Statcon Cases Part 1

Republic of the Philippines
SUPREME COURT
Manila
FIRST DIVISION
G.R. No. 72005 May 29, 1987
PHILIPPINE BRITISH ASSURANCE CO., INC., petitioner,

vs.
HONORABLE INTERMEDIATE APPELLATE COURT; SYCWIN COATING &
WIRES, INC., and DOMINADOR CACPAL, CHIEF DEPUTY SHERRIF OF
MANILA, respondents.
GANCAYCO, J.:
This is a Petition for Review on certiorari of the Resolution dated September 12,
1985 of the Intermediate Appellate Court in AC-G.R. No. CR-05409 1 granting
private respondent's motion for execution pending appeal and ordering the
issuance of the corresponding writ of execution on the counterbond to lift
attachment filed by petitioner. The focal issue that emerges is whether an order
of execution pending appeal of a judgment maybe enforced on the said bond. In
the Resolution of September 25, 1985 2 this Court as prayed for, without
necessarily giving due course to the petition, issued a temporary restraining
order enjoining the respondents from enforcing the order complaint of.
The records disclose that private respondent Sycwin Coating & Wires, Inc., filed
a complaint for collection of a sum of money against Varian Industrial Corporation
before the Regional Trial Court of Quezon City. During the pendency of the suit,
private respondent succeeded in attaching some of the properties of Varian
Industrial Corporation upon the posting of a supersedeas bond. 3 The latter in
turn posted a counterbond in the sum of P1,400, 000.00 4 thru petitioner
Philippine British Assurance Co., Inc., so the attached properties were released.
On December 28, 1984, the trial court rendered a Decision, the dispositive
portion of which reads:
WHEREFORE, plaintiff's Motion for Summary Judgment is hereby

GRANTED, and judgment is rendered in favor of the plaintiff and
against the defendant Varian Industrial Corporation, and the latter is
hereby ordered:
1. To pay plaintiff the amount of P1,401,468.00, the principal

obligation with 12% interest per annum from the date of default until
fully paid;
2. To pay plaintiff 5% of the principal obligation as liquidated
damages;
3. To pay plaintiff P30,000.00 as exemplary damages;
4. To pay plaintiff 15% of P1,401,468.00, the principal obligation, as

and for attorney's fees; and
5. To pay the costs of suit.
Accordingly, the counterclaim of the defendant is hereby

DISMISSED for lack of merit.
SO ORDERED. 5
Varian Industrial Corporation appealed the decision to the respondent Court.

Sycwin then filed a petition for execution pending appeal against the properties of
Varian in respondent Court. Varian was required to file its comment but none was
filed. In the Resolution of July 5, 1985, respondent Court ordered the execution
pending appeal as prayed for. 6 However, the writ of execution was returned
unsatisfied as Varian failed to deliver the previously attached personal properties
upon demand. In a Petition dated August 13, 1985 filed with respondent Court
Sycwin prayed that the surety (herein petitioner) be ordered to pay the value of
its bond. 7 In compliance with the Resolution of August 23, 1985 of the
respondent Court herein petitioner filed its comment. 8 In the Resolution of
September 12, 1985, 9 the respondent Court granted the petition. Hence this
action.
It is the submission of private respondent Sycwin that without a previous motion

for reconsideration of the questioned resolution, certiorari would not lie. While as
a general rule a motion for reconsideration has been considered a condition sine
qua non for the granting of a writ of certiorari, this rule does not apply when
special circumstances warrant immediate or more direct action. 10 It has been
held further that a motion for reconsideration may be dispensed with in cases like
this where execution had been ordered and the need for relief was extremely
urgent. 11
The counterbond provides:
WHEREAS, in the above-entitled case pending in the Regional Trial

Court, National Capital Judicial Region, Branch LXXXV, Quezon
City, an order of Attachment was issued against abovenamed
Defendant;
WHEREAS, the Defendant, for the purpose of lifting and/or

dissolving the order of attachment issued against them in the
above-en-titled case, have offered to file a counterbond in the sum
of PESOS ONE MILLION FOUR HUNDRED THOUSAND ONLY
(P1,400,000.00), Philippine Currency, as provided for in Section 5,
Rule 57 of the Revised Rules of Court.
NOW, THEREFORE, we, VARIAN INDUSTRIAL CORPORATION,

as Principal and the PHILIPPINE BRITISH ASSURANCE
COMPANY, INC., a corporation duly organized and existing under
and by virtue of the laws of the Philippines, as Surety, in
consideration of the above and of the lifting or dissolution of the
order of attachment, hereby jointly and severally, bind ourselves in
favor of the above Plaintiff in the sum of PESOS ONE MILLION
FOUR HUNDRED THOUSAND ONLY (P1,400,000.00), Philippine
Currency, under the condition that in case the Plaintiff recovers
judgment in the action, and Defendant will, on demand, re-deliver
the attached property so released to the Officer of the Court and
the same shall be applied to the payment of the judgment, or in
default thereof, the defendant and Surety will, on demand, pay to
the Plaintiff the full value of the property released.
EXECUTED at Manila, Philippines, this 28th day of June, 1984. 12
Sections 5, 12, and 17 of Rule 57 of the Revised Rules of Court also provide:
SEC. 5. Manner of attaching property. ? The officer executing the

order shall without delay attach, to await judgment and execution in
the action, all the properties of the party against whom the order is
issued in the province, not exempt from execution, or so much
thereof as may be sufficient to satisfy the applicant's demand,
unless the former makes a deposit with the clerk or judge of the
court from which the order issued, or gives a counter-bond
executed to the applicant, in an amount sufficient to satisfy such
demand besides costs, or in an amount equal to the value of the
property which is about to be attached, to secure payment to the
applicant of any judgement ment which he may recover in the
action. The officer shall also forthwith serve a copy of the
applicant's affidavit and bond, and of the order of attachment, on
the adverse party, if he be found within the province.
SEC. 12. Discharge of attachment upon giving counterbond. ? At

any time after an order of attachment has been granted, the party
whose property has been attached, or the person appearing on his
behalf, may, upon reasonable notice to the applicant, apply to the
judge who granted the order, or to the judge of the court in which
the action is pending, for an order discharging the attachment
wholly or in part on the security given. The judge shall, after
hearing, order the discharge of the attachment if a cash deposit is
made, or a counter-bond executed to the attaching creditor is filed,
on behalf of the adverse party, with the clerk or judge of the court
where the application is made, in an amount equal to the value of
the property attached as determined by the judge, to secure the
payment of any judgment that the attaching creditor may recover in
the action. Upon the filing of such counter-bond, copy thereof shall
forthwith be served on the attaching creditor or his lawyer. Upon the
discharge of an attachment in accordance with the provisions of
this section the property attached, or the proceeds of any sale
thereof, shall be delivered to the party making the deposit or giving
the counterbond aforesaid standing in place of the property so
released. Should such counterbond for any reason be found to be,
or become, insufficient, and the party furnishing the same fail to file
an additional counterbond, the attaching creditor may apply for a
new order of attachment.
SEC. 17. When execution returned unsatisfied, recovery had upon

bond. ? If the execution be returned unsatisfied in whole or in part,
the surety or sureties on any counter-bond given pursuant to the
provisions of this rule to secure the payment of the judgment shall
become charged on such counterbond, and bound to pay to the
judgement creditor upon demand, the amount due under the
judgment, which amount may be recovered from such surety or
sureties after notice and summary hearing in the same action.
(Emphasis supplied.)
Under Sections 5 and 12, Rule 57 above reproduced it is provided that the
counterbond is intended to secure the payment of "any judgment" that the
attaching creditor may recover in the action. Under Section 17 of same rule it
provides that when "the execution be returned unsatisfied in whole or in part" it is
only then that "payment of the judgment shall become charged on such
counterbond."
The counterbond was issued in accordance with the provisions of Section 5, Rule
57 of the Rules of Court as provided in the second paragraph aforecited which is
deemed reproduced as part of the counterbond. In the third paragraph it is also
stipulated that the counterbond is to be "applied for the payment of the
judgment." Neither the rules nor the provisions of the counterbond limited its
application to a final and executory judgment. Indeed, it is specified that it applies
to the payment of any judgment that maybe recovered by plaintiff. Thus, the only
logical conclusion is that an execution of any judgment including one pending
appeal if returned unsatisfied maybe charged against such a counterbond.
It is well recognized rule that where the law does not distinguish, courts should
not distinguish. Ubi lex non distinguish nec nos distinguere debemos. 13 "The
rule, founded on logic, is a corollary of the principle that general words and
phrases in a statute should ordinarily be accorded their natural and general
significance. 14 The rule requires that a general term or phrase should not be
reduced into parts and one part distinguished from the other so as to justify its
exclusion from the operation of the law. 15 In other words, there should be no
distinction in the application of a statute where none is indicated. 16 For courts are
not authorized to distinguish where the law makes no distinction. They should
instead administer the law not as they think it ought to be but as they find it and
without regard to consequences. 17
A corollary of the principle is the rule that where the law does not make any
exception, courts may not except something therefrom, unless there is
compelling reason apparent in the law to justify it. 18 Thus where a statute grants
a person against whom possession of "any land" is unlawfully withheld the right
to bring an action for unlawful detainer, this Court held that the phrase "any land"
includes all kinds of land, whether agricultural, residential, or mineral. 19 Since the
law in this case does not make any distinction nor intended to make any
exception, when it speaks of "any judgment" which maybe charged against the
counterbond, it should be interpreted to refer not only to a final and executory
judgment in the case but also a judgment pending appeal.
All that is required is that the conditions provided for by law are complied with, as
outlined in the case of Towers Assurance Corporation v. Ororama Supermart, 20
Under Section 17, in order that the judgment creditor might recover
from the surety on the counterbond, it is necessary (1) that the
execution be first issued against the principal debtor and that such
execution was returned unsatisfied in whole or in part; (2) that the
creditor make a demand upon the surety for the satisfaction of the
judgment, and (3) that the surety be given notice and a summary
hearing on the same action as to his liability for the judgment under
his counterbond.
The rule therefore, is that the counterbond to lift attachment that is issued in
accordance with the provisions of Section 5, Rule 57, of the Rules of Court, shall
be charged with the payment of any judgment that is returned unsatisfied. It
covers not only a final and executory judgement but also the execution of a
judgment pending appeal.
WHEREFORE, the petition is hereby DISMISSED for lack of merit and the
restraining order issued on September 25, 1985 is hereby dissolved with costs
against petitioner.
SO ORDERED.
SUPREME COURT
Manila
EN BANC
G.R. No. 115245 July 11, 1995
JUANITO C. PILAR, petitioner,

vs.
COMMISSION ON ELECTIONS, respondent.
QUIASON, J.:
This is a petition for certiorari under Rule 65 of the Revised Rules of Court
assailing the Resolution dated April 28, 1994 of the Commission on Elections
(COMELEC) in UND No. 94-040.
On March 22, 1992, petitioner Juanito C. Pilar filed his certificate of candidacy for
the position of member of the Sangguniang Panlalawigan of the Province of
Isabela.
On March 25, 1992, petitioner withdrew his certificate of candidacy.
In M.R. Nos. 93-2654 and 94-0065 dated November 3, 1993 and February 13,
1994 respectively, the COMELEC imposed upon petitioner the fine of Ten
Thousand Pesos (P10,000.00) for failure to file his statement of contributions and
expenditures.
In M.R. No. 94-0594 dated February 24, 1994, the COMELEC denied the motion
for reconsideration of petitioner and deemed final M.R. Nos. 93-2654 and 94-
0065 (Rollo, p. 14).
Petitioner went to the COMELEC En Banc (UND No. 94-040), which denied the
petition in a Resolution dated April 28, 1994 (Rollo, pp. 10-13).
Hence, this petition for certiorari.
We dismiss the petition.
II
Section 14 of R.A. No. 7166 entitled "An Act Providing for Synchronized National
and Local Elections and for Electoral Reforms, Authorizing Appropriations
Therefor, and for Other Purposes" provides as follows:
Statement of Contributions and Expenditures: Effect of Failure to

File Statement. Every candidate and treasurer of the political party
shall, within thirty (30) days after the day of the election, file in
duplicate with the offices of the Commission the full, true and
itemized statement of all contributions and expenditures in
connection with the election.
No person elected to any public office shall enter upon the duties of
his office until he has filed the statement of contributions and
expenditures herein required.
The same prohibition shall apply if the political party which

nominated the winning candidate fails to file the statement required
herein within the period prescribed by this Act.
Except candidates for elective barangay office, failure to file the

statements or reports in connection with electoral contributions and
expenditures as required herein shall constitute an administrative
offense for which the offenders shall be liable to pay an
administrative fine ranging from One Thousand Pesos ( P1,000.00)
to Thirty Thousand Pesos (P30,000.00), in the discretion of the
Commission.
The fine shall be paid within thirty (30) days from receipt of notice of
such failure; otherwise, it shall be enforceable by a writ of execution
issued by the Commission against the properties of the offender.
It shall be the duty of every city or municipal election registrar to

advise in writing, by personal delivery or registered mail, within five
(5) days from the date of election all candidates residing in his
jurisdiction to comply with their obligation to file their statements of
contributions and expenditures.
For the commission of a second or subsequent offense under this

Section, the administrative fine shall be from Two Thousand Pesos
(P2,000.00) to Sixty Thousand Pesos (P60,000.00), in the
discretion of the Commission. In addition, the offender shall be
subject to perpetual disqualification to hold public office (Emphasis
supplied).
To implement the provisions of law relative to election contributions and

expenditures, the COMELEC promulgated on January 13, 1992 Resolution No.
2348 (Re: Rules and Regulations Governing Electoral Contributions and
Expenditures in Connection with the National and Local Elections on
May 11, 1992). The pertinent provisions of said Resolution are:
Sec. 13. Statement of contributions and expenditures: Reminders

to candidates to file statements. Within five (5) days from the day of
the election, the Law Department of the Commission, the regional
election director of the National Capital Region, the provincial
election supervisors and the election registrars shall advise in
writing by personal delivery or registered mail all candidates who
filed their certificates of candidacy with them to comply with their
obligation to file their statements of contributions and expenditures
in connection with the elections. Every election registrar shall also
advise all candidates residing in his jurisdiction to comply with said
obligation (Emphasis supplied).
Sec. 17. Effect of failure to file statement. (a) No person elected to

any public office shall enter upon the duties of his office until he has
filed the statement of contributions and expenditures herein
required.
The same prohibition shall apply if the political party which

nominated the winning candidates fails to file the statement
required within the period prescribed by law.
(b) Except candidates for elective barangay office, failure to file

statements or reports in connection with the electoral contributions
and expenditures as required herein shall constitute an
administrative offense for which the offenders shall be liable to pay
an administrative fine ranging from One Thousand Pesos (P1,000)
to Thirty Thousand Pesos (P30,000), in the discretion of the
Commission.
The fine shall be paid within thirty (30) days from receipt of notice of
such failure; otherwise, it shall be enforceable by a writ of execution
issued by the Commission against the properties of the offender.
For the commission of a second or subsequent offense under this

section, the administrative fine shall be from Two Thousand Pesos
(P2,000) to Sixty Thousand Pesos (P60,000), in the discretion of
the Commission. In addition, the offender shall be subject to
perpetual disqualification to hold public office.
Petitioner argues that he cannot be held liable for failure to file a statement of
contributions and expenditures because he was a "non-candidate," having
withdrawn his certificates of candidacy three days after its filing. Petitioner posits
that "it is . . . clear from the law that candidate must have entered the political
contest, and should have either won or lost" (Rollo, p. 39).
Petitioner's argument is without merit.
Section 14 of R.A. No. 7166 states that "every candidate" has the obligation to
file his statement of contributions and expenditures.
Well-recognized is the rule that where the law does not distinguish, courts should
not distinguish, Ubi lex non distinguit nec nos distinguere debemos (Philippine
British Assurance Co. Inc. v. Intermediate Appellate Court, 150 SCRA 520 [1987];
cf Olfato v. Commission on Elections, 103 SCRA 741 [1981]). No distinction is to
be made in the application of a law where none is indicated (Lo Cham v.
Ocampo, 77 Phil. 636 [1946]).
In the case at bench, as the law makes no distinction or qualification as to

whether the candidate pursued his candidacy or withdrew the same, the term
"every candidate" must be deemed to refer not only to a candidate who pursued
his campaign, but also to one who withdrew his candidacy.
The COMELEC, the body tasked with the enforcement and administration of all
laws and regulations relative to the conduct of an election, plebiscite, initiative,
referendum, and recall (The Constitution of the Republic of the Philippines, Art.
IX(C), Sec. 2[1]), issued Resolution No. 2348 in implementation or interpretation
of the provisions of Republic Act No. 7166 on election contributions and
expenditures. Section 13 of Resolution No. 2348 categorically refers to "all
candidates who filed their certificates of candidacy."
Furthermore, Section 14 of the law uses the word "shall." As a general rule, the
use of the word "shall" in a statute implies that the statute is mandatory, and
imposes a duty which may be enforced , particularly if public policy is in favor of
this meaning or where public interest is involved. We apply the general rule
(Baranda v. Gustilo, 165 SCRA 757 [1988]; Diokno v. Rehabilitation Finance
Corporation, 91 Phil. 608 [1952]).
The state has an interest in seeing that the electoral process is clean, and
ultimately expressive of the true will of the electorate. One way of attaining such
objective is to pass legislation regulating contributions and expenditures of
candidates, and compelling the publication of the same. Admittedly, contributions
and expenditures are made for the purpose of influencing the results of the
elections (B.P. Blg. 881, Sec. 94; Resolution No. 2348, Sec. 1). Thus, laws and
regulations prescribe what contributions are prohibited (B.P. Blg. 881, Sec. 95,
Resolution No. 2348, Sec. 4), or unlawful (B.P. Blg. 881, Sec. 96), and what
expenditures are authorized (B.P. Blg. 881, Sec. 102; R.A. No. 7166, Sec. 13;
Resolution No. 2348, Sec. 7) or lawful (Resolution No. 2348, Sec. 8).
Such statutes are not peculiar to the Philippines. In "corrupt and illegal practices
acts" of several states in the United States, as well as in federal statutes,
expenditures of candidates are regulated by requiring the filing of statements of
expenses and by limiting the amount of money that may be spent by a candidate.
Some statutes also regulate the solicitation of campaign contributions (26 Am Jur
2d, Elections ? 287). These laws are designed to compel publicity with respect to
matters contained in the statements and to prevent, by such publicity, the
improper use of moneys devoted by candidates to the furtherance of their
ambitions (26 Am Jur 2d, Elections ? 289). These statutes also enable voters to
evaluate the influences exerted on behalf of candidates by the contributors, and
to furnish evidence of corrupt practices for annulment of elections (Sparkman v.
Saylor [Court of Appeals of Kentucky], 180 Ky. 263, 202 S.W. 649 [1918]).
State courts have also ruled that such provisions are mandatory as to the
requirement of filing (State ex rel. Butchofsky v. Crawford [Court of Civil Appeals
of Texas], 269 S.W. 2d 536 [1954]; Best v. Sidebottom, 270 Ky. 423,109 S.W. 2d
826 [1937]; Sparkman v. Saylor, supra.)
It is not improbable that a candidate who withdrew his candidacy has accepted
contributions and incurred expenditures, even in the short span of his campaign.
The evil sought to be prevented by the law is not all too remote.
It is notesworthy that Resolution No. 2348 even contemplates the situation where
a candidate may not have received any contribution or made any expenditure.
Such a candidate is not excused from filing a statement, and is in fact required to
file a statement to that effect. Under Section 15 of Resolution No. 2348, it is
provided that "[i]f a candidate or treasurer of the party has received no
contribution, made no expenditure, or has no pending obligation, the statement
shall reflect such fact."
Lastly, we note that under the fourth paragraph of Section 73 of the B.P. Blg. 881
or the Omnibus Election Code of the Philippines, it is provided that "[t]he filing or
withdrawal of certificate of candidacy shall not affect whatever civil, criminal or
administrative liabilities which a candidate may have incurred." Petitioner's
withdrawal of his candidacy did not extinguish his liability for the administrative
fine.
WHEREFORE, the petition is DISMISSED.
Narvasa, C.J., Feliciano, Regalado, Davide, Jr., Romero, Bellosillo, Puno, Vitug,
Mendoza and Francisco, JJ., concur.
Kapunan, J., is on leave.

Separate Opinions
MELO, J., dissenting:
The majority opinion is to the effect that every candidate, including one who has
withdrawn his certificate of candidacy, is obliged to file his statement of
contributions and expenditures in line with Section 14 of Republic Act No. 7166
vis-a-vis the pertinent portions of Comelec Resolution No. 2348. I must concede
that the use of the word "shall" in the main statute as well as the implementing
rules generally suggest mandatoriness as to cover all candidates.
But is an anspirant for public office who had a sudden change of heart, so to
speak, still considered a candidate to begin with? I am of the impression that he
is not and is thus not bound to render an accounting subsequent to election for
the simple reason that the term 'candidate' is used to designate a person who
actually submits himself and is voted for at our election (Santos vs. Miranda, 35
Phil. 643, 648 (1916) citing State vs. Hirsch, 125 Ind., 207; 9 L.R.A. 107; Moreno,
Philippine Law Dictionary, 1972 2nd ed., p. 84) Certainly, one who withdraws his
certificate of candidacy 3 days after the filing thereof, can not be voted for at an
election. And considering the shortness of the period of 3 days from the filing to
the withdrawal of the certificate of candidacy, petitioner cannot be accused, as
indeed there is no such charge, of utilizing his aborted candidacy for purposes to
raise funds or to extort money from other candidates in exchange for the
withdrawal.
I, therefore, vote to grant the petition.
Padilla, J., concurs.
Separate Opinions
MELO, J., dissenting:
The majority opinion is to the effect that every candidate, including one who has
withdrawn his certificate of candidacy, is obliged to file his statement of
contributions and expenditures in line with Section 14 of Republic Act No. 7166
vis-a-vis the pertinent portions of Comelec Resolution No. 2348. I must concede
that the use of the word "shall" in the main statute as well as the implementing
rules generally suggest mandatoriness as to cover all candidates.
But is an aspirant for public office who had a sudden change of heart, so to
speak, still considered a candidate to begin with? I am of the impression that he
is not and is thus not bound to render an accounting subsequent to election for
the simple reason that the term 'candidate' is used to designate a person who
actually submits himself and is voted for at our election (Santos vs. Miranda, 35
Phil. 643, 648 (1916) citing State vs. Hirsch, 125 Ind., 207; 9 L.R.A. 107; Moreno,
Philippine Law Dictionary, 1972 2nd ed., p. 84) Certainly, one who withdraws his
certificate of candidacy 3 days after the filing thereof, can not be voted for at an
election. And considering the shortness of the period of 3 days from the filing to
the withdrawal of the certificate of candidacy, petitioner cannot be accused, as
indeed there is no such charge, of utilizing his aborted candidacy for purposes to
raise funds or to extort money from other candidates in exchange for the
withdrawal.
I, therefore, vote to grant the petition.
Padilla, J., concurs.

SUPREME COURT
Manila
SECOND DIVISION
G.R. No. 110898 February 20, 1996
PEOPLE OF THE PHILIPPINES, petitioner,

vs.
HON. JUDGE ANTONIO C. EVANGELISTA, as Presiding Judge of
Branch XXI, 10th Judicial Region, RTC of Misamis Oriental,
Cagayan de Oro City, and GRILDO S. TUGONON, respondents.
MENDOZA, J.:
Private respondent Grildo S. Tugonan was charged with frustrated
homicide in the Regional Trial Court of Misamis Oriental (Branch 21),
the information against him alleging ?
That on or about the 26th day of May, 1988, at more or

less 9:00 o'clock in the evening at Barangay Publican+.3,
Municipality of Villanueva, Province of Misamis Oriental,
Republic of the Philippines and within the jurisdiction of
this Honorable Court, the above-named accused with
intent to kill and with the use of a knife, which he was then
conveniently provided of, did then and there willfully,
unlawfully and feloniously assault, attack and stab Roque
T. Bade thereby inflicting upon him the following injuries,
to wit:
Stab wound, right iliac area,

0.5 cm. penetrating non
perforating lacerating posterior
peritoneum, 0,5 cm.
thus performing all the acts of execution which would

produce the crime of Homicide as a consequence but
which, nevertheless, did not produce it by reason of
causes independent of the will of the accused, that is by
timely medical attendance which prevented his death.
CONTRARY TO and in violation of Article 249 in relation

to Article 6 of the Revised Penal Code.
After trial he was found guilty and sentenced to one year of prision
correccional in its minimum period and ordered to pay to the offended
party P5,000.00 for medical expense, without subsidiary
imprisonment, and the costs. The RTC appreciated in his favor the
privileged mitigating circumstances of incomplete self-defense and
the mitigating circumstance of voluntary surrender.
On appeal the Court of Appeals affirmed private respondent's

conviction but modified his sentence by imposing on him an
indeterminate penalty of 2 months of arresto mayor, as minimum, to 2
years and 4 months of prision correccional, as maximum. 1
On December 21, 1992, respondent Judge Antonio C. Evangelista of
the RTC set the case for repromulgation on January 4, 1993.
On December 28, 1992, private respondent filed a petition for

probation, 2 alleging that (1) he possessed all the qualifications and
none of the disqualifications for probation under P.D. No. 968, as
amended; (2) the Court of Appeals has in fact reduced the penalty
imposed on him by the trial court; (3) in its resolution, the Court of
Appeals took no action on a petition for probation which he had
earlier filed with it so that the petition could be filed with the trial court;
(4) in the trial court's decision, two mitigating circumstances of
incomplete self-defense and voluntarily surrender were appreciated in
his favor; and (5) in Santos To v. Paño, 3 the Supreme Court upheld
the right of the accused to probation notwithstanding the fact that he
had appealed from his conviction by the trial court.
On February 2, 1993, the RTC ordered private respondent to report

for interview to the Provincial Probation Officer. The Provincial
Probation Officer on the other hand was required to submit his report
with recommendation to the court within 60 days. 4
On February 18, 1993, Chief Probation and Parole Officer Isias B.

