Forestry to contest the application of appellees on the ground
that the property still forms part of the public domain. Nor is
there any showing that the lots in question are forestal land....

Thus, while the Court of Appeals erred in ruling that mere possession of
public land for the period required by law would entitle its occupant to a
confirmation of imperfect title, it did not err in ruling in favor of private
respondents as far as the first requirement in Section 48(b) of the Public Land
Act is concerned, for they were able to overcome the burden of proving the
alienability of the land subject of their application.

As correctly found by the Court of Appeals, private respondents were


able to prove their open, continuous, exclusive and notorious possession of the
subject land even before the year 1927. As a rule, we are bound by the factual
findings of the Court of Appeals. Although there are exceptions, petitioner did
not show that this is one of them.[29]

Why did the Court in Ceniza, through the same eminent member who authored Bracewell,
sanction the registration under Section 48(b) of public domain lands declared alienable or
disposable thirty-five (35) years and 180 days after 12 June 1945? The telling difference is that
in Ceniza, the application for registration was filed nearly six (6) years after the land had been
declared alienable or disposable, while in Bracewell, the application was filed nine (9)
years before the land was declared alienable or disposable. That crucial difference was also
stressed in Naguit to contradistinguish it from Bracewell, a difference which the dissent seeks
to belittle.

III.

We next ascertain the correct framework of analysis with respect to Section 14(2). The
provision reads:

SECTION 14. Who may apply. The following persons may file in the proper
Court of First Instance an application for registration of title to land, whether
personally or through their duly authorized representatives:

xxx

(2) Those who have acquired ownership over private lands by


prescription under the provisions of existing laws.
The Court in Naguit offered the following discussion concerning Section 14(2), which we
did even then recognize, and still do, to be an obiter dictum, but we nonetheless refer to it as
material for further discussion, thus:

Did the enactment of the Property Registration Decree and the


amendatory P.D. No. 1073 preclude the application for registration of alienable
lands of the public domain, possession over which commenced only after June
12, 1945? It did not, considering Section 14(2) of the Property Registration
Decree, which governs and authorizes the application of those who have acquired
ownership of private lands by prescription under the provisions of existing laws.

Prescription is one of the modes of acquiring ownership under the Civil


Code.[[30]] There is a consistent jurisprudential rule that properties classified as
alienable public land may be converted into private property by reason of open,
continuous and exclusive possession of at least thirty (30) years.[[31]] With such
conversion, such property may now fall within the contemplation of private lands
under Section 14(2), and thus susceptible to registration by those who have
acquired ownership through prescription. Thus, even if possession of the
alienable public land commenced on a date later than June 12, 1945, and such
possession being been open, continuous and exclusive, then the possessor may
have the right to register the land by virtue of Section 14(2) of the Property
Registration Decree.

Naguit did not involve the application of Section 14(2), unlike in this case where petitioners
have based their registration bid primarily on that provision, and where the evidence
definitively establishes their claim of possession only as far back as 1948. It is in this case that
we can properly appreciate the nuances of the provision.

A.

The obiter in Naguit cited the Civil Code provisions on prescription as the possible basis for
application for original registration under Section 14(2). Specifically, it is Article 1113 which
provides legal foundation for the application. It reads:

All things which are within the commerce of men are susceptible of
prescription, unless otherwise provided. Property of the State or any of its
subdivisions not patrimonial in character shall not be the object of prescription.

It is clear under the Civil Code that where lands of the public domain are patrimonial in
character, they are susceptible to acquisitive prescription. On the other hand, among the public
domain lands that are not susceptible to acquisitive prescription are timber lands and mineral
lands. The Constitution itself proscribes private ownership of timber or mineral lands.
There are in fact several provisions in the Civil Code concerning the acquisition of real
property through prescription. Ownership of real property may be acquired by ordinary
prescription of ten (10) years,[32] or through extraordinary prescription of thirty (30)
years.[33] Ordinary acquisitive prescription requires possession in good faith,[34]as well as just
title.[35]

When Section 14(2) of the Property Registration Decree explicitly provides that persons
who have acquired ownership over private lands by prescription under the provisions of existing
laws, it unmistakably refers to the Civil Code as a valid basis for the registration of lands. The
Civil Code is the only existing law that specifically allows the acquisition by prescription of
private lands, including patrimonial property belonging to the State. Thus, the critical question
that needs affirmation is whether Section 14(2) does encompass original registration
proceedings over patrimonial property of the State, which a private person has acquired
through prescription.

The Naguit obiter had adverted to a frequently reiterated jurisprudence holding that
properties classified as alienable public land may be converted into private property by reason
of open, continuous and exclusive possession of at least thirty (30) years.[36] Yet if we ascertain
the source of the thirty-year period, additional complexities relating to Section 14(2) and to how
exactly it operates would emerge. For there are in fact two distinct origins of the thirty (30)-
year rule.

The first source is Rep. Act No. 1942, enacted in 1957, which amended Section 48(b) of
the Public Land Act by granting the right to seek original registration of alienable public lands
through possession in the concept of an owner for at least thirty years.

The following-described citizens of the Philippines, occupying lands of


the public domain or claiming to own any such lands or an interest therein, but
whose titles have not been perfected or completed, may apply to the Court of
First Instance of the province where the land is located for confirmation of their
claims and the issuance of a certificate of title therefor, under the Land
Registration Act, to wit:

xxx xxx xxx

(b) Those who by themselves or through their predecessors in interest


have been in open, continuous, exclusive and notorious possession and
occupation of agricultural lands of the public domain, under a bona fide claim of
acquisition of ownership, for at least thirty years immediately preceding the
filing of the application for confirmation of title, except when prevented by
war or force majeure. These shall be conclusively presumed to have performed
all the conditions essential to a Government grant and shall be entitled to a
certificate of title under the provisions of this Chapter. (emphasis supplied)[37]
This provision was repealed in 1977 with the enactment of P.D. 1073, which made the
date 12 June 1945 the reckoning point for the first time. Nonetheless, applications for
registration filed prior to 1977 could have invoked the 30-year rule introduced by Rep. Act No.
1942.

The second source is Section 14(2) of P.D. 1529 itself, at least by implication, as it applies
the rules on prescription under the Civil Code, particularly Article 1113 in relation to Article
1137. Note that there are two kinds of prescription under the Civil Codeordinary acquisitive
prescription and extraordinary acquisitive prescription, which, under Article 1137, is completed
through uninterrupted adverse possession for thirty years, without need of title or of good faith.

Obviously, the first source of the thirty (30)-year period rule, Rep. Act No. 1942, became
unavailable after 1977. At present, the only legal basis for the thirty (30)-year period is the law
on prescription under the Civil Code, as mandated under Section 14(2). However, there is a
material difference between how the thirty (30)-year rule operated under Rep. Act No. 1942
and how it did under the Civil Code.

Section 48(b) of the Public Land Act, as amended by Rep. Act No. 1942, did not refer to
or call into application the Civil Code provisions on prescription. It merely set forth a requisite
thirty-year possession period immediately preceding the application for confirmation of title,
without any qualification as to whether the property should be declared alienable at the
beginning of, and continue as such, throughout the entire thirty-(30) years. There is neither
statutory nor jurisprudential basis to assert Rep. Act No. 1942 had mandated such a
requirement,[38] similar to our earlier finding with respect to the present language of Section
48(b), which now sets 12 June 1945 as the point of reference.

Then, with the repeal of Rep. Act No. 1942, the thirty-year possession period as basis for
original registration became Section 14(2) of the Property Registration Decree, which entitled
those who have acquired ownership over private lands by prescription under the provisions of
existing laws to apply for original registration. Again, the thirty-year period is derived from the
rule on extraordinary prescription under Article 1137 of the Civil Code. At the same time,
Section 14(2) puts into operation the entire regime of prescription under the Civil Code, a fact
which does not hold true with respect to Section 14(1).

B.

Unlike Section 14(1), Section 14(2) explicitly refers to the principles on prescription
under existing laws. Accordingly, we are impelled to apply the civil law concept of prescription,
as set forth in the Civil Code, in our interpretation of Section 14(2). There is no similar demand
on our part in the case of Section 14(1).

The critical qualification under Article 1113 of the Civil Code is thus: [p]roperty of the
State or any of its subdivisions not patrimonial in character shall not be the object of
prescription. The identification what consists of patrimonial property is provided by Articles 420
and 421, which we quote in full:

Art. 420. The following things are property of public dominion:

(1) Those intended for public use, such as roads, canals, rivers, torrents,
ports and bridges constructed by the State, banks, shores, roadsteads, and
others of similar character;

(2) Those which belong to the State, without being for public use, and are
intended for some public service or for the development of the national
wealth.

Art. 421. All other property of the State, which is not of the character stated
in the preceding article, is patrimonial property

It is clear that property of public dominion, which generally includes property belonging to the
State, cannot be the object of prescription or, indeed, be subject of the commerce of
man.[39] Lands of the public domain, whether declared alienable and disposable or not, are
property of public dominion and thus insusceptible to acquisition by prescription.

Let us now explore the effects under the Civil Code of a declaration by the President or any duly
authorized government officer of alienability and disposability of lands of the public domain.
Would such lands so declared alienable and disposable be converted, under the Civil Code,
from property of the public dominion into patrimonial property? After all, by connotative
definition, alienable and disposable lands may be the object of the commerce of man; Article
1113 provides that all things within the commerce of man are susceptible to prescription; and
the same provision further provides that patrimonial property of the State may be acquired by
prescription.

Nonetheless, Article 422 of the Civil Code states that [p]roperty of public dominion,
when no longer intended for public use or for public service, shall form part of the patrimonial
property of the State. It is this provision that controls how public dominion property may be
converted into patrimonial property susceptible to acquisition by prescription. After all, Article
420 (2) makes clear that those property which belong to the State, without being for public use,
and are intended for some public service or for the development of the national wealth are
public dominion property. For as long as the property belongs to the State, although already
classified as alienable or disposable, it remains property of the public dominion if when it is
intended for some public service or for the development of the national wealth.

Accordingly, there must be an express declaration by the State that the public
dominion property is no longer intended for public service or the development of the
national wealth or that the property has been converted into patrimonial. Without such
express declaration, the property, even if classified as alienable or disposable, remains
property of the public dominion, pursuant to Article 420(2), and thus incapable of acquisition
by prescription. It is only when such alienable and disposable lands are expressly declared by
the State to be no longer intended for public service or for the development of the national
wealth that the period of acquisitive prescription can begin to run. Such declaration shall be
in the form of a law duly enacted by Congress or a Presidential Proclamation in cases where
the President is duly authorized by law.

It is comprehensible with ease that this reading of Section 14(2) of the Property
Registration Decree limits its scope and reach and thus affects the registrability even of lands
already declared alienable and disposable to the detriment of the bona fide possessors or
occupants claiming title to the lands. Yet this interpretation is in accord with the Regalian
doctrine and its concomitant assumption that all lands owned by the State, although declared
alienable or disposable, remain as such and ought to be used only by the Government.

Recourse does not lie with this Court in the matter. The duty of the Court is to apply the
Constitution and the laws in accordance with their language and intent. The remedy is to
change the law, which is the province of the legislative branch. Congress can very well be
entreated to amend Section 14(2) of the Property Registration Decree and pertinent provisions
of the Civil Code to liberalize the requirements for judicial confirmation of imperfect or
incomplete titles.

The operation of the foregoing interpretation can be illustrated by an actual example.


Republic Act No. 7227, entitled An Act Accelerating The Conversion Of Military Reservations
Into Other Productive Uses, etc., is more commonly known as the BCDA law. Section 2 of the
law authorizes the sale of certain military reservations and portions of military camps in Metro
Manila, including Fort Bonifacio and Villamor Air Base. For purposes of effecting the sale of the
military camps, the law mandates the President to transfer such military lands to the Bases
Conversion Development Authority (BCDA)[40] which in turn is authorized to own, hold and/or
administer them.[41] The President is authorized to sell portions of the military camps, in whole
or in part.[42] Accordingly, the BCDA law itself declares that the military lands subject thereof
are alienable and disposable pursuant to the provisions of existing laws and regulations
governing sales of government properties.[43]

From the moment the BCDA law was enacted the subject military lands have become
alienable and disposable. However, said lands did not become patrimonial, as the BCDA law
itself expressly makes the reservation that these lands are to be sold in order to raise funds for
the conversion of the former American bases at Clark and Subic.[44]Such purpose can be tied to
either public service or the development of national wealth under Article 420(2). Thus, at that
time, the lands remained property of the public dominion under Article 420(2), notwithstanding
their status as alienable and disposable. It is upon their sale as authorized under the BCDA law
to a private person or entity that such lands become private property and cease to be property
of the public dominion.

C.
Should public domain lands become patrimonial because they are declared as such in a
duly enacted law or duly promulgated proclamation that they are no longer intended for public
service or for the development of the national wealth, would the period of possession prior to
the conversion of such public dominion into patrimonial be reckoned in counting the
prescriptive period in favor of the possessors? We rule in the negative.

The limitation imposed by Article 1113 dissuades us from ruling that the period of possession
before the public domain land becomes patrimonial may be counted for the purpose of
completing the prescriptive period. Possession of public dominion property before it becomes
patrimonial cannot be the object of prescription according to the Civil Code. As the application
for registration under Section 14(2) falls wholly within the framework of prescription under the
Civil Code, there is no way that possession during the time that the land was still classified as
public dominion property can be counted to meet the requisites of acquisitive prescription and
justify registration.

Are we being inconsistent in applying divergent rules for Section 14(1) and Section
14(2)? There is no inconsistency. Section 14(1) mandates registration on the basis
of possession, while Section 14(2) entitles registration on the basis
of prescription. Registration under Section 14(1) is extended under the aegis of the Property
Registration Decree and the Public Land Act while registration under Section 14(2) is made
available both by the Property Registration Decree and the Civil Code.

In the same manner, we can distinguish between the thirty-year period under Section 48(b) of
the Public Land Act, as amended by Rep. Act No. 1472, and the thirty-year period available
through Section 14(2) of the Property Registration Decree in relation to Article 1137 of the Civil
Code. The period under the former speaks of a thirty-year period of possession, while the
period under the latter concerns a thirty-year period of extraordinary
prescription. Registration under Section 48(b) of the Public Land Act as amended by Rep. Act
No. 1472 is based on thirty years of possession alone without regard to the Civil Code, while
the registration under Section 14(2) of the Property Registration Decree is founded on
extraordinary prescription under the Civil Code.

It may be asked why the principles of prescription under the Civil Code should not apply as well
to Section 14(1). Notwithstanding the vaunted status of the Civil Code, it ultimately is just one
of numerous statutes, neither superior nor inferior to other statutes such as the Property
Registration Decree. The legislative branch is not bound to adhere to the framework set forth
by the Civil Code when it enacts subsequent legislation. Section 14(2) manifests a clear intent to
interrelate the registration allowed under that provision with the Civil Code, but no such intent
exists with respect to Section 14(1).

IV.
One of the keys to understanding the framework we set forth today is seeing how our land
registration procedures correlate with our law on prescription, which, under the Civil Code, is
one of the modes for acquiring ownership over property.

The Civil Code makes it clear that patrimonial property of the State may be acquired by private
persons through prescription. This is brought about by Article 1113, which states that [a]ll
things which are within the commerce of man are susceptible to prescription, and that
[p]roperty of the State or any of its subdivisions not patrimonial in character shall not be the
object of prescription.

There are two modes of prescription through which immovables may be acquired under the
Civil Code. The first is ordinary acquisitive prescription, which, under Article 1117, requires
possession in good faith and with just title; and, under Article 1134, is completed through
possession of ten (10) years. There is nothing in the Civil Code that bars a person from acquiring
patrimonial property of the State through ordinary acquisitive prescription, nor is there any
apparent reason to impose such a rule. At the same time, there are indispensable
requisitesgood faith and just title. The ascertainment of good faith involves the application of
Articles 526, 527, and 528, as well as Article 1127 of the Civil Code,[45] provisions that more or
less speak for themselves.

On the other hand, the concept of just title requires some clarification. Under Article
1129, there is just title for the purposes of prescription when the adverse claimant came into
possession of the property through one of the modes recognized by law for the acquisition of
ownership or other real rights, but the grantor was not the owner or could not transmit any
right. Dr. Tolentino explains:

Just title is an act which has for its purpose the transmission of ownership,
and which would have actually transferred ownership if the grantor had been the
owner. This vice or defect is the one cured by prescription. Examples: sale with
delivery, exchange, donation, succession, and dacion in payment.[46]
The OSG submits that the requirement of just title necessarily precludes the applicability of
ordinary acquisitive prescription to patrimonial property. The major premise for the argument
is that the State, as the owner and grantor, could not transmit ownership to the possessor
before the completion of the required period of possession.[47] It is evident that the OSG erred
when it assumed that the grantor referred to in Article 1129 is the State. The grantor is the one
from whom the person invoking ordinary acquisitive prescription derived the title, whether by
sale, exchange, donation, succession or any other mode of the acquisition of ownership or
other real rights.

Earlier, we made it clear that, whether under ordinary prescription or extraordinary


prescription, the period of possession preceding the classification of public dominion lands as
patrimonial cannot be counted for the purpose of computing prescription. But after the
property has been become patrimonial, the period of prescription begins to run in favor of the
possessor. Once the requisite period has been completed, two legal events ensue: (1) the
patrimonial property is ipso jure converted into private land; and (2) the person in possession
for the periods prescribed under the Civil Code acquires ownership of the property by
operation of the Civil Code.

It is evident that once the possessor automatically becomes the owner of the converted
patrimonial property, the ideal next step is the registration of the property under
the Torrens system. It should be remembered that registration of property is not a mode of
acquisition of ownership, but merely a mode of confirmation of ownership.[48]

Looking back at the registration regime prior to the adoption of the Property
Registration Decree in 1977, it is apparent that the registration system then did not fully
accommodate the acquisition of ownership of patrimonial property under the Civil Code. What
the system accommodated was the confirmation of imperfect title brought about by the
completion of a period of possession ordained under the Public Land Act (either 30 years
following Rep. Act No. 1942, or since 12 June 1945 following P.D. No. 1073).

The Land Registration Act[49] was noticeably silent on the requisites for alienable public
lands acquired through ordinary prescription under the Civil Code, though it arguably did not
preclude such registration.[50] Still, the gap was lamentable, considering that the Civil Code, by
itself, establishes ownership over the patrimonial property of persons who have completed the
prescriptive periods ordained therein. The gap was finally closed with the adoption of the
Property Registration Decree in 1977, with Section 14(2) thereof expressly authorizing original
registration in favor of persons who have acquired ownership over private lands by prescription
under the provisions of existing laws, that is, the Civil Code as of now.

V.

We synthesize the doctrines laid down in this case, as follows:

(1) In connection with Section 14(1) of the Property Registration Decree, Section 48(b) of the
Public Land Act recognizes and confirms that those who by themselves or through their
predecessors in interest have been in open, continuous, exclusive, and notorious possession
and occupation of alienable and disposable lands of the public domain, under a bona fide claim
of acquisition of ownership, since June 12, 1945 have acquired ownership of, and registrable
title to, such lands based on the length and quality of their possession.

(a) Since Section 48(b) merely requires possession since 12 June 1945 and does
not require that the lands should have been alienable and disposable during the entire
period of possession, the possessor is entitled to secure judicial confirmation of his title
thereto as soon as it is declared alienable and disposable, subject to the timeframe
imposed by Section 47 of the Public Land Act.[51]

(b) The right to register granted under Section 48(b) of the Public Land Act is
further confirmed by Section 14(1) of the Property Registration Decree.
(2) In complying with Section 14(2) of the Property Registration Decree, consider that under the
Civil Code, prescription is recognized as a mode of acquiring ownership of patrimonial property.
However, public domain lands become only patrimonial property not only with a declaration
that these are alienable or disposable. There must also be an express government
manifestation that the property is already patrimonial or no longer retained for public service
or the development of national wealth, under Article 422 of the Civil Code. And only when the
property has become patrimonial can the prescriptive period for the acquisition of property of
the public dominion begin to run.

(a) Patrimonial property is private property of the government. The person


acquires ownership of patrimonial property by prescription under the Civil Code is
entitled to secure registration thereof under Section 14(2) of the Property Registration
Decree.

(b) There are two kinds of prescription by which patrimonial property may be
acquired, one ordinary and other extraordinary. Under ordinary acquisitive prescription,
a person acquires ownership of a patrimonial property through possession for at least
ten (10) years, in good faith and with just title. Under extraordinary acquisitive
prescription, a persons uninterrupted adverse possession of patrimonial property for at
least thirty (30) years, regardless of good faith or just title, ripens into ownership.

B.

We now apply the above-stated doctrines to the case at bar.

It is clear that the evidence of petitioners is insufficient to establish that Malabanan has
acquired ownership over the subject property under Section 48(b) of the Public Land Act. There
is no substantive evidence to establish that Malabanan or petitioners as his predecessors-in-
interest have been in possession of the property since 12 June 1945 or earlier. The earliest that
petitioners can date back their possession, according to their own evidencethe Tax Declarations
they presented in particularis to the year 1948. Thus, they cannot avail themselves of
registration under Section 14(1) of the Property Registration Decree.

Neither can petitioners properly invoke Section 14(2) as basis for registration. While the subject
property was declared as alienable or disposable in 1982, there is no competent evidence that
is no longer intended for public use service or for the development of the national evidence,
conformably with Article 422 of the Civil Code. The classification of the subject property as
alienable and disposable land of the public domain does not change its status as property of the
public dominion under Article 420(2) of the Civil Code.Thus, it is insusceptible to acquisition by
prescription.

VI.
A final word. The Court is comfortable with the correctness of the legal doctrines
established in this decision. Nonetheless, discomfiture over the implications of todays ruling
cannot be discounted. For, every untitled property that is occupied in the country will be
affected by this ruling. The social implications cannot be dismissed lightly, and the Court would
be abdicating its social responsibility to the Filipino people if we simply levied the law without
comment.

The informal settlement of public lands, whether declared alienable or not, is a phenomenon
tied to long-standing habit and cultural acquiescence, and is common among the so-called Third
World countries. This paradigm powerfully evokes the disconnect between a legal system and
the reality on the ground. The law so far has been unable to bridge that gap. Alternative means
of acquisition of these public domain lands, such as through homestead or free patent, have

proven unattractive due to limitations imposed on the grantee in the encumbrance or


alienation of said properties.[52] Judicial confirmation of imperfect title has emerged as the most
viable, if not the most attractive means to regularize the informal settlement of alienable or
disposable lands of the public domain, yet even that system, as revealed in this decision, has
considerable limits.

There are millions upon millions of Filipinos who have individually or exclusively held residential
lands on which they have lived and raised their families. Many more have tilled and made
productive idle lands of the State with their hands. They have been regarded for generation by
their families and their communities as common law owners. There is much to be said about
the virtues of according them legitimate states. Yet such virtues are not for the Court to
translate into positive law, as the law itself considered such lands as property of the public
dominion. It could only be up to Congress to set forth a new phase of land reform to sensibly
regularize and formalize the settlement of such lands which in legal theory are lands of the
public domain before the problem becomes insoluble. This could be accomplished, to cite two
examples, by liberalizing the standards for judicial confirmation of imperfect title, or amending
the Civil Code itself to ease the requisites for the conversion of public dominion property into
patrimonial.

Ones sense of security over land rights infuses into every aspect of well-being not only
of that individual, but also to the persons family. Once that sense of security is deprived, life
and livelihood are put on stasis. It is for the political branches to bring welcome closure to the
long pestering problem.

WHEREFORE, the Petition is DENIED. The Decision of the Court of Appeals dated 23 February
2007 and Resolution dated 2 October 2007 are AFFIRMED. No pronouncement as to costs.

SO ORDERED.
DANTE O. TINGA
Associate Justice

WE CONCUR:

REYNATO S. PUNO
Chief Justice

LEONARDO A. QUISUMBING CONSUELO YNARES-SANTIAGO


Associate Justice Associate Justice

ANTONIO T. CARPIO MA. ALICIA AUSTRIA-MARTINEZ


Associate Justice Associate Justice

RENATO C. CORONA CONCHITA CARPIO MORALES


Associate Justice Associate Justice

MINITA V. CHICO-NAZARIO PRESBITERO J. VELASCO, JR.


Associate Justice Associate Justice
ANTONIO EDUARDO B. NACHURA TERESITA J. LEONARDO DE CASTO
Associate Justice Associate Justice

ARTURO D. BRION DIOSDADO M. PERALTA


Associate Justice Associate Justice

LUCAS P. BERSAMIN
Associate Justice

CERTIFICATION

Pursuant to Article VIII, Section 13 of the Constitution, it is hereby certified that the conclusions
in the above Decision were reached in consultation before the case was assigned to the writer
of the opinion of the Court.

REYNATO S. PUNO
Chief Justice

[1]Hernando
de Soto Interview by Reason Magazine dated 30 November 1999,
at http://www.reason.com/news/show/32213.html (Last visited, 21 April 2009).

[2]More particularly described and delineated in Plan CSD-04-017123. Records, p. 161.

[3]But see note 5.

[4]Id.
[5]The trial court decision identified Eduardo Velazco as the vendor of the property,
notwithstanding the original allegation in the application that Malabanan purchased the same
from Virgilio Velazco. See note 3. In his subsequent pleadings, including those before this Court,
Malabanan or his heirs stated that the property was purchased from Eduardo Velazco, and not
Virgilio. On this point, the appellate court made this observation:

More importantly, Malabanan failed to prove his ownership over Lot 9864-A. In his
application for land registration, Malabanan alleged that he purchased the subject lot from
Virgilio Velazco. During the trial of the case, however, Malabanan testified that he purchased
the subject lot from Eduardo Velazco, which was corroborated by his witness, Aristedes
Velazco, a son of Virgilio Velazco, who stated that Eduardo was a brother of his grandfather. As
aptly observed by the Republic, no copy of the deed of sale covering Lot 9864-A, executed
either by Virgilio or Eduardo Velazco, in favor of Malabanan was marked and offered in
evidence. In the appealed Decision, the court a quo mentioned of a deed of sale executed in
1995 by Eduardo Velazco in favor of Malabanan which was allegedly marked as Exhibit I. It
appears, however, that what was provisionally marked as Exhibit I was a photocopy of the deed
of sale executed by Virgilio Velazco in favor of Leila Benitez and Benjamin Reyes. Section 34,
Rule 132 of the Rules of Court provides that the court shall consider no evidence which has not
been formally offered. The offer is necessary because it is the duty of a judge to rest his findings
of facts and his judgment only and strictly upon the evidence offered by the parties at the trial.
Thus, Malabanan has not proved that Virgilio or Eduardo Velazco was his predecessor-in-
interest. Rollo, pp. 39-40.

[6]Rollo, p. 74.

[7]Id. at 38. Emphasis supplied.

[8]Penned by Associate Justice Marina Buzon of the Court of Appeals Fifth Division, and
concurred in by Associate Justices Edgardo Sundiam and Monina Arevalo-Zenarosa.

[9]G.R. No. 156117, 26 May 2005, 459 SCRA 183.

[10]See rollo, p. 11.

[11]G.R. No. 144507, 17 January 2005, 448 SCRA 442.

[12]Through a Resolution dated 5 December 2007. See rollo, p. 141.

[13]Id. at 186-187.

[14]G.R. No. 157466, 21 June 2007, 525 SCRA 268.

[15]G.R. No. 166865, 2 March 2007, 459 SCRA 271.


[16]G.R. No. 147359, 28 March 2008, 550 SCRA 92.

[17]G.R. No. 173088, 25 June 2008, 555 SCRA 314.

[18]G.R. No. 85322, 30 April 1991, 178 SCRA 708.

[19]G.R. No. 154953, 16 June 2008.

[20]Section 6, Com. Act No. 141, as amended.

[21]Section 9, Com. Act No. 141, as amended.

[22]Section 11, Com. Act No. 141, as amended.

[23]OSG Memorandum, p. 13.

[24]Section 47, Public Land Act, as amended by Rep. Act No. 9176.

[25]R. AGPALO, STATUTORY CONSTRUCTION (3rd ed., 1995) at 182.

[26]See note 3.

[27]380 Phil. 156 (2000).

[28]Also known as Republic v. Court of Appeals, 440 Phil. 697 (2002).

[29]Id. at 710-712.

[30]See CIVIL CODE, Art. 1113.

[31]Seee.g., Director of Lands v. IAC, G.R. No. 65663, 16 October 1992, 214 SCRA 604,
611; Republic v. Court of Appeals, G.R. No. 108998, 24 August 1994, 235 SCRA 567, 576; Group
Commander, Intelligence and Security Group v. Dr. Malvar, 438 Phil. 252, 275 (2002).

[32]See Article 1134, CIVIL CODE.

[33]See Article 1137, CIVIL CODE.

[34]See Article 1117 in relation to Article 1128, Civil Code. See also Articles 526, 527, 528
& 529, Civil Code on the conditions of good faith required.

[35]See Article 1117, in relation to Article 1129, Civil Code.


[36]CitingDirector of Lands v. IAC, G.R. No. 65663, 16 October 1992, 214 SCRA 604,
611; Republic v. Court of Appeals, G.R. No. 108998, 24 August 1994, 235 SCRA 567, 576; Group
Commander, Intelligence and Security Group v. Dr. Malvar, 438 Phil. 252, 275 (2002).

[37]Section48(b) of the Public Land Act, immediately before its amendment by Rep. Act
No. 1942, reads as follows:

Those who by themselves or through their predecessors in interest have been in open,
continuous, exclusive and notorious possession and occupation of agricultural lands of the
public domain, under a bona fide claim of acquisition of ownership, except as against the
Government, since July twenty-sixth, eighteen hundred and ninety-four, except when
prevented by war or force majeure. These shall be conclusively presumed to have performed all
the conditions essential to a Government grant and shall be entitled to a certificate of title
under the provisions of this Chapter.

[38]Again,
Section 48(b) of the Public Land Act, as amended by Rep. Act No. 1942, was
superseded by P.D. No. 1073, which imposed the 12 June 1945 reckoning point, and which was
then incorporated in Section 14(1) of the Property Registration Decree.

[39]See Vllarico v. Sarmiento, G.R. No. 136438, 11 November 2004, 442 SCRA 110.

[40]Rep. Act No. 7227, Sec.7.

[41]Rep. Act No. 7227, Sec. 4(a).

[42]Rep. Act No. 7227, Sec. 7.

[43]Id.

[44]Section 2, Rep. Act No. 7227.

[45]See CIVIL CODE, Art. 1128.

[46]A. TOLENTINO, IV CIVIL CODE OF THE PHILIPPINES (1991 ed.) at 26; citing 2 Castan
175.

[47]Memorandum of the OSG, p. 21.

[48]See Angeles v. Samia, 66 Phil. 44 (1938).

[49]Act No. 496.

[50]See Section 19, Land Registration Act, which allowed application for registration of
title by person or persons claiming, singly or collectively, to own the legal estate in fee simple.
[51]See note 24.

[52]See Section 118, Com. Act No. 141, as amended.

Except in favor of the Government or any of its branches, units, or institutions, lands
acquired under free patent or homestead provisions shall not be subject to encumbrance or
alienation from the date of the approval of the application and for a term of five years from and
after the date of issuance of the patent or grant, nor shall they become liable to the satisfaction
of any debt contracted prior to the expiration of said period, but the improvements or crops on
the land may be mortgaged or pledged to qualified persons, associations, or corporations.

No alienation, transfer, or conveyance of any homestead after five years and before
twenty-five years after issuance of title shall be valid without the approval of the Secretary of
Agriculture and Commerce, which approval shall not be denied except on constitutional and
legal grounds.

Republic of the Philippines


SUPREME COURT
Manila

EN BANC

G.R. No. L-630 November 15, 1947

ALEXANDER A. KRIVENKO, petitioner-appellant,


vs.
THE REGISTER OF DEEDS, CITY OF MANILA, respondent and appellee.

Gibbs, Gibbs, Chuidian and Quasha of petitioner-appellant.


First Assistant Solicitor General Reyes and Solicitor Carreon for respondent-appellee.
Marcelino Lontok appeared as amicus curies.

MORAN, C.J.:

Alenxander A. Kriventor alien, bought a residential lot from the Magdalena Estate, Inc., in
December of 1941, the registration of which was interrupted by the war. In May, 1945, he
sought to accomplish said registration but was denied by the register of deeds of Manila on the
ground that, being an alien, he cannot acquire land in this jurisdiction. Krivenko then brought
the case to the fourth branch of the Court of First Instance of Manila by means of
a consulta, and that court rendered judgment sustaining the refusal of the register of deeds,
from which Krivenko appealed to this Court.

There is no dispute as to these facts. The real point in issue is whether or not an alien under our
Constitution may acquire residential land.

It is said that the decision of the case on the merits is unnecessary, there being a motion to
withdraw the appeal which should have been granted outright, and reference is made to the
ruling laid down by this Court in another case to the effect that a court should not pass upon a
constitutional question if its judgment may be made to rest upon other grounds. There is, we
believe, a confusion of ideas in this reasoning. It cannot be denied that the constitutional
question is unavoidable if we choose to decide this case upon the merits. Our judgment cannot
to be made to rest upon other grounds if we have to render any judgment at all. And we cannot
avoid our judgment simply because we have to avoid a constitutional question. We cannot, for
instance, grant the motion withdrawing the appeal only because we wish to evade the
constitutional; issue. Whether the motion should be, or should not be, granted, is a question
involving different considerations now to be stated.

According to Rule 52, section 4, of the Rules of Court, it is discretionary upon this Court to grant
a withdrawal of appeal after the briefs have been presented. At the time the motion for
withdrawal was filed in this case, not only had the briefs been prensented, but the case had
already been voted and the majority decision was being prepared. The motion for withdrawal
stated no reason whatsoever, and the Solicitor General was agreeable to it. While the motion
was pending in this Court, came the new circular of the Department of Justice, instructing all
register of deeds to accept for registration all transfers of residential lots to aliens. The herein
respondent-appellee was naturally one of the registers of deeds to obey the new circular, as
against his own stand in this case which had been maintained by the trial court and firmly
defended in this Court by the Solicitor General. If we grant the withdrawal, the the result would
be that petitioner-appellant Alexander A. Krivenko wins his case, not by a decision of this Court,
but by the decision or circular of the Department of Justice, issued while this case was pending
before this Court. Whether or not this is the reason why appellant seeks the withdrawal of his
appeal and why the Solicitor General readily agrees to that withdrawal, is now immaterial.
What is material and indeed very important, is whether or not we should allow interference
with the regular and complete exercise by this Court of its constitutional functions, and
whether or not after having held long deliberations and after having reached a clear and
positive conviction as to what the constitutional mandate is, we may still allow our conviction
to be silenced, and the constitutional mandate to be ignored or misconceived, with all the
harmful consequences that might be brought upon the national patromony. For it is but natural
that the new circular be taken full advantage of by many, with the circumstance that perhaps
the constitutional question may never come up again before this court, because both vendors
and vendees will have no interest but to uphold the validity of their transactions, and very
unlikely will the register of deeds venture to disobey the orders of their superior. Thus, the
possibility for this court to voice its conviction in a future case may be remote, with the result
that our indifference of today might signify a permanent offense to the Constitution.
All thse circumstances were thoroughly considered and weighted by this Court for a number of
days and the legal result of the last vote was a denial of the motion withdrawing the appeal. We
are thus confronted, at this stage of the proceedings, with our duty, the constitutional question
becomes unavoidable. We shall then proceed to decide that question.

Article XIII, section 1, of the Constitutional is as follows:

Article XIII. Conservation and utilization of natural resources.

SECTION 1. All agricultural, timber, and mineral lands of the public domain, water,
minerals, coal, petroleum, and other mineral oils, all forces of potential energy, and
other natural resources of the Philippines belong to the State, and their disposition,
exploitation, development, or utilization shall be limited to citizens of the Philippines, or
to corporations or associations at least sixty per centum of the capital of which is owned
by such citizens, subject to any existing right, grant, lease, or concession at the time of
the inaguration of the Government established uunder this Constitution. Natural
resources, with the exception of public agricultural land, shall not be alienated, and no
licence, concession, or lease for the exploitation, development, or utilization of any of
the natural resources shall be granted for a period exceeding twenty-five years,
renewable for another twenty-five years, except as to water rights for irrigation, water
supply, fisheries, or industrial uses other than the development of water "power" in
which cases beneficial use may be the measure and the limit of the grant.

The scope of this constitutional provision, according to its heading and its language, embraces
all lands of any kind of the public domain, its purpose being to establish a permanent and
fundamental policy for the conservation and utilization of all natural resources of the Nation.
When, therefore, this provision, with reference to lands of the public domain, makes mention
of only agricultural, timber and mineral lands, it means that all lands of the public domain are
classified into said three groups, namely, agricultural, timber and mineral. And this classification
finds corroboration in the circumstance that at the time of the adoption of the Constitution,
that was the basic classification existing in the public laws and judicial decisions in the
Philippines, and the term "public agricultural lands" under said classification had then acquired
a technical meaning that was well-known to the members of the Constitutional Convention
who were mostly members of the legal profession.

As early as 1908, in the case of Mapa vs. Insular Government (10 Phil., 175, 182), this Court said
that the phrase "agricultural public lands" as defined in the Act of Congress of July 1, 1902,
which phrase is also to be found in several sections of the Public Land Act (No. 926), means
"those public lands acquired from Spain which are neither mineral for timber lands." This
definition has been followed in long line of decisions of this Court. (See Montano vs. Insular
Government, 12 Phil., 593; Ibaez de Aldecoa vs. Insular Government, 13 Phil., 159;
Ramos vs. Director of Lands, 39 Phil., 175; Jocson vs. Director of Forestry, 39 Phil., 560;
Ankron vs. Government of the Philippines, 40 Phil., 10.) And with respect to residential lands, it
has been held that since they are neither mineral nor timber lands, of necessity they must be
classified as agricultural. In Ibaez de Aldecoa vs. Insular Government (13 Phil., 159, 163), this
Court said:

Hence, any parcel of land or building lot is susceptible of cultivation, and may be
converted into a field, and planted with all kinds of vegetation; for this reason, where
land is not mining or forestal in its nature, it must necessarily be included within the
classification of agricultural land, not because it is actually used for the purposes of
agriculture, but because it was originally agricultural and may again become so under
other circumstances; besides, the Act of Congress contains only three classification, and
makes no special provision with respect to building lots or urban lands that have ceased
to be agricultural land.

In other words, the Court ruled that in determining whether a parcel of land is agricultural, the
test is not only whether it is actually agricultural, but also its susceptibility to cultivation for
agricultural purposes. But whatever the test might be, the fact remains that at the time the
Constitution was adopted, lands of the public domain were classified in our laws and
jurisprudence into agricultural, mineral, and timber, and that the term "public agricultural
lands" was construed as referring to those lands that were not timber or mineral, and as
including residential lands. It may safely be presumed, therefore, that what the members of the
Constitutional Convention had in mind when they drafted the Constitution was this well-known
classification and its technical meaning then prevailing.

