Statutory Construction September 4 Page |1
Republic of the Philippines 1. Respondent is enjoined from threatening to commit or committing
SUPREME COURT
Manila
FIRST DIVISION
G.R. No. 201043 June 16, 2014
REPUBLIC OF THE PHILIPPINES, represented by the Armed Forces
of the Philippines Finance Center (AFPFC), Petitioner,
vs.
DAISY R. YAHON, Respondent.
DECISION
VILLARAMA, JR., J.:
Before the Court is a petition for review on certiorari under Rule 45 which
seeks to nullify and set aside the Decision1 dated November 29, 2011 and
Resolution2 dated March 9, 2012 of the Court of Appeals (CA) Mindanao
Station in CA-G.R. SP No. 02953-MIN. The CA affirmed the orders and
decision of the Regional Trial Court (RTC) of Cagayan de Oro City, Branch 22
granting temporary and permanent protection orders, and denying the
motion to lift the said temporary protection order (TPO).
Daisy R. Yahon (respondent) filed a petition for the issuance of protection
order under the provisions of Republic Act (R.A.) No. 9262,3 otherwise
known as the "Anti-Violence Against Women and Their Children Act of 2004,"
against her husband, S/Sgt. Charles A. Yahon (S/Sgt. Yahon), an enlisted
personnel of the Philippine Army who retired in January 2006. Respondent
and S/Sgt. Yahon were married on June 8, 2003. The couple did not have
any child but respondent has a daughter with her previous live-in partner.
On September 28, 2006, the RTC issued a TPO, as follows:
Finding the herein petition for the Issuance of Protection Order to be
sufficient in form and substance and to prevent great and irreparable injury
to the petitioner, a TEMPORARY PROTECTION ORDER is forthwith issued to
respondent, S/SGT. CHARLES A. YAHON directing him to do the following
acts:
further acts of physical abuse and violence against the petitioner;
2. To stay away at a distance of at least 500 meters from petitioner,
her residence or her place of work;
3. To refrain from harassing, annoying, intimidating, contacting or
communicating with petitioner; 4. Respondent is prohibited from
using or possessing any firearm or deadly weapon on occasions not
related to his job;
5. To provide reasonable financial spousal support to the petitioner.
The Local Police Officers and the Barangay Officials through the Chairman in
the area where the petitioner and respondent live at Poblacion, Claveria,
Misamis Oriental and Bobuntogan, Jasaan, Misamis Oriental are directed to
respond to any request for assistance from the petitioner for the
implementation of this order. They are also directed to accompany the
petitioner to their conjugal abode at Purok 2, Bobuntogan, Jasaan, Misamis
Oriental to get her personal belongings in order to insure the safety of the
petitioner.
The Deputy Sheriff of this Court is ordered to immediately serve the
Temporary Protection Order (TPO) upon the respondent personally and to
seek and obtain the assistance of law enforcement agents, if needed, for
purposes of effecting the smooth implementation of this order.
In the meantime, let copy of this order and petition be served upon the
respondent for him to file an OPPOSITION within a period of five (5) days
from receipt hereof and let a Preliminary Conference and hearing on the
merits be set on October 17, 2006 at 2:00 o’clock in the afternoon.
To insure that petitioner can receive a fair share of respondent’s retirement
and other benefits, the following agencies thru their heads are directed to
WITHHOLD any retirement, pension and other benefits of respondent,
S/SGT. CHARLES A. YAHON, a member of the Armed Forces of the
Philippines assigned at 4ID, Camp Evangelista, Patag, Cagayan de Oro City
until further orders from the court:
1. Commanding General/Officer of the Finance Center of the Armed
Forces of the Philippines, Camp Emilio Aguinaldo, Quezon City;

2. The Management of RSBS, Camp Emilio Aguinaldo, Quezon City;
3. The Regional Manager of PAG-IBIG, Mortola St., Cagayan de Oro
City.
VIOLATION OF THIS ORDER IS PUNISHABLE BY LAW.
IF THE RESPONDENT APPEARS WITHOUT COUNSEL ON THE DATE OF THE
PRELIMINARYCONFERENCE AND HEARING ON THE MERITS OF THE
ISSUANCE OF A PERMANENT PROTECTION ORDER, THE COURT SHALL NOT
RESCHEDULE OR POSTPONE THE PRELIMINARY CONFERENCE AND
HEARING BUT SHALL APPOINT A LAWYER FOR THE RESPONDENT AND
IMMEDIATELY PROCEED WITH THE SAID HEARING.
IF THE RESPONDENT FAILS TO APPEAR ON THE DATE OF THE
PRELIMINARY CONFERENCE AND HEARING ON THE MERITS DESPITE
PROPER NOTICE, THE COURT SHALL ALLOW EX-PARTE PRESENTATION OF
EVIDENCE BY THE PETITIONER AND RENDER JUDGMENT ON THE BASIS OF
THE PLEADINGS AND EVIDENCE ON RECORD. NO DELEGATION OF THE
RECEPTION OF EVIDENCE SHALL BE ALLOWED.
SO ORDERED.4 (Emphasis supplied.)
S/Sgt. Yahon, having been personally served with copy of the TPO, appeared
during the scheduled pre-trial but informed the court that he did not yet
have a counsel and requested for time to hire his own counsel. However, he
did not hire a counsel nor file an opposition or answer to the petition.
Because of his failure to appear in the subsequent hearings of the case, the
RTC allowed the ex-parte presentation of evidence to determine the
necessity of issuance of a Permanent Protection Order (PPO).
Meanwhile, as prayed for by respondent who manifested that S/Sgt. Yahon
deliberately refused to give her spousal support as directed in the TPO (she
claimed that she had no source of livelihood since he had told her to resign
from her job and concentrate on keeping their house), the RTC issued
another order directing S/Sgt. Yahon to give respondent spousal support in
the amount of ₱4,000.00 per month and fifty percent (50%) of his
retirement benefits which shall be automatically deducted and given directly
to respondent.5
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In her testimony, respondent also said that S/Sgt. Yahon never complied
with the TPO as he continued making threats and inflicting physical abuse on
her person, and failed to give her spousal support as ordered by the court.
On July 23, 2007, the RTC rendered its Decision,6 as follows:
After careful review and scrutiny of the evidence presented in this case, this
court finds that there is a need to permanently protect the applicant, Daisy
R. Yahon from further acts of violence that might be committed by
respondent against her. Evidences showed that respondent who was a
member of the Armed Forces of the Philippines assigned at the Headquarters
4ID Camp Evangelista, Cagayan de Oro City had been repeatedly inflicting
physical, verbal, emotional and economic abuse and violence upon the
petitioner. Respondent in several instances had slapped, mauled and
punched petitioner causing her physical harm. Exhibits G and D are medical
certificates showing physical injuries suffered by petitioner inflicted by the
respondent at instances of their marital altercations. Respondent at the
height of his anger often poked a gun on petitioner and threatened to
massacre her and her child causing them to flee for their lives and sought
refuge from other people. He had demanded sex from petitioner at an
unreasonable time when she was sick and chilling and when refused poked a
gun at her. Several police blotters were offered as evidence by petitioner
documenting the incidents when she was subjected to respondent’s ill
temper and ill treatment. Verbally, petitioner was not spared from
respondent’s abuses by shouting at her that he was wishing she would die
and he would celebrate if it happens and by calling and sending her
threatening text messages. These incidents had caused petitioner great
psychological trauma causing her [to] fear for her life and these forced her
to seek refuge from the court for protection. Economically, petitioner was
also deprived by respondent of her spousal support despite order of the
court directing him to give a monthly support of Php4,000.00. In view of the
foregoing, this court finds a need to protect the life of the petitioner not only
physically but also emotionally and psychologically.
Based on the evidence presented, both oral and documentary, and there
being no controverting evidence presented by respondent, this Court finds
that the applicant has established her case by preponderance of evidence.
WHEREFORE, premises considered, judgment is hereby rendered GRANTING
the petition, thus, pursuant to Sec. 30 of A.M. No. 04-10-1-SC, let a
PERMANENT PROTECTION ORDER be issued immediately and respondent,

S/Sgt. CHARLES A.YAHON is ordered to give to petitioner, DAISY R. YAHON
the amount of FOUR THOUSAND PESOS (Php4,000.00) per month by way of
spousal support.
Pursuant to the order of the court dated February 6, 2007, respondent,
S/Sgt. Charles A. Yahon is directed to give it to petitioner 50% of whatever
retirement benefits and other claims that may be due or released to him
from the government and the said share of petitioner shall be automatically
deducted from respondent’s benefits and claims and be given directly to the
petitioner, Daisy R. Yahon.
Let copy of this decision be sent to the Commanding General/Officer of
Finance Center of the Armed Forces of the Philippines, Camp Emilio
Aguinaldo, Quezon City; the Management of RSBS, Camp Emilio Aguinaldo,
Quezon City and the Regional Manager of PAG-IBIG, Mortola St., Cagayan de
Oro City for their guidance and strict compliance.
SO ORDERED.7 (Emphasis supplied.)
Herein petitioner Armed Forces of the Philippines Finance Center (AFPFC),
assisted by the Office of the Judge Advocate General (OTJAG), AFP, filed
before the RTC a Manifestation and Motion (To Lift Temporary Protection
Order Against the AFP)8 dated November 10, 2008. Stating that it was
making a limited and special appearance, petitioner manifested that on
August 29, 2008, it furnished the AFP Pension and Gratuity Management
Center (PGMC) copy of the TPO for appropriate action. The PGMC, on
September 2, 2008, requested the Chief, AFPFC the temporary withholding
of the thirty-six (36) Months Lump Sum (MLS) due to S/Sgt. Yahon.
Thereafter, on October 29, 2008, PGMC forwarded a letter to the Chief of
Staff, AFP for the OTJAG for appropriate action on the TPO, and requesting
for legal opinion as to the propriety of releasing the 36 MLS of S/Sgt. Yahon.
Petitioner informed the RTC that S/Sgt. Yahon’s check representing his 36
MLS had been processed and is ready for payment by the AFPFC, but to date
said check has not been claimed by respondent.
Petitioner further asserted that while it has initially discharged its obligation
under the TPO, the RTC had not acquired jurisdiction over the military
institution due to lack of summons, and hence the AFPFC cannot be bound
by the said court order. Additionally, petitioner contended that the AFPFC is
not a party-in-interest and is a complete stranger to the proceedings before
the RTC on the issuance of TPO/PPO. Not being impleaded in the case,
Statutory Construction September 4 Page |3
petitioner lamented that it was not afforded due process and it was thus
improper to issue execution against the AFPFC. Consequently, petitioner
emphasized its position that the AFPFC cannot be directed to comply with
the TPO without violating its right to procedural due process.
In its Order9 dated December 17, 2008, the RTC denied the aforesaid motion
for having been filed out of time. It noted that the September 28, 2006 TPO
and July 23, 2007 Decision granting Permanent Protection Order (PPO) to
respondent had long become final and executory.
Petitioner’s motion for reconsideration was likewise denied under the RTC’s
Order10 dated March 6, 2009.
On May 27, 2009, petitioner filed a petition for certiorari before the CA
praying for the nullification of the aforesaid orders and decision insofar as it
directs the AFPFC to automatically deduct from S/Sgt. Yahon’s retirement
and pension benefits and directly give the same to respondent as spousal
support, allegedly issued with grave abuse of discretion amounting to lack of
jurisdiction. Respondent filed her Comment with Prayer for Issuance of
Preliminary Injunction, manifesting that there is no information as to
whether S/Sgt. Yahon already received his retirement benefit and that the
latter has repeatedly violated the TPO, particularly on the provision of
spousal support.
After due hearing, the CA‘s Twenty-Second Division issued a
Resolution11 granting respondent’s application, viz:
Upon perusal of the respective pleadings filed by the parties, the Court finds
meritorious private respondent’s application for the issuance of an injunctive
relief. While the 36-month lump sum retirement benefits of S/Sgt. Charles A.
Yahon has already been given to him, yet as admitted by petitioner itself, the
monthly pension after the mentioned retirement benefits has not yet been
released to him. It appears that the release of such pension could render
ineffectual the eventual ruling of the Court in this Petition.
IN VIEW OF THE FOREGOING, let a WRIT OF PRELIMINARY INJUNCTION
issue enjoining the Armed Forces of the Philippines Finance Center, its
employees, agents, representatives, and any all persons acting on its behalf,
from releasing the remaining pension that may be due to S/Sgt. Charles A.
Yahon.

SO ORDERED.12
By Decision dated November 29, 2011, the CA denied the petition for
certiorari and affirmed the assailed orders and decision of the RTC. The CA
likewise denied petitioner’s motion for reconsideration.
In this petition, the question of law presented is whether petitioner military
institution may be ordered to automatically deduct a percentage from the
retirement benefits of its enlisted personnel, and to give the same directly to
the latter’s lawful wife as spousal support in compliance with a protection
order issued by the RTC pursuant to R.A. No. 9262.
A protection order is an order issued by the court to prevent further acts of
violence against women and their children, their family or household
members, and to grant other necessary relief. Its purpose is to safeguard the
offended parties from further harm, minimize any disruption in their daily life
and facilitate the opportunity and ability to regain control of their life. 13 The
protection orders issued by the court may be a Temporary Protection Order
(TPO) or a Permanent Protection Order (PPO), while a protection order that
may be issued by the barangay shall be known as a Barangay Protection
Order (BPO).14
Section 8 of R.A. No. 9262 enumerates the reliefs that may be included in
the TPO, PPO or BPO, to wit:
(a) Prohibition of the respondent from threatening to commit or
committing, personally or through another, any of the acts
mentioned in Section 5 of this Act;
(b) Prohibition of the respondent from harassing, annoying,
telephoning, contacting or otherwise communicating with the
petitioner, directly or indirectly;
(c) Removal and exclusion of the respondent from the residence of
the petitioner, regardless of ownership of the residence, either
temporarily for the purpose of protecting the petitioner, or
permanently where no property rights are violated, and if
respondent must remove personal effects from the residence, the
court shall direct a law enforcement agent to accompany the
respondent to the residence, remain there until respondent has
gathered his things and escort respondent from the residence;
Statutory Construction September 4 Page |4
(d) Directing the respondent to stay away from petitioner and any
designated family or household member at a distance specified by
the court, and to stay away from the residence, school, place of
employment, or any specified place frequented by the petitioner and
any designated family or household member;
(e) Directing lawful possession and use by petitioner of an
automobile and other essential personal effects, regardless of
ownership, and directing the appropriate law enforcement officer to
accompany the petitioner to the residence of the parties to ensure
that the petitioner is safely restored to the possession of the
automobile and other essential personal effects, or to supervise the
petitioner’s or respondent’s removal of personal belongings;
(f) Granting a temporary or permanent custody of a child/children to
the petitioner;
(g) Directing the respondent to provide support to the woman
and/or her child if entitled to legal support. Notwithstanding other
laws to the contrary, the court shall order an appropriate percentage
of the income or salary of the respondent to be withheld regularly by
the respondent's employer for the same to be automatically remitted
directly to the woman. Failure to remit and/or withhold or any delay
in the remittance of support to the woman and/or her child without
justifiable cause shall render the respondent or his employer liable
for indirect contempt of court;
(h) Prohibition of the respondent from any use or possession of any
firearm or deadly weapon and order him to surrender the same to
the court for appropriate disposition by the court, including
revocation of license and disqualification to apply for any license to
use or possess a firearm. If the offender is a law enforcement agent,
the court shall order the offender to surrender his firearm and shall
direct the appropriate authority to investigate on the offender and
take appropriate action on matter;
(i) Restitution for actual damages caused by the violence inflicted,
including, but not limited to, property damage, medical expenses,
child care expenses and loss of income;

(j) Directing the DSWD or any appropriate agency to provide
petitioner temporary shelter and other social services that the
petitioner may need; and
(k) Provision of such other forms of relief as the court deems
necessary to protect and provide for the safety of the petitioner and
any designated family or household member, provided petitioner and
any designated family or household member consents to such relief.
(Emphasis supplied.)
Petitioner argues that it cannot comply with the RTC’s directive for the
automatic deduction of 50% from S/Sgt. Yahon’s retirement benefits and
pension to be given directly to respondent, as it contravenes an explicit
mandate under the law governing the retirement and separation of military
personnel.
The assailed provision is found in Presidential Decree (P.D.) No.
1638,15 which states: Section 31. The benefits authorized under this Decree,
except as provided herein, shall not be subject to attachment, garnishment,
levy, execution or any tax whatsoever; neither shall they be assigned, ceded,
or conveyed to any third person: Provided, That if a retired or separated
officer or enlisted man who is entitled to any benefit under this Decree has
unsettled money and/or property accountabilities incurred while in the active
service, not more than fifty per centum of the pension gratuity or other
payment due such officer or enlisted man or his survivors under this Decree
may be withheld and be applied to settle such accountabilities. (Emphasis
supplied.)
A similar provision is found in R.A. No. 8291, otherwise known as the
"Government Service Insurance System Act of 1997," which reads:
SEC. 39. Exemption from Tax, Legal Process and Lien -- x x x
xxxx
The funds and/or the properties referred to herein as well as the benefits,
sums or monies corresponding to the benefits under this Act shall be exempt
from attachment, garnishment, execution, levy or other processes issued by
the courts, quasi-judicial agencies or administrative bodies including
Commission on Audit (COA) disallowances and from all financial obligations
of the members, including his pecuniary accountability arising from or caused
Statutory Construction September 4 Page |5
or occasioned by his exercise or performance of his official functions or
duties, or incurred relative to or in connection with his position or work
except when his monetary liability, contractual or otherwise, is in favor of the
GSIS.
In Sarmiento v. Intermediate Appellate Court,16 we held that a court order
directing the Philippine National Bank to refrain from releasing to petitioner
all his retirement benefits and to deliver one-half of such monetary benefits
to plaintiff as the latter’s conjugal share is illegal and improper, as it violates
Section 26 of CA 186 (old GSIS Law) which exempts retirement benefits from
execution.
The foregoing exemptions have been incorporated in the 1997 Rules of Civil
Procedure, as amended, which governs execution of judgments and court
orders. Section 13 of Rule 39 enumerates those properties which are exempt
from execution:
SEC. 13. Property exempt from execution.– Except as otherwise expressly
provided by law, the following property, and no other, shall be exempt from
execution:
xxxx
(l) The right to receive legal support, or money or property obtained as such
support, or any pension or gratuity from the Government;(Emphasis
supplied.)
It is basic in statutory construction that in case of irreconcilable conflict
between two laws, the later enactment must prevail, being the more recent
expression of legislative will.17 Statutes must be so construed and
harmonized with other statutes as to form a uniform system of
jurisprudence.18 However, if several laws cannot be harmonized, the earlier
statute must yield to the later enactment. The later law is the latest
expression of the legislative will.19
We hold that Section 8(g) of R.A. No. 9262, being a later enactment, should
be construed as laying down an exception to the general rule above-stated
that retirement benefits are exempt from execution. The law itself declares
that the court shall order the withholding of a percentage of the income or
salary of the respondent by the employer, which shall be automatically

remitted directly to the woman "[n]otwithstanding other laws to the
contrary."
Petitioner further contends that the directive under the TPO to segregate a
portion of S/Sgt. Yahon’s retirement benefits was illegal because said
moneys remain as public funds, citing the case of Pacific Products v.
Ong.20 In that case, this Court sustained the CA when it held that the
garnishment of the amount of ₱10,500 payable to BML Trading and Supply
while it was still in the possession of the Bureau of Telecommunications was
illegal and therefore, null and void. The CA therein relied on the previous
rulings in Director of Commerce and Industry v. Concepcion21 and Avendano
v. Alikpala, et al.22 wherein this Court declared null and void the garnishment
of the salaries of government employees.
Citing the two aforementioned cases, we thus declared in Pacific Products:
A rule, which has never been seriously questioned, is that money in the
hands of public officers, although it may be due government employees, is
not liable to the creditors of these employees in the process of garnishment.
One reason is, that the State, by virtue of its sovereignty may not be sued in
its own courts except by express authorization by the Legislature, and to
subject its officers to garnishment would be to permit indirectly what is
prohibited directly. Another reason is that moneys sought to be garnished, as
long as they remain in the hands of the disbursing officer of the
Government, belong to the latter, although the defendant in garnishment
may be entitled to a specific portion thereof. And still another reason which
covers both of the foregoing is that every consideration of public policy
forbids it.23
We disagree.
Section 8(g) of R.A. No. 9262 used the general term "employer," which
includes in its coverage the military institution, S/Sgt. Yahon’s employer.
Where the law does not distinguish, courts should not distinguish. Thus,
Section 8(g) applies to all employers, whether private or government.
It bears stressing that Section 8(g) providing for spousal and child support, is
a support enforcement legislation.1âwphi1 In the United States, provisions of
the Child Support Enforcement Act24 allow garnishment of certain federal
funds where the intended recipient has failed to satisfy a legal obligation of
child support. As these provisions were designed "to avoid sovereign
Statutory Construction September 4 Page |6
immunity problems" and provide that "moneys payable by the Government
to any individual are subject to child support enforcement proceedings," the
law is clearly intended to "create a limited waiver of sovereign immunity so
that state courts could issue valid orders directed against Government
agencies attaching funds in their possession."25
This Court has already ruled that R.A. No. 9262 is constitutional and does
not violate the equal protection clause. In Garcia v. Drilon26 the issue of
constitutionality was raised by a husband after the latter failed to obtain an
injunction from the CA to enjoin the implementation of a protection order
issued against him by the RTC. We ruled that R.A. No. 9262 rests on real
substantial distinctions which justify the classification under the law: the
unequal power relationship between women and men; the fact that women
are more likely than men to be victims of violence; and the widespread bias
and prejudice against women.
We further held in Garcia that the classification is germane to the purpose of
the law, viz:
The distinction between men and women is germane to the purpose of R.A.
9262, which is to address violence committed against women and children,
spelled out in its Declaration of Policy, as follows:
SEC. 2. Declaration of Policy.– It is hereby declared that the State values the
dignity of women and children and guarantees full respect for human rights.
The State also recognizes the need to protect the family and its members
particularly women and children, from violence and threats to their personal
safety and security.
Towards this end, the State shall exert efforts to address violence committed
against women and children in keeping with the fundamental freedoms
guaranteed under the Constitution and the provisions of the Universal
Declaration of Human Rights, the Convention on the Elimination of All Forms
of Discrimination Against Women, Convention on the Rights of the Child and
other international human rights instruments of which the Philippines is a
party.27
Under R.A. No. 9262, the provision of spousal and child support specifically
address one form of violence committed against women – economic abuse.
 Statutory Construction September 4 Page |7