Valdehueza recommended denial of private respondent's application
for probation on the ground that by appealing the sentence of the trial
court, when he could have then applied for probation, private
respondent waived the right to make his application. The Probation
Officer thought the present case to be distinguishable from Santos To
v. Paño in the sense that in this case the original sentence imposed
on private respondent by the trial court (1 year of imprisonment) was
probationable and there was no reason for private respondent not to
have filed his application for probation then, whereas in Santos To v.
Paño the penalty only became probationable after it had been
reduced as a result of the appeal.
On April 16, 1993 Valdehueza reiterated 5 his "respectful

recommendation that private respondent's application for probation
be denied and that a warrant of arrest be issued for him to serve his
sentence in jail."
The RTC set aside the Probation Officer's recommendation and
granted private respondent's application for probation in its order of
April 23, 1993, 6 Hence this petition by the prosecution.
The issue in this case is whether the RTC committed a grave abuse
of its discretion by granting private respondent's application for
probation despite the fact that he had appealed from the judgment of
his conviction of the trial court.
The Court holds that it did.
Until its amendment by P.D. No. 1990 in 1986, it was possible under
P.D. No. 986, otherwise known as the Probation Law, for the accused
to take his chances on appeal by allowing probation to be granted
even after an accused had appealed his sentence and failed to obtain
an acquittal, just so long as he had not yet started to serve the
sentence. 7 Accordingly, in Santos To v. Paño, it was held that the fact
that the accused had appealed did not bar him from applying for
probation especially because it was as a result of the appeal that his
sentence was reduced and made the probationable limit.
The law was, however, amended by P.D. No. 1990 which took effect
on January 15, 1986 8 precisely to put a stop to the practice of
appealing from judgments of conviction even if the sentence is
probationable for the purpose of securing an acquittal and applying
for probation only if the accused fails in his bid. Thus, as amended by
P.D. No, 1990, ?4 of the Probation Law now reads:
?4. Grant of Probation. ? Subject to the provisions of this

Decree, the trial court may, after it shall have convicted
and sentenced a defendant, and upon application by said
defendant within the period for perfecting an appeal,
suspend the execution of the sentence and place the
defendant on probation for such period and upon such
terms and conditions as it may deem best; Provided, That
no application for probation shall be entertained or
granted if the defendant has perfected the appeal from
the judgment of conviction.
Probation may be granted whether the sentence imposes

a term of imprisonment or a fine only. An application for
probation shall be filed with the trial court. The filing of the
application shall be deemed a waiver of the right to
appeal.
An order granting or denying probation shall not be

appealable. (Emphasis added).
Since private respondent filed his application for probation on

December 28, 1992, after P.D. No. 1990 had taken effect, 9 it is
covered by the prohibition that "no application for probation shall be
entertained or granted if the defendant has perfected the appeal from
the judgment of conviction" and that "the filing of the application shall
be deemed a waiver of the right to appeal," Having appealed from the
judgment of the trial court and having applied for probation only after
the Court of Appeals had affirmed his conviction, private respondent
was clearly precluded from the benefits of probation.
Private respondent argues, however, that a distinction should be

drawn between meritorious appeals (like his appeal notwithstanding
the appellate court's affirmance of his conviction) and unmeritorious
appeals. But the law does not make any distinction and so neither
should the Court. In fact if an appeal is truly meritorious the accused
would be set free and not only given probation. Private respondent's
original sentence (1 year of prision correccional in its minimum
period) and the modified sentence imposed by the Court of Appeals
(2 months of arresto mayor, as minimum, to 2 years and 4 months of
prision correccional, as maximum) are probationable. Thus the fact
that he appealed meant that private respondent was taking his
chances which the law precisely frowns upon. This is precisely the
evil that the amendment in P.D. No. 1990 sought to correct, since in
the words of the preamble to the amendatory law, "probation was not
intended as an escape hatch and should not be used to obstruct and
delay the administration of justice, but should be availed of at the first
opportunity by offenders who are willing to be reformed and
rehabilitated."
The ruling of the RTC that "[h]aving not perfected an appeal against
the Court of Appeals decision, [private respondent] is, therefore, not
covered by [the amendment in] P.D. 1990" is an obvious misreading
of the law. The perfection of the appeal referred in the law refers to
the .appeal taken from a judgment of conviction by the trial court and
not that of the appellate court, since under the law an application for
probation is filed with the trial court which can only grant the same
"after it shall have convicted and sentenced [the] defendant, and
upon application by said defendant within the period for perfecting an
appeal. "Accordingly, in Llamado v. Court of Appeals, 10 it was held
that the petitioner who had appealed his sentence could not
subsequently apply for probation.
WHEREFORE, the petition is GRANTED and the order of April 23,

1993 of the Regional Trial Court of Misamis Oriental (Branch 21)
granting probation to private respondent Grildo S. Tugonon is SET
ASIDE.
SO ORDERED.

SUPREME COURT
Manila
SECOND DIVISION
G.R. No. 87416 April 8, 1991
CECILIO S. DE VILLA, petitioner,

vs.
THE HONORABLE COURT OF APPEALS, PEOPLE OF THE PHILIPPINES,
HONORABLE JOB B. MADAYAG, and ROBERTO Z. LORAYES, respondents.
San Jose Enriquez, Lacas Santos & Borje for petitioner.
Eduardo R. Robles for private respondent.
PARAS, J.:p
This petition for review on certiorari seeks to reverse and set aside the decision *
of the Court of Appeals promulgated on February 1, 1989 in CA-G.R. SP No.
16071 entitled "Cecilio S. de Villa vs. Judge Job B. Madayag, etc. and Roberto Z.
Lorayes," dismissing the petition for certiorari filed therein.
The factual backdrop of this case, as found by the Court of Appeals, is as follows:
On October 5, 1987, petitioner Cecilio S. de Villa was charged

before the Regional Trial Court of the National Capital Judicial
Region (Makati, Branch 145) with violation of Batas Pambansa
Bilang 22, allegedly committed as follows:
That on or about the 3rd day of April 1987, in the

municipality of Makati, Metro Manila, Philippines and
within the jurisdiction of this Honorable Court, the
above-named accused, did, then and there willfully,
unlawfully and feloniously make or draw and issue to
ROBERTO Z. LORAYEZ, to apply on account or for
value a Depositors Trust Company Check No. 3371
antedated March 31, 1987, payable to herein
complainant in the total amount of U.S. $2,500.00
equivalent to P50,000.00, said accused well knowing
that at the time of issue he had no sufficient funds in
or credit with drawee bank for payment of such check
in full upon its presentment which check when
presented to the drawee bank within ninety (90) days
from the date thereof was subsequently dishonored
for the reason "INSUFFICIENT FUNDS" and despite
receipt of notice of such dishonor said accused failed
to pay said ROBERTO Z. LORAYEZ the amount of
P50,000.00 of said check or to make arrangement for
full payment of the same within five (5) banking days
after receiving said notice.
After arraignment and after private respondent had testified on

direct examination, petitioner moved to dismiss the Information on
the following grounds: (a) Respondent court has no jurisdiction over
the offense charged; and (b) That no offense was committed since
the check involved was payable in dollars, hence, the obligation
created is null and void pursuant to Republic Act No. 529 (An Act to
Assure Uniform Value of Philippine Coin and Currency).
On July 19, 1988, respondent court issued its first questioned

orders stating:
Accused's motion to dismiss dated July 5, 1988, is

denied for lack of merit.
Under the Bouncing Checks Law (B.P. Blg. 22),
foreign checks, provided they are either drawn and
issued in the Philippines though payable outside
thereof, or made payable and dishonored in the
Philippines though drawn and issued outside thereof,
are within the coverage of said law. The law likewise
applied to checks drawn against current accounts in
foreign currency.
Petitioner moved for reconsideration but his motion was

subsequently denied by respondent court in its order dated
September 6, 1988, and which reads:
Accused's motion for reconsideration, dated August 9,

1988, which was opposed by the prosecution, is
denied for lack of merit.
The Bouncing Checks Law is applicable to checks

drawn against current accounts in foreign currency
(Proceedings of the Batasang Pambansa, February 7,
1979, p. 1376, cited in Makati RTC Judge (now
Manila City Fiscal) Jesus F. Guerrero's The
Ramifications of the Law on Bouncing Checks, p. 5).
(Rollo, Annex "A", Decision, pp. 20-22).
A petition for certiorari seeking to declare the nullity of the aforequoted orders
dated July 19, 1988 and September 6, 1988 was filed by the petitioner in the
Court of Appeals wherein he contended:
(a) That since the questioned check was drawn against the dollar
account of petitioner with a foreign bank, respondent court has no
jurisdiction over the same or with accounts outside the territorial
jurisdiction of the Philippines and that Batas Pambansa Bilang 22
could have not contemplated extending its coverage over dollar
accounts;
(b) That assuming that the subject check was issued in connection
with a private transaction between petitioner and private
respondent, the payment could not be legally paid in dollars as it
would violate Republic Act No. 529; and
(c) That the obligation arising from the issuance of the questioned
check is null and void and is not enforceable with the Philippines
either in a civil or criminal suit. Upon such premises, petitioner
concludes that the dishonor of the questioned check cannot be said
to have violated the provisions of Batas Pambansa Bilang 22.
(Rollo, Annex "A", Decision, p. 22).
On February 1, 1989, the Court of Appeals rendered a decision, the decretal

portion of which reads:
WHEREFORE, the petition is hereby dismissed. Costs against

petitioner.
SO ORDERED. (Rollo, Annex "A", Decision, p. 5)
A motion for reconsideration of the said decision was filed by the petitioner on
February 7, 1989 (Rollo, Petition, p. 6) but the same was denied by the Court of
Appeals in its resolution dated March 3, 1989 (Rollo, Annex "B", p. 26).
Hence, this petition.
In its resolution dated November 13, 1989, the Second Division of this Court
gave due course to the petition and required the parties to submit simultaneously
their respective memoranda (Rollo, Resolution, p. 81).
The sole issue in this case is whether or not the Regional Trial Court of Makati
has jurisdiction over the case in question.
The petition is without merit.
Jurisdiction is the power with which courts are invested for administering justice,
that is, for hearing and deciding cases (Velunta vs. Philippine Constabulary, 157
SCRA 147 [1988]).
Jurisdiction in general, is either over the nature of the action, over the subject
matter, over the person of the defendant, or over the issues framed in the
pleadings (Balais vs. Balais, 159 SCRA 37 [1988]).
Jurisdiction over the subject matter is determined by the statute in force at the
time of commencement of the action (De la Cruz vs. Moya, 160 SCRA 538
[1988]).
The trial court's jurisdiction over the case, subject of this review, can not be
questioned.
Sections 10 and 15(a), Rule 110 of the Rules of Court specifically provide that:
Sec. 10. Place of the commission of the offense. The complaint or

information is sufficient if it can be understood therefrom that the
offense was committed or some of the essential ingredients thereof
occured at some place within the jurisdiction of the court, unless the
particular place wherein it was committed constitutes an essential
element of the offense or is necessary for identifying the offense
charged.
Sec. 15. Place where action is to be instituted. (a) Subject to

existing laws, in all criminal prosecutions the action shall be
instituted and tried in the court of the municipality or territory where
the offense was committed or any of the essential ingredients
thereof took place.
In the case of People vs. Hon. Manzanilla (156 SCRA 279 [1987] cited in the
case of Lim vs. Rodrigo, 167 SCRA 487 [1988]), the Supreme Court ruled "that
jurisdiction or venue is determined by the allegations in the information."
The information under consideration specifically alleged that the offense was
committed in Makati, Metro Manila and therefore, the same is controlling and
sufficient to vest jurisdiction upon the Regional Trial Court of Makati. The Court
acquires jurisdiction over the case and over the person of the accused upon the
filing of a complaint or information in court which initiates a criminal action
(Republic vs. Sunga, 162 SCRA 191 [1988]).
Moreover, it has been held in the case of Que v. People of the Philippines (154
SCRA 160 [1987] cited in the case of People vs. Grospe, 157 SCRA 154 [1988])
that "the determinative factor (in determining venue) is the place of the issuance
of the check."
On the matter of venue for violation of Batas Pambansa Bilang 22, the Ministry of
Justice, citing the case of People vs. Yabut (76 SCRA 624 [1977], laid down the
following guidelines in Memorandum Circular No. 4 dated December 15, 1981,
the pertinent portion of which reads:
(1) Venue of the offense lies at the place where the check was
executed and delivered; (2) the place where the check was written,
signed or dated does not necessarily fix the place where it was
executed, as what is of decisive importance is the delivery thereof
which is the final act essential to its consummation as an obligation;
. . . (Res. No. 377, s. 1980, Filtex Mfg. Corp. vs. Manuel Chua,
October 28, 1980)." (See The Law on Bouncing Checks Analyzed
by Judge Jesus F. Guerrero, Philippine Law Gazette, Vol. 7. Nos.
11 & 12, October-December, 1983, p. 14).
It is undisputed that the check in question was executed and delivered by the
petitioner to herein private respondent at Makati, Metro Manila.
However, petitioner argues that the check in question was drawn against the
dollar account of petitioner with a foreign bank, and is therefore, not covered by
the Bouncing Checks Law (B.P. Blg. 22).
But it will be noted that the law does not distinguish the currency involved in the
case. As the trial court correctly ruled in its order dated July 5, 1988:
Under the Bouncing Checks Law (B.P. Blg. 22), foreign checks,
provided they are either drawn and issued in the Philippines though
payable outside thereof . . . are within the coverage of said law.
It is a cardinal principle in statutory construction that where the law does not
distinguish courts should not distinguish. Parenthetically, the rule is that where
the law does not make any exception, courts may not except something unless
compelling reasons exist to justify it (Phil. British Assurance Co., Inc. vs. IAC, 150
SCRA 520 [1987]).
More importantly, it is well established that courts may avail themselves of the
actual proceedings of the legislative body to assist in determining the
construction of a statute of doubtful meaning (Palanca vs. City of Manila, 41 Phil.
125 [1920]). Thus, where there is doubts as to what a provision of a statute
means, the meaning put to the provision during the legislative deliberation or
discussion on the bill may be adopted (Arenas vs. City of San Carlos, 82 SCRA
318 [1978]).
The records of the Batasan, Vol. III, unmistakably show that the intention of the
lawmakers is to apply the law to whatever currency may be the subject thereof.
The discussion on the floor of the then Batasang Pambansa fully sustains this
view, as follows:
xxx xxx xxx
THE SPEAKER. The Gentleman from Basilan is

recognized.
MR. TUPAY. Parliamentary inquiry, Mr. Speaker.
THE SPEAKER. The Gentleman may proceed.
MR. TUPAY. Mr. Speaker, it has been mentioned by

one of the Gentlemen who interpellated that any
check may be involved, like U.S. dollar checks, etc.
We are talking about checks in our country. There are
U.S. dollar checks, checks, in our currency, and many
others.
THE SPEAKER. The Sponsor may answer that
inquiry.
MR. MENDOZA. The bill refers to any check, Mr.

Speaker, and this check may be a check in whatever
currency. This would not even be limited to U.S.
dollar checks. The check may be in French francs or
Japanese yen or deutschunorhs. (sic.) If drawn, then
this bill will apply.
MR TUPAY. So it include U.S. dollar checks.
MR. MENDOZA. Yes, Mr. Speaker.
xxx xxx xxx
(p. 1376, Records of the Batasan, Volume III; Emphasis supplied).
PREMISES CONSIDERED, the petition is DISMISSED for lack of merit.
Melencio-Herrera, Padilla, Sarmiento and Regalado, JJ., concur.

SUPREME COURT
Manila
EN BANC
G.R. No. L-14787 January 28, 1961
COLGATE-PALMOLIVE PHILIPPINE, INC., petitioner,

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

Office of the Solicitor General for respondents.
GUTIERREZ DAVID, J.:

The petitioner Colgate-Palmolive Philippines, Inc. is a corporation
duly organized and existing under Philippine laws engaged in the
manufacture of toilet preparations and household remedies. On
several occasions, it imported from abroad various materials such as
irish moss extract, sodium benzoate, sodium saccharinate
precipitated calcium carbonate and dicalcium phosphate, for use as
stabilizers and flavoring of the dental cream it manufactures. For
every importation made of these materials, the petitioner paid to the
Central Bank of the Philippines the 17% special excise tax on the
foreign exchange used for the payment of the cost, transportation and
other charges incident thereto, pursuant to Republic Act No. 601, as
amended, commonly known as the Exchange Tax Law.
On March 14, 1956, the petitioner filed with the Central Bank three
applications for refund of the 17% special excise tax it had paid in the
aggregate sum of P113,343.99. The claim for refund was based on
section 2 of Republic Act 601, which provides that "foreign exchange
used for the payment of the cost, transportation and/or other charges
incident to the importation into the Philippines of . . . stabilizer and
flavors . . . shall be refunded to any importer making application
therefor, upon satisfactory proof of actual importation under the rules
and regulations to be promulgated pursuant to section seven
thereof." After the applications were processed by the officer-in-
charge of the Exchange Tax Administration of the Central Bank, that
official advised, the petitioner that of the total sum of P113,343.99
claimed by it for refund, the amount of P23,958.13 representing the
17% special excise tax on the foreign exchange used to import irish
moss extract, sodium benzoate and precipitated calcium carbonate
had been approved. The auditor of the Central Bank, however,
refused to pass in audit its claims for refund even for the reduced
amount fixed by the Officer-in-Charge of the Exchange Tax
Administration, on the theory that toothpaste stabilizers and flavors
are not exempt under section 2 of the Exchange Tax Law.
Petitioner appealed to the Auditor General, but the latter or,

December 4, 1958 affirmed the ruling of the auditor of the Central
Bank, maintaining that the term "stabilizer and flavors" mentioned in
section 2 of the Exchange Tax Law refers only to those used in the
preparation or manufacture of food or food products. Not satisfied,
the petitioner brought the case to this Court thru the present petition
for review.
The decisive issue to be resolved is whether or not the foreign

exchange used by petitioner for the importation of dental cream
stabilizers and flavors is exempt from the 17% special excise tax
imposed by the Exchange Tax Law, (Republic Act No. 601) so as to
entitle it to refund under section 2 thereof, which reads as follows:
SEC, 2. The tax collected under the preceding section on

foreign exchange used for the payment of the cost,
transportation and/or other charges incident to importation into
the Philippines of rice, flour, canned milk, cattle and beef,
canned fish, soya beans, butterfat, chocolate, malt syrup,
tapioca, stabilizer and flavors, vitamin concentrate, fertilizer,
poultry feed; textbooks, reference books, and supplementary
readers approved by the Board of Textbooks and/or established
public or private educational institutions; newsprint imported by
or for publishers for use in the publication of books, pamphlets,
magazines and newspapers; book paper, book cloth, chip
board imported for the printing of supplementary readers
(approved by the Board of Textbooks) to be supplied to the
Government under contracts perfected before the approval of
this Act, the quantity thereof to be certified by the Director of
Printing; anesthetics, anti-biotics, vitamins, hormones, x-ray
films, laboratory reagents, biologicals, dental supplies, and
pharmaceutical drugs necessary for compounding medicines;
medical and hospital supplies listed in the appendix to this Act,
in quantities to be certified by the Director of Hospitals as
actually needed by the hospitals applying therefor; drugs and
medicines listed in the said appendix; and such other drugs and
medicines as may be certified by the Secretary of Health from
time to time to promote and protect the health of the people of
the Philippines shall be refunded to any importer making
application therefor, upon satisfactory proof of actual
importation under the rules and regulations to be promulgated
pursuant to section seven thereof." (Emphasis supplied.)
The ruling of the Auditor General that the term "stabilizer and flavors"
as used in the law refers only to those materials actually used in the
preparation or manufacture of food and food products is based,
apparently, on the principle of statutory construction that "general
terms may be restricted by specific words, with the result that the
general language will be limited by the specific language which
indicates the statute's object and purpose." (Statutory Construction by
Crawford, 1940 ed. p. 324-325.) The rule, however, is, in our opinion,
applicable only to cases where, except for one general term, all the
items in an enumeration belong to or fall under one specific class. In
the case at bar, it is true that the term "stabilizer and flavors" is
preceded by a number of articles that may be classified as food or
food products, but it is likewise true that the other items immediately
following it do not belong to the same classification. Thus "fertilizer"
and "poultry feed" do not fall under the category of food or food
products because they are used in the farming and poultry industries,
respectively. "Vitamin concentrate" appears to be more of a medicine
than food or food product, for, as matter of fact, vitamins are among
those enumerated in the list of medicines and drugs appearing in the
appendix to the law. It should also here be stated that "cattle", which
is among those listed preceding the term in question, includes not
only those intended for slaughter but also those for breeding
purposes. Again, it is noteworthy that under, Republic Act No. 814
amending the above-quoted section of Republic Act No. 601,
"industrial starch", which does not always refer to food for human
consumption, was added among the items grouped with "stabilizer
and flavors". Thus, on the basis of the grouping of the articles alone,
it cannot validly be maintained that the term "stabilizer and flavors" as
used in the above-quoted provision of the Exchange Tax Law refers
only to those used in the manufacture of food and food products. This
view is supported by the principle "Ubi lex non distinguish nec nos
distinguire debemos", or "where the law does not distinguish, neither
do we distinguish". (Ligget & Myers Tobacco Company vs. Collector
of Internal Revenue, 53 Off. Gaz. No. 15, page 4831). Since the law
does not distinguish between "stabilizer and flavors" used in the
preparation of food and those used in the manufacture of toothpaste
or dental cream, we are not authorized to make any distinction and
must construe the words in their general sense. The rule of
construction that general and unlimited terms are restrained and
limited by particular recitals when used in connection with them, does
not require the rejection of general terms entirely. It is intended
merely as an aid in ascertaining the intention of the legislature and is
to be taken in connection with other rules of construction. (See
Handbook of the Construction and Interpretation of Laws by Black, p.
215.216, 2nd ed.)
Having arrived at the above conclusion, we deem it now idle to pass

upon the other questions raised by the parties.
WHEREFORE, the decision under review is reversed and the

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

SUPREME COURT
Manila
EN BANC
G.R. No. 79094 June 22, 1988
MANOLO P. FULE, petitioner,

vs.
THE HONORABLE COURT OF APPEALS, respondent.
Balagtas P. Ilagan for petitioner.
The Solicitor General for respondent.
MELENCIO-HERRERA, J.:
This is a Petition for Review on certiorari of the Decision of respondent Appellate

Court, which affirmed the judgment of the Regional Trial Court, Lucena City,
Branch LIV, convicting petitioner (the accused-appellant) of Violation of Batas
Pambansa Blg. 22 (The Bouncing Checks Law) on the basis of the Stipulation of
Facts entered into between the prosecution and the defense during the pre-trial
conference in the Trial Court. The facts stipulated upon read:
a) That this Court has jurisdiction over the person and subject
matter of this case;
b) That the accused was an agent of the Towers Assurance
Corporation on or before January 21, 1981;
c) That on January 21, 1981, the accused issued and made out
check No. 26741, dated January 24, 1981 in the sum of P2,541.05;
d) That the said check was drawn in favor of the complaining

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

remittance of collection;
f) That the said check was presented for payment on January 24,
1981 but the same was dishonored for the reason that the said
checking account was already closed;
g) That the accused Manolo Fule has been properly Identified as

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

affirmed the judgment of conviction. 1
Hence, this recourse, with petitioner-appellant contending that:
The Honorable Respondent Court of Appeals erred in the decision

of the Regional Trial Court convicting the petitioner of the offense
charged, despite the cold fact that the basis of the conviction was
based solely on the stipulation of facts made during the pre-trial on
August 8, 1985, which was not signed by the petitioner, nor by his
counsel.
Finding the petition meritorious, we resolved to give due course.
The 1985 Rules on Criminal Procedure, which became effective on January 1,

1985, applicable to this case since the pre-trial was held on August 8, 1985,
provides:
SEC. 4. Pre-trial agreements must be signed. ? No agreement or

admission made or entered during the pre-trial conference shall be
used in evidence against the accused unless reduced to writing and
signed by him and his counsel. (Rule 118) [Emphasis supplied]
By its very language, the Rule is mandatory. Under the rule of statutory
construction, negative words and phrases are to be regarded as mandatory while
those in the affirmative are merely directory (McGee vs. Republic, 94 Phil. 820
[1954]). The use of the term "shall" further emphasizes its mandatory character
and means that it is imperative, operating to impose a duty which may be
enforced (Bersabal vs. Salvador, No. L-35910, July 21, 1978, 84 SCRA 176). And
more importantly, penal statutes whether substantive and remedial or procedural
are, by consecrated rule, to be strictly applied against the government and
liberally in favor of the accused (People vs. Terrado No. L-23625, November 25,
1983, 125 SCRA 648).
The conclusion is inevitable, therefore, that the omission of the signature of the
accused and his counsel, as mandatorily required by the Rules, renders the
Stipulation of Facts inadmissible in evidence. The fact that the lawyer of the
accused, in his memorandum, confirmed the Stipulation of Facts does not cure
the defect because Rule 118 requires both the accused and his counsel to sign
the Stipulation of Facts. What the prosecution should have done, upon
discovering that the accused did not sign the Stipulation of Facts, as required by
Rule 118, was to submit evidence to establish the elements of the crime, instead
of relying solely on the supposed admission of the accused in the Stipulation of
Facts. Without said evidence independent of the admission, the guilt of the
accused cannot be deemed established beyond reasonable doubt.
Consequently, under the circumstances obtaining in this case, the ends of justice
require that evidence be presented to determine the culpability of the accused.
When a judgment has been entered by consent of an attorney without special
authority, it will sometimes be set aside or reopened (Natividad vs. Natividad, 51
Phil. 613 [1928]).
WHEREFORE, the judgment of respondent Appellate Court is REVERSED and

this case is hereby ordered RE-OPENED and REMANDED to the appropriate
Branch of the Regional Trial Court of Lucena City, for further reception of
evidence.
SO ORDERED.

