G.R. No.
79094 June 22, 1988 basis of the conviction was based solely on the stipulation of facts made during the
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
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.
 G.R. No. L-35910 July 21, 1978
PURITA BERSABAL, petitioner,
vs.
HONORABLE JUDGE SERAFIN SALVADOR, as Judge of the Court of First Instance of
Caloocan City, Branch XIV, TAN THAT and ONG PIN TEE, respondents.
MAKASIAR, J.:
On March 23, 1972, petitioner Purita Bersabal seeks to annul the orders of respondent
Judge of August 4, 1971, October 30, 1971 and March 15, 1972 and to compel said
respondent Judge to decide petitioner's perfected appeal on the basis of the evidence
and records of the case submitted by the City Court of Caloocan City plus the
memorandum already submitted by the petitioner and respondents.
Since only questions of law were raised therein, the Court of Appeals, on October 13,
1972, issued a resolution certifying said case to this Court pursuant to Section 17,
paragraph (4) of the Judiciary Act of 1948, as amended.
As found by the Court of Appeals, the facts of this case are as follows:
It appears that private respondents Tan That and Ong Pin Tee filed an ejectment suit,
docketed as Civil Case No. 6926 in the City Court of Caloocan City, against the
petitioner. A decision was rendered by said Court on November 25, 1970, which
decision was appealed by the petitioner to the respondent Court and docketed therein
as Civil Case No. C-2036.
During the pendency of the appeal the respondent court issued on March 23, 1971 an
order which reads:
Pursuant to the provisions of Rep. Act No. 6031, the Clerk of Court of Caloocan City, is
hereby directed to transmit to this Court within fifteen (15) days from receipt hereof
the transcripts of stenographic notes taken down during the hearing of this case
before the City Court of Caloocan City, and likewise, counsels for both parties are
given thirty (30) days from receipt of this order within which to file their respective
memoranda, and thereafter, this case shall be deemed submitted for decision by this
Court.
which order was apparently received by petitioner on April 17, 1971.
The transcript of stenographic notes not having yet been forwarded to the respondent
court, petitioner filed on May 5, 1971 a 'MOTION EX-PARTE TO SUBMIT
MEMORANDUM WITHIN 30 DAYS FROM RECEIPT OF NOTICE OF SUBMISSION OF THE
TRANSCRIPT OF STENOGRAPHIC NOTES TAKEN DURING THE HEARING OF THE CASE
BEFORE THE CITY COURT OF CALOOCAN CITY' which was granted by respondent court
on May 7, 1971. However, before the petitioner could receive any such notice from
the respondent court, the respondent Judge issued an order on August 4, 1971 which
says:
For failure of the defendant-appellant to prosecute her appeal the same is hereby
ordered DISMISSED with costs against her.
Petitioner filed a motion for reconsideration of the order on September 28, 1971,
citing as a ground the granting of his ex-parte motion to submit memorandum within
30 days from notice of the submission of the stenographic notes taken before the City
Court. Private respondents filed their opposition to the motion on September 30,1971.
In the meantime, on October 20,1971, petitioner filed her memorandum dated
October 18, 1971. On October 30, 1971 the respondent Court denied the motion for
reconsideration. Then on January 25, 1972, petitioner filed a motion for leave to file
second motion for reconsideration which was likewise denied by the respondent court
on March 15, 1972. Hence this petition.
The sole inquiry in the case at bar can be stated thus: Whether, in the light of the
provisions of the second paragraph of Section 45 of Republic Act No. 296, as amended
by R.A. No. 6031, the mere failure of an appellant to submit on nine the memorandum
mentioned in the same paragraph would empower the Court of First Instance to
dismiss the appeal on the ground of failure to Prosecute; or, whether it is mandatory
upon said Court to proceed to decide the appealed case on the basis of the evidence
and records transmitted to it, the failure of the appellant to submit a memorandum on
time notwithstanding.
The second paragraph of Section 45 of R.A. No. 296, otherwise known as the
Philippine Judiciary Act of 1948, as amended by R.A. No. 6031 provides, in part, as
follows:
Courts of First Instance shall decide such appealed cases on the basis of the evidence
and records transmitted from the city or municipal courts: Provided, That the parties
may submit memoranda and/or brief with oral argument if so requested ... . (Emphasis
supplied).
The foregoing provision is clear and leaves no room for doubt. It cannot be interpreted
otherwise than that the submission of memoranda is optional on the part of the
parties. Being optional on the part of the parties, the latter may so choose to waive
submission of the memoranda. And as a logical concomitant of the choice given to the
Parties, the Court cannot dismiss the appeal of the party waiving the submission of
said memorandum the appellant so chooses not to submit the memorandum, the
Court of First Instance is left with no alternative but to decide the case on the basis of
the evidence and records transmitted from the city or municipal courts. In other
words, the Court is not empowered by law to dismiss the appeal on the mere failure of
an appellant to submit his memorandum, but rather it is the Court's mandatory duty
to decide the case on the basis of the available evidence and records transmitted to it.
As a general rule, the word "may" when used in a statute is permissive only and
operates to confer discretion; while the word "shall" is imperative, operating to
impose a duty which may be enforced (Dizon vs. Encarnacion, L-18615, Dec. 24, 1963,
9 SCRA 714, 716-717). The implication is that the Court is left with no choice but to
decide the appealed case either on the basis of the evidence and records transmitted
to it, or on the basis of the latter plus memoranda and/or brief with oral argument
duly submitted and/or made on request.
Moreover, memoranda, briefs and oral arguments are not essential requirements.
They may be submitted and/or made only if so requested.
Finally, a contrary interpretation would be unjust and dangerous as it may defeat the
litigant's right to appeal granted to him by law. In the case of Republic vs. Rodriguez
(L-26056, May 29, 1969, 28 SCRA 378) this Court underscored "the need of proceeding
with caution so that a party may not be deprived of its right to appeal except for
weighty reasons." Courts should heed the rule in Municipality of Tiwi, Albay vs.
Cirujales
(L-37520, Dec. 26, 1973, 54 SCRA 390, 395), thus:
The appellate court's summary dismissal of the appeal even before receipt of the
records of the appealed case as ordered by it in a prior mandamus case must be set
aside as having been issued precipitously and without an opportunity to consider and
appreciate unavoidable circumstances of record not attributable to petitioners that
caused the delay in the elevation of the records of the case on appeal.
In the instant case, no notice was received by petitioner about the submission of the
transcript of the stenographic notes, so that his 30-day period to submit his
memorandum would commence to run. Only after the expiration of such period can
the respondent Judge act on the case by deciding it on the merits, not by dismissing
the appeal of petitioner.
WHEREFORE, THE CHALLENGED ORDERS OF RESPONDENT JUDGE DATED AUGUST 4,
1971, OCTOBER 30, 1971 AND MARCH 15, 1971 ARE HEREBY SET ASIDE AS NULL AND
VOID AND THE RESPONDENT COURT IS HEREBY DIRECTED TO DECIDE CIVIL CASE NO.
C-2036 ON THE MERITS. NO COSTS.
Muñoz Palma, Fernandez and Guerrero, JJ., concur.
Separate Opinions
TEEHANKEE, J, concurring:
I concur with the setting aside of the questioned dismissal of petitioner's appeal on
the ground that the record shows quite clearly that there was no failure on part of
petitioner-appellant to prosecute her appeal in respondent judge's court. Petitioner
had been granted in respondent judge's Order of May 7, 1971, 30 days from notice of
submission of the transcripts within which to file her memorandum on appeal, yet her
appeal was dismissed per his Order of August 4, 1971 for alleged failure to prosecute
(by failure to file the memorandum) even before she had received any such notice.
Upon receipt of the dismissal order, petitioner had promptly moved for
reconsideration and filed her memorandum on appeal.
I am not prepared at this stage to concur with the ratio decidendi of the decision
penned by Mr. Justice Makasiar that the Court is not empowered by law to dismiss the
appeal on the mere failure of an appellant to submit his memorandum, but rather it is
the Court's mandatory duty to decide the case on the basis of the available evidence
and records transmitted to it." I entertain serious doubts about such pronouncement,
once when the court of first instance "requests" the party-appellant to submit a
memorandum or brief on appeal under the provisions of Republic Act No. 6031
amending section 45 of Republic Act No. 296, such "request" is tantamount to a
requirement for the proper prosecution of the appeal; thus, when the appellant
willfuly fails to file such memorandum or brief, the judge should be empowered to
dismiss the appeal, applying suppletorily the analogous provisions of Rule 50, section 1
for dismissal of appeal by the higher appellate courts and taking into account that Rule
40, section 9 of the Rules of Court now expressly authorizes the court of first instance
to dismiss an appeal before it "for failure to prosecute."
Separate Opinions
TEEHANKEE, J, Concurring:
I concur with the setting aside of the questioned dismissal of petitioner's appeal on
the ground that the record shows quite clearly that there was no failure on part of
petitioner-appellant to prosecute her appeal in respondent judge's court. Petitioner
had been granted in respondent judge's Order of May 7, 1971, 30 days from notice of
submission of the transcripts within which to file her memorandum on appeal, yet her
appeal was dismissed per his Order of August 4, 1971 for alleged failure to prosecute
(by failure to file the memorandum) even before she had received any such notice.
Upon receipt of the dismissal order, petitioner had promptly moved for
reconsideration and filed her memorandum on appeal.
I am not prepared at this stage to concur with the ratio decidendi of the decision
penned by Mr. Justice Makasiar that the Court is not empowered by law to dismiss the
appeal on the mere failure of an appellant to submit his memorandum, but rather it is
the Court's mandatory duty to decide the case on the basis of the available evidence
and records transmitted to it." I entertain serious doubts about such pronouncement,
once when the court of first instance "requests" the party-appellant to submit a
memorandum or brief on appeal under the provisions of Republic Act No. 6031
amending section 45 of Republic Act No. 296, such "request" is tantamount to a
requirement for the proper prosecution of the appeal; thus, when the appellant
willfuly fails to file such memorandum or brief, the judge should be empowered to
dismiss the appeal, applying suppletorily the analogous provisions of Rule 50, section 1
for dismissal of appeal by the higher appellate courts and taking into account that Rule
40, section 9 of the Rules of Court now expressly authorizes the court of first instance
to dismiss an appeal before it "for failure to prosecute."
G.R. No. 167631 December 16, 2005
Jenette Marie B. Crisologo, Petitioner,
vs.
GLOBE TELECOM INC. and Cesar M. Maureal, Vice President for Human Resources,
Respondents.
RESOLUTION
AUSTRIA-MARTINEZ, J.:
Petitioner was an employee of respondent company. When she was promoted as
Director of Corporate Affairs and Regulatory Matters, she became entitled to an
executive car, and she procured a 1997 Toyota Camry. In April 2002, she was
separated from the company. Petitioner filed a complaint for illegal dismissal and
reinstatement with the National Labor Relations Commission (NLRC), which later
dismissed the complaint. Petitioner filed, on August 12, 2004, a petition for certiorari
with the Court of Appeals, docketed as CA-G.R. SP No. 85679 assailing the NLRC’s
dismissal.
Pending said petition, respondent company filed with the Regional Trial Court of
Mandaluyong (Branch 213) an action for recovery of possession of a motor vehicle
with application for a writ of replevin with damages, docketed as Civil Case No. MC04-
2480. Petitioner filed a motion to dismiss on the ground of litis pendentia and forum
shopping but this was denied by the trial court. Thus, petitioner filed a petition for
certiorari with the Court of Appeals, docketed as CA-G.R. SP No. 85927.1 Petitioner
also filed with the Court of Appeals a motion for the issuance of a writ of prohibition
to enjoin proceedings in the replevin case before the trial court.
Thereafter, respondent company filed a motion to declare defendant in default in Civil
Case No. MC04-2480, which was granted by the trial court. Respondent company was
thus allowed to present its evidence ex-parte. Petitioner filed a motion for
reconsideration of the order of default but it was denied by the trial court. On April 5,
2005, the trial court rendered a judgment by default, the dispositive portion of which
reads:
WHEREFORE, finding merit in all the foregoing uncontroverted facts supported by
documentary exhibits, judgment is hereby rendered declaring plaintiff to have the
right of possession over the subject motor vehicle and ordering defendant plaintiff to
pay plaintiff the following:
1. The amount of TWO MILLION FIVE HUNDRED FIFTY SIX THOUSAND FOUR HUNDRED
SIXTY PESOS (p2,556,460.00) as damages in the form of unpaid daily car rental for 730
(From 15 August 2002 until 22 June 2004) days at THREE THOUSAND FIVE HUNDRED
TWO PESOS (P3,502.00) per day;
2. The sum of TWO HUNDRED THOUSAND PESOS (₱200,000.00) AS AND BY WAY OF
Attorney’s fee;
3. The sum of TWO HUNDRED THOUSAND PESOS (₱200,000.00) as exemplary
damages in order to deter others from doing similar act in withholding possession of a
property to another to which he/she has no right to possess; and
4. Costs of suit.
SO ORDERED.
Petitioner then filed with the Court a petition for review on certiorari under Rule 45 of
the Rules of Court, which was denied by the Court in a Resolution dated May 16, 2005,
for being the wrong remedy under the 1997 Rules of Civil Procedure, as amended.