D. "Economic abuse" refers to acts that make or attempt to make a woman MARTIN S. VILLARAMA, JR.
financially dependent which includes, but is not limited to the following: Associate Justice

1. Withdrawal of financial support or preventing the victim from WE CONCUR:

engaging in any legitimate profession, occupation, business or
activity, except in cases wherein the other spouse/partner objects on MARIA LOURDES P. A. SERENO
valid, serious and moral grounds as defined in Article 73 of the Chief Justice
Family Code; Chairperson

2. Deprivation or threat of deprivation of financial resources and the TERESITA J. LEONARDO-DE

right to the use and enjoyment of the conjugal, community or LUCAS P. BERSAMIN
CASTRO
property owned in common; Associate Justice
Associate Justice
3. Destroying household property;

4. Controlling the victims' own money or properties or solely BIENVENIDO L. REYES

controlling the conjugal money or properties.28 Associate Justice

The relief provided in Section 8(g) thus fulfills the objective of restoring the CERTIFICATION
dignity of women who are victims of domestic violence and provide them
continued protection against threats to their personal safety and security. Pursuant to Section 13, Article VIII of the 1987 Constitution, I certify that the
conclusions in the above Decision had been reached in consultation before
"The scope of reliefs in protection orders is broadened to ensure that the the case was assigned to the writer of the opinion of the Court's Division.
victim or offended party is afforded all the remedies necessary to curtail
access by a perpetrator to the victim. This serves to safeguard the victim MARIA LOURDES P. A. SERENO
from greater risk of violence; to accord the victim and any designated family Chief Justice
or household member safety in the family residence, and to prevent the
perpetrator from committing acts that jeopardize the employment and
support of the victim. It also enables the court to award temporary custody
of minor children to protect the children from violence, to prevent their
abduction by the perpetrator and to ensure their financial support." 29

WHEREFORE, the petition is DENIED for lack of merit. The Decision dated
November 29, 2011 and Resolution dated March 9, 2012 of the Court of
Appeals Mindanao Station in CA-G.R. SP No. 02953-MIN are AFFIRMED and
UPHELD.

No costs.

SO ORDERED.
 Statutory Construction September 4 Page |8

Republic of the Philippines Hence, this petition for certiorari.

SUPREME COURT
Manila We dismiss the petition.

EN BANC II

Section 14 of R.A. No. 7166 entitled "An Act Providing for Synchronized
National and Local Elections and for Electoral Reforms, Authorizing
G.R. No. 115245 July 11, 1995 Appropriations Therefor, and for Other Purposes" provides as follows:

JUANITO C. PILAR, petitioner, Statement of Contributions and Expenditures: Effect of

vs. Failure to File Statement. Every candidate and treasurer of
COMMISSION ON ELECTIONS, respondent. the political party shall, within thirty (30) days after the day
of the election, file in duplicate with the offices of the
Commission the full, true and itemized statement of all
contributions and expenditures in connection with the
QUIASON, J.: election.

This is a petition for certiorari under Rule 65 of the Revised Rules of Court No person elected to any public office shall enter upon the
assailing the Resolution dated April 28, 1994 of the Commission on Elections duties of his office until he has filed the statement of
(COMELEC) in UND No. 94-040.I contributions and expenditures herein required.

On March 22, 1992, petitioner Juanito C. Pilar filed his certificate of The same prohibition shall apply if the political party which
candidacy for the position of member of the Sangguniang Panlalawigan of nominated the winning candidate fails to file the statement
the Province of Isabela. required herein within the period prescribed by this Act.

On March 25, 1992, petitioner withdrew his certificate of candidacy. Except candidates for elective barangay office, failure to file
the statements or reports in connection with electoral
contributions and expenditures as required herein shall
In M.R. Nos. 93-2654 and 94-0065 dated November 3, 1993 and February
constitute an administrative offense for which the offenders
13, 1994 respectively, the COMELEC imposed upon petitioner the fine of Ten
shall be liable to pay an administrative fine ranging from
Thousand Pesos (P10,000.00) for failure to file his statement of contributions
One Thousand Pesos ( P1,000.00) to Thirty Thousand Pesos
and expenditures.
(P30,000.00), in the discretion of the Commission.
In M.R. No. 94-0594 dated February 24, 1994, the COMELEC denied the
The fine shall be paid within thirty (30) days from receipt of
motion for reconsideration of petitioner and deemed final M.R. Nos. 93-2654
notice of such failure; otherwise, it shall be enforceable by a
and 94-0065 (Rollo, p. 14).
writ of execution issued by the Commission against the
properties of the offender.
Petitioner went to the COMELEC En Banc (UND No. 94-040), which denied
the petition in a Resolution dated April 28, 1994 (Rollo, pp. 10-13).

It shall be the duty of every city or municipal election
registrar to advise in writing, by personal delivery or
registered mail, within five (5) days from the date of
election all candidates residing in his jurisdiction to comply
with their obligation to file their statements of contributions
and expenditures.
For the commission of a second or subsequent offense
under this Section, the administrative fine shall be from Two
Thousand Pesos (P2,000.00) to Sixty Thousand Pesos
(P60,000.00), in the discretion of the Commission. In
addition, the offender shall be subject to perpetual
disqualification to hold public office (Emphasis supplied).
To implement the provisions of law relative to election contributions and
expenditures, the COMELEC promulgated on January 13, 1992 Resolution
No. 2348 (Re: Rules and Regulations Governing Electoral Contributions and
Expenditures in Connection with the National and Local Elections on
May 11, 1992). The pertinent provisions of said Resolution are:
Sec. 13. Statement of contributions and
expenditures: Reminders to candidates to file statements.
Within five (5) days from the day of the election, the Law
Department of the Commission, the regional election director
of the National Capital Region, the provincial election
supervisors and the election registrars shall advise in writing
by personal delivery or registered mail all candidates who
filed their certificates of candidacy with them to comply with
their obligation to file their statements of contributions and
expenditures in connection with the elections. Every election
registrar shall also advise all candidates residing in his
jurisdiction to comply with said obligation (Emphasis
supplied).
Sec. 17. Effect of failure to file statement. (a) No person
elected to any public office shall enter upon the duties of his
office until he has filed the statement of contributions and
expenditures herein required.
Statutory Construction September 4 Page |9
The same prohibition shall apply if the political party which
nominated the winning candidates fails to file the statement
required within the period prescribed by law.
(b) Except candidates for elective barangay office, failure to
file statements or reports in connection with the electoral
contributions and expenditures as required herein shall
constitute an administrative offense for which the offenders
shall be liable to pay an administrative fine ranging from
One Thousand Pesos (P1,000) to Thirty Thousand Pesos
(P30,000), in the discretion of the Commission.
The fine shall be paid within thirty (30) days from receipt of
notice of such failure; otherwise, it shall be enforceable by a
writ of execution issued by the Commission against the
properties of the offender.
For the commission of a second or subsequent offense
under this section, the administrative fine shall be from Two
Thousand Pesos (P2,000) to Sixty Thousand Pesos
(P60,000), in the discretion of the Commission. In addition,
the offender shall be subject to perpetual disqualification to
hold public office.
Petitioner argues that he cannot be held liable for failure to file a statement
of contributions and expenditures because he was a "non-candidate," having
withdrawn his certificates of candidacy three days after its filing. Petitioner
posits that "it is . . . clear from the law that candidate must have entered the
political contest, and should have either won or lost" (Rollo, p. 39).
Petitioner's argument is without merit.
Section 14 of R.A. No. 7166 states that "every candidate" has the obligation
to file his statement of contributions and expenditures.
Well-recognized is the rule that where the law does not distinguish, courts
should not distinguish, Ubi lex non distinguit nec nos distinguere
debemos (Philippine British Assurance Co. Inc. v. Intermediate Appellate
Court, 150 SCRA 520 [1987]; cf Olfato v. Commission on Elections, 103
SCRA 741 [1981]). No distinction is to be made in the application of a law
where none is indicated (Lo Cham v. Ocampo, 77 Phil. 636 [1946]).

In the case at bench, as the law makes no distinction or qualification as to
whether the candidate pursued his candidacy or withdrew the same, the
term "every candidate" must be deemed to refer not only to a candidate who
pursued his campaign, but also to one who withdrew his candidacy.
The COMELEC, the body tasked with the enforcement and administration of
all laws and regulations relative to the conduct of an election, plebiscite,
initiative, referendum, and recall (The Constitution of the Republic of the
Philippines, Art. IX(C), Sec. 2[1]), issued Resolution No. 2348 in
implementation or interpretation of the provisions of Republic Act No. 7166
on election contributions and expenditures. Section 13 of Resolution No.
2348 categorically refers to "all candidates who filed their certificates of
candidacy."
Furthermore, Section 14 of the law uses the word "shall." As a general rule,
the use of the word "shall" in a statute implies that the statute is mandatory,
and imposes a duty which may be enforced , particularly if public policy is in
favor of this meaning or where public interest is involved. We apply the
general rule (Baranda v. Gustilo, 165 SCRA 757 [1988]; Diokno v.
Rehabilitation Finance Corporation, 91 Phil. 608 [1952]).
The state has an interest in seeing that the electoral process is clean, and
ultimately expressive of the true will of the electorate. One way of attaining
such objective is to pass legislation regulating contributions and expenditures
of candidates, and compelling the publication of the same. Admittedly,
contributions and expenditures are made for the purpose of influencing the
results of the elections (B.P. Blg. 881, Sec. 94; Resolution No. 2348, Sec. 1).
Thus, laws and regulations prescribe what contributions are prohibited (B.P.
Blg. 881, Sec. 95, Resolution No. 2348, Sec. 4), or unlawful (B.P. Blg. 881,
Sec. 96), and what expenditures are authorized (B.P. Blg. 881, Sec. 102;
R.A. No. 7166, Sec. 13; Resolution No. 2348, Sec. 7) or lawful (Resolution
No. 2348, Sec. 8).
Such statutes are not peculiar to the Philippines. In "corrupt and illegal
practices acts" of several states in the United States, as well as in federal
statutes, expenditures of candidates are regulated by requiring the filing of
statements of expenses and by limiting the amount of money that may be
spent by a candidate. Some statutes also regulate the solicitation of
campaign contributions (26 Am Jur 2d, Elections § 287). These laws are
designed to compel publicity with respect to matters contained in the
statements and to prevent, by such publicity, the improper use of moneys
S t a t u t o r y C o n s t r u c t i o n S e p t e m b e r 4 P a g e | 10
devoted by candidates to the furtherance of their ambitions (26 Am Jur 2d,
Elections § 289). These statutes also enable voters to evaluate the influences
exerted on behalf of candidates by the contributors, and to furnish evidence
of corrupt practices for annulment of elections (Sparkman v. Saylor [Court of
Appeals of Kentucky], 180 Ky. 263, 202 S.W. 649 [1918]).
State courts have also ruled that such provisions are mandatory as to the
requirement of filing (State ex rel. Butchofsky v. Crawford [Court of Civil
Appeals of Texas], 269 S.W. 2d 536 [1954]; Best v. Sidebottom, 270 Ky.
423,109 S.W. 2d 826 [1937]; Sparkman v. Saylor, supra.)
It is not improbable that a candidate who withdrew his candidacy has
accepted contributions and incurred expenditures, even in the short span of
his campaign. The evil sought to be prevented by the law is not all too
remote.
It is notesworthy that Resolution No. 2348 even contemplates the situation
where a candidate may not have received any contribution or made any
expenditure. Such a candidate is not excused from filing a statement, and is
in fact required to file a statement to that effect. Under Section 15 of
Resolution No. 2348, it is provided that "[i]f a candidate or treasurer of the
party has received no contribution, made no expenditure, or has no pending
obligation, the statement shall reflect such fact."
Lastly, we note that under the fourth paragraph of Section 73 of the B.P.
Blg. 881 or the Omnibus Election Code of the Philippines, it is provided that
"[t]he filing or withdrawal of certificate of candidacy shall not affect
whatever civil, criminal or administrative liabilities which a candidate may
have incurred." Petitioner's withdrawal of his candidacy did not extinguish his
liability for the administrative fine.
WHEREFORE, the petition is DISMISSED.
Narvasa, C.J., Feliciano, Regalado, Davide, Jr., Romero, Bellosillo, Puno,
Vitug, Mendoza and Francisco, JJ., concur.
Kapunan, J., is on leave.

Separate Opinions
MELO, J., dissenting:
The majority opinion is to the effect that every candidate, including one who
has withdrawn his certificate of candidacy, is obliged to file his statement of
contributions and expenditures in line with Section 14 of Republic Act No.
7166 vis-a-vis the pertinent portions of Comelec Resolution No. 2348. I must
concede that the use of the word "shall" in the main statute as well as the
implementing rules generally suggest mandatoriness as to cover all
candidates.
But is an anspirant for public office who had a sudden change of heart, so to
speak, still considered a candidate to begin with? I am of the impression that
he is not and is thus not bound to render an accounting subsequent to
election for the simple reason that the term 'candidate' is used to designate
a person who actually submits himself and is voted for at our election
(Santos vs. Miranda, 35 Phil. 643, 648 (1916) citing State vs. Hirsch, 125
Ind., 207; 9 L.R.A. 107; Moreno, Philippine Law Dictionary, 1972 2nd ed., p.
84) Certainly, one who withdraws his certificate of candidacy 3 days after the
filing thereof, can not be voted for at an election. And considering the
shortness of the period of 3 days from the filing to the withdrawal of the
certificate of candidacy, petitioner cannot be accused, as indeed there is no
such charge, of utilizing his aborted candidacy for purposes to raise funds or
to extort money from other candidates in exchange for the withdrawal.
I, therefore, vote to grant the petition.
Padilla, J., concurs.
Separate Opinions
MELO, J., dissenting:
The majority opinion is to the effect that every candidate, including one who
has withdrawn his certificate of candidacy, is obliged to file his statement of
contributions and expenditures in line with Section 14 of Republic Act No.
7166 vis-a-vis the pertinent portions of Comelec Resolution No. 2348. I must
concede that the use of the word "shall" in the main statute as well as the
implementing rules generally suggest mandatoriness as to cover all
candidates.
S t a t u t o r y C o n s t r u c t i o n S e p t e m b e r 4 P a g e | 11
But is an aspirant for public office who had a sudden change of heart, so to
speak, still considered a candidate to begin with? I am of the impression that
he is not and is thus not bound to render an accounting subsequent to
election for the simple reason that the term 'candidate' is used to designate
a person who actually submits himself and is voted for at our election
(Santos vs. Miranda, 35 Phil. 643, 648 (1916) citing State vs. Hirsch, 125
Ind., 207; 9 L.R.A. 107; Moreno, Philippine Law Dictionary, 1972 2nd ed., p.
84) Certainly, one who withdraws his certificate of candidacy 3 days after the
filing thereof, can not be voted for at an election. And considering the
shortness of the period of 3 days from the filing to the withdrawal of the
certificate of candidacy, petitioner cannot be accused, as indeed there is no
such charge, of utilizing his aborted candidacy for purposes to raise funds or
to extort money from other candidates in exchange for the withdrawal.
I, therefore, vote to grant the petition.
Padilla, J., concurs.
SECOND DIVISION
[G.R. No. 110898. February 20, 1996]
PEOPLE OF THE PHILIPPINES, petitioner, vs. HON. JUDGE ANTONIO
C. EVANGELISTA, as Presiding Judge of Branch XXI, 10th Judicial
Region, RTC of Misamis Oriental, Cagayan de Oro City, and GRILDO
S. TUGONON, respondents.
DECISION
MENDOZA, J.:
Private respondent Grildo S. Tugonan was charged with frustrated
homicide in the Regional Trial Court of Misamis Oriental (Branch 21), the
information against him alleging
That on or about the 26th day of May, 1988, at more or less 9:00 oclock in
the evening at Barangay Poblacion, Municipality of Villanueva, Province of
Misamis Oriental, Republic of the Philippines and within the jurisdiction of
this Honorable Court, the abovenamed accused with intent to kill and with
the use of a knife, which he was then conveniently provided of, did then and
there willfully, unlawfully and feloniously assault, attack and stab Roque T.
Bade thereby inflicting upon him the following injuries, to wit:

Stab wound, right iliac area,
0.5 cm. penetrating non
perforating lacerating posterior
peritoneum, 0.5 cm.
thus performing all the acts of execution which would produce the crime of
Homicide as a consequence but which, nevertheless, did not produce it by
reason of causes independent of the will of the accused, that is by timely
medical attendance which prevented his death.
CONTRARY TO and in violation of Article 249 in relation to Article 6 of the
Revised Penal Code.
After trial he was found guilty and sentenced to one year of prision
correccional in its minimum period and ordered to pay to the offended party
P5,000.00 for medical expense, without subsidiary imprisonment, and the
costs. The RTC appreciated in his favor the privileged mitigating
circumstances of incomplete self-defense and the mitigating circumstance of
voluntary surrender.
On appeal the Court of Appeals affirmed private respondents conviction
but modified his sentence by imposing on him an indeterminate penalty of 2
months of arresto mayor, as minimum, to 2 years and 4 months of prision
correccional, as maximum.1
On December 21., 1992, respondent Judge Antonio C. Evangelista of
the RTC set the case for repromulgation of January 4, 1993.
On December 28, 1992, private respondent filed a petition for
probation,2 alleging that (1) he possessed all the qualifications and none of
the disqualifications for probation under P.D. No. 968, as amended; (2) the
Court of Appeals had in fact reduced the penalty imposed on him by the trial
court; (3) in its resolution, the Court of Appeals took no action on a petition
for probation which he had earlier filed with it so that the petition could be
filed with the trial court; (4) in the trial courts decision, two mitigating
circumstances of incomplete self-defense and voluntary surrender were
appreciated in his favor; and (5) in Santos To v. Pao,3 the Supreme Court
upheld the right of the accused to probation notwithstanding the fact that he
had appealed from his conviction by the trial court.
S t a t u t o r y C o n s t r u c t i o n S e p t e m b e r 4 P a g e | 12
On February 2, 1993, the RTC ordered private respondent to report for
interview to the Provincial Probation Officer. The Provincial Probation Officer
on the other hand was required to submit his report with recommendation to
the court within 60 days.4
On February 18, 1993, Chief Probation and Parole Officer Isias B.
Valdehueza recommended denial of private respondents application for
probation on the ground that by appealing the sentence of the trial court,
when he could have then applied for probation, private respondent waived
the right to make his application. The Probation Officer thought the present
case to be distinguishable from Santos To v. Pao in the sense that in this
case the original sentence imposed on private respondent by the trial court
(1 year of imprisonment) was probationable and there was no reason for
private respondent not to have filed his application for probation then,
whereas in Santos To v. Pao the penalty only became probationable after it
had been reduced as a result of the appeal.
On April 16, 1993 Valdehueza reiterated5 his respectful recommendation
that private respondents application for probation be denied and that a
warrant of arrest be issued for him to serve his sentence in jail.
The RTC set aside the Probation Officers recommendation and granted
private respondents application for probation in its order of April 23,
1993.6 Hence this petition by the prosecution.
The issue in this case is whether the RTC committed a grave abuse of
its discretion by granting private respondents application for probation
despite the fact that he had appealed from the judgment of his conviction of
the trial court.
The Court holds that it did.
Until its amendment by P.D. No. 1990 in 1986, it was possible under
P.D. No. 986, otherwise known as the Probation Law, for the accused to take
his chances on appeal by allowing probation to be granted even after an
accused had appealed his sentence and failed to obtain an acquittal, just so
long as he had not yet started to serve the sentence.7 Accordingly, in Santos
To v. Pao, it was held that the fact that the accused had appealed did not
bar him from applying for probation especially because it was as a result of
the appeal that his sentencewas reduced and made the probationable limit.
The law was, however, amended by P.D. No. 1990 which took effect
on January 15, 19868 precisely put a stop to the practice of appealing from
judgments of conviction even if the sentence is probationable for the
purpose of securing an acquittal and applying for probation only if the

accused fails in his bid. Thus, as amended by P.D. No. 1990, 4 of the
Probation Law now reads:
4. Grant of Probation. Subject to the provisions of this Decree, the trial court
may, after it shall have convicted and sentenced a defendant, and upon
application by said defendant within the period for perfecting an
appeal, suspend the execution of the sentence and place the defendant on
probation for such period and upon such terms and conditions as it may
deem best; Provided, That no application for probation shall be entertained
or granted if the defendant has perfected the appeal from the judgment of
conviction.
Probation may be granted whether the sentence imposes a term of
imprisonment or a fine only. An application for probation shall be filed with
the trial court. The filing of the application shall be deemed a waiver of the
right to appeal.
An order granting or denying probation shall not be appealable. (Italics
added)
Since private respondent filed his application for probation on December
28, 1992, after P.D. No. 1990 had taken effect, 9 it is covered by the
prohibition that no application for probation shall be entertained or granted if
the defendant has perfected the appeal from the judgment of conviction and
that the filing of the application shall be deemed a waiver of the right to
appeal. Having appealed from the judgment of the trial court and having
applied for probation only after the Court of Appeals had affirmed his
conviction, private respondent was clearly precluded from the benefits of
probation.
Private respondent argues, however, that a distinction should be drawn
between meritorious appeals (like his appeal notwithstanding the appellate
courts affirmance of his conviction) and unmeritorious appeals. But the law
does not make any distinction and so neither should the Court. In fact if an
appeal is truly meritorious the accused would be set free and not only given
probation. Private respondents original sentence (1 year of prision
correccional in its minimum period) and the modified sentence imposed by
the Court of Appeals (2 months of arresto mayor, as minimum, to 2 years
and 4 months of prision correccional, as maximum) are probationable. Thus
the fact that he appealed meant that private respondent was taking his
chances which the law precisely frowns upon. This is precisely the evil that
the amendment in P.D. No. 1990 sought to correct, since in the words of the
S t a t u t o r y C o n s t r u c t i o n S e p t e m b e r 4 P a g e | 13
preamble to the amendatory law, probation was not intended as an escape
hatch and should not be used to obstruct and delay the administration of
justice, but should be availed of at the first opportunity by offenders who are
willing to be reformed and rehabilitated.
The ruling of the RTC that [h]aving not perfected an appeal against the
Court of Appeals decision, [private respondent] is, therefore, not covered by
[the amendment in] P.D. 1990 is an obvious misreading of the law. The
perfection of the appeal referred in the law refers to the appeal taken from a
judgment of conviction by the trial court and not that of the appellate court,
since under the law an application for probation is filed with the trial court
which can only grant the same after it shall have convicted and sentenced
[the] defendant, and upon application by said defendant within the period
for perfecting an appeal. Accordingly, in Llamado v. Court of Appeals,10 it
was held that the petitioner who had appealed his sentence could not
subsequently apply for probation.
WHEREFORE, the petition is GRANTED and the order of April 23,
1993 of the Regional Trial Court of Misamis Oriental (Branch 21) granting
probation to private respondent Grildo S. Tugonon is SET ASIDE.
SO ORDERED.
Regalado (Chairman), Romero, and Puno, JJ., concur.
Republic of the Philippines
SUPREME COURT
Manila
SECOND DIVISION
G.R. No. 87416 April 8, 1991
CECILIO S. DE VILLA, petitioner,
vs.
THE HONORABLE COURT OF APPEALS, PEOPLE OF THE
PHILIPPINES, HONORABLE JOB B. MADAYAG, and ROBERTO Z.
LORAYES, respondents.
San Jose Enriquez, Lacas Santos & Borje for petitioner.
Eduardo R. Robles for private respondent.
 S t a t u t o r y C o n s t r u c t i o n S e p t e m b e r 4 P a g e | 14
PARAS, J.:
This petition for review on certiorari seeks to reverse and set aside the
decision* of the Court of Appeals promulgated on February 1, 1989 in CA-
G.R. SP No. 16071 entitled "Cecilio S. de Villa vs. Judge Job B. Madayag, etc.
and Roberto Z. Lorayes," dismissing the petition for certiorari filed therein.
The factual backdrop of this case, as found by the Court of Appeals, is as
follows:
On October 5, 1987, petitioner Cecilio S. de Villa was charged before
the Regional Trial Court of the National Capital Judicial Region
(Makati, Branch 145) with violation of Batas Pambansa Bilang 22,
allegedly committed as follows:
That on or about the 3rd day of April 1987, in the
municipality of Makati, Metro Manila, Philippines and within
the jurisdiction of this Honorable Court, the above-named
accused, did, then and there willfully, unlawfully and
feloniously make or draw and issue to ROBERTO Z.
LORAYEZ, to apply on account or for value a Depositors
Trust Company Check No. 3371 antedated March 31, 1987,
payable to herein complainant in the total amount of U.S.
$2,500.00 equivalent to P50,000.00, said accused well
knowing that at the time of issue he had no sufficient funds
in or credit with drawee bank for payment of such check in
full upon its presentment which check when presented to
the drawee bank within ninety (90) days from the date
thereof was subsequently dishonored for the reason
"INSUFFICIENT FUNDS" and despite receipt of notice of
such dishonor said accused failed to pay said ROBERTO Z.
LORAYEZ the amount of P50,000.00 of said check or to
make arrangement for full payment of the same within five
(5) banking days after receiving said notice.
After arraignment and after private respondent had testified on
direct examination, petitioner moved to dismiss the Information on
the following grounds: (a) Respondent court has no jurisdiction over
the offense charged; and (b) That no offense was committed since
the check involved was payable in dollars, hence, the obligation
created is null and void pursuant to Republic Act No. 529 (An Act to
Assure Uniform Value of Philippine Coin and Currency).
On July 19, 1988, respondent court issued its first questioned orders
stating:
Accused's motion to dismiss dated July 5, 1988, is denied for
lack of merit.
Under the Bouncing Checks Law (B.P. Blg. 22), foreign
checks, provided they are either drawn and issued in the
Philippines though payable outside thereof, or made payable
and dishonored in the Philippines though drawn and issued
outside thereof, are within the coverage of said law. The law
likewise applied to checks drawn against current accounts in
foreign currency.
Petitioner moved for reconsideration but his motion was
subsequently denied by respondent court in its order dated
September 6, 1988, and which reads:
Accused's motion for reconsideration, dated August 9, 1988,
which was opposed by the prosecution, is denied for lack of
merit.1âwphi1
The Bouncing Checks Law is applicable to checks drawn
against current accounts in foreign currency (Proceedings of
the Batasang Pambansa, February 7, 1979, p. 1376, cited in
Makati RTC Judge (now Manila City Fiscal) Jesus F.
Guerrero's The Ramifications of the Law on Bouncing
Checks, p. 5). (Rollo, Annex "A", Decision, pp. 20-22).
A petition for certiorari seeking to declare the nullity of the
aforequoted orders dated July 19, 1988 and September 6, 1988 was
filed by the petitioner in the Court of Appeals wherein he contended:
(a) That since the questioned check was drawn against the
dollar account of petitioner with a foreign bank, respondent
court has no jurisdiction over the same or with accounts
 S t a t u t o r y C o n s t r u c t i o n S e p t e m b e r 4 P a g e | 15
outside the territorial jurisdiction of the Philippines and that
Batas Pambansa Bilang 22 could have not contemplated
extending its coverage over dollar accounts;
(b) That assuming that the subject check was issued in
connection with a private transaction between petitioner and
private respondent, the payment could not be legally paid in
dollars as it would violate Republic Act No. 529; and
(c) That the obligation arising from the issuance of the
questioned check is null and void and is not enforceable with
the Philippines either in a civil or criminal suit. Upon such
premises, petitioner concludes that the dishonor of the
questioned check cannot be said to have violated the
provisions of Batas Pambansa Bilang 22. (Rollo, Annex "A",
Decision, p. 22).
On February 1, 1989, the Court of Appeals rendered a decision, the
decretal portion of which reads:
WHEREFORE, the petition is hereby dismissed. Costs against
petitioner.
SO ORDERED. (Rollo, Annex "A", Decision, p. 5)
A motion for reconsideration of the said decision was filed by the
petitioner on February 7, 1989 (Rollo, Petition, p. 6) but the same
was denied by the Court of Appeals in its resolution dated March 3,
1989 (Rollo, Annex "B", p. 26).
Hence, this petition.
In its resolution dated November 13, 1989, the Second Division of
this Court gave due course to the petition and required the parties to
submit simultaneously their respective memoranda (Rollo,
Resolution, p. 81).
The sole issue in this case is whether or not the Regional Trial Court
of Makati has jurisdiction over the case in question.
The petition is without merit.
Jurisdiction is the power with which courts are invested for
administering justice, that is, for hearing and deciding cases (Velunta
vs. Philippine Constabulary, 157 SCRA 147 [1988]).
Jurisdiction in general, is either over the nature of the action, over
the subject matter, over the person of the defendant, or over the
issues framed in the pleadings (Balais vs. Balais, 159 SCRA 37
[1988]).
Jurisdiction over the subject matter is determined by the statute in
force at the time of commencement of the action (De la Cruz vs.
Moya, 160 SCRA 538 [1988]).
The trial court's jurisdiction over the case, subject of this review, can
not be questioned.
Sections 10 and 15(a), Rule 110 of the Rules of Court specifically
provide that:
Sec. 10. Place of the commission of the offense. The
complaint or information is sufficient if it can be understood
therefrom that the offense was committed or some of the
essential ingredients thereof occured at some place within
the jurisdiction of the court, unless the particular place
wherein it was committed constitutes an essential element
of the offense or is necessary for identifying the offense
charged.
Sec. 15. Place where action is to be instituted. (a) Subject to
existing laws, in all criminal prosecutions the action shall be
instituted and tried in the court of the municipality or
territory where the offense was committed or any of the
essential ingredients thereof took place.
In the case of People vs. Hon. Manzanilla (156 SCRA 279 [1987]
cited in the case of Lim vs. Rodrigo, 167 SCRA 487 [1988]), the
Supreme Court ruled "that jurisdiction or venue is determined by the
allegations in the information."
 S t a t u t o r y C o n s t r u c t i o n S e p t e m b e r 4 P a g e | 16
The information under consideration specifically alleged that the
offense was committed in Makati, Metro Manila and therefore, the
same is controlling and sufficient to vest jurisdiction upon the
Regional Trial Court of Makati. The Court acquires jurisdiction over
the case and over the person of the accused upon the filing of a
complaint or information in court which initiates a criminal action
(Republic vs. Sunga, 162 SCRA 191 [1988]).
Moreover, it has been held in the case of Que v. People of the
Philippines (154 SCRA 160 [1987] cited in the case of People vs.
Grospe, 157 SCRA 154 [1988]) that "the determinative factor (in
determining venue) is the place of the issuance of the check."
On the matter of venue for violation of Batas Pambansa Bilang 22,
the Ministry of Justice, citing the case of People vs. Yabut (76 SCRA
624 [1977], laid down the following guidelines in Memorandum
Circular No. 4 dated December 15, 1981, the pertinent portion of
which reads:
(1) Venue of the offense lies at the place where the check
was executed and delivered; (2) the place where the check
was written, signed or dated does not necessarily fix the
place where it was executed, as what is of decisive
importance is the delivery thereof which is the final act
essential to its consummation as an obligation; . . . (Res. No.
377, s. 1980, Filtex Mfg. Corp. vs. Manuel Chua, October 28,
1980)." (See The Law on Bouncing Checks Analyzed by
Judge Jesus F. Guerrero, Philippine Law Gazette, Vol. 7. Nos.
11 & 12, October-December, 1983, p. 14).
It is undisputed that the check in question was executed and
delivered by the petitioner to herein private respondent at Makati,
Metro Manila.
However, petitioner argues that the check in question was drawn
against the dollar account of petitioner with a foreign bank, and is
therefore, not covered by the Bouncing Checks Law (B.P. Blg. 22).
But it will be noted that the law does not distinguish the currency
involved in the case. As the trial court correctly ruled in its order
dated July 5, 1988:
Under the Bouncing Checks Law (B.P. Blg. 22), foreign
checks, provided they are either drawn and issued in the
Philippines though payable outside thereof . . . are within
the coverage of said law.
It is a cardinal principle in statutory construction that where the law
does not distinguish courts should not
distinguish.1âwphi1 Parenthetically, the rule is that where the law
does not make any exception, courts may not except something
unless compelling reasons exist to justify it (Phil. British Assurance
Co., Inc. vs. IAC, 150 SCRA 520 [1987]).
More importantly, it is well established that courts may avail
themselves of the actual proceedings of the legislative body to assist
in determining the construction of a statute of doubtful meaning
(Palanca vs. City of Manila, 41 Phil. 125 [1920]). Thus, where there
is doubts as to what a provision of a statute means, the meaning put
to the provision during the legislative deliberation or discussion on
the bill may be adopted (Arenas vs. City of San Carlos, 82 SCRA 318
[1978]).
The records of the Batasan, Vol. III, unmistakably show that the
intention of the lawmakers is to apply the law to whatever currency
may be the subject thereof. The discussion on the floor of the then
Batasang Pambansa fully sustains this view, as follows:
xxx xxx xxx
THE SPEAKER. The Gentleman from Basilan is recognized.
MR. TUPAY. Parliamentary inquiry, Mr. Speaker.
THE SPEAKER. The Gentleman may proceed.
MR. TUPAY. Mr. Speaker, it has been mentioned by one of
the Gentlemen who interpellated that any check may be
involved, like U.S. dollar checks, etc. We are talking about
checks in our country. There are U.S. dollar checks, checks,
in our currency, and many others.

THE SPEAKER. The Sponsor may answer that inquiry.
MR. MENDOZA. The bill refers to any check, Mr. Speaker,
and this check may be a check in whatever currency. This
would not even be limited to U.S. dollar checks. The check
may be in French francs or Japanese yen or deutschunorhs.
(sic.) If drawn, then this bill will apply.
MR TUPAY. So it include U.S. dollar checks.
MR. MENDOZA. Yes, Mr. Speaker.
xxx xxx xxx
(p. 1376, Records of the Batasan, Volume III; Emphasis supplied).
PREMISES CONSIDERED, the petition is DISMISSED for lack of merit.
Melencio-Herrera, Padilla, Sarmiento and Regalado, JJ., concur.
Republic of the Philippines
SUPREME COURT
Manila
EN BANC
G.R. No. L-14787 January 28, 1961
COLGATE-PALMOLIVE PHILIPPINE, INC., petitioner,
vs.
HON. PEDRO M. GIMENEZ as Auditor General and ISMAEL MATHAY
as AUDITOR OF THE CENTRAL BANK OF THE
PHILIPPINES, respondents.
Ross, Selph and Carrascoso for petitioner.
Office of the Solicitor General for respondents.
GUTIERREZ DAVID, J.:
S t a t u t o r y C o n s t r u c t i o n S e p t e m b e r 4 P a g e | 17
The petitioner Colgate-Palmolive Philippines, Inc. is a corporation duly
organized and existing under Philippine laws engaged in the manufacture of
toilet preparations and household remedies. On several occasions, it
imported from abroad various materials such as irish moss extract, sodium
benzoate, sodium saccharinate precipitated calcium carbonate and dicalcium
phosphate, for use as stabilizers and flavoring of the dental cream it
manufactures. For every importation made of these materials, the petitioner
paid to the Central Bank of the Philippines the 17% special excise tax on the
foreign exchange used for the payment of the cost, transportation and other
charges incident thereto, pursuant to Republic Act No. 601, as amended,
commonly known as the Exchange Tax Law.
On March 14, 1956, the petitioner filed with the Central Bank three
applications for refund of the 17% special excise tax it had paid in the
aggregate sum of P113,343.99. The claim for refund was based on section 2
of Republic Act 601, which provides that "foreign exchange used for the
payment of the cost, transportation and/or other charges incident to the
importation into the Philippines of . . . stabilizer and flavors . . . shall be
refunded to any importer making application therefor, upon satisfactory
proof of actual importation under the rules and regulations to be
promulgated pursuant to section seven thereof." After the applications were
processed by the officer-in-charge of the Exchange Tax Administration of the
Central Bank, that official advised, the petitioner that of the total sum of
P113,343.99 claimed by it for refund, the amount of P23,958.13 representing
the 17% special excise tax on the foreign exchange used to import irish
moss extract, sodium benzoate and precipitated calcium carbonate had been
approved. The auditor of the Central Bank, however, refused to pass in audit
its claims for refund even for the reduced amount fixed by the Officer-in-
Charge of the Exchange Tax Administration, on the theory that toothpaste
stabilizers and flavors are not exempt under section 2 of the Exchange Tax
Law.
Petitioner appealed to the Auditor General, but the latter or, December 4,
1958 affirmed the ruling of the auditor of the Central Bank, maintaining that
the term "stabilizer and flavors" mentioned in section 2 of the Exchange Tax
Law refers only to those used in the preparation or manufacture of food or
food products. Not satisfied, the petitioner brought the case to this Court
thru the present petition for review.
The decisive issue to be resolved is whether or not the foreign exchange
used by petitioner for the importation of dental cream stabilizers and flavors

is exempt from the 17% special excise tax imposed by the Exchange Tax
Law, (Republic Act No. 601) so as to entitle it to refund under section 2
thereof, which reads as follows:
SEC, 2. The tax collected under the preceding section on foreign
exchange used for the payment of the cost, transportation and/or
other charges incident to importation into the Philippines of rice,
flour, canned milk, cattle and beef, canned fish, soya beans,
butterfat, chocolate, malt syrup, tapioca, stabilizer and flavors,
vitamin concentrate, fertilizer, poultry feed; textbooks, reference
books, and supplementary readers approved by the Board of
Textbooks and/or established public or private educational
institutions; newsprint imported by or for publishers for use in the
publication of books, pamphlets, magazines and newspapers; book
paper, book cloth, chip board imported for the printing of
supplementary readers (approved by the Board of Textbooks) to be
supplied to the Government under contracts perfected before the
approval of this Act, the quantity thereof to be certified by the
Director of Printing; anesthetics, anti-biotics, vitamins, hormones, x-
ray films, laboratory reagents, biologicals, dental supplies, and
pharmaceutical drugs necessary for compounding medicines;
medical and hospital supplies listed in the appendix to this Act, in
quantities to be certified by the Director of Hospitals as actually
needed by the hospitals applying therefor; drugs and medicines
listed in the said appendix; and such other drugs and medicines as
may be certified by the Secretary of Health from time to time to
promote and protect the health of the people of the Philippines shall
be refunded to any importer making application therefor, upon
satisfactory proof of actual importation under the rules and
regulations to be promulgated pursuant to section seven thereof."
(Emphasis supplied.)
The ruling of the Auditor General that the term "stabilizer and flavors" as
used in the law refers only to those materials actually used in the
preparation or manufacture of food and food products is based, apparently,
on the principle of statutory construction that "general terms may be
restricted by specific words, with the result that the general language will be
limited by the specific language which indicates the statute's object and
purpose." (Statutory Construction by Crawford, 1940 ed. p. 324-325.) The
rule, however, is, in our opinion, applicable only to cases where, except for
one general term, all the items in an enumeration belong to or fall under one
specific class. In the case at bar, it is true that the term "stabilizer and
S t a t u t o r y C o n s t r u c t i o n S e p t e m b e r 4 P a g e | 18
flavors" is preceded by a number of articles that may be classified as food or
food products, but it is likewise true that the other items immediately
following it do not belong to the same classification. Thus "fertilizer" and
"poultry feed" do not fall under the category of food or food products
because they are used in the farming and poultry industries, respectively.
"Vitamin concentrate" appears to be more of a medicine than food or food
product, for, as matter of fact, vitamins are among those enumerated in the
list of medicines and drugs appearing in the appendix to the law. It should
also here be stated that "cattle", which is among those listed preceding the
term in question, includes not only those intended for slaughter but also
those for breeding purposes. Again, it is noteworthy that under, Republic Act
No. 814 amending the above-quoted section of Republic Act No. 601,
"industrial starch", which does not always refer to food for human
consumption, was added among the items grouped with "stabilizer and
flavors". Thus, on the basis of the grouping of the articles alone, it cannot
validly be maintained that the term "stabilizer and flavors" as used in the
above-quoted provision of the Exchange Tax Law refers only to those used in
the manufacture of food and food products. This view is supported by the
principle "Ubi lex non distinguish nec nos distinguire debemos", or "where
the law does not distinguish, neither do we distinguish". (Ligget & Myers
Tobacco Company vs. Collector of Internal Revenue, 53 Off. Gaz. No. 15,
page 4831). Since the law does not distinguish between "stabilizer and
flavors" used in the preparation of food and those used in the manufacture
of toothpaste or dental cream, we are not authorized to make any distinction
and must construe the words in their general sense. The rule of construction
that general and unlimited terms are restrained and limited by particular
recitals when used in connection with them, does not require the rejection of
general terms entirely. It is intended merely as an aid in ascertaining the
intention of the legislature and is to be taken in connection with other rules
of construction. (See Handbook of the Construction and Interpretation of
Laws by Black, p. 215.216, 2nd ed.)
Having arrived at the above conclusion, we deem it now idle to pass upon
the other questions raised by the parties.
WHEREFORE, the decision under review is reversed and the respondents are
hereby ordered to audit petitioners applications for refund which were
approved by the Officer-in-Charge of the Exchange Tax Administration in the
total amount of P23,958.13.