Certain expressions which appear in Constitutions, . . . are obviously technical; and


where such words have been in use prior to the adoption of a Constitution, it is
presumed that its framers and the people who ratified it have used such expressions in
accordance with their technical meaning. (11 Am. Jur., sec. 66, p.
683.) Also Calder vs. Bull, 3 Dall. [U.S.], 386; 1 Law. ed., 648; Bronson vs. Syverson, 88
Wash., 264; 152 P., 1039.)

It is a fundamental rule that, in construing constitutions, terms employed therein shall


be given the meaning which had been put upon them, and which they possessed, at the
time of the framing and adoption of the instrument. If a word has acquired a fixed,
technical meaning in legal and constitutional history, it will be presumed to have been
employed in that sense in a written Constitution. (McKinney vs. Barker, 180 Ky., 526;
203 S.W., 303; L.R.A., 1918 E, 581.)

Where words have been long used in a technical sense and have been judicially
construed to have a certain meaning, and have been adopted by the legislature as
having a certain meaning prior to a particular statute in which they are used, the rule of
construction requires that the words used in such statute should be construed according
to the sense in which they have been so previously used, although the sense may vary
from strict literal meaning of the words. (II Sutherland, Statutory Construction, p. 758.)
Therefore, the phrase "public agricultural lands" appearing in section 1 of Article XIII of the
Constitution must be construed as including residential lands, and this is in conformity with a
legislative interpretation given after the adoption of the Constitution. Well known is the rule
that "where the Legislature has revised a statute after a Constitution has been adopted, such a
revision is to be regarded as a legislative construction that the statute so revised conforms to
the Constitution." (59 C.J., 1102.) Soon after the Constitution was adopted, the National
Assembly revised the Public Land Law and passed Commonwealth Act No. 141, and sections 58,
59 and 60 thereof permit the sale of residential lots to Filipino citizens or to associations or
corporations controlled by such citizens, which is equivalent to a solemn declaration that
residential lots are considered as agricultural lands, for, under the Constitution, only
agricultural lands may be alienated.

It is true that in section 9 of said Commonwealth Act No. 141, "alienable or disposable public
lands" which are the same "public agriculture lands" under the Constitution, are classified into
agricultural, residential, commercial, industrial and for other puposes. This simply means that
the term "public agricultural lands" has both a broad and a particular meaning. Under its broad
or general meaning, as used in the Constitution, it embraces all lands that are neither timber
nor mineral. This broad meaning is particularized in section 9 of Commonwealth Act No. 141
which classifies "public agricultural lands" for purposes of alienation or disposition, into lands
that are stricly agricultural or actually devoted to cultivation for agricultural puposes; lands that
are residential; commercial; industrial; or lands for other purposes. The fact that these lands
are made alienable or disposable under Commonwealth Act No. 141, in favor of Filipino
citizens, is a conclusive indication of their character as public agricultural lands under said
statute and under the Constitution.

It must be observed, in this connection that prior to the Constitution, under section 24 of Public
Land Act No. 2874, aliens could acquire public agricultural lands used for industrial or
residential puposes, but after the Constitution and under section 23 of Commonwealth Act No.
141, the right of aliens to acquire such kind of lands is completely stricken out, undoubtedly in
pursuance of the constitutional limitation. And, again, prior to the Constitution, under section
57 of Public Land Act No. 2874, land of the public domain suitable for residence or industrial
purposes could be sold or leased to aliens, but after the Constitution and under section 60 of
Commonwealth Act No. 141, such land may only be leased, but not sold, to aliens, and the lease
granted shall only be valid while the land is used for the purposes referred to. The exclusion of
sale in the new Act is undoubtedly in pursuance of the constitutional limitation, and this again
is another legislative construction that the term "public agricultural land" includes land for
residence purposes.

Such legislative interpretation is also in harmony with the interpretation given by the Executive
Department of the Government. Way back in 1939, Secretary of Justice Jose Abad Santos, in
answer to a query as to "whether or not the phrase 'public agricultural lands' in section 1 of
Article XII (now XIII) of the Constitution may be interpreted to include residential, commercial,
and industrial lands for purposes of their disposition," rendered the following short, sharp and
crystal-clear opinion:
Section 1, Article XII (now XIII) of the Constitution classifies lands of the public domain in
the Philippines into agricultural, timber and mineral. This is the basic classification
adopted since the enactment of the Act of Congress of July 1, 1902, known as the
Philippine Bill. At the time of the adoption of the Constitution of the Philippines, the
term 'agricultural public lands' and, therefore, acquired a technical meaning in our
public laws. The Supreme Court of the Philippines in the leading case of Mapa vs. Insular
Government, 10 Phil., 175, held that the phrase 'agricultural public lands' means those
public lands acquired from Spain which are neither timber nor mineral lands. This
definition has been followed by our Supreme Court in many subsequent case. . . .

Residential commercial, or industrial lots forming part of the public domain must have
to be included in one or more of these classes. Clearly, they are neither timber nor
mineral, of necessity, therefore, they must be classified as agricultural.

Viewed from another angle, it has been held that in determining whether lands are
agricultural or not, the character of the land is the test (Odell vs. Durant, 62 N.W., 524;
Lorch vs. Missoula Brick and Tile Co., 123 p.25). In other words, it is the susceptibility of
the land to cultivation for agricultural purposes by ordinary farming methods which
determines whether it is agricultural or not (State vs. Stewart, 190 p. 129).

Furthermore, as said by the Director of Lands, no reason is seen why a piece of land,
which may be sold to a person if he is to devote it to agricultural, cannot be sold to him
if he intends to use it as a site for his home.

This opinion is important not alone because it comes from a Secratary of Justice who later
became the Chief Justice of this Court, but also because it was rendered by a member of the
cabinet of the late President Quezon who actively participated in the drafting of the
constitutional provision under consideration. (2 Aruego, Framing of the Philippine Constitution,
p. 598.) And the opinion of the Quezon administration was reiterated by the Secretary of
Justice under the Osmea administration, and it was firmly maintained in this Court by the
Solicitor General of both administrations.

It is thus clear that the three great departments of the Government judicial, legislative and
executive have always maintained that lands of the public domain are classified into
agricultural, mineral and timber, and that agricultural lands include residential lots.

Under section 1 of Article XIII of the Constitution, "natural resources, with the exception of
public agricultural land, shall not be aliented," and with respect to public agricultural lands,
their alienation is limited to Filipino citizens. But this constitutional purpose conserving
agricultural resources in the hands of Filipino citizens may easily be defeated by the Filipino
citizens themselves who may alienate their agricultural lands in favor of aliens. It is partly to
prevent this result that section 5 is included in Article XIII, and it reads as follows:
Sec. 5. Save in cases of hereditary succession, no private agricultural land will be
transferred or assigned except to individuals, corporations, or associations qualified to
acquire or hold lands of the public domain in the Philippines.

This constitutional provision closes the only remaining avenue through which agricultural
resources may leak into aliens' hands. It would certainly be futile to prohibit the alienation of
public agricultural lands to aliens if, after all, they may be freely so alienated upon their
becoming private agricultural lands in the hands of Filipino citizens. Undoubtedly, as above
indicated, section 5 is intended to insure the policy of nationalization contained in section 1.
Both sections must, therefore, be read together for they have the same purpose and the same
subject matter. It must be noticed that the persons against whom the prohibition is directed in
section 5 are the very same persons who under section 1 are disqualified "to acquire or hold
lands of the public domain in the Philippines." And the subject matter of both sections is the
same, namely, the non-transferability of "agricultural land" to aliens. Since "agricultural land"
under section 1 includes residential lots, the same technical meaning should be attached to
"agricultural land under section 5. It is a rule of statutory construction that "a word or phrase
repeated in a statute will bear the same meaning throughout the statute, unless a different
intention appears." (II Sutherland, Statutory Construction, p. 758.) The only difference between
"agricultural land" under section 5, is that the former is public and the latter private. But such
difference refers to ownership and not to the class of land. The lands are the same in both
sections, and, for the conservation of the national patrimony, what is important is the nature or
class of the property regardless of whether it is owned by the State or by its citizens.

Reference is made to an opinion rendered on September 19, 1941, by the Hon. Teofilo Sison,
then Secretary of Justice, to the effect that residential lands of the public domain may be
considered as agricultural lands, whereas residential lands of private ownership cannot be so
considered. No reason whatsoever is given in the opinion for such a distinction, and no valid
reason can be adduced for such a discriminatory view, particularly having in mind that the
purpose of the constitutional provision is the conservation of the national patrimony, and
private residential lands are as much an integral part of the national patrimony as the
residential lands of the public domain. Specially is this so where, as indicated above, the
prohibition as to the alienable of public residential lots would become superflous if the same
prohibition is not equally applied to private residential lots. Indeed, the prohibition as to private
residential lands will eventually become more important, for time will come when, in view of
the constant disposition of public lands in favor of private individuals, almost all, if not all, the
residential lands of the public domain shall have become private residential lands.

It is maintained that in the first draft of section 5, the words "no land of private ownership"
were used and later changed into "no agricultural land of private ownership," and lastly into
"no private agricultural land" and from these changes it is argued that the word "agricultural"
introduced in the second and final drafts was intended to limit the meaning of the word "land"
to land actually used for agricultural purposes. The implication is not accurate. The wording of
the first draft was amended for no other purpose than to clarify concepts and avoid
uncertainties. The words "no land" of the first draft, unqualified by the word "agricultural," may
be mistaken to include timber and mineral lands, and since under section 1, this kind of lands
can never be private, the prohibition to transfer the same would be superfluous. Upon the
other hand, section 5 had to be drafted in harmony with section 1 to which it is supplementary,
as above indicated. Inasmuch as under section 1, timber and mineral lands can never be
private, and the only lands that may become private are agricultural lands, the words "no land
of private ownership" of the first draft can have no other meaning than "private agricultural
land." And thus the change in the final draft is merely one of words in order to make its subject
matter more specific with a view to avoiding the possible confusion of ideas that could have
arisen from the first draft.

If the term "private agricultural lands" is to be construed as not including residential lots or
lands not strictly agricultural, the result would be that "aliens may freely acquire and possess
not only residential lots and houses for themselves but entire subdivisions, and whole towns
and cities," and that "they may validly buy and hold in their names lands of any area for
building homes, factories, industrial plants, fisheries, hatcheries, schools, health and vacation
resorts, markets, golf courses, playgrounds, airfields, and a host of other uses and purposes
that are not, in appellant's words, strictly agricultural." (Solicitor General's Brief, p. 6.) That this
is obnoxious to the conservative spirit of the Constitution is beyond question.

One of the fundamental principles underlying the provision of Article XIII of the Constitution
and which was embodied in the report of the Committee on Nationalization and Preservation of
Lands and other Natural Resources of the Constitutional Convention, is "that lands, minerals,
forests, and other natural resources constitute the exclusive heritage of the Filipino nation.
They should, therefore, be preserved for those under the sovereign authority of that nation and
for their posterity." (2 Aruego, Framing of the Filipino Constitution, p. 595.) Delegate Ledesma,
Chairman of the Committee on Agricultural Development of the Constitutional Convention, in a
speech delivered in connection with the national policy on agricultural lands, said: "The
exclusion of aliens from the privilege of acquiring public agricultural lands and of owning real
estate is a necessary part of the Public Land Laws of the Philippines to keep pace with the idea
of preserving the Philippines for the Filipinos." (Emphasis ours.) And, of the same tenor was the
speech of Delegate Montilla who said: "With the complete nationalization of our lands and
natural resources it is to be understood that our God-given birthright should be one hundred
per cent in Filipino hands . . .. Lands and natural resources are immovables and as such can be
compared to the vital organs of a person's body, the lack of possession of which may cause
instant death or the shortening of life. If we do not completely antionalize these two of our
most important belongings, I am afraid that the time will come when we shall be sorry for the
time we were born. Our independence will be just a mockery, for what kind of independence
are we going to have if a part of our country is not in our hands but in those of foreigners?"
(Emphasis ours.) Professor Aruego says that since the opening days of the Constitutional
Convention one of its fixed and dominating objectives was the conservation and nationalization
of the natural resources of the country. (2 Aruego, Framing of the Philippine Constitution, p
592.) This is ratified by the members of the Constitutional Convention who are now members
of this Court, namely, Mr. Justice Perfecto, Mr. Justice Briones, and Mr. Justice Hontiveros. And,
indeed, if under Article XIV, section 8, of the Constitution, an alien may not even operate a
small jitney for hire, it is certainly not hard to understand that neither is he allowed to own a
pieace of land.

This constitutional intent is made more patent and is strongly implemented by an act of the
National Assembly passed soon after the Constitution was approved. We are referring again to
Commonwealth Act No. 141. Prior to the Constitution, there were in the Public Land Act No.
2874 sections 120 and 121 which granted aliens the right to acquire private only by way of
reciprocity. Said section reads as follows:

SEC. 120. No land originally acquired in any manner under the provisions of this Act, nor
any permanent improvement on such land, shall be encumbered, alienated, or
transferred, except to persons, corporations, associations, or partnerships who may
acquire lands of the public domain under this Act; to corporations organized in the
Philippine Islands authorized therefor by their charters, and, upon express authorization
by the Philippine Legislature, to citizens of countries the laws of which grant to citizens
of the Philippine Islands the same right to acquire, hold, lease, encumber, dispose of, or
alienate land, or permanent improvements thereon, or any interest therein, as to their
own citizens, only in the manner and to the extent specified in such laws, and while the
same are in force but not thereafter.

SEC. 121. No land originally acquired in any manner under the provisions of the former
Public Land Act or of any other Act, ordinance, royal order, royal decree, or any other
provision of law formerly in force in the Philippine Islands with regard to public
lands, terrenos baldios y realengos, or lands of any other denomination that were
actually or presumptively of the public domain or by royal grant or in any other form,
nor any permanent improvement on such land, shall be encumbered, alienated, or
conveyed, except to persons, corporations, or associations who may acquire land of the
public domain under this Act; to corporate bodies organized in the Philippine Islands
whose charters may authorize them to do so, and, upon express authorization by the
Philippine Legislature, to citizens of the countries the laws of which grant to citizens of
the Philippine Islands the same right to acquire, hold, lease, encumber, dispose of, or
alienate land or pemanent improvements thereon or any interest therein, as to their
own citizens, and only in the manner and to the extent specified in such laws, and while
the same are in force, but not thereafter: Provided, however, That this prohibition shall
not be applicable to the conveyance or acquisition by reason of hereditary succession
duly acknowledged and legalized by competent courts, nor to lands and improvements
acquired or held for industrial or residence purposes, while used for such
purposes: Provided, further, That in the event of the ownership of the lands and
improvements mentioned in this section and in the last preceding section being
transferred by judicial decree to persons,corporations or associations not legally
capacitated to acquire the same under the provisions of this Act, such persons,
corporations, or associations shall be obliged to alienate said lands or improvements to
others so capacitated within the precise period of five years, under the penalty of such
property reverting to the Government in the contrary case." (Public Land Act, No. 2874.)
It is to be observed that the pharase "no land" used in these section refers to all private lands,
whether strictly agricultural, residential or otherwise, there being practically no private land
which had not been acquired by any of the means provided in said two sections. Therefore, the
prohibition contained in these two provisions was, in effect, that no private land could be
transferred to aliens except "upon express authorization by the Philippine Legislature, to
citizens of Philippine Islands the same right to acquire, hold, lease, encumber, dispose of, or
alienate land." In other words, aliens were granted the right to acquire private land merely by
way of reciprocity. Then came the Constitution and Commonwealth Act No. 141 was passed,
sections 122 and 123 of which read as follows:

SEC. 122. No land originally acquired in any manner under the provisions of this Act, nor
any permanent improvement on such land, shall be encumbered, alienated, or
transferred, except to persons, corporations, associations, or partnerships who may
acquire lands of the public domain under this Act or to corporations organized in the
Philippines authorized thereof by their charters.

SEC. 123. No land originally acquired in any manner under the provisions of any previous
Act, ordinance, royal order, royal decree, or any other provision of law formerly in force
in the Philippines with regard to public lands terrenos baldios y realengos, or lands of
any other denomination that were actually or presumptively of the public domain, or by
royal grant or in any other form, nor any permanent improvement on such land, shall be
encumbered, alienated, or conveyed, except to persons, corporations or associations
who may acquire land of the public domain under this Act or to corporate bodies
organized in the Philippines whose charters authorize them to do so: Provided,
however, That this prohibition shall not be applicable to the conveyance or acquisition
by reason of hereditary succession duly acknowledged and legalized by competent
courts: Provided, further, That in the event of the ownership of the lands and
improvements mentioned in this section and in the last preceding section being
transferred by judicial decree to persons, corporations or associations not legally
capacitated to acquire the same under the provisions of this Act, such persons,
corporations, or associations shall be obliged to alienate said lands or improvements to
others so capacitated within the precise period of five years; otherwise, such property
shall revert to the Government.

These two sections are almost literally the same as sections 120 and 121 of Act No. 2874, the
only difference being that in the new provisions, the right to reciprocity granted to aliens is
completely stricken out. This, undoubtedly, is to conform to the absolute policy contained in
section 5 of Article XIII of the Constitution which, in prohibiting the alienation of private
agricultural lands to aliens, grants them no right of reciprocity. This legislative construction
carries exceptional weight, for prominent members of the National Assembly who approved
the new Act had been members of the Constitutional Convention.

It is said that the lot question does not come within the purview of sections 122 and 123 of
Commonwealth Act No. 141, there being no proof that the same had been acquired by one of
the means provided in said provisions. We are not, however, diciding the instant case under the
provisions of the Public Land Act, which have to refer to land that had been formerly of the
public domain, otherwise their constitutionality may be doubtful. We are deciding the instant
case under section 5 of Article XIII of the Constitution which is more comprehensive and more
absolute in the sense that it prohibits the transfer to alien of any private agricultural land
including residential land whatever its origin might have been.

And, finally, on June 14, 1947, the Congress approved Republic Act No. 133 which allows
mortgage of "private real property" of any kind in favor of aliens but with a qualification
consisting of expressly prohibiting aliens to bid or take part in any sale of such real property as a
consequence of the mortgage. This prohibition makes no distinction between private lands that
are strictly agricultural and private lands that are residental or commercial. The prohibition
embraces the sale of private lands of any kind in favor of aliens, which is again a clear
implementation and a legislative interpretation of the constitutional prohibition. Had the
Congress been of opinion that private residential lands may be sold to aliens under the
Constitution, no legislative measure would have been found necessary to authorize mortgage
which would have been deemed also permissible under the Constitution. But clearly it was the
opinion of the Congress that such sale is forbidden by the Constitution and it was such opinion
that prompted the legislative measure intended to clarify that mortgage is not within the
constitutional prohibition.

It is well to note at this juncture that in the present case we have no choice. We are construing
the Constitution as it is and not as we may desire it to be. Perhaps the effect of our
construction is to preclude aliens, admitted freely into the Philippines from owning sites where
they may build their homes. But if this is the solemn mandate of the Constitution, we will not
attempt to compromise it even in the name of amity or equity. We are satisfied, however, that
aliens are not completely excluded by the Constitution from the use of lands for residential
purposes. Since their residence in the Philippines is temporary, they may be granted temporary
rights such as a lease contract which is not forbidden by the Constitution. Should they desire to
remain here forever and share our fortunes and misfortunes, Filipino citizenship is not
impossible to acquire.

For all the foregoing, we hold that under the Constitution aliens may not acquire private or
public agricultural lands, including residential lands, and, accordingly, judgment is affirmed,
without costs.

Feria, Pablo, Perfecto, Hilado, and Briones, JJ., concur.

Separate Opinion

PERFECTO, J., concurring:


Today, which is the day set for the promulgation of this Court's decision might be remembered
by future generations always with joy, with gratitude, with pride. The failure of the highest
tribunal of the land to do its duty in this case would have amounted to a national disaster. We
would have refused to share the responsibility of causing it by, wittingly or unwittingly, allowing
ourselves to act as tools in a conspiracy to sabotage the most important safeguard of the age-
long patrimony of our people, the land which destiny of Providence has set aside to be the
permanent abode of our race for unending generations. We who have children and
grandchildren, and who expect to leave long and ramifying dendriform lines of descendants,
could not bear the thought of the curse they may fling at us should the day arrive when our
people will be foreigners in their fatherland, because in the crucial moment of our history ,
when the vision of judicial statemanship demanded on us the resolution and boldness to affirm
and withhold the letter and spirit of the Constitution, we faltered. We would have prefered
heroic defeat to inglorious desertion. Rather than abandon the sacred folds of the banner of
our convictions for truth, for justice, for racial survival. We are happy to record that this
Supreme Court turned an impending failure to a glorious success, saving our people from a
looming catastrophe.

On July 3, 1946, the case of Oh Cho vs. Director of Lands, (43 Off. Gaz., 866), was submitted for
our decision. The case was initiated in the Court of First Instance of Tayabas on January 17,
1940, when an alien, Oh Cho, a citizen of China, applied for title and registration of a parcel of
land located in the residential district of Guinayangan, Tayabas, with a house thereon. The
Director of Lands opposed the application, one of the main grounds being that "the applicant,
being a Chinese, is not qualified to acquire public or private agricultural lands under the
provisions of the Constitution."

On August 15, 1940, Judge P. Magsalin rendered decision granting the application. The Director
of Lands appealed. In the brief filed by Solicitor General Roman Ozaeta, afterwards Associate
Justice of the Supreme Court and now Secretary of Justice, and Assistant Solicitor General
Rafael Amparo, appellant made only two assignments of error, although both raised but one
question, the legal one stated in the first assignment of error as follows:

The lower court erred in declaring the registration of the land in question in favor of the
applicant who, according to his own voluntary admission is a citizen of the Chinese
Republic.

The brief was accompanied, as Appendix A, by the opinion of Secretary of Justice Jose A. Santos
who, while Chief Justice of the Supreme Court, suffered heroic martyrdom at the hands of
the Japanese addressed to the Secretary of Agriculture and Commerce on July 15, 1939,
supporting the same theory as the one advanced by the Director of Lands. The same legal
question raised by appellant is discussed, not only in the brief for the appellee, but also in the
briefs of the several amici curiae allowed by the Supreme Court to appear in the case.

As a matter of fact, the case has been submitted for final decision of the Supreme Court since
July of 1941, that is, six years ago. It remained undecided when the Pacific War broke out in
December, 1941. After the Supreme Court was recognized in the middle of 1945, it was found
that the case was among those which were destroyed in February, 1945, during the battle for
the liberation of Manila. The case had to be reconstituted upon motion of the office of the
Solicitor General, filed with this Court on January 14, 1946, in which it was also prayed that,
after being reconstituted, the case be submitted for final adjudication. The case was for the
second time submitted for decision on July 3, 1946.

After the last submission, it took the Supreme Court many days to deliberate on the case,
especially on the legal question as to whether an alien may, under the Constitution, acquire
private urban lands. An overwhelming majority answered no. But when the decision was
promulgated on August 31, 1946, a majority resolved to ignore the question, notwithstanding
our efforts to have the question, which is vital, pressing and far-reaching, decided once and for
all, to dispel definitely the uncertainty gnawing the conscience of the people. It has been out lot
to be alone in expressing in unmistakable terms our opinion and decision on the main legal
question raised by the appellant. The constitutional question was by-passed by the majority
because they were of opinion that it was not necessary to be decided, notwithstanding the fact
that it was the main and only legal question upon which appellant Director of Lands relied in his
appeal, and the question has been almost exhaustively argued in four printed briefs filed by the
parties and the amici curiae. Assurance was, nevertheless, given that in the next case in which
the same constitutional question is raised, the majority shall make known their stand on the
question.

The next case came when the present one submitted to us for decision on February 3, 1947.
Again, we deliberated on the constitutional question for several days.

On February 24, 1947, the case was submitted for final vote, and the result was that the
constitutional question was decided against petitioner. The majority was also overwhelming.
There were eight of us, more than two-thirds of the Supreme Court. Only three Justices
dissented.

While the decision was being drafted, somehow, the way the majority had voted must have
leaked out. On July 10, 1947, appellant Krivenko filed a motion for withdrawal of his appeal, for
the evident purpose of preventing the rendering of the majority decision, which would settle
once and for all the all-important constitutional question as to whether aliens may acquire
urban lots in the Philippines.

Appellant chose to keep silent as to his reason for filing the motion. The Solicitor General's
office gave its conformity to the withdrawal of the appeal. This surprising assent was given
without expressing any ground at all. Would the Supreme Court permit itself to be cheated of
its decision voted since February 24, 1947?

Discussion immediately ensued as to whether the motion should be granted or denied, that is,
whether this Court should abstain from promulgating the decision in accordance with the result
of the vote taken on February 24, 1947, as if, after more than six years during which the
question has been submitted for the decision of the highest tribunal of the land, the same has
failed to form a definite opinion.

After a two-day deliberation, the Chief Justice, Mr. Justice Paras, Mr. Justice Hontiveros, Mr.
Justice Padilla and and Mr. Justice Tuason voted to grant the motion for withdrawal. Those who
voted to deny the motion were Mr. Justice Feria, Mr. Justice Pablo, ourselves, Mr. Justice Hilado
and Mr. Justice Bengzon. The vote thus resulted in a tie, 5-5. The deadlock resulting from the tie
should have the effect of denying the motion, as provided by section 2 of Rule 56 to the effect
that "where the Court in banc is equally divided in opinion . . . on all incidental matters, the
petition or motion shall be denied." And we proposed that the rule be complied with, and the
denial be promulgated.

Notwithstanding this, as Mr. Justice Briones was then absent, our brethren resolved to give him
the opportunity of casting his vote on the question, although we insisted that it was
unnecessary. Days later, when all the members of the Court were already present, a new vote
was taken. Mr. Justice Briones voted for the denial of the motion, and his vote would have
resulted, as must be expected, in 6 votes for the denial against 5 for granting. But the final
result was different. Seven votes were cast for granting the motion and only four were cast for
its denial.

But then, by providential design or simply by a happy stroke of luck or fate, on the occasion of
the registration by the register of deeds of Manila of land purchases of two aliens, a heated
public polemic flared up in one section of the press, followed by controversial speeches,
broadcast by radio, and culminating in the issuance on August 12, 1947, of Circular No. 128 of
the Secretary of Justice which reads as follows:

TO ALL REGISTER OF DEEDS:

Paragraph 5 of Circular No. 14, dated August 25, 1945, is hereby amended so as to read as
follows:

5"(a). Instruments by which private real property is mortgaged in favor of any individual,
corporation, or association for a period not exceeding five years, renewable for another
five years, may be accepted for registration. (Section 1, Republic Act No. 138.)

"(b). Deeds or documents by which private residential, commercial, industrial or other


classes of urban lands, or any right, title or interest therein is transferred, assigned or
encumbered to an alien, who is not an enemy national, may be registered. Such classes
of land are not deemed included within the purview of the prohibition contained in
section 5, Article XIII of the Constitution against the acquisition or holding of "private
agricultural land" by those who are not qualified to hold or acquire lands of the public
domain. This is in conformity with Opinion No. 284, series of 1941, of the Secretary of
Justice and with the practice consistently followed for nearly ten years since the
Constitution took effect on November 15, 1935.
"(c). During the effectivity of the Executive Agreement entered into between the
Republic of the Philippines and the Government of the United States on July 4, 1946, in
pursuance of the so-called Parity Amendment to the Constitution, citizens of the United
States and corporations or associations owned or controlled by such citizens are
deemed to have the same rights as citizens of the Philippines and corporations or
associations owned or controlled by such are deemed to have the same rights as citizens
of the Philippines and corporations or associations owned or controlled by citizens of
the Philippines in the acquisition of all classes of lands in the Philippines, whether of
private ownership or pertaining to the public domain."

ROMAN OZAETA
Secretary of Justice

Paragraph 5 of Circular No. 14 dated August 25, 1945, amended by the above is as follows:

Deeds or other documents by which a real property, or a right, or title thereto, or an


interest therein, is transferred, assigned or encumbered to an alien, who is not enemy
national, may be entered in the primary entry book; but, the registration of said deeds
or other documents shall be denied unless and/or until otherwise specifically
directed by a final decision or order of a competent court and the party in interest
shall be advised of such denial, so that he could avail himself of the right to appeal
therefrom, under the provisions of section 200 of the Revised Administrative Code. The
denial of registration of shall be predicated upon the prohibition contained in section 5,
Article XIII (formerly Article XII) of the Constitution of the Philippines, and sections 122
and 123 of Commonwealth Act No. 141, the former as amended by the Commonwealth
Act No. 615.

The polemic found echo even in the Olympic serenity of a cloistered Supreme Court and the
final result of long and tense deliberation which ensued is concisely recorded in the following
resolution adopted on August 29, 1947:

In Krivenko vs. Register of Deeds, City of Manila, L-630, a case already submitted for
decision, the appellant filed a motion to withdraw his appeal with the conformity of the
adverse party. After full discussion of the matter specially in relation to the Court's
discretion (Rule 52, section 4, and Rule 58), Mr. Justice Paras, Mr. Justice Hilado, Mr.
Justice Bengzon, Mr. Justice Padilla and Mr. Justice Tuazon voted to grant, while the
Chief Justice, Mr. Justice Feria, Mr,. Justice Pablo, Mr. Justice Perfecto and Mr. Justice
Briones voted to deny it. A redeliberation was consequently had, with the same result.
Thereupon Mr. Justice Paras proposed that Mr. Justice Hontiveros be asked to sit and
break the tie; but in view of the latter's absence due to illness and petition for
retirement, the Court by a vote of seven to three did not approve the proposition.
Therefore, under Rule 56, section 2, the motion to withdraw is considered denied.
Mr. Justice Padilla states that in his opinion the tie could not have the effect of
overruling the previous vote of seven against four in favor of the motion to withdraw.

Mr. Justice Paras states: Justice Hontiveros is aware of and conversant with the
controversy. He has voted once on the motion to withdraw the appeal. He is still a
member of the Court and, on a moment's notice, can be present at any session of the
Court. Last month, when all the members were present, the votes on the motion stood
7 to 4. Now, in the absence of one member, on reconsideration, another changed his
vote resulting in a tie. Section 2 of Rule 56 requires that all efforts be exerted to break a
deadlock in the votes. I deplore the inability of the majority to agree to my proposition
that Mr. Justice Hontiveros be asked to participate in the resolution of the motion for
withdrawal. I hold it to be fundamental and necessary that the votes of all the members
be taken in cases like this.

Mr. Justice Perfecto stated, for purposes of completeness of the narration of facts, that
when the petition to withdraw the appeal was submitted for resolution of this Court
two days after this petition was filed, five justices voted to grant and five others voted
to deny, and expressed the opinion that since then, according to the rules, the petition
should have been considered denied. Said first vote took place many days before the
one alluded to by Mr. Justice Padilla.

Mr. Justice Tuason states: The motion to withdraw the appeal was first voted upon with
the result that 5 were granting and 5 for denial. Mr. Justice Briones was absent and it
was decided to wait for him. Some time later, the same subject was deliberated upon
and a new voting was had, on which occasion all the 11 justices were present. The
voting stood 7 for allowing the dismissal of the appeal and 4 against. Mr. Justice
Perfecto and Mr. Justice Briones expressed the intention to put in writing their dissents.
Before these dissents were filed, about one month afterwards, without any previous
notice the matter was brought up again and re-voted upon; the result was 5 to 5. Mr.
Justice Hontiveros, who was ill but might have been able to attend if advised of the
necessity of his presence, was absent. As the voting thus stood, Mr. Justice Hontiveros'
vote would have changed its result unless he changed his mind, a fact of which no one is
aware. My opinion is that since there was no formal motion for reconsideration nor a
previous notice that this matter would be taken up once more, and since Mr. Justice
Hontiveros had every reason to believe that the matter was over as far as he was
concerned, this Justice's vote in the penultimate voting should, if he was not to be given
an opportunity to recast his vote, be counted in favor of the vote for the allowance of
the motion to withdraw. Above all, that opportunity should not have been denied on
grounds of pure technicality never invoked before. I counted that the proceeding was
arbitrary and illegal.

The resolution does not recite all the reasons why Mr. Justice Hontiveros did not participate in
that last two votings and why it became unnecessary to wait for him any further to attend the
sessions of the Court and to cast his vote on the question.
Appellant Krivenko moved for the reconsideration of the denial of his withdrawal of appeal,
alleging that it became moot in view of the ruling made by the Secretary of Justice in circular
No. 128, thus giving us a hint that the latter, wittingly or unwittingly, had the effect of trying to
take away from the Supreme Court the decision of an important constitutional question,
submitted to us in a pending litigation. We denied the motion for reconsideration. We did not
want to entertain any obstruction to the promulgation of our decision.

If the processes had in this case had been given the publicity suggested by us for all the official
actuations of this Supreme Court, it should have been known by the whole world that since
July, 1946, that is, more than a year ago, the opinion of the members of this Court had already
been crystallized to the effect that under the Constitution, aliens are forbidded from acquiring
urban lands in the Philippines, and it must have known that in this case a great majority had
voted in that sense on February 24, 1947.

The constitutional question involved in this case cannot be left undecided without jeopardizing
public interest. The uncertainty in the public mind should be dispelled without further delay.
While the doubt among the people as to what is the correct answer to the question remains to
be dissipated, there will be uneasiness, undermining public morale and leading to evils of
unpredictable extent. This Supreme Tribunal, by overwhelming majority, already knows what
the correct answer is, and should not withhold and keep it for itself with the same zealousness
with which the ancient families of the Eumolpides and Keryces were keeping the Eleusinian
mysteries. The oracle of Delphus must speak so that the people may know for their guidance
what destiny has in store for them.

The great question as to whether the land bequeathed to us by our forefathers should remain
as one of the most cherished treasures of our people and transmitted by inheritance to
unending generations of our race, is not a new one. The long chain of land-grabbing invasions,
conquests, depredations, and colonial imperialism recorded in the darkest and bloodiest pages
of history from the bellicose enterprises of the Hittites in the plains of old Assyria, irrigated by
the waters of the Tigris and Euphrates, and the invasion of Egypt by the Hyksos, up to the
conquests of Hernan Cortes and Pizarro, the achievements of Cecil Rhodes, and the formation
of the Spanish, Portuguese, Dutch, French and German colonial empires, had many of its iron
links forged in our soil since Magellan, the greatest navigator of all history, had set foot at
Limasawa and paid, for his daring enterprises, with his life at the hands of Lapulapu's men in
the battle of Mactan.

Since then, almost four centuries ago, our people have continuously been engaged in an
unrelentless struggle to defend the national patrimony against the aggressive onslaughts of
foreigners bent on grabbing our lands. First came the Spanish encomenderos and other
gratuitous concessioners who were granted by the Spanish crown immense areas of land.
Immediately came the friars and other religious corporations who, notwithstanding their sacred
vow of poverty, felt their greed whetted by the bountiful opportunities for easy and
unscrupulous enrichment. Taking advantage of the uncontrollable religious leadership, on one
side, and of the Christian virtues of obedience, resignation, humility, and credulity of a people
who, after conversion to Catholicism, embraced with tacit faith all its tenets and practiced them
with the loyalty and fidelity of persons still immune from the disappointments and bitterness
caused by the vices of modern civilization, the foreign religious orders set aside all compunction
to acquire by foul means many large estates. Through the practice of confession and other
means of moral intimidation, mostly based on the eternal tortures of hell, they were able to
obtain by donation or by will the lands of many simple and credulous Catholics who, in order to
conquer the eternal bliss of heaven, renounced all their property in favor of religious orders
and priests, many under the guise of chaplaincies or other apparently religious purposes,
leaving in destitute their decendants and relatives. Thus big religious landed estates were
formed, and under the system unbearable iniquities were committed. The case of the family of
Rizal is just an index of the situation, which, under the moral leadership of the hero, finally
drove our people into a national revolution not only against the Spanish sovereignty under
which the social cancer had grown to unlimited proportions.

Profiting from the lessons of history, the Delegates to our Constitutional Convention felt it their
duty to insert in the fundamental law effective guarantees for conserving the national
patrimony, the wisdom of which cannot be disputed in a world divided into nations and
nationalities. In the same way that scientists and technicians resorted to radar, sonars,
thermistors and other long range detection devices to stave off far-away enemy attacks in war,
said Delegates set the guarantees to ward off open inroads or devious incursions into the
national patrimony as a means of insuring racial safety and survival.

When the ideal of one world should have been translated into reality, those guarantees might
not be needed and our people may eliminate them. But in the meantime, it is our inescapable
devoir, as the ultimate guardians of the Constitution, never to neglect the enforcement of its
provisions whenever our action is called upon in a case, like the one now before us.

One of the fundamental purposes of the government established by our Constitution is, in its
very words, that it "shall conserve and develop the patrimony of the nation." That mandate is
addressed to all departments and branches of our government, without excluding this Supreme
Court. To make more specific the mandate, Article XIII has been inserted so as to avoid all
doubt that all the natural resources of the country are reserved to Filipino citizens. Our land is
the most important of our natural resources. That land should be kept in the hands of our
people until, by constitutional amendment, they should decide to renounce that age-long
patrimony. Save by hereditary succession the only exception allowed by the Constitution
no foreigner may by any means acquire any land, any kind of land, in the Philippines. That was
the overwhelming sentiment prevailing in the Constitutional Convention, that was the
overpowering desire of the great majority of the Delegates, that was the dominating thought
that was intended to be expressed in the great document, that was what the Committee on
Style the drafter of the final text has written in the Constitution, and that was what was
solemnly ratified in the plebiscite by our people, who then were rankling by the sore spot of
illegally Japanized Davao.
The urgency of settling once and forever the constitutional question raised in this case
cannot be overemphasized. If we should decide this question after many urban lots
have been transferred to and registered in the name of alien purchasers, a situation may
be created in which it will be hard to nullify the transfers and the nullification may
create complications and problems highly distasteful to solve. The Georgia case is an
objective lesson upon which we can mirror ourselves. From pages 22 and 23 of the book
of Charless P. Curtiss, Jr. entitled "Lions Under the Throne," we quote the following:

It is of interest that it seems to have happened chiefly in important cases.


Fletcher vs. Peck, in 1810, is the stock example. That was the first case in which the
Court held a state statute void. It involved a national scandal. The 1795 legislature of
Georgia sold its western lands, most of Alabama and Mississippi, to speculators. Perhaps
it was the greatest real estate steal in our history. The purchase price was only half a
million dollars. The next legislature repealed the statute for fraud, the bribery of
legislator, but not before the land companies had completed the deal and unloaded. By
that time, and increasingly soon afterwards, more and more people had bought, and
their title was in issue. Eleven million of the acres had been bought for eleven cents an
acre by leading citizens of Boston. How could they clear their title? Alexander Hamilton
gave an opinion, that the repeal of the grant was void under the Constitution as an
impairment of the obligation of a contract.