Petitioner thus filed the present motion for reconsideration, alleging that the filing of
said petition is the proper recourse, citing Matute vs. Court of Appeals, 26 SCRA 798
(1969), wherein it was ruled that a defendant declared in default has the remedy set
forth in Section 2, paragraph 3 of Rule 41 of the old Rules of Court.2 Petitioner then
cited in her motion, "Section 2, paragraph 3 or (c) of the Rules of Civil Procedure."3
Evidently, petitioner misread the provision cited in the Matute case as that pertaining
to Section 2(c), Rule 41 of the 1997 Rules of Civil Procedure, as amended, which
states: "(c) Appeal by certiorari. - In all cases where only questions of law are raised or
involved, the appeal shall be to the Supreme Court by petition for review on certiorari
in accordance with Rule 45." Hence, she directly filed her petition for review on
certiorari with the Court.
Petitioner should be reminded that the Matute case is of 1969 vintage and pertained
to the old Rules of Court. As stated in the Matute case, a defendant validly declared in
default has the remedy set forth in Section 2, paragraph 3 of Rule 41. Note that under
the old Rules, Section 2, paragraph 3 of Rule 41 governed appeals from Courts of First
Instance, the Social Security Commission and the Court of Agrarian Relations TO THE
COURT OF APPEALS, and reads:
A party who has been declared in default may likewise appeal from the judgment
rendered against him as contrary to the evidence or to the law, even if no petition for
relief to set aside the order of default has been presented by him in accordance with
Rule 38. (Emphasis supplied)
Had petitioner been more circumspect, she would have easily ascertained that said
Section 2, paragraph 3 of Rule 41 of the old Rules of Court, as cited in the Matute case,
had already been superseded by the 1997 Rules of Civil Procedure, as amended, and
under these new rules, the different modes of appeal are clearly laid down.
The decision sought to be reviewed in this case is a judgment by default rendered by
the trial court in Civil Case No. MC04-2480. As such, the applicable rule is Section 2,
Rule 41 of the 1997 Rules of Civil Procedure, as amended, which provides for the
different modes of appeal from a Regional Trial Court’s judgment or final order, to wit:
Section 2. Modes of appeal. —
(a) Ordinary appeal. — The appeal to the Court of Appeals in cases decided by the
Regional Trial Court in the exercise of its original jurisdiction shall be taken by filing a
notice of appeal with the court which rendered the judgment or final order appealed
from and serving a copy thereof upon the adverse party. No record on appeal shall
be required except in special proceedings and other cases of multiple or separate
appeals where the law or these Rules so require. In such cases, the record on appeal
shall be filed and served in like manner.
(b) Petition for review. — The appeal to the Court of Appeals in cases decided by the
Regional Trial Court in the exercise of its appellate jurisdiction shall be by petition for
review in accordance with Rule 42.
(c) Appeal by certiorari. — In all cases where only questions of law are raised or
involved, the appeal shall be to the Supreme Court by petition for review on certiorari
in accordance with Rule 45. (Emphasis supplied)
In Cerezo vs. Tuazon,4 the Court reiterated the remedies available to a party declared
in default:
a) The defendant in default may, at any time after discovery thereof and before
judgment, file a motion under oath to set aside the order of default on the ground
that his failure to answer was due to fraud, accident, mistake or excusable negligence,
and that he has a meritorious defense (Sec. 3, Rule 18 [now Sec. 3(b), Rule 9]);
b) If the judgment has already been rendered when the defendant discovered the
default, but before the same has become final and executory, he may file a motion for
new trial under Section 1 (a) of Rule 37;
c) If the defendant discovered the default after the judgment has become final and
executory, he may file a petition for relief under Section 2 [now Section 1] of Rule 38;
and
d) He may also appeal from the judgment rendered against him as contrary to the
evidence or to the law, even if no petition to set aside the order of default has been
presented by him (Sec. 2, Rule 41).
Moreover, a petition for certiorari to declare the nullity of a judgment by default is
also available if the trial court improperly declared a party in default, or even if the
trial court properly declared a party in default, if grave abuse of discretion attended
such declaration.5
The filing of the present petition is clearly not the proper remedy to assail the default
judgment rendered by the trial court. Petitioner still has the available remedy of filing
with the Regional Trial Court a motion for new trial or an ordinary appeal to the Court
of Appeals from the trial court’s default judgment. Note that petitioner admits that
she was "properly declared in default."6 Thus, there is no question of any improvident
or improper declaration of default by the trial court, and the remedy of filing a special
civil action for certiorari has been effectively foreclosed on petitioner. Her only
recourse then is to file an ordinary appeal with the Court of Appeals under Section
2(a), Rule 41 of the 1997 Rules of Civil Procedure, as amended.
Instead, she came directly to this Court via petition for review on certiorari, without
setting forth substantial reasons why the ordinary remedies under the law should be
disregarded and the petition entertained. Petitioner cannot even find solace in the
Matute case as the old Rules of Court then applicable explicitly laid down the remedy
of an ordinary appeal to the Court of Appeals, and not appeal by certiorari to this
Court, by a defendant declared in default.
Petitioner further argues that the petition involved questions of law, and the Court
should have taken cognizance of the case. The grounds set forth in her petition prove
otherwise, viz.:
GROUNDS
I
THE COMPLAINT FOR REPLEVIN FILED BY RESPONDENTS AGAINST PETITIONER
SHOULD HAVE BEEN DISMISSED ON THE GROUND OF LITIS PENDENTIA AND FOR
RESPONDENTS’ VIOLATION OF THE RULES AGAINST FORUM-SHOPPING
II
THE TRIAL COURT WENT AHEAD WITH THE EX-PARTE PRESENTATION OF
RESPONDENT’S EVIDENCE DESPITE THE PETITIONER’S PENDING MOTION FOR
RECONSIDERATION
III
THE MONETARY AWARDS FOR DAMAGES AND ATTORNEY’S FEES ARE UNWARRANTED
AND UNJUSTIFIABLE CONSIDERING THAT SUCH ARE NOT SUPPORTED BY LAW AND
JURISPRUDENCE
IV
THE COURT A QUO ISSUED THE ASSAILED DECISION IN A WAY THAT IT IS NOT IN
ACCORD WITH LAW OR APPLICABLE DECISIONS OF THE SUPREME COURT AND HAS SO
FAR DEPARTED FROM THE USUAL COURSE OF JUDICIAL PROCEEDINGS AS TO CALL FOR
THE EXERCISE BY THE SUPREME COURT OF ITS POWER OF SUPERVISION
The test of whether a question is one of law or of fact is not the appellation given to
such question by the party raising the same; rather, it is whether the appellate court
can determine the issue raised without reviewing or evaluating the evidence, in which
case, it is a question of law; otherwise, it is a question of fact.7 The issues on the
award of damages call for a re-evaluation of the evidence before the trial court, which
is obviously a question of fact. Cases where an appeal involved questions of fact, of
law, or both fall within the exclusive appellate jurisdiction of the Court of Appeals.8
(Emphasis supplied)
It is on this score that the Court is inclined to concur with petitioner’s argument that
even if the remedy resorted to was wrong, the Court may refer the case to the Court
of Appeals under Rule 56, Section 6, paragraph 2 of the 1997 Rules of Civil Procedure,
as amended, which provides: "(A)n appeal by certiorari taken to the Supreme Court
from the Regional Trial Court submitting issues of fact may be referred to the Court of
Appeals for decision or appropriate action." This despite the express provision in
Section 5(f) of the same Rule, which provides that an appeal may be dismissed when
there is error in the choice or mode of appeal.
Both Sections 5(f) and 6 of Rule 57 use the term "may," denoting discretion on the
part of the Court in dismissing the appeal or referring the case to the Court of Appeals.
The question of fact involved in the appeal and substantial ends of justice warrant a
referral of this case to the Court of Appeals for further appropriate proceedings.
WHEREFORE, the motion for reconsideration is GRANTED. The petition is reinstated
and the case is REFERRED to the Court of Appeals for appropriate action.
SO ORDERED.
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 Decision1 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.
G.R. No. 170678 July 17, 2006
ROMMEL G. MUÑOZ, petitioner,
vs.
COMMISSION ON ELECTIONS, CARLOS IRWIN G. BALDO, JR., respondents.
DECISION
YNARES-SANTIAGO, J.:
This is a petition for certiorari and prohibition with prayer for the issuance of a writ of
preliminary injunction and/or temporary restraining order filed by petitioner Rommel
G. Muñoz assailing the Resolution1 dated December 15, 2005 of the Commission on
Elections (COMELEC) En Banc in SPC No. 04-124 which affirmed the Resolution2 dated
October 25, 2004 of the COMELEC First Division granting the petition of private
respondent Carlos Irwin G. Baldo, Jr. to annul petitioner's proclamation as mayor of
Camalig, Albay.
The facts of the case are as follows:
Petitioner and private respondent were candidates for mayor of Camalig, Albay in the
May 10, 2004 election.3 At 6:00 o'clock in the evening of May 10, 2004, the Municipal
Board of Canvassers (MBC) convened and canvassed the election returns (ER). 4
On May 11, 2004, the lawyers of private respondent objected to the inclusion of the
26 ERs from various precincts based on the following grounds: 1) eight ERs lack inner
seal; 2) seven ERs lack material data; 3) one ER lack signatures; 4) four ERs lack
signatures and thumbmarks of the members of the Board of Election Inspectors on the
envelope containing them; 5) one ER lack the name and signature of the poll clerk on
the second page thereof; 6) one ER lack the number of votes in words and figures; and
7) four ERs were allegedly prepared under intimidation.5
On May 13, 2004, the MBC denied the objections and ruled to include the objected
ERs in the canvass. Private respondent appealed the said ruling to the COMELEC on
May 18, 2004 and was docketed as SPC No. 04-087 and raffled to the COMELEC First
Division.6
Despite the pendency of the appeal, petitioner was proclaimed on May 19, 2004 by
the MBC as the winning candidate for mayor of Camalig, Albay.7
On May 21, 2004, private respondent filed with the COMELEC a petition to annul the
proclamation of the petitioner for being premature and illegal. The case was docketed
as SPC No. 04-124 and raffled to the COMELEC First Division.8
On October 25, 2004, the COMELEC First Division rendered a Resolution in SPC No. 04-
124 granting the petition to annul the proclamation. The dispositive portion thereof
reads:
WHEREFORE, in view of the foregoing, the Commission (FIRST DIVISION) hereby
GRANTS the Petition. The proclamation of x x x ROMMEL MUñOZ as winning candidate
for mayor of Camalig, Albay is ANNULLED for having been made in an irregular
proceeding and for being precipitate and premature.
SO ORDERED.9
Petitioner's motion for reconsideration10 was denied for lack of merit by the COMELEC
En Banc in a Resolution dated December 15, 2005, thus:
WHEREFORE, premises considered, the Commission En Banc hereby DENIES the
Motion for Reconsideration filed by x x x Muñoz for lack of merit. Accordingly, the
ANNULMENT and SETTING ASIDE, by the First Division, of the proclamation of x x x
ROMMEL MUñOZ as the duly elected Mayor is hereby AFFIRMED.
The Regional Election Director of Region V, Atty. Zacarias C. Zaragoza, Jr., is hereby
DIRECTED to constitute a new Municipal Board of Canvassers from among the Election
Officers in the Region.
Accordingly, the new Municipal Board of Canvassers of Camalig, Albay is hereby
DIRECTED to:
a) RECONVENE, and after due notice to all parties/candidates concerned,
b) RE-CANVASS all the election returns of Camalig, Albay, and on the basis thereof,
c) PREPARE a new Certificate of Canvass, and forthwith
d) PROCLAIM the winning candidates for Mayoralty position.
SO ORDERED.11
Hence, petitioner files the instant petition for certiorari and prohibition with prayer for
the issuance of a writ of preliminary injunction and/or temporary restraining order.
On January 17, 2006, the Court issued a temporary restraining order effective
immediately and ordered the COMELEC to cease and desist from implementing and
enforcing the December 15, 2005 Resolution in SPC No. 04-124.12
Petitioner relies on the following grounds in support of his petition:
I questions of law and fact.
THE PUBLIC [RESPONDENT] COMELEC COMMITTED GRAVE ABUSE OF DISCRETION
AMOUNTING TO LACK OR EXCESS OF JURISDICTION WHEN IT ISSUED THE ASSAILED
RESOLUTION DENYING FOR LACK OF MERIT PETITIONER'S MOTION FOR
RECONSIDERATION OF THE 25 OCTOBER [2004] RESOLUTION OF THE PUBLIC
RESPONDENT'S FIRST DIVISION, FOR BEING CONTRARY TO LAW, RULES AND WELL-
SETTLED JURISPRUDENCE;
II
THE PUBLIC RESPONDENT COMMITTED GRAVE ABUSE OF DISCRETION AMOUNTING
TO LACK OR EXCESS OF JURISDICTION WHEN IT ISSUED THE ASSAILED RESOLUTION
ANNULLING AND SETTING ASIDE THE PROCLAMATION OF PETITIONER AS DULY
ELECTED MAYOR OF CAMALIG, ALBAY WITHOUT FIRST RESOLVING THE PENDING
APPEAL FIRST INITIATED, SPC 04-87;
III
THE PUBLIC RESPONDENT COMMITTED GRAVE ABUSE OF DISCRETION AMOUNTING
TO LACK OR EXCESS OF JURISDICTION WHEN IT ISSUED THE ASSAILED RESOLUTION
DIRECTING THE NEW MUNICIPAL BOARD OF CANVASSERS OF CAMALIG, ALBAY, TO
RECONVENE AND RE-CANVASS ALL ELECTION RESULTS OF CAMALIG, ALBAY, FOR
BEING CONTRARY TO LAW.13
The foregoing issues may be summarized into two: 1) whether or not the COMELEC
First Division committed grave abuse of discretion when it decided only the Petition to
Annul Proclamation despite the agreement of the parties to consolidate private
respondent's appeal from the ruling of the MBC since both cases were raffled to the
same Division and the issue in the latter case was connected to, if not determinative
of, the merits of the former case; and 2) whether or not the COMELEC En Banc
correctly ordered the new MBC to re-canvass all the ERs and to proclaim the winner
on the basis thereof despite the pendency of the appeal with the First Division.