Bengzon, Bautista Angelo, Concepcion, Reyes, J.B.L., Barrera, Paredes and
Dizon, JJ., concur.
Labrador, J., reserves his vote.
EN BANC
[G.R. No. 89483. August 30, 1990.]
REPUBLIC OF THE PHILIPPINES THRU: THE PRESIDENTIAL
COMMISSION ON GOOD GOVERNMENT (PCGG), AFP ANTI-GRAFT
BOARD, COL. ERNESTO A. PUNSALANG and PETER T.
TABANG, Petitioners, v. HON. EUTROPIO MIGRINO, as Presiding
Judge, Regional Trial Court, NCJR, Branch 151, Pasig, Metro Manila
and TROADIO TECSON, Respondents.
The Solicitor General, for Petitioners.
Pacifico B. Advincula for Private Respondent.
DECISION
CORTES, J.:
This case puts in issue the authority of the Presidential Commission on Good
Government (PCGG), through the New Armed Forces of the Philippines Anti-
Graft Board (hereinafter referred to as the "Board"), to investigate and cause
the prosecution of petitioner, a retired military officer, for violation of
Republic Acts Nos. 3019 and 1379.
Assailed by the Republic in this petition for certiorari, prohibition and/or
mandamus with prayer for the issuance of a writ of preliminary injunction
and/or temporary restraining order are the orders of respondent judge in
Civil Case No. 57092 Branch 151 of the Regional Trial Court of Pasig, Metro
Manila: (1) dated June 23, 1989, denying petitioners’ Motion to Dismiss and
Opposition, and (2) dated June 26, 1989, granting private respondent’s
application for the issuance of a writ of preliminary injunction. Thus, the
petition seeks the annulment of the two orders, the issuance of an injunction
to enjoin respondent judge from proceeding with Civil Case No. 57092 and,
finally, the dismissal of the case before the trial court.
S t a t u t o r y C o n s t r u c t i o n S e p t e m b e r 4 P a g e | 19
The controversy traces its roots to the order of then PCGG Chairman Jovito
R. Salonga, dated May 13, 1986, which created the New Armed Forces of the
Philippines Anti-Graft Board. The Board was created to "investigate the
unexplained wealth and corrupt practices of AFP personnel, both retired and
in active service." The order further stated that" [t]he Board shall be
primarily charged with the task of investigating cases of alleged violations of
the Anti-Graft and Corrupt Practices Act (Republic Act No. 3019, as
amended) and shall make the necessary recommendations to appropriate
government agencies and instrumentalities with respect to the action to be
taken thereon based on its findings."cralaw virtua1aw library
Acting on information received by the Board, which indicated the acquisition
of wealth beyond his lawful income, private respondent Lt. Col. Troadio
Tecson (ret.) was required by the Board to submit his explanation/comment
together with his supporting evidence by October 31, 1987 [Annex "B",
Petition]. Private respondent requested, and was granted, several
postponements, but was unable to produce his supporting evidence because
they were allegedly in the custody of his bookkeeper who had gone abroad.
Just the same, the Board proceeded with its investigation and submitted its
resolution, dated June 30, 1988, recommending that private respondent be
prosecuted and tried for violation of Rep. Act No. 3019, as amended, and
Rep. Act No. 1379, as amended.chanrobles lawlibrary : rednad
The case was set for preliminary investigation by the PCGG. Private
respondent moved to dismiss the case on the following grounds: (1) that the
PCGG has no jurisdiction over his person; (2) that the action against him
under Rep. Act No. 1379 has already prescribed; (3) that E.O. No. 14,
insofar as it suspended the provisions of Rep. Act No. 1379 on prescription of
actions, was inapplicable to his case; and (4) that having retired from the
AFP on May 9, 1984, he was now beyond the reach of Rep. Act No. 3019.
The Board opposed the motion to dismiss.
In a resolution dated February 8, 1989, the PCGG denied the motion to
dismiss for lack of merit. Private respondent moved for reconsideration but
this was denied by the PCGG in a resolution dated March 8, 1989. Private
respondent was directed to submit his counter-affidavit and other
controverting evidence on March 20, 1989 at 2:00 p.m.
On March 13, 1989, private respondent filed a petition for prohibition with
preliminary injunction with the Regional Trial Court in Pasig, Metro Manila.

The case was docketed as Case No. 57092 and raffled to Branch 151,
respondent judge’s court. Petitioner filed a motion to dismiss and opposed
the application for the issuance of a writ of preliminary injunction on the
principal ground that the Regional Trial Court had no jurisdiction over the
Board, citing the case of PCGG v. Peña, G.R. No. 77663, April 12, 1988, 159
SCRA 556. Private respondent opposed the motion to dismiss. Petitioner
replied to the opposition.
On June 23, 1989, respondent judge denied petitioner’s motion to dismiss.
On June 26, 1989, respondent judge granted the application for the issuance
of a writ of preliminary injunction, enjoining petitioners from investigating or
prosecuting private respondent under Rep. Acts Nos. 3019 and 1379 upon
the filing of a bond in the amount of Twenty Thousand Pesos (P20,000.00).
Hence, the instant petition.
On August 29, 1989, the Court issued a restraining order enjoining
respondent judge from enforcing his orders dated June 23, 1989 and June
26, 1989 and from proceeding with Civil Case No. 57092.
Private respondent filed his comment, to which petitioners filed a reply. A
rejoinder to the reply was filed by private Respondent. The Court gave due
course to the petition and the parties filed their memoranda. Thereafter, the
case was deemed submitted.
The issues raised in the petition are as follows:chanrob1es virtual 1aw library
I.
WHETHER OR NOT RESPONDENT JUDGE GRAVELY ABUSED HIS
DISCRETION OR ACTED WITHOUT OR IN EXCESS OF JURISDICTION IN
ASSUMING JURISDICTION OVER AND INTERFERING WITH THE ORDERS
AND FUNCTIONS OF THE PRESIDENTIAL COMMISSION ON GOOD
GOVERNMENT.
II.
WHETHER, OR NOT RESPONDENT JUDGE GRAVELY ABUSED HIS
DISCRETION OR ACTED WITHOUT OR IN EXCESS OF JURISDICTION IN
S t a t u t o r y C o n s t r u c t i o n S e p t e m b e r 4 P a g e | 20
ISSUING THE ASSAILED ORDER DATED JUNE 26, 1989 ENJOINING
PETITIONERS FROM INVESTIGATING AND PROSECUTING PRIVATE
RESPONDENT FOR VIOLATION OF REPUBLIC ACT NO. 3019, OTHERWISE
KNOWN AS ANTI-GRAFT AND CORRUPT PRACTICES ACT AND REPUBLIC
ACT NO. 1379, OTHERWISE KNOWN AS AN ACT FOR THE FORFEITURE OF
UNLAWFULLY ACQUIRED PROPERTY [Rollo, p. 19].
As to the first issue, petitioner contends that following the ruling of the Court
in PCGG v. Peña the Board, being a creation and/or extension of the PCGG,
is beyond the jurisdiction of the Regional Trial Court. On the second issue,
petitioner strongly argues that the private respondent’s case falls within the
jurisdiction of the PCGG.
The pivotal issue is the second one. On this point, private respondent’s
position is as follows:chanrob1es virtual 1aw library
1. . . . he is not one of the subordinates contemplated in Executive Orders 1
, 2 , 14 and 14-A as the alleged illegal acts being imputed to him, that of
alleged amassing wealth beyond his legal means while Finance Officer of the
Philippine Constabulary, are acts of his own alone, not connected with his
being a crony, business associate, etc. or subordinate as the petition does
not allege so. Hence the PCGG has no jurisdiction to investigate him.
If indeed private respondent amassed wealth beyond his legal means, the
procedure laid down by Rep. Act 1379 as already pointed out before be
applied. And since, he has been separated from the government more than
four years ago, the action against him under Republic Act 1379 has already
prescribed.
2. . . . no action can be filed anymore against him now under Republic Act
1379 for recovery of unexplained wealth for the reason that he has retired
more than four years ago.
3. . . . The order creating the AFP Anti-Graft Board (Annex "A", Petition) is
null and void. Nowhere in Executive Orders 1, 2, 14 and 14-A is there any
authority given to the commission, its chairman and members, to create
Boards or bodies to be invested with powers similar to the powers invested
with the commission .. [Comment, pp. 6-7; Rollo, pp. 117-118].
1. The most important question to be resolved in this case is whether or not
private respondent may be investigated and caused to be prosecuted by the
Board, an agency of the PCGG, for violation of Rep. Acts Nos. 3019 and

1379. According to petitioners, the PCGG has the power to investigate and
cause the prosecution of private respondent because he is a "subordinate" of
former President Marcos. They cite the PCGG’s jurisdiction over —
(a) The recovery of all ill-gotten wealth accumulated by former President
Ferdinand E. Marcos, his immediate family, relatives, subordinates and close
associates, whether located in the Philippines or abroad, including the
takeover or sequestration of all business enterprises and entities owned or
controlled by them, during his administration, directly or through nominees,
by taking undue advantage of their public office and/or using their powers,
authority, influence, connections or relationship. [E.O. No. 1, sec. 2.].
Undoubtedly, the alleged unlawful accumulation of wealth was done during
the administration of Pres. Marcos. However, what has to be inquired into is
whether or not private respondent acted as a "subordinate" of Pres. Marcos
within the contemplation of E.O. No. 1, the law creating the PCGG, when he
allegedly unlawfully acquired the properties.
A close reading of E. O. No. 1 and related executive orders will readily show
what is contemplated within the term "subordinate."cralaw virtua1aw library
The Whereas Clauses of E. O. No. 1 express the urgent need to recover the
ill-gotten wealth amassed by former President Ferdinand E. Marcos, his
immediate family, relatives, and close associates both here and abroad.
E.O. No. 2 freezes "all assets and properties in the Philippines in which
former President Marcos and/or his wife, Mrs. Imelda Romualdez Marcos,
their close relatives, subordinates, business associates, dummies, agents, or
nominees have any interest or participation."cralaw virtua1aw library
Applying the rule in statutory construction known as ejusdem generis, that is
— and prejudice to the Filipino people and the Republic of the Philippines" ;
[W]here general words follow an enumeration of persons or things, by words
of a particular and specific meaning, such general words are not to be
construed in their widest extent, but are to be held as applying only to
persons or things of the same kind or class as those specifically mentioned
[Smith, Bell & Co., Ltd. v. Register of Deeds of Davao, 96 Phil. 53, 58 (1954),
citing Black on Interpretation of Laws, 2nd Ed., 203].
the term "subordinate" as used in E.O. Nos. 1 and 2 would refer to one who
enjoys a close association or relation with former Pres. Marcos and/or his
S t a t u t o r y C o n s t r u c t i o n S e p t e m b e r 4 P a g e | 21
wife, similar to the immediate family member, relative, and close associate in
E.O. No. 1 and the close relative, business associate, dummy, agent, or
nominee in E.O. No. 2.
Thus, as stated by the Court in Bataan Shipyard & Engineering Co., Inc. v.
PCGG, G.R. No. 75885, May 27, 1987, 150 SCRA 181, 205-206.
The situations envisaged and sought to be governed [by Proclamation No. 3
and E.O. Nos. 1, 2 and 14] are self-evident, these being:chanrob1es virtual
1aw library
1) that" (i)ll gotten properties (were) amassed by the leaders and supporters
of the previous regime" ;
a) more particularly, that" (i)ll-gotten wealth (was) accumulated by former
President Ferdinand E. Marcos, his immediate family, relatives, subordinates,
and close associates, . . . located in the Philippines or abroad, xx (and)
business enterprises and entities (came to be) owned or controlled by them,
during . . . (the Marcos) administration, directly or through nominees, by
taking undue advantage of their public office and/or using their powers,
authority, influence, connections or relationship;"
b) otherwise stated, that "there are assets and properties pertaining to
former President Ferdinand E. Marcos, and/or his wife Mrs. Imelda
Romualdez Marcos, their close relatives, subordinates, business associates,
dummies, agents or nominees which had been or were acquired by them
directly or indirectly, through or as a result of the improper or illegal use of
funds or properties owned by the Government of the Philippines or any of its
branches, instrumentalities, enterprises, banks or financial institutions, or by
taking undue advantage of their office, authority, influence, connections or
relationship, resulting in their unjust enrichment and causing grave damage
c) that "said assets and properties are in the form of bank accounts,
deposits, trust accounts, shares of stocks, buildings, shopping centers,
condominiums, mansions, residences, estates, and other kinds of real and
personal properties in the Philippines and in various countries of the world;"
and.
2) that certain "business enterprises and properties (were) taken over by the
government of the Marcos Administration or by entities or persons close to
former President Marcos." [Footnotes deleted].

It does not suffice, as in this case, that the respondent is or was a
government official or employee during the administration of former Pres.
Marcos. There must be a prima facie showing that the respondent unlawfully
accumulated wealth by virtue of his close association or relation with former
Pres. Marcos and/or his wife. This is so because otherwise the respondent’s
case will fall under existing general laws and procedures on the matter. Rep.
Act No. 3019, the Anti-Graft and Corrupt Practices Act, penalizes the corrupt
practices of any public officer. Under Rep. Act No. 1379 (An Act Declaring
Forfeited in Favor of the State Any Property Found to Have Been Unlawfully
Acquired By Any Public Officer or Employee and Providing for the Procedure
Therefor), whenever any public officer or employee has acquired during his
incumbency an amount of property which is manifestly out of proportion to
his salary as such public officer or employee and to his other lawful income
and the income from legitimately acquired property, said property shall be
presumed prima facie to have been unlawfully acquired [Sec. 2]. The
Solicitor General shall file the petition and prosecute the case in behalf of the
Republic, after preliminary investigation by the provincial or city prosecutor
[Ibid].
Moreover, the record shows that private respondent was being investigated
for unlawfully acquired wealth under Rep. Acts Nos. 3019 and 1379, and not
under E.O. Nos. 1, 2, 14 and 14-A.
Since private respondent was being investigated by the PCGG through the
AFP Anti-Graft Board it would have been presumed that this was under Rep.
Acts Nos. 3019 and 1379 in relation to E.O. Nos. 1, 2, 14 and 14-A. But the
record itself belies this presumption:chanrob1es virtual 1aw library
(a) The letter of the chairman of the AFP Anti-Graft Board to private
respondent, dated October 16, 1987, states: "This letter is in connection with
the alleged information received by the AFP Anti-Graft Board indicating your
acquisition of wealth beyond legal means of income in violation of Rep. Act
No. 3019 known as the Anti-Graft and Corrupt Practices Act." [Rollo, p. 39].
(b) The Resolution dated June 30, 1988 of the Board categorically
states:chanrob1es virtual 1aw library
I. PRELIMINARY STATEMENT:chanrob1es virtual 1aw library
This refers to the case against Col Troadio B. Tecson PC (Ret) for alleged
unexplained wealth pursuant to R.A. 3019, as amended, otherwise known as
S t a t u t o r y C o n s t r u c t i o n S e p t e m b e r 4 P a g e | 22
Anti-Graft and Corrupt Practices Act and R.A. 1379, as amended, otherwise
known as the "Act for Forfeiture of Unlawfully Acquired Property." [Rollo, p.
43].
The resolution alleges that private respondent unlawfully accumulated wealth
by taking advantage of his office as Finance Officer of the Philippine
Constabulary. No attempt is made in the Board’s resolution to link him or his
accumulation of wealth to former Pres. Marcos and/or his wife.
(c) The letter of the Board chairman to the chairman of the PCGG, dated July
28, 1988, is clear:chanrob1es virtual 1aw library
Respectfully transmitted herewith for the prosecution before the
Sandiganbayan is the case folder of COLONEL TROADIO TECSON (Ret) who
after preliminary investigation of the case by the Board, found a prima facie
evidence against subject officer for violating Section 8, R.A. 3019, as
amended by BP 195, otherwise known as the Anti-Graft and Corrupt
Practices Act and R.A. 1379, otherwise known as an Act for the Forfeiture of
Unlawfully Acquired Property." [Rollo, p. 46].
Moreover, from the allegations of petitioner in its memorandum, it would
appear that private respondent accumulated his wealth for his own account.
Petitioner quoted the letter of Ignacio Datahan, a retired PC sergeant, to
General Fidel Ramos, the material portion of which reads:chanrob1es virtual
1aw library
. . . After an official in the military unit received an Allotment Advice the
same signed a cash advance voucher, let us say in the amount of P5,000.00.
Without much ado, outright, Col. Tecson paid the amount. The official
concerned was also made to sign the receipt portion on the voucher the
amount of which was left blank. Before the voucher is passed for routine
processing by Mrs. Leonor Cagas, clerk of Col. Tecson and its facilitator, the
maneuver began. The amount on the face of the cash advance voucher is
altered or superimposed. The original amount of P5,000.00 was now made
say, P95,000.00. So it was actually the amount of P95,000.00 that appeared
on the records. The difference of P90,000.00 went to the syndicate.
. . . Boy Tanyag, bookkeeper in Col. Tecson’s office took care of the work.
. . . In the liquidation of the altered cash advance amount, names of persons
found in the Metropolitan Manila Telephone Directory with fictitious
addresses appeared as recipients or payees. Leonor and Boy got their shares

on commission basis of the looted amount while the greater part went to
Col. Tecson. [Rollo, pp. 184-185.].
Clearly, this alleged unlawful accumulation of wealth is not that
contemplated in E.O. Nos. 1, 2, 14 and 14-A.
2. It will not do to cite the order of the PCGG Chairman, dated May 13, 1986,
creating the Board and authorizing it to investigate the unexplained wealth
and corrupt practices of AFP personnel, both retired and in active service, to
support the contention that PCGG has jurisdiction over the case of
private Respondent. The PCGG cannot do more than what it was empowered
to do. Its powers are limited. Its task is limited to the recovery of the ill-
gotten wealth of the Marcoses, their relatives and cronies. The PCGG cannot,
through an order of its chairman, grant itself additional powers — powers
not contemplated in its enabling law.
3. Petitioner assails the trial court’s cognizance of the petition filed by
private Respondent. Particularly, petitioner argues that the trial court cannot
acquire jurisdiction over the PCGG. This matter has already been settled in
Peña, supra, where the Court ruled that those who wish to question or
challenge the PCGG’s acts or orders must seek recourse in the
Sandiganbayan, which is vested with exclusive and original jurisdiction. The
Sandiganbayan’s decisions and final orders are in turn subject to review
on certiorari exclusively by this Court. [Ibid, at pp. 564-565].
The ruling in Peña was applied in PCGG v. Aquino, G.R. No. 77816, June 30,
1988, 163 SCRA 363, Soriano III v. Yuson, G.R. No. 74910 (and five other
cases), August 10, 1988, 164 SCRA 226 and Olaguer v. RTC, NCJR, Br. 48,
G.R. No. 81385, February 21, 1989, 170 SCRA 478, among others, to enjoin
the regional trial courts from interfering with the actions of the PCGG.
Respondent judge clearly acted without or in excess of his jurisdiction when
he took cognizance of Civil Case No. 57092 and issued the writ of preliminary
injunction against the PCGG.
4. Thus, we are confronted with a situation wherein the PCGG acted in
excess of its jurisdiction and, hence, may be enjoined from doing so, but the
court that issued the injunction against the PCGG has not been vested by law
with jurisdiction over it and, thus, the injunction issued was null and void.
The nullification of the assailed order of respondent judge issuing the writ of
preliminary injunction is therefore in order. Likewise, respondent judge must
S t a t u t o r y C o n s t r u c t i o n S e p t e m b e r 4 P a g e | 23
be enjoined from proceeding with Civil Case No. 57092.
But in view of the patent lack of authority of the PCGG to investigate and
cause the prosecution of private respondent for violation of Rep. Acts Nos.
3019 and 1379, the PCGG must also be enjoined from proceeding with the
case, without prejudice to any action that may be taken by the proper
prosecutory agency. The rule of law mandates that an agency of government
be allowed to exercise only the powers granted it.
5. The pronouncements made above should not be taken to mean that the
PCGG’s creation of the AFP Anti-Graft Board is a nullity and that the PCGG
has no authority to investigate and cause the prosecution of members and
former members of the Armed Forces of the Philippines for violations of Rep.
Acts Nos. 3019 and 1379. The PCGG may investigate and cause the
prosecution of active and retired members of the AFP for violations of Rep.
Acts Nos. 3019 and 1379 only in relation to E.O. Nos. 1, 2, 14 and 14-A, i.e.,
insofar as they involve the recovery of the ill-gotten wealth of former Pres.
Marcos and his family and "cronies." But the PCGG would not have
jurisdiction over an ordinary case falling under Rep. Acts Nos. 3019 and
1379, as in the case at bar. E.O. Nos. 1, 2, 14 and 14-A did not envision the
PCGG as the investigator and prosecutor of all unlawful accumulations of
wealth. The PCGG was created for a specific and limited purpose, as we have
explained earlier, and necessarily its powers must be construed with this in
mind.
6. n his pleadings, private respondent contends that he may no longer be
prosecuted because of prescription. He relies on section 2 of Rep. Act No.
1379 which provides that" [t]he right to file such petition [for forfeiture of
unlawfully acquired wealth] shall prescribe within four years from the date of
resignation, dismissal or separation or expiration of the term of the officer or
employee concerned." He retired on May 9, 1984, or more than six (6) years
ago. However, it must be pointed out that section 2 of Rep. Act No. 1379
should be deemed amended or repealed by Article XI, section 15 of the 1987
Constitution which provides that" [t]he right of the State to recover
properties unlawfully acquired by public officials or employees, from them or
from their nominees or transferees, shall not be barred by prescription,
laches, or estoppel." Considering that sec. 2 of Rep. Act No. 1379 was
deemed amended or repealed before the prescriptive period provided therein
had lapsed insofar as private respondent is concerned, we cannot say that
he had already acquired a vested right that may not be prejudiced by a
subsequent enactment.