But could they not get a decision from the Supreme Court? Robert Fletcher of Anhirst,
New Hampshire, had bought fifteen thousand acres from John Peck of Boston. He sued
Peck, and he won. Fletcher appealed. Plainly it was a friendly suit. Marshall was
nobody's fool. He told Cranch that the Court was reluctant to decide the case "as it
appeared manifestly made up for the purpose of getting the Court's judgment." John
Quincy Adams so reports in his diary. Yet Marshall decided it, and he held the repeal
void, just as Hamilton said it was. "The fact that Marshall rendered an opinion, under
the circumstances," says Beveridge, "is one of the finest proofs of his greatness. A
weaker man than John Marshall, and one less wise and courageous, would have
dismissed the appeal." That may be, but it was the act of a stateman, not of a judge. The
Court has always been able to overcome its judicial diffidence on state occasions.

We see from the above how millions of acres of land were stolen from the people of Georgia
and due to legal technicalities the people were unable to recover the stolen property. But in the
case of Georgia, the lands had fallen into American hands and although the scandal was of
gigantic proportions, no national disaster ensued. In our case if our lands should fall into foreign
hands, although there may not be any scandal at all, the catastrophe sought to be avoided by
the Delegates to our Constitutional Convention will surely be in no remote offing.

We conclude that, under the provisions of the Constitution, aliens are not allowed to acquire
the ownership of urban or residential lands in the Philippines and, as consequence, all
acquisitions made in contravention of the prohibitions since the fundamental law became
effective are null and void per se and ab initio. As all public officials have sworn, and are duty
bound, to obey and defend the Constitution, all those who, by their functions, are in charge of
enforcing the prohibition as laid down and interpreted in the decision in this case, should spare
no efforts so that any and all violations which may have taken place should be corrected.

We decide, therefore, that, upon the above premises, appellant Alexander A. Krivenko, not
being a Filipino citizen, could not acquire by purchase the urban or residential lot here in
question, the sale made in his favor by the Magdalena Estate, Inc. being null and void ab initio,
and that the lower court acted correctly in rendering the appealed decision, which we affirm.

HILADO, J., concurring:

Upon appellant's motion to withdraw his appeal herein with the conformity of the Solicitor
General in behalf of appellee, indulging, at that time, all possible intendments in favor of
another department, I ultimately voted to grant the motion after the matter was finally
deliberated and voted upon. But the votes of the ten Justices participating were evenly divided,
and under Rule 52, section 4, in relation, with Rule 56, section 2, the motion was denied. The
resolution to deny was adopted in the exercise of the court's discretion under Rule 52, section
4, by virtue of which it has discretion to deny the withdrawal of the appeal even though both
appellant and appellee agree upon the withdrawal, when appellee's brief has been filed. Under
the principle that where the necessary number have concurred in an opinion or resolution, the
decision or determination rendered is the decision or determination of the court (2 C.J.S., 296),
the resolution denying the motion to withdraw the appeal was the resolution of the court.
Pursuant to Rule 56, section 2, where the court in banc is equally divided in opinion, such a
motion "shall be denied." As a necessary consequence, the court as to decide the case upon the
merits.

After all, a consistent advocate and defender of the principle of separation of powers in a
government like ours that I have always been, I think that under the circumstances it is well for
all concerned that the Court should go ahead and decide the constitutional question presented.
The very doctrine that the three coordinate, co-equal and independent departments should be
maintained supreme in their respective legitimate spheres, makes it at once the right and duty
of each to defend and uphold its own peculiar powers and authority. Public respect for and
confidence in each department must be striven for and kept, for any lowering of the respect
and diminution of that confidence will in the same measure take away from the very usefulness
of the respective department to the people. For this reason, I believe that we should avert and
avoid any tendency in this direction with respect to this Court.

I am one of those who presume that Circular No. 128, dated August 12, 1947, of the Secretary
of Justice, was issued in good faith. But at the same time, that declaration in sub-paragraph (b)
of paragraph 5 of Circular No. 14, which was already amended, to the effect that private
residential, commercial, industrial or other classes of urban lands "are not deemed included
within the purview of the prohibition contained in section 5, Article XIII, of the Constitution",
made at a time when the self-same question was pending decision of this Court, gives rise to
the serious danger that should this Court refrain from deciding said question and giving its own
interpretation of the constitutional mandate, the people may see in such an attitude an
abandonment by this Court of a bounden duty, peculiarly its own, to decide a question of such
a momentous transcedence, in view of an opinion, given in advance of its own decision, by an
officer of another department. This will naturally detract in no small degree from public respect
and confidence towards the highest Court of land. Of course, none of us the other
governmental departments included would desire such a situation to ensue.

I have distinctively noticed that the decision of the majority is confined to the constitutional
question here presented, namely, "whether or not an alien under our Constitution may acquire
residential land." (Opinion, p. 2) Leases of residential lands, or acquisition, ownership or lease
of a house or building thereon, for example, are not covered by the decision.

With these preliminary remarks and the statement of my concurrence in the opinion ably
written by the Chief Justice, I have signed said decision.

BRIONES, M., conforme:

Estoy conforme en un todo con la ponencia, a la cual no e puede aadir ni quitar nada, tal es su
acabada y compacta elaboracion. Escribo, sin embargo, esta opinion separada nada mas que
para unas observaciones, particularmente sobre ciertas fases extraordinarias de este asunto
harto singular y extraordinario.

I. Conforme se relata en la concurrencia del Magistrado Sr. Perfecto, despues de laboriosas


deliberaciones este asunto se puso finalmente a votacion el 24 de Febrero de este ao,
confirmandose la sentencia apelada por una buena mayoria. En algunos comentarios
adelantados por cierta parte de la prensa impaciencia que solo puede hallar explicacion en
un nervioso y excesivo celo en la vigilancia de los intereses publicos, maxime tratandose, como
se trata, de la conservacion del patrimonio nacional se ha hecho la pregunta de por que se
ha demorado la promulgacion de la sentencia, habiendose votado el asunto todavia desde case
comienzos del ao.

A simple vista, la pregunta tiene justificacion; pero bien considerados los hechos se vera que no
ha habido demora en el presente caso, mucho menos una demora desusada, alarmante, que
autorice y justifique una critica contra los metodos de trabajo de esta corte. El curso seguido
por el asunto ha sido normal, bajo las circunstancias. En realidad, no yan en esta Corte ahora,
sino aun en el pasado, antes de la guerra, hubo mas lentitud en casos no tan dificiles ni tan
complicados como el que nos ocupa, en que las cuestiones planteadas y discutidas no tenian la
densidad constitucional y juridica de las que se discuten en el presente caso. Hay que tener en
cuenta que desde el 24 de Febrero en que se voto finalmente el asunto hasta el 1.0 de Abril en
que comenzaron las vacaciones judiciales, no habian transcurrido mas que 34 dias; y cuando se
reanudaron formalmente las sesiones de esta Corte en Julio se suscito un incidente de lo mas
extraordinario incidente que practicamente vino a impedir, a paralizar la pronta
promulgacion de la sentencia. Me refiero a la mocion que el 10 de Julio persentaron los
abogados del apelante pidiendo permiso para retirar su apelacion. Lo sorpredente de esta
mocion es que viene redactada escuetamente, sin explicar el por que de la retirada, ni expresar
ningun fundamento. Pero lo mas sorpredente todavia es la conformidad dada por el Procurador
General, tambien escueta e inceremoniosamente.

Digo que es sorprendente la retirada de la apelacion porque pocos casos he visto que hayan
sido arguidos con tanta energiaa, tanto interes y tanto celo por la parte apelante como este que
nos ocupa. Los abogados del apelante no solo presentaron un alegato concienzudo de 34
paginas, sino que cuando se llamo a vista el asunto informaron verbalmente ante esta Corte
argumentando vigorosa y extensamente sobre el caso. El Procurador General, por su parte, ha
presentado un alegato igualmente denso, de 31 paginas, en que se discuten acabadamente,
hasta el punto maximo de saturacion y agotamiento, todos los angulos de la formidable
cuestion constitutional objeto de este asunto. Tambien informo el Procurador General
verbalmente ante esta Corte, entablando fuerte lid con los abogados del apelante.

Con la mocion de retirada de la apelacion se hubo de retardar necesariamente la promulgacion


de la sentencia, pues trabajosas deliberaciones fueron necesarias para resolver la cuestion,
dividiendose casi por igual los miembros de la Corte sobre si debia o no permitirse la retirada.
Habia unanimidad en que bajo la regla 52, seccion 4, del Reglamento de los Tribunales
teniamos absoluta discrecion para conceder o denegar la mocion, toda vez que los alegatos
estaban sometidos desde hacia tiempo, el asunto estaba votado y no faltaba mas que la firma y
promulgacion de la decision juntamente con las disidencias. Sin embargo, algunos Magistrados
opinaban que la discrecion debia ejercitarse en favor de la retirada en virtud de la practica de
evitar la aplicacion de la Constitucion a la solucion de un litigio siempre que se puede
sentenciarlo de otra manera. (Entre los Magistrados que pensaban de esta manera se incluian
algunos que en el fundo del asunto estaban a favor de la confirmacion de la sentencia apelada,
es decir, creian que la Constitucion prohibe a los extranjeros la adquisicion a titulo dominical de
todo genero de propiedad inmueble, sin excluir los solares residenciales, comerciales e
industriales.) Pero otros Magistrados opinaban que en el estado tan avanzado en que se hallaba
el asunto los dictados del interes publico y de la sana discrecion requerian imperiosamente que
la cuestion se atacase y decidiese frontalmente; que si una mayoria de esta Corte estaba
convencida, como al parecer lo estaba, de que existia esa interdiccion constitucional contra la
facultad adquisitiva de los extranjeros, nuestro claro deber era apresurarnos a dar pleno y
positivo cumplimiento a la Constitucion al presentarse la primera oportunidad; que el meollo
del asunto, la lis mota era eso la interdiccion constitucional ; por tanto, no habia otra
manera de decidirlo mas que aplicando la Constitucion; obrar de otra manera seria desercion,
abandono de un deber jurado.

Asi estaban las deliberaciones cuando ocurre otro incidente mucho mas extraordinario y
sorprendente todavia que la retirada no explicada de la apelacion con la insolita conformidad
del Procurador General; algo asi como si de un cielo sereno, sin nubes, cayera de pronto un
bolido en medio de nosotros, en medio de la Corte: me refiero a la circular num. 128 del
Secretario de Justicia expedida el 12 de Agosto proximo pasado, esto es, 32 dias despues de
presentada la mocion de retirada de la apelacion. Esa circular se cita comprensivamente en la
ponencia y su texto se copia integramente en la concurrencia del Magistrado Sr. Perfecto; asi
que me creo excusado de transcibirla in toto. En breves terminos, la circular reforma el parrafo
5 de la circular num. 14 del mismo Departamento de Justicia de fecha 25 de Agosto, 1945, y
levanta la prohibicion o interdiccion sobre el registro e inscripcion en el registro de la propiedad
de las "escrituras o documentos en virtud de los cuales terrenos privados residencias,
comerciales, industriales u otras clases de terrenos urbanos, o cualquier derecho, titulo o
interes en ellos, se transfieren, ceden o gravan a un extranjero que no es nacional enemigo." En
otras palabras, el Secretario de Justicia, por medio de esta circular dejaba sin efecto la
prohibicion contenida en lacircular num. 14 del mismo Departamento la prohibicion que
precisamente ataca el apelante Krivenko en el asunto que tenemos ante Nos y authorizaba y
ordenaba a todoslos Registradores de Titulos en Filipinas para que inscribiesen las escrituras o
documentos de venta, hipoteca o cualquier otro gravamen a favor de extranjeros, siempre que
no se tratase de terrenos publicos o de "terrenos privados agricolas," es decir, siempre que los
terrenos objeto de la escritura fuesen "residenciales, comerciales e industriales."

La comparacion de esa circular con un bolido caido subitamenteen medio de la Corte no es un


simple tropo, no esuna mera imagen retorica; refleja una verdadera realidad.Esa circular, al
derogar la prohibicion decretada en elparrafo 5 de la circular num. 14 prohibicion que,
comoqueda dicho, es precisamente el objeto del presente asunto venia practicamente a
escamotear la cuestion discutida, lacuestion sub judice sustrayendola de la jurisdiccion de
lostribunales. Dicho crudamente, el Departamento de Justiciavenia a arrebatar el asunto de
nuestras manos, delas manos de esta Corte, anticipandose a resolverlo por simismo y dando
efectividad y vigor inmediatos a su resolucionmediante la correspondiente autorizacion a los
Registradoresde Titulos.

A la luz de esa circular queda perfectamente explicadala mocion de retirada de la apelacion


consentida insolitamentepor el Procurador General. Para que esperar ladecision de la Corte
Suprema que acaso podria ser adversa? No estaba ya esa circular bajo la cual podian
registrarseahora la ventas de terrenos residenciales, comerciales oindustriales a extranjeros?
Por eso no es extrao quelos abogados del apelante Krivenko, en su mocion de 1.0 de
Septiembre, 1947, pidiendo la reconsideracion de nuestroauto denegando la retirada de la
apelacion, dijeran porprimera vez como fundamento que la cuestion ya era simplemente
academica ("question is now moot") en vista deesa circular y de la conformidad del Procurador
Generalcon la retirada de la apelacion. He aqui las propias palabras de la mocion del apelante
Krivenko:

In view of Circular No. 128 of the Department of Justice, dated August 12, 1947, which
amends Circular No. 14 by expressly authorizing the registration of the sale of urban
lands to aliens, and in view of the fact that the Solicitor General has joined in the motion
for withdrawal of the appeal, there is no longer a controversy between the parties and
the question is now moot. For this reason the court no longer has jurisdiction to act on
the case.1

Lo menos que se puede decir de esa accion del Departamentode Justicia atravesandose en el
camino de los tribunalesmientras un asunto esta sub judice, es que ello no tieneprecedentes,
que yo sepa, en los anales de la administracionde justicia en Filipinas en cerca de medio siglo
que llevamosde existencia bajo un gobierno constitucional y sustancialmente republicano. Ni
aun en los llamados dias del Imperio, cuando la soberania americana era mas propensa a
manejar el baston grueso y afirmar vigorosamente losfueros de su poder y autoridad, se vio
jamas a un departamento de Justicia o a alguna de sus dependencias entrometerseen el
ejercicio ordenado por los tribunales de sujurisdiccion y competencia. Era una tradicion
firmamenteestablecida en las esfersas del Poder Ejecutivo tradicioninviolada e inviolable
maxime en el Departamento de Justicia y en la Fiscalia General, el inhibirse de expresar
algunaopinion sobre un asunto ya sometido a los tribunales, excepto cuando venian llamados a
hacerlo, en representaciondel gobierno, en los tramites de un litigio, civil o
criminal,propiamente planteado ante dichos tribunales. Fuera deestos casos, la inhibicion era
tradicionalmente absoluta,observada con la devocion y la escrupulosidad de un rito.Y la razon
era muy sencilla: hamas se queria estorbar nientorpecer la funcion de los tribunales de justicia,
loscuales, bajo la carta organica y las leyes, tenian absolutoderecho a actuar con maximo
desembarazo, libres de todaingerencia extraa. Esto se hizo bajo la Ley Cooper; estose hizo
bajo la Ley Jones; y esto se hizo bajo la Ley Tydings-McDuffie, la ley organica del
Commonwealth. Creo que el pueblo filipino tiene derecho a que eso mismo se haga bajo el
gobierno de la Republica, que es suyo, que es de su propia hechura. No faltaba mas que los
hombres de su propia raza le nieguen lo que no le negaron gobernantesde otra raza!

No se niega la facultad de supervision que tiene el Departamento de Justicia sobre las oficinas y
dependenciasque caen bajo su jurisdiccion, entre ellas las varias oficinasde registro de la
propiedad en Manila y en las provincias.Tampoco se niega la facultad que tiene dicho
Departamentopara expedir circulares, ya de caracter puramente administrativo,ya de caracter
semijudicial, dando instrucciones,vgr., a los registradores acerca de como deben
desempenarsus funciones. De hecho la circular num. 14 de 25 deAgosto, 1945, es de esta
ultima naturaleza: en ella seinstruye y ordena a los registradores de titulos que noregistren ni
inscriban ventas de propiedad inmueble aextranjeros, asi sean terrenos residenciales,
comerciales oindustriales. Pero la facultad llega solo hasta alli; fuerade esas fronteras el campo
ya es pura y exclusivamentejudicial. Cuando una determinada circular del Departamentoa los
registradores es combatida o puesta en telade juicio ante los tribunales, ora por
fundamentosconstitucionales, ora por razones meramente legales, ya no esel Departamento el
que tiene que determinar o resolverla disputa, sino que eso compete en absoluto a los
tribunalesde justicia. Asi lo dispone terminantemente el articulo200 del Codigo Administrativo.
Segun este articulo, elasunto o disputa debe elevarse en forma de consulta a la Sala Cuarta del
Juzgado de Primera Instancia de Manila.La ley no confiere ninguna facultad al Departamento
deJusticia para enjuiciar y decidir el caso. Y cuando unaparte no estuviere conforme con la
decision de la SalaCuarta, ella puede alzarse de la sentencia para ante laCorte Suprema. He aqui
el texto integro del articulo 200 del Codigo Administrativo:

SEC. 200. Reference of doubtful matter to judge of fourth branch of Court of First
Instance at Manila. When the register of deeds is in doubt with regard to the proper
step to be taken or memorandum to be made in pursuance of any deed, mortgage, or
other instrument presented for registration or where any party in interest does not
agree with the register of deeds with reference to any such matter, the question shall
be referred to the judge of the fourth branch of the Court of First Instance of the Ninth
Judicial District either on the certificate of the register of deeds stating the question
upon which he is in doubt or upon the suggestion in writing of the party in interest; and
thereupon said judge, upon consideration of the matter as shown by the record certified
to him, and in case of registered lands, after notice to the parties and hearing, shall
enter an order prescribing the step to be taken or memorandum to be made.

Tal es lo que ha ocurrido en el presente caso. Krivenkopresento su escritura de compraventa al


Registrador de laPropiedad de Manila. Este denego la inscripcion solicitadaen virtud de la
prohibicion contenida en la circular num.14. Que hizo Krivenko entonces? Elevo acaso el
asuntoal Departamento de Justicia? No. Lo que hicieron susabogados entonces fue presentar
una demanda el 23 de Noviembre, 1945, contra el Registrador de Titulos ante laSala Cuarta del
Juzgado de Primera Instancia de Manila,numerandose dicha demanda como consulta num.
1289; ycuando esta Sala decidio el asunto confirmando la acciondel Registrador, Krivenko trajo
a esta Corte la apelacionque estamos considerando. Tan elemental es esto que enla misma
circular num. 14 se dice que la prohibicion quedadecretada hasta que los tribunales resuelvan
lo contrario. He aqui la fraseologia pertinente de dicha circularnum. 14:

. . . the registration of said deeds or other documents shall be denied, unless and /or
until otherwise specifically directed by a final decision or order of a competent court
and the party in interest shall be advised of such denial, so that he could avail himself of
the right to appeal therefrom, under the provisions of section 200 of the Revised
Administrative Code.

La posicion de la Corte Suprema ante este caso claro ypositivo de intromision (interference) en
sus funciones esde lo mas peculiar. Tenemos en el Reglamento de losTribunales algunas
disposiciones que proveen sancion pordesacato para ciertos actos de intromision en el ejercicio
de lasfunciones judiciales.2 Pero se preguntara naturalmente;son aplicables estas disposiciones
cuando la intromisionprocede de un ramo del poder ejecutivo, el cual, como sesabe, en la
mecanica de los poderes del Estado, es usandoun anglicismo-coigual y coordinado con el
poder judicial,maxime si esa intromision se ha realizado so capa de unacto oficial? Cualquiera,
pues, puede imaginarse la situaciontremendamente embarazosa, inclusive angustiosa enque
esta Corte ha quedado colocada con motivo de esa intromision departamental, exponiendose a
chocar con otropoder del Estado. En casos recientes en que estaban envueltos otros poderes,
esta Corte, estimando dudosa suposicion constitucional, prefirio adoptar una actitud
deelegante inhibicion, de "manos fuera" (hands-off), si bienhay que hacer constar que con la
fuerte disidencia dealgunos Magistrados, entre ellos el opinante.3 Tenemos, portanto, un caso
de verdadera intromision en que siendo, porlo menos, dudosa la facultad de esta Corte para
imponeruna sancion por desacato de acuerdo con el Reglamento delos Tribunales, le queda el
unico recurso decente, ordenado:registrar su excepcion sin ambages ni eufemismos contrala
intromision, y reafirmar con todo vigor, con toda firmezasu independencia.
Se arguye con tenaz persitencia que debiamos de haberconcedido la mocion de retirada de la
apelacion, por dosrazones: (a) porque el Procurador General estaba conformecon dicha
retirada; (b) para evitar la resolucion delpunto constitucional envuelto, en virtud de la
practica,segun se dice, de soslayar toda cuestion constitucionalsiempre que se pueda. Respecto
de la primera razon serasuficiente decir que el Procurador General es libre de entraren
cualquiera transaccion sobre un asunto en que interviene,pero es evidente que su accion no ata
no obliga aesta Corte en el ejercicio de la discrecion que le confierela regla, 52, seccion 4, del
Reglamento de los Tribunales,que reza como sigue:

Rule 52, SEC. 4 An appeal may be withdrawn as of right at any time before the filing
of appelle's brief. After that brief is filed the withdrawal may be allowed by the court in
its discretion. . . . (Las cursivas son nuestras.)

Como se ve, nuestra discrecion es absoluta:no estacondicionada por la conformidad o


disconformidad de una delas partes. Y la incondicionalidad de esa discrecion es masabsoluta e
imperativa alli donde el litigio versa sobre unamateria queno afecta solo a un interes privado,
sino quees de interes publico, como el caso presente en que el Procurador General ha
transigido no sobre un asunto suyopersonal o de un cliente particular, sino de un cliente
demucha mayor monta y significacion el pueblo filipino ysiendo materia del litigio la
propiedad del suelo, parte, vitalisima del patrimonio nacional que nuestro pueblo hacolocado
bajo la salvaguardia de la Constitucion.

Respecto del segundo fundamento, o se que debiamospermitir la retirada dela apelacion para
no tener queresolver la cuestion constitucional disputada, bastara decirque la practica,
prinsipio o doctrina que se invoca, llevaconsigo una salvedad o cualificacion y es que el litigio se
pueda resolver de otra maera. Podemos soslayar elpunto constitucional discutido en el
pleito que nos ocupa? Podemos decidirlo bajo otra ratio decidendi, esto es, queno sea la
constitucionalidad o inconstitucionalidad de laventa del inmueble al apelante Krivenko, en
virtud desucondicion de extranjero? Indudablemente que no: la lis mota, la unica, es la misma
constitucionalidad de la compraventa de que se trata. Para decidir si al recurrido apelado,
Registrador de Titulos de la Ciudad de Manila,le asiste o no razon para denegar la inscripcion
solicitada por el recurrente y apelante, Krivenko, la unica disposicionlegal que se puede aplicar
es el articulo XIII, seccion 5, dela Constitucion de Filipinas, invocado por el Registrador como
defensa e inserto en el parrafo 5 de la circular num.14 como fundamento de la prohibicion o
interdiccion contrael registro de las ventas de terreno a extranjeros. Nohay otra ley para el
caso.

El caso de Oh Cho contra el Director de Terrenos43 Gac. Of., No. 3 pag. 866), que se cita en
unade las disidencias, es completamente diferente. Es verdadque alli se planteo tambien la
cuestion constitucional de quese trata, por cierto que el que lo planteaba en nombre
delGobierno era el actual Secretario de Justicia que entoncesera Procurador General, y lo
pleantaba en un sentido absolumente concorde con la circular num. 14. Pero esta Corte, con la
disidencia de algunos Magistrados, opto porsoslayar el punot constitucional denegando el
registro solicitadopor Oh Cho, por fundamento de que bajo la LeyNo. 2874 sobre terrenos de
dominio publico los extranjerosestan excluidos de dichos terrenos; es decir, que el
terrenosolicitado se considero como terreno publico. Podemos hacer la misma evasion en el
presente caso, acogiendonosa la ley No. 2874 o a cualquier otra ley? Indudablemente que no
porque ningun Magistrado de esta Corte, muchomenos los disidentes, consideran el terreno
reclamado por Krivenko como terreno publico. Luego todos los caminosestan bloqueados para
nosotros, menos el camino constitucional.Luego el segundo fundamento alegado paracubrir la
evasiva tambien debe descartarse totalmente.

Se insinua que no debiamos darnos prisa en resolver constitucionalmente el presente asunto,


puesto que puedenpresentarse otros de igual naturaleza en tiempo no remoto,y en efecto se
cita el caso de Rellosa contra Gaw Chee Hun(49 Off. Gaz., 4345), en que los alegatos de ambas
partesya estan sometidos y se halla ahora pendiente de decision.Es evidente que esto tampoco
arguye en favor de la evasiva,en primer lugar, porque cuando se le somete el deber de
iraveriguando en su Escribania si hay casos de igual naturaleza, sino que los casos se someten
por orden de prelaciony prioridad de tiempo a medida que esten preparados paracaso debe
decidirse por sus propios meritos y conforme ala ley pertinente. La salvedad o cualificacion de la
doctrinao practica que se invoca no dice: "hay qoe soslayar la cuestionconstitucional siempre
que se pueda resolver de otra manera, reservando dicha cuestion constitucional para otro caso;
la salvedad es dentro del mismo caso. De otro modono seria un simple soslayo legal, sino que
seria unsub terfugio impropio, indebido, ilegal. En el presente caso no ha habido ninguna prisa,
excesivo celo, como se insinua;desde luego no mayor prisa que en otros asuntos. Elcurso, el
ritmo de los tramites ha sido normal; en realidad,si ha habido algo, ha sido un poco de
parsimonia, lentitud.

Habia justificacion para demorar el pronto, rapido pronunciamento de nuestro veredicto


sobre la formidablecuestion constitucional debatida, por lo menos, tan pronto como fuese
posible? Habia alguna razon de interespublico para justificar una evasiva?
Absolutamenteninguna. Por el contrario, nuestro deber ineludible, imperioso,era formular y
promulgar inmediatamente ese veredicto. Lo debiamos a nuestras conciencias; lo debiamos,
sobretodo, al pais para la tranquilidad y conveniencia de todos del pueblo filipino y de los
extranjeros residentes o quetuvieren voluntad de residir o negociar en estas Islas. Asicada cual
podria hacer su composicion de lugar, podriaorientarse sin zozobras ni miedo a la
incertidumbre. Tantonacionales como extranjeros sabrian donde invertir sudinero. Todo lo que
necesitabamos era tener dentro de esta Corte una provee la interdiccion de que se trata.
Tuvimosesa mayoria cunado se voto por primera vez este asuntoen Febrero de este ao (8
contra 3); la tuvimos cuandodespues de laboriosas deliberaciones quedo denegada lamocion de
retirada de la mayoria haya cambiado de opinionsobre el fondo de la cuestion; la tenemos
ahora naturalmente.Por tanto, nada hace falta ya para que se de lasenal de "luz verde" a la
promulgacion de la sentencia.Toda evasiva seira neglignecia, desidia. Es mas: seriaabandono de
un deber jurado, como digo en otra parte deesta concurrencia; y la Corte Suprema
naturalmente npha de permitir que se la pueda proferir el cargo de queha abandonado su
puesto privilegiado de vigia, de centinela avanzado de la Constitucion.
No es que la Corte Suprema, con esto, pretenda tener"un monopolio de la virtud de sostener y
poner en vigor,o de suplir una deficiencia en la Constitucion," o que segobierno, como se
insinua en una de las disidencias. Nohay tal cosa. El principio de la supremacia judicial no esuna
pretension ni mucho menos un ademan de inmodestiao arrogancia, sino que es una parte vital
de nuestrasinstutuciones, una condicion peculiarisima de nuestro sistema de gobierno en que
la judicatura, como uno de lostres poderes del Estado, corresponde la facultad exclusivade
disponer de los asuntos judiciales. Con respecto a losasuntos de registro particularmente esa
facultad exclusivano solo se infiere del principio de la supremacia judicial, sino que, como ya se
ha dicho en otra parte de esta concurrencia,se halla especificamente estutuida en el articulo
200del Codigo Administrativo transcrito arriba. Este articuloconfiere jurisdiccion exclusiva a los
tribunales de justiciapara decidir las cuestiones sobre registro, y esto lo ha reconocido el mismo
Departamento de Justicia en su circularnum. 14 al referir tales cuestiones a la determinacion
oarbitrio judicial en casos de duda o litigio.

Es injustificada la insinuacion de que, al parecer, la mayoria denego la retirada de la apelacion


no tanto para resolver el asunto en su fondo o por sus meritos, como paraenrvar los efectos de
la circular num. !28 del Departamentode Justicia, pues Krivenko, el apelante, habriaganado
entonces su pleito no en virtud de una sentenciajudicial, sino pasando por la puerta
trasera abierta por esacircular. Tampoco hay tal cosa. Ya repetidas veces seha dicho que el
presente asunto se habia votado muchoantes de que se expidiese esa circular. Lo que
mascorrectamente podria decirse es que antes de la expedicion deesa desafortunada circular
poderosas razones de interespublico aconsejaban que se denegase la retirada de la apelacion y
se diese fin al asunto mediante una sentencia enel fondo, despues de la expidicion esas razones
quedaroncentuplicadas. La explicacion es sencilla: nuestra aquiescenciaa la reirada hubiera
podico interpretarse entoncescomo que nuestra jurisdiccion. Es mas: hubiera
podidointerpretarse como una abyecta rendicion en la pugna porsostener los fueros de cada
ramo coigual y coordinado del gobierno.

Es todavia mas injustificada la insinuacion de que ladenegacion de la retirada de la apelacion


equivale "a asumir queel solicitante-apelante y el Procurador General sehan confabulado con el
Departamento de Justicia no solopara ingerirse en las funciones de esta Corte, sino
paraenajenar el patrimonio nacional a los extranjeros." Estoes inconcebible. La corte presume
que todos han obradode buena fe, de acuerdo con los dictados de su conciencia.Se ha
denegado la retirada de la apelacion por razonespuramente juridicas y objectivas, sin
consideracion a losmotivos de nadie.

Por ultimo, estimo que debe rectificarse la asercion de queel Magistrado Hontiveros fue
excluido de la votacion queculmino en un emmpate y que determino el rechazamientode la
retirada de la apelacion, a tenor de la regla 56, seccion2, Reglamento de los Tribunales. El
Magistrado Hontiverosno estaba presente en la sesion por estar enfermo;pero estaban
presentes 10 Magistrados, es decir, mas queel numero necesario para formar quorum y para
despacharlos asuntos. La rueda de la justicia en la Corte Supremajamas ha dejado de rodar por
la ausencia de uno o dosmiembros, siempre que hubiese quorum. A la votacionprecedieron
muy laboriosas y vivas deliberaciones. Ningun Magistrado Ilamo la atencion de la Corte hacia la
ausencia del Sr. Hontiveros. Ningun Magistrado pidio que se leesperase o llamase al Sr.
Hontiveros. Todos se conformaroncon que se efectuase la votacion, no obstante la ausencia del
Sr. Hontiveros. En efecto, se hace la votaciony resulta un empate, es decir, 5 contra 5. De
acuerdo conla regla 56, quedaba naturalmente denegrada la mocion deretirada. Donde esta,
pues, la "ilegalidad", donde la"arbitrariedad"?

Algunos dias despues se presento una mocion de reconsideracion,la misma en que ya se


alegaba como ndamentoel hecho de que la cuestion era simplemente academica (moot
question) por la conformidad del Procurador Generalcon la retirada y por la circular num. !28
del Departamento de Justicia. Tampoco estaba presente el Sr. Hontiverosal someterse la
mocion, la cual fue de nuevo denegada.Pregunto otra vez: donde esta la "arbitrariedad"?
Queculpa tenia la Corte de que el Sr. Hontiveros no pudieraestar presente por estar enfermo?
Iba a detenerse larueda de la justicia por eso? Conviene, sin embargo, hacerconstar que sobre
el fondo de la cuestion el Sr. Hontiverosera uno de los 8 que habian votado en favor de la
confirmacion de la sentencia apelada, es decir, en favor delveredicto de que la Contitucion
excluye a los extrajerosde la propiedad de bienes raices en Filipinas.

II. No queda casi nada decir sobre el fondo de lacuestion. Todos los angulos y fases de la misma
estanacabadamente tratados y discutidos en la ponencia. Melimitare, por tanto, a hacer unas
cuantas observaciones,unas sobre hermeneutica legal, y otra sobre historia
nacionalcontemporanea, aprovachando en este ultimo respectomis reminiscencias y mi
experiencia como humilde miembroque fui de la Asamblea Constituyente que redacto y
arobola Constitucion de Filipinas.

Toda la cuestion, a mi juicio, se reduce a determinar einterpretar la palabra "agricola"


(agricultural) usada enel articulo XIII, seccion 5, de la Constitucion. He aqui eltexto completo de
la seccion:

SEC. 5. Save in cases of hereditary succession, no private agricultural land shall be


transferred or assigned except to individuals, corporations, or associations qualified to
acquire or hold lands of the public domain in the Philippines.

Incluye la palabra "agricultural" aqui empleada los terrenosresidenciales, comerciales e


industriales? Tal es lacuestion: la mayoria de esta Corte que si; los disidentesdicen que no.

Es indudable que por razones sanas de hermenuetica legalel articulo XIII de que se trata debe
interpretarse como untodo homogeneo, simetrico. En otras palabras, los cocablosalli
empleados deben interpretarse en el sentido de quetienen un mismo significado. Es absurdo
pensar o suponerque en el texto de una ley, sobre todo dentro del estrechomarco de un
articulo, un vocablo tenga dos o mas significadosdistintos, a menos que la misma ley asi to diga
expresamente. Lapresuncion es que el legislador sigue y seatiene a las reglas literarias
elementales.
Ahora bien: el articulo XIII consta de dos partes laprimera, que trata de los terrenos agricolas
de dominiopublico, y la segunda, que se a los terrenos agricolaprivados o partuculares.

La primera parte se compone de las secciones 1 y 2que vinculanla propiedad de los terrenos
publicos enel Estado y disponen que solo se pueden enajenar a favorde ciudadanos filipinos, o
de corporaciones o asociacionesen que el 60 por ciento del cacital, por lo menos, pertenecea
tales ciudadanos. En secciones se emplea literalmentela frase "public agricultural land."

La segunda parte la componen las secciones 3 y 5: laseccion 3 perceptua que "the Congress
may determine bylaw the size of private agricultural land which individuals,coporations, or
associations may acquire and hold, subjectto rights existing prior to the enactment of such
law"4 ;y la seccion 5 es la que queda transcrita mas arriba y esobjeto del presente litigio. En
ambas secciones se emplealiteralmente la frase "private agricultural land."

No hay ninguna cuestion de que la frase "public agriculturalland" empleada en la primera parte
comprende terrenosresidenciales, comerciales e industriales; lo admitenlos mismos abogados
del apelante y los Sres. Magistradosdisidentes. Y por que lo admiten? Sera porque en
laConstitucion se define la palabra "agricultural" aplicadaa terrenos publicos, en el sentido de
incluir solaresresidenciales, comerciales e industriales? Indudablementeque no, porque en
ninguna parte de la Constitucion se datal definicion. Lo admiten porque en esta
jurisdicciontenemos una serie consistente de sentencias de esta CorteSuprema en que es
jurisprudencia firmamente establecidala doctrina de que la palabra "agricultural" usada en
laLey del Congreso de los Estados Unidos de 1902 (LeyCooper) y en nuestras leyes de terrenos
publicos comprendey abarca solares residenciales, comerciales, industriales yqualquier otra
clase de terrenos, excepto forestales yminerales.5 Es decir, que se aplica a la actual Constitucion
deFilipinas una interpretacion clasica, tradicional, embebidaen nuestra jurisprudencia de cerca
de medio siglo.

Ahora bien, pregunto: si la palabra "agricultural" empleadaen la primera parte del articulo XIII
tiene talsignificado y lo tiene porque la Constitucion no da otrodiferente por que esa
misma palabra empleada en lasegunda parte, unas cuantas lineas mas adelante, no hade tener
el mismo significado? Da acaso la Constitucionuna definicion de la palabra "agricultural"
cuandose refiere a terreno privado? Donde esta esa definicion? O es que se pretende que la
diferenciacion opera no envirtud de la palabra "agricultural", sino en virtud delvocablo "public"
o "private", segun que se trate de terrenopublico o privado?

Si la intencion de la Asemblea Constituyente fuera eldar a la palabra "agricultural" aplicada a


terreno privadoun significado distinto de cuando se refiere a terreno publico, lo hubiese hecho
constar asi expresamente en elmismo texto de la Constitucion Si, como se admite, laAsemblea
opto por no definir la palabra "agricultural"aplicada a terreno poblico porque contaba para ello
con ladefinicion clasica establecida en la jurisprudencia, cuandola misma Asemblea tampoco
definio la palabra con relaciona terreno privado, es logico inferir que tuvo la mismaintencion,
esto es, aplicar la definicion de la jurisprudenciaa ambos tipos de terreno el publico y el
privado. Pensarde otra manera podria ser ofensivo, insultante; podriaequivaler a decir que
aquella Asemblea estaba compuestade miembros ignorantes, desconocederos de las reglas
elementalesen la tecnica de redaccion legislativa.

Tuve el honor de partenecer a aquella Asemblea comouno de los Delegados por Cebu. Tambien
me cupo elhonor de partenecer al llamado Comite de Siete elcomite encargado finalmente
de redactar la ponencia dela Constitucion. No digo que aquella Asemblea estabacompuesta de
sabios, pero indudablemente no era inferiora ninguna otra de su tipo en cualquiera otra
partedel mundo. Alli habia un plantel de buenos abogados,algunos versados y especialistas en
derecho constitucional.Alli estaba el Presidente de la Universidad de FilipinasDr. Rafael Palma;
alli estaba el propio Presidentede la Asemblea Constituyente Hon. Claro M. Recto, conlos
prestigios de su reconocida cultura juridica y humanista; alli estaba tambien el Dr. Jose P.
Laurel, considerado comouna de las primeras autoridades en derecho constitucionaly politico
en nuestro pais. En el Comite de Siete o dePonencia figuraban el actual Presidente de Filipinas
Hon.Manuel Roxas; el ex-Senador de Cebu Hon. Filemon Sotto;el Hon. Vicente Singson
Encarnacion, lider de la minoria en la primera Asemblea Filipina, ex-miembro de la Comisionde
FIlipinas, ex-Senador y ex-Secretario de Gabinete;el ex-Magistrado de la Corte Suprema Hon.
NorbertoRomualdez; el actual Secretario de Hacienda Hon. MiguelCuaderno; y el ex-Decano del
Colegio de Artes Liberalesde la Universidad de Filipinas, Hon. Conrado Benitez.