SUPREME COURT
Manila
EN BANC
G.R. No. L-63318 November 25, 1983
PHILIPPINE CONSUMERS FOUNDATION, INC., petitioner,

vs.
NATIONAL TELECOMMUNICATIONS COMMISSION AND PHILIPPINE LONG
DISTANCE TELEPHONE COMPANY, respondents.
Tomas C. Llamas for petitioner.
The Solicitor General for respondent NTC.
Graciano C. Regala and Eliseo B. Alampay for respondent PLDT.
RELOVA, J.: 񩫮??wph!1
Petition for certiorari seeking to set aside and annul the decision, dated
November 22, 1982, of public respondent National Telecommunications
Commission (NTC, for short), approving the application of the Philippine Long
Distance Telephone Company (PLDT, for short) of its revised schedule for its
Subscriber Investment Plan (SIP) for the entire service area, including the ex-
RETELCO area; as well as the order of January 14, 1983 which denied the
motion for reconsideration of petitioner Philippine Consumers Foundation, Inc.
(PCFI, for short).
Records show that on March 20, 1980, private respondent PLDT filed an
application with the NTC for the approval of a revised schedule for its Subscriber
Investment Plan (SIP), docketed as Case No. 82-27.
On April 14, 1982, the NTC issued an ex-parte order provisionally approving the
revised schedule which, however, was set aside by this Court on August 31,
1982 in the case of "Samuel Bautista vs. NTC, et al.," 116 SCRA 411. The Court
therein ruled that "there was necessity of a hearing by the Commission before it
should have acted on the application of the PLDT so that the public could air its
opposition, particularly the herein petitioner and the Solicitor General,
representing the government. They should be given the opportunity to
substantiate their objection that the rates under the subscriber investment plan
are excessive and unreasonable and, as a consequence, the low income and
middle class group cannot afford to have telephone connections; and, that there
is no need to increase the rate because the applicant is financially sound."
On November 22, 1982, the NTC rendered the questioned decision permanently
approving PLDT's new and increased SIP rates, the dispositive portion of which
reads: t 걮? w⣼/CITE>
IN VIEW OF ALL THE FOREGOING, this Commission finds that
applicant's reduced proposals for its revised Subscriber Investment
Plan Schedule, upon further reductions herein ordered with respect
to subscriber investments for new installations of single residential
telephones in the Metro Manila and Provincial Service Areas, are
all within the 50%-of-cost limit provided in P.D. 217; that they are
just and reasonable and in consonance with the public policies
declared in said decree; and that it is in the public interest that
applicant's revised SIP Schedule be, as it is hereby APPROVED,
as follows:
REVISED SIP SCHEDULE
Service Category Revised SIP Rates
Metro Manila Provincial t 걮?w⣼/CITE>
1. New Installations ?
1. PBX/PABX Trunk P 5,000 P3,000
2. Business Phone:
Single line 3,500 2,000
Party line 2,000 1,600
3. Residential Phone:
Party line 900 800
4. Leased Line 2,500 2,500
5. Tie trunk or tie line 2,500 2,500
6. Outside local 2,500 2,500
II. Transfers ?
1. PBX/PABX 1,500 1,200
2. Business Phone:
Single line 800 600

Party line 600 500
3. Residential Phone:
Single line 600 500
Party line 500 300
4. Leased Line 800 800
Revised SIP Rates
Metro Manila Provincial
5. Tie trunk or tie line P800 P800
6. Outside Local 800 800
(pp. 34-35, Rollo)
Petitioner filed a motion for reconsideration of the above judgment on December

14, 1982, and after a month, or on January 14, 1983, NTC denied said motion for
reconsideration.
It is the submission of petitioner that the SIP schedule presented by the PLDT is
pre-mature and, therefore, illegal and baseless, because the NTC has not yet
promulgated the required rules and regulations implementing Section 2 of
Presidential Decree No. 217 which provides: t 걮? w⣼/CITE>
Section 2. The Department of Public Works, Transportation and

Communications through its Board of Communications and/or
appropriate agency shall see to it that the herein declared policies
for the telephone industry are immediately implemented and for this
purpose pertinent rules and regulations may be promulgated ...
(Emphasis supplied).
Petitioner avers that the "substitute procedural vehicle utilized by NTC in allowing
the establishment of SIP by PLDT was by treating the appropriate Petition of
PLDT as if the same were a rate case over which the Rules of Practice was
applicable. NTC proceeded to invoke the summary powers provided for in the
Rules of Practice to fully bear on the hapless consumer, notably the repressive
'Provisional Reliefs;' (pp. 5-6, Rollo) that at the hearings thereof, "NTC limited the
numerous oppositors in the instant Application, among them PCFI, by applying
the two oppositor-rule. This means that only two of the oppositors will be heard in
representation of all the oppositors, again pursuant to the procedure laid down in
the Rules of Practice." (p. 130, rollo) Further, the NTC invoked its extraordinary
powers pursuant to Section 3 of Rule 15 of the Rules of Practice, "whereby even
without an iota or proof to substantiate its application, NTC allowed the desired
increase purportedly on a provisional basis. " (p. 129, rollo)
The question is whether or not respondent acted with grave abuse of discretion
when it approved the Revised Subscriber Investment Plan (SIP) of respondent
PLDT in the absence of specific rules and regulations implementing Presidential
Decree No. 217. Petitioner claims that these implementing rules and regulations
are mandatory pre-requisite for the approval of said SIP rates.
Respondent NTC admits the absence of rules and regulations referred to in PD

217. However, it contends that nowhere in said decree is there any legal
provision making the promulgation of rules a mandatory pre-requisite to the
establishment of SIP and the determination of its schedules; that since
respondent NTC is enjoined to implement the declared policies of the decree, for
its immediate implementation, it may rely on existing Rules of Practice; that
under the same Rules of Practice all existing subscriber investment plans were
presented, considered and approved by the NTC; that the promulgation of the
rules is inherently an internal and administrative matter and therefore, is not a
proper subject of litigation, much less a duty of the NTC to accomplish; and, that
public respondent may or may not promulgate the rules in the immediate
implementation of said decree as the word used there is "may."
We are not persuaded.
Presidential Decree No. 217 was promulgated on June 16, 1973 and paragraph
4 of Section 1 thereof provides: t 걮?w⣼/CITE>
4. In line with the objective of spreading ownership among a wide

base of the people, the concept of telephone subscriber self-
financing is hereby adopted whereby a telephone subscriber
finances part of the capital investments in telephone installations
through the purchase of stocks, whether common or preferred
stock, of the telephone company. (Emphasis supplied)
There is merit in the contention of petitioner that it is the duty of respondent NTC
to promulgate rules and regulations because: t 걮?w⣼/CITE>
1. P.D. 217 deals with matters so alien, innovative and untested

such that existing substantive and procedural laws would not be
applicable. Thus, the Subscriber Investment Plan (SIP) was so set
up precisely to ensure the financial viability of public
telecommunications companies which in turn assures the
enjoyment of the population at minimum cost the benefits of a
telephone facility.
The SIP has never been contemplated prior to P.D. 217.
The existing law on the other hand, the Public Service Act,
diametrically runs counter to the spirit and intention, if not the
purpose of P.D. 217. It may even be gainsaid that as long as the
optimum number of individuals may enjoy telephone service, there
is no limitation on the profitability of such companies. Hence, while
P.D. 217 encourages the profitability of public telecommunication
companies, the Public Service Act limits the same.
2. In the absence of such rules and regulations, there is outright

confusion among the rights of PLDT, the consumers and the
government itself. As may clearly be seen, how can the Decision
be said to have assured that most of the population will enjoy
telephone facilities? Did the Decision likewise assure the financial
viability of PLDT? Was the government's duty to provide telephone
service to its constituents subserved by the Decision? These
questions can never be answered unless such rules and
regulations are set up.
3. Finally, it should be emphasized that NTC is estopped from

claiming that there is no need to promulgate such rules and
regulations. In the case of PCFI vs. NTC, G.R. No. 61892, now
pending resolution before this Honorable Tribunal, NTC totally
refused to act on a petition filed by PLDT precisely for the
promulgation of such rules and regulations.
Why then did NTC refuse to act on such petition if and when there
is no need for the promulgation of such rules and regulations? After
all NTC could have simply ruled that the petition in G.R. No. 61892
is unnecessary because such rules and regulations are also
unnecessary. (pp. 135-136, Rollo)
At any rate, there is no justification for the rate increase of the revised schedule
of PLDT's Subscriber Investment Plan. It is to say the least, untimely, considering
the present economic condition obtaining in the country. The approved rate
defeats the purpose of the decree which is to spread ownership among the wide
base of investors. The State, in Presidential Decree No. 217 promulgated on
June 16, 1973, adopted the basic policies of the telephone industry, which,
among others, are: (1) the attainment of efficient telephone service for as wide
an area as possible at the lowest reasonable costs to the subscriber; (2) the
capital requirements of telephone utilities obtained from ownership funds shall be
raised from a broad base of investors, involving as large a number of individual
investors as may be possible; and (3) in any subscriber self-financing plan, the
amount of subscriber self-financing will, in no case, exceed fifty per centum
(50%) of the cost of the installed telephone line, as may be determined from time
to time by the regulatory bodies of the State.
The load on the back of our people is heavy enough. Let us not increase its
weight further. Noteworthy is the concurrence of Justice Vicente Abad Santos in
the case of Bautista vs. NTC (supra) that "the PLDT which is reported to have
made over 100 million pesos in profits in just six months but with its service so
poor that even the First Lady has taken notice should think of improved service
before increased profits."
Indeed, let t us not aggravate the situation of the populace by raising the revised
SIP schedule plan of the PLDT. A rate increase would be an additional burden on
the telephone subscribers. The plan to expand the company program and/or
improve its service is laudable, but the expenses should not be shouldered by
the telephone subscribers. Considering the multi-million profits of the company,
the cost of expansion and/or improvement should come from part of its huge
profits.
Anent the question that petitioner should have appealed the decision of
respondent NTC, instead of filing the instant petition, suffice it to say that
certiorari is available despite existence of the remedy of appeal where public
welfare and the advancement of public policy so dictate, or the orders
complained of were issued in excess of or without jurisdiction (Jose vs. Zulueta,
2 SCRA 574).
ACCORDINGLY, the DECISION of the public respondent National

Telecommunications Commission, dated November 22, 1982, and the ORDER
dated January 14, 1983. are hereby ANNULLED and SET ASIDE.
SO ORDERED.

SUPREME COURT
Manila
EN BANC
G.R. No. L-63318 August 18, 1984
PHILIPPINE CONSUMERS FOUNDATION, INC., petitioner,

vs.
NATIONAL TELECOMMUNICATIONS COMMISSION and PHILIPPINE
LONG DISTANCE TELEPHONE CO., respondents.
Tomas C. Llamas for petitioners.

The Solicitor General for respondent NTC.
Eliseo Alampay, Jr., Graciano C. Regala and Augusto San Pedro for
private respondents.
RESOLUTION
MAKASIAR, J.:
On March 2, 1983, petitioner filed the instant petition praying, among

others, that the decision of respondent NTC dated November 22, 1982
and the order dated January 14, 1983 be annulled and set aside on the
grounds therein stated (pp. 2-19, rec.).
After the petitioner, the private respondent, and the Solicitor General for
public respondent NTC filed their respective comments and memoranda
(pp. 47-53, 96-106, 109-116, 127-142, 147-164, 206-221, rec.), on
November 25, 1983, the decision sought to be reconsidered was
promulgated, annulling and setting aside the challenged decision and
order, respectively dated November 22, 1982 and January 14, 1983 (pp.
225-232, rec.).
Said decision is not unanimous as it bears the concurrence of only 9

members of this Court, while 3 members took no part and 1 member
reserved his vote (p 232, rec.)
In a resolution dated January 10, 1984 and released on January 17,

1984, the Court granted respondent PLDT's motion for 15-day extension
from the expiration of the reglementary period within which to file a
motion for reconsideration (pp. 233, 236, rec.).
On January 12, 1984, PLDT filed its motion for reconsideration (pp. 237-
268, rec.).
On February 27, 1984, respondent PLDT filed a motion to admit attached

supplemental motion for reconsideration (pp. 281-301, rec.).
On February 27, 1984, public respondent NTC, thru the Solicitor General,
filed a manifestation and motion that it is joining core, respondent PLDT
in its motion for reconsideration thereby adopting the same as its own
(pp. 302-303, 305-306, rec.).
In a resolution dated March 1, 1984 and issued on March 2, 1984, the

Court admitted the supplemental motion for reconsideration of PLDT,
noted the manifestation and motion of the Solicitor General for and in
behalf of respondent NTC that it is joining the motion for reconsideration
of PLDT and adopting it as its own, and required petitioner to convenient
within 10 days from notice on the aforesaid supplemental motion for
reconsideration of PLDT (p. 304-A, rec.).
On March 28, 1984, petitioner filed its comment on respondent's motion

for reconsideration (pp. 310-317, rec.).
In a resolution dated April 3, 1984 and issued on April 11, 1984, the Court
denied the motion for reconsideration (p. 318A, rec.).
On April 6, 1984, respondent PLDT filed a motion to strike out "discussion

(e)" in petitioner's "comment on respondents' motions" dated March 20,
1984 (pp. 319-321, rec.).
In a resolution dated April 12, 1984 and issued on April 16, 1984, the
Court required petitioner's counsel Atty. Tomas Llamas to comment within
10 days from notice on the aforesaid motion to strike out (p. 323, rec.).
On April 17, 1984, respondent PLDT, thru counsel, filed a motion for
leave to file within 15 days from date a second motion for reconsideration
(pp. 324-326, rec.).
On April 27, 1984, petitioner filed an opposition to the aforesaid motion of

PLDT for leave to file within 15 days to file a second motion for
reconsideration (pp. 328-330, rec.).
On May 2, 1984, private respondent PLDT filed a second motion for

reconsideration with an annex (pp. 332-344, rec.).
In a resolution dated May 8, 1984 but issued on May 11, 1984, the Court
granted the motion of PLDT to file a second motion for reconsideration
within 15 days from April 16, 1984, noted the opposition of petitioner to
said motion, and required petitioner to comment within 15 days from
notice on the aforesaid second motion for reconsideration of PLDT for the
reconsideration of the decision of November 25, 1983 (p. 345, rec.).
On May 4, 1984, petitioner filed its comment on the second motion for
reconsideration of private respondent (pp. 346-350, rec.).
In a resolution dated May 10, 1984 and issued on May 16, 1984, the
Court required respondents to file a reply within 10 days from notice on
the aforesaid comment of petitioner on private respondent PLDT's motion
praying that the discussion (par. 3) in petitioner's comment on the first
motion for reconsideration and the supplemental motion for
reconsideration be deleted (p. 352, rec.).
On May 21, 1984, public respondent NTC filed a manifestation joining

private respondent PLDT and adopting the latter's second motion for
reconsideration (pp. 353-354, rec.), which the Court granted in a
resolution dated May 29, 1984 and issued on June 6, 1984 (p. 355-A).
On May 28,1984, respondent PLDT filed a motion for extension of 10

days or until June 7, 1984 within which to submit the required reply in the
resolution of May 10, 1984 and issued on May 16, 1984 (pp. 356-357,
rec.), which was granted in a resolution dated June 5, 1984 and issued
on July 3, 1984 (p. 357-A, rec.).
On June 1, 1984, petitioner filed its comment on PLDT's second motion

for reconsideration, with a motion to declare final the decision with
respect to public respondent NTC (pp. 358362, rec.).
A day before June 1, 1984, or on May 31, 1984, private respondent PLDT
filed its reply to petitioner's "comment on motion of private respondent"
dated May 4, 1984 [motion to strike] (pp. 366-369, rec.).
On July 16, 1984, after its motions for extension were granted, public
respondent NTC thru the Solicitor General, finally filed its reply (pp. 370-
371, 372-A, 373, 375-381, rec.).
It should be emphasized that the resolution of this Court dated April 3,

1984 but issued on April 11, 1984, denying the first motion for
reconsideration did not state that the denial is final (see p. 318-A, rec.).
And the motion of May 29, 1984 but filed on June 1, 1984 of petitioner to
declare as final the decision of November 25, 1983 (which motion was
included in plaintiff's comment on PLDT's second motion for
reconsideration) with respect to public respondent NTC (pp. 361-362,
rec.), was not acted upon by this Court, ostensibly because as early as
May 21, 1984, public respondent NTC, thru the Solicitor General, filed a
manifestation that it is joining private respondent PLDT in its second
motion for reconsideration dated May 18, 1984 and adopting it as its own
(pp. 353-354, rec.).
II
It is not disputed ? and should be emphasized that on August 31, 1982,

this Court set aside the NTC order dated April 14, 1982 in the case of
Samuel Bautista vs. NTC, et al. (16 SCRA 411) provisionally approving
the revised schedule of rates for the Subscriber Investments Plan, on the
ground that there was necessity of a hearing by the Commission before it
could have acted on the PLDT application for said revised schedule, to
give opportunity to the public, especially herein petitioner and the Solicitor
General to substantiate their objections to the said schedule as excessive
and unreasonable, especially for the low-income and middle-income
groups, which cannot afford telephone connections and that there is no
need to increase the rate because PLDT is financially sound.
Thereafter, in NTC Case No. 82-87 entitled "Re Philippine Long Distance
Telephone Co. respondent NTC conducted several hearings on PLDT's
revised Subscriber Investments Plan schedule at which written
oppositions were filed by herein petitioner PCFI, the Solicitor General,
Atty. Samuel Bautista, Flora Alabanza, the municipality of Marikina, and
the Integrated Telecommunications Suppliers' Association of the
Philippines (ITESAP). Other oppositors failed to file their written
oppositions. The hearings on the merits actually started on August 4,
1982 and continued for four (4) subsequent dates.
The oppositors, thru counsel, thoroughly cross-examined the witness for

the applicant, Mr. Romeo Sisteban applicant's Vice-President for Budget
and Financial Planning.
None of the oppositors opted to present evidence but merely filed

Memoranda and thereafter manifested that the case is submitted for
decision Because PLDT made some concessions in favor of the
oppositors, oppositors ITESAP, Eastern Telecommunications, Inc.,
Philippine Global Communications, Inc. (Philcom), Globe-Mackay Cable
and Radio Corporation (GMCR) withdrew their opposition and manifested
that they are no longer opposing the application after which respondent
NTC issued the challenged decision of November 22, 1982.
Respondent NTC rendered the challenged decision dated November 22,

1982, approving the revised schedule on the ground that the rates are
within the 50% of cost limit provided in P.D. No. 217, that they are just
and reasonable and in consonance with the public policies declared in
said decree, and that such approval is in the public interest (see NTC
decision of Nov. 22, 1982, pp. 2-19, rec.).
It is undisputed therefore that petitioner and the other oppositors were

accorded due process.
From said decision dated November 22, 1982, petitioner filed the instant
petition.
III
The decision promulgated on November 25, 1983 interprets the rule-

making authority delegated in Section 2 of P.D. No. 217 to the then
Department of Public Works, Transportation and Communications as
mandatory, which construction is not supported by the actual phraseology
of said Section 2, which reads thus:
The Department of Public Works, Transportation and

Communications, through its Board of Communications
and/or appropriate agency shall see to it that the herein
declared policies for the telephone industry are immediately
implemented and for this purpose, pertinent rules and
regulations may be promulgated (emphasis supplied).
The basic canon of statutory interpretation is that the word used in the
law must be given its ordinary meaning, unless a contrary intent is
manifest from the law itself. Hence, the phrase "may be promulgated"
should not be construed to mean "shall" or "must". It shall be interpreted
in its ordinary sense as permissive or discretionary on the part of the
delegate ? department or the Board 6f Communications then, now the
National Telecommunications Commission ? whether or not to
promulgate pertinent rules and regulations. There is nothing in P.D. No.
217 which commands that the phrase "may be promulgated" should be
construed as "shall be promulgated." The National Telecommunications
Commission can function and has functioned without additional rules,
aside from the existing Public Service Law, as amended, and the existing
rules already issued by the Public Service Commission, as well as the
1978 rules issued by the Board of Communications, the immediate
predecessor of respondent NTC. It should be recalled that the PLDT
petition for approval of its revised SIP schedule was filed on March
20,1980.
P.D. No. 217 does not make the rules and regulations to be promulgated
by the respondent NTC as essential to the exercise of its jurisdiction over
applications for SIP schedules. In Ang Tibay vs. CIR (69 Phil. 635), this
Court, through Mr. Justice Jose P. Laurel, did not include the
promulgation of rules and regulations as among the seven (7)
requirements of due process in quasi-judicial proceedings before a quasi-
judicial body such as the respondent NTC.
What is patently mandatory on the ministry or National