Moreover, to bar the Government from recovering ill-gotten wealth would
result in the validation or legitimization of the unlawful acquisition, a
consequence at variance with the clear intent of Rep. Act No. 1379, which
provides:chanrobles virtual lawlibrary
SEC. 11. Laws on prescription. — The laws concerning acquisitive
prescription and limitation of actions cannot be invoked by, nor shall they
benefit the respondent, in respect to any property unlawfully acquired by
him.
Thus, we hold that the appropriate prosecutory agencies, i.e., the city or
provincial prosecutor and the Solicitor General under sec. 2 of Rep. Act No.
1379, may still investigate the case and file the petition for the forfeiture of
unlawfully acquired wealth against private respondent, now a private citizen.
(On the other hand, as regards respondents for violations of Rep. Acts Nos.
3019 and 1379 who are still in the government service, the agency granted
the power to investigate and prosecute them is the Office of the
Ombudsman [Rep. Act No. 6770]). Under Presidential Decree No. 1606, as
amended, and Batas Pambansa Blg. 195 violations of Rep. Acts Nos. 3019
and 1379 shall be tried by the Sandiganbayan.
7. The Court hastens to add that this decision is without prejudice to the
prosecution of private respondent under the pertinent provisions of the
Revised Penal Code and other related penal laws.
WHEREFORE, the order of respondent judge dated June 26, 1989 in Civil
Case No. 57092 is NULLIFIED and SET ASIDE. Respondent judge is
ORDERED to dismiss Civil Case No. 57092. The temporary restraining order
issued by the Court on August 29, 1989 is MADE PERMANENT. The PCGG is
ENJOINED from proceeding with the investigation and prosecution of private
respondent in I.S. No. 37, without prejudice to his investigation and
prosecution by the appropriate prosecutory agency.
SO ORDERED.
Fernan, C.J., Narvasa, Melencio-Herrera, Gutierrez, Jr., Cruz, Paras,
Feliciano, Gancayco, Padilla, Bidin, Griño-Aquino, Medialdea and
Regalado, JJ., concur.
Sarmiento, J., on leave.
S t a t u t o r y C o n s t r u c t i o n S e p t e m b e r 4 P a g e | 24
Republic of the Philippines
SUPREME COURT
Manila
SECOND DIVISION
G.R. No. L-47757-61 January 28, 1980
THE PEOPLE OF THE PHILIPPINES, ABUNDIO R. ELLO, As 4th
Assistant of Provincial Bohol VICENTE DE LA SERNA. JR., as
complainant all private prosecutor, petitioners,
vs.
HON. VICENTE B. ECHAVES, JR., as Judge of the Court of First
Instance of Bohol Branch II, ANO DACULLO, GERONIMO OROYAN,
MARIO APARICI, RUPERTO CAJES and MODESTO S
SUELLO, respondents.
AQUINO, J.:p
The legal issue in this case is whether Presidential Decree No. 772, which
penalizes squatting and similar acts, applies to agricultural lands. The decree
(which took effect on August 20, 1975) provides:
SECTION 1. Any person who, with the use of force,
intimidation or threat, or taking advantage of the absence or
tolerance of the landowner, succeeds in occupying or
possessing the property of the latter against his will for
residential, commercial or any other purposes, shall be
punished by an imprisonment ranging from six months to
one year or a fine of not less than one thousand nor more
than five thousand pesos at the discretion of the court, with
subsidiary imprisonment in case of insolvency. (2nd
paragraph is omitted.)
The record shows that on October 25, 1977 Fiscal Abundio R. Ello filed with
the lower court separate informations against sixteen persons charging them
with squatting as penalized by Presidential Decree No. 772. The information
against Mario Aparici which is similar to the other fifteen informations, reads:

That sometime in the year 1974 continuously up to the
present at barangay Magsaysay, municipality of Talibon,
province of Bohol, Philippines and within the jurisdiction of
this Honorable Court, the above-named accused, with
stealth and strategy, enter into, occupy and cultivate a
portion of a grazing land physically occupied, possessed and
claimed by Atty. Vicente de la Serna, Jr. as successor to the
pasture applicant Celestino de la Serna of Pasture Lease
Application No. 8919, accused's entrance into the area has
been and is still against the win of the offended party; did
then and there willfully, unlawfully, and feloniously squat
and cultivate a portion of the said grazing land; said
cultivating has rendered a nuisance to and has deprived the
pasture applicant from the full use thereof for which the land
applied for has been intended, that is preventing applicant's
cattle from grazing the whole area, thereby causing damage
and prejudice to the said applicant-possessor-occupant, Atty.
Vicente de la Serna, Jr. (sic)
Five of the informations, wherein Ano Dacullo, Geronimo Oroyan, Mario
Aparici, Ruperto Cajes and Modesto Suello were the accused, were raffled to
Judge Vicente B. Echaves, Jr. of Branch II (Criminal Cases Nos. 1824, 1828,
1832, 1833 and 1839, respectively).
Before the accused could be arraigned, Judge Echaves motu proprio issued
an omnibus order dated December 9, 1977 dismissing the five informations
on the grounds (1) that it was alleged that the accused entered the land
through "stealth and strategy", whereas under the decree the entry should
be effected "with the use of force, intimidation or threat, or taking advantage
of the absence or tolerance of the landowner", and (2) that under the rule
of ejusdem generis the decree does not apply to the cultivation of a grazing
land.
Because of that order, the fiscal amended the informations by using in lieu of
"stealth and strategy" the expression "with threat, and taking advantage of
the absence of the ranchowner and/or tolerance of the said ranchowner".
The fiscal asked that the dismissal order be reconsidered and that the
amended informations be admitted.
The lower court denied the motion. It insisted that the phrase "and for other
purposes" in the decree does not include agricultural purposes because its
S t a t u t o r y C o n s t r u c t i o n S e p t e m b e r 4 P a g e | 25
preamble does not mention the Secretary of Agriculture and makes reference
to the affluent class.
From the order of dismissal, the fiscal appealed to this Court under Republic
Act No. 5440. The appeal is devoid of merit.
We hold that the lower court correctly ruled that the decree does not apply
to pasture lands because its preamble shows that it was intended to apply to
squatting in urban communities or more particularly to illegal constructions in
squatter areas made by well-to-do individuals. The squating complained of
involves pasture lands in rural areas.
The preamble of the decree is quoted below:
WHEREAS, it came to my knowledge that despite the
issuance of Letter of Instruction No. 19 dated October 2,
1972, directing the Secretaries of National Defense, Public
Work. 9 and communications, Social Welfare and the
Director of Public Works, the PHHC General Manager, the
Presidential Assistant on Housing and Rehabilitation Agency,
Governors, City and Municipal Mayors, and City and District
Engineers, "to remove an illegal constructions including
buildings on and along esteros and river banks, those along
railroad tracks and those built without permits on public and
private property." squatting is still a major problem in urban
communities all over the country;
WHEREAS, many persons or entities found to have been
unlawfully occupying public and private lands belong to the
affluent class;
WHEREAS, there is a need to further intensify the
government's drive against this illegal and nefarious
practice.
It should be stressed that Letter of Instruction No. 19 refers to illegal
constructions on public and private property. It is complemented by Letter of
Instruction No. 19-A which provides for the relocation of squatters in the
interest of public health, safety and peace and order.

On the other hand, it should be noted that squatting on public agricultural
lands, like the grazing lands involved in this case, is punished by Republic Act
No. 947 which makes it unlawful for any person, corporation or association
to forcibly enter or occupy public agricultural lands. That law provides:
SECTION 1. It shall be unlawful for any person corporation
or association to enter or occupy, through force,
intimidation, threat, strategy or stealth, any public
agriculture land including such public lands as are granted to
private individuals under the provision of the Public Land Act
or any other laws providing for the of public agriculture
lands in the Philippines and are duly covered by the
corresponding applications for the notwithstanding standing
the fact that title thereto still remains in the Government or
for any person, natural or judicial to investigate induce or
force another to commit such acts.
Violations of the law are punished by a fine of not exceeding one thousand
or imprisonment for not more than one year, or both such fine and
imprisonment in the discretion of the court, with subsidiary imprisonment in
case of insolvency. (See People vs. Lapasaran 100 Phil. 40.)
The rule of ejusdem generis (of the same kind or species) invoked by the
trial court does not apply to this case. Here, the intent of the decree is
unmistakable. It is intended to apply only to urban communities, particularly
to illegal constructions. The rule of ejusdem generis is merely a tool of
statutory construction which is resorted to when the legislative intent is
uncertain (Genato Commercial Corp. vs. Court of Tax Appeals, 104 Phil.
615,618; 28 C.J.S. 1049-50).
WHEREFORE, the trial court's order of dismissal is affirmed. No costs.
SO ORDERED.
Barredo, Antonio, Concepcion Jr. and Abad Santos, J., concur.
FIRST DIVISION
G.R. No. 180235, January 20, 2016
S t a t u t o r y C o n s t r u c t i o n S e p t e m b e r 4 P a g e | 26
ALTA VISTA GOLF AND COUNTRY CLUB, Petitioner, v. THE CITY OF
CEBU, HON. MAYOR TOMAS R. OSME�A, IN HIS CAPACITY AS
MAYOR OF CEBU, AND TERESITA C. CAMARILLO, IN HER CAPACITY
AS THE CITY TREASURER, Respondents.
DECISION
LEONARDO-DE CASTRO, J.:
Before the Court is a Petition for Review on Certiorari of the
Resolution1 dated March 14, 2007 and the Order2 dated October 3, 2007 of
the Regional Trial Court (RTC), Cebu City, Branch 9 in Civil Case No. CEB-
31988, dismissing the Petition for Injunction, Prohibition, Mandamus,
Declaration of Nullity of Closure Order, Declaration of Nullity of Assessment,
and Declaration of Nullity of Section 42 of Cebu City Tax Ordinance, with
Prayer for Temporary Restraining Order and Writ of Preliminary
Injunction3 filed by petitioner Alta Vista Golf and Country Club against
respondents City of Cebu (Cebu City), then Cebu City Mayor Tomas R.
Osme�a (Osme�a), and then Cebu City Treasurer Teresita Camarillo
(Camarillo).
Petitioner is a non-stock and non-profit corporation operating a golf course in
Cebu City.
On June 21, 1993, the Sangguniang Panlungsod of Cebu City enacted City
Tax Ordinance No. LXIX, otherwise known as the "Revised Omnibus Tax
Ordinance of the City of Cebu" (Revised Omnibus Tax Ordinance).
Section 42 of the said tax ordinance on amusement tax was amended by City
Tax Ordinance Nos. LXXXII4and LXXXIV5 (which were enacted by
the Sangguniang Panlungsod of Cebu City on December 2, 1996 and April
20, 1998, respectively6) to read as follows:
Section 42. Rate of Tax. - There shall be paid to the Office of the City
Treasurer by the proprietors, lessees or operators of theaters, cinemas,
concert halls, circuses and other similar places of entertainment, an
amusement tax at the rate of thirty percent (30%), golf courses and polo
grounds at the rate of twenty percent (20%), of their gross receipts
on entrance, playing green, and/or admission fees; PROVIDED,
HOWEVER, That in case of movie premieres or gala shows for the benefit of
a charitable institution/foundation or any government institution where
 S t a t u t o r y C o n s t r u c t i o n S e p t e m b e r 4 P a g e | 27

higher admission fees are charged, the aforementioned rate of thirty percent places of amusement, but not professional basketball games. Professional
(30%) shall be levied against the gross receipts based on the regular basketball games did not fall under the same category as theaters,
admission fees, subject to the approval of the Sangguniang Panlungsod; cinematographs, concert halls, and circuses as the latter basically belong to
PROVIDED FURTHER, That in case payment of the amusement tax is made artistic forms of entertainment while the former catered to sports and
promptly on or before the date hereinbelow prescribed, a rebate of five gaming.
percent (5%) on the aforementioned gross receipts shall be given to the
proprietors, lessees or operators of theaters; PROVIDED FURTHERMORE, Through a letter dated October 11, 2005, respondent Camarillo sought to
that as an incentive to theater operators who own the real property and/or collect once more from petitioner deficiency business taxes, fees, and
building where the theater is located, an additional one percent (1%) rebate charges for the year 1998, totaling P2,981,441.52, computed as follows:
shall be given to said operator/real property owner concerned for as long as
their theater/movie houses are then (10) years old or older or the theater or
movie house is located at the city's redevelopment area bounded on the Restaurant - P4,021,830.65 P 40,950.00
north by Gen. Maxilom Street up to the port area; on the south by V. Rama
Avenue up to San Nicolas area; and on the west by B. Rodriguez St. and Permit Fee 2,000.00
General Maxilom Avenue; PROVIDED FINALLY, that the proceeds of this
additional one percent (1%) rebate shall be used by the building/property Liquor-P1,940,283.80 20,160.00
owner-theater operator to modernize their theater facilities. (Emphases
supplied.) Permit Fee 2,000.00

Commission/Other Income 14,950.00

In an Assessment Sheet7 dated August 6, 1998, prepared by Cebu City
Assessor Sandra I. Po, petitioner was originally assessed deficiency business P1,262,764.28
taxes, fees, and other charges for the year 1998, in the total amount of
P3,820,095.68, which included amusement tax on its golf course amounting Permit Fee 1,874.00
to P2,612,961.24 based on gross receipts of
P13,064,806.20.8chanroblesvirtuallawlibrary Retail Cigarettes - P42,076.11 - Permit 84.15

Through the succeeding years, respondent Cebu City repeatedly attempted Non-Securing of Permit ��������
to collect from petitioner its deficiency business taxes, fees, and charges for 979.33
1998, a substantial portion of which consisted of the amusement tax on the
golf course. Petitioner steadfastly refused to pay the amusement tax arguing Sub-Total P 82,997.98
that the imposition of said tax by Section 42 of the Revised Omnibus Tax
Ordinance, as amended, was irregular, improper, and illegal. Less: Payment based on computer assessment ����
74,858.61
Petitioner reasoned that under the Local Government Code, amusement tax
can only be imposed on operators of theaters, cinemas, concert halls, or Short payment P 12,723.18
places where one seeks to entertain himself by seeing or viewing a show or
performance. Petitioner further cited the ruling in Philippine Basketball 25% surcharge 3,180.80
Association (PBA) v. Court of Appeals9 that under Presidential Decree No.
231, otherwise known as the Local Tax Code of 1973, the province could 72% interest 11,450.00
only impose amusement tax on admission from the proprietors, lessees, or
Penalty for understatement 500.00
operators of theaters, cinematographs, concert halls, circuses, and other

Amount Due P 27,854.85
Add: Amusement Tax on golf P petitioner was liable to pay amusement tax on its golf course.13Ultimately,
course 1,373,761.24
25% surcharge (P6,868,806.20 x 343,440.31
20%)
72% Interest ��� 2,953,586.67
1,236,385.12
GRAND TOTAL P2,981,441.5210
(Emphasis supplied.)
Petitioner, through counsel, wrote respondent Camarillo a letter 11 dated
October 17, 2005 still disputing the amusement tax assessment on its golf
course for 1998 for being illegal. Petitioner, in a subsequent letter dated
November 30, 2005, proposed that:
While the question of the legality of the amusement tax on golf courses is
still unresolved, may we propose that Alta Vista Golf and Country Club settle
first the other assessments contained in your Assessment Sheet issued on
October 11, 2005.
At this early stage, we also request that pending resolution of the legality of
the amusement tax imposition on golf courses in [the Revised Omnibus Tax
Ordinance, as amended], Alta Vista Golf and Country Club be issued the
required Mayor's and/or Business Permit.12chanrobleslaw
Respondent Camarillo treated the letter dated October 17, 2005 of petitioner
as a Protest of Assessment and rendered on December 5, 2005 her ruling
denying said Protest on the following grounds: (a) a more thorough and
comprehensive reading of the PBA case would reveal that the Court actually
ruled therein that PBA was liable to pay amusement tax, but to the national
government, not the local government; (b) Section 42 of the Revised
Omnibus Tax Ordinance, as amended, enjoyed the presumption of
constitutionality and petitioner failed to avail itself of the remedy under
Section 187 of the Local Government Code to challenge the legality or
validity of Section 42 of the Revised Omnibus Tax Ordinance, as amended,
by filing an appeal with the Secretary of Justice within 30 days from
S t a t u t o r y C o n s t r u c t i o n S e p t e m b e r 4 P a g e | 28
effectivity of said ordinance; and (c) the Office of the City Attorney issued a
letter dated July 9, 2004 affirming respondent Camarillo's position that
respondent Camarillo held:
WHEREFORE, upon consideration of the legal grounds as above-mentioned,
we reiterate our previous stand on the validity of the ASSESSMENT SHEET
pertaining to the Tax Deficiencies for CY 1998 and this ruling serve as the
FINAL DEMAND for immediate settlement and payment of your amusement
tax liabilities and/or delinquencies otherwise we will constrained (sic) the
non-issuance of a Mayor's Business Permit for nonpayment of the said
deficiency on amusement tax and/or other tax liabilities as well as to file the
appropriate filing of administrative and judicial remedies for the collection of
the said tax liability and the letter treated as a Protest of Assessment that
was duly submitted before this office is hereby DENIED.14chanrobleslaw
Shortly after, on January 12, 2006, petitioner was served with a Closure
Order15 dated December 28, 2005 issued by respondent City Mayor Osmefia.
According to the Closure Order, petitioner committed blatant violations of the
laws and Cebu City Ordinances, to wit:
1. Operating a business without a business permit for five (5)
years, from year 2001-2005, in relation to Chapters I and II and
the penalty clauses under Sections 4, 6, 8, 66 (f) and 114 of the City
Tax Ordinance No. 69, otherwise known as the REVISED CITY TAX
ORDINANCE OF THE CITY OF CEBU, as amended by CO. 75;
2. Nonpayment of deficiency on Business Taxes and Fees
amounting to Seventeen Thousand Four Hundred Ninety-
Nine Pesos and Sixty-Four Centavos (Php17,499.64), as
adjusted, despite repeated demands in violation [of] Sections 4 and
8 of City Tax Ordinance No. 69, as amended;
3. Nonpayment of deficiency on Amusement Tax and the
penalties relative therewith totaling Two Million Nine
Hundred Fifty-Three Thousand Five Hundred Eighty-Six
Pesos and Eighty-Six Centavos (Php2,953,586.86) in violation
of Sections 4 and 8 in relation to Section 42 of City Tax Ordinance
No. 69, as amended, business permit-violation of the Article 172,
Revised Penal Code of the Philippines. (Emphases supplied.)