The petition is partly granted.
Anent the first issue, we find no merit in petitioner's contention.
While Section 9, Rule 3 of the COMELEC Rules of Procedure provides that "when an
action or proceeding involves a question of law and fact which is similar to or common
with that of another action or proceeding, the same may be consolidated with the
action or proceeding bearing the lower docket number," however, this rule is only
permissive, not mandatory. We have consistently held that the term "may" is
indicative of a mere possibility, an opportunity or an option. The grantee of that
opportunity is vested with a right or faculty which he has the option to exercise. If he
chooses to exercise the right, he must comply with the conditions attached thereto, 14
which in this case require that the cases to be consolidated must involve similar
In the case at bar, the consolidation of SPC No. 04-087 with SPC No. 04-124 is
inappropriate as they do not involve similar questions of law and fact. SPC No. 04-087
assails the inclusion of the 26 ERs by the MBC on the ground that these were
incomplete, contained material defects and were prepared under intimidation, issues
which are proper for a pre-proclamation controversy under paragraphs (b) and (c) of
Section 243 of the Omnibus Election Code. On the other hand, SPC No. 04-124 is a
petition for the annulment of petitioner's proclamation for allegedly being
prematurely done, in violation of Section 36(i) of COMELEC Resolution No. 6669 15
which instructs the board of canvassers "not proclaim any candidate as winner unless
authorized by the Commission after the latter has ruled on the objections brought to it
on appeal by the losing party; [a]ny proclamation made in violation hereof shall be
void ab initio, unless the contested returns/certificates will not affect the results of the
elections." In fine, SPC No. 04-087 pertains to the preparation of the ERs which is a
pre-proclamation controversy, while SPC No. 04-124 refers to the conduct of the MBC
in proclaiming the petitioner without authority of the COMELEC.
Mere pendency of the two cases before the same division of the COMELEC is not a
ground for their outright consolidation. The discretion to consolidate cases may be
exercised only when the conditions are present. In any event, the records are bereft of
evidence that the parties agreed to consolidate the two cases or that the COMELEC
First Division had granted the same.
Further, we find that the COMELEC First Division correctly annulled the proclamation
of the petitioner. Time and again, this Court has given its imprimatur on the principle
that COMELEC is with authority to annul any canvass and proclamation which was
illegally made.16 At the time the proclamation was made, the COMELEC First Division
had not yet resolved SPC No. 04-087. Pursuant to Section 36(i) of COMELEC Resolution
No. 6669, which finds basis in Section 20(i) of Republic Act (R.A.) No. 7166,17 the MBC
should not have proclaimed petitioner as the winning candidate absent the
authorization from the COMELEC. Any proclamation made under such circumstances
is void ab initio.18
We likewise do not agree with petitioner's contention that the proclamation was valid
as the contested ERs will not affect the results of the election.
Section 20(i) of R.A. No. 7166 reads:
Sec. 20. Procedure in Disposition of Contested Election Returns. –
xxxx
(i) The board of canvassers shall not proclaim any candidate as winner unless
authorized by the Commission after the latter has ruled on the objections brought to it
on appeal by the losing party. Any proclamation made in violation hereof shall be void
ab initio, unless the contested returns will not adversely affect the results of the
election. (Emphasis supplied)
The phrase "results of the election" is not statutorily defined. However, it had been
jurisprudentially explained in Lucero v. Commission on Elections19 to mean:
[T]he net result of the election in the rest of the precincts in a given constituency, such
that if the margin of a leading candidate over that of his closest rival in the latter
precincts is less than the total number of votes in the precinct where there was failure
of election, then such failure would certainly affect "the result of the election." 20
Although the Lucero case involves a failure of election, the definition of "results of
election" applies to the disposition of contested election returns under Section 20(i) of
R.A. No. 7166. In both situations, the law endeavors to determine the will of the
people in an expeditious manner in that if the total number of votes in the precinct
where there is a failure of election or in case of the contested ERs, is less than the lead
of a candidate over his closest rival, the results of the election would not be adversely
affected. Hence, a proclamation may be made because the winning candidate can be
ascertained. Otherwise, a special election must be held or an authorization of the
COMELEC is necessary after ruling on the objections brought to it on appeal by the
losing party in order to determine the will of the electorate. Proclamation made in
violation of the rules is void ab initio as it would be based on an incomplete canvass of
votes. It is well settled that an incomplete canvass of votes is illegal and cannot be the
basis of a subsequent proclamation. A canvass is not reflective of the true vote of the
electorate unless the board of canvassers considers all returns and omits none. 21
In the case at bar, petitioner obtained a margin of 762 votes over the private
respondent based on the canvass of the uncontested ERs whereas the total number of
votes in the 26 contested ERs is 5,178, which is higher than the 762-lead of the
petitioner over the private respondent. Clearly, the results of the election would be
adversely affected by the uncanvassed returns.
As aptly held by the COMELEC First Division:
The votes obtained by petitioner and private respondent tallied in the contested
election returns can not be the basis of the partial proclamation. The objected election
returns cannot be considered, even provisionally, as the true and final result of the
elections in the contested precincts. The possibility remains, remote thought (sic) it
may be that they could be excluded and the results reflected therein disregarded. The
contested election returns involved 5,178 votes as this is the number of voters who
actually voted in the precincts covered by the objections. The lead of [petitioner] over
[private respondent] as shown in the uncontested returns was less than this number.
Clearly, the results of the elections could be adversely affected by the uncanvassed
returns. Truly, the Board erred in its perception that its partial proclamation was
warranted.22
While the COMELEC En Banc correctly affirmed the October 25, 2004 Resolution of its
First Division in SPC 04-124 insofar as it annulled petitioner's proclamation, however,
we find that it exceeded its authority and thus gravely abused its discretion when it
ordered the new MBC to re-canvass all ERs even before its First Division could decide
on SPC No. 04-087 filed by private respondent assailing the ruling of the MBC to
include the 26 contested ERs in the canvass.
Section 3 of Article IX-C of the 1987 Constitution provides:
Sec. 3. The Commission on Elections may sit en banc or in two divisions, and shall
promulgate its rules of procedure in order to expedite disposition of election cases,
including pre-proclamation controversies. All such election cases shall be heard and
decided in division, provided that motions for reconsideration of decisions shall be
decided by the Commission en banc.
In Sarmiento v. Commission on Elections23 and Zarate v. Commission on Elections,24 the
Court similarly held that "election cases must first be heard and decided by a Division
of the Commission," and that the "Commission, sitting en banc, does not have the
authority to hear and decide the same at the first instance."
Thus, in Acosta v. Commission on Elections,25 the Court held that the COMELEC En
Banc violated the foregoing Constitutional mandate when it affirmed the trial court's
decision that was not the subject of the special civil action before it, but of the appeal
filed by therein petitioner, which was still undocketed at the time and the parties have
not yet submitted any evidence in relation thereto.
Clearly, by ordering the re-canvass of all the ERs in SPC No. 04-124, the COMELEC En
Banc in effect rendered a decision on the merits of SPC No. 04-087, which up to the
present is still pending before its First Division, in violation of the rule that it does not
have the authority to hear and decide election cases, including pre-proclamation
controversies, at the first instance. As the proclamation of the winning candidate has
been delayed for more than two years now due to these cases, the COMELEC First
Division is directed to expeditiously resolve SPC No. 04-087, which is summary in
nature.
WHEREFORE, in view of the foregoing, the petition is PARTLY GRANTED. The
December 15, 2005 Resolution of the COMELEC En Banc in SPC No. 04-124 which
affirmed the annulment and setting aside by its First Division of the proclamation of
petitioner Rommel G. Muñoz as Mayor of Camalig, Albay for being premature, is
AFFIRMED with the MODIFICATION that the order to constitute a new Municipal
Board of Canvassers to re-canvass all the election returns of Camalig, Albay; to
prepare a new Certificate of Canvass; and to declare the winning candidate for
mayoralty position is SET ASIDE for having been issued with grave abuse of discretion.
The temporary restraining order issued on January 17, 2006 is hereby SET ASIDE.
SO ORDERED.
G.R. No. 98382 May 17, 1993
PHILIPPINE NATIONAL BANK, petitioner,
vs.
THE COURT OF APPEALS and EPIFANIO DE LA CRUZ, respondents.
Santiago, Jr., Vidad, Corpus & Associates for petitioner.
Pedro R. Lazo for spouses-intervenors.
Rosendo G. Tansinsin, Jr. for private respondent.
MELO, J.:
The notices of sale under Section 3 of Act No. 3135, as amended by Act No. 4118, on
extra-judicial foreclosure of real estate mortgage are required to be posted for not
less than twenty days in at least three public places of the municipality or city where
the property is situated, and if such property is worth more than four hundred pesos,
such notices shall also be published once a week for at least three consecutive weeks
in a newspaper of general circulation in the municipality or city.
Respondent court, through Justice Filemon Mendoza with whom Justices Campos, Jr.
and Aldecoa, Jr. concurred, construed the publication of the notices on March 28,
April 11 and l2, 1969 as a fatal announcement and reversed the judgment appealed
from by declaring void, inter alia, the auction sale of the foreclosed pieces of realty,
the final deed of sale, and the consolidation of ownership (p. 27, Rollo).
Hence, the petition at bar, premised on the following backdrop lifted from the text of
the challenged decision:
The facts of the case as related by the trial court are, as follows:
This is a verified complaint brought by the plaintiff for the reconveyance to him (and
resultant damages) of two (2) parcels of land mortgaged by him to the defendant
Philippine National Bank (Manila), which the defendant allegedly unlawfully
foreclosed. The defendant then consolidated ownership unto itself, and subsequently
sold the parcels to third parties. The amended Answer of the defendant states on the
other hand that the extrajudicial foreclosure, consolidation of ownership, and
subsequent sale to the third parties were all valid, the bank therefore counterclaims
for damages and other equitable remedies.
xxx xxx xxx
From the evidence and exhibits presented by both parties, the Court is of the opinion
that the following facts have been proved: Two lots, located at Bunlo, Bocaue, Bulacan
(the first covered by Torrens Certificate No. 16743 and possessed of an area of
approximately 3,109 square meters: the second covered by Torrens Certificate No.
5787, possessed of an area of around 610 square meters, and upon which stood a
residential-commercial building were mortgaged to the defendant Philippine National
Bank. The lots were under the common names of the plaintiff (Epifanio dela Cruz), his
brother (Delfin) and his sister (Maria). The mortgage was made possible because of
the grant by the latter two to the former of a special power of attorney to mortgage
the lots to the defendant. The lots were mortgaged to guarantee the following
promissory notes:
(1) a promissory note for Pl2,000.00, dated September 2, 1958, and payable within 69
days (date of maturity — Nov. l0, 1958);
(2) a promissory note for P4,000.00, dated September 22, 1958, and payable within 49
days (date of maturity — Nov. 10, 1958);
(3) a promissory note for P4,000.00, dated June 30, 1.9581 and payable within 120
days (date of maturity — Nov. 10, 1958) See also Annex C of the complaint itself).
[1 This date of June 30, 1958 is disputed by the plaintiff who claims that the correct
date is June 30, 1961, which is the date actually mentioned in the promissory note. It
is however difficult to believe the plaintiff's contention since if it were true and
correct, this would mean that nearly three (3) years elapsed between the second and
the third promissory note; that at the time the third note was executed, the first two
had not yet been paid by the plaintiff despite the fact that the first two were supposed
to be payable within 69 and 49 days respectively. This state of affairs would have
necessitated the renewal of said two promissory notes. No such renewal was proved,
nor was the renewal ever alleged. Finally, and this is very significant: the third
mentioned promissory note states that the maturity date is Nov. 10, 1958. Now then,
how could the loan have been contracted on June 30, 1961? It will be observed that in
the bank records, the third mentioned promissory note was really executed on June
30, 1958 (See Exhs. 9 and 9-A). The Court is therefore inclined to believe that the date
"June 30, 1961" was a mere clerical error and hat the true and correct date is June
1958. However, even assuming that the true and correct date is June 30, 1961, the
fact still remains that the first two promissory notes had been guaranteed by the
mortgage of the two lots, and therefore, it was legal and proper to foreclose on the
lots for failure to pay said two promissory notes.