No se puede concebir como bajo la inspiracion y guiade estas personas pudiera redactarse el
texto de un articuloenque un vocablo el vocablo "agricultural" tuviera dosacepciones
diferentes: una, aplicada a terrenos publicos;y otra, aplicada a terrenos privados. Menos se
concibeque, si fuese esta la intencion, se incurriese en una comisionimperdonable: la omision
de una definicion especifica, diferenciadora, que evitase caos y confusion en la mente delos
abogados y del publico. Teniendo en cuenta la innegablecompetencia de los Delegados a la
Asemblea Constituyentey de sus liders, lo mas logico pensar es que alno definir la palabra
"agricultural" y al no diferenciarsu aplicacion entre terrenos publicos y privados, lo
hicierondeliberamente, esto es, conla manifiesta intencion dedejar enteramente la
interpretacion de la palabra a la luzde una sola comun definicin la establecida en la
jurisprudenciadel asunto tipico de Mapa contra Gobierno Insular y otrossimilares (supra); es
decir, que la palabra "agricultural",aplicada a terrenos privados, incluye tambien
solaresresidenciales, comerciales, e industriales.

A word or phrase repeated in a statute will bear the same meaning throughout the
statute, unless a different intention appears. . . . Where words have been long used in a
technical sense and have been judicially construed to have a certain meaning, and have
been adopted by the legislature as having a certain meaning prior to a particular statute
in which they are used, the rule of construction requires that the words used in such
statute should be construed according to the sense in which they have been so
previously used, although that sense may vary from the strict literal meaning of the
words." (II Sutherland, Stat. Construction, p. 758.)

Pero acaso se diga que la Asemblea Constituyente hadejado sin definir la palabra "agricultural"
referente aterreno particular, dando a entendar con su silencio queendosaba la definicion al
diccionario o a la usanza popular.La suposicion es igualmente insostenible. ?Por queen un caso
se entrega la definicion a la jurisprudencia,y por que en otro al diccionario, o al habla
popular?Aparte de que los miembros y dirigentes de la AsembleaConstituyente sabian muy
bien que esto causaria unatremenda confusion. Ni los diccionarios, ni mucho menosel lenguaje
popular, ofrecen apoyo seguro para una fiely autorizada interpretacion. Si el texto mismo de la
ley,con definiciones especificas y casuisticas, todavia ofrecedudas a veces como no el lexico
vulgar, con su infinitavariedad de matices e idiotismos?

Ahora mismo no estamos presenciando una confusionn,una perplejidad? Hay acaso


uniformidad en la definicionde lo que es un terreno privado agricola? No; cadacual lo define a
su manera. Uno de los disidentesel Magistrado Sr. Tuason toma su definicion de la palabra
"agricultural " del Diccionario Internacional de Webster que dice . . . "of or pertaining to
agricultural connected with, or engaged in, tillage; as the agricultural class; agricultural
implements, wages etc." Tambien hacereferncia el mismo Magistrado al concepto popular.
Otrodisidente el Magistrado Sr. Padilla dice que "the termprivate agricultural land means lands
privately owneddevoted to cultivation, to the raising of agriculturalproducts." El Magistrado Sr
Paras no da ninguna definicion;da por definida la palabra "agricultural", al parecer, segunel
concepto popular.

Pero, sobre todo, los abogados del apelante definen elvocablo de una manera distinta. Segun
ellos, "land spoken of as `agricultural' naturally refers to land not only susceptible of agricultural
or cultivation but more valuable for such than for another purpose, say residential,commercial
or educational. . . . The criterion is notmere susceptibility of conversion into a farm but its
greater value when devoted to one or the other purpose." Demode que, segun esta definicion,
lo que determina la calidaddel terreno es su valor relativo, segun que se dedique alcultivo, o a
residencia, o al comercio, o a la industria.Los autores de esta definicion indudablemente tienen
encuenta el hecho de que en las afueras de las ciudades existenterrenos immensos que desde
tiempo inmemorial se handedicado a la agricultura, pero que se han convertido ensubdivisiones
multiplicandose su valor en mil por cientosi no mas. De hecho esos terrenos son agricolas;
comoque todavia se ven alli los pilapiles y ciertas partes estancultivadas; pero en virtud de
su mayor valor para residencia,comercio e industria se les aquiere colocar fuera dela
prohibicion constitucional. En verdad, el criterio nopuede ser mas elastico y convencional, y
denota cuanincierta y cuan confusa es la situacion a que da lugar latesis del apelante y de los
que le sostienen.

Si hubieramos de hacer depender la definicion de loque es un terreno agricola del concepto


popular y de losdiccionarios, asi sean los mejores y mas cientificamente elaborados que
normas claras, concretas y definitivasde diferenciacion podrian establecerse? Podrian
trazarsefronteras inconfundibles entre lo que es agricola y lo quees residencial, comercial e
industrial? Podria hacerseuna clasificacion que no fuese arbitraria? Indudablementeque no. El
patron mas usual de diferenciacion es lanaturaleza urbana o rural del terreno; se considera
comoresidencial, comercial e industrial todo lo que esta dentrode una urbe, ciudad o poblacion.
Pero resolveria esto la dificultad? Proporcionaria un patron exacto, cientifico,no arbitrario?
Tampoco. Por que dentro de una ciudado poblacio puede haber y hay terrenos agricolas.
Comodijo muy bien el Magistrado Sr. Willard en el asunto clasico de Mapa contra Gobierno
Insular, "uno de los inconvenientes de la adopcion de este criterio es que es tanvago e
indeterminado, que seria muy dificil aplicarlo enla practica. Que terrenos son agricolas por
naturaleza? l mismo Fiscal General, en su alegato presentado en este asunto, dice: 'La montaa
mas pedregosa y el suelo mas pobre son susceptible de cultivo mediante la mano del hombre'"
(Mapa contra Insular, 10 Jur. Fil.,183). Y Luego el Sr. Willard aade las siguietes
observacionessumamente petinentes e ilustratives para una correctare solucion del asunto que
nos ocupa, a saber:

. . . Tales terrenos (agricolas, quiere decir) se pueden encontrar dentro de los limites de
cualquier ciudad. Hay dentrode la ciudad de Manila, y en la parte densamente poblada
de lamisma, una granja experimental. Esta es por su naturaleza agricola. Contigua a la
Luneta, en la misma ciudad, hay una gran extension de terreno denominado Camp
Wallace, destinada a sports. El terreno que circuda los muros de la ciudad de Manila,
situado entre estos y el paseo del Malecon por el Sur y Este contiene muchas hectareas
de extension y es de naturaleza agricola. La Luneta misma podria en cualquier tiempo
destinarse al cultivo.

La dificultad es mayor tratanndose de diferenciar unterreno agricola de un terreno industrial.


En este respectoes preciso tener en cuenta que un terreno industiralno tienee que ser
necesariamente urbano; en realidad,la tendencia moderna es a situar las industrias fuera deas
ciudades en vastas zonas rurales. Verbigracia; anpredor de la famosa cascada de Maria Cristina
en Lanao existen grandes extensiones de terreno agricola, algunasde propiedad particular.
Cuando, se industrialice aquellaformidable fuerza hidraulica bajo el llamado Plan Beyster que
normas segfuras se podrian establecer para poner envigor la prohibicion constitucional fuese
burlada enajenandosetierras agricolas de propiedad privada a favorde extranjeros, ya sean
individuos, ya sean corporacioneso asociaciones, so pretexto de ser industriales?

Resulta evidence de lo expueto que los redactores denuetra Constitucion no pudienron haber
tenido la idea deque el articulo XIII fuera interpretado a la luz de ese criterio vago e
indeterminado que llama el Sr. Willard. Es mas logico pensar que el criterio que ellos tenian
enla mente era el criterio establicido en la jurisprudencia sentada en el asunto clasico de
Mapa contra Gobierno y otros asuntos concomitantes citados criterio mas frime, mas
seguro, menos expuesto a confusion y arbitrariedad, y sobre todo, "que ofrece menos
inconvenientes", parafraseando otra vez al Magistrado Sr. Willard, (supra, p. 185).

Otro serio inconveniente, La seccion 3, articulo XIIIde;la Constitucion, dispone que "el Congreso
puedo determinarpor ley l;a eextension superficial del terrenoprivado agricola que los
individous, corporaciones o asociaciones pueden adquirir y poseer, sujeto a los derechos
existentes antes de la aprobacion de dicha ley." Si seinterpretase que la frase "private
agricultural land" noincluye terrenos residenciales, comerciales e industriales,entonces estas
ultimas clases de yterreno quedarian excluidas de la facultad reguladora concedida por la
Constitucion al Congreso mediante dicha seccion 3. Entoncesun individuo o una corporacion
podrian ser dueos de todoslos terrenos de una ciudad; no habria limite a las adquisicionesy
posesiones en lo tocante a terrenos residenciales,comerciales e industriles. Esto parece
absurdo, peroseria obligada consecuencia de la tesis sustentada por elapelante.

Se hace hincapie en el argumento de que el el procesode tamizacion del articulo XIII durante las
deliberacionesde la Asamblea Constituyente y de los Comites de Ponnnnenciay de estilo al
principio no figuraba el adjetivo "agricola"en la seccion 5, diciendose solo "terreno privado" y
quesolo mas trade se aadio la palabra calificativa agricola"private agricultural land" De este
se quiere inferir quela adicion de la palabra "agricultural" debio de ser poralgun motivo y este
no podia ser mas que el de que sequiso excluir los terrenos residenciales comerciales e
industriales, limitandose el precepto a los propia o estrictamenteagricolas.

La deduccion es incorrecta y sin fundamento. No cabedecir que la adicion de la plabra


"agricultural" en estecaso equivale a excuir los terrenos residenciales, comercialese
industriales, por la sencilla razon de que la Constitucion no solo no define lo que es residencial
comercial e industrial, comercial e industrial. En cambio ya hemosvisto que la palabra
"agricultral" tiene una significaciontradicionalmente bien establecida en nuestra
jurisprudenciay en nuestro vocabulario juridico: incluye no solo terrenoscultivados o
susceptibles fe cultivo, sino tambien residencialescomerciales e industriales. Se admite por todo
elmundo que la palabra tiene tal significacion en el articuloXIII, seccion 5, de la Constitucion, en
cuanto se refierea terreno publico. Ahora bien; que diferencia hay, despuesde todo, entire un
terreno publico agricolo y uno sea a la calidad de agricola, absolutamente ninguna.Uno no es
mas menois agricola que el otro. La unicadiferencia se refiere a la propiedad, al titulo dominical
en que el uno es del Estado y el otro es de un particular.

En realidad, creo que la diferencia es mas bien psicologica,subjetiva en que vulgarmente


hablando pareceque los conceptos de "agricola" y "residencial" se repelen.No se debe
menospreciar la influencia del vulgo en algunascosas; en la misma literatura el vulgo juega su
papel; digasi no la formacion popular del romancero. Pero es indudable que cietas cosas estan
por encima del conceptovulgar una de estae la interpretacion de la leyes, lahermeneutica
legal. Esto no es exagerar la importancia de la tecnica sino que es simplemente colocar las
cosasensu verdadero lugar. La interpretacion de la ley es unafuncion de minoria los
abogados. Si no fuera asi paraque los abogados? Y para que las escuelas de dercho,y para que
los exmenes, cada vez mas rigidos, para de purar el alma de la toga, que dijo un gran abogado
espaol?6 Asi que cuando decimos que el precepto constitucional en cuestion debe
interpretatarse tecnicamente, a la luz de la jurisprudencia, por ser ello el metodo mas seguro
para hallar la verdad judicial, no importa que ello repugne al concepto vulgar a simple vista, no
ponemos,en realidad, nionguna pica en Flandes, sino que propugnamos una cosa harto
elememntal por lo sabida.

Por tanto no es necesario especular o devanarse lossesos tratando de inquirir por que en la
tamizacion delprecepto se aadio el adjetivo 'agricultural" a las palabras"private land" en vez
de dejarlas solas sin cualificacion.Algunos diran que fue por razon de simentria para
hacer"pendant diran que fue por razon de simetria para hacer"pendant" con la frase "public
agricultural land" puestamas arriba. Pero esto np tiene ninguna importancia. Loimportante es
saber que la aadidura, tal como esta jurisdiccion, de la palbra "agricultural" empleada en dicho
texto. Eso es todo; lo demas creo que es puro bizantinis mo.

III. Cero que una examen de los documentos y debatesde la Asamblea Constituyente para ver
de inquirir la motivacion y finalidad del precepto constitucional que nos ocupapuede ayudar
grandemente y arrojar no poca luz en lainterpretacion de la letra y espiritu de dicho
precepto.Este genero de inquisicion es perfectamente propio y permisible en hermeneutica
constitucional, y se ha hechosiempre, segun las majores autoridades sobre la materia. Cooley,
en su authorizado tratado sobre Limitaciones Constitucionales (Constitutional Limitations) dice
a este efectolo sigiuente:

When the inquiry is directedto ascertaining the mischief designed to be remedied, or


the purpose sought to be accomplished by a particular provision, it may be proper to
examine the proceedings of the convention which framed the instrument. Where the
proceedings clearly point out the purpose of the provision, the aid will be valuable and
satisfactory; but where the question is one of abstract meaning, it will be difficult to
derive from this source much reliable assistance in interpretation. (1 Cooley on
Constitutional Limitations [8th ed.], p. 142.)

Que atmosfera prevalecia en la Asamblea sobre elproblema de la tierra en general sobre el


problema capitalismo de los terrenos naturales? Cual era la tendenciapredominante entre los
Delegados? Y como era tambienel giro de la opinion, del sentimiento publico es decir comoera
el pulso del pueblo mismo del cual la Asamblea despuesde todo no era mas que organo e
interprete?

Varios discursos sobre el particular se pronounciaronen la Asamblea Constituyente. El tono


predomionante entodos ellos era un fuerte, profundo nacionalismo. Tanto dentro como fuera
de la Asamblea Constituyente era evidente, acusado, el afan unanime y decidido de conservar
el patrimonio nacional no solo para las presentes generaciones filipinas, sino tambien para la
posteridad. Y patrimonio nacional tenia, en la mente de todos un significadocategorio e
indubitable; significion de si es dedominio publico o privado. Muestras tipicas y representativas
de este tono pecular y dominantes de la ideologiaconstituyente son ciertas m,anifestaciones
que constanen el diario de serines has en el curso de los debateso en el proceso de la redaccion
del proyecto constitucionalpor Delegados de palabra autorizadam bien por su significacion
personal bein por el papel particula que desempeaban en las treas constituyentes. Por
ejemplo el Delegado Montilla por Negros Occidental, conspicuo representante del agro, usando
del privilegio de madia horaparlamentaria dijo en parte lo siguinte:

. . . Con la completa nacionnalization de nuestras tierras y recursos natural debe


entenderse que nuetro patrimonio nacional debe estar vinculado 100 por 100 en manos
filipinas. Tierras y recursos naturales son inm,uebles y como tales pueden compararse
con los organos vitales del cuerpo de una persona: la falta de posesion de los mismo
puede caussar la muete instantannea o el abreviamiento de la vida (Diario de Sesiones
Asamblea Constituyente, inedita, "Framing of the Constitution," tit. 2 0 pag. 592 Libro
del Profesor Aruego).

Como se ve el Delegado Montilla habla de tierras sin adjetivacion, es decir sin difenciar entre
propiedad publica y privada.

El Delgado Ledesma, por Iloilo, otro conspicuo representante del agro presidente del comte de
agricultura de la Asamblea que los extramnjeros no podian ser mismas palabras:

La exclusion de los extranjeros del privilegio de adquirir terrenos publicos agricolas y de


poder se dueos de propiedades inmuebles (real estate) es una parte necesaria de las
leyes de terrenos publicos de Filipinas para mantener firme la idea de conservar
Filipinaspara los filipos' (Diario de Sesiones, id.; Libro de Aruego, supra, pag. 593.)

Es harto significtativo que en el informe del Colite de Nacionalizacion y Conservacion de


Recursos Naturales de la Asamblea Constituyente la plabra tierra (land) se usa generricamente
sin cualificacion de publica o privada. Dice el Comite:

Que la tierra, los minerales los bosques y otros recursos naturalesconstituyen la


herencia exclusiva de la nacion filipina. Deben,por tanto, ser conservados para aquellos
que se halian bajo la autoridad soberana de esa nacion y para su posteridad. (Libro de
Aruego, supra, pag. 595.)

La conservacion y fomento del patrimonio nacional fue una verdadera obsesion en la Asamblea
Constituyente. Sus mienbros que todavia viven recordaran l;a infinita paciencia, el esmero de
orfe breria con que se trabajo el preambulo de la Constitucion. Cada frase, cada concepto se
sometio a un rigido proceso de seleccion y las gemas resultans es la labor benedictina una de
las gemas redel patrimonio nacional. He aqui el preambulo:

The Filipino people, imploring the aid of Divene Providence,in order to establish a
government that shall enbody their ideals, conserve and develop the patrimony of the
nation, promote the general welfare, and secure to themslves and their posterity the
blessings of independence under a regime of justice, liberty, and democracy, do ordain
and promulgate this Constitution.

El espiritu fuertemente nacionalista que saturaba la Asamblea Constituyente con respecto a la


tierre y recursosnaturales es de facil explicacion. Estabamos escribiendouna Constitucion no
solo para el Commonwealth, sino tambien para la republica que advendria despues de10 aos.
Querianos, puesd asegurar firmemente las basesde nuestra nacionalidad. Que cosa major para
ello quebildar por los cuatro costrados el cuerpo dela mnacion delcual parodiando al
Delegado Montilla la tierra y losresoursos naturales son como organos vitales cuya
perdidapuede causar la muerte instantanea o el abreviamiento dela vida?
Para aprociar el pulso de la nacion en aquel memontohistorico es preciso tener en cuenta las
cirucmstancias.Nos debamos perfecta cuenta de nuetra posicion geografica,asi como tambien
de nuestras limitaciones demograficas.Se trataba, por ciento de una conciencia
agudamenteatormentadora y alarmante. Estabamos roodeadosde enormes mesas humanas
centenares de milliones economica y biologicamente agresivas, avidad de desbordarsepor
tadas partes, poir las areas del Pafico particularmente,en busca de espacio vitales. China,
Japon-Japon, sobretodo que estaba entonces en el apogeo de su delirio deengrandecimiento
economico y militarista. Teniamos apantadoal mismo corazon, como espada rutilante de
Samurrai,el pavoroso problema de Davao, donde, por errores incialesdel Gobierno, Japon tenia
el control de la tierra, instituyendos alli una especie de Japon en miniatura, con todaslas
amenasas y peligros que ello implicaba para la integridadde nuestra existancia nacional. Como
que Davaoya se llamaba popular y sarcasticamente Davaoko, entragica rima con Manchuko.

Tambien nos obsesionaban otras lecciones dolorosas dehistoria contemporanea. Texas, Mejico,
Cuba y otraspaises del Mar Caribe y de la America Latina que todaviaexpiaban, como una
terrible maldicion el error de susgobernantes al permitir la enajenacion del suelo a extranjeros.

Con el commercio y la industria principalmente en manosno-filipinas, los Delegados a la


Constituyente se haciancargo tambien de la vitalisima necesidad de, por lo menos,vincular el
apatrimonio nacional, entre otras cosas la tierra, en manos de los filipinos.

Que de extrao habia, pues, que en semejante atmosfera y tales circumstancias se aprobase un
articulo rigidamentenacionalismta como es el Article XIII? La motivacion y finalidad, como ya se
ha dicho, era triple: (a)consetvar el patrimonio nacional para las presentes yfuturas
generaciones filipinas; (b) vincular, por lo menos,la propiedad de la tierra y de los recursos
naturales en manos filipinas como la mejor manera de mantener elequilibrio de un sistema
economico dominado principalmente por extranjeros en virtud de su tecnica (know-how)
superior y de su abudancia de capitales: (c) prefictos y complicaciones internacionales.

No se concibe que los Delegados tuvieran la intercionde excluir del precepto los terrenos
residenciales comercialese industrial, pues sabian muy bien que los finesque se trataban de
conseguir y los peligros quie se trataban de evitar con la politica de nacionalizacion y
conservacionrezaban tanto para una clase de terrenos como para otra. Por que se iba a temer,
verbigracia, el dominio extranjero sobre un terreno estrictamente, agricola, sujeto a cultivo, y
no sobre el terreno en que estuviera instalada unaformidable industria o fabrica?

Otro detalle significativo. Era tan vigoroso el sentimiento nacionalista en la Asamblea


Constituyente que, noobstante el natural sentimiento de gratitud que nos obligabaa favor de
los americanos., a estos no se les concedioningun privilegio en relacion con la tierra y demas
recusosnaturales, sino que se les coloco en el mismo plano que alos otros extranjeros. Como
que ha habido necesidad deuna reforma constitucional la llmada reforma sobre laparidad
para equipararlos a los filipinos.
The mere literal construction of a section in a statute ought not to prevail if it is opposed
to the intention of the legislature apparent by the statute; and if the words are
sufficiently flexible to admit of some other construction it is to be adopted to effectuate
that intention. The intent prevails over the letter, and the latter will, if possible, be so
read as to conform to the spirit of the act. While the intention of the legislature must be
ascertained from the words used to express it, the manifest reason and the obvious
purpose of the law should not be sacrificed to a literal interpretation of such words. (II
Sutherland, Stat. Construction, pp. 721, 722.)

IV. Se insinua que no debieramos declarar que laConstitucion excluye a loc extranjeros de la
propiedadsobre terrenos residenciales e industriales,porque ello imposibilitaria toda accion
legislativa en sentidocontrario para el caso de que el Congreso Ilegagealguna vez a pensar que
semejante interdiccio debialevantarse. Se dice que es majes y mas conveniente dejaresta
cuestion en manos del Congreso para que haya maselasticidad en las soluciones de los
diferentes problemassobre la tierra.

Cometeriamos un grave error si esto hicieramos. Estaes una cuestion constitucional por
excelencia. Solamenteel pueblo puede disponer del patrimonio nacional. Ni el Congreso, ni
mucho menos los tribunales, pueden disponerde ese patrimonio. Lo mas que puede hecer el
Congreso es proponer una reforma constitucional mediante los votosde tres cuartas (3/4) de
sus miembros;

Republic of the Philippines


SUPREME COURT
Manila

EN BANC

G.R. No. L-24066 December 9, 1925

VALENTIN SUSI, plaintiff-appellee,


vs.
ANGELA RAZON and THE DIRECTOR OF LANDS, defendants. THE DIRECTOR OF
LANDS, appellant.

Acting Attorney-General Reyes for appellant.


Monico R. Mercado for appellee.
VILLA-REAL, J.:

This action was commenced in the Court of First Instance of Pampanga by a complaint filed by
Valentin Susi against Angela Razon and the Director of Lands, praying for judgment: (a)
Declaring plaintiff the sole and absolute owner of the parcel of land described in the second
paragraph of the complaint; (b) annulling the sale made by the Director of Lands in favor of
Angela Razon, on the ground that the land is a private property; (c) ordering the cancellation of
the certificate of title issued to said Angela Razon; and (d) sentencing the latter to pay plaintiff
the sum of P500 as damages, with the costs.

For his answer to the complaint, the Director of Lands denied each and every allegation
contained therein and, as special defense, alleged that the land in question was a property of
the Government of the United States under the administration and control of the Philippine
Islands before its sale to Angela Razon, which was made in accordance with law.

After trial, whereat evidence was introduced by both parties, the Court of First Instance of
Pampanga rendered judgment declaring the plaintiff entitled to the possession of the land,
annulling the sale made by the Director of Lands in favor of Angela Razon, and ordering the
cancellation of the certificate of title issued to her, with the costs against Angela Razon. From
this judgment the Director of Lands took this appeal, assigning thereto the following errors, to
wit: (1) The holding that the judgment rendered in a prior case between the plaintiff and
defendant Angela Razon on the parcel of land in question is controlling in this action; (2) the
holding that plaintiff is entitled to recover the possession of said parcel of land; the annulment
of the sale made by the Director of Lands to Angela Razon; and the ordering that the certificate
of title issued by the register of deeds of the Province of Pampanga to Angela Razon by virtue of
said sale be cancelled; and (3) the denial of the motion for new trial filed by the Director of
Lands.

The evidence shows that on December 18, 1880, Nemesio Pinlac sold the land in question, then
a fish pond, tho Apolonio Garcia and Basilio Mendoza for the sum of P12, reserving the right to
repurchase the same (Exhibit B). After having been in possession thereof for about eight years,
and the fish pond having been destroyed, Apolonio Garcia and Basilio Mendoza, on September
5, 1899, sold it to Valentin Susi for the sum of P12, reserving the right to repurchase it (Exhibit
A). Before the execution of the deed of sale, Valentin Susi had already paid its price and sown
"bacawan" on said land, availing himself of the firewood gathered thereon, with the proceeds
of the sale of which he had paid the price of the property. The possession and occupation of the
land in question, first, by Apolonio Garcia and Basilio Mendoza, and then by Valentin Susi has
been open, continuous, adverse and public, without any interruption, except during the
revolution, or disturbance, except when Angela Razon, on September 13, 1913, commenced an
action in the Court of First Instance of Pampanga to recover the possession of said land (Exhibit
C), wherein after considering the evidence introduced at the trial, the court rendered judgment
in favor of Valentin Susi and against Angela Razon, dismissing the complaint (Exhibit E). Having
failed in her attempt to obtain possession of the land in question through the court, Angela
Razon applied to the Director of Lands for the purchase thereof on August 15, 1914 (Exhibit C).
Having learned of said application, Valentin Susi filed and opposition thereto on December 6,
1915, asserting his possession of the land for twenty-five years (Exhibit P). After making the
proper administrative investigation, the Director of Lands overruled the opposition of Valentin
Susi and sold the land to Angela Razon. By virtue of said grant the register of deeds of
Pampanga, on August 31, 1921, issued the proper certificate of title to Angela Razon. Armed
with said document, Angela Razon required Valentin Susi to vacate the land in question, and as
he refused to do so, she brought and action for forcible entry and detainer in the justice of the
peace court of Guagua, Pampanga, which was dismissed for lack of jurisdiction, the case being
one of title to real property (Exhibit F and M). Valentin Susi then brought this action.

With these facts in view, we shall proceed to consider the questions raised by the appellant in
his assignments of error.lawphi1.net

It clearly appears from the evidence that Valentin Susi has been in possession of the land in
question openly, continuously, adversely, and publicly, personally and through his
predecessors, since the year 1880, that is, for about forty-five years. While the judgment of the
Court of First Instance of Pampanga against Angela Razon in the forcible entry case does not
affect the Director of Lands, yet it is controlling as to Angela Razon and rebuts her claim that
she had been in possession thereof. When on August 15, 1914, Angela Razon applied for the
purchase of said land, Valentin Susi had already been in possession thereof personally and
through his predecessors for thirty-four years. And if it is taken into account that Nemesio
Pinlac had already made said land a fish pond when he sold it on December 18, 1880, it can
hardly be estimated when he began to possess and occupy it, the period of time being so long
that it is beyond the reach of memory. These being the facts, the doctrine laid down by the
Supreme Court of the United States in the case of Cario vs. Government of the Philippine
Islands (212 U. S., 4491), is applicable here. In favor of Valentin Susi, there is, moreover, the
presumption juris et de jure established in paragraph (b) of section 45 of Act No. 2874,
amending Act No. 926, that all the necessary requirements for a grant by the Government were
complied with, for he has been in actual and physical possession, personally and through his
predecessors, of an agricultural land of the public domain openly, continuously, exclusively and
publicly since July 26, 1894, with a right to a certificate of title to said land under the provisions
of Chapter VIII of said Act. So that when Angela Razon applied for the grant in her favor,
Valentin Susi had already acquired, by operation of law, not only a right to a grant, but a grant
of the Government, for it is not necessary that certificate of title should be issued in order that
said grant may be sanctioned by the courts, an application therefore is sufficient, under the
provisions of section 47 of Act No. 2874. If by a legal fiction, Valentin Susi had acquired the land
in question by a grant of the State, it had already ceased to be the public domain and had
become private property, at least by presumption, of Valentin Susi, beyond the control of the
Director of Lands. Consequently, in selling the land in question to Angela Razon, the Director of
Lands disposed of a land over which he had no longer any title or control, and the sale thus
made was void and of no effect, and Angela Razon did not thereby acquire any right.

The Director of Lands contends that the land in question being of the public domain, the
plaintiff-appellee cannot maintain an action to recover possession thereof.lawphi1.net
If, as above stated, the land, the possession of which is in dispute, had already become, by
operation of law, private property of the plaintiff, there lacking only the judicial sanction of his
title, Valentin Susi has the right to bring an action to recover possession thereof and hold it.

For the foregoing, and no error having been found in the judgment appealed from, the same is
hereby affirmed in all its parts, without special pronouncement as to costs. So ordered.

Avancea, C.J., Malcolm, Street, Villamor, Ostrand, Johns, and Romualdez, JJ., concur.
Johnson, J., took no part.

Republic of the Philippines


SUPREME COURT
Manila

FIRST DIVISION

G.R. No. 195825 February 27, 2013

SPOUSES ALFONSO AND MARIA ANGELES CUSI, Petitioners,


vs.
LILIA V. DOMINGO, Respondent.

x-----------------------x

G.R. No. 195871

RAMONA LIZA L. DE VERA, Petitioner,


vs
LILIA V. DOMINGO AND SPOUSES RADELIA AND ALFRED SY, Respondents.

DECISION

BERSAMIN, J.:
Under the Torrens system of land registration, the registered owner of realty cannot be
deprived of her property through fraud, unless a transferee acquires the property as an
innocent purchaser for value. A transferee who acquires the property covered by a reissued
owner's copy of the certificate of title without taking the ordinary precautions of honest
persons in doing business and examining the records of the proper Registry of Deeds, or who
fails to pay the full market value of the property is not considered an innocent purchaser for
value.

Under review in these consolidated appeals is the Decision promulgated on July 16,
2010,1 whereby the Court of Appeals (CA) in CA-G.R. CV No. 90452 affirmed the revised
decision rendered on March 1, 2007 by the Regional Trial Court in Quezon City (RTC) against the
petitioners and their seller.2

Antecedents

The property in dispute was a vacant unfenced lot situated in White Plains, Quezon City and
covered by Transfer Certificate of Title (TCT) No. N-165606 issued in the name of respondent
Lilia V. Domingo by the Registry of Deeds of Quezon City. It had an area of 658 square
meters.3 In July 1999, Domingo learned that construction activities were being undertaken on
her property without her consent. She soon unearthed the series of anomalous transactions
affecting her property.

On July 18, 1997, one Radelia Sy (Sy),4 representing herself as the owner of the property,
petitioned the RTC for the issuance of a new owners copy of Domingos TCT No. N-165606,
appending to her petition a deed of absolute sale dated July 14, 1997 purportedly executed in
her favor by Domingo;5 and an affidavit of loss dated July 17, 1997,6 whereby she claimed that
her bag containing the owners copy of TCT No. N-165606 had been snatched from her on July
13, 1997 while she was at the SM City in North EDSA, Quezon City. The RTC granted Sys
petition on August 26, 1997.7 The Registry of Deeds of Quezon City then issued a new owners
duplicate copy of TCT No. N-165606, which was later cancelled by virtue of the deed of absolute
sale dated July 14, 1997, and in its stead the Registry of Deeds of Quezon City issued TCT No.
186142 in Sys name.8

Sy subsequently subdivided the property into two, and sold each half by way of contract to sell
to Spouses Edgardo and Ramona Liza De Vera and to Spouses Alfonso and Maria Angeles Cusi.
The existence of the individual contracts to sell was annotated on the dorsal portion of Sys TCT
No. 186142 as Entry No. PE-8907/N-186142,9 stating that the consideration of the sale
was P1,000,000.00 for each set of buyers, or for a total of P2,000,000.00 for the entire property
that had an actual worth of not less than P14,000,000.00. TCT No. 186142 in the name of Sy
was then cancelled by virtue of the deeds of sale executed between Sy and Spouses De Vera,
and between Sy and Spouses Cusi, to whom were respectively issued TCT No. 189568 10 and TCT
No. 189569.11 All the while, the transactions between Sy and the De Veras, and between Sy and
the Cusis were unknown to Domingo, whose TCT No. N-165606 remained in her undisturbed
possession.12
It turned out that the construction activities taking place on the property that Domingo learned
about were upon the initiative of the De Veras in the exercise of their dominical and possessory
rights.

Domingo commenced this action against Sy and her spouse, the De Veras and the Cusis in the
RTC, the complaint being docketed as Civil Case No. Q-99-39312 and entitled Lilia V. Domingo v.
Spouses Radelia and Alfred Sy, Spouses Alfonso G. and Maria Angeles S. Cusi, Spouses Edgardo
M. and Ramona Liza L. De Vera, BPI Family Savings Bank and The Register of Deeds of Quezon
City, seeking the annulment or cancellation of titles, injunction and damages. Domingo applied
for the issuance of a writ of preliminary prohibitory and mandatory injunction, and a temporary
restraining order (TRO).13 The RTC granted Domingos application for the TRO enjoining the
defendants from proceeding with the construction activities on the property. The RTC later
granted her application for the writ of preliminary injunction.

Ruling of the RTC

On September 30, 2003, the RTC rendered a decision,14 disposing:

WHEREFORE, in view of all the foregoing judgment is hereby rendered:

(a) declaring the sale between Lilia V. Domingo and Radella Sy void and of (sic) effect;

(b) declaring the Sps. Edgardo and Ramona Liza De Vera and Sps. Alfonso and Maria
Angeles Cusi to be purchasers in good faith and for value;

(c) lifting the writ of preliminary injunction;

(d) finding defendant Radella Sy liable to the plaintiff Lilia Domingo liable (sic) for
damages, as follows:

1. Fourteen Million Pesos (P14,000,000.00) representing the value of the


property covered by TCT No. 165606 plus legal rate of interest until fully paid;

2. One Million Pesos (P1,000,000.00) representing moral damages;

3. Five Hundred Thousand Pesos (P500,000.00) representing exemplary


damages;

4. Five Hundred Thousand Pesos (P500,000.00) representing attorneys fees;

5. Two Hundred Thousand Pesos (P200,000.00) representing litigation expenses;


and

6. Costs of Suit.
IT IS SO ORDERED.

Acting on the motions for reconsideration separately filed by Sy and Domingo, 15 the RTC
reconsidered and set aside its September 30, 2003 decision, and allowed the presentation of
rebuttal and sur-rebuttal evidence.

On March 1, 2007, the RTC rendered a new decision,16 ruling:

WHEREFORE, in view of the foregoing, Judgment is hereby rendered:

(a) Declaring the sale between Lilia Domingo and Radelia Sy void and of no effect;

(b) Declaring the Sps. Edgardo and Ramona Liza De Vera and Sps. Alfonso and Maria
Angeles Cusi not purchasers in good faith and for value;

(c) TCT Nos. 189568 and 189569 are hereby cancelled and declared Null and Void Ab
Initio;

(d) Directing the Register of Deeds of Quezon City to annotate this Order on TCT No.
189568 and 189569;

(e) TCT No. 165606 in the name of Lilia Domingo is hereby revalidated; and,

(f) Finding defendant Radelia Sy liable to the plaintiff Lilia V. Domingo liable (sic) for
damages, as follows:

1. One Million Pesos (P1,000,000.00) representing moral damages;

2. Five Hundred Thousand Pesos (P500,000.00) representing exemplary


damages;

3. Five Hundred Thousand Pesos (P500,000.00) representing attorneys fees;

4. Two Hundred Thousand Pesos (P200,000.00) representing litigation expenses;


and,

5. Costs of suit.

This Decision is without prejudice to whatever civil action for recovery and damages, the
defendants Sps. De Vera and Sps. Cusi may have against defendant Spouses Radelia and Alfred
Sy.

SO ORDERED.
Ruling of the CA

On appeal, the assignment of errors each set of appellants made was as follows:

Spouses Cusi

a) THE REGIONAL TRIAL COURT GRAVELY ERRED IN FINDING THAT DEFENDANTS


SPOUSES ALFONSO AND MARIA ANGELES CUSI ARE NOT PURCHASERS IN GOOD FAITH
AND FOR VALUE.

b) THE REGIONAL TRIAL COURT GRAVELY ERRED IN FAILING TO RESOLVE THE ISSUE OF
WHETHER OR NOT CODEFENDANTS SPOUSES RADELIA SY AND ALFRED SY ARE LIABLE
FOR SPOUSES CUSIS CROSS-CLAIM.

c) THE REGIONAL TRIAL COURT ERRED IN FAILING TO AWARD DAMAGES AND


ATTORNEYS FEES TO DEFENDANTS SPOUSES CUSI.17

Spouses Sy

a) THE TRIAL COURT A QUO ERRED IN HOLDING THAT THE SALE BETWEEN LILIA
DOMINGO AND RADELIA SY VOID AND OF NO EFFECT AND WAS PROCURRED (sic)
THROUGH FRAUDULENT MEANS.

b) THAT THE HONORABLE COURT ERRED IN AWARDING ACTUAL MORAL DAMAGES,


EXEMPLARY DAMAGES AND ATTORNEYS FEES AND LITIGATION EXPENSES THE SAME
BEING NULL AND VOID FOR BEING CONTRARY TO LAW.

c) THAT THE SAID DECISION IS CONTRARY TO LAW AND JURISPRUDENCE AND IS NOT
SUPPORTED BY EVIDENCE, AS THE SAME CONTAIN SERIOUS REVERSIBLE ERRORS WHEN
THE COURT A QUO DECLARED THAT TCT NOS. 189568 AND 189569 CANCELLED AND
DECLARED NULL AND VOID AB INITIO.

d) THE INSTANT ASSAILED DECISION OF THE HONORABLE COURT HAVE (sic) DEPRIVED
DEFENDANT[S] SPOUSES SY OF THEIR BASIC CONSTITUTIONAL RIGHT TO DUE PROCESS
OF LAW.18

Spouses De Vera

a) THE LOWER COURT ERRED IN HOLDING THAT THE DE VERA SPOUSES ARE NOT
PURCHASERS IN GOOD FAITH AND NOT ENTITLED TO THE POSSESSION OF THE
PROPERTY COVERED BY TCT NO. N-189568.

b) THE LOWER COURT ALSO ERRED IN NOT AWARDING DEFENDANT-APPELLANT DE


VERA HER COUNTERCLAIMS AGAINST PLAINTIFF-APPELLEE.19
As stated, the CA promulgated its decision on July 16, 2010, affirming the RTC with modification
of the damages to be paid by the Sys to Domingo, viz:

WHEREFORE, premises considered, the instant appeal is denied. Accordingly, the Decision
dated March 1, 2007 of the Regional Trial Court is hereby AFFIRMED with the modification on
the award of damages to be paid by defendants-appellants Spouses Radelia and Alfred Sy in
favor of the plaintiff-appellee Lilia V. Domingo, to wit;

1. P500,000.00 by way of moral damages;

2. P200,000.00 by way of exemplary damages;

3. P100,000.00 as attorneys fees and litigation expenses.

SO ORDERED.20

The CA held that the sale of the property from Domingo to Sy was null and void and conveyed
no title to the latter for being effected by forging the signature of Domingo; that Sy thereby
acquired no right in the property that she could convey to the Cusis and De Veras as her buyers;
that although acknowledging that a purchaser could rely on what appeared on the face of the
certificate of title, the Cusis and De Veras did not have the status of purchasers in good faith
and for value by reason of their being aware of Sys TCT No. 186142 being a reconstituted
owners copy, thereby requiring them to conduct an inquiry or investigation into the status of
the title of Sy in the property, and not simply rely on the face of Sys TCT No. 186142; and that
the Cusis and De Veras were also aware of other facts that should further put them on guard,
particularly the several nearly simultaneous transactions respecting the property, and the
undervaluation of the purchase price from P7,000,000.00/half to only P1,000,000.00/half to
enable Sy to pay a lesser capital gains tax.