The Closure Order established respondent Mayor Osme�a's authority for
issuance of the same and contained the following directive:
As the chief executive of the City, the Mayor has the power and duty to:
Enforce all laws and ordinances relative to the governance of the city x x x
and, in addition to the foregoing, shall x x x Issue such executive orders for
the faithful and appropriate enforcement and execution of laws and
ordinances x x x. These are undeniable in the LOCAL GOVERNMENT CODE,
Section 455, par. (2) and par. (2)(iii).
Not only that, these powers can be exercised under the general welfare
clause of the Code, particularly Section 16 thereof, where it is irrefutable that
"every government unit shall exercise the powers expressly granted, those
necessarily implied therefrom, as well as powers necessary, appropriate, or
incidental of its efficient and effective governance, and those which are
essential to the promotion of the general welfare."
This CLOSURE ORDER precisely satisfies these legal precedents. Hence now,
in view whereof, your business establishment is hereby declared closed in
direct contravention of the above-specified laws and city ordinances. Please
cease and desist from further operating your business immediately upon
receipt of this order.
This closure order is without prejudice to the constitutional/statutory right of
the City to file criminal cases against corporate officers, who act for and its
behalf, for violations of Section 114 of the REVISED CITY TAX ORDINANCE
OF THE CITY OF CEBU and Section 516 of the LOCAL GOVERNMENT CODE,
with penalties of imprisonment and/or fine.
FOR STRICT AND IMMEDIATE COMPLIANCE.16chanrobleslaw
The foregoing developments prompted petitioner to file with the RTC on
January 13, 2006 a Petition for Injunction, Prohibition, Mandamus,
Declaration of Nullity of Closure Order, Declaration of Nullity of Assessment,
and Declaration of Nullity of Section 42 of Cebu City Tax Ordinance, with
Prayer for Temporary Restraining Order and Writ of Preliminary Injunction,
against respondents, which was docketed as Civil Case No. CEB-
31988.17 Petitioner eventually filed an Amended Petition on January 19,
2006.18Petitioner argued that the Closure Order is unconstitutional as it had
been summarily issued in violation of its right to due process; a city mayor
has no power under the Local Government Code to deny the issuance of a
S t a t u t o r y C o n s t r u c t i o n S e p t e m b e r 4 P a g e | 29
business permit and order the closure of a business for nonpayment of
taxes; Section 42 of the Revised Omnibus Tax Ordinance, as amended, is
null and void for being ultra vires or beyond the taxing authority of
respondent Cebu City, and consequently, the assessment against petitioner
for amusement tax for 1998 based on said Section 42 is illegal and
unconstitutional; and assuming arguendothat respondent Cebu City has the
power to impose amusement tax on petitioner, such tax for 1998 already
prescribed and could no longer be enforced.
Respondents filed a Motion to Dismiss based on the grounds of (a) lack of
jurisdiction of the RTC over the subject matter; (b) non-exhaustion of
administrative remedies; (c) noncompliance with Section 187 of the Local
Government Code, which provides the procedure and prescriptive periods for
challenging the validity of a local tax ordinance; (d) noncompliance with
Section 252 of the Local Government Code and Section 75 of Republic Act
No. 3857, otherwise known as the Revised Charter of the City of Cebu,
requiring payment under protest of the tax assessed; and (e) failure to
establish the authority of Ma. Theresa Ozoa (Ozoa) to institute the case on
behalf of petitioner.19chanroblesvirtuallawlibrary
In its Opposition to the Motion to Dismiss, petitioner countered that the RTC,
a court of general jurisdiction, could take cognizance of its Petition in Civil
Case No. CEB-31988, which not only involved the issue of legality or illegality
of a tax ordinance, but also sought the declaration of nullity of the Closure
Order and the issuance of writs of injunction and prohibition. Petitioner
likewise asserted that Section 195 of the Local Government Code on the
protest of assessment does, not require payment under protest. Section 252
of the same Code invoked by respondents applies only to real property
taxes. In addition, petitioner maintained that its Petition in Civil Case No.
CEB-31988 could not be barred by prescription. There is nothing in the Local
Government Code that could deprive the courts of the power to determine
the constitutionality or validity of a tax ordinance due to prescription. It is
the constitutional duty of the courts to pass upon the validity of a tax
ordinance and such duty cannot be limited or restricted. Petitioner further
contended that there is no need for exhaustion of administrative remedies
given that the issues involved are purely legal; the notice of closure is
patently illegal for having been issued without due process; and there is an
urgent need for judicial intervention. Lastly, petitioner pointed out that there
were sufficient allegations in the Petition that its filing was duly authorized by
petitioner. At any rate, petitioner already attached to its Opposition its Board
Resolution No. 104 authorizing Ozoa to file a case to nullify the Closure
Order. Thus, petitioner prayed for the denial of the Motion to

Dismiss.20chanroblesvirtuallawlibrary
Respondents, in their Rejoinder to Petitioner's Opposition to the Motion to
Dismiss,21 asserted that the Closure Order was just a necessary consequence
of the nonpayment by petitioner of the amusement tax assessed against it.
The Revised Omnibus Tax Ordinance of respondent Cebu City directs that no
permit shall be issued to a business enterprise which made no proper
payment of tax and, correspondingly, no business enterprise may be allowed
to operate or continue to operate without a business permit. The
fundamental issue in the case was still the nonpayment by petitioner of
amusement tax. Respondents relied on Reyes v. Court of Appeals,22 in which
the Court categorically ruled that the prescriptive periods fixed in Section 187
of the Local Government Code are mandatory and prerequisites before
seeking redress from a competent court. Section 42 of the Revised Omnibus
Tax Ordinance, as amended, was passed on April 20, 1998, so the institution
by petitioner of Civil Case No. CEB-31988 before the RTC on January 13,
2006 - without payment under protest of the assessed amusement tax and
filing of an appeal before the Secretary of Justice within 30 days from the
effectivity of the Ordinance - was long barred by prescription.
After filing by the parties of their respective Memorandum, the RTC issued
an Order23 dated March 16, 2006 denying the prayer of petitioner for
issuance of a Temporary Restraining Order (TRO). The RTC found that when
the business permit of petitioner expired and it was operating without a
business permit, it ceased to have a legal right to do business. The RTC
affirmed respondent Mayor Osme�a's authority to issue or grant business
licenses and permits pursuant to the police power inherent in his office; and
such authority to issue or grant business licenses and permits necessarily
included the authority to suspend or revoke or even refuse the issuance of
the said business licenses and permits in case of violation of the conditions
for the issuance of the same. The RTC went on to hold that:
[Petitioner] was given opportunities to be heard when it filed a protest [of]
the assessment which was subsequently denied. To the mind of this court,
this already constitutes the observance of due process and that [petitioner]
had already been given the opportunity to be heard. Due process and
opportunity to be heard does not necessarily mean winning the argument in
one's favor but to be given the fair chance to explain one's side or views with
regards [to] the matter in issue, which in this case is the legality of the tax
assessment.
It is therefore clear that when this case was filed, [petitioner] had no more
S t a t u t o r y C o n s t r u c t i o n S e p t e m b e r 4 P a g e | 30
legal right in its favor for the courts to protect. It would have been a
different story altogether had [petitioner] paid the tax assessment for the
green fees even under protest and despite payment and [respondent] Mayor
refused the issuance of the business permit because all the requisites for the
issuance of the said permit are all complied with.24chanroblesvirtuallawlibrary
On March 20, 2006, petitioner paid under protest to respondent Cebu City,
through respondent Camarillo, the assessed amusement tax, plus penalties,
interest, and surcharges, in the total amount of P2,750,249.17. 25cralawred
Since the parties agreed that the issues raised in Civil Case No. CEB-31988
were all legal in nature, the RTC already considered the case submitted for
resolution after the parties filed their respective
Memorandum.26chanroblesvirtuallawlibrary
On March 14, 2007, the RTC issued a Resolution granting the Motion to
Dismiss of respondents. Quoting from Reyes and Hagonoy Market Vendor
Association v. Municipality of Hagonoy, Bulacan,27 the RTC sustained the
position of respondents that Section 187 of the Local Government Code is
mandatory. Thus, the RTC adjudged:
From the above cited cases, it can be gleaned that the period in the filing of
the protests is important. In other words, it is the considered opinion of this
court [that] when a taxpayer questions the validity of a tax ordinance passed
by a local government legislative body, a different procedure directed in
Section 187 is to be followed. The reason for this could be because the tax
ordinance is clearly different from a law passed by Congress. The local
government code has set several limitations on the taxing power of the local
government legislative bodies including the issue of what should be taxed.
In this case, since the Petitioner failed to comply with the procedure outlined
in Section 187 of the Local Government Code and the fact that this case was
filed way beyond the period to file a case in court, then this court believes
that the action must fail.
Because of the procedural infirmity in bringing about this case to the court,
then the substantial issue of the propriety of imposing amusement taxes on
the green fees could no longer be determined.
WHEREFORE, in view of the aforegoing, this case is hereby
DISMISSED.28chanrobleslaw

The RTC denied the Motion for Reconsideration of petitioner in an Order
dated October 3, 2007.
Petitioner is presently before the Court on pure questions of law, viz.:
I. WHETHER OR NOT THE POWER OF JUDICIAL REVIEW OVER THE
VALIDITY OF A LOCAL TAX ORDINANCE HAS BEEN RESTRICTED BY
SECTION 187 OF THE LOCAL GOVERNMENT CODE.
II. WHETHER OR NOT THE CITY OF CEBU OR ANY LOCAL
GOVERNMENT CAN VALIDLY IMPOSE AMUSEMENT TAX TO THE ACT
OF PLAYING GOLF.29
There is merit in the instant Petition.
The RTC judgment on pure
questions of law may be directly
appealed to this Court via a petition
for review on certiorari.
Even before the RTC, the parties already acknowledged that the case
between them involved only questions of law; hence, they no longer
presented evidence and agreed to submit the case for resolution upon
submission of their respective memorandum.
It is incontestable that petitioner may directly appeal to this Court from the
judgment of the RTC on pure questions of law via its Petition for Review
on Certiorari. Rule 41, Section 2(c) of the Rules of Court provides that "[i]n
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." As the Court declared in Bonifacio v. Regional Trial Court of
Makati, Branch 14930:
The established policy of strict observance of the judicial hierarchy of courts,
as a rule, requires that recourse must first be made to the lower-ranked
court exercising concurrent jurisdiction with a higher court. A regard for
judicial hierarchy clearly indicates that petitions for the issuance of
extraordinary writs against first level courts should be filed in the RTC and
those against the latter should be filed in the Court of Appeals. The rule is
S t a t u t o r y C o n s t r u c t i o n S e p t e m b e r 4 P a g e | 31
not iron-clad, however, as it admits of certain exceptions.
Thus, a strict application of the rule is unnecessary when cases brought
before the appellate courts do not involve factual but purely legal questions.
(Citations omitted.)
"A question of law exists when the doubt or controversy concerns the correct
application of law or jurisprudence to a certain set of facts; or when the
issue does not call for an examination of the probative value of the evidence
presented, the truth or falsehood of facts being admitted[;]" and it may be
brought directly before this Court, the undisputed final arbiter of all
questions of law.31chanroblesvirtuallawlibrary
The present case is an exception
to Section 187 of the Local Government
Code and the doctrine of exhaustion of
administrative remedies.
Section 187 of the Local Government Code reads:
Sec. 187. Procedure for Approval and Effectivity of Tax Ordinances and
Revenue Measures; Mandatory Public Hearings. - The procedure for approval
of local tax ordinances and revenue measures shall be in accordance with
the provisions of this Code: Provided, That public hearings shall be
conducted for the purpose prior to the enactment thereof: Provided,
further, That any question on the constitutionality or legality of tax
ordinances or revenue measures may be raised on appeal within thirty (30)
days from the effectivity thereof to the Secretary of Justice who shall render
a decision within sixty (60) days from the date of receipt of the
appeal: Provided, however, That such appeal shall not have the effect of
suspending the effectivity of the ordinance and the accrual and payment of
the tax, fee, or charge levied therein: Provided, finally, That within thirty
(30) days after receipt of the decision or the lapse of the sixty-day period
without the Secretary of Justice acting upon the appeal, the aggrieved party
may file appropriate proceedings with a court of competent jurisdiction.
Indeed, the Court established in Reyes that the aforequoted provision is a
significant procedural requisite and, therefore, mandatory:
Clearly, the law requires that the dissatisfied taxpayer who questions the
validity or legality of a tax ordinance must file his appeal to the Secretary of

Justice, within 30 days from effectivity thereof. In case the Secretary decides
the appeal, a period also of 30 days is allowed for an aggrieved party to go
to court. But if the Secretary does not act thereon, after the lapse of 60
days, a party could already proceed to seek relief in court. These three
separate periods are clearly given for compliance as a prerequisite before
seeking redress in a competent court. Such statutory periods are set to
prevent delays as well as enhance the orderly and speedy discharge of
judicial functions. For this reason the courts construe these provisions of
statutes as mandatory.
A municipal tax ordinance empowers a local government unit to impose
taxes. The power to tax is the most effective instrument to raise needed
revenues to finance and support the myriad activities of local government
units for the delivery of basic services essential to the promotion of the
general welfare and enhancement of peace, progress, and prosperity of the
people. Consequently, any delay in implementing tax measures would be to
the detriment of the public. It is for this reason that protests over tax
ordinances are required to be done within certain time frames. In the instant
case, it is our view that the failure of petitioners to appeal to the Secretary of
Justice within 30 days as required by Sec. 187 of R.A. 7160 is fatal to their
cause.32 (Citations omitted.)
The Court further affirmed in Hagonoy that:
At this point, it is apropos to state that the timeframe fixed by law for parties
to avail of their legal remedies before competent courts is not a "mere
technicality" that can be easily brushed aside. The periods stated in Section
187 of the Local Government Code are mandatory. Ordinance No. 28 is a
revenue measure adopted by the municipality of Hagonoy to fix and collect
public market stall rentals. Being its lifeblood, collection of revenues by the
government is of paramount importance. The funds for the operation of its
agencies and provision of basic services to its inhabitants are largely derived
from its revenues and collections. Thus, it is essential that the validity of
revenue measures is not left uncertain for a considerable length of
time. Hence, the law provided a time limit for an aggrieved party to assail
the legality of revenue measures and tax ordinances.33 (Citations omitted.)
Nevertheless, in later cases, the Court recognized exceptional circumstances
that justify noncompliance by a taxpayer with Section 187 of the Local
Government Code.
The Court ratiocinated in Ongsuco v. Malones,34 thus:
S t a t u t o r y C o n s t r u c t i o n S e p t e m b e r 4 P a g e | 32
It is true that the general rule is that before a party is allowed to seek the
intervention of the court, he or she should have availed himself or herself of
all the means of administrative processes afforded him or her. Hence, if
resort to a remedy within the administrative machinery can still be made by
giving the administrative officer concerned every opportunity to decide on a
matter that comes within his or her jurisdiction, then such remedy should be
exhausted first before the court's judicial power can be sought. The
premature invocation of the intervention of the court is fatal to one's cause
of action. The doctrine of exhaustion of administrative remedies is based on
practical and legal reasons. The availment of administrative remedy entails
lesser expenses and provides for a speedier disposition of controversies.
Furthermore, the courts of justice, for reasons of comity and convenience,
will shy away from a dispute until the system of administrative redress has
been completed and complied with, so as to give the administrative agency
concerned every opportunity to correct its error and dispose of the case.
However, there are several exceptions to this rule.
The rule on the exhaustion of administrative remedies is intended to
preclude a court from arrogating unto itself the authority to resolve a
controversy, the jurisdiction over which is initially lodged with an
administrative body of special competence. Thus, a case where the issue
raised is a purely legal question, well within the competence; and
the jurisdiction of the court and not the administrative agency,
would clearly constitute an exception. Resolving questions of law,
which involve the interpretation and application of laws,
constitutes essentially an exercise of judicial power that is
exclusively allocated to the Supreme Court and such lower courts
the Legislature may establish.
In this case, the parties are not disputing any factual matter on
which they still need to present evidence. The sole issue petitioners
raised before the RTC in Civil Case No. 25843 was whether Municipal
Ordinance No. 98-01 was valid and enforceable despite the absence, prior to
its enactment, of a public hearing held in accordance with Article 276 of the
Implementing Rules and Regulations of the Local Government Code. This is
undoubtedly a pure question of law, within the competence and
jurisdiction of the RTC to resolve.
Paragraph 2(a) of Section 5, Article VIII of the Constitution, expressly
establishes the appellate jurisdiction of this Court, and impliedly recognizes
the original jurisdiction of lower courts over cases involving the
constitutionality or validity of an ordinance:ChanRoblesVirtualawlibrary

Section 5. The Supreme Court shall have the following powers:
xxxx
(2) Review, revise, reverse, modify or affirm on appeal or certiorari, as the
law or the Rules of Court may provide, final judgments and orders of lower
courts in:
(a) All cases in which the constitutionality or validity of any treaty,
international or executive agreement, law, presidential decree, proclamation,
order, instruction, ordinance, or regulation is in question.
In J.M. Tuason and Co., Inc. v. Court of Appeals, Ynot v. Intermediate
Appellate Court, and Commissioner of Internal Revenue v. Santos, the Court
has affirmed the jurisdiction of the RTC to resolve questions of
constitutionality and validity of laws (deemed to include local ordinances) in
the first instance, without deciding questions which pertain to legislative
policy. (Emphases supplied, citations omitted.)
In Cagayan Electric Power and Light Co., Inc. (CEPALCO) v. City of Cagayan
De Oro,35 the Court initially conceded that as in Reyes, the failure of
taxpayer CEPALCO to appeal to the Secretary of Justice within the statutory
period of 30 days from the effectivity of the ordinance should have been
fatal to its cause. However, the Court purposefully relaxed the application of
the rules in view of the more substantive matters.
Similar to Ongsuco and CEPALCO, the case at bar constitutes an exception to
the general rule. Not only does the instant Petition raise pure questions of
law, but it also involves substantive matters imperative for the Court to
resolve.
Section 42 of the Revised Omnibus
Tax Ordinance, as amended, imposing
amusement tax on golf courses is null
and void as it is beyond the authority of
respondent Cebu City to enact under the
Local Government Code.
The Local Government Code authorizes the imposition by local government
units of amusement tax under Section 140, which provides:
S t a t u t o r y C o n s t r u c t i o n S e p t e m b e r 4 P a g e | 33
Sec. 140. Amusement Tax. - (a) The province may levy an amusement tax to
be collected from the proprietors, lessees, or operators of theaters,
cinemas, concert halls, circuses, boxing stadia, and other places of
amusement at a rate of not more than thirty percent (30%) of the gross
receipts from admission fees.
(b) In the case of theaters or cinemas, the tax shall first be deducted and
withheld by their proprietors, lessees, or operators and paid to the provincial
treasurer before the gross receipts are divided between said proprietors,
lessees, or operators and the distributors of the cinematographic films.
(c) The holding of operas, concerts, dramas, recitals, painting, and art
exhibitions, flower shows, musical programs, literary and oratorical
presentations, except pop, rock, or similar concerts shall be exempt from the
payment of the tax hereon imposed.
(d) The sangguniang panlalawigan may prescribe the time, manner, terms
and conditions for the payment of tax. In case of fraud or failure to pay the
tax, the sangguniang panlalawigan may impose such surcharges, interests
and penalties as it may deem appropriate.
(e) The proceeds from the amusement tax shall be shared equally by the
province and the municipality where such amusement places are located.
(Emphasis supplied.)
"Amusement places," as defined in Section 131 (c) of the Local Government
Code, "include theaters, cinemas, concert halls, circuses and other places of
amusement where one seeks admission to entertain oneself by seeing or
viewing the show or performance."
The pronouncements of the Court in Pelizloy Realty Corporation v. The
Province of Benguet36 are of particular significance to this case. The Court,
in Pelizloy Realty, declared null and void the second paragraph of Article X,
Section 59 of the Benguet Provincial Code, in so far as it imposes
amusement taxes on admission fees to resorts, swimming pools, bath
houses, hot springs, and tourist spots. Applying the principle of ejusdem
generis, as well as the ruling in the PBA case, the Court expounded on the
authority of local government units to impose amusement tax under Section
140, in relation to Section 131(c), of the Local Government Code, as follows:
Under the principle of ejusdem generis, "where a general word or phrase
follows an enumeration of particular and specific words of the same class or