On September 6, 1961, Atty. Ramon de los Reyes of the bank (PNB) presented under
Act No. 3135 a foreclosure petition of the two mortgaged lots before the Sheriff's
Office at Malolos, Bulacan; accordingly, the two lots were sold or auctioned off on
October 20, 1961 with the defendant PNB as the highest bidder for P28,908.46. On
March 7, 1963, Sheriff Leopoldo Palad executed a Final Deed of Sale, in response to a
letter-request by the Manager of the PNB (Malolos Branch). On January 15, 1963 a
Certificate of Sale in favor of the defendant was executed by Sheriff Palad. The final
Deed of Sale was registered in the Bulacan Registry of Property on March 19, 1963.
Inasmuch as the plaintiff did not volunteer to buy back from the PNB the two lots, the
PNB sold on June 4, 1970 the same to spouses Conrado de Vera and Marina de Vera in
a "Deed of Conditional Sale". (Decision, pp.3-5; Amended Record on Appeal, pp. 96-
98).
After due consideration of the evidence, the CFI on January 22, 1978 rendered its
Decision, the dispositive portion of which reads:
WHEREFORE, PREMISES CONSIDERED, the instant complaint against the defendant
Philippine National Bank is hereby ordered DISMISSED, with costs against the plaintiff.
The Counterclaim against the plaintiff is likewise DISMISSED, for the Court does not
believe that the complaint had been made in bad faith.
SO ORDERED. (Decision, p. B.; Amended Record on Appeal, p. 100)
Not satisfied with the judgment, plaintiff interposed the present appeal assigning as
errors the following:
I.
THE LOWER COURT ERRED IN HOLDING IN FOOTNOTE I OF ITS DECISION THAT IT IS
THEREFORE INCLINED TO BELIEVE THAT THE DATE "JUNE 30, 1962" WAS A MERE
CLERICAL ERROR AND THAT THE TRUE AND CORRECT DATE IS JUNE 30, 1958. IT ALSO
ERRED IN HOLDING IN THE SAME FOOTNOTE I THAT "HOWEVER, EVEN ASSUMING
THAT THE TRUE AND CORRECT DATE IS JUNE 30, 1961, THE FACT STILL REMAINS THAT
THE FIRST TWO PROMISSORY NOTES HAD BEEN GUARANTEED BY THE MORTGAGE OF
THE TWO LOTS, AND THEREFORE, IT WAS LEGAL AND PROPER TO FORECLOSE ON THE
LOTS FOR FAILURE TO PAY SAID TWO PROMISSORY NOTES". (page 115, Amended
Record on Appeal)
II.
THE LOWER COURT ERRED IN NOT HOLDING THAT THE PETITION FOR EXTRAJUDICIAL
FORECLOSURE WAS PREMATURELY FILED AND IS A MERE SCRAP OF PAPER BECAUSE IT
MERELY FORECLOSED THE ORIGINAL AND NOT THE AMENDED MORTGAGE.
III.
THE LOWER COURT ERRED IN HOLDING THAT "IT IS CLEAR THAT THE AUCTION SALE
WAS NOT PREMATURE". (page 117, Amended Record on Appeal)
IV.
THE LOWER COURT ERRED IN HOLDING THAT "SUFFICE IT TO STATE THAT ACTUALLY
THE POWER OF ATTORNEY GIVEN TO THE PNB WAS EMBODIED IN THE REAL ESTATE
MORTGAGE (EXB. 10) WHICH WAS REGISTERED IN THE REGISTRY OF PROPERTY OF
BULACAN AND WAS ANNOTATED ON THE TWO TORRENS CERTIFICATES INVOLVED"
(page 118, Amended Record on Appeal).
V.
THE LOWER COURT ERRED IN HOLDING THAT "THE NOTICES REQUIRED UNDER SEC. 3
OF ACT NO. 3135 WERE ALL COMPLIED WITH" AND "THAT THE DAILY RECORD . . . IS A
NEWSPAPER OF GENERAL CIRCULATION (pages 117-118, Amended Record on Appeal).
VI.
THE LOWER COURT ERRED IN NOT DECLARING THE CERTIFICATE OF SALE, FINAL DEED
OF SALE AND AFFIDAVIT OF CONSOLIDATION, NULL AND VOID.
VII.
THE LOWER COURT ERRED IN NOT ORDERING DEFENDANT TO RECONVEY TO
PLAINTIFF THE PARCELS OF LAND COVERED BY T.C.T. NOS. 40712 AND 40713 OF
BULACAN (page 8, Amended Record on Appeal)
VIII.
THE LOWER COURT ERRED IN NOT ORDERING DEFENDANT TO PAY TO PLAINTIFF
REASONABLE AMOUNTS OF MORAL AND EXEMPLARY DAMAGES AND ATTORNEY'S
FEES (page 8. Amended Record on Appeal).
IX.
THE LOWER COURT ERRED IN DISMISSING THE INSTANT COMPLAINT AGAINST THE
PHILIPPINE NATIONAL BANK WITH COSTS AGAINST THE PLAINTIFF. (page 118,
Amended Record on Appeal)." (Brief for Plaintiff-Appellant, pp. 1-4) (pp. 17-21, Rollo)
With reference to the pertinent issue at hand, respondent court opined:
The Notices of Sale of appellant's foreclosed properties were published on March 228,
April 11 and April 12, 1969 issues of the newspaper "Daily Record" (Amended Record
on Appeal, p. 108). The date March 28, 1969 falls on a Friday while the dates April 11
and 12, 1969 are on a Friday and Saturday, respectively. Section 3 of Act No. 3135
requires that the notice of auction sale shall be "published once a week for at least
three consecutive weeks". Evidently, defendant-appellee bank failed to comly with
this legal requirement. The Supreme Court has held that:
The rule is that statutory provisions governing publication of notice of mortgage
foreclosure sales must be strictly complied with, and that even slight deviations
therefrom will invalidate the notice and render the sale at least voidable (Jalandoni vs.
Ledesma, 64 Phil. l058. G.R. No. 42589, August 1937 and October 29, 1937).
Interpreting Sec. 457 of the Code of Civil Procedure (reproduced in Sec. 18(c) of Rule
39, Rules of Court and in Sec. 3 of Act No. 3135) in Campomanes vs. Bartolome and
German & Co. (38 Phil. 808, G.R. No. 1309, October 18, 1918), this Court held that if a
sheriff sells without notice prescribed by the Code of Civil Procedure induced thereto
by the judgment creditor, and the purchaser at the sale is the judgment creditor, the
sale is absolutely void and no title passes. This is regarded as the settled doctrine in
this jurisdiction whatever the rule may be elsewhere (Boria vs. Addison, 14 Phil. 895,
G.R. No. 18010, June 21, 1922).
. . . It has been held that failure to advertise a mortgage foreclosure sale in compliance
with statutory requirements constitutes a jurisdictional defect invalidating the sale
and that a substantial error or omission in a notice of sale will render the notice
insufticient and vitiate the sale (59 C.J.S. 1314). (Tambunting vs. Court of Appeals, L-
48278, November 8, 1988; 167 SCRA 16, 23-24).
In view of the admission of defendant-appellee in its pleading showing that there was
no compliance of the notice prescribed in Section 3 of Act No. 3135, as amended by
Act 4118, with respect to the notice of sale of the foreclosed real properties in this
case, we have no choice but to declare the auction sale as absolutely void in view of
the fact that the highest bidder and purchaser in said auction sale was defendant-
appellee bank. Consequently, the Certificate of Sale, the Final Deed of Sale and
Affidavit of Consolidation are likewise of no legal efffect. (pp. 24-25, Rollo)
Before we focus our attention on the subject of whether or not there was valid
compliance in regard to the required publication, we shall briefly discuss the other
observations of respondent court vis-a-vis herein private respondent's ascriptions
raised with the appellate court when his suit for reconveyance was dismissed by the
court of origin even as private respondent does not impugn the remarks of
respondent court along this line.
Although respondent court acknowledged that there was an ambiguity on the date of
execution of the third promissory note (June 30, 1961) and the date of maturity
thereof (October 28, 1958), it was nonetheless established that the bank introduced
sufficient proof to show that the discrepancy was a mere clerical error pursuant to
Section 7, Rule l30 of the Rules of Court. Anent the second disputation aired by private
respondent, the appellate court observed that inasmuch as the original as well as the
subsequent mortgage were foreclosed only after private respondent's default, the
procedure pursued by herein petitioner in foreclosing the collaterals was thus
appropriate albeit the petition therefor contained only a copy of the original
mortgage.
It was only on the aspect of publication of the notices of sale under Act No. 3135, as
amended, and attorney's fees where herein private respondent scored points which
eliminated in the reversal of the trial court's decision. Respondent court was of the
impression that herein petitioner failed to comply with the legal requirement and the
sale effected thereafter must be adjudged invalid following the ruling of this Court in
Tambunting vs. Court of Appeals (167 SCRA 16 [1988]); p. 8, Decision, p. 24, Rollo). In
view of petitioner's so-called indifference to the rules set forth under Act No. 3135, as
amended, respondent court expressly authorized private respondent to recover
attorney's fees because he was compelled to incur expenses to protect his interest.
Immediately upon the submission of a supplemental petition, the spouses Conrado
and Marina De Vera filed a petition in intervention claiming that the two parcels of
land involved herein were sold to them on June 4, 1970 by petitioner for which
transfer certificates of title were issued in their favor (p. 40, Rollo). On the other hand,
private respondent pressed the idea that the alleged intervenors have no more
interest in the disputed lots in view of the sale effected by them to Teresa Castillo,
Aquilino and Antonio dela Cruz in 1990 (pp. 105-106, Rollo).
On March 9, 1992, the Court resolved to give due course to the petition and required
the parties to submit their respective memoranda (p. 110, Rollo).
Now, in support of the theory on adherence to the conditions spelled in the
preliminary portion of this discourse, the pronouncement of this Court in Bonnevie vs.
Court of Appeals (125 SCRA [1983]; p. 135, Rollo) is sought to be utilized to press the
point that the notice need not be published for three full weeks. According to
petitioner, there is no breach of the proviso since after the first publication on March
28, 1969, the second notice was published on April 11, 1969 (the last day of the
second week), while the third publication on April 12, 1969 was announced on the first
day of the third week. Petitioner thus concludes that there was no violation from the
mere happenstance that the third publication was made only a day after the second
publication since it is enough that the second publication be made on any day within
the second week and the third publication, on any day within the third week.
Moreover, in its bid to rectify its admission in judicio, petitioner asseverates that said
admission alluded to refers only to the dates of publications, not that there was non-
compliance with the publication requirement.
Private respondent, on the other hand, views the legal question from a different
perspective. He believes that the period between each publication must never be less
than seven consecutive days (p. 4, Memorandum; p. 124, Rollo).
We are not convinced by petitioner's submissions because the disquisition in support
thereof rests on the erroneous impression that the day on which the first publication
was made, or on March 28, 1969, should be excluded pursuant to the third paragraph
of Article 17 of the New Civil Code.
It must be conceded that Article 17 is completely silent as to the definition of what is a
"week". In Concepcion vs. Zandueta (36 O.G. 3139 [1938]; Moreno, Philippine Law
Dictionary, Second Ed., 1972, p. 660), this term was interpreted to mean as a period of
time consisting of seven consecutive days — a definition which dovetails with the
ruling in E.M. Derby and Co. vs. City of Modesto, et al. (38 Pac. Rep. 900 [1984]; 1
Paras, Civil Code of the Philippines Annotated, Twelfth Ed., 1989, p. 88; 1 Tolentino,
Commentaries and Jurisprudence on th Civil Code, 1990, p. 46). Following the
interpretation in Derby as to the publication of an ordinance for "at least two weeks"
in some newspaper that:
. . . here there is no date or event suggesting the exclusion of the first day's publication
from the computation, and the cases above cited take this case out of the rule stated
in Section 12, Code Civ. Proc. which excludes the first day and includes the last;
the publication effected on April 11, 1969 cannot be construed as sufficient
advertisement for the second week because the period for the first week should be
reckoned from March 28, 1969 until April 3, 1969 while the second week should be
counted from April 4, 1969 until April 10, 1969. It is clear that the announcement on
April 11, 1969 was both theoretically and physically accomplished during the first day
of the third week and cannot thus be equated with compliance in law. Indeed, where
the word is used simply as a measure of duration of time and without reference to the
calendar, it means a period of seven consecutive days without regard to the day of the
week on which it begins (1 Tolentino, supra at p. 467 citing Derby).
Certainly, it would have been absurd to exclude March 28, 1969 as reckoning point in
line with the third paragraph of Article 13 of the New Civil Code, for the purpose of
counting the first week of publication as to the last day thereof fall on April 4, 1969
because this will have the effect of extending the first week by another day. This
incongruous repercussion could not have been the unwritten intention of the
lawmakers when Act No. 3135 was enacted. Verily, inclusion of the first day of
publication is in keeping with the computation in Bonnevie vs. Court of Appeals (125
SCRA 122 [1983]) where this Court had occasion to pronounce, through Justice
Guerrero, that the publication of notice on June 30, July 7 and July 14, 1968 satisfied
the publication requirement under Act No. 3135. Respondent court cannot, therefore,
be faulted for holding that there was no compliance with the strict requirements of
publication independently of the so- called admission in judicio.