Telecommunications Commission is the immediate implementation of the
policies declared in P.D. No. 217. To repeat, the ministry or the NTC "shall
see to it that the herein declared policies for the telephone industry are
immediately implemented ..." The formulation of rules and regulations is
purely discretionary on the part of the delegate.
Both words "shall and "may be" are employed in the lone sentence of
Section 2 of P.D. No. 217. This graphically demonstrates that P.D. No.
217 preserves the distinction between their ordinary, usual or nominal
senses.
This is emphasized by the fact that under Section 3 of P.D. No. 217, only
"the pertinent provisions" of the Public Service Act, as amended, which
are in conflict with the provisions of P.D. No. 217, had been repealed or
modified by said P.D. No. 217.
Section 3 of P.D. No. 217 states:
The pertinent provisions of the Public Service Act, as

amended, the franchise of the Philippine Long Distance
Telephone Company under Act 3436, as amended, all
existing legislative and/or municipal franchises and other
laws, executive orders, proclamations, rules and regulations
or parts thereof, as are in conflict with the provisions of this
Decree are hereby repealed or modified accordingly.
And under the Public Service Act, as amended (C.A. No. 146), the board
of Communications then, now the NTC, can fix a provisional amount for
the subscriber's investment to be effective immediately, without hearing
(par. 3 of Sec. 16, C.A. 146, as amended).
Section 16 (c) of C.A. No. 146, as amended, provides:
(c) To fix and determine individual or joint rates, toll charges,

classifications, or schedules thereof, as well as
communication, mileage, kilometrage, and oilier special
rates which shall be imposed, observed, and followed
thereafter by any public service: Provided That the
Commission may, in its discretion approve rates proposed
by public services provisionally and without necessity of any
hearing, but it shall call a hearing thereon within thirty days
thereafter, upon publication and notice to the concerns
operating in the territory affects Provided further, That in
case the public service equipment of an operator is used
principally or secondarily for the promotion of a private
business, the net profits of said private business shall be
considered in relation with the public service of such
operator for the purpose of fixing the rates.
The Rules of Practice and Procedures promulgated on January 25, 1978

by the Board of Communications, the immediate predecessor of
respondent NTC, pursuant to Section 11 of the Public Service Act,
otherwise known as Commonwealth Act No. 146, as amended, govern
the rules of practice and procedure before the BOC then, now respondent
NTC. Section 2 of said Rules defines their scope, including exempting
parties from the application of the rules in the interest of justice and to
best serve the public interest, and the NTC may apply such suitable
procedure to improve the service in the transaction of public service.
Thus, Section 2 of Rule 1 of said Rules reads:
Sec. 2. Scope. ? These rules govern pleadings, practice

and procedure before the Board of Communications in all
matters of hearing, investigation and proceedings within the
jurisdiction of the Board. However, in the broader interest of
justice and in order to best serve the public interest, the
Board may, in any particular matter, except it from these
rules and apply such suitable procedure to improve the
service in the transaction of the public business.
Sections 4 and 5 of Rule 2 of said rules insure the appearance of the

Solicitor General and other consumers or users. The notice of hearing is
required to be published and to be served on the affected parties by
Section 2 of Rule 8; while Section I of Rule 9 allows the filing of written
oppositions to the application Under Section 3 of Rule 15, the BOC then,
now the NTC, may grant, on motion of the applicant or on its own
initiative, provisional relief based on the pleading, supporting affidavits
and other documents attached thereto, without prejudice to a final
decision after completion of the hearing which shall be caged within thirty
(30) days from the grant of the provisional relief.
Finally, Section 1 of Rule 19 provides for the suppletory application of the

Rules of Court governing proceedings before the Court of First Instance
then, now the Regional Trial Courts, which are not inconsistent with the
rules of practice and procedure promulgated by the BOC on January 25,
1978.
There is nothing in P.D. No. 217 modifying, much less repeating Section
16 (c) of the Public Service Act, as amended.
It is true that P.D. No. 1874 promulgated on July 21, 1983 amending
Section 2 of P.D. No. 217 expressly authorizes the National
Telecommunications Commission (now the successor of the Board of
Communications) to approve "such amounts for subscriber investments
as applied for provisionally and without the necessity of a hearing; but
shall call a hearing thereon within thirty (30) days thereafter, upon
publication and notice to all parties affected." But such amendment
merely reiterates or confirms paragraph (c) of Section 16 of C.A. No. 146,
as amended, otherwise known as the Public Service Law, and serves
merely to clarify the seeming ambiguity of the repealing clause in Section
3 of P.D. No. 217 to dissipate an doubts on such power of the National
Telecommunications Commission.
The construction of the majority decision of November 25, 1983 of the

word "may" to mean "shall" is too strained, if not tortured.
IV
WE cannot subscribe to the view that the National Telecommunications

Commission should or must promulgate "pertinent rules and regulations
because the existing substantive and procedural laws as well as the rules
promulgated by the Public Service Commission under and pursuant to
the Public Service Law, otherwise known as CA No. 146, as amended,
are more than adequate to determine the reasonability of the amounts of
investment of telephone subscribers, the viability of the company and the
other factors that go into determining such amounts and such viability.
The existing laws and rules on rate-making are more than sufficient for a
proper determination of such amounts of investments of individual
subscribers and the profitability of the venture.
The adequacy of the existing Public Service Law, otherwise known as

C.A. No. 146, as amended, and rules had been demonstrated, because
they have been applied in the following cases involving PLDT:
1. PLDT vs. PSC, G.R. No. L-26762, Aug. 31, 1970, 34

SCRA 609;
2. Republic vs. PLDT, G.R. No. L-18841, Jan. 27, 1969, 26

SCRA 620;
3. PLDT vs. PSC, G.R. Nos. L-24198 & L-24207-10, Dec.

18, 1968, 26 SCRA 427;
4. Republic Telephone Co. vs. PLDT, G.R. No. L-21070;
PLDT vs. Republic Telephone Co., G.R. No. L-21075, both
decided on Sept. 23, 1968, 25 SCRA 80;
5. PLDT vs. Medina, G.R. No. L-24658, April 3, 1968, 23

SCRA 1; and
6. PLDT vs. Medina, G.R. Nos. L-24340-44, July 18, 1967,

20 SCRA 669.
As heretofore stated, as early as January 25, 1978, other pertinent rules

of practice and procedure were promulgated by the then Board of
Communications, now the respondent National Telecommunications
Commission, implementing P.D. No, 217, in addition to the applicable
provisions of the Public Service Law, as amended, and the rules
previously issue by the Public Service Commission (Annex 2 to the
Memo of respondent PLDT filed on August 15, 1983, pp. 147-165, rec.).
Even before 1978, respondent applied the procedure prescribed by the

Public Service Law, as amended, and the rules previously issued by the
Public Service Commission, the NTC predecessor, in several cases
involving similar applications for SIP schedules of Filipino Telephone
Corporation (BOC Case No. 73-064; see BOC decision in said cases
dated December 5, 1974, May 11, 1978, March 15, 1977, Feb. 19, 1976
and Aug. 31, 1978 ? Annexes 3, 4, 4-A, 5, pp. 166-195, rec.).
The majority opinion recognizes that for the last three years, the PLDT
had earned a yearly average net profit of over P100 million and the
existing subscribers have been receiving their corresponding quarterly
dividends on their investments.
It should be stressed that Section 5 of Article XIV of the 1973

Constitution, as amended, expressly directs that "the State shall
encourage equity participation in public utilities by the general public." As
above-stated, the existing individual subscribers of PLDT had been
sharing in the net profits of the company every quarter after the
promulgation of P.D. 217 on June 16, 1973.
The amount that is provisionally approved under the subscriber's

investment plan for PBX/PAEX trunks and for business telephones in
Metro Manila and the provinces, whether new installations or transfers,
appears to be reasonable, including those for the leased lines or outside
local.
To lighten the burden of subscribers, investments may be paid in

installments or under some convenient arrangements which the NTC may
authorize, which is now expressly provided for in Section 1 of P.D. 1874
amending Sec. 6 of P.D. 217.
Section 1 of P.D. 1874 directs that:
Section 1, paragraph 6 of the Presidential Decree No. 217

is hereby amended to read as follows:
6. In any subscriber self-financing plan, the

amount of subscriber self-financing wilt in no
case, exceed fifty per centum (50%) of the
amount which results from dividing the
telephone utility's gross investment in
telephone plant in service by its number of
primary stations in service, both as reported in
the utility's latest audited annual report
rendered he National Telecommunications
Commission; PROVIDED, however, that the
amount payable by the telephone subscriber
may be paid on installment or under such
payment arrangement as the National
Telecommunications Commission may
authorize.
It should be likewise emphasized that pursuant to the mandate of Section

5, Article XIV of the 1973 Constitution, as amended, the law-making
authority, in issuing both P.D. Nos. 217 and 1874, established the all-
important policy of making available on regular and uninterrupted basis
the telephone service because it is
a crucial element in the conduct of business activity ... and

is essential for the smooth and efficient function of industry,
... efficient telephone service contributes directly to national

development by facilitating trade and commerce;
... the telephone industry is one of the most highly capital

intensive industries;
... the telephone industry has fundamentally different

financing characteristics from other utilities in that capital
requirements per telephone unit installed increase as the
number of customers serviced also increases instead of
decreasing in cost per unit as in power and water utilities;
... continued reliance on the traditional sources of capital

funds through foreign and domestic borrowing and through
public ownership of common capital stock will result in a
high cost of capital heavy cash requirements for
amortization and thus eventually in higher effective cost of
telephone service to subscribers;
... the subscribers to telephone service tend to be among

the residents of urban areas and among the relatively
higher income segment of the population;
... it is in the interest of the national economy to encourage

savings and to place these savings in productive
enterprises and
... it is the announced policies of the government to

encourage the spreading out of ownership in public utilities
(see Whereases of P.D. 217; emphasis supplied).
P.D. No. 217 further states as the basic policies of the State concerning
the telephone industry "in the interest of social, economic and general
well-being of the people ...
1. The attainment of efficient telephone service for as wide

an area as possible at the lowest reasonable cost to the
subscriber;
2. The expansion of telephone service shall be financed

through an optimal combination of domestic and foreign
sources of financing and an optimal combination of debt
and equity funds so as to minimize the aggregate cost of
capital of telephone utilities;
3. Consistent with the declared policy of the State to attain

widespread ownership of public utilities obtained from
ownership funds shall be raised from a broad base of
investors, involving as large a number of individual
investors as may be possible;
4. In line with the objective of spreading ownership among a

wide base of the people, the concept of telephone
subscriber self-financing is hereby adopted whereby a
telephone subscriber finances part of the capital
investments in telephone installations through the purchase
of stocks, whether common or preferred stock, of the
telephone company;
5. As part of any subscriber self-financing plan, when the

issuance of preferred stock is contemplated, it is required
that the subscriber be assured, in all cases of a fixed
annual income from his investment and that these preferred
capital stocks be convertible into common shares, after a
reasonable period and under reasonable terms, at the
option of the preferred stockholder; and
6. In any subscriber self-financing plan, the amount of

subscriber self-financing wig, in no case, exceed fifty per
centum (50%) of the cost of the installed telephone line, as
may be determined from time to time by the regulatory
bodies of the State.
The same policies and objectives are substantially re-stated and

capsulized in the three Whereases of P.D. No. 1874 amending P.D. No.
217 as pointed out in the basic policies aforestated in P.D. No. 217 that
the cost per telephone unit increases in proportion to the increase in the
number of customers served; and that foreign borrowing will impose
heavy cash requirements for amortizations of such foreign loans which
would result in the higher effective costs of telephone service to
subscribers and ultimately would be a heavy drain on our dollar reserves,
which will result in our inability to meet our other foreign commitments
and mark the image of the Republic of the Philippines in international
trade relations. Thus, P.D. No. 217 stresses that in the interest of the
national economy it is essential to encourage savings and to place these
savings (subscriber's investments) in productive enterprises.
PLDT is profitable for the subscribers-investors as shown by its net profit

and the dividends received quarterly by the existing subscribers.
There is no showing ? not even an allegation ? that the net profits

realized by PLDT all these years have been dissipated and not plowed
back into the firm to improve its service.
But the rising cost of materials and labor needed to improve the PLDT
service, aggravated by the devaluation of our currency, all the more justify
the revised SIP schedule approved by the respondent NTC.
The approved revised SIP schedule, which appears reasonable and fair
is herein reproduced:
REVISED SIP SCHEDULE
Revised SIP Rates
Service Category
Metro Provincia
Manila l
I. New
Installation
s?
1. P5,000 P3,000
PBX/PABX
Trunk
2. Phone:
Party line 2,000 1,500
3. Phone:
Party line 900 800
4. Leased 2,500 2,500

line
5. Tie trunk 2,500 2,500

or tie line
6. Outside 2,500 2,500
local
II. Transfers
?
1. 1,500 1,200
PBX/PABX
2. Phone:
Single line 800 600
Party line 600 500
3.
Residential
Phone:
Single line 600 500
Party line 500 300
4. Leased 800 800

line
5. Tie trunk 800 800

or tie line
6. Outside 800 800

local
(pp. 34-35, rec.).

With the dividends that will be received quarterly under the revised SIP schedule,
the subscribers (whether of phone installations for business with or without trunk
lines, as wen as transfers of the same; or of residential phones whether single or
party line as well as transfers of the same), will recover their investments after
some years and will thereafter remain stockholders and part-owners of PLDT. All
the subscribers therefore, are assured not only of profits from but also
preservation of, their investments, which are not donations to PLDT.
There are always two sides ? sometimes more ? to a case or proposition or

issue. There are many cases decided by this Court where this Court had
reconsidered Its decisions and even reversed Itself, conformably to the
environmental facts and the applicable law.
After a re-study of the facts and the law, illuminated by mutual exchange of views
the members of the Court may and do change their minds.
To repeat, the decision of November 25, 1983 was not a

unanimous decision for it has the concurrence of only nine (9)
members of the Court, because three (3) took no part and one (1)
reserved his vote (p. 232, rec.).
WHEREFORE, THE DECISION OF NOVEMBER 25, 1983 SHOULD BE AS IT IS

HEREBY RECONSIDERED AND SET ASIDE AND THE PETTION IS HEREBY
DISMISSED. NO COSTS.
SO ORDERED.
Concepcion, Jr., Guerrero, Escolin, De la Fuente and Cuevas, JJ., concur.
Aquino and Plana, JJ., concur in the result.
Fernando, C.J., took no part.
Separate Opinions
TEEHANKEE, J., dissenting:
I join the dissents of Justices Abad Santos and Relova. I only wish to add that
there has been a departure here from the Court's usual practice and rules (cf.
Rule 52, sec. 2; Rule 51, sec. 1; and Rule 56, Secs. 1 and 11) of setting the case
for rehearing and hearing the parties in oral argument when a new majority
(because of a change of votes or new members or for whatever reason) is
inclined to reconsider and overturn the original majority; more so, on a second
motion for reconsideration, the first motion for reconsideration having been
denied without a dissenting vote and the parties not having been previously
heard in oral argument.
GUTIERREZ, JR., J., separate opinion:
My concurrence in Mr. Justice Makasiar's ponencia is not without certain

misgivings. I agree with the Court's views on the powers of the National
Telecommunications Commission, the applicability of existing rules and
regulations, and the policy declarations in P.D. Nos. 217 and 1874. However,
while now convinced that the increase in mandatory investments for subscribers
is based on law and that there is no showing of arbitrariness in the law's
implementation, I must confess that I see no justification for the continued
inefficient services rendered by the respondent telephone company. When the
Court was deliberating on the motion for reconsideration, my own residential
telephone was out of order. And I believe that our experiences in our
neighborhood do not represent isolated cases. I have yet to hear from or about
satisfied PLDT customers.
My point is ?increased rates and increases in the "subscribers' self-financing

plan" must be matched by equivalent and demonstrably improved telephone
service. More than its duty to increase rates and subscribers' fees whenever
warranted, the respondent Commission has the statutory and greater obligation
to supervise "the attainment of efficient telephone service for as wide an area as
possible at the lowest reasonable cost to the subscribers."
I am aware that almost all major or components of our telephone system must be
imported from foreign sources. Since the Philippine peso is now worth one
American nickel the cost of services based on imported materials must increase.
Loans contracted when the foreign exchange rate was not so disadvantageous
now require double or treble amortizations in depreciated pesos. The Court
cannot assume the role of King Canute. Only the financial experts in the political
departments can return the peso to a respectable value. Moreover, it is indeed to
the nation's advantage to look for local capital sources instead of resorting to
more foreign borrowings.
I must stress, however, that consumers would not mind paying reasonable
increases if they get satisfactory services. The respondent telephone company
has yet to solve this elementary and glaringly obvious problem. Pinpointing the
cause and applying the solution should be the company's number one concern.
ABAD SANTOS, J., dissenting:

I vote to deny the second Motion for Reconsideration. I am amazed that the
decision which was promulgated as recently as November 25, 1983, with no
dissenting opinion to dilute its acceptability should now be reconsidered. My
amazement is heightened by the fact that when the case was discussed on July
26, 1984, I had the impression that the motion was doomed so that a request to
defer action on it would have met the same fate had not the request been put on
a pag-bigyan basis.
The case involves a simple problem of statutory construction ? that of Section 2

of Presidential Decree No. 217. It reads as follows:
The Department of Public Works, Transportation and Commissions,

through its Board of Communications and/or appropriate agency
shall see to it that the herein declared policies for the telephone
industry are immediately implemented and for this purpose,
pertinent rules and regulations may be promulgated.
The issue is whether or not the National Telecommunications (NTC) must first
promulgate the rules and regulations mentioned in the decree before it can
approve the Subscriber Investment Plan (SIP) of private respondent Philippine
Long Distance Telephone Co. (PLDT).
The decision, without any dissenting opinion, sustained the petitioner's

contention that it is the duty of NTC to first Promulgate rules and regulations.
The resolution, which is not unanimous, does not subscribe to the view that the
NTC should or must promulgate rules and regulations because, it is said, the
decree must be given its ordinary meaning; the word used is the permissive
"may" and not the mandatory "shall The non-unanimous resolution thus relies on
the canons index animi sermo est (speech is the indication of intent) and a verba
legis non est recedendum (from the words of the statute there should be no
departure).
Any lawyer of modest sophistication knows that canons of statutory construction

march in pairs of opposite. Thus with the canons above mentioned we have the
following opposite: verba intention, non e contra, debent incservice (words ought
to be more subservient to the intent and not the intent to the words). Sutherland
explains the limits of literalism thus:
The literal interpretation of the words of an act should not prevail if

it creates a result contrary to the apparent intention of the
legislature and if the words are sufficiently flexible to admit of a
construction which will effectuate the legislative intention The
intention prevails over the letter, and the letter must if possible be
read so 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 obvious purpose of the law should not
be sacrificed to a literal interpretation of such words. Thus words or
clauses may be enlarged or restricted to harmonize with other
provisions of an act. The particular inquiry is not what is the
abstract force of the words or what they may comprehend, but in
what sense were they intended to be understood or what
understanding do they convey as used in the particular act. (Vol. 2A
Statutory Construction, pp. 65-66 [1972].)
It is an elementary rule in statutory construction that the word "may" in a statute

is permissive while the word "shall" is mandatory. The rule, however, is not
absolute. Thus Professor Luis J. Gonzaga states:
According to Black, 'Where the statute provides for the doing of

some act which is required by justice or public duty, or where it
invests a public body, municipality or officer with power and
authority to take some action which concerns the public interest or
rights of individuals, the permissive language win be construed as
mandatory and the execution of the power may be insisted upon as
a duty. Thus, where the statute provided that 'the commissioners
may take into consideration the enhanced value to the remaining
land of an owner whose land was taken for highway purposes it
was held that the word may should be given a mandatory meaning
and is the same as the word 'shall', since it directs the doing of a
thing for the sake of justice or the public good. Similarly, a statute
by which municipal corporations are 'authorized and empowered to
provide for the support of indigent persons within their limits or to
make public improvements as to open and repair streets, remove
obstructions from highways, construct sewers and the like, are to
be construed as mandatory although they only purport to grant
permission or authority since the public has an interest in such
matters and the grant of authority is therefore equivalent to the
imposition of duty." (Statutes and their Construction, pp. 98-99
[1969].)
In the case at bar compelling reasons dictate that the provision of the decree
should be construed as mandatory mother than merely directory. They are stated
in the unanimous decision as follows:
1. P.D. 217 deals with matters so alien innovative and untested

telephone facility.
diametrically runs counter to the split and intention, if not the
purpose of P.D. 217. It may even be gained that as long as the
Optimum number of individuals may enjoy telephone service, there
is no station on the profitability of such companies. Hence, while

government itself. As may clearly be after how can the Decision be
said to have assured that most of the population will enjoy

all NTC could have simply ruled that the petition in G.R. No. 618R2
The above reasons also rebut the contention in the non-unanimous resolution
that the existing substantive and procedure laws as well as the rules promulgated
by the Public Service Commission are more than adequate to determine the
reasonableness of the amounts of investment of telephone subscribers, etc.
The PLDT's SIP is an unreasonable imposition by a utility company on a captive

public. The injury is compounded by the fact that although the company makes
mega profits its service, to use a McEnroe expression, is the pits.
Melencio-Herrera, J., concur.
RELOVA, J., dissenting:

For the reasons stated in my ponencia of November 25, 1983, I vote to DENY
the second motion for reconsideration, dated May 2, 1984, filed by private
respondent Philippine Long Distance Telephone Company, through counsel. The
argument advanced in the motion that Presidential Decree No. 217 was
amended by Presidential Decree No. 1874 which was issued on July 21, 1983, is
without merit. Section 4 of said PD 1874 specifically provides that "all decisions
or orders of the National Telecommunications Commission heretofore issued
approving subscribers investment plans or revisions thereof, are hereby declared
valid and legal in all respects, excepting such decisions or orders as, on the date
of this decree, are pending review by the Supreme Court." The case at bar was
filed with this Court on March 3, 1983 or before the issuance of Presidential
Decree No. 1874.
Besides, Section 1 of Presidential Decree No. 217 which was promulgated on

June 16, 1973 declares that "in the interest of the social, economic and general
well being of the people, the State hereby adopts the following basic policies of
the telephone industry:
1. The attainment of efficient telephone service for as wide an area as possible at

the lowest reasonable cost to the subsciber.
xxx xxx xxx
Separate Opinions
TEEHANKEE, J., dissenting:
I join the dissents of Justices Abad Santos and Relova. I only wish to add that
there has been a departure here from the Court's usual practice and rules (cf.
Rule 52, sec. 2; Rule 51, sec. 1; and Rule 56, Secs. 1 and 11) of setting the case
for rehearing and hearing the parties in oral argument when a new majority
(because of a change of votes or new members or for whatever reason) is
inclined to reconsider and overturn the original majority; more so, on a second
motion for reconsideration, the first motion for reconsideration having been
denied without a dissenting vote and the parties not having been previously
heard in oral argument.
GUTIERREZ, JR., J., separate opinion:
My concurrence in Mr. Justice Makasiar's ponencia is not without certain

misgivings. I agree with the Court's views on the powers of the National
Telecommunications Commission, the applicability of existing rules and
regulations, and the policy declarations in P.D. Nos. 217 and 1874. However,
while now convinced that the increase in mandatory investments for subscribers
is based on law and that there is no showing of arbitrariness in the law's
implementation, I must confess that I see no justification for the continued
inefficient services rendered by the respondent telephone company. When the
Court was deliberating on the motion for reconsideration, my own residential
telephone was out of order. And I believe that our experiences in our
neighborhood do not represent isolated cases. I have yet to hear from or about
satisfied PLDT customers.
My point is ?increased rates and increases in the "subscribers' self-financing

plan" must be matched by equivalent and demonstrably improved telephone
service. More than its duty to increase rates and subscribers' fees whenever
warranted, the respondent Commission has the statutory and greater obligation
to supervise "the attainment of efficient telephone service for as wide an area as
possible at the lowest reasonable cost to the subscribers."
I am aware that almost all major or components of our telephone system must be
imported from foreign sources. Since the Philippine peso is now worth one
American nickel the cost of services based on imported materials must increase.
Loans contracted when the foreign exchange rate was not so disadvantageous
now require double or treble amortizations in depreciated pesos. The Court
cannot assume the role of King Canute. Only the financial experts in the political
departments can return the peso to a respectable value. Moreover, it is indeed to
the nation's advantage to look for local capital sources instead of resorting to
more foreign borrowings.
I must stress, however, that consumers would not mind paying reasonable
increases if they get satisfactory services. The respondent telephone company
has yet to solve this elementary and glaringly obvious problem. Pinpointing the
cause and applying the solution should be the company's number one concern.
ABAD SANTOS, J., dissenting:
I vote to deny the second Motion for Reconsideration. I am amazed that the
decision which was promulgated as recently as November 25, 1983, with no
dissenting opinion to dilute its acceptability should now be reconsidered. My
amazement is heightened by the fact that when the case was discussed on July
26, 1984, I had the impression that the motion was doomed so that a request to
defer action on it would have met the same fate had not the request been put on
a pag-bigyan basis.
The case involves a simple problem of statutory construction ? that of Section 2

of Presidential Decree No. 217. It reads as follows:
The Department of Public Works, Transportation and Commissions,
through its Board of Communications and/or appropriate agency
shall see to it that the herein declared policies for the telephone
industry are immediately implemented and for this purpose,
pertinent rules and regulations may be promulgated.
The issue is whether or not the National Telecommunications (NTC) must first
promulgate the rules and regulations mentioned in the decree before it can
approve the Subscriber Investment Plan (SIP) of private respondent Philippine
Long Distance Telephone Co. (PLDT).
The decision, without any dissenting opinion, sustained the petitioner's