The CA later on denied the motions for reconsideration.21

Issues

Hence, this appeal via petitions for review on certiorari by the Cusis (G.R. No. 195825) and
Ramona Liza L. De Vera22 (G.R. No. 195871).

In G.R. No. 195825, the Cusis submit the following issues:23

WHETHER OR NOT THE HONORABLE COURT OF APPEALS ERRED IN FINDING THAT


TRANSFER CERTIFICATE OF TITLE NO. 186142 REGISTERED IN THE NAME OF RADELIA SY
IS A RECONSTITUTED TITLE.
II

WHETHER OR NOT THE PETITIONERS ARE BUYERS IN GOOD FAITH AND FOR VALUE.

III

GRANTING, WITHOUT ADMITTING, THAT THE DECISION OF THE HONORABLE COURT OF


APPEALS IS CORRECT WITH RESPECT TO THE SECOND ISSUE, WHETHER OR NOT
PETITIONERS ARE ENTITLED TO REIMBURSEMENT OF ALL THE PAYMENTS MADE BY
PETITIONERS TO THEIR CODEFENDANTS SPOUSES ALFRED AND RADELIA SY IN ADDITION
TO DAMAGES AND ATTORNEYS FEES.

In G.R. No. 195871, De Vera asserts that the primordial issue is whether or not she was an
innocent purchaser for value and in good faith.

Ruling of the Court

The petitions for review are bereft of merit.

Firstly, now beyond dispute is the nullity of the transfer of Domingos property to Sy because
both lower courts united in so finding. The unanimity in findings of both the RTC and the CA on
this all-important aspect of the case is now conclusive on the Court in view of their consistency
thereon as well as by reason of such findings being fully supported by preponderant evidence.
We consider to be significant that the Sys no longer came to the Court for further review,
thereby rendering the judgment of the CA on the issue of nullity final and immutable as to
them.

Secondly, the Cusis and De Vera commonly contend that the CA gravely erred in not
considering them to be purchasers in good faith and for value. They argue that Sys TCT No.
186142 was free of any liens or encumbrances that could have excited their suspicion; and that
they nonetheless even went beyond the task of examining the face of Sys TCT No. 186142,
recounting every single detail of their quest to ascertain the validity of Sys title, but did not find
anything by which to doubt her title.

The Court concurs with the finding by the CA that the Cusis and De Vera were not purchasers
for value and in good faith. The records simply do not support their common contention in that
respect.

Under the Torrens system of land registration,24 the State is required to maintain a register of
landholdings that guarantees indefeasible title to those included in the register. The system has
been instituted to combat the problems of uncertainty, complexity and cost associated with old
title systems that depended upon proof of an unbroken chain of title back to a good root of
title. The State issues an official certificate of title to attest to the fact that the person named is
the owner of the property described therein, subject to such liens and encumbrances as
thereon noted or what the law warrants or reserves.25

One of the guiding tenets underlying the Torrens system is the curtain principle, in that one
does not need to go behind the certificate of title because it contains all the information about
the title of its holder. This principle dispenses with the need of proving ownership by long
complicated documents kept by the registered owner, which may be necessary under a private
conveyancing system, and assures that all the necessary information regarding ownership is on
the certificate of title. Consequently, the avowed objective of the Torrens system is to obviate
possible conflicts of title by giving the public the right to rely upon the face of the Torrens
certificate and, as a rule, to dispense with the necessity of inquiring further; on the part of the
registered owner, the system gives him complete peace of mind that he would be secured in his
ownership as long as he has not voluntarily disposed of any right over the covered land. 26

The Philippines adopted the Torrens system through Act No. 496, 27 also known as the Land
Registration Act, which was approved on November 6, 1902 and took effect on February 1,
1903. In this jurisdiction, therefore, "a person dealing in registered land has the right to rely on
the Torrens certificate of title and to dispense with the need of inquiring further, except when
the party has actual knowledge of facts and circumstances that would impel a reasonably
cautious man to make such inquiry".28

To obtain a grasp of whether a person has actual knowledge of facts and circumstances that
would impel a reasonably cautious man to make such inquiry, an internal matter, necessitates
an analysis of evidence of a persons conduct.29 That renders the determination of intent as a
factual issue,30 something that the Court does not normally involve itself in because of its not
being a trier of facts. Indeed, as a rule, the review function of the Court is limited to a review of
the law involved.

But the Court now delves into the facts relating to the issue of innocence of the petitioners in
their purchase of the property, considering that the RTC, through its original decision, at first
regarded them to have been innocent purchasers who were not aware of any flaw or defect in
Sys title based on the fact that the property had been unfenced and vacant. The RTC also
regarded the petitioners making of reasonable verifications as their exercise of the due
diligence required of an ordinary buyer.31 The RTC later completely turned around through
another decision, however, and it was such decision that the CA affirmed subject to the
modifications of the damages granted to Domingo.

There is no question that the petitioners exerted some effort as buyers to determine whether
the property did rightfully belong to Sy. For one, they did not find any encumbrance, like a
notice of lis pendens, being annotated on the TCT of Sy. Nonetheless, their observance of a
certain degree of diligence within the context of the principles underlying the Torrens system
was not their only barometer under the law and jurisprudence by which to gauge the validity of
their acquisition of title. As the purchasers of the property, they also came under the clear
obligation to purchase the property not only in good faith but also for value.

Therein lay the problem. The petitioners were shown to have been deficient in their vigilance as
buyers of the property. It was not enough for them to show that the property was unfenced
and vacant; otherwise, it would be too easy for any registered owner to lose her property,
including its possession, through illegal occupation. Nor was it safe for them to simply rely on
the face of Sys TCT No. 186142 in view of the fact that they were aware that her TCT was
derived from a duplicate owners copy reissued by virtue of the loss of the original duplicate
owners copy. That circumstance should have already alerted them to the need to inquire
beyond the face of Sys TCT No. 186142. There were other circumstances, like the almost
simultaneous transactions affecting the property within a short span of time, as well as the
gross undervaluation of the property in the deeds of sale, ostensibly at the behest of Sy to
minimize her liabilities for the capital gains tax, that also excited suspicion, and required them
to be extra-cautious in dealing with Sy on the property.

To the Court, the CAs treatment of Sys TCT No. 186142 as similar to a reconstituted copy of a
Torrens certificate of title was not unwarranted. In doing so, the CA cited the ruling in Barstowe
Philippines Corporation v. Republic,32 where the Court, quoting from precedents, opined that
"the nature of a reconstituted Transfer Certificate of Title of registered land is similar to that of
a second Owners Duplicate Transfer Certificate of Title," in that "both are issued, after the
proper proceedings, on the representation of the registered owner that the original of the said
TCT or the original of the Owners Duplicate TCT, respectively, was lost and could not be located
or found despite diligent efforts exerted for that purpose;"33 and that both were "subsequent
copies of the originals thereof," a fact that a "cursory examination of these subsequent copies
would show" and "put on notice of such fact [anyone dealing with such copies who is] thus
warned to be extracareful."34

Verily, the Court has treated a reissued duplicate owners copy of a TCT as merely a
reconstituted certificate of title. In Garcia v. Court of Appeals,35 a case with striking similarities
to this one, an impostor succeeded in tricking a court of law into granting his petition for the
issuance of a duplicate owners copy of the supposedly lost TCT. The impostor then had the TCT
cancelled by presenting a purported deed of sale between him and the registered owners, both
of whom had already been dead for some time, and another TCT was then issued in the
impostors own name. This issuance in the impostors own name was followed by the issuance
of yet another TCT in favor of a third party, supposedly the buyer of the impostor. In turn, the
impostors transferee (already the registered owner in his own name) mortgaged the property
to Spouses Miguel and Adela Lazaro, who then caused the annotation of the mortgage on the
TCT. All the while, the original duplicate owners copy of the TCT remained in the hands of an
heir of the deceased registered owners with his co-heirs knowledge and consent.

The inevitable litigation ensued, and ultimately ended up with the Court.1wphi1 The Lazaros,
as the mortgagees, claimed good faith, and urged the Court to find in their favor. But the Court
rebuffed their urging, holding instead that they did not deal on the property in good faith
because: (a) "the title of the property mortgaged to the Lazaros was a second owners duplicate
TCT, which is, in effect a reconstituted title. This circumstance should have alerted them to
make the necessary investigation, but they did not;" and (b) their argument, that "because the
TCT of the property on which their mortgage lien was annotated did not contain the
annotation: "Reconstituted title," the treatment of the reissued duplicate owners copy of the
TCT as akin to a reconstituted title did not apply, had no merit considering that: "The nature of
a reconstituted Transfer Certificate of Title of registered land is similar to that of a second
Owner's Duplicate Transfer Certificate of Title. Both are issued, after the proper proceedings,
on the representation of the registered owner that the original of the said TCT or the original of
the Owner's Duplicate TCT, respectively, was lost and could not be located or found despite
diligent efforts exerted for that purpose. Both, therefore, are subsequent copies of the originals
thereof. A cursory examination of these subsequent copies would show that they are not the
originals. Anyone dealing with such copies are put on notice of such fact and thus warned to be
extra-careful. This warning the mortgagees Lazaros did not heed, or they just ignored it." 36

The fraud committed in Garcia paralleled the fraud committed here.1wphi1 The registered
owner of the property was Domingo, who remained in the custody of her TCT all along; the
impostor was Sy, who succeeded in obtaining a duplicate owners copy; and the Cusis and the
De Veras were similarly situated as the Spouses Lazaro, the mortgagees in Garcia. The Cusis and
the De Veras did not investigate beyond the face of Sys TCT No. 186142, despite the certificate
derived from the reissued duplicate owners copy being akin to a reconstituted TCT. Thereby,
they denied themselves the innocence and good faith they supposedly clothed themselves with
when they dealt with Sy on the property.

The records also show that the forged deed of sale from Domingo to Sy appeared to be
executed on July 14, 1997; that the affidavit of loss by which Sy would later on support her
petition for the issuance of the duplicate owners copy of Domingos TCT No. 165606 was
executed on July 17, 1997, the very same day in which Sy registered the affidavit of loss in the
Registry of Deeds of Quezon City; that Sy filed the petition for the issuance of the duplicate
owners copy of Domingos TCT No. 165606; that the RTC granted her petition on August 26,
1997; and that on October 31, 1997, a real estate mortgage was executed in favor of one Emma
Turingan, with the mortgage being annotated on TCT No. 165606 on November 10, 1997.

Being the buyers of the registered realty, the Cusis and the De Veras were aware of the
aforementioned several almost simultaneous transactions affecting the property. Their
awareness, if it was not actual, was at least presumed, and ought to have put them on their
guard, for, as the CA pointed out, the RTC observed that "[t]hese almost simultaneous
transactions, particularly the date of the alleged loss of the TCT No. 165606 and the purported
Deed of Sale, suffice[d] to arouse suspicion on [the part of] any person dealing with the subject
property."37 Simple prudence would then have impelled them as honest persons to make
deeper inquiries to clear the suspiciousness haunting Sys title. But they still went on with their
respective purchase of the property without making the deeper inquiries. In that regard, they
were not acting in good faith.
Another circumstance indicating that the Cusis and the De Veras were not innocent purchasers
for value was the gross undervaluation of the property in the deeds of sale at the measly price
of P1,000,000.00 for each half when the true market value was then in the aggregate of at
least P14,000,000.00 for the entire property. Even if the undervaluation was to accommodate
the request of Sy to enable her to minimize her liabilities for the capital gains tax, their
acquiescence to the fraud perpetrated against the Government, no less, still rendered them as
parties to the wrongdoing. They were not any less guilty at all. In the ultimate analysis, their
supposed passivity respecting the arrangement to perpetrate the fraud was not even plausible,
because they knew as the buyers that they were not personally liable for the capital gains taxes
and thus had nothing to gain by their acquiescence. There was simply no acceptable reason for
them to have acquiesced to the fraud, or for them not to have rightfully insisted on the
declaration of the full value of the realty in their deeds of sale. By letting their respective deeds
of sale reflect the grossly inadequate price, they should suffer the consequences, including the
inference of their bad faith in transacting the sales in their favor.

De Vera particularly insists that she and her late husband did not have any hand in the
undervaluation; and that Sy, having prepared the deed of sale, should alone be held responsible
for the undervaluation that had inured only to her benefit as the seller. However, such
insistence was rendered of no consequence herein by the fact that neither she nor her late
husband had seen fit to rectify the undervaluation. It is notable that the De Veras were
contracting parties who appeared to have transacted with full freedom from undue influence
from Sy or anyone else.

Although the petitioners argue that the actual consideration of the sale was
nearly P7,000,000.00 for each half of the property, the Court rejects their argument as devoid
of factual basis, for they did not adduce evidence of the actual payment of that amount to Sy.
Accordingly, the recitals of the deeds of sale were controlling on the consideration of the sales.

Good faith is the honest intention to abstain from taking unconscientious advantage of
another. It means the "freedom from knowledge and circumstances which ought to put a
person on inquiry."38

Given this notion of good faith, therefore, a purchaser in good faith is one who buys the
property of another without notice that some other person has a right to, or interest in, such
property and pays full and fair price for the same.38 As an examination of the records shows,
the petitioners were not innocent purchasers in good faith and for value. Their failure to
investigate Sy's title despite the nearly simultaneous transactions on the property that ought to
have put them on inquiry manifested their awareness of the flaw in Sy's title. That they did not
also appear to have paid the full price for their share of the property evinced their not having
paid true value.39

Resultantly, the Court affirms the lower courts, and restores to Domingo her rights of dominion
over the propetiy.
WHEREFORE, the Court AFFIRMS the decision of the Court of Appeals promulgated on July 16,
201 0; and ORDERS the petitioners to pay the costs of suit.

SO ORDERED.

LUCAS P. BERSAMIN
Associate Justice

WE CONCUR:

MARIA LOURDES P. A. SERENO


Chief Justice

TERESITA LEONARDO-DE CASTRO MARTIN S. VILLARAMA, JR.


Associate Justice Associate Justice

BIENVENIDO L. REYES
Associate Justice

CERTIFICATION

Pursuant to Section 13, A11icle VIII of the Constitution, I certify that the conclusions in the
above Decision had been reached in consultation before the case was assigned to the writer of
the opinion of the Court's Division.

MARIA LOURDES P. A. SERENO


Chief Justice

CASE DIGESTS

HEIRS OF MARIO MALABANAN vs. REPUBLIC OF THE PHILIPPINES


HEIRS OF MARIO MALABANAN vs. REPUBLIC OF THE PHILIPPINES
GR No. 179987
April 29, 2009
en banc

FACTS:

On 20 February 1998, Mario Malabanan filed an application for land registration before the RTC
of Cavite-Tagaytay, covering a parcel of land situated in Silang Cavite, consisting of 71,324
square meters. Malabanan claimed that he had purchased the property from Eduardo Velazco,
and that he and his predecessors-in-interest had been in open, notorious, and continuous
adverse and peaceful possession of the land for more than thirty (30) years. Velazco testified
that the property was originally belonged to a twenty-two hectare property owned by his great-
grandfather, Lino Velazco. Lino had four sons Benedicto, Gregorio, Eduardo and Estebanthe
fourth being Aristedess grandfather. Upon Linos death, his four sons inherited the property
and divided it among themselves. But by 1966, Estebans wife, Magdalena, had become the
administrator of all the properties inherited by the Velazco sons from their father, Lino. After
the death of Esteban and Magdalena, their son Virgilio succeeded them in administering the
properties, including Lot 9864-A, which originally belonged to his uncle, Eduardo Velazco. It was
this property that was sold by Eduardo Velazco to Malabanan.

Among the evidence presented by Malabanan during trial was a Certification dated 11 June
2001, issued by the Community Environment & Natural Resources Office, Department of
Environment and Natural Resources (CENRO-DENR), which stated that the subject property was
verified to be within the Alienable or Disposable land per Land Classification Map No. 3013
established under Project No. 20-A and approved as such under FAO 4-1656 on March 15,
1982. On 3 December 2002, the RTC approved the application for registration.

The Republic interposed an appeal to the Court of Appeals, arguing that Malabanan had failed
to prove that the property belonged to the alienable and disposable land of the public domain,
and that the RTC had erred in finding that he had been in possession of the property in the
manner and for the length of time required by law for confirmation of imperfect title. On 23
February 2007, the Court of Appeals reversed the RTC ruling and dismissed the appliocation of
Malabanan.

ISSUES:

1. In order that an alienable and disposable land of the public domain may be registered under
Section 14(1) of Presidential Decree No. 1529, otherwise known as the Property Registration
Decree, should the land be classified as alienable and disposable as of June 12, 1945 or is it
sufficient that such classification occur at any time prior to the filing of the applicant for
registration provided that it is established that the applicant has been in open, continuous,
exclusive and notorious possession of the land under a bona fide claim of ownership since June
12, 1945 or earlier?

2. For purposes of Section 14(2) of the Property Registration Decree may a parcel of land
classified as alienable and disposable be deemed private land and therefore susceptible to
acquisition by prescription in accordance with the Civil Code?

3. May a parcel of land established as agricultural in character either because of its use or
because its slope is below that of forest lands be registrable under Section 14(2) of the Property
Registration Decree in relation to the provisions of the Civil Code on acquisitive prescription?

4. Are petitioners entitled to the registration of the subject land in their names under Section
14(1) or Section 14(2) of the Property Registration Decree or both?

HELD:

The Pertition is denied.

(1) In connection with Section 14(1) of the Property Registration Decree, Section 48(b) of the
Public Land Act recognizes and confirms that those who by themselves or through their
predecessors in interest have been in open, continuous, exclusive, and notorious possession
and occupation of alienable and disposable lands of the public domain, under a bona fide claim
of acquisition of ownership, since June 12, 1945 have acquired ownership of, and registrable
title to, such lands based on the length and quality of their possession.

(a) Since Section 48(b) merely requires possession since 12 June 1945 and does not require that
the lands should have been alienable and disposable during the entire period of possession, the
possessor is entitled to secure judicial confirmation of his title thereto as soon as it is declared
alienable and disposable, subject to the timeframe imposed by Section 47 of the Public Land
Act.

(b) The right to register granted under Section 48(b) of the Public Land Act is further confirmed
by Section 14(1) of the Property Registration Decree.

(2) In complying with Section 14(2) of the Property Registration Decree, consider that under the
Civil Code, prescription is recognized as a mode of acquiring ownership of patrimonial property.
However, public domain lands become only patrimonial property not only with a declaration
that these are alienable or disposable. There must also be an express government
manifestation that the property is already patrimonial or no longer retained for public service
or the development of national wealth, under Article 422 of the Civil Code. And only when the
property has become patrimonial can the prescriptive period for the acquisition of property of
the public dominion begin to run.

(a) Patrimonial property is private property of the government. The person acquires ownership
of patrimonial property by prescription under the Civil Code is entitled to secure registration
thereof under Section 14(2) of the Property Registration Decree.

(b) There are two kinds of prescription by which patrimonial property may be acquired, one
ordinary and other extraordinary. Under ordinary acquisitive prescription, a person acquires
ownership of a patrimonial property through possession for at least ten (10) years, in good faith
and with just title. Under extraordinary acquisitive prescription, a persons uninterrupted
adverse possession of patrimonial property for at least thirty (30) years, regardless of good faith
or just title, ripens into ownership.
It is clear that the evidence of petitioners is insufficient to establish that Malabanan has
acquired ownership over the subject property under Section 48(b) of the Public Land Act. There
is no substantive evidence to establish that Malabanan or petitioners as his predecessors-in-
interest have been in possession of the property since 12 June 1945 or earlier. The earliest that
petitioners can date back their possession, according to their own evidencethe Tax
Declarations they presented in particularis to the year 1948. Thus, they cannot avail
themselves of registration under Section 14(1) of the Property Registration Decree.

Neither can petitioners properly invoke Section 14(2) as basis for registration. While the subject
property was declared as alienable or disposable in 1982, there is no competent evidence that
is no longer intended for public use service or for the development of the national evidence,
conformably with Article 422 of the Civil Code. The classification of the subject property as
alienable and disposable land of the public domain does not change its status as property of the
public dominion under Article 420(2) of the Civil Code. Thus, it is insusceptible to acquisition by
prescription.

CASE DIGEST: Krivenko vs. The Register of Deeds, City of Manila


G.R. No. L-360 November 15, 1947

ALEXANDER A. KRIVENKO, petitioner-appelant, vs. THE REGISTER OF DEEDS, CITY OF MANILA,


respondent and appellee.

FACTS:

Alexander Krivenko, an alien, bought a residential lot in December of 1941. The registration was
interrupted by war. In 1945, he sought to accomplish the registration but was denied by the
register of deed on ground that, being an alien, he cannot acquire land within the jurisdiction.
Krivenko appealed to the Court.

ISSUES:

1. Whether or not an alien under our Constitution may acquire residential land?
2. Whether or not the prohibitions of the rights to acquire residential lot that was already of
private ownership prior to the approval of this Constitutions is applicable at the case at bar?

RULING:

1. NO. Under the Article XIII, Section 1, of the Constitution states that: All agricultural, timber,
and mineral lands of the public domain, water, minerals, coal, petroleum, and other mineral
oils, all forces of potential energy, and other natural resources of the Philippines belong to the
State, and their disposition, exploitation, development, or utilization shall be limited to citizens
of the Philippines, or to corporations or associations at least sixty per centum of the capital of
which is owned by such citizens, subject to any existing right, grant, lease, or concession at the
time of the inauguration of the Government established under this Constitution. This means to
say that, under the provisions of the Constitutions, aliens are not allowed to acquire the
ownership of urban or residential lands in the Philippines and, as consequence, all acquisitions
made in contravention of the prohibitions since the fundamental law became effective are null
and void per se and ab initio.

2. Prior to the Constitution, there were in the Public Land Act No. 2874 sections 120 and 121
which granted aliens the right to acquire private only by way of reciprocity. It is to be observed
that the pharase "no land" used in this section refers to all private lands, whether strictly
agricultural, residential or otherwise, there being practically no private land which had not been
acquired by any of the means provided in said two sections. Therefore, the prohibition
contained in these two provisions was, in effect, that no private land could be transferred to
aliens except "upon express authorization by the Philippine Legislature, to citizens of Philippine
Islands the same right to acquire, hold, lease, encumber, dispose of, or alienate land." In other
words, aliens were granted the right to acquire private land merely by way of reciprocity.

LABOR LAW
Republic of the Philippines
Supreme Court
Manila

EN BANC

ANTONIO M. SERRANO, G.R. No. 167614


Petitioner,

Present:

PUNO, C.J.,

QUISUMBING,

YNARES-SANTIAGO,

CARPIO,

AUSTRIA-MARTINEZ,

- versus - CORONA,

CARPIO MORALES,

TINGA,

CHICO-NAZARIO,

VELASCO, Jr.,

NACHURA,

LEONARDO-DE CASTRO,

BRION, and

GALLANT MARITIME SERVICES, PERALTA, JJ.

INC. and MARLOW NAVIGATION

CO., INC., Promulgated:

Respondents. March 24, 2009

x----------------------------------------------------------x
DECISION

AUSTRIA-MARTINEZ, J.:

For decades, the toil of solitary migrants has helped lift entire families
and communities out of poverty. Their earnings have built houses, provided
health care, equipped schools and planted the seeds of businesses. They have
woven together the world by transmitting ideas and knowledge from country
to country. They have provided the dynamic human link between cultures,
societies and economies. Yet, only recently have we begun to understand not
only how much international migration impacts development, but how
smart public policies can magnify this effect.

United Nations Secretary-General Ban Ki-Moon

Global Forum on Migration and Development

Brussels, July 10, 2007[1]

For Antonio Serrano (petitioner), a Filipino seafarer, the last clause in the
5 paragraph of Section 10, Republic Act (R.A.) No. 8042,[2] to wit:
th
Sec. 10. Money Claims. - x x x In case of termination of overseas
employment without just, valid or authorized cause as defined by law or
contract, the workers shall be entitled to the full reimbursement of his placement
fee with interest of twelve percent (12%) per annum, plus his salaries for the
unexpired portion of his employment contract or for three (3) months for every
year of the unexpired term, whichever is less.

x x x x (Emphasis and underscoring supplied)

does not magnify the contributions of overseas Filipino workers (OFWs) to national
development, but exacerbates the hardships borne by them by unduly limiting their
entitlement in case of illegal dismissal to their lump-sum salary either for the unexpired
portion of their employment contract or for three months for every year of the unexpired
term, whichever is less (subject clause).Petitioner claims that the last clause violates the
OFWs' constitutional rights in that it impairs the terms of their contract, deprives them of
equal protection and denies them due process.

By way of Petition for Review under Rule 45 of the Rules of Court, petitioner assails
the December 8, 2004 Decision[3] and April 1, 2005 Resolution[4] of the Court of Appeals
(CA), which applied the subject clause, entreating this Court to declare the subject clause
unconstitutional.
Petitioner was hired by Gallant Maritime Services, Inc. and Marlow Navigation Co.,
Ltd. (respondents) under a Philippine Overseas Employment Administration (POEA)-
approved Contract of Employment with the following terms and conditions:
Duration of contract 12 months

Position Chief Officer

Basic monthly salary US$1,400.00

Hours of work 48.0 hours per week


Overtime US$700.00 per month

Vacation leave with pay 7.00 days per month[5]

On March 19, 1998, the date of his departure, petitioner was constrained to
accept a downgraded employment contract for the position of Second Officer with a
monthly salary of US$1,000.00, upon the assurance and representation of respondents
that he would be made Chief Officer by the end of April 1998.[6]

Respondents did not deliver on their promise to make petitioner Chief


Officer.[7] Hence, petitioner refused to stay on as Second Officer and was repatriated to
the Philippines on May 26, 1998.[8]

Petitioner's employment contract was for a period of 12 months or from March


19, 1998 up to March 19, 1999, but at the time of his repatriation on May 26, 1998, he
had served only two (2) months and seven (7) days of his contract, leaving an unexpired
portion of nine (9) months and twenty-three (23) days.

Petitioner filed with the Labor Arbiter (LA) a Complaint[9] against respondents for
constructive dismissal and for payment of his money claims in the total amount of
US$26,442.73, broken down as follows:

May 27/31, 1998 (5 days) incl. Leave pay US$ 413.90

June 01/30, 1998 2,590.00

July 01/31, 1998 2,590.00

August 01/31, 1998 2,590.00

Sept. 01/30, 1998 2,590.00

Oct. 01/31, 1998 2,590.00


Nov. 01/30, 1998 2,590.00

Dec. 01/31, 1998 2,590.00

Jan. 01/31, 1999 2,590.00

Feb. 01/28, 1999 2,590.00

Mar. 1/19, 1999 (19 days) incl. leave pay 1,640.00


--------------------------------------------------------------------------------

25,382.23

Amount adjusted to chief mate's salary

(March 19/31, 1998 to April 1/30, 1998) + 1,060.50[10]


----------------------------------------------------------------------------------------------

TOTAL CLAIM US$ 26,442.73[11]

as well as moral and exemplary damages and attorney's fees.

The LA rendered a Decision dated July 15, 1999, declaring the dismissal of
petitioner illegal and awarding him monetary benefits, to wit:

WHEREFORE, premises considered, judgment is hereby rendered declaring


that the dismissal of the complainant (petitioner) by the respondents in the
above-entitled case was illegal and the respondents are hereby ordered to pay
the complainant [petitioner], jointly and severally, in Philippine Currency, based
on the rate of exchange prevailing at the time of payment, the amount
of EIGHT THOUSAND SEVEN HUNDRED SEVENTY U.S. DOLLARS
(US $8,770.00), representing the complainants salary for three (3) months of
the unexpired portion of the aforesaid contract of employment.

The respondents are likewise ordered to pay the complainant [petitioner], jointly
and severally, in Philippine Currency, based on the rate of exchange prevailing
at the time of payment, the amount of FORTY FIVE U.S. DOLLARS (US$
45.00),[12] representing the complainants claim for a salary differential. In
addition, the respondents are hereby ordered to pay the complainant, jointly and
severally, in Philippine Currency, at the exchange rate prevailing at the time of
payment, the complainants (petitioner's) claim for attorneys fees equivalent to
ten percent (10%) of the total amount awarded to the aforesaid employee under
this Decision.

The claims of the complainant for moral and exemplary damages are hereby
DISMISSED for lack of merit.

All other claims are hereby DISMISSED.

SO ORDERED.[13] (Emphasis supplied)

In awarding petitioner a lump-sum salary of US$8,770.00, the LA based his


computation on the salary period of three months only -- rather than the entire unexpired
portion of nine months and 23 days of petitioner's employment contract - applying the
subject clause. However, the LA applied the salary rate of US$2,590.00, consisting of
petitioner's [b]asic salary, US$1,400.00/month + US$700.00/month, fixed overtime pay, +
US$490.00/month, vacation leave pay = US$2,590.00/compensation per month.[14]

Respondents appealed[15] to the National Labor Relations Commission (NLRC) to


question the finding of the LA that petitioner was illegally dismissed.

Petitioner also appealed[16] to the NLRC on the sole issue that the LA erred in not
applying the ruling of the Court in Triple Integrated Services, Inc. v. National Labor
Relations Commission[17] that in case of illegal dismissal, OFWs are entitled to their salaries
for the unexpired portion of their contracts.[18]

In a Decision dated June 15, 2000, the NLRC modified the LA Decision, to wit:

WHEREFORE, the Decision dated 15 July 1999 is MODIFIED.


Respondents are hereby ordered to pay complainant, jointly and severally, in
Philippine currency, at the prevailing rate of exchange at the time of payment
the following:

1. Three (3) months salary


$1,400 x 3 US$4,200.00
2. Salary differential 45.00
US$4,245.00
3. 10% Attorneys fees 424.50
TOTAL US$4,669.50

The other findings are affirmed.


SO ORDERED.[19]

The NLRC corrected the LA's computation of the lump-sum salary awarded to
petitioner by reducing the applicable salary rate from US$2,590.00 to US$1,400.00
because R.A. No. 8042 does not provide for the award of overtime pay, which should be
proven to have been actually performed, and for vacation leave pay.[20]

Petitioner filed a Motion for Partial Reconsideration, but this time he questioned the
constitutionality of the subject clause.[21] The NLRC denied the motion.[22]

Petitioner filed a Petition for Certiorari[23] with the CA, reiterating the constitutional
challenge against the subject clause.[24] After initially dismissing the petition on a
technicality, the CA eventually gave due course to it, as directed by this Court in its
Resolution dated August 7, 2003 which granted the petition for certiorari, docketed as
G.R. No. 151833, filed by petitioner.

In a Decision dated December 8, 2004, the CA affirmed the NLRC ruling on the
reduction of the applicable salary rate; however, the CA skirted the constitutional issue
raised by petitioner.[25]

His Motion for Reconsideration[26] having been denied by the


[27]
CA, petitioner brings his cause to this Court on the following grounds:

I
The Court of Appeals and the labor tribunals have decided the case in a
way not in accord with applicable decision of the Supreme Court involving
similar issue of granting unto the migrant worker back wages equal to the
unexpired portion of his contract of employment instead of limiting it to three
(3) months

II
In the alternative that the Court of Appeals and the Labor Tribunals were
merely applying their interpretation of Section 10 of Republic Act No. 8042, it
is submitted that the Court of Appeals gravely erred in law when it failed to
discharge its judicial duty to decide questions of substance not theretofore
determined by the Honorable Supreme Court, particularly, the constitutional
issues raised by the petitioner on the constitutionality of said law, which
unreasonably, unfairly and arbitrarily limits payment of the award for back
wages of overseas workers to three (3) months.

III
Even without considering the constitutional limitations [of] Sec. 10 of
Republic Act No. 8042, the Court of Appeals gravely erred in law in excluding
from petitioners award the overtime pay and vacation pay provided in his
contract since under the contract they form part of his salary.[28]

On February 26, 2008, petitioner wrote the Court to withdraw his petition as he is
already old and sickly, and he intends to make use of the monetary award for his medical
treatment and medication.[29] Required to comment, counsel for petitioner filed a motion,
urging the court to allow partial execution of the undisputed monetary award and, at the
same time, praying that the constitutional question be resolved.[30]

Considering that the parties have filed their respective memoranda, the Court now
takes up the full merit of the petition mindful of the extreme importance of the
constitutional question raised therein.

On the first and second issues

The unanimous finding of the LA, NLRC and CA that the dismissal of petitioner
was illegal is not disputed. Likewise not disputed is the salary differential of US$45.00
awarded to petitioner in all three fora. What remains disputed is only the computation of
the lump-sum salary to be awarded to petitioner by reason of his illegal dismissal.
Applying the subject clause, the NLRC and the CA computed the lump-sum salary
of petitioner at the monthly rate of US$1,400.00 covering the period of three months out of
the unexpired portion of nine months and 23 days of his employment contract or a total of
US$4,200.00.

Impugning the constitutionality of the subject clause, petitioner contends that, in


addition to the US$4,200.00 awarded by the NLRC and the CA, he is entitled to
US$21,182.23 more or a total of US$25,382.23, equivalent to his salaries for the entire
nine months and 23 days left of his employment contract, computed at the monthly rate of
US$2,590.00.[31]
The Arguments of Petitioner

Petitioner contends that the subject clause is unconstitutional because it unduly


impairs the freedom of OFWs to negotiate for and stipulate in their overseas employment
contracts a determinate employment period and a fixed salary package.[32] It also impinges
on the equal protection clause, for it treats OFWs differently from local Filipino workers
(local workers) by putting a cap on the amount of lump-sum salary to which OFWs are
entitled in case of illegal dismissal, while setting no limit to the same monetary award for
local workers when their dismissal is declared illegal; that the disparate treatment is not
reasonable as there is no substantial distinction between the two groups;[33] and that it
defeats Section 18,[34] Article II of the Constitution which guarantees the protection of the
rights and welfare of all Filipino workers, whether deployed locally or overseas.[35]

Moreover, petitioner argues that the decisions of the CA and the labor tribunals are
not in line with existing jurisprudence on the issue of money claims of illegally dismissed
OFWs.Though there are conflicting rulings on this, petitioner urges the Court to sort them
out for the guidance of affected OFWs.[36]
Petitioner further underscores that the insertion of the subject clause into R.A. No.
8042 serves no other purpose but to benefit local placement agencies. He marks the
statement made by the Solicitor General in his Memorandum, viz.:

Often, placement agencies, their liability being solidary, shoulder the


payment of money claims in the event that jurisdiction over the foreign
employer is not acquired by the court or if the foreign employer reneges on its
obligation. Hence, placement agencies that are in good faith and which fulfill
their obligations are unnecessarily penalized for the acts of the foreign
employer. To protect them and to promote their continued helpful
contribution in deploying Filipino migrant workers, liability for money claims
was reduced under Section 10 of R.A. No. 8042. [37] (Emphasis supplied)

Petitioner argues that in mitigating the solidary liability of placement agencies, the
subject clause sacrifices the well-being of OFWs. Not only that, the provision makes
foreign employers better off than local employers because in cases involving the illegal
dismissal of employees, foreign employers are liable for salaries covering a maximum of
only three months of the unexpired employment contract while local employers are liable
for the full lump-sum salaries of their employees. As petitioner puts it:

In terms of practical application, the local employers are not limited to


the amount of backwages they have to give their employees they have illegally
dismissed, following well-entrenched and unequivocal jurisprudence on the
matter. On the other hand, foreign employers will only be limited to giving the
illegally dismissed migrant workers the maximum of three (3) months unpaid
salaries notwithstanding the unexpired term of the contract that can be more
than three (3) months.[38]

Lastly, petitioner claims that the subject clause violates the due process clause, for it
deprives him of the salaries and other emoluments he is entitled to under his fixed-period
employment contract.[39]

The Arguments of Respondents

In their Comment and Memorandum, respondents contend that the constitutional


issue should not be entertained, for this was belatedly interposed by petitioner in his appeal
before the CA, and not at the earliest opportunity, which was when he filed an appeal
before the NLRC.[40]

The Arguments of the Solicitor General

The Solicitor General (OSG)[41] points out that as R.A. No. 8042 took effect on July
15, 1995, its provisions could not have impaired petitioner's 1998 employment
contract. Rather, R.A. No. 8042 having preceded petitioner's contract, the provisions
thereof are deemed part of the minimum terms of petitioner's employment, especially on
the matter of money claims, as this was not stipulated upon by the parties.[42]

Moreover, the OSG emphasizes that OFWs and local workers differ in terms of the
nature of their employment, such that their rights to monetary benefits must necessarily be
treated differently. The OSG enumerates the essential elements that distinguish OFWs
from local workers: first, while local workers perform their jobs within Philippine territory,
OFWs perform their jobs for foreign employers, over whom it is difficult for our courts to
acquire jurisdiction, or against whom it is almost impossible to enforce judgment; and
second, as held in Coyoca v. National Labor Relations Commission[43] and Millares v.
National Labor Relations Commission,[44] OFWs are contractual employees who can never
acquire regular employment status, unlike local workers who are or can become regular
employees. Hence, the OSG posits that there are rights and privileges exclusive to local
workers, but not available to OFWs; that these peculiarities make for a reasonable and
valid basis for the differentiated treatment under the subject clause of the money claims of
OFWs who are illegally dismissed. Thus, the provision does not violate the equal
protection clause nor Section 18, Article II of the Constitution.[45]

Lastly, the OSG defends the rationale behind the subject clause as a police power
measure adopted to mitigate the solidary liability of placement agencies for this redounds
to the benefit of the migrant workers whose welfare the government seeks to promote. The
survival of legitimate placement agencies helps [assure] the government that migrant
workers are properly deployed and are employed under decent and humane conditions.[46]
The Court's Ruling

The Court sustains petitioner on the first and second issues.