WHEREFORE, the petitions for certiorari and intervention are hereby dismissed and
the decision of the Court of Appeals dated April 17, 1991 is hereby affirmed in toto.
SO ORDERED.
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 8-31-912
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.
G.R. No. 90501 August 5, 1991
ARIS (PHIL.) INC., petitioner,
vs.
NATIONAL LABOR RELATIONS COMMISSION, LABOR ARBITER FELIPE GARDUQUE III,
LEODEGARIO DE GUZMAN, LILIA PEREZ, ROBERTO BESTAMONTE, AIDA OPENA,
REYNALDO TORIADO, APOLINARIO GAGAHINA, RUFINO DE CASTRO, FLORDELIZA
RAYOS DEL SOL, STEVE SANCHO, ESTER CAIRO, MARIETA MAGALAD, and MARY B.
NADALA, respondents.
Cesar C. Cruz & Partners for petitioner.
Zosimo Morillo for respondent Rayos del Sol.
Banzuela, Flores, Miralles, Raneses, Sy & Associates for private respondents.
DAVIDE, JR., J.:
Petitioner assails the constitutionality of the amendment introduced by Section 12 of
Republic Act No. 6715 to Article 223 of the Labor Code of the Philippines (PD No. 442,
as amended) allowing execution pending appeal of the reinstatement aspect of a
decision of a labor arbiter reinstating a dismissed or separated employee and of
Section 2 of the NLRC Interim Rules on Appeals under R.A. No. 6715 implementing the
same. It also questions the validity of the Transitory Provision (Section 17) of the said
Interim Rules.
The challenged portion of Section 12 of Republic Act No. 6715, which took effect on 21
March 1989, reads as follows:
SEC 12. Article 223 of the same code is amended to read as follows:
ART. 223. Appeal.
xxx xxx xxx
In any event, the decision of the Labor Arbiter reinstating a dismissed or separated
employee, in so far as the reinstatement aspect is concerned, shall immediately be
executory, even pending appeal. The employee shall either be admitted back to work
under the same terms and conditions prevailing prior to his dismissal or separation or,
at the option of the employer, merely reinstated in the payroll. The posting of a bond
by the employer shall not stay the execution for reinstatement provided therein.
This is a new paragraph ingrafted into the Article.
Sections 2 and 17 of the "NLRC Interim Rules On Appeals Under R.A. No. 6715,
Amending the Labor Code", which the National Labor Relations Commission (NLRC)
promulgated on 8 August 1989, provide as follows:
Section 2. Order of Reinstatement and Effect of Bond. — In so far as the reinstatement
aspect is concerned, the decision of the Labor Arbiter reinstating a dismissed or
separated employee shall immediately be executory even pending appeal. The
employee shall either be admitted back to work under the same terms and conditions
prevailing prior to his dismissal or separation, or, at the option of the employer,
merely be reinstated in the payroll.
The posting of a bond by the employer shall not stay the execution for reinstatement.
xxx xxx xxx
Section 17. Transitory provision. — Appeals filed on or after March 21, 1989, but prior
to the effectivity of these Interim Rules must conform to the requirements as herein
set forth or as may be directed by the Commission.
The antecedent facts and proceedings which gave rise to this petition are not
disputed:
On 11 April 1988, private respondents, who were employees of petitioner, aggrieved
by management's failure to attend to their complaints concerning their working
surroundings which had become detrimental and hazardous, requested for a
grievance conference. As none was arranged, and believing that their appeal would be
fruitless, they grouped together after the end of their work that day with other
employees and marched directly to the management's office to protest its long silence
and inaction on their complaints.
On 12 April 1988, the management issued a memorandum to each of the private
respondents, who were identified by the petitioner's supervisors as the most active
participants in the rally requiring them to explain why they should not be terminated
from the service for their conduct. Despite their explanation, private respondents
were dismissed for violation of company rules and regulations, more specifically of the
provisions on security and public order and on inciting or participating in illegal strikes
or concerted actions.
Private respondents lost no time in filing a complaint for illegal dismissal against
petitioner and Mr. Gavino Bayan with the regional office of the NLRC at the National
Capital Region, Manila, which was docketed therein as NLRC-NCR-00-0401630-88.
After due trial, Labor Arbiter Felipe Garduque III handed down on 22 June 1989 a
decision' the dispositive portion of which reads:
ACCORDINGLY, respondent Aris (Phils.), Inc. is hereby ordered to reinstate within ten
(10) days from receipt hereof, herein complainants Leodegario de Guzman, Rufino de
Castro, Lilia M. Perez, Marieta Magalad, Flordeliza Rayos del Sol, Reynaldo Toriado,
Roberto Besmonte, Apolinario Gagahina, Aidam (sic) Opena, Steve C. Sancho Ester
Cairo, and Mary B. Nadala to their former respective positions or any substantial
equivalent positions if already filled up, without loss of seniority right and privileges
but with limited backwages of six (6) months except complainant Leodegario de
Guzman.
All other claims and prayers are hereby denied for lack of merit.
SO ORDERED.
On 19 July 1989, complainants (herein private respondents) filed a Motion For
Issuance of a Writ of Execution2 pursuant to the above-quoted Section 12 of R.A. No.
6715.
On 21 July 1989, petitioner filed its Appeal.3
On 26 July 1989, the complainants, except Flor Rayos del Sol, filed a Partial Appeal.4
On 10 August 1989, complainant Flor Rayos del Sol filed a Partial Appeal.5
On 29 August 1989, petitioner filed an Opposition6 to the motion for execution
alleging that Section 12 of R.A. No. 6715 on execution pending appeal cannot be
applied retroactively to cases pending at the time of its effectivity because it does not
expressly provide that it shall be given retroactive effect7 and to give retroactive
effect to Section 12 thereof to pending cases would not only result in the imposition of
an additional obligation on petitioner but would also dilute its right to appeal since it
would be burdened with the consequences of reinstatement without the benefit of a
final judgment. In their Reply8 filed on 1 September 1989, complainants argued that
R.A. No. 6715 is not sought to be given retroactive effect in this case since the decision
to be executed pursuant to it was rendered after the effectivity of the Act. The said
law took effect on 21 March 1989, while the decision was rendered on 22 June 1989.
Petitioner submitted a Rejoinder to the Reply on 5 September 1989.9
On 5 October 1989, the Labor Arbiter issued an Order granting the motion for
execution and the issuance of a partial writ of execution10 as far as reinstatement of
herein complainants is concerned in consonance with the provision of Section 2 of the
rules particularly the last sentence thereof.
In this Order, the Labor Arbiter also made reference to Section 17 of the NLRC Interim
Rules in this wise:
Since Section 17 of the said rules made mention of appeals filed on or after March 21,
1989, but prior to the effectivity of these interim rules which must conform with the
requirements as therein set forth (Section 9) or as may be directed by the
Commission, it obviously treats of decisions of Labor Arbiters before March 21,1989.
With more reason these interim rules be made to apply to the instant case since the
decision hereof (sic) was rendered thereafter.11
Unable to accept the above Order, petitioner filed the instant petition on 26 October
198912 raising the issues adverted to in the introductory portion of this decision
under the following assignment of errors:
A. THE LABOR ARBITER A QUO AND THE NLRC, IN ORDERING THE REINSTATEMENT OF
THE PRIVATE RESPONDENTS PENDING APPEAL AND IN PROVIDING FOR SECTION 2 OF
THE INTERIM RULES, RESPECTIVELY, ACTED WITHOUT AND IN EXCESS OF
JURISDICTION SINCE THE BASIS FOR SAID ORDER AND INTERIM RULE, i.e., SECTION 12
OF R.A. 6715 IS VIOLATIVE OF THE CONSTITUTIONAL GUARANTY OF DUE PROCESS IT
BEING OPPRESSIVE AND UNREASONABLE.
B. GRANTING ARGUENDO THAT THE PROVISION IN(SIC) REINSTATEMENT PENDING
APPEAL IS VALID, NONETHELESS, THE LABOR ARBITER A QUO AND THE NLRC STILL
ACTED IN EXCESS AND WITHOUT JURISDICTION IN RETROACTIVELY APPLYING SAID
PROVISION TO PENDING LABOR CASES.
In Our resolution of 7 March 1989, We required the respondents to comment on the
petition.
Respondent NLRC, through the Office of the Solicitor General, filed its Comment on 20
November 1989.13 Meeting squarely the issues raised by petitioner, it submits that
the provision concerning the mandatory and automatic reinstatement of an employee
whose dismissal is found unjustified by the labor arbiter is a valid exercise of the police
power of the state and the contested provision "is then a police legislation."
As regards the retroactive application thereof, it maintains that being merely
procedural in nature, it can apply to cases pending at the time of its effectivity on the
theory that no one can claim a vested right in a rule of procedure. Moreover, such a
law is compatible with the constitutional provision on protection to labor.
On 11 December 1989, private respondents filed a Manifestation14 informing the
Court that they are adopting the Comment filed by the Solicitor General and stressing
that petitioner failed to comply with the requisites for a valid petition for certiorari
under Rule 65 of the Rules of Court.
On 20 December 1989, petitioner filed a Rejoinder15 to the Comment of the Solicitor
General.
In the resolution of 11 January 1990,16 We considered the Comments as respondents'
Answers, gave due course to the petition, and directed that the case be calendared for
deliberation.
In urging Us to declare as unconstitutional that portion of Section 223 of the Labor
Code introduced by Section 12 of R.A. No. 6715, as well as the implementing provision
covered by Section 2 of the NLRC Interim Rules, allowing immediate execution, even
pending appeal, of the reinstatement aspect of a decision of a labor arbiter reinstating
a dismissed or separated employee, petitioner submits that said portion violates the
due process clause of the Constitution in that it is oppressive and unreasonable. It
argues that a reinstatement pending appeal negates the right of the employer to self-
protection for it has been ruled that an employer cannot be compelled to continue in
employment an employee guilty of acts inimical to the interest of the employer; the
right of an employer to dismiss is consistent with the legal truism that the law, in
protecting the rights of the laborer, authorizes neither the oppression nor the
destruction of the employer. For, social justice should be implemented not through
mistaken sympathy for or misplaced antipathy against any group, but even-handedly
and fairly.17
To clinch its case, petitioner tries to demonstrate the oppressiveness of reinstatement
pending appeal by portraying the following consequences: (a) the employer would be
compelled to hire additional employees or adjust the duties of other employees
simply to have someone watch over the reinstated employee to prevent the
commission of further acts prejudicial to the employer, (b) reinstatement of an
undeserving, if not undesirable, employee may demoralize the rank and file, and (c) it
may encourage and embolden not only the reinstated employees but also other
employees to commit similar, if not graver infractions.
These rationalizations and portrayals are misplaced and are purely conjectural which,
unfortunately, proceed from a misunderstanding of the nature and scope of the relief
of execution pending appeal.
Execution pending appeal is interlinked with the right to appeal. One cannot be
divorced from the other. The latter may be availed of by the losing party or a party
who is not satisfied with a judgment, while the former may be applied for by the
prevailing party during the pendency of the appeal. The right to appeal, however, is
not a constitutional, natural or inherent right. It is a statutory privilege of statutory
origin18 and, therefore, available only if granted or provided by statute. The law may
then validly provide limitations or qualifications thereto or relief to the prevailing
party in the event an appeal is interposed by the losing party. Execution pending
appeal is one such relief long recognized in this jurisdiction. The Revised Rules of Court
allows execution pending appeal and the grant thereof is left to the discretion of the
court upon good reasons to be stated in a special order.19
Before its amendment by Section 12 of R.A. No. 6715, Article 223 of the Labor Code
already allowed execution of decisions of the NLRC pending their appeal to the
Secretary of Labor and Employment.
In authorizing execution pending appeal of the reinstatement aspect of a decision of
the Labor Arbiter reinstating a dismissed or separated employee, the law itself has laid
down a compassionate policy which, once more, vivifies and enhances the provisions
of the 1987 Constitution on labor and the working-man.