contention that it is the duty of NTC to first Promulgate rules and regulations.
The resolution, which is not unanimous, does not subscribe to the view that the
NTC should or must promulgate rules and regulations because, it is said, the
decree must be given its ordinary meaning; the word used is the permissive
"may" and not the mandatory "shall The non-unanimous resolution thus relies on
the canons index animi sermo est (speech is the indication of intent) and a verba
legis non est recedendum (from the words of the statute there should be no
departure).
Any lawyer of modest sophistication knows that canons of statutory construction

march in pairs of opposite. Thus with the canons above mentioned we have the
following opposite: verba intention, non e contra, debent incservice (words ought
to be more subservient to the intent and not the intent to the words). Sutherland
explains the limits of literalism thus:
The literal interpretation of the words of an act should not prevail if

it creates a result contrary to the apparent intention of the
legislature and if the words are sufficiently flexible to admit of a
construction which will effectuate the legislative intention The
intention prevails over the letter, and the letter must if possible be
read so 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 obvious purpose of the law should not
be sacrificed to a literal interpretation of such words. Thus words or
clauses may be enlarged or restricted to harmonize with other
provisions of an act. The particular inquiry is not what is the
abstract force of the words or what they may comprehend, but in
what sense were they intended to be understood or what
understanding do they convey as used in the particular act. (Vol. 2A
Statutory Construction, pp. 65-66 [1972].)
It is an elementary rule in statutory construction that the word "may" in a statute
is permissive while the word "shall" is mandatory. The rule, however, is not
absolute. Thus Professor Luis J. Gonzaga states:
According to Black, 'Where the statute provides for the doing of

some act which is required by justice or public duty, or where it
invests a public body, municipality or officer with power and
authority to take some action which concerns the public interest or
rights of individuals, the permissive language win be construed as
mandatory and the execution of the power may be insisted upon as
a duty. Thus, where the statute provided that 'the commissioners
may take into consideration the enhanced value to the remaining
land of an owner whose land was taken for highway purposes it
was held that the word may should be given a mandatory meaning
and is the same as the word 'shall', since it directs the doing of a
thing for the sake of justice or the public good. Similarly, a statute
by which municipal corporations are 'authorized and empowered to
provide for the support of indigent persons within their limits or to
make public improvements as to open and repair streets, remove
obstructions from highways, construct sewers and the like, are to
be construed as mandatory although they only purport to grant
permission or authority since the public has an interest in such
matters and the grant of authority is therefore equivalent to the
imposition of duty." (Statutes and their Construction, pp. 98-99
[1969].)
In the case at bar compelling reasons dictate that the provision of the decree
should be construed as mandatory mother than merely directory. They are stated
in the unanimous decision as follows:
1. P.D. 217 deals with matters so alien innovative and untested

telephone facility.
diametrically runs counter to the split and intention, if not the
purpose of P.D. 217. It may even be gained that as long as the
Optimum number of individuals may enjoy telephone service, there
is no station on the profitability of such companies. Hence, while

government itself. As may clearly be after how can the Decision be
said to have assured that most of the population will enjoy

all NTC could have simply ruled that the petition in G.R. No. 618R2
The above reasons also rebut the contention in the non-unanimous resolution
that the existing substantive and procedure laws as well as the rules promulgated
by the Public Service Commission are more than adequate to determine the
reasonableness of the amounts of investment of telephone subscribers, etc.
The PLDT's SIP is an unreasonable imposition by a utility company on a captive

public. The injury is compounded by the fact that although the company makes
mega profits its service, to use a McEnroe expression, is the pits.
RELOVA, J., dissenting:
For the reasons stated in my ponencia of November 25, 1983, I vote to DENY
the second motion for reconsideration, dated May 2, 1984, filed by private
respondent Philippine Long Distance Telephone Company, through counsel. The
argument advanced in the motion that Presidential Decree No. 217 was
amended by Presidential Decree No. 1874 which was issued on July 21, 1983, is
without merit. Section 4 of said PD 1874 specifically provides that "all decisions
or orders of the National Telecommunications Commission heretofore issued
approving subscribers investment plans or revisions thereof, are hereby declared
valid and legal in all respects, excepting such decisions or orders as, on the date
of this decree, are pending review by the Supreme Court." The case at bar was
filed with this Court on March 3, 1983 or before the issuance of Presidential
Decree No. 1874.
Besides, Section 1 of Presidential Decree No. 217 which was promulgated on

June 16, 1973 declares that "in the interest of the social, economic and general
well being of the people, the State hereby adopts the following basic policies of
the telephone industry:
1. The attainment of efficient telephone service for as wide an area as possible at

the lowest reasonable cost to the subsciber.

SUPREME COURT
Manila
SECOND DIVISION
G.R. No. 117188 August 7, 1997
LOYOLA GRAND VILLAS HOMEOWNERS (SOUTH) ASSOCIATION, INC.,

petitioner,
vs.
HON. COURT OF APPEALS, HOME INSURANCE AND GUARANTY
CORPORATION, EMDEN ENCARNACION and HORATIO AYCARDO,
respondents.
ROMERO, J.:
May the failure of a corporation to file its by-laws within one month from the date
of its incorporation, as mandated by Section 46 of the Corporation Code, result in
its automatic dissolution?
This is the issue raised in this petition for review on certiorari of the Decision 1 of
the Court of Appeals affirming the decision of the Home Insurance and Guaranty
Corporation (HIGC). This quasi-judicial body recognized Loyola Grand Villas
Homeowners Association (LGVHA) as the sole homeowners' association in
Loyola Grand Villas, a duly registered subdivision in Quezon City and Marikina
City that was owned and developed by Solid Homes, Inc. It revoked the
certificates of registration issued to Loyola Grand Villas homeowners (North)
Association Incorporated (the North Association for brevity) and Loyola Grand
Villas Homeowners (South) Association Incorporated (the South Association).
LGVHAI was organized on February 8, 1983 as the association of homeowners

and residents of the Loyola Grand Villas. It was registered with the Home
Financing Corporation, the predecessor of herein respondent HIGC, as the sole
homeowners' organization in the said subdivision under Certificate of
Registration No. 04-197. It was organized by the developer of the subdivision
and its first president was Victorio V. Soliven, himself the owner of the developer.
For unknown reasons, however, LGVHAI did not file its corporate by-laws.
Sometime in 1988, the officers of the LGVHAI tried to register its by-laws. They
failed to do so. 2 To the officers' consternation, they discovered that there were
two other organizations within the subdivision ? the North Association and the
South Association. According to private respondents, a non-resident and Soliven
himself, respectively headed these associations. They also discovered that these
associations had five (5) registered homeowners each who were also the
incorporators, directors and officers thereof. None of the members of the LGVHAI
was listed as member of the North Association while three (3) members of
LGVHAI were listed as members of the South Association. 3 The North
Association was registered with the HIGC on February 13, 1989 under Certificate
of Registration No. 04-1160 covering Phases West II, East III, West III and East
IV. It submitted its by-laws on December 20, 1988.
In July, 1989, when Soliven inquired about the status of LGVHAI, Atty. Joaquin A.
Bautista, the head of the legal department of the HIGC, informed him that
LGVHAI had been automatically dissolved for two reasons. First, it did not submit
its by-laws within the period required by the Corporation Code and, second, there
was non-user of corporate charter because HIGC had not received any report on
the association's activities. Apparently, this information resulted in the registration
of the South Association with the HIGC on July 27, 1989 covering Phases West I,
East I and East II. It filed its by-laws on July 26, 1989.
These developments prompted the officers of the LGVHAI to lodge a complaint

with the HIGC. They questioned the revocation of LGVHAI's certificate of
registration without due notice and hearing and concomitantly prayed for the
cancellation of the certificates of registration of the North and South Associations
by reason of the earlier issuance of a certificate of registration in favor of
LGVHAI.
On January 26, 1993, after due notice and hearing, private respondents obtained
a favorable ruling from HIGC Hearing Officer Danilo C. Javier who disposed of
HIGC Case No. RRM-5-89 as follows:
WHEREFORE, judgment is hereby rendered recognizing the Loyola
Grand Villas Homeowners Association, Inc., under Certificate of
Registration No. 04-197 as the duly registered and existing homeowners
association for Loyola Grand Villas homeowners, and declaring the
Certificates of Registration of Loyola Grand Villas Homeowners (North)
Association, Inc. and Loyola Grand Villas Homeowners (South)
Association, Inc. as hereby revoked or cancelled; that the receivership be
terminated and the Receiver is hereby ordered to render an accounting
and turn-over to Loyola Grand Villas Homeowners Association, Inc., all
assets and records of the Association now under his custody and
possession.
The South Association appealed to the Appeals Board of the HIGC. In its
Resolution of September 8, 1993, the Board 4 dismissed the appeal for lack of
merit.
Rebuffed, the South Association in turn appealed to the Court of Appeals, raising
two issues. First, whether or not LGVHAI's failure to file its by-laws within the
period prescribed by Section 46 of the Corporation Code resulted in the
automatic dissolution of LGVHAI. Second, whether or not two homeowners'
associations may be authorized by the HIGC in one "sprawling subdivision."
However, in the Decision of August 23, 1994 being assailed here, the Court of
Appeals affirmed the Resolution of the HIGC Appeals Board.
In resolving the first issue, the Court of Appeals held that under the Corporation
Code, a private corporation commences to have corporate existence and juridical
personality from the date the Securities and Exchange Commission (SEC) issues
a certificate of incorporation under its official seal. The requirement for the filing
of by-laws under Section 46 of the Corporation Code within one month from
official notice of the issuance of the certificate of incorporation presupposes that
it is already incorporated, although it may file its by-laws with its articles of
incorporation. Elucidating on the effect of a delayed filing of by-laws, the Court of
Appeals said:
We also find nothing in the provisions cited by the petitioner, i.e., Section
46 and 22, Corporation Code, or in any other provision of the Code and
other laws which provide or at least imply that failure to file the by-laws
results in an automatic dissolution of the corporation. While Section 46, in
prescribing that by-laws must be adopted within the period prescribed
therein, may be interpreted as a mandatory provision, particularly because
of the use of the word "must," its meaning cannot be stretched to support
the argument that automatic dissolution results from non-compliance.
We realize that Section 46 or other provisions of the Corporation Code are

silent on the result of the failure to adopt and file the by-laws within the
required period. Thus, Section 46 and other related provisions of the
Corporation Code are to be construed with Section 6 (1) of P.D. 902-A.
This section empowers the SEC to suspend or revoke certificates of
registration on the grounds listed therein. Among the grounds stated is the
failure to file by-laws (see also II Campos: The Corporation Code, 1990
ed., pp. 124-125). Such suspension or revocation, the same section
provides, should be made upon proper notice and hearing. Although P.D.
902-A refers to the SEC, the same principles and procedures apply to the
public respondent HIGC as it exercises its power to revoke or suspend the
certificates of registration or homeowners association. (Section 2 [a], E.O.
535, series 1979, transferred the powers and authorities of the SEC over
homeowners associations to the HIGC.)
We also do not agree with the petitioner's interpretation that Section 46,
Corporation Code prevails over Section 6, P.D. 902-A and that the latter is
invalid because it contravenes the former. There is no basis for such
interpretation considering that these two provisions are not inconsistent
with each other. They are, in fact, complementary to each other so that
one cannot be considered as invalidating the other.
The Court of Appeals added that, as there was no showing that the registration of
LGVHAI had been validly revoked, it continued to be the duly registered
homeowners' association in the Loyola Grand Villas. More importantly, the South
Association did not dispute the fact that LGVHAI had been organized and that,
thereafter, it transacted business within the period prescribed by law.
On the second issue, the Court of Appeals reiterated its previous ruling 5 that the
HIGC has the authority to order the holding of a referendum to determine which
of two contending associations should represent the entire community, village or
subdivision.
Undaunted, the South Association filed the instant petition for review on
certiorari. It elevates as sole issue for resolution the first issue it had raised
before the Court of Appeals, i.e., whether or not the LGVHAI's failure to file its by-
laws within the period prescribed by Section 46 of the Corporation Code had the
effect of automatically dissolving the said corporation.
Petitioner contends that, since Section 46 uses the word "must" with respect to
the filing of by-laws, noncompliance therewith would result in "self-extinction"
either due to non-occurrence of a suspensive condition or the occurrence of a
resolutory condition "under the hypothesis that (by) the issuance of the certificate
of registration alone the corporate personality is deemed already formed." It
asserts that the Corporation Code provides for a "gradation of violations of
requirements." Hence, Section 22 mandates that the corporation must be
formally organized and should commence transaction within two years from date
of incorporation. Otherwise, the corporation would be deemed dissolved. On the
other hand, if the corporation commences operations but becomes continuously
inoperative for five years, then it may be suspended or its corporate franchise
revoked.
Petitioner concedes that Section 46 and the other provisions of the Corporation
Code do not provide for sanctions for non-filing of the by-laws. However, it insists
that no sanction need be provided "because the mandatory nature of the
provision is so clear that there can be no doubt about its being an essential
attribute of corporate birth." To petitioner, its submission is buttressed by the facts
that the period for compliance is "spelled out distinctly;" that the certification of
the SEC/HIGC must show that the by-laws are not inconsistent with the Code,
and that a copy of the by-laws "has to be attached to the articles of
incorporation." Moreover, no sanction is provided for because "in the first place,
no corporate identity has been completed." Petitioner asserts that "non-provision
for remedy or sanction is itself the tacit proclamation that non-compliance is fatal
and no corporate existence had yet evolved," and therefore, there was "no need
to proclaim its demise." 6 In a bid to convince the Court of its arguments,
petitioner stresses that:
. . . the word MUST is used in Sec. 46 in its universal literal meaning and
corollary human implication ? its compulsion is integrated in its very
essence ? MUST is always enforceable by the inevitable consequence ?
that is, "OR ELSE". The use of the word MUST in Sec. 46 is no
exception ? it means file the by-laws within one month after notice of
issuance of certificate of registration OR ELSE. The OR ELSE, though not
specified, is inextricably a part of MUST . Do this or if you do not you are
"Kaput". The importance of the by-laws to corporate existence compels
such meaning for as decreed the by-laws is "the government" of the
corporation. Indeed, how can the corporation do any lawful act as such
without by-laws. Surely, no law is indeed to create chaos. 7
Petitioner asserts that P.D. No. 902-A cannot exceed the scope and power of the
Corporation Code which itself does not provide sanctions for non-filing of by-
laws. For the petitioner, it is "not proper to assess the true meaning of Sec.
46 . . . on an unauthorized provision on such matter contained in the said
decree."
In their comment on the petition, private respondents counter that the

requirement of adoption of by-laws is not mandatory. They point to P.D. No. 902-
A as having resolved the issue of whether said requirement is mandatory or
merely directory. Citing Chung Ka Bio v. Intermediate Appellate Court, 8 private
respondents contend that Section 6(I) of that decree provides that non-filing of
by-laws is only a ground for suspension or revocation of the certificate of
registration of corporations and, therefore, it may not result in automatic
dissolution of the corporation. Moreover, the adoption and filing of by-laws is a
condition subsequent which does not affect the corporate personality of a
corporation like the LGVHAI. This is so because Section 9 of the Corporation
Code provides that the corporate existence and juridical personality of a
corporation begins from the date the SEC issues a certificate of incorporation
under its official seal. Consequently, even if the by-laws have not yet been filed, a
corporation may be considered a de facto corporation. To emphasize the fact the
LGVHAI was registered as the sole homeowners' association in the Loyola
Grand Villas, private respondents point out that membership in the LGVHAI was
an "unconditional restriction in the deeds of sale signed by lot buyers."
In its reply to private respondents' comment on the petition, petitioner reiterates

its argument that the word " must" in Section 46 of the Corporation Code is
mandatory. It adds that, before the ruling in Chung Ka Bio v. Intermediate
Appellate Court could be applied to this case, this Court must first resolve the
issue of whether or not the provisions of P.D. No. 902-A prescribing the rules and
regulations to implement the Corporation Code can "rise above and change" the
substantive provisions of the Code.
The pertinent provision of the Corporation Code that is the focal point of
controversy in this case states:
Sec. 46. Adoption of by-laws. ? Every corporation formed under this Code,
must within one (1) month after receipt of official notice of the issuance of
its certificate of incorporation by the Securities and Exchange
Commission, adopt a code of by-laws for its government not inconsistent
with this Code. For the adoption of by-laws by the corporation, the
affirmative vote of the stockholders representing at least a majority of the
outstanding capital stock, or of at least a majority of the members, in the
case of non-stock corporations, shall be necessary. The by-laws shall be
signed by the stockholders or members voting for them and shall be kept
in the principal office of the corporation, subject to the stockholders or
members voting for them and shall be kept in the principal office of the
corporation, subject to inspection of the stockholders or members during
office hours; and a copy thereof, shall be filed with the Securities and
Exchange Commission which shall be attached to the original articles of
incorporation.
Notwithstanding the provisions of the preceding paragraph, by-laws may

be adopted and filed prior to incorporation; in such case, such by-laws
shall be approved and signed by all the incorporators and submitted to the
Securities and Exchange Commission, together with the articles of
incorporation.
In all cases, by-laws shall be effective only upon the issuance by the
Securities and Exchange Commission of a certification that the by-laws
are not inconsistent with this Code.
The Securities and Exchange Commission shall not accept for filing the
by-laws or any amendment thereto of any bank, banking institution,
building and loan association, trust company, insurance company, public
utility, educational institution or other special corporations governed by
special laws, unless accompanied by a certificate of the appropriate
government agency to the effect that such by-laws or amendments are in
accordance with law.
As correctly postulated by the petitioner, interpretation of this provision of law

begins with the determination of the meaning and import of the word "must" in
this section Ordinarily, the word "must" connotes an imperative act or operates to
impose a duty which may be enforced. 9 It is synonymous with "ought" which
connotes compulsion or mandatoriness. 10 However, the word "must" in a statute,
like "shall," is not always imperative. It may be consistent with an exercise of
discretion. In this jurisdiction, the tendency has been to interpret "shall" as the
context or a reasonable construction of the statute in which it is used demands or
requires. 11 This is equally true as regards the word "must." Thus, if the languages
of a statute considered as a whole and with due regard to its nature and object
reveals that the legislature intended to use the words "shall" and "must" to be
directory, they should be given that meaning. 12
In this respect, the following portions of the deliberations of the Batasang

Pambansa No. 68 are illuminating:
MR. FUENTEBELLA. Thank you, Mr. Speaker.
On page 34, referring to the adoption of by-laws, are we made to

understand here, Mr. Speaker, that by-laws must immediately be filed
within one month after the issuance? In other words, would this be
mandatory or directory in character?
MR. MENDOZA. This is mandatory.
MR. FUENTEBELLA. It being mandatory, Mr. Speaker, what would be the

effect of the failure of the corporation to file these by-laws within one
month?
MR. MENDOZA. There is a provision in the latter part of the Code which
identifies and describes the consequences of violations of any provision of
this Code. One such consequences is the dissolution of the corporation for
its inability, or perhaps, incurring certain penalties.
MR. FUENTEBELLA. But it will not automatically amount to a dissolution

of the corporation by merely failing to file the by-laws within one month.
Supposing the corporation was late, say, five days, what would be the
mandatory penalty?
MR. MENDOZA. I do not think it will necessarily result in the automatic or
ipso facto dissolution of the corporation. Perhaps, as in the case, as you
suggested, in the case of El Hogar Filipino where a quo warranto action is
brought, one takes into account the gravity of the violation committed. If
the by-laws were late ? the filing of the by-laws were late by, perhaps, a
day or two, I would suppose that might be a tolerable delay, but if they are
delayed over a period of months ? as is happening now ? because of the
absence of a clear requirement that by-laws must be completed within a
specified period of time, the corporation must suffer certain
consequences. 13
This exchange of views demonstrates clearly that automatic corporate dissolution

for failure to file the by-laws on time was never the intention of the legislature.
Moreover, even without resorting to the records of deliberations of the Batasang
Pambansa, the law itself provides the answer to the issue propounded by
petitioner.
Taken as a whole and under the principle that the best interpreter of a statute is
the statute itself (optima statuli interpretatix est ipsum statutum), 14 Section 46
aforequoted reveals the legislative intent to attach a directory, and not mandatory,
meaning for the word "must" in the first sentence thereof. Note should be taken
of the second paragraph of the law which allows the filing of the by-laws even
prior to incorporation. This provision in the same section of the Code rules out
mandatory compliance with the requirement of filing the by-laws "within one (1)
month after receipt of official notice of the issuance of its certificate of
incorporation by the Securities and Exchange Commission." It necessarily follows
that failure to file the by-laws within that period does not imply the "demise" of the
corporation. By-laws may be necessary for the "government" of the corporation
but these are subordinate to the articles of incorporation as well as to the
Corporation Code and related statutes. 15 There are in fact cases where by-laws
are unnecessary to corporate existence or to the valid exercise of corporate
powers, thus:
In the absence of charter or statutory provisions to the contrary, by-laws

are not necessary either to the existence of a corporation or to the valid
exercise of the powers conferred upon it, certainly in all cases where the
charter sufficiently provides for the government of the body; and even
where the governing statute in express terms confers upon the corporation
the power to adopt by-laws, the failure to exercise the power will be
ascribed to mere nonaction which will not render void any acts of the
corporation which would otherwise be valid. 16 (Emphasis supplied.)
As Fletcher aptly puts it:
It has been said that the by-laws of a corporation are the rule of its life,
and that until by-laws have been adopted the corporation may not be able
to act for the purposes of its creation, and that the first and most important
duty of the members is to adopt them. This would seem to follow as a
matter of principle from the office and functions of by-laws. Viewed in this
light, the adoption of by-laws is a matter of practical, if not one of legal,
necessity. Moreover, the peculiar circumstances attending the formation of
a corporation may impose the obligation to adopt certain by-laws, as in the
case of a close corporation organized for specific purposes. And the
statute or general laws from which the corporation derives its corporate
existence may expressly require it to make and adopt by-laws and specify
to some extent what they shall contain and the manner of their adoption.
The mere fact, however, of the existence of power in the corporation to
adopt by-laws does not ordinarily and of necessity make the exercise of
such power essential to its corporate life, or to the validity of any of its
acts. 17
Although the Corporation Code requires the filing of by-laws, it does not
expressly provide for the consequences of the non-filing of the same within the
period provided for in Section 46. However, such omission has been rectified by
Presidential Decree No. 902-A, the pertinent provisions on the jurisdiction of the
SEC of which state:
Sec. 6. In order to effectively exercise such jurisdiction, the Commission

shall possess the following powers:
xxx xxx xxx
(1) To suspend, or revoke, after proper notice and hearing, the franchise
or certificate of registration of corporations, partnerships or associations,
upon any of the grounds provided by law, including the following:
xxx xxx xxx
5. Failure to file by-laws within the required period;
xxx xxx xxx
In the exercise of the foregoing authority and jurisdiction of the

Commission or by a Commissioner or by such other bodies, boards,
committees and/or any officer as may be created or designated by the
Commission for the purpose. The decision, ruling or order of any such
Commissioner, bodies, boards, committees and/or officer may be
appealed to the Commission sitting en banc within thirty (30) days after
receipt by the appellant of notice of such decision, ruling or order. The
Commission shall promulgate rules of procedures to govern the
proceedings, hearings and appeals of cases falling with its jurisdiction.
The aggrieved party may appeal the order, decision or ruling of the
Commission sitting en banc to the Supreme Court by petition for review in
accordance with the pertinent provisions of the Rules of Court.
Even under the foregoing express grant of power and authority, there can be no
automatic corporate dissolution simply because the incorporators failed to abide
by the required filing of by-laws embodied in Section 46 of the Corporation Code.
There is no outright "demise" of corporate existence. Proper notice and hearing
are cardinal components of due process in any democratic institution, agency or
society. In other words, the incorporators must be given the chance to explain
their neglect or omission and remedy the same.
That the failure to file by-laws is not provided for by the Corporation Code but in
another law is of no moment. P.D. No. 902-A, which took effect immediately after
its promulgation on March 11, 1976, is very much apposite to the Code.
Accordingly, the provisions abovequoted supply the law governing the situation in
the case at bar, inasmuch as the Corporation Code and P.D. No. 902-A are
statutes in pari materia. Interpretare et concordare legibus est optimus
interpretandi. Every statute must be so construed and harmonized with other
statutes as to form a uniform system of jurisprudence. 18
As the "rules and regulations or private laws enacted by the corporation to

regulate, govern and control its own actions, affairs and concerns and its
stockholders or members and directors and officers with relation thereto and
among themselves in their relation to it," 19 by-laws are indispensable to
corporations in this jurisdiction. These may not be essential to corporate birth but
certainly, these are required by law for an orderly governance and management
of corporations. Nonetheless, failure to file them within the period required by law
by no means tolls the automatic dissolution of a corporation.
In this regard, private respondents are correct in relying on the pronouncements

of this Court in Chung Ka Bio v. Intermediate Appellate Court, 20 as follows:
. . . . Moreover, failure to file the by-laws does not automatically operate to

dissolve a corporation but is now considered only a ground for such
dissolution.
Section 19 of the Corporation Law, part of which is now Section 22 of the