When the Court is called upon to exercise its power of judicial review of the acts of
its co-equals, such as the Congress, it does so only when these conditions obtain: (1) that
there is an actual case or controversy involving a conflict of rights susceptible of judicial
determination;[47] (2) that the constitutional question is raised by a proper party[48] and at the
earliest opportunity;[49] and (3) that the constitutional question is the very lis mota of the
case,[50] otherwise the Court will dismiss the case or decide the same on some other
ground.[51]

Without a doubt, there exists in this case an actual controversy directly involving
petitioner who is personally aggrieved that the labor tribunals and the CA computed his
monetary award based on the salary period of three months only as provided under the
subject clause.

The constitutional challenge is also timely. It should be borne in mind that the
requirement that a constitutional issue be raised at the earliest opportunity entails the
interposition of the issue in the pleadings before a competent court, such that, if the issue is
not raised in the pleadings before that competent court, it cannot be considered at the trial
and, if not considered in the trial, it cannot be considered on appeal.[52] Records disclose
that the issue on the constitutionality of the subject clause was first raised, not in petitioner's
appeal with the NLRC, but in his Motion for Partial Reconsideration with said labor
tribunal,[53] and reiterated in his Petition for Certiorari before the CA.[54] Nonetheless, the
issue is deemed seasonably raised because it is not the NLRC but the CA which has the
competence to resolve the constitutional issue. The NLRC is a labor tribunal that merely
performs a quasi-judicial function its function in the present case is limited to
determining questions of fact to which the legislative policy of R.A. No. 8042 is to be
applied and to resolving such questions in accordance with the standards laid down by the
law itself;[55]thus, its foremost function is to administer and enforce R.A. No. 8042, and not
to inquire into the validity of its provisions. The CA, on the other hand, is vested with the
power of judicial review or the power to declare unconstitutional a law or a provision
thereof, such as the subject clause.[56] Petitioner's interposition of the constitutional issue
before the CA was undoubtedly seasonable.The CA was therefore remiss in failing to take
up the issue in its decision.
The third condition that the constitutional issue be critical to the resolution of the
case likewise obtains because the monetary claim of petitioner to his lump-sum salary for
the entire unexpired portion of his 12-month employment contract, and not just for a period
of three months, strikes at the very core of the subject clause.

Thus, the stage is all set for the determination of the constitutionality of the subject
clause.

Does the subject clause violate Section 10,


Article III of the Constitution on non-impairment
of contracts?

The answer is in the negative.

Petitioner's claim that the subject clause unduly interferes with the stipulations in his
contract on the term of his employment and the fixed salary package he will receive[57] is
not tenable.

Section 10, Article III of the Constitution provides:

No law impairing the obligation of contracts shall be passed.


The prohibition is aligned with the general principle that laws newly enacted have
only a prospective operation,[58] and cannot affect acts or contracts already
perfected;[59] however, as to laws already in existence, their provisions are read into
contracts and deemed a part thereof.[60] Thus, the non-impairment clause under Section 10,
Article II is limited in application to laws about to be enacted that would in any way
derogate from existing acts or contracts by enlarging, abridging or in any manner changing
the intention of the parties thereto.

As aptly observed by the OSG, the enactment of R.A. No. 8042 in 1995 preceded
the execution of the employment contract between petitioner and respondents in
1998. Hence, it cannot be argued that R.A. No. 8042, particularly the subject clause,
impaired the employment contract of the parties. Rather, when the parties executed
their 1998 employment contract, they were deemed to have incorporated into it all the
provisions of R.A. No. 8042.

But even if the Court were to disregard the timeline, the subject clause may not be
declared unconstitutional on the ground that it impinges on the impairment clause, for the
law was enacted in the exercise of the police power of the State to regulate a business,
profession or calling, particularly the recruitment and deployment of OFWs, with the noble
end in view of ensuring respect for the dignity and well-being of OFWs wherever they
may be employed.[61] Police power legislations adopted by the State to promote the health,
morals, peace, education, good order, safety, and general welfare of the people are
generally applicable not only to future contracts but even to those already in existence, for
all private contracts must yield to the superior and legitimate measures taken by the State to
promote public welfare.[62]

Does the subject clause violate Section 1,


Article III of the Constitution, and Section 18,
Article II and Section 3, Article XIII on labor
as a protected sector?

The answer is in the affirmative.


Section 1, Article III of the 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 law.

Section 18,[63] Article II and Section 3,[64] Article XIII accord all members of the
labor sector, without distinction as to place of deployment, full protection of their rights and
welfare.

To Filipino workers, the rights guaranteed under the foregoing constitutional


provisions translate to economic security and parity: all monetary benefits should be
equally enjoyed by workers of similar category, while all monetary obligations should be
borne by them in equal degree; none should be denied the protection of the laws which is
enjoyed by, or spared the burden imposed on, others in like circumstances.[65]

Such rights are not absolute but subject to the inherent power of Congress to
incorporate, when it sees fit, a system of classification into its legislation; however, to be
valid, the classification must comply with these requirements: 1) it is based on substantial
distinctions; 2) it is germane to the purposes of the law; 3) it is not limited to existing
conditions only; and 4) it applies equally to all members of the class.[66]

There are three levels of scrutiny at which the Court reviews the constitutionality
of a classification embodied in a law: a) the deferential or rational basis scrutiny in which
the challenged classification needs only be shown to be rationally related to serving a
legitimate state interest;[67] b) the middle-tier or intermediate scrutiny in which the
government must show that the challenged classification serves an important state
interest and that the classification is at least substantially related to serving that
interest;[68] and c) strict judicial scrutiny[69] in which a legislative classification which
impermissibly interferes with the exercise of a fundamental right[70] or operates to the
peculiar disadvantage of a suspect class[71] is presumed unconstitutional, and the burden
is upon the government to prove that the classification is necessary to achieve
a compelling state interest and that it is the least restrictive means to protect such
interest.[72]
Under American jurisprudence, strict judicial scrutiny is triggered by suspect
classifications[73] based on race[74] or gender[75] but not when the classification is drawn
along income categories.[76]

It is different in the Philippine setting. In Central Bank (now Bangko Sentral ng


Pilipinas) Employee Association, Inc. v. Bangko Sentral ng Pilipinas,[77] the
constitutionality of a provision in the charter of the Bangko Sentral ng Pilipinas (BSP), a
government financial institution (GFI), was challenged for maintaining its rank-and-file
employees under the Salary Standardization Law (SSL), even when the rank-and-file
employees of other GFIs had been exempted from the SSL by their respective
charters. Finding that the disputed provision contained a suspect classification based on
salary grade, the Court deliberately employed the standard of strict judicial scrutiny in its
review of the constitutionality of said provision. More significantly, it was in this case that
the Court revealed the broad outlines of its judicial philosophy, to wit:

Congress retains its wide discretion in providing for a valid classification,


and its policies should be accorded recognition and respect by the courts of
justice except when they run afoul of the Constitution.The deference stops
where the classification violates a fundamental right, or prejudices persons
accorded special protection by the Constitution. When these violations arise,
this Court must discharge its primary role as the vanguard of constitutional
guaranties, and require a stricter and more exacting adherence to
constitutional limitations. Rational basis should not suffice.

Admittedly, the view that prejudice to persons accorded special


protection by the Constitution requires a stricter judicial scrutiny finds no
support in American or English jurisprudence. Nevertheless, these foreign
decisions and authorities are not per se controlling in this jurisdiction. At best,
they are persuasive and have been used to support many of our decisions. We
should not place undue and fawning reliance upon them and regard them as
indispensable mental crutches without which we cannot come to our own
decisions through the employment of our own endowments. We live in a
different ambience and must decide our own problems in the light of our own
interests and needs, and of our qualities and even idiosyncrasies as a people,
and always with our own concept of law and justice. Our laws must be
construed in accordance with the intention of our own lawmakers and such
intent may be deduced from the language of each law and the context of other
local legislation related thereto. More importantly, they must be construed to
serve our own public interest which is the be-all and the end-all of all our
laws. And it need not be stressed that our public interest is distinct and
different from others.

xxxx

Further, the quest for a better and more equal world calls for the use of
equal protection as a tool of effective judicial intervention.

Equality is one ideal which cries out for bold attention and action in the
Constitution. The Preamble proclaims equality as an ideal precisely in protest
against crushing inequities in Philippine society. The command to promote
social justice in Article II, Section 10, in all phases of national development,
further explicitated in Article XIII, are clear commands to the State to take
affirmative action in the direction of greater equality. x x x [T]here is thus in the
Philippine Constitution no lack of doctrinal support for a more vigorous state
effort towards achieving a reasonable measure of equality.

Our present Constitution has gone further in guaranteeing vital social


and economic rights to marginalized groups of society, including labor. Under
the policy of social justice, the law bends over backward to accommodate the
interests of the working class on the humane justification that those with less
privilege in life should have more in law. And the obligation to afford
protection to labor is incumbent not only on the legislative and executive
branches but also on the judiciary to translate this pledge into a living reality.
Social justice calls for the humanization of laws and the equalization of social
and economic forces by the State so that justice in its rational and objectively
secular conception may at least be approximated.

xxxx

Under most circumstances, the Court will exercise judicial restraint in


deciding questions of constitutionality, recognizing the broad discretion given
to Congress in exercising its legislative power. Judicial scrutiny would be based
on the rational basis test, and the legislative discretion would be given
deferential treatment.

But if the challenge to the statute is premised on the denial of a


fundamental right, or the perpetuation of prejudice against persons favored by
the Constitution with special protection, judicial scrutiny ought to be more
strict. A weak and watered down view would call for the abdication of this
Courts solemn duty to strike down any law repugnant to the Constitution and
the rights it enshrines. This is true whether the actor committing the
unconstitutional act is a private person or the government itself or one of its
instrumentalities. Oppressive acts will be struck down regardless of the
character or nature of the actor.

xxxx

In the case at bar, the challenged proviso operates on the basis of the
salary grade or officer-employee status. It is akin to a distinction based on
economic class and status, with the higher grades as recipients of a benefit
specifically withheld from the lower grades. Officers of the BSP now receive
higher compensation packages that are competitive with the industry, while the
poorer, low-salaried employees are limited to the rates prescribed by the
SSL. The implications are quite disturbing: BSP rank-and-file employees are
paid the strictly regimented rates of the SSL while employees higher in rank -
possessing higher and better education and opportunities for career
advancement - are given higher compensation packages to entice them to
stay. Considering that majority, if not all, the rank-and-file employees consist
of people whose status and rank in life are less and limited, especially in terms
of job marketability, it is they - and not the officers - who have the real
economic and financial need for the adjustment . This is in accord with the
policy of the Constitution "to free the people from poverty, provide adequate
social services, extend to them a decent standard of living, and improve the
quality of life for all. Any act of Congress that runs counter to this
constitutional desideratum deserves strict scrutiny by this Court before it can
pass muster. (Emphasis supplied)

Imbued with the same sense of obligation to afford protection to labor, the Court in
the present case also employs the standard of strict judicial scrutiny, for it perceives in the
subject clause a suspect classification prejudicial to OFWs.

Upon cursory reading, the subject clause appears facially neutral, for it applies to all
OFWs. However, a closer examination reveals that the subject clause has a discriminatory
intent against, and an invidious impact on, OFWs at two levels:

First, OFWs with employment contracts of less than one year vis--vis
OFWs with employment contracts of one year or more;

Second, among OFWs with employment contracts of more than one


year; and

Third, OFWs vis--vis local workers with fixed-period employment;

OFWs with employment contracts of less


than one year vis--vis OFWs with
employment contracts of one year or more

As pointed out by petitioner,[78] it was in Marsaman Manning Agency, Inc. v.


National Labor Relations Commission[79] (Second Division, 1999) that the Court laid down
the following rules on the application of the periods prescribed under Section 10(5) of R.A.
No. 804, to wit:

A plain reading of Sec. 10 clearly reveals that the choice of which


amount to award an illegally dismissed overseas contract worker, i.e., whether
his salaries for the unexpired portion of his employment contract or three (3)
months salary for every year of the unexpired term, whichever is less, comes
into play only when the employment contract concerned has a term of at least
one (1) year or more. This is evident from the words for every year of the
unexpired term which follows the words salaries x x x for three months. To
follow petitioners thinking that private respondent is entitled to three (3) months
salary only simply because it is the lesser amount is to completely disregard and
overlook some words used in the statute while giving effect to some. This is
contrary to the well-established rule in legal hermeneutics that in interpreting a
statute, care should be taken that every part or word thereof be given effect since
the law-making body is presumed to know the meaning of the words employed
in the statue and to have used them advisedly. Ut res magis valeat quam
pereat.[80] (Emphasis supplied)

In Marsaman, the OFW involved was illegally dismissed two months into his 10-month
contract, but was awarded his salaries for the remaining 8 months and 6 days of his
contract.

Prior to Marsaman, however, there were two cases in which the Court made
conflicting rulings on Section 10(5). One was Asian Center for Career and Employment
System and Services v. National Labor Relations Commission (Second Division, October
1998),[81] which involved an OFW who was awarded a two-year employment contract, but
was dismissed after working for one year and two months. The LA declared his dismissal
illegal and awarded him SR13,600.00 as lump-sum salary covering eight months,
the unexpired portion of his contract. On appeal, the Court reduced the award to
SR3,600.00 equivalent to his three months salary, this being the lesser value, to wit:

Under Section 10 of R.A. No. 8042, a worker dismissed from overseas


employment without just, valid or authorized cause is entitled to his salary for
the unexpired portion of his employment contract or for three (3) months for
every year of the unexpired term, whichever is less.

In the case at bar, the unexpired portion of private respondents


employment contract is eight (8) months. Private respondent should therefore
be paid his basic salary corresponding to three (3) months or a total of
SR3,600.[82]

Another was Triple-Eight Integrated Services, Inc. v. National Labor Relations


Commission (Third Division, December 1998),[83] which involved an OFW (therein
respondent Erlinda Osdana) who was originally granted a 12-month contract, which was
deemed renewed for another 12 months. After serving for one year and seven-and-a-half
months, respondent Osdana was illegally dismissed, and the Court awarded her salaries for
the entire unexpired portion of four and one-half months of her contract.

The Marsaman interpretation of Section 10(5) has since been adopted in the
following cases:

Period Applied in
Case Title Contract Period of Unexpired the Computation
Period Service Period of the Monetary
Award
Skippers v. 6 months 2 months 4 months 4 months
Maguad[84]
Bahia Shipping 9 months 8 months 4 months 4 months
v. Reynaldo
Chua [85]
Centennial 9 months 4 months 5 months 5 months
Transmarine v.
dela Cruz l[86]
Talidano v. 12 months 3 months 9 months 3 months
Falcon[87]
Univan v. 12 months 3 months 9 months 3 months
CA [88]
Oriental v. 12 months more than 2 10 months 3 months
CA [89] months
PCL v. 12 months more than 2 more or less 9 3 months
NLRC[90] months months
Olarte v. 12 months 21 days 11 months and 9 3 months
Nayona[91] days
JSS v. 12 months 16 days 11 months and 3 months
Ferrer[92] 24 days
Pentagon v. 12 months 9 months 2 months and 23 2 months and 23
[93]
Adelantar and 7 days days days
Phil. Employ 12 months 10 months 2 months Unexpired portion
v. Paramio,
et al.[94]
Flourish 2 years 26 days 23 months and 4 6 months or 3
Maritime v. days months for each
Almanzor [95] year of contract
Athenna 1 year, 10 1 month 1 year, 9 months 6 months or 3
Manpower v. months and and 28 days months for each
Villanos [96] 28 days year of contract
As the foregoing matrix readily shows, the subject clause classifies OFWs into two
categories. The first category includes OFWs with fixed-period employment contracts of
less than one year; in case of illegal dismissal, they are entitled to their salaries for the entire
unexpired portion of their contract. The second category consists of OFWs with fixed-
period employment contracts of one year or more; in case of illegal dismissal, they are
entitled to monetary award equivalent to only 3 months of the unexpired portion of their
contracts.

The disparity in the treatment of these two groups cannot be


discounted. In Skippers, the respondent OFW worked for only 2 months out of his 6-month
contract, but was awarded his salaries for the remaining 4 months. In contrast, the
respondent OFWs in Oriental and PCL who had also worked for about 2 months out of
their 12-month contracts were awarded their salaries for only 3 months of the unexpired
portion of their contracts. Even the OFWs involved in Talidano and Univan who
had worked for a longer period of 3 months out of their 12-month contracts before being
illegally dismissed were awarded their salaries for only 3 months.

To illustrate the disparity even more vividly, the Court assumes a hypothetical
OFW-A with an employment contract of 10 months at a monthly salary rate of
US$1,000.00 and a hypothetical OFW-B with an employment contract of 15 months with
the same monthly salary rate of US$1,000.00. Both commenced work on the same day and
under the same employer, and were illegally dismissed after one month of work. Under the
subject clause, OFW-A will be entitled to US$9,000.00, equivalent to his salaries for the
remaining 9 months of his contract, whereas OFW-B will be entitled to only US$3,000.00,
equivalent to his salaries for 3 months of the unexpired portion of his contract, instead of
US$14,000.00 for the unexpired portion of 14 months of his contract, as the US$3,000.00
is the lesser amount.

The disparity becomes more aggravating when the Court takes into account
jurisprudence that, prior to the effectivity of R.A. No. 8042 on July 14, 1995,[97] illegally
dismissed OFWs, no matter how long the period of their employment contracts, were
entitled to their salaries for the entire unexpired portions of their contracts. The matrix
below speaks for itself:
Case Title Contract Period of Unexpired Period Applied in the
Period Service Period Computation of the
Monetary Award
ATCI v. CA, 2 years 2 months 22 months 22 months
et al.[98]
Phil. Integrated 2 years 7 days 23 months and 23 months and 23
v. NLRC[99] 23 days days
JGB v. NLC[100] 2 years 9 months 15 months 15 months
Agoy v. 2 years 2 months 22 months 22 months
NLRC[101]
EDI v. NLRC, 2 years 5 months 19 months 19 months
et al.[102]
Barros v. 12 months 4 months 8 months 8 months
NLRC, et al.[103]
Philippine 12 months 6 months 5 months and 5 months and 18 days
Transmarine v. and 22 days 18 days
Carilla[104]

It is plain that prior to R.A. No. 8042, all OFWs, regardless of contract periods or
the unexpired portions thereof, were treated alike in terms of the computation of their
monetary benefits in case of illegal dismissal. Their claims were subjected to a uniform
rule of computation: their basic salaries multiplied by the entire unexpired portion of their
employment contracts.

The enactment of the subject clause in R.A. No. 8042 introduced a differentiated
rule of computation of the money claims of illegally dismissed OFWs based on their
employment periods, in the process singling out one category whose contracts have an
unexpired portion of one year or more and subjecting them to the peculiar disadvantage of
having their monetary awards limited to their salaries for 3 months or for the unexpired
portion thereof, whichever is less, but all the while sparing the other category from such
prejudice, simply because the latter's unexpired contractsfall short of one year.

Among OFWs With Employment


Contracts of More Than One Year
Upon closer examination of the terminology employed in the subject clause, the
Court now has misgivings on the accuracy of the Marsaman interpretation.

The Court notes that the subject clause or for three (3) months for every year of the
unexpired term, whichever is less contains the qualifying phrases every year and unexpired
term. By its ordinary meaning, the word term means a limited or definite extent of
time.[105] Corollarily, that every year is but part of an unexpired term is significant in many
ways: first, the unexpired term must be at least one year, for if it were any
shorter, there would be no occasion for such unexpired term to be measured by every year;
and second, the original term must be more than one year, for otherwise, whatever would
be the unexpired term thereof will not reach even a year. Consequently, the more decisive
factor in the determination of when the subject clause for three (3) months for every year of
the unexpired term, whichever is less shall apply is not the length of the original contract
period as held in Marsaman,[106] but the length of the unexpired portion of the contract
period -- the subject clause applies in cases when the unexpired portion of the contract
period is at least one year, which arithmetically requires that the original contract period be
more than one year.

Viewed in that light, the subject clause creates a sub-layer of discrimination among
OFWs whose contract periods are for more than one year: those who are illegally
dismissed with less than one year left in their contracts shall be entitled to their salaries for
the entire unexpired portion thereof, while those who are illegally dismissed with one year
or more remaining in their contracts shall be covered by the subject clause, and their
monetary benefits limited to their salaries for three months only.

To concretely illustrate the application of the foregoing interpretation of the subject


clause, the Court assumes hypothetical OFW-C and OFW-D, who each have a 24-month
contract at a salary rate of US$1,000.00 per month. OFW-C is illegally dismissed on the
12th month, and OFW-D, on the 13th month. Considering that there is at least 12 months
remaining in the contract period of OFW-C, the subject clause applies to the computation
of the latter's monetary benefits. Thus, OFW-C will be entitled, not to US$12,000,00 or the
latter's total salaries for the 12 months unexpired portion of the contract, but to the lesser
amount of US$3,000.00 or the latter's salaries for 3 months out of the 12-month unexpired
term of the contract. On the other hand, OFW-D is spared from the effects of the subject
clause, for there are only 11 months left in the latter's contract period. Thus, OFW-D will
be entitled to US$11,000.00, which is equivalent to his/her total salaries for the entire 11-
month unexpired portion.

OFWs vis--vis Local Workers


With Fixed-Period Employment

As discussed earlier, prior to R.A. No. 8042, a uniform system of computation of


the monetary awards of illegally dismissed OFWs was in place. This uniform system was
applicable even to local workers with fixed-term employment.[107]

The earliest rule prescribing a uniform system of computation was actually Article
299 of the Code of Commerce (1888),[108] to wit:

Article 299. If the contracts between the merchants and their shop
clerks and employees should have been made of a fixed period, none of the
contracting parties, without the consent of the other, may withdraw from the
fulfillment of said contract until the termination of the period agreed upon.

Persons violating this clause shall be subject to indemnify the loss and
damage suffered, with the exception of the provisions contained in the following
articles.

In Reyes v. The Compaia Maritima,[109] the Court applied the foregoing provision to
determine the liability of a shipping company for the illegal discharge of its managers prior
to the expiration of their fixed-term employment. The Court therein held the shipping
company liable for the salaries of its managers for the remainder of their fixed-term
employment.
There is a more specific rule as far as seafarers are concerned: Article 605 of the
Code of Commerce which provides:

Article 605. If the contracts of the captain and members of the crew with
the agent should be for a definite period or voyage, they cannot be discharged
until the fulfillment of their contracts, except for reasons of insubordination in
serious matters, robbery, theft, habitual drunkenness, and damage caused to the
vessel or to its cargo by malice or manifest or proven negligence.

Article 605 was applied to Madrigal Shipping Company, Inc. v. Ogilvie,[110] in


which the Court held the shipping company liable for the salaries and subsistence
allowance of its illegally dismissed employees for the entire unexpired portion of their
employment contracts.

While Article 605 has remained good law up to the present,[111] Article 299 of the
Code of Commerce was replaced by Art. 1586 of the Civil Code of 1889, to wit:
Article 1586. Field hands, mechanics, artisans, and other laborers hired
for a certain time and for a certain work cannot leave or be dismissed without
sufficient cause, before the fulfillment of the contract.(Emphasis supplied.)

Citing Manresa, the Court in Lemoine v. Alkan[112] read the disjunctive "or" in Article 1586
as a conjunctive "and" so as to apply the provision to local workers who are employed for
a time certain although for no particular skill. This interpretation of Article 1586 was
reiterated in Garcia Palomar v. Hotel de France Company.[113] And in
both Lemoine and Palomar, the Court adopted the general principle that in actions for
wrongful discharge founded on Article 1586, local workers are entitled to recover
damages to the extent of the amount stipulated to be paid to them by the terms of their
contract. On the computation of the amount of such damages, the Court in Aldaz v.
Gay[114] held:
The doctrine is well-established in American jurisprudence, and nothing
has been brought to our attention to the contrary under Spanish
jurisprudence, that when an employee is wrongfully discharged it is his duty to
seek other employment of the same kind in the same community, for the
purpose of reducing the damages resulting from such wrongful discharge.
However, while this is the general rule, the burden of showing that he failed to
make an effort to secure other employment of a like nature, and that other
employment of a like nature was obtainable, is upon the defendant. When an
employee is wrongfully discharged under a contract of employment his
prima facie damage is the amount which he would be entitled to had he
continued in such employment until the termination of the period. (Howard
vs. Daly, 61 N. Y., 362; Allen vs. Whitlark, 99 Mich., 492; Farrell vs. School
District No. 2, 98 Mich., 43.)[115] (Emphasis supplied)
On August 30, 1950, the New Civil Code took effect with new provisions on fixed-
term employment: Section 2 (Obligations with a Period), Chapter 3, Title I, and Sections 2
(Contract of Labor) and 3 (Contract for a Piece of Work), Chapter 3, Title VIII, Book
IV.[116] Much like Article 1586 of the Civil Code of 1889, the new provisions of the Civil
Code do not expressly provide for the remedies available to a fixed-term worker who is
illegally discharged. However, it is noted that in Mackay Radio & Telegraph Co., Inc. v.
Rich,

Republic of the Philippines


SUPREME COURT
Manila

EN BANC

G.R. No. 170139 August 5, 2014

SAMEER OVERSEAS PLACEMENT AGENCY, INC., Petitioner,


vs.
JOY C. CABILES, Respondent.

DECISION

LEONEN, J.:

This case involves an overseas Filipino worker with shattered dreams. It is our duty, given the facts
and the law, to approximate justice for her.

We are asked to decide a petition for review1 on certiorari assailing the Court of Appeals
decision2 dated June 27, 2005. This decision partially affirmed the National Labor
RelationsCommissions resolution dated March 31, 2004,3 declaring respondents dismissal illegal,
directing petitioner to pay respondents three-month salary equivalent to New Taiwan Dollar (NT$)
46,080.00, and ordering it to reimburse the NT$3,000.00 withheld from respondent, and pay her
NT$300.00 attorneys fees.4

Petitioner, Sameer Overseas Placement Agency, Inc., is a recruitment and placement


agency.5 Responding to an ad it published, respondent, Joy C. Cabiles, submitted her application for
a quality control job in Taiwan.6

Joys application was accepted.7 Joy was later asked to sign a oneyear employment contract for a
monthly salary of NT$15,360.00.8 She alleged that Sameer Overseas Agency required her to pay a
placement fee of P70,000.00 when she signed the employment contract.9
Joy was deployed to work for TaiwanWacoal, Co. Ltd. (Wacoal) on June 26, 1997.10 She alleged that
in her employment contract, she agreed to work as quality control for one year.11 In Taiwan, she was
asked to work as a cutter.12

Sameer Overseas Placement Agencyclaims that on July 14, 1997, a certain Mr. Huwang from
Wacoal informedJoy, without prior notice, that she was terminated and that "she should immediately
report to their office to get her salary and passport."13 She was asked to "prepare for immediate
repatriation."14

Joy claims that she was told that from June 26 to July 14, 1997, she only earned a total of
NT$9,000.15 According to her, Wacoal deducted NT$3,000 to cover her plane ticket to Manila.16

On October 15, 1997, Joy filed a complaint17 with the National Labor Relations Commission against
petitioner and Wacoal. She claimed that she was illegally dismissed.18 She asked for the return of her
placement fee, the withheld amount for repatriation costs, payment of her salary for 23 months as
well as moral and exemplary damages.19 She identified Wacoal as Sameer Overseas Placement
Agencys foreign principal.20

Sameer Overseas Placement Agency alleged that respondent's termination was due to her
inefficiency, negligence in her duties, and her "failure to comply with the work requirements [of] her
foreign [employer]."21 The agency also claimed that it did not ask for a placement fee
of P70,000.00.22 As evidence, it showedOfficial Receipt No. 14860 dated June 10, 1997, bearing the
amount of P20,360.00.23 Petitioner added that Wacoal's accreditation with petitioner had already
been transferred to the Pacific Manpower & Management Services, Inc. (Pacific) as of August 6,
1997.24 Thus, petitioner asserts that it was already substituted by Pacific Manpower.25

Pacific Manpower moved for the dismissal of petitioners claims against it.26 It alleged that there was
no employer-employee relationship between them.27 Therefore, the claims against it were outside the
jurisdiction of the Labor Arbiter.28 Pacific Manpower argued that the employment contract should first
be presented so that the employers contractual obligations might be identified.29 It further denied that
it assumed liability for petitioners illegal acts.30

On July 29, 1998, the Labor Arbiter dismissed Joys complaint.31 Acting Executive Labor Arbiter
Pedro C.Ramos ruled that her complaint was based on mereallegations.32 The Labor Arbiter found
that there was no excess payment of placement fees, based on the official receipt presented by
petitioner.33 The Labor Arbiter found unnecessary a discussion on petitioners transfer of obligations
to Pacific34 and considered the matter immaterial in view of the dismissal of respondents complaint.35

Joy appealed36 to the National Labor Relations Commission.

In a resolution37 dated March 31, 2004, the National Labor Relations Commission declared that Joy
was illegally dismissed.38 It reiterated the doctrine that the burden of proof to show that the dismissal
was based on a just or valid cause belongs to the employer.39 It found that Sameer Overseas
Placement Agency failed to prove that there were just causes for termination.40 There was no
sufficient proofto show that respondent was inefficient in her work and that she failed to comply with
company requirements.41 Furthermore, procedural dueprocess was not observed in terminating
respondent.42

The National Labor Relations Commission did not rule on the issue of reimbursement of placement
fees for lack of jurisdiction.43 It refused to entertain the issue of the alleged transfer of obligations to
Pacific.44 It did not acquire jurisdiction over that issue because Sameer Overseas Placement Agency
failed to appeal the Labor Arbiters decision not to rule on the matter.45
The National Labor Relations Commission awarded respondent only three (3) months worth of
salaryin the amount of NT$46,080, the reimbursement of the NT$3,000 withheld from her, and
attorneys fees of NT$300.46

The Commission denied the agencys motion for reconsideration47 dated May 12, 2004 through a
resolution48dated July 2, 2004.

Aggrieved by the ruling, Sameer Overseas Placement Agency caused the filing of a petition49 for
certiorari with the Court of Appeals assailing the National Labor Relations Commissions resolutions
dated March 31, 2004 and July 2, 2004.

The Court of Appeals50 affirmed the decision of the National Labor Relations Commission with
respect to the finding of illegal dismissal, Joys entitlement to the equivalent of three months worth of
salary, reimbursement of withheld repatriation expense, and attorneys fees.51 The Court of Appeals
remanded the case to the National Labor Relations Commission to address the validity of petitioner's
allegations against Pacific.52 The Court of Appeals held, thus: Although the public respondent found
the dismissal of the complainant-respondent illegal, we should point out that the NLRC merely
awarded her three (3) months backwages or the amount of NT$46,080.00, which was based upon
its finding that she was dismissed without due process, a finding that we uphold, given petitioners
lack of worthwhile discussion upon the same in the proceedings below or before us. Likewise we
sustain NLRCs finding in regard to the reimbursement of her fare, which is squarely based on the
law; as well as the award of attorneys fees.

But we do find it necessary to remand the instant case to the public respondent for further
proceedings, for the purpose of addressing the validity or propriety of petitioners third-party
complaint against the transferee agent or the Pacific Manpower & Management Services, Inc. and
Lea G. Manabat. We should emphasize that as far as the decision of the NLRC on the claims of Joy
Cabiles, is concerned, the same is hereby affirmed with finality, and we hold petitioner liable thereon,
but without prejudice to further hearings on its third party complaint against Pacific for
reimbursement.

WHEREFORE, premises considered, the assailed Resolutions are hereby partly AFFIRMED in
accordance with the foregoing discussion, but subject to the caveat embodied inthe last sentence.
No costs.

SO ORDERED.53

Dissatisfied, Sameer Overseas Placement Agency filed this petition.54

We are asked to determine whether the Court of Appeals erred when it affirmed the ruling of the
National Labor Relations Commission finding respondent illegally dismissed and awarding her three
months worth of salary, the reimbursement of the cost ofher repatriation, and attorneys fees despite
the alleged existence of just causes of termination.

Petitioner reiterates that there was just cause for termination because there was a finding of Wacoal
that respondent was inefficient in her work.55

Therefore, it claims that respondents dismissal was valid.56


Petitioner also reiterates that since Wacoals accreditation was validly transferred to Pacific at the
time respondent filed her complaint, it should be Pacific that should now assume responsibility for
Wacoals contractual obligations to the workers originally recruited by petitioner.57

Sameer Overseas Placement Agencyspetition is without merit. We find for respondent.

Sameer Overseas Placement Agency failed to show that there was just cause for causing Joys
dismissal. The employer, Wacoal, also failed to accord her due process of law.

Indeed, employers have the prerogative to impose productivity and quality standards at work.58 They
may also impose reasonable rules to ensure that the employees comply with these
standards.59 Failure to comply may be a just cause for their dismissal.60 Certainly, employers cannot
be compelled to retain the services of anemployee who is guilty of acts that are inimical to the
interest of the employer.61 While the law acknowledges the plight and vulnerability of workers, it does
not "authorize the oppression or self-destruction of the employer."62 Management prerogative is
recognized in law and in our jurisprudence.

This prerogative, however, should not be abused. It is "tempered with the employees right to
security of tenure."63Workers are entitled to substantive and procedural due process before
termination. They may not be removed from employment without a validor just cause as determined
by law and without going through the proper procedure.

Security of tenure for labor is guaranteed by our Constitution.64

Employees are not stripped of their security of tenure when they move to work in a different
jurisdiction. With respect to the rights of overseas Filipino workers, we follow the principle of lex loci
contractus.Thus, in Triple Eight Integrated Services, Inc. v. NLRC,65 this court noted:

Petitioner likewise attempts to sidestep the medical certificate requirement by contending that since
Osdana was working in Saudi Arabia, her employment was subject to the laws of the host country.
Apparently, petitioner hopes tomake it appear that the labor laws of Saudi Arabia do not require any
certification by a competent public health authority in the dismissal of employees due to illness.

Again, petitioners argument is without merit.

First, established is the rule that lex loci contractus (the law of the place where the contract is made)
governs in this jurisdiction. There is no question that the contract of employment in this case was
perfected here in the Philippines. Therefore, the Labor Code, its implementing rules and regulations,
and other laws affecting labor apply in this case.Furthermore, settled is the rule that the courts of the
forum will not enforce any foreign claim obnoxious to the forums public policy. Herein the
Philippines, employment agreements are more than contractual in nature. The Constitution itself, in
Article XIII, Section 3, guarantees the special protection of workers, to wit:

The State shall afford full protection to labor, local and overseas, organized and unorganized, and
promote full employment and equality of employment opportunities for all.

It shall guarantee the rights of all workers to selforganization, collective bargaining and negotiations,
and peaceful concerted activities, including the right to strike in accordance with law. They shall be
entitled to security of tenure, humane conditions of work, and a living wage. Theyshall also
participate in policy and decision-making processes affecting their rights and benefits as may be
provided by law.

....

This public policy should be borne in mind in this case because to allow foreign employers to
determine for and by themselves whether an overseas contract worker may be dismissed on the
ground of illness would encourage illegal or arbitrary pretermination of employment
contracts.66 (Emphasis supplied, citation omitted)

Even with respect to fundamental procedural rights, this court emphasized in PCL Shipping
Philippines, Inc. v. NLRC,67 to wit:

Petitioners admit that they did notinform private respondent in writing of the charges against him and
that they failed to conduct a formal investigation to give him opportunity to air his side. However,
petitioners contend that the twin requirements ofnotice and hearing applies strictly only when the
employment is within the Philippines and that these need not be strictly observed in cases of
international maritime or overseas employment.

The Court does not agree. The provisions of the Constitution as well as the Labor Code which afford
protection to labor apply to Filipino employees whether working within the Philippines or abroad.
Moreover, the principle of lex loci contractus (the law of the place where the contract is made)
governs in this jurisdiction. In the present case, it is not disputed that the Contract of Employment
entered into by and between petitioners and private respondent was executed here in the Philippines
with the approval of the Philippine Overseas Employment Administration (POEA). Hence, the Labor
Code together with its implementing rules and regulations and other laws affecting labor apply in this
case.68 (Emphasis supplied, citations omitted)

By our laws, overseas Filipino workers (OFWs) may only be terminated for a just or authorized
cause and after compliance with procedural due process requirements.

Article 282 of the Labor Code enumerates the just causes of termination by the employer. Thus:

Art. 282. Termination by employer. An employer may terminate an employment for any of the
following causes:

(a) Serious misconduct or willful disobedience by the employee of the lawful orders of his
employer or representative in connection with his work;

(b) Gross and habitual neglect by the employee of his duties;

(c) Fraud or willful breach by the employee of the trust reposed in him by his employer or
duly authorized representative;

(d) Commission of a crime or offense by the employee against the person of his employer or
any immediate member of his family or his duly authorized representatives; and

(e) Other causes analogous to the foregoing.


Petitioners allegation that respondentwas inefficient in her work and negligent in her duties69 may,
therefore, constitute a just cause for termination under Article 282(b), but only if petitioner was able
to prove it.

The burden of proving that there is just cause for termination is on the employer. "The employer
must affirmatively show rationally adequate evidence that the dismissal was for a justifiable
cause."70 Failure to show that there was valid or just cause for termination would necessarily mean
that the dismissal was illegal.71

To show that dismissal resulting from inefficiency in work is valid, it must be shown that: 1) the
employer has set standards of conduct and workmanship against which the employee will be judged;
2) the standards of conduct and workmanship must have been communicated tothe employee; and
3) the communication was made at a reasonable time prior to the employees performance
assessment.

This is similar to the law and jurisprudence on probationary employees, which allow termination
ofthe employee only when there is "just cause or when [the probationary employee] fails to qualify as
a regular employee in accordance with reasonable standards made known by the employer to the
employee at the time of his [or her] engagement."72

However, we do not see why the application of that ruling should be limited to probationary
employment. That rule is basic to the idea of security of tenure and due process, which are
guaranteed to all employees, whether their employment is probationary or regular.

The pre-determined standards that the employer sets are the bases for determining the probationary
employees fitness, propriety, efficiency, and qualifications as a regular employee. Due process
requires that the probationary employee be informed of such standards at the time of his or her
engagement so he or she can adjusthis or her character or workmanship accordingly. Proper
adjustment to fit the standards upon which the employees qualifications will be evaluated will
increase ones chances of being positively assessed for regularization by his or her employer.

Assessing an employees work performance does not stop after regularization. The employer, on a
regular basis, determines if an employee is still qualified and efficient, based on work standards.
Based on that determination, and after complying with the due process requirements of notice and
hearing, the employer may exercise its management prerogative of terminating the employee found
unqualified.