These provisions are the quintessence of the aspirations of the workingman for
recognition of his role in the social and economic life of the nation, for the protection
of his rights, and the promotion of his welfare. Thus, in the Article on Social Justice and
Human Rights of the Constitution,20 which principally directs Congress to give highest
priority to the enactment of measures that protect and enhance the right of all people
to human dignity, reduce social, economic, and political inequalities, and remove
cultural inequities by equitably diffusing wealth and political power for the common
good, the State is mandated to afford full protection to labor, local and overseas,
organized and unorganized, and promote full employment and equality of
employment opportunities for all; to guarantee the rights of all workers to self-
organization, collective bargaining and negotiations, and peaceful concerted activities,
including the right to strike in accordance with law, security of tenure, human
conditions of work, and a living wage, to participate in policy and decision-making
processes affecting their rights and benefits as may be provided by law; and to
promote the principle of shared responsibility between workers and employers and
the preferential use of voluntary modes in settling disputes. Incidentally, a study of the
Constitutions of various nations readily reveals that it is only our Constitution which
devotes a separate article on Social Justice and Human Rights. Thus, by no less than its
fundamental law, the Philippines has laid down the strong foundations of a truly just
and humane society. This Article addresses itself to specified areas of concern labor,
agrarian and natural resources reform, urban land reform and housing, health,
working women, and people's organizations and reaches out to the underprivileged
sector of society, for which reason the President of the Constitutional Commission of
1986, former Associate Justice of this Court Cecilia Muñoz-Palma, aptly describes this
Article as the "heart of the new Charter."21
These duties and responsibilities of the State are imposed not so much to express unconstitutionality. A doubt, even if well-founded, does not suffice. Justice Malcolm's
sympathy for the workingman as to forcefully and meaningfully underscore labor as a aphorism is apropos: To doubt is to sustain.27
primary social and economic force, which the Constitution also expressly affirms With
The reason for this:
equal intensity.22 Labor is an indispensable partner for the nation's progress and
stability. ... can be traced to the doctrine of separation of powers which enjoins on each
department a proper respect for the acts of the other departments. ... The theory is
If in ordinary civil actions execution of judgment pending appeal is authorized for
that, as the joint act of the legislative and executive authorities, a law is supposed to
reasons the determination of which is merely left to the discretion of the judge, We
have been carefully studied and determined to be constitution before it was finally
find no plausible reason to withhold it in cases of decisions reinstating dismissed or
enacted. Hence, as long as there is some other basis that can be used by the courts for
separated employees. In such cases, the poor employees had been deprived of their
its decision, the constitutionality of the challenged law will not be touched upon and
only source of livelihood, their only means of support for their family their very
the case will be decided on other available grounds.28
lifeblood. To Us, this special circumstance is far better than any other which a judge, in
his sound discretion, may determine. In short, with respect to decisions reinstating The issue concerning Section 17 of the NLRC Interim Rules does not deserve a
employees, the law itself has determined a sufficiently overwhelming reason for its measure of attention. The reference to it in the Order of the Labor Arbiter of 5
execution pending appeal. October 1989 was unnecessary since the procedure of the appeal proper is not
involved in this case. Moreover, the questioned interim rules of the NLRC,
The validity of the questioned law is not only supported and sustained by the
promulgated on 8 August 1989, can validly be given retroactive effect. They are
foregoing considerations. As contended by the Solicitor General, it is a valid exercise of
procedural or remedial in character, promulgated pursuant to the authority vested
the police power of the State. Certainly, if the right of an employer to freely discharge
upon it under Article 218(a) of the Labor Code of the Philippines, as amended. Settled
his employees is subject to regulation by the State, basically in the exercise of its
is the rule that procedural laws may be given retroactive effect.29 There are no vested
permanent police power on the theory that the preservation of the lives of the citizens
rights in rules of procedure.30 A remedial statute may be made applicable to cases
is a basic duty of the State, that is more vital than the preservation of corporate
pending at the time of its enactment.31
profits.23 Then, by and pursuant to the same power, the State may authorize an
immediate implementation, pending appeal, of a decision reinstating a dismissed or WHEREFORE, the petition is hereby DISMISSED for lack of merit. Costs against
separated employee since that saving act is designed to stop, although temporarily petitioner.
since the appeal may be decided in favor of the appellant, a continuing threat or SO ORDERED.
danger to the survival or even the life of the dismissed or separated employee and its
family.
The charge then that the challenged law as well as the implementing rule are
unconstitutional is absolutely baseless.1âwphi1 Laws are presumed constitutional.24
To justify nullification of a law, there must be a clear and unequivocal breach of the
Constitution, not a doubtful and argumentative implication; a law shall not be
declared invalid unless the conflict with the constitution is clear beyond reasonable
doubt.25 In Parades, et al. vs. Executive Secretary26 We stated:
2. For one thing, it is in accordance with the settled doctrine that between two
possible constructions, one avoiding a finding of unconstitutionality and the other
yielding such a result, the former is to be preferred. That which will save, not that
which will destroy, commends itself for acceptance. After all, the basic presumption all
these years is one of validity. The onerous task of proving otherwise is on the party
seeking to nullify a statute. It must be proved by clear and convincing evidence that
there is an infringement of a constitutional provision, save in those cases where the
challenged act is void on its face. Absent such a showing, there can be no finding of
 G.R. No. 115044 January 27, 1995
HON. ALFREDO S. LIM, in his capacity as Mayor of Manila, and the City of Manila,
petitioners,
vs.
HON. FELIPE G. PACQUING, as Judge, branch 40, Regional Trial Court of Manila and
ASSOCIATED CORPORATION, respondents.
G.R. No. 117263 January 27, 1995
TEOFISTO GUINGONA, JR. and DOMINADOR R. CEPEDA, petitioners,
vs.
HON. VETINO REYES and ASSOCIATED DEVELOPMENT CORPORATION, respondents.
PADILLA, J.:
These two (2) cases which are inter-related actually involve simple issues. if these
issues have apparently become complicated, it is not by reason of their nature
because of the events and dramatis personae involved.
The petition in G.R. No. 115044 was dismissed by the First Division of this Court on 01
September 1994 based on a finding that there was "no abuse of discretion, much less
lack of or excess of jurisdiction, on the part of respondent judge [Pacquing]", in issuing
the questioned orders. Judge Pacquing had earlier issued in Civil Case No. 88-45660,
RTC of Manila, Branch 40, the following orders which were assailed by the Mayor of
the City of Manila, Hon. Alfredo S. Lim, in said G.R. No. 115044:
a. order dated 28 March 1994 directing Manila mayor Alfredo S. Lim to issue the
permit/license to operate the jai-alai in favor of Associated Development Corporation
(ADC).
b. order dated 11 April 1994 directing mayor Lim to explain why he should not be cited
for contempt for non-compliance with the order dated 28 March 1994.
c. order dated 20 April 1994 reiterating the previous order directing Mayor Lim to
immediately issue the permit/license to Associated Development Corporation (ADC).
The order dated 28 march 1994 was in turn issued upon motion by ADC for execution
of a final judgment rendered on 9 September 1988 which ordered the Manila Mayor
to immediately issue to ADC the permit/license to operate the jai-alai in Manila, under
Manila Ordinance No. 7065.
On 13 September 1994, petitioner Guingona (as executive secretary) issued a directive
to then chairman of the Games and Amusements Board (GAB) Francisco R. Sumulong,
jr. to hold in abeyance the grant of authority, or if any had been issued, to withdraw
such grant of authority, to Associated Development Corporation to operate the jai-alai
in the City of Manila, until the following legal questions are properly resolved:
1. Whether P.D. 771 which revoked all existing Jai-Alai franchisers issued by local
governments as of 20 August 1975 is unconstitutional.
2. Assuming that the City of Manila had the power on 7 September 1971 to issue a Jai-
Alai franchise to Associated Development Corporation, whether the franchise granted
is valied considering that the franchise has no duration, and appears to be granted in
perpetuity.
3. Whether the City of Manila had the power to issue a Jai-Alai franchise to Associated
Development Corporation on 7 September 1971 in view of executive Order No. 392
dated 1 January 1951 which transferred from local governments to the Games and
Amusements Board the power to regulate Jai-Alai.1
On 15 September 1994, respondent Associated Development Corporation (ADC) filed
a petition for prohibition, mandamus, injunction and damages with prayer for
temporary restraining order and/or writ of preliminary injunction in the Regional Trial
Court of Manila against petitioner Guingona and then GAB chairman Sumulong,
docketed as Civil Case No. 94-71656, seeking to prevent GAB from withdrawing the
provisional authority that had earlier been granted to ADC. On the same day, the RTC
of Manila, Branch 4, through presiding Judge Vetino Reyes, issued a temporary
restraining order enjoining the GAB from withdrawing ADC's provisional authority.
This temporary restraining order was converted into a writ of preliminary injunction
upon ADC's posting of a bond in the amount of P2,000,000.00.2
Subsequently, also in G.R. No. 115044, the Republic of the Philippines, through the
Games and Amusements Board, filed a "Motion for Intervention; for Leave to File a
Motion for reconsideration in Intervention; and to Refer the case to the Court En
Banc" and later a "Motion for Leave to File Supplemental Motion for Reconsideration-
in-Intervention and to Admit Attached Supplemental Motion for Reconsideration-in-
Intervention".
In an En Banc Resolution dated 20 September 1994, this Court referred G.R. No.
115044 to the Court En Banc and required the respondents therein to comment on
the aforementioned motions.
Meanwhile, Judge Reyes on 19 October 1994 issued another order, this time, granting
ADC a writ of preliminary mandatory injunction against Guingona and GAB to compel
them to issue in favor of ADC the authority to operate jai-alai.
Guingona, as executive secretary, and Dominador Cepeda, Jr. as the new GAB
chairman, then filed the petition in G.R. No. 117263 assailing the abovementioned
orders of respondent Judge Vetino Reyes.
On 25 October 1994, in G.R. No. 117263, this Court granted petitioner's motion for
leave to file supplemental petition and to admit attached supplemental petition with
urgent prayer for restraining order. The Court further required respondents to file
their comment on the petition and supplemental petition with urgent prayer for
restraining order. The Court likewise set the case and all incidents thereof for hearing
on 10 November 1994.
At the hearing on 10 November 1994, the issues to be resolved were formulated by
the Court as follows:
1. whether or not intervention by the Republic of the Philippines at this stage of the
proceedings is proper;
2. assuming such intervention is proper, whether or not the Associated Development
Corporation has a valid and subsisting franchise to maintain and operate the jai-alai;
3. whether or not there was grave abuse of discretion committed by respondent Judge
Reyes in issuing the aforementioned temporary restraining order (later writ of
preliminary injunction); and
4. whether or not there was grave abuse of discretion committed by respondent Judge
Reyes in issuing the aforementioned writ of preliminary mandatory injunction.
On the issue of the propriety of the intervention by the Republic of the Philippines, a
question was raised during the hearing on 10 November 1994 as to whether
intervention in G.R. No. 115044 was the proper remedy for the national government
to take in questioning the existence of a valid ADC franchise to operate the jai-alai or
whether a separate action for quo warranto under Section 2, Rule 66 of the Rules of
Court was the proper remedy.
We need not belabor this issue since counsel for respondent ADC agreed to the
suggestion that this Court once and for all settle all substantive issues raised by the
parties in these cases. Moreover, this Court can consider the petition filed in G.R. No.
117263 as one for quo warranto which is within the original jurisdiction of the Court
under section 5(1), Article VIII of the Constitution. 3
On the propriety of intervention by the Republic, however, it will be recalled that this
Court in Director of Lands v. Court of Appeals (93 SCRA 238) allowed intervention even
beyond the period prescribed in Section 2 Rule 12 of the Rules of Court. The Court
ruled in said case that a denial of the motions for intervention would "lead the Court
to commit an act of injustice to the movants, to their successor-in-interest and to all
purchasers for value and in good faith and thereby open the door to fraud, falsehood
and misrepresentation, should intervenors' claim be proven to be true."
In the present case, the resulting injustice and injury, should the national
government's allegations be proven correct, are manifest, since the latter has squarely
questioned the very existence of a valid franchise to maintain and operate the jai-alai
(which is a gambling operation) in favor of ADC. As will be more extensively discussed
later, the national government contends that Manila Ordinance No. 7065 which
purported to grant to ADC a franchise to conduct jai-alai operations is void and ultra
vires since Republic Act No. 954, approved on 20 June 1953, or very much earlier than
said Ordinance No. 7065, the latter approved 7 September 1971, in Section 4 thereof,
requires a legislative franchise, not a municipal franchise, for the operation of jai-alai.
Additionally, the national government argues that even assuming, arguendo, that the
abovementioned ordinance is valid, ADC's franchise was nonetheless effectively
revoked by Presidential decree No. 771, issued on 20 August 1975, Sec. 3 of which
expressly revoked all existing franchises and permits to operate all forms of gambling
facilities (including the jai-alai) issued by local governments.
On the other hand, ADC's position is that Ordinance No. 7065 was validly enacted by
the City of Manila pursuant to its delegated powers under it charter, Republic Act No.
409. ADC also squarely assails the constitutionality of PD No. 771 as violative of the
equal protection and non-impairment clauses of the Constitution. In this connection,
counsel for ADC contends that this Court should really rule on the validity of PD No.
771 to be able to determine whether ADC continues to possess a valid franchise.
It will undoubtedly be a grave injustice to both parties in this case if this Court were to
shirk from ruling on the issue of constitutionality of PD No. 771. Such issue has, in our
view, become the very lis mota in resolving the present controversy, in view of ADC's
insistence that it was granted a valid and legal franchise by Ordinance No. 7065 to
operate the jai-alai.
The time-honored doctrine is that all laws (PD No. 771 included) are presumed valid
and constitutional until or unless otherwise ruled by this Court. Not only this; Article
XVIII Section 3 of the Constitution states:
Sec. 3. All existing laws, decrees, executive orders, proclamations, letters of
instructions and other executive issuances not inconsistent with this Constitution shall
remain operative until amended, repealed or revoked.
There is nothing on record to show or even suggest that PD No. 771 has been
repealed, altered or amended by any subsequent law or presidential issuance (when
the executive still exercised legislative powers).
Neither can it be tenably stated that the issue of the continued existence of ADC's
franchise by reason of the unconstitutionality of PD No. 771 was settled in G.R. No.