Corporation Code, provided that the powers of the corporation would
cease if it did not formally organize and commence the transaction of its
business or the continuation of its works within two years from date of its
incorporation. Section 20, which has been reproduced with some
modifications in Section 46 of the Corporation Code, expressly declared
that "every corporation formed under this Act, must within one month after
the filing of the articles of incorporation with the Securities and Exchange
Commission, adopt a code of by-laws." Whether this provision should be
given mandatory or only directory effect remained a controversial question
until it became academic with the adoption of PD 902-A. Under this
decree, it is now clear that the failure to file by-laws within the required
period is only a ground for suspension or revocation of the certificate of
registration of corporations.
Non-filing of the by-laws will not result in automatic dissolution of the

corporation. Under Section 6(I) of PD 902-A, the SEC is empowered to
"suspend or revoke, after proper notice and hearing, the franchise or
certificate of registration of a corporation" on the ground inter alia of
"failure to file by-laws within the required period." It is clear from this
provision that there must first of all be a hearing to determine the
existence of the ground, and secondly, assuming such finding, the penalty
is not necessarily revocation but may be only suspension of the charter. In
fact, under the rules and regulations of the SEC, failure to file the by-laws
on time may be penalized merely with the imposition of an administrative
fine without affecting the corporate existence of the erring firm.
It should be stressed in this connection that substantial compliance with

conditions subsequent will suffice to perfect corporate personality.
Organization and commencement of transaction of corporate business are
but conditions subsequent and not prerequisites for acquisition of
corporate personality. The adoption and filing of by-laws is also a condition
subsequent. Under Section 19 of the Corporation Code, a Corporation
commences its corporate existence and juridical personality and is
deemed incorporated from the date the Securities and Exchange
Commission issues certificate of incorporation under its official seal. This
may be done even before the filing of the by-laws, which under Section 46
of the Corporation Code, must be adopted "within one month after receipt
of official notice of the issuance of its certificate of incorporation." 21
That the corporation involved herein is under the supervision of the HIGC does
not alter the result of this case. The HIGC has taken over the specialized
functions of the former Home Financing Corporation by virtue of Executive Order
No. 90 dated December 17, 1989. 22 With respect to homeowners associations,
the HIGC shall "exercise all the powers, authorities and responsibilities that are
vested on the Securities and Exchange Commission . . . , the provision of Act
1459, as amended by P.D. 902-A, to the contrary notwithstanding." 23
WHEREFORE, the instant petition for review on certiorari is hereby DENIED and
the questioned Decision of the Court of Appeals AFFIRMED. This Decision is
immediately executory. Costs against petitioner.
SO ORDERED.
SUPREME COURT
Baguio
FIRST DIVISION
G.R. No. 126496 April 30, 1997
GMCR, INC.; SMART COMMUNICATIONS, INC.; INTERNATIONAL

COMMUNICATIONS CORP.; ISLA COMMUNICATIONS CO., INC., petitioners,
vs.
BELL TELECOMMUNICATION PHILIPPINES, INC.; THE NATIONAL
TELECOMMUNICATIONS COMMISSION and HON. SIMEON L. KINTANAR in
his official capacity as Commissioner of the National Telecommunications,
respondents.
COMMISSIONER SIMEON L. KINTANAR, NATIONAL

TELECOMMUNICATIONS COMMISSION, petitioner,
vs.
BELL TELECOMMUNICATION PHILIPPINES, INC., respondent.
HERMOSISIMA, JR., J.:
Before us are consolidated petitions seeking the review and reversal of the
decision 1 of the respondent Court of Appeals 2 declaring the National
Telecommunications Commission (hereafter, NTC) to be a collegial body under
Executive Order No. 546 3 and ordering the NTC to heretofore sit and act en
banc, i.e., with the concurrence of at least two commissioners, for a valid
dispensation of its quasi-judicial functions.
Established by evidence are the following facts:
On October 19, 1993, private respondent Bell Telecommunication Philippines,

Inc. (hereafter, BellTel) filed with the NTC an Application for a Certificate of Public
Convenience and Necessity to Procure, Install, Operate and Maintain Nationwide
Integrated Telecommunications Services and to Charge Rates Therefor and with
Further Request for the Issuance of Provisional Authority. This application was
docketed as NTC Case No. 93-481. At the time of the filing of this application,
private respondent BellTel had not been granted a legislative franchise to engage
in the business of telecommunications service.
Since private respondent BellTel was, at that time, an unenfranchised applicant, it

was excluded in the deliberations for service area assignments for local
exchange carrier service 4. Thus, only petitioners GMCR, Inc., Smart
Communications, Inc., Isla Communications Co., Inc. and International
Communications Corporation, among others, were beneficiaries of formal awards
of service area assignments in April and May, 1994.
On March 25, 1994, Republic Act No. 7692 was enacted granting private
respondent BellTel a congressional franchise which gave private respondent
BellTel the right, privilege and authority to
carry on the business of providing telecommunications services in

and between provinces, cities, and municipalities in the Philippines
and for this purpose, to establish, operate, manage, lease, maintain
and purchase telecommunications systems, including mobile,
cellular and wired or wireless telecommunications systems, fiber
optics, satellite transmit and receive systems, and other
telecommunications systems and their value-added services such
as, but not limited to, transmission of voice, data, facsimile, control
signals, audio and video, information service bureau, and all other
telecommunications systems technologies as are at present
available or be made available through technical advances or
innovations in the future, or construct, acquire, lease and operate or
manage transmitting and receiving stations and switching stations,
both for local and international services, lines, cables or systems,
as is, or are convenient or essential to efficiently carry out the
purposes of this franchise. 5
On July 12, 1994, private respondent BellTel filed with the NTC a second
Application 6 praying for the issuance of a Certificate of Public Convenience and
Necessity for the installation, operation and maintenance of a combined
nationwide local toll (domestic and international) and tandem telephone
exchanges and facilities using wire, wireless, microwave radio, satellites and
fiber optic cable with Public Calling Offices (PCOs) and very small aperture
antennas (VSATs) under an integrated system. This second application was
docketed as NTC Case No. 94-229. In this second application, BellTel proposed
to install 2,600,000 telephone lines in ten (10) years using the most modern and
latest state-of-the-art facilities and equipment and to provide a 100% digital local
exchange telephone network
Private respondent BellTel moved to withdraw its earlier application docketed as

NTC Case No. 93-481. In an Order dated July 11, 1994, this earlier application
was ordered withdrawn, without prejudice.
The second application of private respondent BellTel which was docketed as

NTC Case No. 94-229 was assigned to a Hearing Officer for reception of private
respondent BellTel's evidence. Written opposition and other pertinent pleadings
were filed by petitioners GMCR, Inc., Smart Communications, Inc., Isla
Communications Co., Inc. and International Communications Corporation as
oppositors. Other oppositors to private respondent BellTel's application were
Capitol Wireless, Inc., Eastern Misamis Oriental Telephone Cooperative, Liberty
Broadcasting Network, Inc., Midsayap Communication, Northern Telephone,
PAPTELCO, Pilipino Telephone Corporation, Philippine Global Communications,
Inc., Philippine Long Distance Telephone Company, Philippine Telegraph and
Telephone Corporation, Radio Communications of the Philippines, Inc. and
Extelcom and Telecommunications Office.
On December 20, 1994, private respondent BellTel completed the presentation of

its evidence-in-chief. In the course of the proceedings, the witnesses of BellTel
were cross-examined by the aforementioned oppositors. On December 21, 1994,
BellTel filed its Formal Offer of Evidence together with all the technical, financial
and legal documents in support of its application. Pursuant to its rules, the
application was referred to the Common Carriers Authorization Department
(CCAD) for study and recommendation.
On February 6, 1995, the CCAD, through Engr. Marle Rabena, submitted to

Deputy Commissioner Fidelo Q. Dumlao, a Memorandum dated February 6,
1995 7 manifesting his findings and recommending that "based on technical
documents submitted, BellTel's proposal is technically feasible." 8
Subsequently, Mr. Raulito Suarez, the chief of the Rates and Regulatory Division
of CCAD, conducted a financial evaluation of the project proposal of private
respondent BellTel. On March 29, 1995, Mr. Suarez made the finding that BellTel
has the financial capability to support its proposed project at least for the initial
two (2) years.
Agreeing with the findings and recommendations of the CCAD, NTC Deputy
Commissioners Fidelo Dumlao and Consuelo Perez adopted the same and
expressly signified their approval thereto by making the following notation on the
aforestated Memorandum of the CCAD dated February 6, 1995:
With the finding of financial capability and technical feasibility, the

application merits due/favorable consideration. 9
Below this notation, Deputy Commissioners Fidelo Dumlao and Consuelo

Perez affixed their signatures and the date, "4/6/95."
In view of these favorable recommendations by the CCAD and two

members of the NTC, the Legal Department thereof prepared a working
draft 10 of the order granting provisional authority to private respondent
BellTel. The said working draft was initialed by Deputy Commissioners
Fidelo Q. Dumlao and Consuelo Perez but was not signed by
Commissioner Simeon Kintanar.
While ordinarily, a decision that is concurred in by two of the three members
composing a quasi-judicial body is entitled to promulgation, petitioners claim that
pursuant to the prevailing policy and the corresponding procedure and practice in
the NTC, the exclusive authority to sign, validate and promulgate any and all
orders, resolutions and decisions of the NTC is lodged in the Chairman, in this
case, Commissioner Simeon Kintanar, and, thus, since only Commissioner
Simeon Kintanar is recognized by the NTC Secretariat as the sole authority to
sign any and all orders, resolutions and decisions of the NTC, only his vote
counts; Deputy Commissioners Dumlao and Perez have allegedly no voting
power and both their concurrence which actually constitutes the majority is inutile
without the assent of Commissioner Kintanar.
Anxious over the inaction of the NTC in the matter of its petition praying for the
issuance of a provisional authority, private respondent BellTel filed on May 5,
1995 an Urgent Ex-Parte Motion to Resolve Application and for the Issuance of a
Provisional Authority 11. Reference was explicitly made to the findings of the
CCAD and recommendations of Deputy Commissioners Dumlao and Perez that
were all favorable to private respondent BellTel. Mention was also made of the
aforementioned working draft of the order granting a provisional authority to
BellTel, which draft was made by the Legal Department of the NTC and initialed
by the said deputy commissioners.
No action was taken by the NTC on the aforecited motion. Thus, on May 12,
1995, private respondent BellTel filed a Second Urgent Ex-Parte Motion 12
reiterating its earlier prayer.
Petitioners-oppositors filed an Opposition 13

to the aforestated two motions of
private respondent BellTel.
In an Order dated May 16, 1995, signed solely by Commissioner Simeon

Kintanar, the NTC, instead of resolving the two pending motions of private
respondent BellTel, set the said motions for a hearing on May 29, 1995. On May
29, 1995, however, no hearing was conducted as the same was reset on June
13, 1995.
On June 13, 1995, the day of the hearing, private respondent BellTel filed a
Motion to Promulgate (Amending the Motion to Resolve) 14. In said motion,
private respondent prayed for the promulgation of the working draft of the order
granting a provisional authority to private respondent BellTel, on the ground that
the said working draft had already been signed or initialed by Deputy
Commissioners Dumlao and Perez who, together, constitute a majority out of the
three commissioners composing the NTC. To support its prayer, private
respondent BellTel asserted that the NTC was a collegial body and that as such,
two favorable votes out of a maximum three votes by the members of the
commission, are enough to validly promulgate an NTC decision.
On June 23, 1995, petitioners-oppositors filed their Joint Opposition 15
to the
aforecited motion.
On July 4, 1995, the NTC denied the said motion in an Order solely signed by
Commissioner Simeon Kintanar.
On July 17, 1995, private respondent BellTel filed with this court a Petition for
Certiorari, Mandamus and Prohibition seeking the nullification of the aforestated
Order dated July 4, 1995 denying the Motion to Promulgate.
On July 26, 1995, we issued a Resolution referring said petition to the

respondent Court of Appeals for proper determination and resolution pursuant to
Section 9, par. 1 of B.P. Blg. 129.
In the interim, the Solicitor General filed with the respondent appellate court a
Manifestation In Lieu of Comment 16 in which the Solicitor General took a legal
position adverse to that of the NTC. The Solicitor General, after a close
examination of the laws creating the NTC and its predecessors and a studious
analysis of certain Department of Transportation and Communications (DOTC)
orders, NTC circulars, and Department of Justice (DOJ) legal opinions pertinent
to the issue of collegiality of the NTC, made the following recommendations:
WHEREFORE, the Solicitor General respectfully prays that this

Honorable Court:
(a) declare respondent National Telecommunications Commission

as a collegial body;
(b) restrain respondent Commissioner Simeon Kintanar from

arrogating unto himself alone the powers of the said agency;
(c) order NTC, acting as a collegial body, to resolve petitioner Bell

Telecom's application under NTC-94-229;
(d) declare NTC Memorandum Circulars 1-1-93 and 3-1-93 as void;

[and]
(e) uphold the legality of DOTC Department Order 92-614. 17
On September 23, 1996, respondent Court of Appeals promulgated the herein

assailed decision the dispositive portion of which reads as follows:
IN THE LIGHT OF ALL THE FOREGOING, judgment is hereby

rendered as follows:
1. Petitioner's petition for a writ of Certiorari and Prohibition is
hereby granted. Accordingly, NTC Memorandum Circular No. 1-1-
93, Annex "J" of the Petition, Memorandum Circular No. 3-1-93,
Annex "K" of the Petition and the Order of Kintanar, Annex "L" of
the Petition, are hereby SET ASIDE for being contrary to law. The
Respondents and all those acting for and in their behalf are hereby
enjoined and prohibited from implementing or enforcing the same;
[and]
2. Petitioner's petition for mandamus is hereby GRANTED in that

the Respondent NTC, composed of Kintanar and deputy
commissioners Perez and Dumlao, are hereby directed to meet en
banc and to consider and act on the draft Order, Annex "B" of the
Petition, within fifteen (15) days from the finality of this Decision.
Without pronouncement as to costs.
SO ORDERED. 18
The herein assailed decision being unacceptable to petitioner

Simeon Kintanar and petitioners GMCR, Inc., Smart
Communications, Inc., Isla Communications Co., Inc. and
International Communications Corporation as oppositors in the
application of private respondent BellTel for a provisional authority,
they filed with this court separate petitions for review.
Commissioner Kintanar's petition, docketed as G.R No. 126526,

ascribes to the respondent appellate court the following assignment
of errors:
1. The Court of Appeals in setting aside NTC MC 1-1-93 and MC 3-

1-93 and the Order of the Commission dated July 4, 1995, made a
collateral attack on a law which was nowhere called for in the
pleadings of the parties nor is authorized by the Rules of Court.
2. The Court of Appeals erred in assuming and imposing that the

Commission is a collegial body simply by reason of the fact that
other bodies which were a spin off from the defunct Public Service
Commission were created as a collegial body. The law that created
EO 546 erased the collegial character of the proceeding before the
NTC.
3. The Court of Appeals' decision contains serious contradiction;

worse, it considered evidence not formally offered or incorporated
into the records of the case; yet failed to consider evidence
submitted by petitioner- appellant nor on the prejudicial issue on
non-joinder of indispensable parties.
3.1 CA erred in assuming that the NTC is collegial by
the fact that Charters of other regulatory agencies
expressly made them collegial while this express
provision was absent in NTC's charter.
3.2 CA contradicts itself by holding that DOTC MC 92-

614 prevails and [requires] collegiality.
3.3 The decisions by Undersecretary Lichauco signed

by her and her 2 deputies are in no way indicative of
collegiality and should not be considered as having
any persuasive effect . . .
3.4 The Court of Appeals erred in applying the Board

of Communications Rules of Practice and
Procedures.
4. The Court of Appeals erred when it granted mandamus, directing

and in effect controlling Commissioner Kintanar and deputy
Commissioners Dumlao and Perez, to meet en banc to consider
and act on a "draft Order" only which the Court itself recognized no
longer had the approval of two (2) Commissioners while in the
same token the Court of Appeals had set aside a duly promulgated
Order of July 4, 1995 allegedly because it did not carry the approval
of 2 commissioners. 19
On the other hand, petitioners-oppositors, in their petition docketed as G.R No.

126496, assail the decision of respondent appellate court on the following
grounds:
1. The Court of Appeals erred in not dismissing the instant Petition

outright for its failure to implead indispensable parties, in violation
of Section 5, Rule 65 and Sec. 3, Rule 7 of the Revised Rules of
Court;
2. The Court of Appeals seriously erred in taking cognizance of and

passing upon BellTel's Petition, which on its face is premature since
the Order of July 4, 1996 assailed was not a find decision of the
Commission;
3. Even assuming arguendo that the Court of Appeals can take

cognizance of the Petition, the disposition in Decision therein which
nullifies NTC Memorandum Circulars 1-1-93 and 3-1-93 itself
constitutes a collateral attack on the said laws, the validity of which
were never put in issue by any of the parties, contrary to the clear
legal requirement that the validity of laws can be attacked only in
direct proceedings instituted for that purpose;
4. It was in fact improper for the Court of Appeals to pass on the

validity of NTC Circular No. 1-1-93 and Memorandum Circular No
3-1-93 since the same was absolutely unnecessary for the
resolution of the Petition;
5. Even assuming that the Court of Appeals correctly defined the

prime issues as being that of collegiality, nonetheless the Court of
Appeals committed a serious error of law in declaring the NTC as a
collegial body despite the clear intent of E.O. No. 546 and the
provisions of DOTC MC 95-640, and the obvious implications of
pending bills in Congress on the reorganization of the NTC;
6. The Decision, in mandating that the NTC Commissioner and

Deputy Commissioners sit to consider the draft-and only the draft-in
rendering its Decision in BellTel's application constitutes an
unwarranted, unauthorized and unlawful interference in and
canalization of the discretionary functions of the Commission as a
quasi-judicial entity; and
7. The Decision condones the illegal and unethical act of BellTel of

surreptitiously securing a draft decision, and encourages and
places premium on future similar illegal acts-all in violation of the
ruling and the mandate of the Supreme Court in In Re Jurado: Adm.
Matter No. 90-5-383 (July 12, 1990). 20
On December 16, 1996, private respondent BellTel filed an Omnibus Motion 21

praying for, among others, the consolidation of G.R Nos. 126496 and 126526.
On December 18, 1996, respondent BellTel filed its Comment. 22 On the same
day, the NTC and Commissioner Kintanar filed a Manifestation/Motion 23 echoing
the prayer for the consolidation of the G.R Nos. 126496 and 126526.
On December 19, 1996, the Office of the Solicitor General filed a

Manifestation/Motion 24 reiterating that its legal stance in this case is adverse to
that of the NTC and praying that it be excluded from filing any comment in behalf
of the NTC.
In a Resolution dated February 5, 1997, we resolved, among others, to excuse

the Solicitor General from filing any comment in behalf of the NTC, require the
NTC to file its own comment in G.R No. 126496 and to consolidate G.R Nos.
126496 and 126526.
On March 6, 1997, the NTC and Commissioner Kintanar filed a
Manifestation/Motion 25 praying that the latter's petition in G.R No. 126526 be
adopted as their comment in the consolidated cases.
Upon the joinder of issues in these consolidated cases, we perceive the

fundamental issue to be that of the collegiality of the NTC as a quasi-judicial
agency.
We find the consolidated petitions wanting of merit.
First. We hereby declare that the NTC is a collegial body requiring a majority vote
out of the three members of the commission in order to validly decide a case or
any incident therein. Corollarily, the vote alone of the chairman of the
commission, as in this case, the vote of Commissioner Kintanar, absent the
required concurring vote coming from the rest of the membership of the
commission to at least arrive at a majority decision, is not sufficient to legally
render an NTC order, resolution or decision.
Simply put, Commissioner Kintanar is not the National Telecommunications

Commission. He alone does not speak for and in behalf of the NTC. The NTC
acts through a three-man body, and the three members of the commission each
has one vote to cast in every deliberation concerning a case or any incident
therein that is subject to the jurisdiction of the NTC. When we consider the
historical milieu in which the NTC evolved into the quasi-judicial agency it is now
under Executive Order No. 146 which organized the NTC as a three-man
commission and expose the illegality of all memorandum circulars negating the
collegial nature of the NTC under Executive Order No. 146, we are left with only
one logical conclusion: the NTC is a collegial body and was a collegial body even
during the time when it was acting as a one-man regime.
We thus quote with approval the encompassing legal ruminations of the

respondent Court of Appeals in disposing of the issue of the collegiality of the
NTC:
In resolving the issue, We recall that, on November 17, 1936, the

National Assembly passed Commonwealth Act No. 146 which
created the Public Service Commission (PSC). While providing that
the PSC shall consist of a Public Service Commissioner and a
Deputy Commissioner, the law made it clear that the PSC was not
a collegial body by stating that the Deputy Commissioner could act
only on matters delegated to him by the Public Service
Commissioner. As amended by RA 2677, the Public Service
Commission was transformed into and emerged as a collegial body,
composed of one Public Service Commissioner and five (5)
Associate Commissioners. The amendment provided that contested
cases and all cases involving the fixing of rates shall be decided by
the Commission en banc.
On September 24, 1972, then President Ferdinand E. Marcos

signed, into law, Presidential Decree No. 1 adopting and approving
the Integrated Reorganization Plan which, in turn, created the
Board of Communications (BOC) in place of the PSC. This time, the
new regulatory board was composed of three (3) officers exercising
quasi-judicial functions:
. . . The Board of Communications shall be composed

of a full time Chairman who shall be of unquestioned
integrity and recognized prominence in previous
public and/or private employment; two full-time
members who shall be competent on all aspects of
communications, preferably one of whom shall be a
lawyer and the other an economist . . .
On January 25, 1978, the BOC promulgated its "Rules of

Procedure and Practice" in connection with applications and
proceedings before it.
On July 23, 1979, President Marcos issued Executive Order No.