where the latter follow the former, the general word or phrase is to be
construed to include, or to be restricted to persons, things or cases akin to,
resembling, or of the same kind or class as those specifically mentioned."
The purpose and rationale of the principle was explained by the Court
in National Power Corporation v. Angas as
follows:ChanRoblesVirtualawlibrary
The purpose of the rule on ejusdem generis is to give effect to both the
particular and general words, by treating the particular words as indicating
the class and the general words as including all that is embraced in said
class, although not specifically named by the particular words. This is
justified on the ground that if the lawmaking body intended the general
terms to be used in their unrestricted sense, it would have not made an
enumeration of particular subjects but would have used only general terms.
[2 Sutherland, Statutory Construction, 3rd ed., pp. 395-400].
In Philippine Basketball Association v. Court of Appeals, the Supreme Court
had an opportunity to interpret a starkly similar provision or the counterpart
provision of Section 140 of the LGC in the Local Tax Code then in effect.
Petitioner Philippine Basketball Association (PBA) contended that it was
subject to the imposition by LGUs of amusement taxes (as opposed to
amusement taxes imposed by the national government). In support of its
contentions, it cited Section 13 of Presidential Decree No. 231, otherwise
known as the Local Tax Code of 1973, (which is analogous to Section 140 of
the LGC) providing the following:ChanRoblesVirtualawlibrary
Section 13. Amusement tax on admission. � The province shall impose a tax
on admission to be collected from the proprietors, lessees, or operators of
theaters, cinematographs, concert halls, circuses and other places of
amusement xxx.
Applying the principle of ejusdem generis, the Supreme Court rejected PBA's
assertions and noted that:ChanRoblesVirtualawlibrary
[I]n determining the meaning of the phrase 'other places of amusement',
one must refer to the prior enumeration of theaters, cinematographs,
concert halls and circuses with artistic expression as their common
characteristic. Professional basketball games do not fall under the same
category as theaters, cinematographs, concert halls and circuses as the latter
basically belong to artistic forms of entertainment while the former caters to
sports and gaming.
However, even as the phrase 'other places of amusement' was already
clarified in Philippine Basketball Association, Section 140 of the LGC adds to
the enumeration of 'places of amusement' which may properly be subject to
amusement tax. Section 140 specifically mentions 'boxing stadia' in addition
to "theaters, cinematographs, concert halls [and] circuses" which were
S t a t u t o r y C o n s t r u c t i o n S e p t e m b e r 4 P a g e | 34
already mentioned in PD No. 231. Also, 'artistic expression' as a
characteristic does not pertain to 'boxing stadia'.
In the present case, the Court need not embark on a laborious effort at
statutory construction. Section 131 (c) of the LGC already provides a clear
definition of 'amusement places':
xxxx
Indeed, theaters, cinemas, concert halls, circuses, and boxing
stadia are bound by a common typifying characteristic in that they
are all venues primarily for the staging of spectacles or the holding
of public shows, exhibitions, performances, and other events meant
to be viewed by an audience. Accordingly, 'other places of
amusement' must be interpreted in light of the typifying
characteristic of being venues "where one seeks admission to
entertain oneself by seeing or viewing the show or performances"
or being venues primarily used to stage spectacles or hold public
shows, exhibitions, performances, and other events meant to be
viewed by an audience.
As defined in The New Oxford American Dictionary, 'show' means "a
spectacle or display of something, typically an impressive one"; while
'performance' means "an act of staging or presenting a play, a conceit, or
other form of entertainment." As such, the ordinary definitions of the
words 'show' and 'performance' denote not only visual engagement
(i.e., the seeing or viewing of things) but also active doing (e.g.,
displaying, staging or presenting) such that actions are manifested
to, and (correspondingly) perceived by an audience.
Considering these, it is clear that resorts, swimming pools, bath houses, hot
springs and tourist spots cannot be considered venues primarily "where one
seeks admission to entertain oneself by seeing or viewing the show or
performances". While it is true that they may be venues where people are
visually engaged, they are not primarily venues for their proprietors or
operators to actively display, stage or present shows and/or performances.
Thus, resorts, swimming pools, bath houses, hot springs and tourist spots do
not belong to the same category or class as theaters, cinemas, concert halls,
circuses, and boxing stadia. It follows that they cannot be considered as
among the 'other places of amusement' contemplated by Section 140 of the

LGC and which may properly be subject to amusement taxes.37 (Emphases
supplied, citations omitted.)
In light of Pelizloy Realty, a golf course cannot be considered a place of
amusement. As petitioner asserted, people do not enter a golf course to see
or view a show or performance. Petitioner also, as proprietor or operator of
the golf course, does not actively display, stage, or present a show or
performance. People go to a golf course to engage themselves in a physical
sport activity, i.e., to play golf; the same reason why people go to a gym or
court to play badminton or tennis or to a shooting range for target practice,
yet there is no showing herein that such gym, court, or shooting range is
similarly considered an amusement place subject to amusement tax. There is
no basis for singling out golf courses for amusement tax purposes from other
places where people go to play sports. This is in contravention of one of the
fundamental principles of local taxation: that the "[taxation shall be uniform
in each local government unit."38 Uniformity of taxation, like the kindred
concept of equal protection, requires that all subjects or objects of taxation,
similarly situated, are to be treated alike both in privileges and
liabilities.39chanroblesvirtuallawlibrary
Not lost on the Court is its declaration in Manila Electric Co. v. Province of
Laguna40 that under the 1987 Constitution, "where there is neither a grant
nor a prohibition by statute, the tax power [of local government units] must
be deemed to exist although Congress may provide statutory limitations and
guidelines." Section 186 of the Local Government Code also expressly grants
local government units the following residual power to tax:
Sec. 186. Power to Levy Other Taxes, Fees, or Charges. - Local government
units may exercise the power to levy taxes, fees, or charges on any
base or subject not otherwise specifically enumerated herein or
taxed under the provisions of the National Internal Revenue Code,
as amended, or other applicable laws: Provided,that the taxes, fees, or
charges shall not be unjust, excessive, oppressive, confiscatory or contrary
to declared national policy: Provided, further, That the ordinance levying
such taxes, fees or charges shall not be enacted without any prior public
hearing conducted for the purpose. (Emphasis supplied.)
Respondents, however, cannot claim that Section 42 of the Revised Omnibus
Tax Ordinance, as amended, imposing amusement tax on golf courses, was
enacted pursuant to the residual power to tax of respondent Cebu City. A
local government unit may exercise its residual power to tax when there is
neither a grant nor a prohibition by statute; or when such taxes, fees, or
S t a t u t o r y C o n s t r u c t i o n S e p t e m b e r 4 P a g e | 35
charges are not otherwise specifically enumerated in the Local Government
Code, National Internal Revenue Code, as amended, or other applicable
laws. In the present case, Section 140, in relation to Section 131(c), of the
Local Government Code already explicitly and clearly cover amusement tax
and respondent Cebu City must exercise its authority to impose amusement
tax within the limitations and guidelines as set forth in said statutory
provisions.
WHEREFORE, in view of all the foregoing, the Court GRANTS the instant
Petition, and REVERSES and SETS ASIDE the Resolution dated March 14,
2007 and the Order dated October 3, 2007 of the Regional Trial Court, Cebu
City, Branch 9 in Civil Case No. CEB-31988. The Court DECLARES NULL
and VOID the following: (a) Section 42 of the Revised Omnibus Tax
Ordinance of the City of Cebu, as amended by City Tax Ordinance Nos.
LXXXII and LXXXIV, insofar as it imposes amusement tax of 20% on the
gross receipts on entrance, playing green, and/or admission fees of golf
courses; (b) the tax assessment against petitioner for amusement tax on its
golf course for the year 1998 in the amount of Pl,373,761.24, plus
surcharges and interest pertaining to said amount, issued by the Office of
the City Treasurer, City of Cebu; and (c) the Closure Order dated December
28, 2005 issued against Alta Vista Golf and Country Club by the Office of the
Mayor, City of Cebu. The Court also ORDERS the City of Cebu to refund to
Alta Vista Golf and Country Club the amusement tax, penalties, surcharge,
and interest paid under protest by the latter in the total amount of
P2,750,249.17 or to apply the same amount as tax credit against existing or
future tax liability of said Club.
SO ORDERED
Sereno, C.J., (Chairperson), Bersamin, Perlas-Bernabe, and Jardeleza, JJ.,
concur.
Republic of the Philippines
SUPREME COURT
Manila
EN BANC
G.R. No. 169435 February 27, 2008

MUNICIPALITY OF NUEVA ERA, ILOCOS NORTE, represented by its
Municipal Mayor, CAROLINE ARZADON-GARVIDA, petitioner,
vs.
MUNICIPALITY OF MARCOS, ILOCOS NORTE, represented by its
Municipal Mayor, SALVADOR PILLOS, and the HONORABLE COURT
OF APPEALS, respondents.
DECISION
REYES, R.T., J.:
AS the law creating a municipality fixes its boundaries, settlement of
boundary disputes between municipalities is facilitated by carrying into effect
the law that created them.
Any alteration of boundaries that is not in accordance with the law creating a
municipality is not the carrying into effect of that law but its amendment,
which only the Congress can do.1
For Our review on certiorari is the Decision2 of the Court of Appeals (CA)
reversing to a certain extent that3 of the Regional Trial Court (RTC), Branch
12, Laoag City, Ilocos Norte, in a case that originated from the Sangguniang
Panlalawigan (SP) of Ilocos Norte about the boundary dispute between the
Municipalities of Marcos and Nueva Era in Ilocos Norte.
The CA declared that Marcos is entitled to have its eastern boundary
extended up "to the boundary line between the province of Ilocos Norte and
Kalinga-Apayao."4 By this extension of Marcos' eastern boundary, the CA
allocated to Marcos a portion of Nueva Era's territory.
The Facts
The Municipality of Nueva Era was created from the settlements of
Bugayong, Cabittaoran, Garnaden, Padpadon, Padsan, Paorpatoc, Tibangran,
and Uguis which were previously organized as rancherias, each of which was
under the independent control of a chief. Governor General Francis Burton
Harrison, acting on a resolution passed by the provincial government of
Ilocos Norte, united these rancherias and created the township of Nueva Era
by virtue of Executive Order (E.O.) No. 66 5 dated September 30, 1916.
S t a t u t o r y C o n s t r u c t i o n S e p t e m b e r 4 P a g e | 36
The Municipality of Marcos, on the other hand, was created on June 22,
1963 pursuant to Republic Act (R.A.) No. 3753 entitled "An Act Creating the
Municipality of Marcos in the Province of Ilocos Norte." Section 1 of R.A. No.
3753 provides:
SECTION 1. The barrios of Capariaan, Biding, Escoda, Culao,
Alabaan, Ragas and Agunit in the Municipality of Dingras, Province of
Ilocos Norte, are hereby separated from the said municipality and
constituted into a new and separate municipality to be known as the
Municipality of Marcos, with the following boundaries:
On the Northwest, by the barrios Biding-Rangay boundary going
down to the barrios Capariaan-Gabon boundary consisting of foot
path and feeder road; on the Northeast, by the Burnay River which
is the common boundary of barrios Agunit and Naglayaan; on the
East, by the Ilocos Norte-Mt. Province boundary; on the South, by
the Padsan River which is at the same time the boundary between
the municipalities of Banna and Dingras; on the West and
Southwest, by the boundary between the municipalities of Batac and
Dingras.
The Municipality of Marcos shall have its seat of government in the
barrio of Biding.
Based on the first paragraph of the said Section 1 of R.A. No. 3753, it is clear
that Marcos shall be derived from the listed barangays of Dingras, namely:
Capariaan, Biding, Escoda, Culao, Alabaan, Ragas and Agunit. The
Municipality of Nueva Era or any of its barangays was not mentioned. Hence,
if based only on said paragraph, it is clear that Nueva Era may not be
considered as a source of territory of Marcos.
There is no issue insofar as the first paragraph is concerned which named
only Dingras as the mother municipality of Marcos. The problem, however,
lies in the description of Marcos' boundaries as stated in the second
paragraph, particularly in the phrase: "on the East, by the Ilocos Norte-Mt.
Province boundary."
It must be noted that the term "Mt. Province" stated in the above phrase
refers to the present adjoining provinces of Benguet, Mountain Province,
Ifugao, Kalinga and Apayao, which were then a single province.

Mt. Province was divided into the four provinces of Benguet, Mountain
Province, Ifugao, and Kalinga-Apayao by virtue of R.A. No. 4695 which was
enacted on June 18, 1966. On February 14, 1995, the province of Kalinga-
Apayao, which comprises the sub-provinces of Kalinga and Apayao, was
further converted into the regular provinces of Kalinga and Apayao pursuant
to R.A. No. 7878.
The part of then Mt. Province which was at the east of Marcos is now the
province of Apayao. Hence, the eastern boundary referred to by the second
paragraph of Section 1 of R.A. No. 3753 is the present Ilocos Norte-Apayao
boundary.
On the basis of the said phrase, which described Marcos' eastern boundary,
Marcos claimed that the middle portion of Nueva Era, which adjoins its
eastern side, formed part of its territory. Its reasoning was founded upon the
fact that Nueva Era was between Marcos and the Ilocos Norte-Apayao
boundary such that if Marcos was to be bounded on the east by the Ilocos
Norte-Apayao boundary, part of Nueva Era would consequently be obtained
by it.6
Marcos did not claim any part of Nueva Era as its own territory until after
almost 30 years,7 or only on March 8, 1993, when its Sangguniang Bayan
passed Resolution No. 93-015.8 Said resolution was entitled: "Resolution
Claiming an Area which is an Original Part of Nueva Era, But Now Separated
Due to the Creation of Marcos Town in the Province of Ilocos Norte."
Marcos submitted its claim to the SP of Ilocos Norte for its consideration and
approval. The SP, on the other hand, required Marcos to submit its position
paper.9
In its position paper, Marcos alleged that since its northeastern and eastern
boundaries under R.A. No. 3753 were the Burnay River and the Ilocos Norte-
Mountain Province boundary, respectively, its eastern boundary should not
be limited to the former Dingras-Nueva Era boundary, which was
coterminous and aligned with the eastern boundary of Dingras. According to
Marcos, its eastern boundary should extend further to the east or up to the
Ilocos-Norte-Mt. Province boundary pursuant to the description of its eastern
boundary under R.A. No. 3753.10
In view of its claim over the middle portion of Nueva Era, Marcos posited
that Nueva Era was cut into two parts. And since the law required that the
S t a t u t o r y C o n s t r u c t i o n S e p t e m b e r 4 P a g e | 37
land area of a municipality must be compact and contiguous, Nueva Era's
northern isolated portion could no longer be considered as its territory but
that of Marcos'. Thus, Marcos claimed that it was entitled not only to the
middle portion11 of Nueva Era but also to Nueva Era's isolated northern
portion. These areas claimed by Marcos were within Barangay Sto. Niño,
Nueva Era.
Nueva Era reacted to the claim of Marcos through its Resolution No. 1, Series
of 1993. It alleged that since time immemorial, its entire land area was an
ancestral domain of the "tinguians," an indigenous cultural community. It
argued to the effect that since the land being claimed by Marcos must be
protected for the tinguians, it must be preserved as part of Nueva Era.12
According to Nueva Era, Marcos was created out of the territory of Dingras
only. And since R.A. No. 3753 specifically mentioned seven (7) barrios of
Dingras to become Marcos, the area which should comprise Marcos should
not go beyond the territory of said barrios.13
From the time Marcos was created in 1963, its eastern boundary had been
considered to be aligned and coterminous with the eastern boundary of the
adjacent municipality of Dingras. However, based on a re-survey in 1992,
supposedly done to conform to the second paragraph of Section 1 of R.A.
No. 3753, an area of 15,400 hectares of Nueva Era was alleged to form part
of Marcos.14 This was the area of Barangay Sto. Niño, Nueva Era that Marcos
claimed in its position paper.
On March 29, 2000, the SP of Ilocos Norte ruled in favor of Nueva Era.
The fallo of its decision15 reads:
WHEREFORE, in view of all the foregoing, this Body has no
alternative but to dismiss, as it hereby DISMISSES said petition for
lack of merit. The disputed area consisting of 15,400 hectares, more
or less, is hereby declared as part and portion of the territorial
jurisdiction of respondent Nueva Era.16
R.A. No. 3753 expressly named the barangays that would comprise Marcos,
but none of Nueva Era's barangayswere mentioned. The SP thus construed,
applying the rule of expressio unius est exclusio alterius, that no part of
Nueva Era was included by R.A. No. 3753 in creating Marcos.17

The SP ratiocinated that if Marcos was to be bounded by Mt. Province, it
would encroach upon a portion, not only of Nueva Era but also of Abra.
Thus:
x x x Even granting, for the sake of argument, that the eastern
boundary of Marcos is indeed Mountain Province, Marcos will then be
claiming a portion of Abra because the province, specifically
Barangay Sto. Niño, Nueva Era, is actually bounded on the East by
the Province of Abra. Abra is situated between and separates the
Provinces of Ilocos Norte and Mountain Province.
This is precisely what this body would like to avoid. Statutes should
be construed in the light of the object to be achieved and the evil or
mischief to be suppressed, and they should be given such
construction as will advance the object, suppress the mischief and
secure the benefits intended.18 (Citations omitted)
The SP further explained:
Invariably, it is not the letter, but the spirit of the law and the intent
of the legislature that is important. When the interpretation of the
statute according to the exact and literal import of its words would
lead to absurdity, it should be construed according to the spirit and
reason, disregarding if necessary the letters of the law. It is believed
that congress did not intend to have this absurd situation to be
created when it created the Municipality of Marcos. This body, by the
mandate given to it by the RA 7160 otherwise known Local
Government Code, so believes that respondent Nueva Era or any
portion thereof has been excluded from the ambit of RA 3753. Under
the principle of "espressio (sic) unios (sic) est exclusio alterius," by
expressly naming the barangays that will comprise the town of
Marcos, those not mentioned are deemed excluded. In Republic Act
4354, where Section 2 thereof enumerated the barrios comprising
the City of Davao excluding the petitioner Barrio Central as part of
the said City, the court held that there arose a prima facie conclusion
that the said law abolished Barrio Central as part of Davao City.
Historically, the hinterlands of Nueva Era have been known to be the
home of our brothers and sisters belonging to peculiar groups of
non-(C)hristian inhabitants with their own rich customs and
traditions and this body takes judicial notice that the inhabitants of
S t a t u t o r y C o n s t r u c t i o n S e p t e m b e r 4 P a g e | 38
Nueva Era have proudly claimed to be a part of this rich culture.
With this common ancestral heritage which unfortunately is absent
with Marcos, let it not be disturbed.19 (Emphasis ours and citations
omitted)
RTC Decision
On appeal by Marcos, the RTC affirmed the decision of the SP in its
decision20 of March 19, 2001. The dispositive part of the RTC decision reads:
WHEREFORE, the instant appeal is hereby DISMISSED. The
questioned decision of the Sangguniang Panlalawigan of Ilocos Norte
is hereby AFFIRMED.
No costs.
SO ORDERED.21
The RTC reasoned out in this wise:
The position of the Municipality of Marcos is that the provision of
R.A. 3753 as regards its boundary on the East which is the "Ilocos
Norte-Mt. Province" should prevail.
On the other hand, the Municipality of Nueva Era posits the theory
that only the barrios of the Municipality of Dingras as stated in R.A.
3753 should be included in the territorial jurisdiction of the
Municipality of Marcos. The Sangguniang Panlalawigan agreed with
the position of Nueva Era.
xxxx
An examination of the Congressional Records during the
deliberations of the R.A. 3753 (House Bill No. 3721) shows the
Explanatory Note of Congressman Simeon M. Valdez, 2nd District,
Ilocos Norte, to wit:
EXPLANATORY NOTE