The regular employee must constantlyattempt to prove to his or her employer that he or she meets
all the standards for employment. This time, however, the standards to be met are set for the
purpose of retaining employment or promotion. The employee cannot be expected to meet any
standard of character or workmanship if such standards were not communicated to him or her.
Courts should remain vigilant on allegations of the employers failure to communicatework standards
that would govern ones employment "if [these are] to discharge in good faith [their] duty to
adjudicate."73

In this case, petitioner merely alleged that respondent failed to comply with her foreign employers
work requirements and was inefficient in her work.74 No evidence was shown to support such
allegations. Petitioner did not even bother to specify what requirements were not met, what
efficiency standards were violated, or what particular acts of respondent constituted inefficiency.
There was also no showing that respondent was sufficiently informed of the standards against which
her work efficiency and performance were judged. The parties conflict as to the position held by
respondent showed that even the matter as basic as the job title was not clear.

The bare allegations of petitioner are not sufficient to support a claim that there is just cause for
termination. There is no proof that respondent was legally terminated.

Petitioner failed to comply with


the due process requirements

Respondents dismissal less than one year from hiring and her repatriation on the same day show
not onlyfailure on the partof petitioner to comply with the requirement of the existence of just cause
for termination. They patently show that the employersdid not comply with the due process
requirement.

A valid dismissal requires both a valid cause and adherence to the valid procedure of
dismissal.75 The employer is required to give the charged employee at least two written notices
before termination.76 One of the written notices must inform the employee of the particular acts that
may cause his or her dismissal.77 The other notice must "[inform] the employee of the employers
decision."78 Aside from the notice requirement, the employee must also be given "an opportunity to
be heard."79

Petitioner failed to comply with the twin notices and hearing requirements. Respondent started
working on June 26, 1997. She was told that she was terminated on July 14, 1997 effective on the
same day and barely a month from her first workday. She was also repatriated on the same day that
she was informed of her termination. The abruptness of the termination negated any finding that she
was properly notified and given the opportunity to be heard. Her constitutional right to due process of
law was violated.

II

Respondent Joy Cabiles, having been illegally dismissed, is entitled to her salary for the unexpired
portion ofthe employment contract that was violated together with attorneys fees and reimbursement
of amounts withheld from her salary.

Section 10 of Republic Act No. 8042,otherwise known as the Migrant Workers and Overseas
Filipinos Act of1995, states thatoverseas workers who were terminated without just, valid, or
authorized cause "shall be entitled to the full reimbursement of his placement fee with interest of
twelve (12%) per annum, plus his salaries for the unexpired portion of his employment contract or for
three (3) months for every year of the unexpired term, whichever is less."

Sec. 10. MONEY CLAIMS. Notwithstanding any provision of law to the contrary, the Labor Arbiters
of the National Labor Relations Commission (NLRC) shall have the original and exclusive jurisdiction
to hear and decide, within ninety (90) calendar days after filing of the complaint, the claims arising
out of an employer-employee relationship or by virtue of any law or contract involving Filipino
workers for overseas deployment including claims for actual, moral, exemplary and other forms of
damages.

The liability of the principal/employer and the recruitment/placement agency for any and all claims
under this section shall be joint and several. This provisions [sic] shall be incorporated in the contract
for overseas employment and shall be a condition precedent for its approval. The performance bond
to be filed by the recruitment/placementagency, as provided by law, shall be answerable for all
money claims or damages that may be awarded to the workers. If the recruitment/placement agency
is a juridical being, the corporate officers and directors and partners as the case may be, shall
themselves be jointly and solidarily liable with the corporation orpartnership for the aforesaid claims
and damages.

Such liabilities shall continue during the entire period or duration of the employment contract and
shall not be affected by any substitution, amendment or modification made locally or in a foreign
country of the said contract.

Any compromise/amicable settlement or voluntary agreement on money claims inclusive of


damages under this section shall be paid within four (4) months from the approval of the settlement
by the appropriate authority.

In case of termination of overseas employment without just, valid or authorized cause as defined by
law or contract, the workers shall be entitled to the full reimbursement of his placement fee with
interest of twelve (12%) per annum, plus his salaries for the unexpired portion of his employment
contract or for three (3) months for every year of the unexpired term, whichever is less.

....

(Emphasis supplied)

Section 15 of Republic Act No. 8042 states that "repatriation of the worker and the transport of his
[or her] personal belongings shall be the primary responsibility of the agency which recruited or
deployed the worker overseas." The exception is when "termination of employment is due solely to
the fault of the worker,"80 which as we have established, is not the case. It reads: SEC. 15.
REPATRIATION OF WORKERS; EMERGENCY REPATRIATION FUND. The repatriation of the
worker and the transport of his personal belongings shall be the primary responsibility of the agency
which recruited or deployed the worker overseas. All costs attendant to repatriation shall be borne by
or charged to the agency concerned and/or its principal. Likewise, the repatriation of remains and
transport of the personal belongings of a deceased worker and all costs attendant thereto shall be
borne by the principal and/or local agency. However, in cases where the termination of employment
is due solely to the fault of the worker, the principal/employer or agency shall not in any manner be
responsible for the repatriation of the former and/or his belongings.

....

The Labor Code81 also entitles the employee to 10% of the amount of withheld wages as attorneys
feeswhen the withholding is unlawful.

The Court of Appeals affirmedthe National Labor Relations Commissions decision to award
respondent NT$46,080.00 or the threemonth equivalent of her salary, attorneys fees of NT$300.00,
and the reimbursement of the withheld NT$3,000.00 salary, which answered for her repatriation.

We uphold the finding that respondent is entitled to all of these awards. The award of the three-
month equivalent of respondents salary should, however, be increased to the amount equivalent to
the unexpired term of the employment contract.

In Serrano v. Gallant Maritime Services, Inc. and Marlow Navigation Co., Inc.,82 this court ruled that
the clause "or for three (3) months for every year of the unexpired term, whichever is less"83 is
unconstitutional for violating the equal protection clause and substantive due process.84
A statute or provision which was declared unconstitutional is not a law. It "confers no rights; it
imposes no duties; it affords no protection; it creates no office; it is inoperative as if it has not been
passed at all."85

We are aware that the clause "or for three (3) months for every year of the unexpired term,
whichever is less"was reinstated in Republic Act No. 8042 upon promulgation of Republic Act No.
10022 in 2010. Section 7 of Republic Act No. 10022 provides:

Section 7.Section 10 of Republic Act No. 8042, as amended, is hereby amended to read as follows:

SEC. 10. Money Claims. Notwithstanding any provision of law to the contrary, the Labor Arbiters of
the National Labor Relations Commission (NLRC) shall have the original and exclusive jurisdiction to
hear and decide, within ninety (90) calendar days after the filing of the complaint, the claims arising
out of an employer-employee relationship or by virtue of any law or contract involving Filipino
workers for overseas deployment including claims for actual, moral, exemplary and other forms of
damage. Consistent with this mandate, the NLRC shall endeavor to update and keep abreast with
the developments in the global services industry.

The liability of the principal/employer and the recruitment/placement agency for any and all claims
under this section shall be joint and several. This provision shall be incorporated in the contract for
overseas employment and shall be a condition precedent for its approval. The performance bond to
de [sic] filed by the recruitment/placement agency, as provided by law, shall be answerable for all
money claims or damages that may be awarded to the workers. If the recruitment/placement agency
is a juridical being, the corporate officers and directors and partners as the case may be, shall
themselves be jointly and solidarily liable with the corporation or partnership for the aforesaid claims
and damages.

Such liabilities shall continue during the entire period or duration of the employment contract and
shall not be affected by any substitution, amendment or modification made locally or in a foreign
country of the said contract.

Any compromise/amicable settlement or voluntary agreement on money claims inclusive of


damages under this section shall be paid within thirty (30) days from approval of the settlement by
the appropriate authority.

In case of termination of overseas employment without just, valid or authorized cause as defined by
law or contract, or any unauthorized deductions from the migrant workers salary, the worker shall be
entitled to the full reimbursement if [sic] his placement fee and the deductions made with interest at
twelve percent (12%) per annum, plus his salaries for the unexpired portion of his employment
contract or for three (3) months for every year of the unexpired term, whichever is less.

In case of a final and executory judgement against a foreign employer/principal, it shall be


automatically disqualified, without further proceedings, from participating in the Philippine Overseas
Employment Program and from recruiting and hiring Filipino workers until and unless it fully satisfies
the judgement award.

Noncompliance with the mandatory periods for resolutions of case providedunder this section shall
subject the responsible officials to any or all of the following penalties:

(a) The salary of any such official who fails to render his decision or resolution within the
prescribed period shall be, or caused to be, withheld until the said official complies therewith;
(b) Suspension for not more than ninety (90) days; or

(c) Dismissal from the service with disqualification to hold any appointive public office for five
(5) years.

Provided, however,That the penalties herein provided shall be without prejudice to any liability which
any such official may have incured [sic] under other existing laws or rules and regulations as a
consequence of violating the provisions of this paragraph. (Emphasis supplied)

Republic Act No. 10022 was promulgated on March 8, 2010. This means that the reinstatement of
the clause in Republic Act No. 8042 was not yet in effect at the time of respondents termination from
work in 1997.86 Republic Act No. 8042 before it was amended byRepublic Act No. 10022 governs this
case.

When a law is passed, this court awaits an actual case that clearly raises adversarial positions in
their proper context before considering a prayer to declare it as unconstitutional.

However, we are confronted with a unique situation. The law passed incorporates the exact clause
already declared as unconstitutional, without any perceived substantial change in the circumstances.

This may cause confusion on the part of the National Labor Relations Commission and the Court of
Appeals.At minimum, the existence of Republic Act No. 10022 may delay the execution of the
judgment in this case, further frustrating remedies to assuage the wrong done to petitioner.

Hence, there is a necessity to decide this constitutional issue.

Moreover, this court is possessed with the constitutional duty to "[p]romulgate rules concerning the
protection and enforcement of constitutional rights."87 When cases become mootand academic, we
do not hesitate to provide for guidance to bench and bar in situations where the same violations are
capable of repetition but will evade review. This is analogous to cases where there are millions of
Filipinos working abroad who are bound to suffer from the lack of protection because of the
restoration of an identical clause in a provision previously declared as unconstitutional.

In the hierarchy of laws, the Constitution is supreme. No branch or office of the government may
exercise its powers in any manner inconsistent with the Constitution, regardless of the existence of
any law that supports such exercise. The Constitution cannot be trumped by any other law. All laws
must be read in light of the Constitution. Any law that is inconsistent with it is a nullity.

Thus, when a law or a provision of law is null because it is inconsistent with the Constitution,the
nullity cannot be cured by reincorporation or reenactment of the same or a similar law or provision. A
law or provision of law that was already declared unconstitutional remains as such unless
circumstances have sochanged as to warrant a reverse conclusion.

We are not convinced by the pleadings submitted by the parties that the situation has so changed so
as to cause us to reverse binding precedent.

Likewise, there are special reasons of judicial efficiency and economy that attend to these cases.
The new law puts our overseas workers in the same vulnerable position as they were prior to
Serrano. Failure to reiterate the very ratio decidendi of that case will result in the same untold
economic hardships that our reading of the Constitution intended to avoid. Obviously, we cannot
countenance added expenses for further litigation thatwill reduce their hardearned wages as well as
add to the indignity of having been deprived of the protection of our laws simply because our
precedents have not been followed. There is no constitutional doctrine that causes injustice in the
face of empty procedural niceties. Constitutional interpretation is complex, but it is never
unreasonable.

Thus, in a resolution88 dated October 22, 2013, we ordered the parties and the Office of the Solicitor
General to comment on the constitutionality of the reinstated clause in Republic Act No. 10022.

In its comment,89 petitioner argued that the clause was constitutional.90 The legislators intended a
balance between the employers and the employees rights by not unduly burdening the local
recruitment agency.91Petitioner is also of the view that the clause was already declared as
constitutional in Serrano.92

The Office of the Solicitor General also argued that the clause was valid and
constitutional.93 However, since the parties never raised the issue of the constitutionality of the clause
asreinstated in Republic Act No. 10022, its contention is that it is beyond judicial review.94

On the other hand, respondentargued that the clause was unconstitutional because it infringed on
workers right to contract.95

We observe that the reinstated clause, this time as provided in Republic Act. No. 10022, violates the
constitutional rights to equal protection and due process.96 Petitioner as well as the Solicitor General
have failed to show any compelling changein the circumstances that would warrant us to revisit the
precedent.

We reiterate our finding in Serrano v. Gallant Maritime that limiting wages that should be recovered
by anillegally dismissed overseas worker to three months is both a violation of due process and the
equal protection clauses of the Constitution.

Equal protection of the law is a guarantee that persons under like circumstances and falling within
the same class are treated alike, in terms of "privileges conferred and liabilities enforced."97 It is a
guarantee against "undue favor and individual or class privilege, as well as hostile discrimination or
the oppression of inequality."98

In creating laws, the legislature has the power "to make distinctions and classifications."99

In exercising such power, it has a wide discretion.100

The equal protection clause does not infringe on this legislative power.101 A law is void on this basis,
only if classifications are made arbitrarily.102 There is no violation of the equal protection clause if the
law applies equally to persons within the same class and if there are reasonable grounds for
distinguishing between those falling within the class and those who do not fall within the class.103 A
law that does not violate the equal protection clause prescribesa reasonable classification.104

A reasonable classification "(1) must rest on substantial distinctions; (2) must be germane to the
purposes of the law; (3) must not be limited to existing conditions only; and (4) must apply equally to
all members of the same class."105

The reinstated clause does not satisfy the requirement of reasonable classification.
In Serrano, we identified the classifications made by the reinstated clause. It distinguished between
fixed-period overseas workers and fixedperiod local workers.106 It also distinguished between
overseas workers with employment contracts of less than one year and overseas workers with
employment contracts of at least one year.107 Within the class of overseas workers with at least one-
year employment contracts, there was a distinction between those with at least a year left in their
contracts and those with less than a year left in their contracts when they were illegally dismissed.108

The Congress classification may be subjected to judicial review. In Serrano, there is a "legislative
classification which impermissibly interferes with the exercise of a fundamental right or operates to
the peculiar disadvantage of a suspect class."109

Under the Constitution, labor is afforded special protection.110 Thus, this court in Serrano, "[i]mbued
with the same sense of obligation to afford protection to labor, . . . employ[ed] the standard of strict
judicial scrutiny, for it perceive[d] in the subject clause a suspect classification prejudicial to
OFWs."111

We also noted in Serranothat before the passage of Republic Act No. 8042, the money claims of
illegally terminated overseas and local workers with fixed-term employment werecomputed in the
same manner.112 Their money claims were computed based onthe "unexpired portions of their
contracts."113 The adoption of the reinstated clause in Republic Act No. 8042 subjected the money
claims of illegally dismissed overseas workers with an unexpired term of at least a year to a cap of
three months worth of their salary.114 There was no such limitation on the money claims of illegally
terminated local workers with fixed-term employment.115

We observed that illegally dismissed overseas workers whose employment contracts had a term of
less than one year were granted the amount equivalent to the unexpired portion of their employment
contracts.116 Meanwhile, illegally dismissed overseas workers with employment terms of at least a
year were granted a cap equivalent to three months of their salary for the unexpired portions of their
contracts.117

Observing the terminologies used inthe clause, we also found that "the subject clause creates a sub-
layer of discrimination among OFWs whose contract periods are for more than one year: those who
are illegally dismissed with less than one year left in their contracts shall be entitled to their salaries
for the entire unexpired portion thereof, while those who are illegally dismissed with one year or
more remaining in their contracts shall be covered by the reinstated clause, and their monetary
benefits limited to their salaries for three months only."118

We do not need strict scrutiny to conclude that these classifications do not rest on any real or
substantial distinctions that would justify different treatments in terms of the computation of money
claims resulting from illegal termination.

Overseas workers regardless of their classifications are entitled to security of tenure, at least for the
period agreed upon in their contracts. This means that they cannot be dismissed before the end of
their contract terms without due process. If they were illegally dismissed, the workers right to
security of tenure is violated.

The rights violated when, say, a fixed-period local worker is illegally terminated are neither greater
than norless than the rights violated when a fixed-period overseas worker is illegally terminated. It is
state policy to protect the rights of workers withoutqualification as to the place of employment.119 In
both cases, the workers are deprived of their expected salary, which they could have earned had
they not been illegally dismissed. For both workers, this deprivation translates to economic insecurity
and disparity.120 The same is true for the distinctions
SECOND DIVISION

[G.R. No. 156367. May 16, 2005]

AUTO BUS TRANSPORT SYSTEMS, INC., petitioner, vs. ANTONIO


BAUTISTA, respondent.

DECISION
CHICO-NAZARIO, J.:

Before Us is a Petition for Review on Certiorari assailing the Decision[1] and


Resolution[2] of the Court of Appeals affirming the Decision[3] of the National Labor
Relations Commission (NLRC). The NLRC ruling modified the Decision of the Labor
Arbiter (finding respondent entitled to the award of 13th month pay and service incentive
leave pay) by deleting the award of 13th month pay to respondent.

THE FACTS

Since 24 May 1995, respondent Antonio Bautista has been employed by petitioner
Auto Bus Transport Systems, Inc. (Autobus), as driver-conductor with travel routes
Manila-Tuguegarao via Baguio, Baguio- Tuguegarao via Manila and Manila-Tabuk via
Baguio. Respondent was paid on commission basis, seven percent (7%) of the total
gross income per travel, on a twice a month basis.
On 03 January 2000, while respondent was driving Autobus No. 114 along Sta. Fe,
Nueva Vizcaya, the bus he was driving accidentally bumped the rear portion of Autobus
No. 124, as the latter vehicle suddenly stopped at a sharp curve without giving any
warning.
Respondent averred that the accident happened because he was compelled by the
management to go back to Roxas, Isabela, although he had not slept for almost twenty-
four (24) hours, as he had just arrived in Manila from Roxas, Isabela. Respondent
further alleged that he was not allowed to work until he fully paid the amount of
P75,551.50, representing thirty percent (30%) of the cost of repair of the damaged
buses and that despite respondents pleas for reconsideration, the same was ignored by
management. After a month, management sent him a letter of termination.
Thus, on 02 February 2000, respondent instituted a Complaint for Illegal Dismissal
with Money Claims for nonpayment of 13th month pay and service incentive leave pay
against Autobus.
Petitioner, on the other hand, maintained that respondents employment was replete
with offenses involving reckless imprudence, gross negligence, and dishonesty. To
support its claim, petitioner presented copies of letters, memos, irregularity reports, and
warrants of arrest pertaining to several incidents wherein respondent was involved.
Furthermore, petitioner avers that in the exercise of its management prerogative,
respondents employment was terminated only after the latter was provided with an
opportunity to explain his side regarding the accident on 03 January 2000.
On 29 September 2000, based on the pleadings and supporting evidence presented
by the parties, Labor Arbiter Monroe C. Tabingan promulgated a Decision, [4] the
dispositive portion of which reads:

WHEREFORE, all premises considered, it is hereby found that the complaint for
Illegal Dismissal has no leg to stand on. It is hereby ordered DISMISSED, as it is
hereby DISMISSED.

However, still based on the above-discussed premises, the respondent must pay to the
complainant the following:

a. his 13th month pay from the date of his hiring to the date of his
dismissal, presently computed at P78,117.87;

b. his service incentive leave pay for all the years he had been in service
with the respondent, presently computed at P13,788.05.

All other claims of both complainant and respondent are hereby dismissed for lack of
merit.[5]

Not satisfied with the decision of the Labor Arbiter, petitioner appealed the decision
to the NLRC which rendered its decision on 28 September 2001, the decretal portion of
which reads:

[T]he Rules and Regulations Implementing Presidential Decree No. 851, particularly
Sec. 3 provides:

Section 3. Employers covered. The Decree shall apply to all employers except to:

xxx xxx xxx

e) employers of those who are paid on purely commission, boundary, or task basis,
performing a specific work, irrespective of the time consumed in the performance
thereof. xxx.
Records show that complainant, in his position paper, admitted that he was paid on a
commission basis.

In view of the foregoing, we deem it just and equitable to modify the assailed
Decision by deleting the award of 13th month pay to the complainant.

WHEREFORE, the Decision dated 29 September 2000 is MODIFIED by deleting the


award of 13th month pay. The other findings are AFFIRMED. [6]

In other words, the award of service incentive leave pay was maintained. Petitioner
thus sought a reconsideration of this aspect, which was subsequently denied in a
Resolution by the NLRC dated 31 October 2001.
Displeased with only the partial grant of its appeal to the NLRC, petitioner sought
the review of said decision with the Court of Appeals which was subsequently denied by
the appellate court in a Decision dated 06 May 2002, the dispositive portion of which
reads:

WHEREFORE, premises considered, the Petition is DISMISSED for lack of merit;


and the assailed Decision of respondent Commission in NLRC NCR CA No. 026584-
2000 is hereby AFFIRMED in toto. No costs. [7]

Hence, the instant petition.

ISSUES

1. Whether or not respondent is entitled to service incentive leave;


2. Whether or not the three (3)-year prescriptive period provided under Article 291
of the Labor Code, as amended, is applicable to respondents claim of service
incentive leave pay.

RULING OF THE COURT

The disposition of the first issue revolves around the proper interpretation of Article
95 of the Labor Code vis--vis Section 1(D), Rule V, Book III of the Implementing Rules
and Regulations of the Labor Code which provides:

Art. 95. RIGHT TO SERVICE INCENTIVE LEAVE

(a) Every employee who has rendered at least one year of service shall be
entitled to a yearly service incentive leave of five days with pay.
Book III, Rule V: SERVICE INCENTIVE LEAVE

SECTION 1. Coverage. This rule shall apply to all employees except:

(d) Field personnel and other employees whose performance is unsupervised


by the employer including those who are engaged on task or contract
basis, purely commission basis, or those who are paid in a fixed amount
for performing work irrespective of the time consumed in the performance
thereof; . . .

A careful perusal of said provisions of law will result in the conclusion that the grant
of service incentive leave has been delimited by the Implementing Rules and
Regulations of the Labor Code to apply only to those employees not explicitly excluded
by Section 1 of Rule V. According to the Implementing Rules, Service Incentive Leave
shall not apply to employees classified as field personnel. The phrase other employees
whose performance is unsupervised by the employer must not be understood as a
separate classification of employees to which service incentive leave shall not be
granted. Rather, it serves as an amplification of the interpretation of the definition of field
personnel under the Labor Code as those whose actual hours of work in the field cannot
be determined with reasonable certainty.[8]
The same is true with respect to the phrase those who are engaged on task or
contract basis, purely commission basis. Said phrase should be related with field
personnel, applying the rule on ejusdem generis that general and unlimited terms are
restrained and limited by the particular terms that they follow. [9] Hence, employees
engaged on task or contract basis or paid on purely commission basis are not
automatically exempted from the grant of service incentive leave, unless, they fall under
the classification of field personnel.
Therefore, petitioners contention that respondent is not entitled to the grant of
service incentive leave just because he was paid on purely commission basis is
misplaced. What must be ascertained in order to resolve the issue of propriety of the
grant of service incentive leave to respondent is whether or not he is a field personnel.
According to Article 82 of the Labor Code, field personnel shall refer to non-
agricultural employees who regularly perform their duties away from the principal place
of business or branch office of the employer and whose actual hours of work in the field
cannot be determined with reasonable certainty. This definition is further elaborated in
the Bureau of Working Conditions (BWC), Advisory Opinion to Philippine Technical-
Clerical Commercial Employees Association[10] which states that:

As a general rule, [field personnel] are those whose performance of their job/service is
not supervised by the employer or his representative, the workplace being away from
the principal office and whose hours and days of work cannot be determined with
reasonable certainty; hence, they are paid specific amount for rendering specific
service or performing specific work. If required to be at specific places at specific
times, employees including drivers cannot be said to be field personnel despite the
fact that they are performing work away from the principal office of the
employee. [Emphasis ours]

To this discussion by the BWC, the petitioner differs and postulates that under said
advisory opinion, no employee would ever be considered a field personnel because
every employer, in one way or another, exercises control over his employees. Petitioner
further argues that the only criterion that should be considered is the nature of work of
the employee in that, if the employees job requires that he works away from the
principal office like that of a messenger or a bus driver, then he is inevitably a field
personnel.
We are not persuaded. At this point, it is necessary to stress that the definition of a
field personnel is not merely concerned with the location where the employee regularly
performs his duties but also with the fact that the employees performance is
unsupervised by the employer. As discussed above, field personnel are those who
regularly perform their duties away from the principal place of business of the
employer and whose actual hours of work in the field cannot be determined with
reasonable certainty. Thus, in order to conclude whether an employee is a field
employee, it is also necessary to ascertain if actual hours of work in the field can be
determined with reasonable certainty by the employer. In so doing, an inquiry must be
made as to whether or not the employees time and performance are constantly
supervised by the employer.
As observed by the Labor Arbiter and concurred in by the Court of Appeals:

It is of judicial notice that along the routes that are plied by these bus companies, there
are its inspectors assigned at strategic places who board the bus and inspect the
passengers, the punched tickets, and the conductors reports. There is also the
mandatory once-a-week car barn or shop day, where the bus is regularly checked as to
its mechanical, electrical, and hydraulic aspects, whether or not there are problems
thereon as reported by the driver and/or conductor. They too, must be at specific place
as [sic] specified time, as they generally observe prompt departure and arrival from
their point of origin to their point of destination. In each and every depot, there is
always the Dispatcher whose function is precisely to see to it that the bus and its crew
leave the premises at specific times and arrive at the estimated proper time. These, are
present in the case at bar. The driver, the complainant herein, was therefore under
constant supervision while in the performance of this work. He cannot be considered a
field personnel.[11]

We agree in the above disquisition. Therefore, as correctly concluded by the


appellate court, respondent is not a field personnel but a regular employee who
performs tasks usually necessary and desirable to the usual trade of petitioners
business. Accordingly, respondent is entitled to the grant of service incentive leave.
The question now that must be addressed is up to what amount of service incentive
leave pay respondent is entitled to.
The response to this query inevitably leads us to the correlative issue of whether or
not the three (3)-year prescriptive period under Article 291 of the Labor Code is
applicable to respondents claim of service incentive leave pay.
Article 291 of the Labor Code states that all money claims arising from employer-
employee relationship shall be filed within three (3) years from the time the cause of
action accrued; otherwise, they shall be forever barred.
In the application of this section of the Labor Code, the pivotal question to be
answered is when does the cause of action for money claims accrue in order to
determine the reckoning date of the three-year prescriptive period.
It is settled jurisprudence that a cause of action has three elements, to wit, (1) a
right in favor of the plaintiff by whatever means and under whatever law it arises or is
created; (2) an obligation on the part of the named defendant to respect or not to violate
such right; and (3) an act or omission on the part of such defendant violative of the right
of the plaintiff or constituting a breach of the obligation of the defendant to the plaintiff. [12]
To properly construe Article 291 of the Labor Code, it is essential to ascertain the
time when the third element of a cause of action transpired. Stated differently, in the
computation of the three-year prescriptive period, a determination must be made as to
the period when the act constituting a violation of the workers right to the benefits being
claimed was committed. For if the cause of action accrued more than three (3) years
before the filing of the money claim, said cause of action has already prescribed in
accordance with Article 291.[13]
Consequently, in cases of nonpayment of allowances and other monetary benefits,
if it is established that the benefits being claimed have been withheld from the employee
for a period longer than three (3) years, the amount pertaining to the period beyond the
three-year prescriptive period is therefore barred by prescription. The amount that can
only be demanded by the aggrieved employee shall be limited to the amount of the
benefits withheld within three (3) years before the filing of the complaint.[14]
It is essential at this point, however, to recognize that the service incentive leave is
a curious animal in relation to other benefits granted by the law to every employee. In
the case of service incentive leave, the employee may choose to either use his leave
credits or commute it to its monetary equivalent if not exhausted at the end of the
year.[15] Furthermore, if the employee entitled to service incentive leave does not use or
commute the same, he is entitled upon his resignation or separation from work to the
commutation of his accrued service incentive leave. As enunciated by the Court
in Fernandez v. NLRC:[16]

The clear policy of the Labor Code is to grant service incentive leave pay to workers
in all establishments, subject to a few exceptions. Section 2, Rule V, Book III of the
Implementing Rules and Regulations provides that [e]very employee who has
rendered at least one year of service shall be entitled to a yearly service incentive
leave of five days with pay. Service incentive leave is a right which accrues to every
employee who has served within 12 months, whether continuous or broken reckoned
from the date the employee started working, including authorized absences and paid
regular holidays unless the working days in the establishment as a matter of practice
or policy, or that provided in the employment contracts, is less than 12 months, in
which case said period shall be considered as one year. It is also commutable to its
money equivalent if not used or exhausted at the end of the year. In other words, an
employee who has served for one year is entitled to it. He may use it as leave days or
he may collect its monetary value. To limit the award to three years, as the solicitor
general recommends, is to unduly restrict such right. [Italics supplied]
[17]

Correspondingly, it can be conscientiously deduced that the cause of action of an


entitled employee to claim his service incentive leave pay accrues from the moment the
employer refuses to remunerate its monetary equivalent if the employee did not make
use of said leave credits but instead chose to avail of its commutation. Accordingly, if
the employee wishes to accumulate his leave credits and opts for its commutation upon
his resignation or separation from employment, his cause of action to claim the whole
amount of his accumulated service incentive leave shall arise when the employer fails to
pay such amount at the time of his resignation or separation from employment.
Applying Article 291 of the Labor Code in light of this peculiarity of the service
incentive leave, we can conclude that the three (3)-year prescriptive period commences,
not at the end of the year when the employee becomes entitled to the commutation of
his service incentive leave, but from the time when the employer refuses to pay its
monetary equivalent after demand of commutation or upon termination of the
employees services, as the case may be.
The above construal of Art. 291, vis--vis the rules on service incentive leave, is in
keeping with the rudimentary principle that in the implementation and interpretation of
the provisions of the Labor Code and its implementing regulations, the workingmans
welfare should be the primordial and paramount consideration. [18] The policy is to extend
the applicability of the decree to a greater number of employees who can avail of the
benefits under the law, which is in consonance with the avowed policy of the State to
give maximum aid and protection to labor.[19]
In the case at bar, respondent had not made use of his service incentive leave nor
demanded for its commutation until his employment was terminated by petitioner.
Neither did petitioner compensate his accumulated service incentive leave pay at the
time of his dismissal. It was only upon his filing of a complaint for illegal dismissal, one
month from the time of his dismissal, that respondent demanded from his former
employer commutation of his accumulated leave credits. His cause of action to claim
the payment of his accumulated service incentive leave thus accrued from the time
when his employer dismissed him and failed to pay his accumulated leave credits.
Therefore, the prescriptive period with respect to his claim for service incentive
leave pay only commenced from the time the employer failed to compensate his
accumulated service incentive leave pay at the time of his dismissal. Since respondent
had filed his money claim after only one month from the time of his dismissal,
necessarily, his money claim was filed within the prescriptive period provided for by
Article 291 of the Labor Code.
WHEREFORE, premises considered, the instant petition is hereby DENIED. The
assailed Decision of the Court of Appeals in CA-G.R. SP. No. 68395 is hereby
AFFIRMED. No Costs.
SO ORDERED.
Puno, (Chairman), Austria-Martinez, Callejo, Sr., and Tinga, JJ., concur.

[1]
CA-G.R. SP No. 68395, dated 06 May 2002, penned by Associate Justice Andres B. Reyes, Jr. with
Associate Justices Conrado M. Vasquez, Jr. and Mario L. Guaria, III, concurring.
[2]
Dated 12 December 2002.
[3]
NLRC NCR CA No. 026584-2000 (NLRC Case No. RAB CAR 02-0088-00), dated 28 September 2001.
[4]
NLRC Case No. RAB-CAR-02-0088-00.
[5]
Rollo, pp. 46-47.
[6]
Rollo, pp. 52-53.
[7]
CA Decision, p. 10; Rollo, p. 24.
[8]
See Mercidar Fishing Corporation v. NLRC, G.R. No. 112574, 08 October 1998, 297 SCRA440.
[9]
Cebu Institute of Technology v. Ople, G.R. No. L- 58870, 18 December 1987, 156 SCRA 629, 672,
citing Vera v. Cuevas, G.R. No. L-33693, 31 May 1979, 90 SCRA 379.
[10]
06 April 1989; Rollo. p. 20.
[11]
Rollo, pp. 45-46.
[12]
Baliwag Transit, Inc. v. Ople, G.R. No. 57642, 16 March 1989, 171 SCRA 250, citing Agric. Credit &
Cooperative Financing Administration v. Alpha Ins. & Surety Co., Inc., G.R. No. L-24566, 29 July
1968, 24 SCRA 151; Summit Guaranty and Insurance Co., Inc. v. De Guzman, G.R. No. L-50997,
30 June 1987, 151 SCRA 389; Tormon v. Cutanda, G.R. No. L-18785, 23 December 1963, 9
SCRA 698.
[13]
See De Guzman, et al. v. CA and Nasipit Lumber Co., G.R. No.132257, 12 October 1998, 297 SCRA
743.
[14]
See E. Ganzon, Inc. v. NLRC, G.R. No. 123769, 22 December 1999, 321 SCRA 434.
[15]
Fernandez v. NLRC, G.R. No. 105892, 28 January 1998, 349 Phil 65.
[16]
Ibid.
[17]
Ibid., pp. 94-95.
[18]
Abella v. NLRC, G.R. No. L-71813, 20 July 1987, 152 SCRA 140, citing Volkschel Labor Union v.
Bureau of Labor Relations, G.R. No. L-45824, 19 June 1985, 137 SCRA 43.
[19]
Sarmiento v. Employees Compensation Commission, G.R. No. L-68648, 24 September 1986, 144
SCRA 421, citing Cristobal v. Employees Compensation Commission, G.R. No. L-49280, 26
February 1981, 103 SCRA 329; Acosta v. Employees Compensation Commission, G.R. No. L-
55464, 12 November 1981, 109 SCRA 209.

SECOND DIVISION

[G.R. No. 114734. March 31, 2000]

VIVIAN Y. IMBUIDO, petitioner, vs. NATIONAL LABOR RELATIONS


COMMISSION, INTERNATIONAL INFORMATION SERVICES, INC. and
GABRIEL LIBRANDO, respondents.

DECISION

BUENA, J.:

This special civil action for certiorari seeks to set aside the Decision[1] of the National
Labor Relations Commission (NLRC) promulgated on September 27, 1993 and its
Order dated January 11, 1994, which denied petitioners motion for reconsideration. Scslx

Petitioner was employed as a data encoder by private respondent International


Information Services, Inc., a domestic corporation engaged in the business of data
encoding and keypunching, from August 26, 1988 until October 18, 1991 when her
services were terminated. From August 26, 1988 until October 18, 1991, petitioner
entered into thirteen (13) separate employment contracts with private respondent, each
contract lasting only for a period of three (3) months. Aside from the basic hourly rate,
specific job contract number and period of employment, each contract contains the
following terms and conditions: Slxsc

"a. This Contract is for a specific project/job contract only and shall be
effective for the period covered as above-mentioned unless sooner
terminated when the job contract is completed earlier or withdrawn by
client, or when employee is dismissed for just and lawful causes provided
by law. The happening of any of these events will automatically terminate
this contract of employment. Slxmis

"b. Subject shall abide with the Companys rules and regulations for its
employees attached herein to form an integral part hereof.

"c. The nature of your job may require you to render overtime work with
pay so as not to disrupt the Companys commitment of scheduled delivery
dates made on said job contract."[2]
In September 1991, petitioner and twelve (12) other employees of private respondent
allegedly agreed to the filing of a petition for certification election involving the rank-and-
file employees of private respondent.[3] Thus, on October 8, 1991, Lakas Manggagawa
sa Pilipinas (LAKAS) filed a petition for certification election with the Bureau of Labor
Relations (BLR), docketed as NCR-OD-M-9110-128.[4]

Subsequently, on October 18, 1991, petitioner received a termination letter from Edna
Kasilag, Administrative Officer of private respondent, allegedly "due to low volume of
work."[5]

Thus, on May 25, 1992, petitioner filed a complaint for illegal dismissal with prayer for
service incentive leave pay and 13th month differential pay, with the National Labor
Relations Commission, National Capital Region, Arbitration Branch, docketed as NLRC-
NCR Case No. 05-02912-92.[6]

In her position paper dated August 3, 1992 and filed before labor arbiter Raul T. Aquino,
petitioner alleged that her employment was terminated not due to the alleged low
volume of work but because she "signed a petition for certification election among the
rank and file employees of respondents," thus charging private respondent with
committing unfair labor practices. Petitioner further complained of non-payment of
service incentive leave benefits and underpayment of 13th month pay.[7]

On the other hand, private respondent, in its position paper filed on July 16, 1992,
maintained that it had valid reasons to terminate petitioners employment and disclaimed
any knowledge of the existence or formation of a union among its rank-and-file
employees at the time petitioners services were terminated.[8] Private respondent
stressed that its business "relies heavily on companies availing of its services. Its
retention by client companies with particular emphasis on data encoding is on a project
to project basis,"[9] usually lasting for a period of "two (2) to five (5) months." Private
respondent further argued that petitioners employment was for a "specific project with a
specified period of engagement." According to private respondent, "the certainty of the
expiration of complainants engagement has been determined at the time of their (sic)
engagement (until 27 November 1991) or when the project is earlier completed or when
the client withdraws," as provided in the contract.[10] "The happening of the second event
[completion of the project] has materialized, thus, her contract of employment is
deemed terminated per the Brent School ruling."[11] Finally, private respondent averred
that petitioners "claims for non-payment of overtime time (sic) and service incentive
leave [pay] are without factual and legal basis."[12]

In a decision dated August 25, 1992, labor arbiter Raul T. Aquino, ruled in favor of
petitioner, and accordingly ordered her reinstatement without loss of seniority rights and
privileges, and the payment of backwages and service incentive leave pay. The
dispositive part of the said decision reads: Missdaa

"WHEREFORE, responsive to the foregoing, judgment is hereby rendered


ordering respondents to immediately reinstate complainant [petitioner
herein] as a regular employee to her former position without loss of
seniority rights and privileges and to pay backwages from the time of
dismissal up to the date of this decision, the same to continue until
complainant [s] [petitioner herein] actual reinstatement from (sic) the
service. Respondents are likewise ordered to pay complainant [petitioner
herein] service incentive leave pay computed as follows: Sdaadsc

Backwages:

10/18/91 8/25/92 = 10.23 mos.