546, creating the Ministries of Public Works, and of Transportation
and Communications, merged the defunct Board of
Communications and the Telecommunications Control Bureau into
a single entity, the National Telecommunications Commission
(NTC). The said law was issued by then President Marcos in the
exercise of his legislative powers. Sec. 16 of E.O. 546 provides that
?
. . . The Commission shall be composed of a

Commissioner and two Deputy Commissioners,
preferably one of whom shall be a lawyer and another
an economist. . . .
The aforementioned Executive Order took effect on September 24,

1979 . . . However, the NTC did not promulgate any Rules of
Procedure and Practice. Consequently, the then existing Rules of
Procedure and Practice promulgated by the BOC was applied to
proceedings in the NTC. In the meantime, the Decisions of the NTC
were signed by the Chairman alone of the NTC which rendered the
two (2) deputy Commissioners "non-participative" in the task of
decision-making. This prompted the then Minister of Transportation
and Communication Jose P. Dans, Jr. to seek the legal opinion of
the then Minister of Justice Ricardo C. Puno, as to whether the
NTC was a collegial body or not. On January 11, 1984, Minister
Puno sent a letter-opinion . . . to the effect that the NTC was not a
collegial body but a single entity and thus the then practice of only
the Chairman of the NTC signing the Decisions of the NTC was
authorized by law. . . .
Admittedly, the opinion of the Secretary of Justice is entitled to

great weight . . . . However, the same is not controlling or
conclusive on the courts . . . . We find and declare, in the present
recourse, that the Puno Opinion is not correct. Admittedly, EO 546
does not specifically state that the NTC was a collegial body.
Neither does it provide that the NTC should meet En Banc in
deciding a case or in exercising its adjudicatory or quasi-judicial
functions. But the absence of such provisions does not militate
against the collegial nature of the NTC under the context of Section
16 of EO 546 and under the Rules of Procedure and Practice
applied by the NTC in its proceedings. Under [Rule 15] of said
Rules, the BOC (now the NTC) sits En Banc.
. . . In every case heard by the Board en banc, the

orders, rulings, decisions and resolutions disposing of
the merits of the matter within its jurisdiction shall be
reached with the concurrence of at least two regular
members after deliberation and consultation and
thereafter assigned to a member for the writing of the
opinion. Any member dissenting from the order, ruling,
decision or resolution shall state in writing the reason
for his dissent.
In all other cases, a duly assigned Member shall issue

all orders, rulings, decisions and resolutions pertinent
to the case assigned to him. Copy of the decision on
the merit of the case so assigned shall be furnished
the Chairman of the Board.
xxx xxx xxx
Inscrutably, a case before the BOC may be assigned to and heard

by only a member thereof who is tasked to prepare and promulgate
his Decision thereon, or heard, En Banc, by the full membership of
the BOC in which case the concurrence of at least two (2) of the
membership of the BOC is necessary for a valid Decision . . . .
While it may be true that the aforesaid Rules of Procedure was
promulgated before the effectivity of Executive Order No. 546,
however, the Rules of Procedure of BOC governed the rules of
practice and procedure before the NTC when it was established
under Executive Order No. 546. This was enunciated by the
Supreme Court in the case of "Philippine Consumers Foundation,
Inc. versus National Telecommunications Commission, 131 SCRA
200" when it declared that:
The Rules of Practice and Procedure promulgated on

January 25, 1978 by the Board of Communications,
the immediate predecessor of respondent NTC . . .
govern the rules of practice and procedure before the
BOC then, now respondent NTC. . . .
In the case of "Philippine Long Distance Telephone Company

versus National Telecommunications, et al., 190 SCRA 717", the
Supreme Court applied and cited Rule 15 of the Rules of Procedure
and Practice of BOC . . . .
Hence, under its Rules of Procedure and Practice, the Respondent

NTC, as its predecessor, the BOC, had consistently been and
remains a collegial body.
Respondents Kintanar's and NTC's pose that Respondent Kintanar,

alone, is vested with authority to sign and promulgate a Decision of
the NTC is antithetical to the nature of a commission as envisaged
in Executive Order No. 546. It must be borne in mind that a
Commission is defined as:
[a] body composed of several persons acting under

lawful authority to perform some public senica (City of
Louisville Municipal Housing Commission versus
Public Housing Administration, 261 Southwestern
Reporter, 2nd, page 286).
A Commission is also defined as a board or committee of officials

appointed and empowered to perform certain acts or exercise
certain jurisdiction of a public nature or service . . . (Black, Law
Dictionary, page 246). There is persuasive authority that a
"commission" is synonymous with "board" (State Ex. Rel. Johnson
versus Independent School District No. 810, Wabash County, 109
Northwestern Reporter 2nd, page 596). Indeed, as can be easily
discerned from the context of Section 16 of Executive Order No.
546, the Commission is composed of a Commissioner and two (2)
deputy commissioners . . . not the commissioner, alone, as
pontificated by Kintanar. The conjunctive word "and" is not without
any legal significance. It is not, by any chance, a surplusage in the
law. It means "in addition to" (McCaull Webster Elevator Company
versus Adams, 167 Northwestern Reporter, 330, page 332). The
word "and", whether it is used to connect words, phrases or full
sentence[s], must be accepted as binding together and as relating
to one another . . . .
In interpreting a statute, every part thereof should be given effect

on the theory that it was enacted as an integrated law and not as a
combination of dissonant provisions. As the aphorism goes, "that
the thing may rather have effect than be destroyed" . . . If it was the
intention of President Marcos to constitute merely a single entity, a
"one-man" governmental body, instead of a commission or a three-
man collegial body, he would not have constituted a commission
and would not have specifically decreed that the Commission is
composed of, not the commissioner alone, but of the commissioner
and the two (2) deputy commissioners. Irrefragably, then, the NTC
is a commission composed not only of Kintanar, but Perez and
Dumlao as well, acting together in the performance of their
adjudicatory or quasi-judicial functions, conformably with the Rules
of Procedure and Practice promulgated by the BOC and applicable
to the NTC.
The barefaced fact that . . . of Executive Order 546 used the word
"deputy" to designate the two (2) other members of the
Commission does not militate against the collegiality of the
NTC. . . . The collegiality of the NTC cannot be disparaged by the
mere nominal designation of the membership thereof. Indeed, We
are convinced that such nominal designations are without functional
implications and are designed merely for the purpose of
administrative structure or hierarchy of the personnel of the NTC. . .
.
In hindsight, even Secretary Garcia was in accord with the

collegiality of the NTC when he promulgated and issued
Department Order No. 92-614 . . . Even then Commissioner
Mariano Benedicto openly expressed his vehement opposition to
the Department Order of Secretary Garcia and opted to seek refuge
in the opinion of the then Minister of Justice Puno . . . . It was only
when Commissioner Benedicto resigned and Respondent Kintanar
was designated to replace Commissioner Benedicto that Secretary
Garcia flip-flapped [sic], and suddenly found it expedient to recall
his Department Order No. 92-614 and authorize Kintanar to decide,
all by himself, all cases pending with the NTC in frontal violation of
the Rules of Procedure and Practice before the NTC, more
specifically Rule 15 thereof . . . .
xxx xxx xxx

The Respondents cannot find solace in House Bill No. 10558 to
buttress their argument . . . because under the House Bill, the NTC
is transformed into a collegial body. Indeed, We find Respondents'
pose tenuous. For, it can likewise be argued, with justification, that
House Bill No. 10558 indeed confirms the existing collegial nature
of the NTC by so expressly reaffirming the same.
xxx xxx xxx
In sum, then, We find and so declare that NTC Circular No. 1-1-93 .
. . Memorandum Circular No. 3-1-93 . . . and the Order of Kintanar .
. . declaring the NTC as a single entity or non-collegial entity, are
contrary to law and thus null and void and should be, as they are
hereby, set aside. 26
Second. Petitioners take us to task with their vigorous contention that respondent
appellate court's act of nullifying NTC Memorandum Circular No. 1-1-93 issued
by then Commissioner Mariano Benedicto, Jr. and NTC Memorandum Circular
No. 3-1-93 issued also by then Commissioner Benedicto on January 6, 1993,
was a collateral attack against the aforecited circulars and an unnecessary and
abusive exercise of the court's power to nullify administrative regulations.
It must be remembered by petitioners, however, that administrative regulations

derive their validity from the statute that they were, in the first place, intended to
implement. Memorandum Circulars 1-1-93 and 3-1-93 are on their face null and
void ab initio for being unabashedly contrary to law. They were nullified by
respondent Court of Appeals because they are absolutely illegal and, as such,
are without any force and effect. The fact that implementation of these illegal
regulations has resulted in the institutionalization of the one-man rule in the NTC,
is not and can never be a ratification of such an illegal practice. At the least,
these illegal regulations are an erroneous interpretation of E.O. No. 546 and in
the context of and its predecessor laws. At the most, these illegal regulations are
attempts to validate the one-man rule in the NTC as executed by persons with
the selfish interest of maintaining their illusory hold of power.
Since the questioned memorandum circulars are inherently and patently null and
void for being totally violative of the spirit and letter of E.O. No. 546 that
constitutes the NTC as a collegial body, no court may shirk from its duty of
striking down such illegal regulations.
Third. In its certiorari action before the respondent Court of Appeals, private
respondent BellTel was proceeding against the NTC and Commissioner Kintanar
for the former's adherence and defense of its one-man rule as enforced by the
latter. Thus, only the NTC and Commissioner Kintanar may be considered as
indispensable parties. After all, it is they whom private respondent BellTel seek to
be chastised and corrected by the court for having acted in grave abuse of their
discretion amounting to lack or excess of jurisdiction.
The oppositors in NTC Case No. 94-229 are not absolutely necessary for the
final determination of the issue of grave abuse of discretion on the part of the
NTC and of Commissioner Kintanar in his capacity as chairman of NTC because
the task of defending them primarily lies in the Office of the Solicitor General.
Furthermore, were the court to find that certiorari lies against the NTC and
Commissioner Kintanar, the oppositors' cause could not be significantly affected
by such ruling because the issue of grave abuse of discretion goes not into the
merits of the case in which the oppositors are interested but into the issue of
collegiality that requires, regardless of the merits of a case, that the same be
decided on the basis of a majority vote of at least two members of the
commission.
The issue in this case is, it bears repeating, not the merits of the application of
private respondent BellTel for a provisional authority to operate what promises to
be the most technologically advanced telephone service in the country. This court
is not in any way concerned with whether or not private respondent BellTel's
project proposal is technically feasible or financially viable, and this court should
not, in fact, delve into these matters which are patently outside of its review
jurisdiction. All that respondent Court of Appeals passed upon was the question
of whether or not the NTC and Commissioner Kintanar committed grave abuse of
discretion, and so we must review and ascertain the correctness of the findings
of the respondent appellate court on this score, and this score alone.
Thus, the claim of petitioners that there is here a case of non-joinder of

indispensable parties in the persons of all of the oppositors in NTC Case No. 94-
229, is untenable.
Fourth. Petitioners, in apparent paranoia, argue that what the respondent

appellate court has actually ordered, was that the NTC sit and meet en banc and
forthwith grant private respondent BellTel's application for a provisional authority.
Petitioners, however, have obviously over-read the second part of the dispositive
portion of the herein assailed decision rendered by respondent Court of Appeals.
There is no dispute that jurisprudence is settled as to the propriety of mandamus

in causing a quasi-judicial agency to exercise its discretion in a case already ripe
for adjudication and long-awaiting the proper disposition. As to how this
discretion is to be exercised, however, is a realm outside the office of the special
civil action of mandamus. It is elementary legal knowledge, after all, that
mandamus does not lie to control discretion.
When the respondent Court of Appeals directed Commissioners Kintanar,

Dumlao and Perez to meet en banc and to consider and act on the working draft
of the order granting provisional authority to BellTel, said court was simply
ordering the NTC to sit and meet en banc as a collegial body, and the subject of
the deliberation of the three-man commission would be the said working draft
which embodies one course of action that may be taken on private respondent
BellTel's application for a provisional authority. The respondent Court of Appeals,
however, did not order the NTC to forthwith grant said application. This is
understandable since every commissioner of the three-man NTC has a vote each
to cast in disposing of private respondent BellTel's application and the
respondent appellate court would not pre-empt the exercise by the members of
the commission of their individual discretion in private respondent BellTel's case.
Respondent appellate court intends, however, for the NTC to promptly proceed
with the consideration of private respondent BellTel's application for provisional
authority, for the same has been ripe for decision since December, 1994. With
the marked propensity of Commissioner Kintanar to delay action on the said
application and his insistent arrogation of sole power to promulgate any and all
NTC decisions, respondent Court of Appeals' order for the NTC to sit and meet
en banc to consider private respondent BellTel's application for a provisional
authority, attains deep significance.
Fifth. The accusation of petitioners that the working draft of the order granting
provisional authority to private respondent BellTel, was obtained by the latter
through illegal means, is a serious charge. However, not a single piece of
evidence has been proffered by petitioners to prove this charge.
Private respondent BellTel makes no secret of the source of the said working
draft. In private respondent BellTel's Urgent Ex-Parte Motion to Resolve
Application and For Issuance of Provisional Authority, it is alleged that said
working draft was prepared by Atty. Basilio Bolante of the Legal Department of
the NTC. 27 Said working draft was initialed by the CCAD Head, Engr. Edgardo
Cabarios and by Deputy Commissioners Dumlao and Perez. 28 The working draft
is attached to the records of NTC Case No. 94-229 which may be borrowed by
any person for any stated purpose. 29
Significantly, no one among the aforementioned persons has renounced the

working draft or declared it to be spurious. More importantly, petitioners have
utterly failed to offer proof of any illegality in the preparation or procurement of
said working draft.
The more critical point that matters most, however, is that we cannot be diverted
from the principal issue in this case concerning the collegiality of the NTC. In the
ultimate, the issue of the procurement of the working draft is more apropos for a
criminal or administrative investigation than in the instant proceedings largely
addressed to the resolution of a purely legal question.
WHEREFORE, premises considered, the instant consolidated petitions are

hereby DISMISSED for lack of merit.
Costs against petitioners.
SO ORDERED.

SUPREME COURT
Manila
EN BANC
G.R. No. 129952 June 16, 1998
GOVERNOR JOSIE CASTILLO-CO, petitioner,

vs.
HONORABLE ROBERT BARBERS, DEPUTY OMBUDSMAN JESUS
GUERRERO, EMILIO GONZALES, III and CONGRESSMAN JUNIE CUA,
respondents.
RESOLUTION
KAPUNAN, J.:
Petitioner Governor Josie Castillo-Co of Quirino, through this special civil

action for certiorari and prohibition, with prayer for temporary restraining
order/writ of preliminary injunction, seeks to nullify the Order of the Deputy
Ombudsman directing her preventive suspension.
On 27 June 1997, Quirino Congressman Junie Cua filed a complaint

before the Office of the Ombudsman against Governor Castillo-Co and
Provincial Engineer Virgilio Ringor. Congressman Cua alleged that in the
course of its investigation in aid of legislation, the House of Representative
Committee on Good Government chaired by him uncovered irregularities
in the purchase of heavy equipment by the Governor and the Provincial
Engineer. Congressman Cua charged that the equipment purchased was
"reconditioned" instead of "brand new" as required by resolutions of the
province's Sanggunian authorizing such purchase. Other irregularities
claimed to have been committed included overpricing, lack of public
bidding, lack of inspection, advance payment prior to delivery in violation
of Section 338 of the Local Government Code, and an attempt to cover up
such irregularities. Congressman Cua thus accused Governor Castillo-Co
and Provincial Engineer Ringor of violating Sections 3(e) and 3(g) of the
Anti-Graft and Corrupt Practices Act, 1 as amended, and Articles 213 2 and
217 3 of the Revised Penal Code.
In an Order 4 dated 4 July 1997, that is, a week after the complaint was
filed, Governor Castillo-Co and Provincial Engineer Ringor were placed
under preventive suspension for a period of six (6) months. Said order
was signed by Emilio A. Gonzales, III, Director, and approved by Jesus
Guerrero, Deputy Ombudsman for Luzon.
Governor Castillo-Co and Provincial Engineer Ringor thereafter filed

separate motions for reconsideration. Both motions were denied in a "Joint
Order" 5 dated 1 August 1997 signed by Director Gonzales and approved
by Deputy Ombudsman Guerrero.
On 12 August 1997, Governor Castillo-Co filed the present petition.

Petitioner imputes grave abuse of discretion upon the Deputy
Ombudsman for issuing the order of preventive suspension against her.
As may be deduced from the petition, the grounds invoked in support
thereof are:
(1) The Deputy Ombudsman is not authorized to sign the order of

preventive suspension.
(2) The issuance of such order was hasty and selective, and
deprived petitioner of due process, and
(3) The conditions required to sustain petitioner's preventive

suspension have not been met and that, at any rate, the duration
thereof is excessive.
In a Resolution dated 26 August 1997, 6 this Court resolved, among others,

to grant petitioner's prayers for a temporary restraining order.
The petition has no merit.
Petitioner claims that under Republic Act No. 7975, 7 only the Ombudsman
has the authority to sign the order placing officials with a 27 salary grade
or above, like petitioner-governor, under preventive suspension. 8 In this
case, the suspension order was neither signed nor approved by
Ombudsman Aniano Desierto. Rather, said order was signed by Director
Emilio Gonzales III and approved by Deputy Ombudsman for Luzon Jesus
Guerrero.
There is nothing in RA 7975, however, that would remotely suggest that
only the Ombudsman, and not his Deputy, may sign an order preventively
suspending officials occupying positions classified as grade 27 or above.
On the other hand, Section 24 of Republic Act No. 6770 9 provides:
Sec. 24. Preventive Suspension. ? The Ombudsman or his Deputy

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

terminated by the Office of the Ombudsman but not more than six
months, without pay, except when the delay in the disposition of the
case by the Office of the Ombudsman is due to the fault,
negligence or petition of the respondent, in which case the period of
such delay shall not be counted in computing the period of
suspension herein provided. (Emphasis supplied).
Similarly, Section 9, Rule III of the Rules of Procedure of the Office of

Ombudsman 10 provides:
Sec. 9. Preventive suspension. ? Pending investigation, the

respondent may be preventively suspended without pay for a
period of not more than six (6) months, if, in the judgment of the
Ombudsman or his proper deputy, the evidence of guilt is strong,
and (a) the charge against such officer or employees involves
dishonestly, oppression or gross misconduct, or neglect in the
performance of duty, (b) the charge would warrant removal from the
service, or (c) the respondent's continued stay in office may
prejudice the case filed against him.
If the administrative investigation is not terminated within the period

the respondent is suspended, the respondent shall be automatically
reinstated unless the delay in the disposition of the case is due to
the fault, negligence or any cause attributable to the respondent, in
which case the period of such delay shall not be counted in
computing the period of suspension. (Emphasis supplied.)
Under these provisions, there cannot be any doubt that the Ombudsman
or his Deputy may preventively suspend an officer or employee, where
appropriate, as indicated by the word "or" between the "Ombudsman" and
"his Deputy." The word "or" is a disjunctive term signifying disassociation
and independence of one thing from each of the other things enumerated.
11
The law does not require that only the Ombudsman himself may sign the
order suspension.
II
Petitioner next questions the manner by which the suspension order was
issued. She claims that she was denied due process because she was not
afforded the opportunity to controvert the evidence against her before the
order of preventive suspension was issued. 12 A preventive suspension,
however, can be decreed on an official under investigation after charges
are brought and even before the charges are heard under investigation
after charges are brought and even before the charges are heard since
the same is not in the nature of a penalty, 13 but merely a preliminary step
in an administrative investigation. Thus, in Lastimosa vs. Vasquez, 14 we
quoted with favor our pronouncement in Nera vs. Garcia: 15
In connection with the suspension of petitioner before he could file

his answer to the administrative complaint, suffice it to say that the
suspension was not a punishment or penalty for the acts of
dishonesty and misconduct in office, but only as a preventive
measure. Suspension as a preliminary step in an administrative
investigation. If after such investigation, the charges are
established and the person investigated is found guilty of facts
warranting his removal, then he is removed or dismissed. This is
the penalty. There is, therefore, nothing improper in suspending an
officer pending his investigation and before the charges against him
are heard and be given an opportunity to prove his innocence.
The fact that the said order was issued seven days after the complaint
was filed did not constitute grave abuse of discretion. The immediate
issuance of such order is required in order to prevent the subject of the
suspension from committing further irregularities. Such prompt action,
moreover, is in consonance with Section 15 of RA 6770 which exhorts the
Ombudsman to:
. . . give priority to complaints filed against high ranking government

officials and/or those occupying supervisory positions, complaints
involving grave offenses as well as complaints involving large sums
of money and/or properties.
We do not give much credence to petitioner's suggestions of a malicious

conspiracy between the Deputy Ombudsman Guerrero and Congressman
Cua, reputedly petitioner's political adversary, to harass her. The Deputy
Ombudsman and the Congressman, being public officials, enjoy the
presumption of regularity of performance of dutes. Such presumption can
be overcome only by strong and convincing evidence. 16 No such evidence
exists in this case.
III
Contrary to petitioner's contention, the conditions required to sustain her

preventive suspension have been met in this case. These conditions are:
(1) That the evidence of guilt is strong; and
(2) That any of the following circumstances are present:
(a) the charge against such officer or employee

involves dishonesty, oppression, or grave misconduct
or neglect in the performance of duty;
(b) the charges would warrant removal from the

service; or
(c) the respondent's continued stay in office may

prejudice the case filed against him. 17
The first requisite rests upon the determination of the disciplining authority,
the Office of the Ombudsman in this case:
As held in Buenaseda v. Flavier, however, whether the evidence of

guilt is strong is left to the determination of the Ombudsman by
taking into account the evidence before him. A preliminary hearing
as in bail petitions in cases involving capital offenses is not
required. In rejecting a similar argument as that made argument as
that made by petitioner in this case, this Court said in that case.
The import of the Nera decision is that the disciplining authority is

given the discretion to decide when the evidence of guilt is strong.
This fact is bolstered by Section 24 of R.A. No. 6770, which
expressly left such determination of guilt to the "Judgment" of the
Ombudsman on the basis of the administrative complaint . . . 18
We find no reason to disturb such determination in this case.
All the circumstances enumerated in the second requisite are likewise

present. Petitioner is charged with, among others, fraud against the public
treasury and malversation, offenses indubitably involving dishonesty and
grave misconduct. These charges, if proven true, also constitute grounds
for her removal upon order of the proper court. Section 60(c) of the Local
Government Code states.
Sec. 60. Grounds for Disciplinary Actions. ? An elective official ma

be disciplined suspended or removed from office on any of the
following grounds:
xxx xxx xxx,
c) Dishonesty, oppression, misconduct in office, gross negligence,

or an offense punishable by at least prision mayor.
. . . (Emphasis supplied).
Petitioner's high position likewise gives her access to public records and
the cloud to influence possible witness. Her continued stay in office may
thus prejudice the prosecution of the case filed against her. It is immaterial
that, as petitioner contends, no evidence has been adduced to prove that
petitioner may influence possible witnesses or may tamper with the public
records. It is sufficient that there exists such a possibility.
Finally, the duration of petitioner's suspension is not excessive. Petitioner's

suspension for six (6) months is within the limits prescribed by Section 24
of R.A. 6770. The length of the period of suspension within such limits, like
the evaluation of the strength of the evidence, lies in the discretion of the
Ombudsman.
WHEREFORE, this petition is hereby DISMISSED. The temporary

restraining order issued by this Court per its Resolution dated 26 August
1997 is hereby LIFTED with immediate effect.
SO ORDERED.