115044, for the decision of the Court's First Division in said case, aside from not being
final, cannot have the effect of nullifying PD No. 771 as unconstitutional, since only the
Court En Banc has that power under Article VIII, Section 4(2) of the Constitution.4
And on the question of whether or not the government is estopped from contesting
ADC's possession of a valid franchise, the well-settled rule is that the State cannot be
put in estoppel by the mistakes or errors, if any, of its officials or agents (Republic v.
Intermediate Appellate Court, 209 SCRA 90)
Consequently, in the light of the foregoing expostulation, we conclude that the
republic (in contra distinction to the City of Manila) may be allowed to intervene in
G.R. No. 115044. The Republic is intervening in G.R. No. 115044 in the exercise, not of
its business or proprietary functions, but in the exercise of its governmental functions
to protect public morals and promote the general welfare.
II
Anent the question of whether ADC has a valid franchise to operate the Jai-Alai de
Manila, a statement of the pertinent laws is in order.
1. The Charter of the City of Manila was enacted by Congress on 18 June 1949. Section
18 thereof provides:
Sec. 18. Legislative Powers. — The Municipal Board shall have the following legislative
powers:
xxx xxx xxx
(jj) To tax, license, permit and regulate wagers or betting by the public on boxing, sipa,
bowling, billiards, pools, horse and dog races, cockpits, jai-alai, roller or ice-skating on
any sporting or athletic contests, as well as grant exclusive rights to establishments for
this purpose, notwithstanding any existing law to the contrary.
2. On 1 January 1951, Executive Order No. 392 was issued transferring the authority to
regulate jai-alais from local government to the Games and Amusements Board (GAB).
3. On 20 June 1953, Congress enacted Republic Act No. 954, entitled "An Act to
Prohibit With Horse Races and Basque Pelota Games (Jai-Alai), And To Prescribe
Penalties For Its Violation". The provisions of Republic Act No. 954 relating to jai-alai
are as follows:
Sec. 4. No person, or group of persons other than the operator or maintainer of a
fronton with legislative franchise to conduct basque pelota games (Jai-alai), shall offer,
to take or arrange bets on any basque pelota game or event, or maintain or use a
totalizator or other device, method or system to bet or gamble on any basque pelota
game or event. (emphasis supplied).
Sec. 5. No person, operator or maintainer of a fronton with legislative franchise to
conduct basque pelota games shall offer, take, or arrange bets on any basque pelota
game or event, or maintain or use a totalizator or other device, method or system to
bet or gamble on any basque pelota game or event outside the place, enclosure, or
fronton where the basque pelota game is held. (emphasis supplied).
4. On 07 September 1971, however, the Municipal Board of Manila nonetheless
passed Ordinance No. 7065 entitled "An Ordinance Authorizing the Mayor To Allow
And Permit The Associated Development Corporation To Establish, Maintain And
Operate A Jai-Alai In The City Of Manila, Under Certain Terms And Conditions And For
Other Purposes."
5. On 20 August 1975, Presidential Decree No. 771 was issued by then President
Marcos. The decree, entitled "Revoking All Powers and Authority of Local
Government(s) To Grant Franchise, License or Permit And Regulate Wagers Or Betting
By The Public On Horse And Dog Races, Jai-Alai Or Basque Pelota, And Other Forms Of
Gambling", in Section 3 thereof, expressly revoked all existing franchises and permits
issued by local governments.
6. On 16 October 1975, Presidential Decree No. 810, entitled "An Act granting The
Philippine Jai-Alai And Amusement Corporation A Franchise To Operate, Construct And
Maintain A Fronton For Basque Pelota And Similar Games of Skill In THE Greater
Manila Area," was promulgated.
7 On 08 May 1987, then President Aquino, by virtue of Article XVIII, Section 6, of the
Constitution, which allowed the incumbent legislative powers until the first Congress
was convened, issued Executive Order No. 169 expressly repealing PD 810 and
revoking and cancelling the franchise granted to the Philippine Jai-Alai and
Amusement Corporation.
Petitioners in G.R. No. 117263 argue that Republic Act No. 954 effectively removed
the power of the Municipal Board of Manila to grant franchises for gambling
operations. It is argued that the term "legislative franchise" in Rep. Act No. 954 is used
to refer to franchises issued by Congress.
On the other hand, ADC contends that Republic Act N. 409 (Manila Chapter) gives
legislative powers to the Municipal Board to grant franchises, and since Republic Act
No. 954 does not specifically qualify the word "legislative" as referring exclusively to
Congress, then Rep. Act No. 954 did not remove the power of the Municipal Board
under Section 18(jj) of Republic Act No. 409 and consequently it was within the power
of the City of Manila to allow ADC to operate the jai-alai in the City of Manila.
On this point, the government counter-argues that the term "legislative powers" is
used in Rep. Act No. 409 merely to distinguish the powers under Section 18 of the law
from the other powers of the Municipal Board, but that the term "legislative
franchise" in Rep. Act No. 954 refers to a franchise granted solely by Congress.
Further, the government argues that Executive Order No. 392 dated 01 January 1951
transferred even the power to regulate Jai-Alai from the local governments to the
Games and Amusements Board (GAB), a national government agency.
It is worthy of note that neither of the authorities relied upon by ADC to support its
alleged possession of a valid franchise, namely the Charter of the City of Manila (Rep.
Act No. 409) and Manila Ordinance No. 7065 uses the word "franchise". Rep. Act No.
409 empowers the Municipal Board of Manila to "tax, license, permit and regulate
wagers or betting" and to "grant exclusive rights to establishments", while Ordinance Act No. 4221) would or would not be operative within the province, is unconstitutional
No. 7065 authorized the Manila City Mayor to "allow and permit" ADC to operate jai- for being an undue delegation of legislative power.
alai facilities in the City of Manila.
From the ruling in Vera, it would be logical to conclude that, if ADC's arguments were
It is clear from the foregoing that Congress did not delegate to the City of Manila the to prevail, this Court would likewise declare Section 18(jj) of the Revised Charter of
power "to franchise" wagers or betting, including the jai-alai, but retained for itself Manila unconstitutional for the power it would delegate to the Municipal Board of
such power "to franchise". What Congress delegated to the City of Manila in Rep. Act Manila would give the latter the absolute and unlimited discretion to render the penal
No. 409, with respect to wagers or betting, was the power to "license, permit, or code provisions on gambling inapplicable or inoperative to persons or entities issued
regulate" which therefore means that a license or permit issued by the City of Manila permits to operate gambling establishments in the City of Manila.
to operate a wager or betting activity, such as the jai-alai where bets are accepted,
We need not go to this extent, however, since the rule is that laws must be presumed
would not amount to something meaningful UNLESS the holder of the permit or
valid, constitutional and in harmony with other laws. Thus, the relevant provisions of
license was also FRANCHISED by the national government to so operate. Moreover,
Rep. Acts Nos. 409 and 954 and Ordinance No. 7065 should be taken together and it
even this power to license, permit, or regulate wagers or betting on jai-alai was
should then be clear that the legislative powers of the Municipal Board should be
removed from local governments, including the City of Manila, and transferred to the
understood to be regulatory in nature and that Republic Act No. 954 should be
GAB on 1 January 1951 by Executive Order No. 392. The net result is that the authority
understood to refer to congressional franchises, as a necessity for the operation of jai-
to grant franchises for the operation of jai-alai frontons is in Congress, while the
alai.
regulatory function is vested in the GAB.
We need not, however, again belabor this issue further since the task at hand which
In relation, therefore, to the facts of this case, since ADC has no franchise from
will ultimately, and with finality, decide the issues in this case is to determine whether
Congress to operate the jai-alai, it may not so operate even if its has a license or
PD No. 771 validly revoked ADC's franchise to operate the jai-alai, assuming (without
permit from the City Mayor to operate the jai-alai in the City of Manila.
conceding) that it indeed possessed such franchise under Ordinance No. 7065.
It cannot be overlooked, in this connection, that the Revised Penal Code punishes
ADC argues that PD No. 771 is unconstitutional for being violative of the equal
gambling and betting under Articles 195 to 199 thereof. Gambling is thus generally
protection and non-impairment provisions of the Constitution. On the other hand, the
prohibited by law, unless another law is enacted by Congress expressly exempting or
government contends that PD No. 771 is a valid exercise of the inherent police power
excluding certain forms of gambling from the reach of criminal law. Among these form
of the State.
the reach of criminal law. Among these forms of gambling allowed by special law are
the horse races authorized by Republic Acts Nos. 309 and 983 and gambling casinos The police power has been described as the least limitable of the inherent powers of
authorized under Presidential Decree No. 1869. the State. It is based on the ancient doctrine — salus populi est suprema lex (the
welfare of the people is the supreme law.) In the early case of Rubi v. Provincial Board
While jai-alai as a sport is not illegal per se, the accepting of bets or wagers on the
of Mindoro (39 Phil. 660), this Court through Mr. Justice George A. Malcolm stated
results of jai-alai games is undoubtedly gambling and, therefore, a criminal offense
thus:
punishable under Articles 195-199 of the Revised Penal Code, unless it is shown that a
later or special law had been passed allowing it. ADC has not shown any such special The police power of the State . . . is a power co-extensive with self-protection, and is
law. not inaptly termed the "law of overruling necessity." It may be said to be that inherent
and plenary power in the State which enables it to prohibit all things hurtful to the
Republic Act No. 409 (the Revised Charter of the City of Manila) which was enacted by
comfort, safety and welfare of society. Carried onward by the current of legislation,
Congress on 18 June 1949 gave the Municipal Board certain delegated legislative
the judiciary rarely attempts to dam the onrushing power of legislative discretion,
powers under Section 18. A perusal of the powers enumerated under Section 18
provided the purposes of the law do not go beyond the great principles that mean
shows that these powers are basically regulatory in nature.5 The regulatory nature of
security for the public welfare or do not arbitrarily interfere with the right of the
these powers finds support not only in the plain words of the enumerations under
individual.
Section 28 but also in this Court's ruling in People v. Vera (65 Phil. 56).
In the matter of PD No. 771, the purpose of the law is clearly stated in the "whereas
In Vera, this Court declared that a law which gives the Provincial Board the discretion
clause" as follows:
to determine whether or not a law of general application (such as, the Probation law-
WHEREAS, it has been reported that in spite of the current drive of our law
enforcement agencies against vices and illegal gambling, these social ills are still
prevalent in many areas of the country;
WHEREAS, there is need to consolidate all the efforts of the government to eradicate
and minimize vices and other forms of social ills in pursuance of the social and
economic development program under the new society;
WHEREAS, in order to effectively control and regulate wagers or betting by the public
on horse and dog races, jai-alai and other forms of gambling there is a necessity to
transfer the issuance of permit and/or franchise from local government to the
National Government.
It cannot be argued that the control and regulation of gambling do not promote public
morals and welfare. Gambling is essentially antagonistic and self-reliance. It breeds
indolence and erodes the value of good, honest and hard work. It is, as very aptly
stated by PD No. 771, a vice and a social ill which government must minimize (if not
eradicate) in pursuit of social and economic development.
In Magtajas v. Pryce Properties Corporation (20 July 1994, G.R. No. 111097), this Court
stated thru Mr. Justice Isagani A. Cruz:
In the exercise of its own discretion, the legislative power may prohibit gambling
altogether or allow it without limitation or it may prohibit some forms of gambling and
allow others for whatever reasons it may consider sufficient. Thus, it has prohibited
jueteng and monte but permits lotteries, cockfighting and horse-racing. In making such
choices, Congress has consulted its own wisdom, which this Court has no authority to
review, much less reverse. Well has it been said that courts do not sit to resolve the
merits of conflicting theories. That is the prerogative of the political departments. It is
settled that questions regarding wisdom, morality and practicability of statutes are not
addressed to the judiciary but may be resolved only by the executive and legislative
departments, to which the function belongs in our scheme of government. (Emphasis
supplied)
Talks regarding the supposed vanishing line between right and privilege in American
constitutional law has no relevance in the context of these cases since the reference
there is to economic regulations. On the other hand, jai-alai is not a mere economic
activity which the law seeks to regulate. It is essentially gambling and whether it
should be permitted and, if so, under what conditions are questions primarily for the
lawmaking authority to determine, talking into account national and local interests.
Here, it is the police power of the State that is paramount.
ADC questions the motive for the issuance of PD Nos. 771. Clearly, however, this Court
cannot look into allegations that PD No. 771 was enacted to benefit a select group
which was later given authority to operate the jai-alai under PD No. 810. The
examination of legislative motivation is generally prohibited. (Palmer v. Thompson,
403 U.S. 217, 29 L. Ed. 2d 438 [1971] per Black, J.) There is, the first place, absolute
lack of evidence to support ADC's allegation of improper motivation in the issuance of
PD No. 771. In the second place, as already averred, this Court cannot go behind the
expressed and proclaimed purposes of PD No. 771, which are reasonable and even
laudable.
It should also be remembered that PD No. 771 provides that the national government
can subsequently grant franchises "upon proper application and verification of the
qualifications of the applicant." ADC has not alleged that it filed an application for a
franchise with the national government subsequent to the enactment of PD No. 771;
thus, the allegations abovementioned (of preference to a select group) are based on
conjectures, speculations and imagined biases which do not warrant the consideration
of this Court.