P118.00 x 26 x 10.23 mos. = P31, 385.64

Service Incentive Leave Pay

1989 = P89.00 x 5 days = P445.00

1990 = 106 x 5 days = P530.00

1991 = 118 x 5 days = P590.00

P 1, 565.00

Total P32, 950.64

SO ORDERED."[13]

In his decision, the labor arbiter found petitioner to be a regular employee, ruling that
"[e]ven if herein complainant [petitioner herein] had been obstensively (sic) hired for a
fixed period or for a specific undertaking, she should be considered as [a] regular
employee of the respondents in conformity with the provisions (sic) laid down under
Article 280 of the Labor Code,"[14]after finding that "[i]t is crystal clear that herein
complainant [petitioner herein] performed a job which are (sic) usually necessary or
desirable in the usual business of respondent [s]."[15] The labor arbiter further denounced
"the purpose behind the series of contracts which respondents required complainant to
execute as a condition of employment was to evade the true intent and spirit of the labor
laws for the workingmen."[16] Furthermore, the labor arbiter concluded that petitioner was
illegally dismissed because the alleged reason for her termination, that is, low volume of
work, is "not among the just causes for termination recognized by law,"[17] hence, he
ordered her immediate reinstatement without loss of seniority rights and with full
backwages. With regard to the service incentive leave pay, the labor arbiter decided "to
grant the same for failure of the respondents to fully controvert said claims." [18] Lastly, the
labor arbiter rejected petitioners claim for 13th month pay "since complainant [petitioner
herein] failed to fully substantiate and argued (sic) the same."[19]
On appeal, the NLRC reversed the decision of the labor arbiter in a
decision[20] promulgated on September 27, 1993, the dispositive part of which reads:

"WHEREFORE, the appealed decision is hereby set aside. The complaint


for illegal dismissal is hereby dismissed for being without merit.
Complainants [petitioner herein] claim for service incentive leave pay is
hereby remanded for further arbitration.

SO ORDERED."[21]

The NLRC ruled that "[t]here is no question that the complainant [petitioner herein],
viewed in relation to said Article 280 of the [Labor] Code, is a regular employee judging
from the function and/or work for which she was hired. xxx xxx. But this does not
necessarily mean that the complainant [petitioner herein] has to be guaranteed a
tenurial security beyond the period for which she was hired." [22] The NLRC held that the
complainant [petitioner herein], while hired as a regular worker, is statutorily
guaranteed, in her tenurial security, only up to the time the specific project for which she
was hired is completed."[23] Hence, the NLRC concluded that "[w]ith the specific project
"at RCBC 014" admittedly completed, the complainant [petitioner herein] has therefore
no valid basis in charging illegal dismissal for her concomittant (sic) dislocation."[24]

In an Order dated January 11, 1994, the NLRC denied petitioners motion for
reconsideration.[25]

In this petition for certiorari, petitioner, for and in her behalf, argues that (1) the public
respondent "committed grave abuse of discretion when it ignored the findings of Labor
Arbiter Raul Aquino based on the evidence presented directly before him, and when it
made findings of fact that are contrary to or not supported by evidence," [26] (2)
"[p]etitioner was a "regular employee," NOT a "project employee" as found by public
respondent NLRC,"[27] (3) "[t]he termination of petition (sic) was tainted with unfair labor
practice,"[28] and (4) the public respondent "committed grave abuse of discretion in
remanding the awarded service incentive leave pay for further arbitration."[29]

The petition is impressed with merit. Sdaadsc

We agree with the findings of the NLRC that petitioner is a project employee. The
principal test for determining whether an employee is a project employee or a regular
employee is whether the project employee was assigned to carry out a specific project
or undertaking, the duration and scope of which were specified at the time the employee
was engaged for that project.[30] A project employee is one whose employment has been
fixed for a specific project or undertaking, the completion or termination of which has
been determined at the time of the engagement of the employee or where the work or
service to be performed is seasonal in nature and the employment is for the duration of
the season.[31] In the instant case, petitioner was engaged to perform activities which
were usually necessary or desirable in the usual business or trade of the employer, as
admittedly, petitioner worked as a data encoder for private respondent, a corporation
engaged in the business of data encoding and keypunching, and her employment was
fixed for a specific project or undertaking the completion or termination of which had
been determined at the time of her engagement, as may be observed from the series of
employment contracts[32] between petitioner and private respondent, all of which
contained a designation of the specific job contract and a specific period of employment.

However, even as we concur with the NLRCs findings that petitioner is a project
employee, we have reached a different conclusion. In the recent case of Maraguinot, Jr.
vs. NLRC,[33] we held that "[a] project employee or a member of a work pool may acquire
the status of a regular employee when the following concur: Rtcspped

1) There is a continuous rehiring of project employees even after [the]


cessation of a project;[34] and

2) The tasks performed by the alleged "project employee" are vital,


necessary and indispensable to the usual business or trade of the
employer.[35]"

The evidence on record reveals that petitioner was employed by private respondent as
a data encoder, performing activities which are usually necessary or desirable in the
usual business or trade of her employer, continuously for a period of more than three (3)
years, from August 26, 1988 to October 18, 1991[36] and contracted for a total of thirteen
(13) successive projects. We have previously ruled that "[h]owever, the length of time
during which the employee was continuously re-hired is not controlling, but merely
serves as a badge of regular employment."[37]Based on the foregoing, we conclude that
petitioner has attained the status of a regular employee of private respondent.

At this point, we reiterate with emphasis that: Korte

"xxx xxx

"At this time, we wish to allay any fears that this decision unduly burdens
an employer by imposing a duty to re-hire a project employee even after
completion of the project for which he was hired. The import of this
decision is not to impose a positive and sweeping obligation upon the
employer to re-hire project employees. What this decision merely
accomplishes is a judicial recognition of the employment status of a
project or work pool employee in accordance with what is fait
accompli, i.e., the continuous re-hiring by the employer of project or
work pool employees who perform tasks necessary or desirable to
the employer's usual business or trade. Let it not be said that this
decision "coddles" labor, for as Lao[38] has ruled, project or work pool
employees who have gained the status of regular employees are
subject to the "no work-no pay" principle, to repeat:
"A work pool may exist although the workers in the pool do not receive
salaries and are free to seek other employment during temporary breaks
in the business, provided that the worker shall be available when called to
report for a project. Although primarily applicable to regular seasonal
workers, this set-up can likewise be applied to project workers insofar as
the effect of temporary cessation of work is concerned. This is beneficial
to both the employer and employee for it prevents the unjust situation of
"coddling labor at the expense of capital" and at the same time enables
the workers to attain the status of regular employees. Sclaw

"The Court's ruling here is meant precisely to give life to the constitutional
policy of strengthening the labor sector, but, we stress, not at the expense
of management. Lest it be misunderstood, this ruling does not mean that
simply because an employee is a project or work pool employee even
outside the construction industry, he is deemed, ipso jure, a regular
employee. All that we hold today is that once a project or work pool
employee has been: (1) continuously, as opposed to intermittently,
re-hired by the same employer for the same tasks or nature of tasks;
and (2) these tasks are vital, necessary and indispensable to the
usual business or trade of the employer, then the employee must be
deemed a regular employee, pursuant to Article 280 of the Labor
Code and jurisprudence. To rule otherwise would allow
circumvention of labor laws in industries not falling within the ambit
of Policy Instruction No. 20/Department Order No. 19, hence allowing
the prevention of acquisition of tenurial security by project or work
pool employees who have already gained the status of regular
employees by the employer's conduct."[39](emphasis supplied)

Being a regular employee, petitioner is entitled to security of tenure and could only be
dismissed for a just or authorized cause, as provided in Article 279 of the Labor Code,
as amended: Sclex

"Art. 279. Security of Tenure In cases of regular employment, the


employer shall not terminate the services of an employee except for a just
cause or when authorized by this Title. An employee who is unjustly
dismissed from work shall be entitled to reinstatement without loss of
seniority rights and other privileges and to his full backwages, inclusive of
allowances, and to his other benefits or their monetary equivalent
computed from the time his compensation was withheld from him up to the
time of his actual reinstatement."

The alleged causes of petitioners dismissal (low volume of work and belatedly,
completion of project) are not valid causes for dismissal under Articles 282 and 283 of
the Labor Code. Thus, petitioner is entitled to reinstatement without loss of seniority
rights and other privileges, and to her full backwages, inclusive of allowances, and to
her other benefits or their monetary equivalent computed from the time her
compensation was withheld from her up to the time of her actual reinstatement.
However, complying with the principles of "suspension of work" and "no work, no pay"
between the end of one project and the start of a new one, in computing petitioners
backwages, the amounts corresponding to what could have been earned during the
periods from the date petitioner was dismissed until her reinstatement when private
respondent was not undertaking any project, should be deducted. Xlaw

With regard to petitioners claim for service incentive leave pay, we agree with the labor
arbiter that petitioner is entitled to service incentive leave pay, as provided in Article 95
of the Labor Code, which reads:

"Article 95 Right to service incentive leave

(a) Every employee who has rendered at least one year of service shall be
entitled to a yearly service incentive leave of five days with pay.

xxx xxx xxx."

Having already worked for more than three (3) years at the time of her unwarranted
dismissal, petitioner is undoubtedly entitled to service incentive leave benefits,
computed from 1989 until the date of her actual reinstatement. As we ruled in the recent
case of Fernandez vs. NLRC,[40] "[s]ince a service incentive leave is clearly demandable
after one year of service whether continuous or broken or its equivalent period, and it is
one of the "benefits" which would have accrued if an employee was not otherwise
illegally dismissed, it is fair and legal that its computation should be up to the date of
reinstatement as provided under Section [Article] 279 of the Labor Code, as amended,
which reads: Xsc

"ART. 279. Security of Tenure. An employee who is unjustly dismissed


from work shall be entitled to reinstatement without loss of seniority rights
and other privileges and to his full backwages, inclusive of allowances,
and to his other benefits or their monetary equivalent computed from
the time his compensation is withheld from him up to the time of his actual
reinstatement." (emphasis supplied).

WHEREFORE, the instant petition is GRANTED. The assailed decision of the National
Labor Relations Commission in NLRC NCR CA No. 003845-92 dated September 27,
1993, as well as its Order dated January 11, 1994, are hereby ANNULLED and SET
ASIDE for having been rendered with grave abuse of discretion, and the decision of the
Labor Arbiter in NLRC NCR Case No. 05-02912-92 is REINSTATED with
MODIFICATION as above-stated, with regard to the computation of back wages and
service incentive leave pay. Sc

SO ORDERED.

Bellosillo, (Chairman), Mendoza, Quisumbing, and De Leon, Jr., JJ., concur.


[1]
Penned by Commissioner Vicente S.E. Veloso, and concurred in by Commissioners Bartolome S. Carale and
Alberto R. Quimpo.
[2]
Rollo, pp. 44-56.
[3]
Ibid., p. 117.
[4]
Ibid.
[5]
Ibid., p. 118.
[6]
Ibid., p. 26.
[7]
Ibid, pp. 26-27.

LABOR LAW CASE DIGEST

SERRANO v. GALLANT MARITIME SERVICES INC. & MARLOWE NAVIGATION CO.,


INC.

G.R. No. 167614. March 24, 2009

Facts:
Petitioner was hired by Gallant Maritime Services, Inc. and Marlow Navigation Co., Ltd.
(respondents) under aPOEA-approved Contract of Employment. On March 19, 1998,
the date of his departure, petitioner was constrained toaccept a downgraded
employment contract for the position of Second Officer with a monthly salary of
US$1,000.00, uponthe assurance and representation of respondents that he would be
made Chief Officer by the end of April. However,respondents did not deliver on their
promise to make petitioner Chief Officer. Hence, petitioner refused to stay on as
SecondOfficer and was repatriated to the Philippines on May.

Petitioner's employment contract was for a period of 12 months or from March 19, 1998
up to March 19, 1999, butat the time of his repatriation on May 26, 1998, he had served
only two (2) months and seven (7) days of his contract,leaving an unexpired portion
of nine (9) months and twenty-three (23) days. Petitioner filed with the Labor Arbiter
(LA) a Complaint against respondents for constructive dismissal and for payment of his
money claims. LA rendered the dismissal of petitioner illegal and awarding
him monetary benefits.Respondents appealed to the NLRC to question the finding of
the LA. Likewise, petitioner also appealed to the NLRC onthe sole issue that the LA
erred in not applying the ruling of the Court in
Triple Integrated Services, Inc. v. National Labor Relations Commission

that in case of illegal dismissal, OFWs are entitled to their salaries for the unexpired
portion of their contracts. Petitioner also appealed to the NLRC on the sole issue that
the LA erred in not applying the ruling of the Courtin
Triple Integrated Services, Inc. v. National Labor Relations Commission

that in case of illegal dismissal, OFWs areentitled to their salaries for the unexpired
portion of their contracts. Petitioner filed a Motion for Partial Reconsideration;
hequestioned the constitutionality of the subject clause. Petitioner filed a Petition for

Certiorari

with the CA, reiterating theconstitutional challenge against the subject clause. CA
affirmed the NLRC ruling on the reduction of the applicable salaryrate; however, the CA
skirted the constitutional issue raised by petitioner.The last clause in the 5

th

paragraph of Section 10, Republic Act (R.A.) No. 8042, to wit: Sec. 10.

Money Claims

. - x x x In case of termination of overseas employment without just, validor authorized


cause as defined by law or contract, the workers shall be entitled to the full
reimbursement of his placement fee with interest of twelve percent (12%) per annum,
plus his salaries for the unexpired portion of his employment contract

or for three (3) months for every year of the unexpired term,whichever is less.

Applying the subject clause, the NLRC and the CA computed the lump-sum salary of
petitioner at the monthly rateof US$1,400.00 covering the period of three months out of
the unexpired portion of nine months and 23 days of hisemployment contract or a total
of US$4,200.00.Impugning the constitutionality of the subject clause, petitioner
contends that, in addition to the US$4,200.00awarded by the NLRC and the CA, he is
entitled to US$21,182.23 more or a total of US$25,382.23, equivalent to
hissalaries for the entire nine months and 23 days left of his employment contract, comp
uted at the monthly rate of US$2,590.00

Issue:

1.)

Is petitioner entitled to his monetary claim which is the lump-sum salary for the entire
unexpired portion of his12-month employment contract, and not just for a period of three
months?

2.)
Should petitioners overtime and leave pay form part of the salary basis in the
computation of his monetaryaward, because these are fixed benefits that have been
stipulated into his contract?

Held:1.)

Yes.

Petitioner is awarded his salaries for the entire unexpired portion of his employment
contract consisting of nine months and 23 days computed at the rate of US$1,400.00
per month. The subject clause or for three months for everyyear of the unexpired term,
whichever is less in the 5

th

paragraph of Section 10 of Republic Act No. 8042 is

declaredunconstitutional.

In sum, prior to R.A. No. 8042, OFWs and local workers with fixed-term employment
who were illegallydischarged were treated alike in terms of the computation of their
money claims: they were uniformly entitled to their salaries for the entire unexpired
portions of their contracts.

But with the enactment of R.A. No. 8042, specifically theadoption of the subject clause,
illegally dismissed OFWs with an unexpired portion of one year or more in their
employmentcontract have since been differently treated in that their money claims are
subject to a 3-month cap, whereas no suchlimitation is imposed on local workers with
fixed-term employment.

The Court concludes that the subject clause contains a suspect classification in that, in
the computation of themonetary benefits of fixed-term employees who are illegally
discharged, it imposes a 3-month cap on the claim of OFWswith an unexpired portion of
one year or more in their contracts, but none on the claims of other OFWs or local
workerswith fixed-term employment. The subject clause singles out one classification of
OFWs and burdens it with a peculiar disadvantage.

The Court further holds that the subject clause violates petitioner's right to substantive
due process, for it depriveshim of property, consisting of monetary benefits, without any
existing valid governmental purpose. The subject clause beingunconstitutional,
petitioner is entitled to his salaries for the entire unexpired period of nine months and 23
days of hisemployment contract, pursuant to law and jurisprudence prior to the
enactment of R.A. No. 8042.
2.) No.

The word

salaries

in Section 10(5) does not include overtime and leave pay. For seafarers like
petitioner,DOLE Department Order No. 33, series 1996, provides a Standard
Employment Contract of Seafarers, in which salary isunderstood as the basic wage,
exclusive of overtime, leave pay and other bonuses; whereas overtime pay is
compensation for all work performed in excess of the regular eight hours, and holiday
pay is compensation for any work performed ondesignated rest days and holidays. By
the foregoing definition alone, there is no basis for the automatic inclusion of overtime
and holiday pay inthe computation of petitioner's monetary award; unless there is
evidence that he performed work during those periods.

AUTO BUS TRANSPORT SYSTEMS, INC. vs ANTONIO BAUTISTA


G.R. No. 156367 May 16 2005
AUTO BUS TRANSPORT SYSTEMS, INC. vs ANTONIO BAUTISTA
G.R. No. 156367 May 16 2005

FACTS:
Antonio Bautista was employed by Auto Bus Transport Systems, Inc. in May 1995. He was assigned to
the Isabela-Manila route and he was paid by commission (7% of gross income per travel for twice a
month).

In January 2000, while he was driving his bus he bumped another bus owned by Auto Bus. He claimed
that he bumped the he accidentally bumped the bus as he was so tired and that he has not slept for more
than 24 hours because Auto Bus required him to return to Isabela immediately after arriving at Manila.
Damages were computed and 30% or P75,551.50 of it was being charged to Bautista. Bautista refused
payment.

Auto Bus terminated Bautista after due hearing as part of Auto Bus management prerogative. Bautista
sued Auto Bus for Illegal Dismissal. The Labor Arbiter Monroe Tabingan dismissed Bautistas petition but
ruled that Bautista is entitled to P78,1117.87 13th month pay payments and P13,788.05 for his unpaid
service incentive leave pay.

The case was appealed before the National Labor Relations Commission. NLRC modified the LAs ruling.
It deleted the award for 13th Month pay. The court of Appeals affirmed the NLRC.

Auto Bus averred that Bautista is a commissioned employee and if that is not reason enough that
Bautista is also a field personnel hence he is not entitled to a service incentive leave. They invoke:

Art. 95. RIGHT TO SERVICE INCENTIVE LEAVE


(a) Every employee who has rendered at least one year of service shall be entitled to a yearly service
incentive leave of five days with pay.

Book III, Rule V: SERVICE INCENTIVE LEAVE

SECTION 1. Coverage. ' This rule shall apply to all employees except:

(d) Field personnel and other employees whose performance is unsupervised by the employer including
those who are engaged on task or contract basis, purely commission basis, or those who are paid in a
fixed amount for performing work irrespective of the time consumed in the performance thereof; . . .

ISSUE:
Whether or not Bautista is entitled to Service Incentive Leave.

If he is, Whether or not the three (3)-year prescriptive period provided under Article 291 of the Labor
Code, as amended, is applicable to respondent's claim of service incentive leave pay.

HELD:
Yes, Bautista is entitled to Service Incentive Leave. The Supreme Court emphasized that it does not
mean that just because an employee is paid on commission basis he is already barred to receive service
incentive leave pay.

The question actually boils down to whether or not Bautista is a field employee.

According to Article 82 of the Labor Code, 'field personnel shall refer to non-agricultural employees who
regularly perform their duties away from the principal place of business or branch office of the employer
and whose actual hours of work in the field cannot be determined with reasonable certainty.

As a general rule, field personnel are those whose performance of their job/service is not supervised by
the employer or his representative, the workplace being away from the principal office and whose hours
and days of work cannot be determined with reasonable certainty; hence, they are paid specific amount
for rendering specific service or performing specific work. If required to be at specific places at specific
times, employees including drivers cannot be said to be field personnel despite the fact that they are
performing work away from the principal office of the employee.

Certainly, Bautista is not a field employee. He has a specific route to traverse as a bus driver and that is a
specific place that he needs to be at work. There are inspectors hired by Auto Bus to constantly check
him. There are inspectors in bus stops who inspects the passengers, the punched tickets, and the driver.
Therefore he is definitely supervised though he is away from the Auto Bus main office.

On the other hand, the 3 year prescriptive period ran but Bautista was able to file his suit in time before
the prescriptive period expired. It was only upon his filing of a complaint for illegal dismissal, one month
from the time of his dismissal, that Bautista demanded from his former employer commutation of his
accumulated leave credits. His cause of action to claim the payment of his accumulated service incentive
leave thus accrued from the time when his employer dismissed him and failed to pay his accumulated
leave credits.

Therefore, the prescriptive period with respect to his claim for service incentive leave pay only
commenced from the time the employer failed to compensate his accumulated service incentive leave
pay at the time of his dismissal. Since Bautista had filed his money claim after only one month from the
time of his dismissal, necessarily, his money claim was filed within the prescriptive period provided for by
Article 291 of the Labor Code.
SAMEER OVERSEAS PLACEMENT AGENCY, INC., Petitioner,

vs.

JOY C. CABILES, Respondent.

G.R. No. 170139 August 5, 2014

PONENTE: Leonen

TOPIC: Section 10 of RA 8042 vis-a-vis Section 7 of RA 10022

FACTS:

Petitioner, Sameer Overseas Placement Agency, Inc., is a recruitment and


placement agency.

Respondent Joy Cabiles was hired thus signed a one-year employment


contractfor a monthly salary of NT$15,360.00. Joy was deployed to work for Taiwan
Wacoal, Co. Ltd. (Wacoal) on June 26, 1997. She alleged that in her employment
contract, she agreed to work as quality control for one year. In Taiwan, she was asked to
work as a cutter.

Sameer claims that on July 14, 1997, a certain Mr. Huwang from Wacoal
informed Joy, without prior notice, that she was terminated and that she should
immediately report to their office to get her salary and passport. She was asked to
prepare for immediate repatriation. Joy claims that she was told that from June 26 to
July 14, 1997, she only earned a total of NT$9,000.15 According to her, Wacoal
deducted NT$3,000 to cover her plane ticket to Manila.

On October 15, 1997, Joy filed a complaint for illegal dismissal with the NLRC
against petitioner and Wacoal. LA dismissed the complaint. NLRC reversed LAs
decision. CA affirmed the ruling of the National Labor Relations Commission finding
respondent illegally dismissed and awarding her three months worth of salary, the
reimbursement of the cost of her repatriation, and attorneys fees

ISSUE:

Whether or not Cabiles was entitled to the unexpired portion of her salary due
to illegal dismissal.
HELD:

YES. The Court held that the award of the three-month equivalent of
respondents salary should be increased to the amount equivalent to the unexpired term
of the employment contract.

In Serrano v. Gallant Maritime Services, Inc. and Marlow Navigation Co., Inc.,
this court ruled that the clause or for three (3) months for every year of the unexpired
term, whichever is less is unconstitutional for violating the equal protection clause and
substantive due process.

A statute or provision which was declared unconstitutional is not a law. It


confers no rights; it imposes no duties; it affords no protection; it creates no office; it is
inoperative as if it has not been passed at all.

The Court said that they are aware that the clause or for three (3) months for
every year of the unexpired term, whichever is less was reinstated in Republic Act No.
8042 upon promulgation of Republic Act No. 10022 in 2010.

Ruling on the constitutional issue

In the hierarchy of laws, the Constitution is supreme. No branch or office of the


government may exercise its powers in any manner inconsistent with the Constitution,
regardless of the existence of any law that supports such exercise. The Constitution
cannot be trumped by any other law. All laws must be read in light of the Constitution.
Any law that is inconsistent with it is a nullity.

Thus, when a law or a provision of law is null because it is


inconsistent with the Constitution, the nullity cannot be cured by
reincorporation or reenactment of the same or a similar law or provision.
A law or provision of law that was already declared unconstitutional remains as such
unless circumstances have so changed as to warrant a reverse conclusion.

The Court observed that the reinstated clause, this time as provided in Republic
Act. No. 10022, violates the constitutional rights to equal protection and due process.96
Petitioner as well as the Solicitor General have failed to show any compelling change in
the circumstances that would warrant us to revisit the precedent.

The Court declared, once again, the clause, or for three (3) months for every
year of the unexpired term, whichever is less in Section 7 of Republic Act No. 10022
amending Section 10 of Republic Act No. 8042 is declared unconstitutional and,
therefore, null and void.
SECOND DIVISION

[G.R. No. 114734. March 31, 2000]

VIVIAN Y. IMBUIDO, petitioner, vs. NATIONAL LABOR RELATIONS


COMMISSION, INTERNATIONAL INFORMATION SERVICES, INC. and
GABRIEL LIBRANDO,respondents.

DECISION

BUENA, J.:

This special civil action for certiorari seeks to set aside the Decision[1] of the National
Labor Relations Commission (NLRC) promulgated on September 27, 1993 and its
Order dated January 11, 1994, which denied petitioners motion for
reconsideration. Scslx

Petitioner was employed as a data encoder by private respondent International


Information Services, Inc., a domestic corporation engaged in the business of data
encoding and keypunching, from August 26, 1988 until October 18, 1991 when her
services were terminated. From August 26, 1988 until October 18, 1991, petitioner
entered into thirteen (13) separate employment contracts with private respondent, each
contract lasting only for a period of three (3) months. Aside from the basic hourly rate,
specific job contract number and period of employment, each contract contains the
following terms and conditions: Slxsc

"a. This Contract is for a specific project/job contract only and shall be
effective for the period covered as above-mentioned unless sooner
terminated when the job contract is completed earlier or withdrawn by
client, or when employee is dismissed for just and lawful causes provided
by law. The happening of any of these events will automatically terminate
this contract of employment. Slxmis

"b. Subject shall abide with the Companys rules and regulations for its
employees attached herein to form an integral part hereof.

"c. The nature of your job may require you to render overtime work with
pay so as not to disrupt the Companys commitment of scheduled delivery
dates made on said job contract."[2]

In September 1991, petitioner and twelve (12) other employees of private respondent
allegedly agreed to the filing of a petition for certification election involving the rank-and-
file employees of private respondent.[3] Thus, on October 8, 1991, Lakas Manggagawa
sa Pilipinas (LAKAS) filed a petition for certification election with the Bureau of Labor
Relations (BLR), docketed as NCR-OD-M-9110-128.[4]
Subsequently, on October 18, 1991, petitioner received a termination letter from Edna
Kasilag, Administrative Officer of private respondent, allegedly "due to low volume of
work."[5]

Thus, on May 25, 1992, petitioner filed a complaint for illegal dismissal with prayer for
service incentive leave pay and 13th month differential pay, with the National Labor
Relations Commission, National Capital Region, Arbitration Branch, docketed as NLRC-
NCR Case No. 05-02912-92.[6]

In her position paper dated August 3, 1992 and filed before labor arbiter Raul T. Aquino,
petitioner alleged that her employment was terminated not due to the alleged low
volume of work but because she "signed a petition for certification election among the
rank and file employees of respondents," thus charging private respondent with
committing unfair labor practices. Petitioner further complained of non-payment of
service incentive leave benefits and underpayment of 13th month pay. [7]

On the other hand, private respondent, in its position paper filed on July 16, 1992,
maintained that it had valid reasons to terminate petitioners employment and
disclaimed any knowledge of the existence or formation of a union among its rank-and-
file employees at the time petitioners services were terminated.[8] Private respondent
stressed that its business "relies heavily on companies availing of its services. Its
retention by client companies with particular emphasis on data encoding is on a project
to project basis,"[9] usually lasting for a period of "two (2) to five (5) months." Private
respondent further argued that petitioners employment was for a "specific project with a
specified period of engagement." According to private respondent, "the certainty of
the expiration of complainants engagement has been determined at the time of their
(sic) engagement (until 27 November 1991) or when the project is earlier completed or
when the client withdraws," as provided in the contract.[10] "The happening of the second
event [completion of the project] has materialized, thus, her contract of employment is
deemed terminated per the Brent School ruling."[11] Finally, private respondent averred
that petitioners "claims for non-payment of overtime time (sic) and service incentive
leave [pay] are without factual and legal basis."[12]

In a decision dated August 25, 1992, labor arbiter Raul T. Aquino, ruled in favor of
petitioner, and accordingly ordered her reinstatement without loss of seniority rights and
privileges, and the payment of backwages and service incentive leave pay. The
dispositive part of the said decision reads: Missdaa

"WHEREFORE, responsive to the foregoing, judgment is hereby rendered


ordering respondents to immediately reinstate complainant [petitioner
herein] as a regular employee to her former position without loss of
seniority rights and privileges and to pay backwages from the time of
dismissal up to the date of this decision, the same to continue until
complainant [s] [petitioner herein] actual reinstatement from (sic) the
service. Respondents are likewise ordered to pay complainant [petitioner
herein] service incentive leave pay computed as follows:Sdaadsc
Backwages:

10/18/91 8/25/92 = 10.23 mos.

P118.00 x 26 x 10.23 mos. = P31, 385.64

Service Incentive Leave Pay

1989 = P89.00 x 5 days = P445.00

1990 = 106 x 5 days = P530.00

1991 = 118 x 5 days = P590.00

P 1, 565.00

Total P32, 950.64

SO ORDERED."[13]

In his decision, the labor arbiter found petitioner to be a regular employee, ruling that
"[e]ven if herein complainant [petitioner herein] had been obstensively (sic) hired for a
fixed period or for a specific undertaking, she should be considered as [a] regular
employee of the respondents in conformity with the provisions (sic) laid down under
Article 280 of the Labor Code,"[14] after finding that "[i]t is crystal clear that herein
complainant [petitioner herein] performed a job which are (sic) usually necessary or
desirable in the usual business of respondent [s]."[15] The labor arbiter further denounced
"the purpose behind the series of contracts which respondents required complainant
to execute as a condition of employment was to evade the true intent and spirit of the
labor laws for the workingmen."[16] Furthermore, the labor arbiter concluded that
petitioner was illegally dismissed because the alleged reason for her termination, that is,
low volume of work, is "not among the just causes for termination recognized by
law,"[17] hence, he ordered her immediate reinstatement without loss of seniority rights
and with full backwages. With regard to the service incentive leave pay, the labor arbiter
decided "to grant the same for failure of the respondents to fully controvert said
claims."[18] Lastly, the labor arbiter rejected petitioners claim for 13th month pay "since
complainant [petitioner herein] failed to fully substantiate and argued (sic) the same."[19]

On appeal, the NLRC reversed the decision of the labor arbiter in a


decision[20] promulgated on September 27, 1993, the dispositive part of which reads:

"WHEREFORE, the appealed decision is hereby set aside. The complaint


for illegal dismissal is hereby dismissed for being without merit.
Complainants [petitioner herein] claim for service incentive leave pay is
hereby remanded for further arbitration.
SO ORDERED."[21]

The NLRC ruled that "[t]here is no question that the complainant [petitioner herein],
viewed in relation to said Article 280 of the [Labor] Code, is a regular employee judging
from the function and/or work for which she was hired. xxx xxx. But this does not
necessarily mean that the complainant [petitioner herein] has to be guaranteed a
tenurial security beyond the period for which she was hired." [22] The NLRC held that
the complainant [petitioner herein], while hired as a regular worker, is statutorily
guaranteed, in her tenurial security, only up to the time the specific project for which she
was hired is completed."[23] Hence, the NLRC concluded that "[w]ith the specific project
"at RCBC 014" admittedly completed, the complainant [petitioner herein] has therefore
no valid basis in charging illegal dismissal for her concomittant (sic) dislocation."[24]

In an Order dated January 11, 1994, the NLRC denied petitioners motion for
reconsideration.[25]

In this petition for certiorari, petitioner, for and in her behalf, argues that (1) the public
respondent "committed grave abuse of discretion when it ignored the findings of Labor
Arbiter Raul Aquino based on the evidence presented directly before him, and when it
made findings of fact that are contrary to or not supported by evidence," [26] (2)
"[p]etitioner was a "regular employee," NOT a "project employee" as found by public
respondent NLRC,"[27] (3) "[t]he termination of petition (sic) was tainted with unfair labor
practice,"[28] and (4) the public respondent "committed grave abuse of discretion in
remanding the awarded service incentive leave pay for further arbitration."[29]

The petition is impressed with merit. Sdaadsc

We agree with the findings of the NLRC that petitioner is a project employee. The
principal test for determining whether an employee is a project employee or a
regular employee is whether the project employee was assigned to carry out a
specific project or undertaking, the duration and scope of which were specified at
the time the employee was engaged for that project.[30] A project employee is one
whose employment has been fixed for a specific project or undertaking, the
completion or termination of which has been determined at the time of the
engagement of the employee or where the work or service to be performed is
seasonal in nature and the employment is for the duration of the season.[31] In the
instant case, petitioner was engaged to perform activities which were usually necessary
or desirable in the usual business or trade of the employer, as admittedly, petitioner
worked as a data encoder for private respondent, a corporation engaged in the
business of data encoding and keypunching, and her employment was fixed for a
specific project or undertaking the completion or termination of which had been
determined at the time of her engagement, as may be observed from the series of
employment contracts[32] between petitioner and private respondent, all of which
contained a designation of the specific job contract and a specific period of employment.
However, even as we concur with the NLRCs findings that petitioner is a project
employee, we have reached a different conclusion. In the recent case of Maraguinot, Jr.
vs. NLRC,[33] we held that "[a] project employee or a member of a work pool may
acquire the status of a regular employee when the following concur: Rtcspped

1) There is a continuous rehiring of project employees even after


[the] cessation of a project;[34] and

2) The tasks performed by the alleged "project employee" are vital,


necessary and indispensable to the usual business or trade of the
employer.[35]"

The evidence on record reveals that petitioner was employed by private respondent as
a data encoder, performing activities which are usually necessary or desirable in the
usual business or trade of her employer, continuously for a period of more than three (3)
years, from August 26, 1988 to October 18, 1991[36] and contracted for a total of
thirteen (13) successive projects. We have previously ruled that "[h]owever, the
length of time during which the employee was continuously re-hired is not
controlling, but merely serves as a badge of regular employment."[37] Based on the
foregoing, we conclude that petitioner has attained the status of a regular employee of
private respondent.

At this point, we reiterate with emphasis that: Korte

"xxx xxx

"At this time, we wish to allay any fears that this decision unduly burdens
an employer by imposing a duty to re-hire a project employee even after
completion of the project for which he was hired. The import of this
decision is not to impose a positive and sweeping obligation upon the
employer to re-hire project employees. What this decision merely
accomplishes is a judicial recognition of the employment status of a
project or work pool employee in accordance with what is fait
accompli, i.e., the continuous re-hiring by the employer of project or
work pool employees who perform tasks necessary or desirable to
the employer's usual business or trade. Let it not be said that this
decision "coddles" labor, for asLao[38] has ruled, project or work pool
employees who have gained the status of regular employees are
subject to the "no work-no pay" principle, to repeat:

"A work pool may exist although the workers in the pool do not receive
salaries and are free to seek other employment during temporary breaks
in the business, provided that the worker shall be available when called to
report for a project. Although primarily applicable to regular seasonal
workers, this set-up can likewise be applied to project workers insofar as
the effect of temporary cessation of work is concerned. This is beneficial
to both the employer and employee for it prevents the unjust situation of
"coddling labor at the expense of capital" and at the same time enables
the workers to attain the status of regular employees. Sclaw

"The Court's ruling here is meant precisely to give life to the constitutional
policy of strengthening the labor sector, but, we stress, not at the expense
of management. Lest it be misunderstood, this ruling does not mean that
simply because an employee is a project or work pool employee even
outside the construction industry, he is deemed, ipso jure, a regular
employee. All that we hold today is that once a project or work pool
employee has been: (1) continuously, as opposed to intermittently,
re-hired by the same employer for the same tasks or nature of tasks;
and (2) these tasks are vital, necessary and indispensable to the
usual business or trade of the employer, then the employee must be
deemed a regular employee, pursuant to Article 280 of the Labor
Code and jurisprudence. To rule otherwise would allow
circumvention of labor laws in industries not falling within the ambit
of Policy Instruction No. 20/Department Order No. 19, hence allowing
the prevention of acquisition of tenurial security by project or work
pool employees who have already gained the status of regular
employees by the employer's conduct."[39] (emphasis supplied)

Being a regular employee, petitioner is entitled to security of tenure and could only be
dismissed for a just or authorized cause, as provided in Article 279 of the Labor Code,
as amended: Sclex

"Art. 279. Security of Tenure In cases of regular employment, the


employer shall not terminate the services of an employee except for a just
cause or when authorized by this Title. An employee who is unjustly
dismissed from work shall be entitled to reinstatement without loss of
seniority rights and other privileges and to his full backwages, inclusive of
allowances, and to his other benefits or their monetary equivalent
computed from the time his compensation was withheld from him up to the
time of his actual reinstatement."

The alleged causes of petitioners dismissal (low volume of work and belatedly,
completion of project) are not valid causes for dismissal under Articles 282 and 283 of
the Labor Code. Thus, petitioner is entitled to reinstatement without loss of seniority
rights and other privileges, and to her full backwages, inclusive of allowances, and to
her other benefits or their monetary equivalent computed from the time her
compensation was withheld from her up to the time of her actual reinstatement.
However, complying with the principles of "suspension of work" and "no work, no pay"
between the end of one project and the start of a new one, in computing petitioners
backwages, the amounts corresponding to what could have been earned during the
periods from the date petitioner was dismissed until her reinstatement when private
respondent was not undertaking any project, should be deducted. Xlaw
With regard to petitioners claim for service incentive leave pay, we agree with the labor
arbiter that petitioner is entitled to service incentive leave pay, as provided in Article 95
of the Labor Code, which reads:

"Article 95 Right to service incentive leave

(a) Every employee who has rendered at least one year of service shall be
entitled to a yearly service incentive leave of five days with pay.

xxx xxx xxx."

Having already worked for more than three (3) years at the time of her unwarranted
dismissal, petitioner is undoubtedly entitled to service incentive leave benefits,
computed from 1989 until the date of her actual reinstatement. As we ruled in the recent
case of Fernandez vs. NLRC,[40] "[s]ince a service incentive leave is clearly demandable
after one year of service whether continuous or broken or its equivalent period,
and it is one of the "benefits" which would have accrued if an employee was not
otherwise illegally dismissed, it is fair and legal that its computation should be up to the
date of reinstatement as provided under Section [Article] 279 of the Labor Code, as
amended, which reads: Xsc

"ART. 279. Security of Tenure. An employee who is unjustly dismissed


from work shall be entitled to reinstatement without loss of seniority rights
and other privileges and to his full backwages, inclusive of allowances,
and to his other benefits or their monetary equivalent computed from
the time his compensation is withheld from him up to the time of his actual
reinstatement." (emphasis supplied).

WHEREFORE, the instant petition is GRANTED. The assailed decision of the National
Labor Relations Commission in NLRC NCR CA No. 003845-92 dated September 27,
1993, as well as its Order dated January 11, 1994, are hereby ANNULLED and SET
ASIDE for having been rendered with grave abuse of discretion, and the decision of the
Labor Arbiter in NLRC NCR Case No. 05-02912-92 is REINSTATED with
MODIFICATION as above-stated, with regard to the computation of back wages and
service incentive leave pay. Sc

SO ORDERED.

Bellosillo, (Chairman), Mendoza, Quisumbing, and De Leon, Jr., JJ., concur.