SUPREME COURT
Manila
EN BANC
G.R. No. 109902 August 2, 1994
ALU-TUCP, Representing Members: ALAN BARINQUE, with 13 others,

namely: ENGR. ALAN G. BARINQUE, ENGR. DARRELL LEE ELTAGONDE,
EDUARD H. FOOKSON, JR., ROMEO R. SARONA, RUSSELL GACUS,
JERRY BONTILAO, EUSEBIO MARIN, JR., LEONIDO ECHAVEZ, BONIFACIO
MEJOS, EDGAR S. BONTUYAN, JOSE G. GARGUENA, JR., OSIAS B.
DANDASAN, and GERRY I. FETALVERO, petitioners,
vs.
NATIONAL LABOR RELATIONS COMMISSION and NATIONAL STEEL
CORPORATION (NSC), respondents.
Leonard U. Sawal for petitioners.
Saturnino Mejorada for private respondent.
FELICIANO, J.:
In this Petition for Certiorari, petitioners assail the Resolution of the National
Labor Relations Commission ("NLRC") dated 8 January 1993 which declared
petitioners to be project employees of private respondent National Steel
Corporation ("NSC"), and the NLRC's subsequent Resolution of 15 February
1993, denying petitioners' motion for reconsideration.
Petitioners plead that they had been employed by respondent NSC in connection
with its Five Year Expansion Program (FAYEP I & II) 1 for varying lengths of time
when they were separated from NSC's service:
Employee Date Nature of Separated
Employed Employment
1. Alan Barinque 5-14-82 Engineer 1 8-31-91

2. Jerry Bontilao 8-05-85 Engineer 2 6-30-92
3. Edgar Bontuyan 11-03-82 Chairman to present
4. Osias Dandasan 9-21-82 Utilityman 1991
5. Leonido Echavez 6-16-82 Eng. Assistant 6-30-92
6. Darrell Eltagonde 5-20-85 Engineer 1 8-31-91
7. Gerry Fetalvero 4-08-85 Mat. Expediter regularized
8. Eduard Fookson 9-20-84 Eng. Assistant 8-31-91
9. Russell Gacus 1-30-85 Engineer 1 6-30-92
10. Jose Garguena 3-02-81 Warehouseman to present
11. Eusebio Mejos 11-17-82 Survey Aide 8-31-91
12. Bonifacio Mejos 11-17-82 Surv. Party Head 1992
13. Romeo Sarona 2-26-83 Machine Operator 8-31-91 2
On 5 July 1990, petitioners filed separate complaints for unfair labor practice,
regularization and monetary benefits with the NLRC, Sub-Regional Arbitration
Branch XII, Iligan City.
The complaints were consolidated and after hearing, the Labor Arbiter in a
Decision dated 7 June 1991, declared petitioners "regular project employees who
shall continue their employment as such for as long as such [project] activity
exists," but entitled to the salary of a regular employee pursuant to the provisions
in the collective bargaining agreement. It also ordered payment of salary
differentials. 3
Both parties appealed to the NLRC from that decision. Petitioners argued that
they were regular, not project, employees. Private respondent, on the other hand,
claimed that petitioners are project employees as they were employed to
undertake a specific project ? NSC's Five Year Expansion Program (FAYEP I &
II).
The NLRC in its questioned resolutions modified the Labor Arbiter's decision. It
affirmed the Labor Arbiter's holding that petitioners were project employees since
they were hired to perform work in a specific undertaking ? the Five Years
Expansion Program, the completion of which had been determined at the time of
their engagement and which operation was not directly related to the business of
steel manufacturing. The NLRC, however, set aside the award to petitioners of
the same benefits enjoyed by regular employees for lack of legal and factual
basis.
Deliberating on the present Petition for Certiorari, the Court considers that
petitioners have failed to show any grave abuse of discretion or any act without
or in excess of jurisdiction on the part of the NLRC in rendering its questioned
resolutions of 8 January 1993 and 15 February 1993.
The law on the matter is Article 280 of the Labor Code which reads in full:
Art. 280. Regular and Casual Employment ? The provisions of the

written agreement to the contrary notwithstanding and regardless of
the oral agreement of the parties, and employment shall be
deemed to be regular where the employee has been engaged to
perform activities which are usually necessary or desirable in the
usual business or trade of the employer, except where the
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 services
to be performed is seasonal in nature and the employment is for the
duration of the season.
An employment shall be deemed to be casual if it is not covered by
the preceding paragraph: Provided, That, any employee who has
rendered at least one year service, whether such service is
continuous or broken, shall be considered a regular employee with
respect to the activity in which he is employed and his employment
shall continue while such actually exists. (Emphasis supplied)
Petitioners argue that they are "regular" employees of NSC because: (i) their jobs
are "necessary, desirable and work-related to private respondent's main
business, steel-making"; and (ii) they have rendered service for six (6) or more
years to private respondent NSC. 4
The basic issue is thus whether or not petitioners are properly characterized as
"project employees" rather than "regular employees" of NSC. This issue relates,
of course, to an important consequence: the services of project employees are
co-terminous with the project and may be terminated upon the end or completion
of the project for which they were hired. 5 Regular employees, in contract, are
legally entitled to remain in the service of their employer until that service is
terminated by one or another of the recognized modes of termination of service
under the Labor Code. 6
It is evidently important to become clear about the meaning and scope of the
term "project" in the present context. The "project" for the carrying out of which
"project employees" are hired would ordinarily have some relationship to the
usual business of the employer. Exceptionally, the "project" undertaking might not
have an ordinary or normal relationship to the usual business of the employer. In
this latter case, the determination of the scope and parameeters of the "project"
becomes fairly easy. It is unusual (but still conceivable) for a company to
undertake a project which has absolutely no relationship to the usual business of
the company; thus, for instance, it would be an unusual steel-making company
which would undertake the breeding and production of fish or the cultivation of
vegetables. From the viewpoint, however, of the legal characterization problem
here presented to the Court, there should be no difficulty in designating the
employees who are retained or hired for the purpose of undertaking fish culture
or the production of vegetables as "project employees," as distinguished from
ordinary or "regular employees," so long as the duration and scope of the project
were determined or specified at the time of engagement of the "project
employees." 7 For, as is evident from the provisions of Article 280 of the Labor
Code, quoted earlier, the principal test for determining whether particular
employees are properly characterized as "project employees" as distinguished
from "regular employees," is whether or not the "project employees" were
assigned to carry out a "specific project or undertaking," the duration (and scope)
of which were specified at the time the employees were engaged for that project.
In the realm of business and industry, we note that "project" could refer to one or
the other of at least two (2) distinguishable types of activities. Firstly, a project
could refer to a particular job or undertaking that is within the regular or usual
business of the employer company, but which is distinct and separate, and
identifiable as such, from the other undertakings of the company. Such job or
undertaking begins and ends at determined or determinable times. The typical
example of this first type of project is a particular construction job or project of a
construction company. A construction company ordinarily carries out two or more
discrete identifiable construction projects: e.g., a twenty-five- storey hotel in
Makati; a residential condominium building in Baguio City; and a domestic air
terminal in Iloilo City. Employees who are hired for the carrying out of one of
these separate projects, the scope and duration of which has been determined
and made known to the employees at the time of employment, are properly
treated as "project employees," and their services may be lawfully terminated at
completion of the project.
The term "project" could also refer to, secondly, a particular job or undertaking
that is not within the regular business of the corporation. Such a job or
undertaking must also be identifiably separate and distinct from the ordinary or
regular business operations of the employer. The job or undertaking also begins
and ends at determined or determinable times. The case at bar presents what
appears to our mind as a typical example of this kind of "project."
NSC undertook the ambitious Five Year Expansion Program I and II with the
ultimate end in view of expanding the volume and increasing the kinds of
products that it may offer for sale to the public. The Five Year Expansion Program
had a number of component projects: e.g., (a) the setting up of a "Cold Rolling
Mill Expansion Project"; (b) the establishment of a "Billet Steel-Making Plant"
(BSP); (c) the acquisition and installation of a "Five Stand TDM"; and (d) the
"Cold Mill Peripherals Project." 8 Instead of contracting out to an outside or
independent contractor the tasks of constructing the buildings with related civil
and electrical works that would house the new machinery and equipment, the
installation of the newly acquired mill or plant machinery and equipment and the
commissioning of such machinery and equipment, NSC opted to execute and
carry out its Five Yeear Expansion Projects "in house," as it were, by
administration. The carrying out of the Five Year Expansion Program (or more
precisely, each of its component projects) constitutes a distinct undertaking
identifiable from the ordinary business and activity of NSC. Each component
project, of course, begins and ends at specified times, which had already been
determined by the time petitioners were engaged. We also note that NSC did the
work here involved ? the construction of buildings and civil and electrical works,
installation of machinery and equipment and the commissioning of such
machinery ? only for itself. Private respondent NSC was not in the business of
constructing buildings and installing plant machinery for the general business
community, i.e., for unrelated, third party, corporations. NSC did not hold itself out
to the public as a construction company or as an engineering corporation.
Which ever type of project employment is found in a particular case, a common
basic requisite is that the designation of named employees as "project
employees" and their assignment to a specific project, are effected and
implemented in good faith, and not merely as a means of evading otherwise
applicable requirements of labor laws.
Thus, the particular component projects embraced in the Five Year Expansion
Program, to which petitioners were assigned, were distinguishable from the
regular or ordinary business of NSC which, of course, is the production or making
and marketing of steel products. During the time petitioners rendered services to
NSC, their work was limited to one or another of the specific component projects
which made up the FAYEP I and II. There is nothing in the record to show that
petitioners were hired for, or in fact assigned to, other purposes, e.g., for
operating or maintaining the old, or previously installed and commissioned, steel-
making machinery and equipment, or for selling the finished steel products.
We, therefore, agree with the basic finding of the NLRC (and the Labor Arbiter)
that the petitioners were indeed "project employees:"
It is well established by the facts and evidence on record that

herein 13 complainants were hired and engaged for specific
activities or undertaking the period of which has been determined at
time of hiring or engagement. It is of public knowledge and which
this Commission can safely take judicial notice that the expansion
program (FAYEP) of respondent NSC consist of various phases [of]
project components which are being executed or implemented
independently or simultaneously from each other . . .
In other words, the employment of each "project worker" is

dependent and co-terminous with the completion or termination of
the specific activity or undertaking [for which] he was hired which
has been pre-determined at the time of engagement. Since, there is
no showing that they (13 complainants) were engaged to perform
work-related activities to the business of respondent which is steel-
making, there is no logical and legal sense of applying to them the
proviso under the second paragraph of Article 280 of the Labor
Code, as amended.
xxx xxx xxx
The present case therefore strictly falls under the definition of

"project employees" on paragraph one of Article 280 of the Labor
Code, as amended. Moreover, it has been held that the length of
service of a project employee is not the controlling test of
employment tenure but whether or not "the 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". (See Hilario Rada v. NLRC, G.R.
No. 96078, January 9, 1992; and Sandoval Shipping, Inc. v. NLRC,
136 SCRA 674 (1985). 9
Petitioners next claim that their service to NSC of more than six (6) years should
qualify them as regular employees. We believe this claim is without legal basis.
The simple fact that the employment of petitioners as project employees had
gone beyond one (1) year, does not detract from, or legally dissolve, their status
as project employees. 10 The second paragraph of Article 280 of the Labor Code,
quoted above, providing that an employee who has served for at least one (1)
year, shall be considered a regular employee, relates to casual employees, not to
project employees.
In the case of Mercado, Sr. vs. National Labor Relations Commission, 11 this
Court ruled that the proviso in the second paragraph of Article 280 relates only to
casual employees and is not applicable to those who fall within the definition of
said Article's first paragraph, i.e., project employees. The familiar grammatical
rule is that a proviso is to be construed with reference to the immediately
preceding part of the provision to which it is attached, and not to other sections
thereof, unless the clear legislative intent is to restrict or qualify not only the
phrase immediately preceding the proviso but also earlier provisions of the
statute or even the statute itself as a whole. No such intent is observable in
Article 280 of the Labor Code, which has been quoted earlier.
ACCORDINGLY, in view of the foregoing, the Petition for Certiorari is hereby

DISMISSED for lack of merit. The Resolutions of the NLRC dated 8 January
1993 and 15 February 1993 are hereby AFFIRMED. No pronouncement as to
costs.
SO ORDERED.

SUPREME COURT
Manila
SECOND DIVISION
G.R. No. 118870 March 29, 1996

NERISSA Z. PEREZ, petitioner,
vs.
THE COURT OF APPEALS (Ninth Division) and RAY C. PEREZ,
respondents.
ROMERO, J.:p
Parties herein would have this Court duplicate the feat of King
Solomon who was hailed in Biblical times for his sagacious, if, at
times unorthodox, manner of resolving conflicts, the most celebrated
case being that when his authority was invoked to determine the
identity of the real mother as between two women claiming the same
infant. Since there could only be one mother, the daunting task that
confronted the king/judge was to choose the true one.
In the instant case, we are faced with the challenge of deciding, as

between father and mother, who should have rightful custody of a
child who bears in his person both their genes.
While there is a provision of law squarely in point, the two courts

whose authority have been invoked to render a decision have arrived
at diametrically opposite conclusions.
It has fallen upon us now to likewise act as judge between the trial
court, on the one hand, and the appellate, on the other.
On the issue of custody over the minor Ray Perez II, respondent
Court of Appeals ruled in favor of the boy's father Ray C. Perez,
reversing the trial court's decision to grant custody to Nerissa Z.
Perez, the child's mother.
Ray Perez, private respondent, is a doctor of medicine practicing in

Cebu while Nerissa, his wife who is petitioner herein, is a registered
nurse. They were married in Cebu on December 6, 1986. After six
miscarriages, two operations and a high-risk pregnancy, petitioner
finally gave birth to Ray Perez II in New York on July 20, 1992.
Petitioner who began working in the United States in October 1988,

used part of her earnings to build a modest house in Mandaue City,
Cebu. She also sought medical attention for her successive
miscarriages in New York. She became a resident alien in February
1992.
Private respondent stayed with her in the U.S. twice and took care of
her when she became pregnant. Unlike his wife, however, he had
only a tourist visa and was not employed.
On January 17, 1993, the couple and their baby arrived in Cebu. After
a few weeks, only Nerissa returned to the U.S. She alleged that they
came home only for a five-week vacation and that they all had round-
trip tickets. However, her husband stayed behind to take care of his
sick mother and promised to follow her with the baby. According to
Ray, they had agreed to reside permanently in the Philippines but
once Nerissa was in New York, she changed her mind and continued
working. She was supposed to come back immediately after winding
up her affairs there.
When Nerissa came home a few days, before Ray II's first birthday,
the couple was no longer on good terms. That their love for each
other was fading became apparent from their serious quarrels.
Petitioner did not want to live near her in-laws and rely solely on her
husband's meager income of P5,000.00. 1 She longed to be with her
only child but he was being kept away from her by her husband.
Thus, she did not want to leave RJ (Ray Junior) with her husband
and in-laws. She wished for her son to grow up with his mother.
On the other hand, Ray wanted to stay here, where he could raise his
son even as he practiced his profession. He maintained that it would
not be difficult to live here since they have their own home and a car.
They could live comfortably on his P15,000.00 monthly income 2 as
they were not burdened with having to pay any debts.
Petitioner was forced to move to her parents' home on Guizo Street

in Mandaue. Despite mediation by the priest who solemnized their
marriage, the couple failed to reconcile.
On July 26, 1993, Nerissa Z. Perez filed a petition for habeas corpus 3
asking respondent Ray C. Perez to surrender the custody of their
son, Ray Z. Perez II, to her.
On August 27, 1993, the court a quo issued an Order awarding
custody of the one-year old child to his mother, Nerissa Perez, citing
the second paragraph of Article 213 of the Family Code which
provides that no child under seven years of age shall be separated
from the mother, unless the court finds compelling reasons to order
otherwise. The dispositive portion of the Order reads:
WHEREFORE, foregoing premises considered, Order is

hereby issued ordering the respondent to turn over the
custody of their child Ray Cortes Perez II, his passport
and round trip ticket to herein petitioner with a warning
that if he will escape together with the child for the
purpose of hiding the minor child instead of complying
with this Order, that warrant for his arrest will be issued.
SO ORDERED. 4
Upon appeal by Ray Perez, the Court of Appeals, on September 27,

1994, reversed the trial court's order and awarded custody of the boy
to his father. 5
Petitioner's motion for reconsideration having been denied, 6 she filed

the instant petition for review where the sole issue is the custody of
Ray Perez II, now three years old.
Respondent court differed in opinion from the trial court and ruled that
there were enough reasons to deny Nerissa Perez custody over Ray
II even if the child is under seven years old. It held that granting
custody to the boy's father would be for the child's best interest and
welfare. 7
Before us is the unedifying situation of a husband and wife in marital

discord, struggling for custody of their only child. It is sad that
petitioner and private respondent have not found it in their hearts to
understand each other and live together once again as a family.
Separated in fact, they now seek the Court's assistance in the matter
of custody or parental authority over the child.
The wisdom and necessity for the exercise of joint parental authority
need not be belabored. The father and the mother complement each
other in giving nurture and providing that holistic care which takes into
account the physical, emotional, psychological, mental, social and
spiritual needs of the child. By precept and example, they mold his
character during his crucial formative years.
However, the Court's intervention is sought in order that a decision

may be made as to which parent shall be given custody over the
young boy. The Court's duty is to determine whether Ray Perez II will
be better off with petitioner or with private respondent. We are not
called upon to declare which party committed the greater fault in their
domestic quarrel.
When the parents of the child are separated, Article 213 of the Family
Code is the applicable law. It provides:
Art. 213. In case of separation of the parents, parental

authority shall be exercised by the parent designated by
the Court. The Court shall take into account all relevant
considerations, especially the choice of the child over
seven years of age, unless the parent chosen is unfit.
No child under seven years of age shall be separated

from the mother. unless the court finds compelling
reasons to order otherwise. (Emphasis supplied).
Since the Code does not qualify the word "separation" to mean legal
separation decreed by a court, couples who are separated in fact,
such as petitioner and private respondent, are covered within its
terms. 8
The Revised Rules of Court also contains a similar provision. Rule

99, section 6 (Adoption and Custody of Minors) provides:
Sec. 6. Proceedings as to child whose parents are

separated. Appeal. When husband and wife are divorced
or living separately, and apart from each other, and the
questions as to the care, custody, and control of a child or
children of their marriage is brought before a Court of
First Instance by petition or as an incident to any other
proceeding, the court, upon hearing the testimony as may
be pertinent, shall award the care, custody, and control of
each such child as will be for its best interest, permitting
the child to choose which parent it prefers to live with if it
be over ten years of age, unless the parent chosen be
unfit to take charge of the child by reason of moral
depravity, habitual drunkenness, incapacity, or
poverty. . . . No child under seven years of age shall be
separated from its mother, unless the court finds there are
compelling reasons therefor. (Emphasis supplied)
The provisions of law quoted above clearly mandate that a child

under seven years of age shall not be separated from his mother
unless the court finds compelling reasons to order otherwise. The use
of the word "shall" in Article 213 of the Family Code and Rule 99,
section 6 of the Revised Rules of Court connotes a mandatory
character. In the case of Lacson v. San Jose-Lacson, 9 the Court
declared:
The use of the word shall in article 363 10 of the Civil Code,
coupled with the observations made by the Code Commission in respect to the
said legal provision, underscores its mandatory character. It prohibits in no
uncertain terms the separation of a mother and her child below seven years,
unless such separation is grounded upon compelling reasons as determined by a
court. 11
The rationale for awarding the custody of children younger than

seven years of age to their mother was explained by the Code
Commission:
The general rule is recommended in order to avoid many

a tragedy where a mother has seen her baby torn away
from her. No man can sound the deep sorrows of a
mother who is deprived of her child of tender age. The
exception allowed by the rule has to be for "compelling
reasons" for the good of the child; those cases must
indeed be rare, if the mother's heart is not to be unduly
hurt. If she has erred, as in cases of adultery, the penalty
of imprisonment and the divorce decree (relative divorce)
will ordinarily be sufficient punishment for her. Moreover,
moral dereliction will not have any effect upon the baby
who is as yet unable to understand her situation. (Report
of the Code Commission, p. 12) 12
The Family Code, in reverting to the provision of the Civil Code that a
child below seven years old should not be separated from the mother
(Article 363), has expressly repealed the earlier Article 17, paragraph
three of the Child and Youth Welfare Code (Presidential Decree No.
603) which reduced the child's age to five years. 13
The general rule that a child under seven years of age shall not be
separated from his mother finds its raison d'être in the basic need of
a child for his mother's loving care. 14 Only the most compelling of
reasons shall justify the court's awarding the custody of such a child
to someone other than his mother, such as her unfitness to exercise
sole parental authority. In the past the following grounds have been
considered ample justification to deprive a mother of custody and
parental authority: neglect, abandonment, 15 unemployment and
immorality, 16 habitual drunkenness, 17 drug addiction, maltreatment of
the child, insanity and being sick with a communicable disease. 18
It has long been settled that in custody cases, 19 the foremost

consideration is always the welfare and best interest of the child. In
fact, no less than an international instrument, the Convention on the
Rights of the Child provides: "In all actions concerning children,
whether undertaken by public or private social welfare institutions,
courts of law, administrative authorities or legislative bodies, the best
interests of the child shall be a primary consideration." 20
Courts invariably look into all relevant factors presented by the

contending parents, such as their material resources, social and
moral
situations. 21
In the case at bench, financial capacity is not a determinative factor

inasmuch as both parties have demonstrated that they have ample
means.
Respondent court stated that petitioner has no permanent place of

work in the U.S.A. and has taken this point against her. The records,
however, show that she is employed in a New York hospital 22 and
was, at the time the petition was filed, still abroad. 23 She testified that
she intends to apply for a job elsewhere, presumably to improve her
work environment and augment her income, as well as for
convenience. 24 The Court takes judicial notice of the fact that a
registered nurse, such as petitioner, is still very much in demand in
the United States. Unlike private respondent, a doctor who by his own
admission could not find employment there, petitioner immediately
got a job in New York. Considering her skill and experience petitioner
should find no difficulty in obtaining work elsewhere, should she
desire to do so.
The decision under review casts doubt on petitioner's capability to

take care of the child, particularly since she works on twelve-hour
shifts thrice weekly, at times, even at night. There being no one to
help her look after the child, it is alleged that she cannot properly
attend to him. This conclusion is as unwarranted as it is
unreasonable. First, her present work schedule is not so
unmanageable as to deprive her of quality time for Ray II. Quite a
number of working mothers who are away from home for longer
periods of time are still able to raise a family well, applying time
management principles judiciously. Second, many a mother, finding
herself in such a position, has invited her own mother or relative to
join her abroad, providing the latter with plane tickets and liberal
allowances, to look after the child until he is able to take care of
himself. Others go on leave from work until such time as the child can
be entrusted to day-care centers. Delegating child care temporarily to
qualified persons who run day-care centers does not detract from
being a good mother, as long as the latter exercises supervision, for
even in our culture, children are often brought up by housemaids or
"yayas" under the eagle eyes of the mother. Third, private
respondent's work schedule was not presented in evidence at the
trial. Although he is a general practitioner, the records merely show
that he maintains a clinic, works for several companies on retainer
basis and teaches part-time. 25 Hence, respondent court's conclusion
that "his work schedule is flexible (and h)e can always find time for
his son" 26 is not well-founded. Fourth, the fact that private respondent
lives near his parents and sister is not crucial in this case. Fifth,
petitioner's work schedule cited in the respondent court's decision is
not necessarily permanent. Hospitals work in shifts and, given a
mother's instinctive desire to lavish upon her child the utmost care,
petitioner may be expected to arrange her schedule in such a way as
to allocate time for him. Finally, it does not follow that petitioner
values her career more than her family simply because she wants to
work in the United States. There are any number of reasons for a
person's seeking a job outside the country, e.g. to augment her
income for the family's benefit and welfare, and for psychological
fulfillment, to name a few. In the instant case, it has been shown that
petitioner earned enough from her job to be able to construct a house
for the family in Mandaue City. The record describes sketchily the
relations between Ray and Nerissa Perez. The transcripts of the
three hearings are inadequate to show that petitioner did not exert
earnest efforts and make sacrifices to save her marriage.
It is not difficult to imagine how heart-rending it is for a mother whose

attempts at having a baby were frustrated several times over a period
of six years to finally bear one, only for the infant to be snatched from
her before he has even reached his first year. The mother's role in the
life of her child, such as Ray II, is well-nigh irreplaceable. In prose
and poetry, the depth of a mother's love has been immortalized times
without number, finding as it does, its justification, not in fantasy but in
reality.
WHEREFORE, the petition for review is GRANTED. The decision of

the Court of Appeals dated September 27, 1994 as well as its
Resolution dated January 24, 1995 are hereby REVERSED and SET
ASIDE. The Order of the trial court dated August 27, 1993 is hereby
REINSTATED. Custody over the minor Ray Z. Perez II is awarded to
his mother, herein petitioner Nerissa Z. Perez. This decision is
immediately executory.
SO ORDERED.

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Republic of the Philippines

G.R. No. 72005 May 29, 1987

PHILIPPINE BRITISH ASSURANCE CO., INC., petitioner,

WHEREFORE, plaintiff's Motion for Summary Judgment is hereby

1. To pay plaintiff the amount of P1,401,468.00, the principal

3. To pay plaintiff P30,000.00 as exemplary damages;

4. To pay plaintiff 15% of P1,401,468.00, the principal obligation, as

5. To pay the costs of suit.

Accordingly, the counterclaim of the defendant is hereby

Varian Industrial Corporation appealed the decision to the respondent Court.

It is the submission of private respondent Sycwin that without a previous motion

The counterbond provides:

WHEREAS, in the above-entitled case pending in the Regional Trial

WHEREAS, the Defendant, for the purpose of lifting and/or

NOW, THEREFORE, we, VARIAN INDUSTRIAL CORPORATION,

EXECUTED at Manila, Philippines, this 28th day of June, 1984. 12

SEC. 5. Manner of attaching property. ? The officer executing the

SEC. 12. Discharge of attachment upon giving counterbond. ? At

SEC. 17. When execution returned unsatisfied, recovery had upon

G.R. No. 115245 July 11, 1995

JUANITO C. PILAR, petitioner,

On March 25, 1992, petitioner withdrew his certificate of candidacy.

Hence, this petition for certiorari.

We dismiss the petition.

Statement of Contributions and Expenditures: Effect of Failure to

The same prohibition shall apply if the political party which

Except candidates for elective barangay office, failure to file the

It shall be the duty of every city or municipal election registrar to

For the commission of a second or subsequent offense under this

To implement the provisions of law relative to election contributions and

Sec. 13. Statement of contributions and expenditures: Reminders

Sec. 17. Effect of failure to file statement. (a) No person elected to

The same prohibition shall apply if the political party which

(b) Except candidates for elective barangay office, failure to file

For the commission of a second or subsequent offense under this

Petitioner's argument is without merit.

In the case at bench, as the law makes no distinction or qualification as to

WHEREFORE, the petition is DISMISSED.

Kapunan, J., is on leave.

MELO, J., dissenting:

I, therefore, vote to grant the petition.

Padilla, J., concurs.

MELO, J., dissenting:

I, therefore, vote to grant the petition.

Padilla, J., concurs.

Republic of the Philippines

G.R. No. 110898 February 20, 1996

PEOPLE OF THE PHILIPPINES, petitioner,

That on or about the 26th day of May, 1988, at more or

Stab wound, right iliac area,

thus performing all the acts of execution which would

CONTRARY TO and in violation of Article 249 in relation

On appeal the Court of Appeals affirmed private respondent's

On December 28, 1992, private respondent filed a petition for

On February 2, 1993, the RTC ordered private respondent to report

On February 18, 1993, Chief Probation and Parole Officer Isias B.

On April 16, 1993 Valdehueza reiterated 5 his "respectful

The Court holds that it did.

?4. Grant of Probation. ? Subject to the provisions of this

Probation may be granted whether the sentence imposes

An order granting or denying probation shall not be

Since private respondent filed his application for probation on

Private respondent argues, however, that a distinction should be