On the other hand, it is noteworthy that while then president Aquino issued Executive
Order No. 169 revoking PD No. 810 (which granted a franchise to a Marcos-crony to
operate the jai-alai), she did not scrap or repeal PD No. 771 which had revoked all
franchises to operate jai-alais issued by local governments, thereby re-affirming the
government policy that franchises to operate jai-alais are for the national government
(not local governments) to consider and approve.
On the alleged violation of the non-impairment and equal protection clauses of the
Constitution, it should be remembered that a franchise is not in the strict sense a
simple contract but rather it is more importantly, a mere privilege specially in matters
which are within the government's power to regulate and even prohibit through the
exercise of the police power. Thus, a gambling franchise is always subject to the
exercise of police power for the public welfare.
In RCPI v. NTC (150 SCRA 450), we held that:
A franchise started out as a "royal privilege or (a) branch of the King's prerogative,
subsisting in the hands of a subject." This definition was given by Finch, adopted by
Blackstone, and accepted by every authority since . . . Today, a franchise being merely
a privilege emanating from the sovereign power of the state and owing its existence to
a grant, is subject to regulation by the state itself by virtue of its police power through
its administrative agencies.
There is a stronger reason for holding ADC's permit to be a mere privilege because jai-
alai, when played for bets, is pure and simple gambling. To analogize a gambling
franchise for the operation of a public utility, such as public transportation company, is
to trivialize the great historic origin of this branch of royal privilege.
As earlier noted, ADC has not alleged ever applying for a franchise under the
provisions of PD No. 771. and yet, the purpose of PD No. 771 is quite clear from its
provisions, i.e., to give to the national government the exclusive power to grant
gambling franchises. Thus, all franchises then existing were revoked but were made
subject to reissuance by the national government upon compliance by the applicant
with government-set qualifications and requirements.
There was no violation by PD No. 771 of the equal protection clause since the decree
revoked all franchises issued by local governments without qualification or exception.
ADC cannot allege violation of the equal protection clause simply because it was the
only one affected by the decree, for as correctly pointed out by the government, ADC
was not singled out when all jai-alai franchises were revoked. Besides, it is too late in
the day for ADC to seek redress for alleged violation of its constitutional rights for it
could have raised these issues as early as 1975, almost twenty 920) years ago.
Finally, we do not agree that Section 3 of PD No. 771 and the requirement of a
legislative franchise in Republic Act No. 954 are "riders" to the two 92) laws and are
violative of the rule that laws should embrace one subject which shall be expressed in
the title, as argued by ADC. In Cordero v. Cabatuando (6 SCRA 418), this Court ruled
that the requirement under the constitution that all laws should embrace only one
subject which shall be expressed in the title is sufficiently met if the title is
comprehensive enough reasonably to include the general object which the statute
seeks to effect, without expressing each and every end and means necessary or
convenient for the accomplishing of the objective.
III
On the issue of whether or not there was grave abuse of discretion committed by
respondent Judge Reyes in issuing the temporary restraining order (later converted to
a writ of preliminary injunction) and the writ of preliminary mandatory injunction, we
hold and rule there was.
Section 3, Rule 58 of the rules of Court provides for the grounds for the issuance of a
preliminary injunction. While ADC could allege these grounds, respondent judge
should have taken judicial notice of Republic Act No. 954 and PD 771, under Section 1
rule 129 of the Rules of court. These laws negate the existence of any legal right on
the part of ADC to the reliefs it sought so as to justify the issuance of a writ of
preliminary injunction. since PD No. 771 and Republic Act No. 954 are presumed valid
and constitutional until ruled otherwise by the Supreme Court after due hearing, ADC
was not entitled to the writs issued and consequently there was grave abuse of
discretion in issuing them.
WHEREFORE, for the foregoing reasons, judgment is hereby rendered:
1. allowing the Republic of the Philippines to intervene in G.R. No. 115044.
2. declaring Presidential Decree No. 771 valid and constitutional.
3. declaring that respondent Associated Development corporation (ADC) does not
possess the required congressional franchise to operate and conduct the jai-alai under
Republic Act No. 954 and Presidential Decree No. 771.
4. setting aside the writs of preliminary injunction and preliminary mandatory
injunction issued by respondent Judge Vetino Reyes in civil Case No. 94-71656.
SO ORDERED.
[G.R. No. 149276. September 27, 2002]
JOVENCIO LIM and TERESITA LIM, petitioners, vs. THE PEOPLE OF THE PHILIPPINES,
THE REGIONAL TRIAL COURT OF QUEZON CITY, BRANCH 217, THE CITY PROSECUTOR
OF QUEZON CITY, AND WILSON CHAM, respondents.
DECISION
CORONA, J.:
The constitutionality of PD 818, a decree which amended Article 315 of the Revised
Penal Code by increasing the penalties for estafa committed by means of bouncing
checks, is being challenged in this petition for certiorari, for being violative of the due
process clause, the right to bail and the provision against cruel, degrading or inhuman
punishment enshrined under the Constitution.
The antecedents of this case, as gathered from the parties pleadings and documentary
proofs, follow.
In December 1991, petitioner spouses issued to private respondent two postdated
checks, namely, Metrobank check no. 464728 dated January 15, 1992 in the amount of
P365,750 and Metrobank check no. 464743 dated January 22, 1992 in the amount of
P429,000. Check no. 464728 was dishonored upon presentment for having been
drawn against insufficient funds while check no. 464743 was not presented for
payment upon request of petitioners who promised to replace the dishonored check.
When petitioners reneged on their promise to cover the amount of check no. 464728,
the private respondent filed a complaint-affidavit before the Office of the City
Prosecutor of Quezon City charging petitioner spouses with the crime of estafa under
Article 315, par. 2 (d) of the Revised Penal Code, as amended by PD 818.
On February 16, 2001, the City Prosecutor issued a resolution finding probable cause
against petitioners and recommending the filing of an information for estafa with no
bail recommended. On the same day, an information for the crime of estafa was filed
with Branch 217 of the Regional Trial Court of Quezon City against petitioners. The
case was docketed as Criminal Case No. Q-01-101574. Thereafter, the trial court
issued a warrant for the arrest of herein petitioners, thus:
It appearing on the face of the information and from supporting affidavit of the
complaining witness and its annexes that probable cause exists, that the crime charged
was committed and accused is probably guilty thereof, let a warrant for the arrest of
the accused be issued.
No Bail Recommended.
SO ORDERED.i[1]
On July 18, 2001, petitioners filed an Urgent Motion to Quash Information and
Warrant of Arrest which was denied by the trial court. Likewise, petitioners motion for
bail filed on July 24, 2001 was denied by the trial court on the same day. Petitioner
Jovencio Lim was arrested by virtue of the warrant of arrest issued by the trial court
and was detained at the Quezon City Jail. However, petitioner Teresita Lim remained
at large.
On August 22, 2001, petitioners filed the instant petition for certiorari imputing grave
abuse of discretion on the part of the lower court and the Office of the City Prosecutor
of Quezon City, arguing that PD 818 violates the constitutional provisions on due
process, bail and imposition of cruel, degrading or inhuman punishment.
In a resolution dated February 26, 2002, this Court granted the petition of Jovencio
Lim to post bail pursuant to Department of Justice Circular No. 74 dated November 6,
2001 which amended the 2000 Bail Bond Guide involving estafa under Article 315, par.
2 (d), and qualified theft. Said Circular specifically provides as follows:
xxx xxx xxx
3) Where the amount of fraud is P32,000.00 or over in which the imposable penalty is
reclusion temporal to reclusion perpetua, bail shall be based on reclusion temporal
maximum, pursuant to Par. 2 (a) of the 2000 Bail Bond Guide, multiplied by P2,000.00,
plus an additional of P2,000.00 for every P10,000.00 in excess of P22,000.00; Provided,
however, that the total amount of bail shall not exceed P60,000.00.
In view of the aforementioned resolution, the matter concerning bail shall no longer
be discussed. Thus, this decision will focus on whether or not PD 818 violates Sections
1 and 19 of Article III of the Constitution, which respectively provide:
Section 1. No person shall be deprived of life, liberty or property without due process
of law, nor shall any person be denied the equal protection of the laws.
x x x unusual punishment is generally aimed at the form or character of the punishment
Section 19 (1) Excessive fines shall not be imposed, nor cruel, degrading or inhuman
punishment inflicted. x x x.
We shall deal first with the issue of whether PD 818 was enacted in contravention of
Section 19 of Article III of the Constitution. In this regard, the impugned provision of
PD 818 reads as follows:
SECTION 1. Any person who shall defraud another by means of false pretenses or
fraudulent acts as defined in paragraph 2(d) of Article 315 of the Revised Penal Code,
as amended by Republic Act No. 4885, shall be punished by:
1st. The penalty of reclusion temporal if the amount of the fraud is over 12,000 pesos
but does not exceed 22,000 pesos, and if such amount exceeds the later sum, the
penalty provided in this paragraph shall be imposed in its maximum period, adding one
year for each additional 10,000 pesos but the total penalty which may be imposed
shall in no case exceed thirty years. In such cases, and in connection with the accessory
penalties which may be imposed under the Revised Penal Code, the penalty shall be
termed reclusion perpetua;
2nd. The penalty of prision mayor in its maximum period, if the amount of the fraud is
over 6,000 pesos but does not exceed 12,000 pesos.
3rd. The penalty of prision mayor in its medium period, if such amount is over 200 pesos
but does not exceed 6,000 pesos; and
4th. By prision mayor in its minimum period, if such amount does not exceed 200 pesos.
Petitioners contend that, inasmuch as the amount of the subject check is P365,750,
they can be penalized with reclusion perpetua or 30 years of imprisonment. This
penalty, according to petitioners, is too severe and disproportionate to the crime they
committed and infringes on the express mandate of Article III, Section 19 of the
Constitution which prohibits the infliction of cruel, degrading and inhuman
punishment.
Settled is the rule that a punishment authorized by statute is not cruel, degrading or
disproportionate to the nature of the offense unless it is flagrantly and plainly
oppressive and wholly disproportionate to the nature of the offense as to shock the
moral sense of the community. It takes more than merely being harsh, excessive, out
of proportion or severe for a penalty to be obnoxious to the Constitution.ii[2] Based
on this principle, the Court has consistently overruled contentions of the defense that
the penalty of fine or imprisonment authorized by the statute involved is cruel and
degrading.
In People vs. Tongko,iii[3] this Court held that the prohibition against cruel and
rather than its severity in respect of its duration or amount, and applies to
punishments which never existed in America or which public sentiment regards as
cruel or obsolete. This refers, for instance, to those inflicted at the whipping post or in
the pillory, to burning at the stake, breaking on the wheel, disemboweling and the
like. The fact that the penalty is severe provides insufficient basis to declare a law
unconstitutional and does not, by that circumstance alone, make it cruel and inhuman.
Petitioners also argue that while PD 818 increased the imposable penalties for estafa With the foregoing considerations in mind, this Court upholds the constitutionality of
committed under Article 315, par. 2 (d) of the Revised Penal Code, it did not increase PD 818.
the amounts corresponding to the said new penalties. Thus, the original amounts
WHEREFORE, the petition is hereby DISMISSED.
provided for in the Revised Penal Code have remained the same notwithstanding that
they have become negligible and insignificant compared to the present value of the SO ORDERED.
peso.
This argument is without merit. The primary purpose of PD 818 is emphatically and
categorically stated in the following:
WHEREAS, reports received of late indicate an upsurge of estafa (swindling) cases
committed by means of bouncing checks;
WHEREAS, if not checked at once, these criminal acts would erode the peoples
confidence in the use of negotiable instruments as a medium of commercial
transaction and consequently result in the retardation of trade and commerce and the
undermining of the banking system of the country;
WHEREAS, it is vitally necessary to arrest and curb the rise in this kind of estafa cases
by increasing the existing penalties provided therefor.
Clearly, the increase in the penalty, far from being cruel and degrading, was motivated
by a laudable purpose, namely, to effectuate the repression of an evil that undermines
the countrys commercial and economic growth, and to serve as a necessary
precaution to deter people from issuing bouncing checks. The fact that PD 818 did not
increase the amounts corresponding to the new penalties only proves that the
amount is immaterial and inconsequential. What the law sought to avert was the
proliferation of estafa cases committed by means of bouncing checks. Taking into
account the salutary purpose for which said law was decreed, we conclude that PD
818 does not violate Section 19 of Article III of the Constitution.
Moreover, when a law is questioned before the Court, the presumption is in favor of
its constitutionality. To justify its nullification, there must be a clear and unmistakable
breach of the Constitution, not a doubtful and argumentative one.iv[4] The burden of
proving the invalidity of a law rests on those who challenge it. In this case, petitioners
failed to present clear and convincing proof to defeat the presumption of
constitutionality of PD 818.
With respect to the issue of whether PD 818 infringes on Section 1 of Article III of the
Constitution, petitioners claim that PD 818 is violative of the due process clause of the
Constitution as it was not published in the Official Gazette. This claim is incorrect and
must be rejected. Publication, being an indispensable part of due process, is
imperative to the validity of laws, presidential decrees and executive orders.v[5] PD
818 was published in the Official Gazette on December 1, 1975.vi[6]