This bill seeks to create in the Province of Ilocos Norte a
new municipality to be known as the Municipality of Marcos,
to be comprised by the present barrios of Capariaan, Biding
Escoda, Culao, Alabaan, Ragas and Agunit, all in the
Municipality of Dingras of the same province. The seat of
government will be in the sitio of San Magro in the present
barrio of Ragas.
xxxx
On the other hand, the Municipality of Dingras will not be
adversely affected too much because its finances will still be
sound and stable. Its capacity to comply with its obligations,
especially to its employees and personnel, will not be
diminished nor its operations paralyzed. On the contrary,
economic development in both the mother and the proposed
municipalities will be accelerated.
In view of the foregoing, approval of this bill is earnestly
requested.
(Sgd.) SIMEON M. VALDEZ
Congressman, 2nd District
Ilocos Norte22
Parenthetically, the legislative intent was for the creation of
the Municipality of Marcos, Ilocos Norte from the barrios
(barangays) of the Municipality of Dingras, Ilocos Norte only.
Hence, the Municipality of Marcos cannot add any area
beyond the territorial jurisdiction of the Municipality of
Dingras, Ilocos Norte. This conclusion might have been
different only if the area being claimed by the Municipality of
Marcos is within the territorial jurisdiction of the Municipality
of Dingras and not the Municipality of Nueva Era. In such
case, the two conflicting provisions may be harmonized by
including such area within the territorial jurisdiction of the
Municipality of Dingras as within the territorial jurisdiction of
the Municipality of Marcos.23 (Emphasis ours)
CA Disposition
S t a t u t o r y C o n s t r u c t i o n S e p t e m b e r 4 P a g e | 39
Still determined to have a more extensive eastern boundary, Marcos filed a
petition for review24 of the RTC decision before the CA. The issues raised by
Marcos before the CA were:
1. Whether or not the site of Hercules Minerals and Oil, Inc. which is
within a Government Forest Reservation in Barangay Sto. Niño,
formerly of Nueva Era, is a part of the newly created Municipality of
Marcos, Ilocos Norte.
2. Whether or not the portion of Barangay Sto. Niño on the East
which is separated from Nueva Era as a result of the full
implementation of the boundaries of the new Municipality of Marcos
belongs also to Marcos or to Nueva Era.25
The twin issues involved two portions of Nueva Era, viz.: (1) middle portion,
where Hercules Minerals and Oil, Inc. is located; and (2) northern portion of
Nueva Era, which, according to Marcos, was isolated from Nueva Era in view
of the integration to Marcos of said middle portion.
Marcos prayed before the CA that the above two portions of Nueva Era be
declared as part of its own territory. It alleged that it was entitled to the
middle portion of Nueva Era in view of the description of Marcos' eastern
boundary under R.A. No. 3753. Marcos likewise contended that it was
entitled to the northern portion of Nueva Era which was allegedly isolated
from Nueva Era when Marcos was created. It posited that such isolation of
territory was contrary to law because the law required that a municipality
must have a compact and contiguous territory.26
In a Decision27 dated June 6, 2005, the CA partly reversed the RTC decision
with the following disposition:
WHEREFORE, we partially GRANT the petition treated as one
for certiorari. The Decisions of both the Sangguniang
Panlalawigan and Regional Trial Court of Ilocos
Norte are REVERSED and SET ASIDEinsofar as they made the
eastern boundary of the municipality of Marcos co-terminous with
the eastern boundary of Dingras town, and another is rendered
extending the said boundary of Marcos to the boundary line between
the province of Ilocos Norte and Kalinga-Apayao, but the same
Decisions are AFFIRMED with respect to the denial of the claim of
Marcos to the detached northern portion of barangay Sto. Niño

which should, as it is hereby ordered to, remain with the municipality
of Nueva Era. No costs.
SO ORDERED.28
In concluding that the eastern boundary of Marcos was the boundary line
between Ilocos Norte and Kalinga-Apayao, the CA gave the following
explanation:
Clearly then, both the SP and the RTC erred when they ruled that the
eastern boundary of Marcos is only coterminous with the eastern boundary
of the adjacent municipality of Dingras and refused to extend it up to the
boundary line between the provinces of Ilocos Norte and Mountain Province
(Kalinga-Apayao). R.A. No. 3753, the law creating Marcos, is very explicit
and leaves no room for equivocation that the boundaries of Marcos town
are:
"On the Northwest by the barrios Biding-Rangay boundary
going down to the barrios Capariaan-Gabon boundary
consisting of foot path and feeder road; on the Northeast, by
the Burnay River which is the common boundary of barrios
Agunit and Naglayaan; on the East, by the Ilocos Norte-
Mt. Province boundary; on the South by the Padsan
River, which is at the same time the boundary between the
municipalities of Banna and Dingras; on the West and
Southwest by the boundary between the municipalities of
Batac and Dingras."
To stop short at the eastern boundary of Dingras as the eastern
boundary also of Marcos and refusing to go farther to the boundary
line between Ilocos Norte and Mountain Province (Kalinga-Apayao) is
tantamount to amending the law which Congress alone can do. Both
the SP and RTC have no competence to undo a valid act of
Congress.
It is not correct to say that Congress did not intend to take away any
part of Nueva Era and merge it with Marcos for it is chargeable with
conclusive knowledge that when it provided that the eastern
boundary of Marcos is the boundary line between Ilocos Norte and
Mountain Province, (by the time of both the SB and RTC Decision
was already Kalinga-Apayao), it would be cutting through a portion
S t a t u t o r y C o n s t r u c t i o n S e p t e m b e r 4 P a g e | 40
of Nueva Era. As the law is written so must it be applied. Dura lex
sed lex!29
The CA likewise held that the province Abra was not located between Marcos
and Kalinga-Apayao; and that Marcos would not encroach upon a portion of
Abra for it to be bounded by Kalinga-Apayao, to wit:
Nueva Era's contention that to lay out the eastern jurisdiction of
Marcos to the boundary line between Ilocos Norte and Mountain
Province (Kalinga-Apayao) would mean annexing part of the
municipality of Itnig, province of Abra to Marcos as Abra is between
Ilocos Norte and Mountain Province is geographically erroneous.
From Nueva Era's own map of Region 1, which also depicts the
locations of Kalinga-Apayao, Abra, Mountain Province, Benguet and
Nueva Vizcaya after the partition of the old Mountain Province into
the provinces of Kalinga-Apayao, Ifugao, Mountain Province and
Benguet, the province of Abra is situated far to the south of Kalinga
Apayao and is between the latter and the present Mountain
Province, which is farther south of Abra. Abra is part of the eastern
boundary of Ilocos Sur while Kalinga-Apayao is the eastern boundary
of Ilocos Norte. Hence, in no way will the eastern boundary of the
municipality of Marcos encroach upon a portion of Abra.30
However, Marcos' claim over the alleged isolated northern portion of Nueva
Era was denied. The CA ruled:
Going now to the other area involved, i.e., the portion of Sto. Niño
that is separated from its mother town Nueva Era and now lies east
of the municipalities of Solsona and Dingras and north of Marcos, it
bears stressing that it is not included within the area of Marcos as
defined by law. But since it is already detached from Sto. Niño,
Marcos is laying claim to it to be integrated into its territory by the
SP because it is contiguous to a portion of said municipality.
We hold that the SP has no jurisdiction or authority to act on the
claim, for it will necessarily substantially alter the north eastern and
southern boundaries of Marcos from that defined by law and unduly
enlarge its area. Only Congress can do that. True, the SP may
substantially alter the boundary of a barangay within its jurisdiction.
But this means the alteration of the boundary of a barangay in
relation to another barangay within the same municipality for as

long as that will not result in any change in the boundary of that
municipality. The area in dispute therefore remains to be a part of
Sto. Niño, a barangay of Nueva Era although separated by the newly
created Marcos town pursuant to Section 7(c) of the 1991 Local
Government Code which states:
SEC. 7. Creation and Conversion. - As a general rule, the
creation of a local government unit or its conversion from
one level to another shall be based on verifiable indicators of
viability and projected capacity to provide services, to wit:
xxxx
(c) Land Area. - It must be contiguous, unless it comprises
two or more islands or is separated by a local
government unit independent of the others; properly
identified by metes and bounds with technical descriptions;
and sufficient to provide for such basic services and facilities
to meet the requirements of its populace.31
The CA also expressed the view that Marcos adopted the wrong mode of
appeal in bringing the case to it. The case, according to the CA, was
appealable only to the RTC. Nonetheless, despite its pronouncement that the
case was dismissible, the CA took cognizance of the same by treating it as
one for certiorari, to wit:
A final word. At the outset, we agonized over the dilemma of
choosing between dismissing outright the petition at bar or
entertaining it. This is for the simple reason that a petition for review
is a mode of appeal and is not appropriate as the Local Government
Code provides for the remedy of appeal in boundary disputes only to
the Regional Trial Court but not any further appeal to this Court.
Appeal is a purely statutory right. It cannot be exercised unless it is
expressly granted by law. This is too basic to require the citation of
supporting authority.
xxxx
By the same token, since the Local Government Code does not
explicitly grant the right of further appeal from decisions of the RTCs
in boundary disputes between or among local government units,
S t a t u t o r y C o n s t r u c t i o n S e p t e m b e r 4 P a g e | 41
Marcos town cannot exercise that right from the adverse decision of
the RTC of Ilocos Norte. Nonetheless, because of the transcendental
legal and jurisdictional issues involved, we solved our inceptive
dilemma by treating the petition at bar as a special civil action
for certiorari.32
Nueva Era was not pleased with the decision of the CA. Hence, this petition
for review on certiorari under Rule 45.
Issues
Nueva Era now raises the following issues:
a) Whether or not, the Court of Appeals has jurisdiction on the
Petition for Review on Appeal, since Sec. 119 of the Local
Government Code, which provides that "An appeal to the Decision of
the Sangguniang Panlalawigan is exclusively vested to the Regional
Trial Court, without further Appeal to the Court of Appeals";
b) Whether or not, the Court of Appeals gravely abused its
discretion, in treating the Petition for Review On Appeal, filed under
Rule 45, Revised Rules of Court, as a Petition for Certiorari, under
Rule 65 of the Revised Rules of Court;
c) Whether or not, the Court of Appeals erred in its appreciation of
facts, in declaring that MARCOS East is not coterminous with the
Eastern boundary of its mother town-Dingras. That it has no factual
and legal basis to extend MARCOS territory beyond Brgys. Agunit
(Ferdinand) and Culao (Elizabeth) of Marcos, and to go further East,
by traversing and disintegrating Brgy. Sto. Niño, and drawing parallel
lines from Sto. Niño, there lies Abra, not Mt. Province or Kalinga-
Apayao.33
Basically, there are two (2) issues to resolve here: (1) whether or not the
mode of appeal adopted by Marcos in bringing the case to the CA is proper;
and (2) whether or not the eastern boundary of Marcos extends over and
covers a portion of Nueva Era.
Our Ruling

Marcos correctly appealed the RTC judgment via petition for review
under Rule 42.
Under Section 118(b) of the Local Government Code, "(b)oundary disputes
involving two (2) or more municipalities within the same province shall be
referred for settlement to the sangguniang panlalawigan concerned." The
dispute shall be formally tried by the said sanggunian in case the disputing
municipalities fail to effect an amicable settlement.34
The SP of Ilocos validly took cognizance of the dispute between the parties.
The appeal of the SP judgment to the RTC was likewise properly filed by
Marcos before the RTC. The problem, however, lies in whether the RTC
judgment may still be further appealed to the CA.
The CA pronounced that the RTC decision on the boundary dispute was not
appealable to it. It ruled that no further appeal of the RTC decision may be
made pursuant to Section 119 of the Local Government Code 35 which
provides:
SECTION 119. Appeal. - Within the time and manner prescribed by
the Rules of Court, any party may elevate the decision of
the sanggunian concerned to the proper Regional Trial Court having
jurisdiction over the area in dispute. The Regional Trial Court shall
decide the appeal within one (1) year from the filing thereof.
Pending final resolution of the disputed area prior to the dispute
shall be maintained and continued for all legal purposes.
The CA concluded that since only the RTC was mentioned as appellate court,
the case may no longer be further appealed to it. The CA stated that
"(a)ppeal is a purely statutory right. It cannot be exercised unless it is
expressly granted by law. This is too basic to require the citation of
supporting authority."36
The CA, however, justified its taking cognizance of the case by declaring
that: "because of the transcendental legal and jurisdictional issues involved,
we solved our inceptive dilemma by treating the petition at bar as a special
civil action for certiorari."37
The CA erred in declaring that only the RTC has appellate jurisdiction over
the judgment of the SP.
S t a t u t o r y C o n s t r u c t i o n S e p t e m b e r 4 P a g e | 42
True, appeal is a purely statutory right and it cannot be exercised unless it is
expressly granted by law. Nevertheless, the CA can pass upon the petition
for review precisely because the law allows it.
Batas Pambansa (B.P.) Blg. 129 or the Judiciary Reorganization Act of 1980,
as amended by R.A. No. 7902,38vests in the CA the appellate jurisdiction over
all final judgments, decisions, resolutions, orders or awards of Regional Trial
Courts and quasi-judicial agencies, instrumentalities, boards or commissions,
among others.39 B.P. Blg. 129 has been further supplemented by the 1997
Rules of Civil Procedure, as amended, which provides for the remedy of
appeal via petition for review under Rule 42 to the CA in cases decided by
the RTC in the exercise of its appellate jurisdiction.
Thus, the CA need not treat the appeal via petition for review filed by Marcos
as a petition for certiorari to be able to pass upon the same. B.P. Blg. 129, as
amended, which is supplemented by Rule 42 of the Rules of Civil Procedure,
gives the CA the authority to entertain appeals of such judgments and final
orders rendered by the RTC in the exercise of its appellate jurisdiction.
At the time of creation of Marcos, approval in a plebiscite of the
creation of a local government unit is not required.
Section 10, Article X of the 1987 Constitution provides that:
No province, city, municipality, or barangay may be created, divided,
merged, abolished, or its boundary substantially altered, except in
accordance with the criteria established in the local government code
and subject to approval by a majority of the votes cast in a plebiscite
in the political units directly affected. 40
The purpose of the above constitutional provision was acknowledged by the
Court through Justice Reynato S. Puno in Miranda v. Aguirre,41 where it was
held that:
The 1987 Constitution, more than any of our previous Constitutions,
gave more reality to the sovereignty of our people for it was borne
out of the people power in the 1986 EDSA revolution. Its Section 10,
Article X addressed the undesirable practice in the past whereby
local government units were created, abolished, merged or divided
on the basis of the vagaries of politics and not of the welfare of the
people. Thus, the consent of the people of the local government unit

directly affected was required to serve as a checking mechanism to
any exercise of legislative power creating, dividing, abolishing,
merging or altering the boundaries of local government units. It is
one instance where the people in their sovereign capacity decide on
a matter that affects them - direct democracy of the people as
opposed to democracy thru people's representatives. This plebiscite
requirement is also in accord with the philosophy of the Constitution
granting more autonomy to local government units. 42
Nueva Era contends that the constitutional and statutory43 plebiscite
requirement for the creation of a local government unit is applicable to this
case. It posits that the claim of Marcos to its territory should be denied due
to lack of the required plebiscite.
We agree with Nueva Era's contention that Marcos' claim over parts of its
territory is not tenable. However, the reason is not the lack of the required
plebiscite under the 1987 and 1973 constitutions and the Local Government
Code of 1991 but other reasons as will be discussed below.
At the time Marcos was created, a plebiscite was not required by law to
create a local government unit. Hence, Marcos was validly created without
conducting a plebiscite. As a matter of fact, no plebiscite was conducted in
Dingras, where it was derived.
Lex prospicit, non respicit. The law looks forward, not backward.44 It is the
basic norm that provisions of the fundamental law should be given
prospective application only, unless legislative intent for its retroactive
application is so provided.45
In the comparable case of Ceniza v. Commission on Elections46 involving the
City of Mandaue, the Court has this to say:
Petitioners assail the charter of the City of Mandaue as
unconstitutional for not having been ratified by the residents of the
city in a plebiscite. This contention is untenable. The Constitutional
requirement that the creation, division, merger, abolition, or
alteration of the boundary of a province, city, municipality, or barrio
should be subject to the approval by the majority of the votes cast in
a plebiscite in the governmental unit or units affected is a new
requirement that came into being only with the 1973 Constitution. It
is prospective in character and therefore cannot affect the creation
S t a t u t o r y C o n s t r u c t i o n S e p t e m b e r 4 P a g e | 43
of the City of Mandaue which came into existence on June 21,
1969.47 (Citations omitted and underlining supplied).
Moreover, by deciding this case, We are not creating Marcos but merely
interpreting the law that created it. Its creation was already a fait
accompli. Therefore, there is no reason for Us to further require a plebiscite.
As pointed out by Justice Isagani Cruz, to wit:
Finally, it should be observed that the provisions of the Constitution
should be given only a prospective application unless the contrary is
clearly intended. Were the rule otherwise, rights already acquired or
vested might be unduly disturbed or withdrawn even in the absence
of an unmistakable intention to place them within the scope of the
Constitution.48
No part of Nueva Era's territory was taken for the creation of
Marcos under R.A. No. 3753.
Only the barrios (now barangays) of Dingras from which Marcos obtained its
territory are named in R.A. No. 3753. To wit:
SECTION 1. The barrios of Capariaan, Biding, Escoda, Culao,
Alabaan, Ragas and Agunit in the Municipality of Dingras, Province of
Ilocos Norte, are hereby separated from the said municipality and
constituted into a new and separate municipality to be known as the
Municipality of Marcos, with the following boundaries:
Since only the barangays of Dingras are enumerated as Marcos' source of
territory, Nueva Era's territory is, therefore, excluded.
Under the maxim expressio unius est exclusio alterius, the mention of one
thing implies the exclusion of another thing not mentioned. If a statute
enumerates the things upon which it is to operate, everything else must
necessarily and by implication be excluded from its operation and
effect.49 This rule, as a guide to probable legislative intent, is based upon the
rules of logic and natural workings of the human mind.50
Had the legislature intended other barangays from Nueva Era to become
part of Marcos, it could have easily done so by clear and concise language.

Where the terms are expressly limited to certain matters, it may not by
interpretation or construction be extended to other matters. 51 The rule
proceeds from the premise that the legislature would not have made
specified enumerations in a statute had the intention been not to restrict its
meaning and to confine its terms to those expressly mentioned. 52
Moreover, since the barangays of Nueva Era were not mentioned in the
enumeration of barangays out of which the territory of Marcos shall be set,
their omission must be held to have been done intentionally. This conclusion
finds support in the rule of casus omissus pro omisso habendus est, which
states that a person, object or thing omitted from an enumeration must be
held to have been omitted intentionally.53
Furthermore, this conclusion on the intention of the legislature is bolstered
by the explanatory note of the bill which paved the way for the creation of
Marcos. Said explanatory note mentioned only Dingras as the mother
municipality of Marcos.
Where there is ambiguity in a statute, as in this case, courts may resort to
the explanatory note to clarify the ambiguity and ascertain the purpose and
intent of the statute.54
Despite the omission of Nueva Era as a mother territory in the law creating
Marcos, the latter still contends that said law included Nueva Era. It alleges
that based on the description of its boundaries, a portion of Nueva Era is
within its territory.
The boundaries of Marcos under R.A. No. 3753 read:
On the Northwest, by the barrios Biding-Rangay boundary going
down to the barrios Capariaan-Gabon boundary consisting of foot
path and feeder road; on the Northeast, by the Burnay River which
is the common boundary of barrios Agunit and Naglayaan; on the
East, by the Ilocos Norte-Mt. Province boundary; on the South, by
the Padsan River which is at the same time the boundary between
the municipalities of Banna and Dingras; on the West and
Southwest, by the boundary between the municipalities of Batac and
Dingras.
Marcos contends that since it is "bounded on the East, by the Ilocos Norte-
Mt. Province boundary," a portion of Nueva Era formed part of its territory
S t a t u t o r y C o n s t r u c t i o n S e p t e m b e r 4 P a g e | 44
because, according to it, Nueva Era is between the Marcos and Ilocos Norte-
Mt. Province boundary. Marcos posits that in order for its eastern side to
reach the Ilocos Norte-Mt. Province boundary, it will necessarily traverse the
middle portion of Nueva Era.
Marcos further claims that it is entitled not only to the middle portion of
Nueva Era but also to its northern portion which, as a consequence, was
isolated from the major part of Nueva Era.
We cannot accept the contentions of Marcos.
Only Dingras is specifically named by law as source territory of Marcos.
Hence, the said description of boundaries of Marcos is descriptive only of the
listed barangays of Dingras as a compact and contiguous territory.
Considering that the description of the eastern boundary of Marcos under
R.A. No. 3753 is ambiguous, the same must be interpreted in light of the
legislative intent.
The law must be given a reasonable interpretation, to preclude absurdity in
its application.55 We thus uphold the legislative intent to create Marcos out of
the territory of Dingras only.
Courts must give effect to the general legislative intent that can be
discovered from or is unraveled by the four corners of the statute, and in
order to discover said intent, the whole statute, and not only a particular
provision thereof, should be considered.56 Every section, provision or clause
of the statute must be expounded by reference to each other in order to
arrive at the effect contemplated by the legislature. The intention of the
legislator must be ascertained from the whole text of the law, and every part
of the act is to be taken into view.57
It is axiomatic that laws should be given a reasonable interpretation, not one
which defeats the very purpose for which they were passed. This Court has
in many cases involving the construction of statutes always cautioned
against narrowly interpreting a statute as to defeat the purpose of the
legislature and stressed that it is of the essence of judicial duty to construe
statutes so as to avoid such a deplorable result (of injustice or absurdity) and
that therefore "a literal interpretation is to be rejected if it would be unjust or
lead to absurd results."58
 S t a t u t o r y C o n s t r u c t i o n S e p t e m b e r 4 P a g e | 45

Statutes are to be construed in the light of the purposes to be achieved and

Associate Justice Associate Justice
the evils sought to be remedied. Thus, in construing a statute, the reason for
its enactment should be kept in mind and the statute should be construed TERESITA J. LEONARDO-DE CASTRO
with reference to the intended scope and purpose. The court may consider Associate Justice
the spirit and reason of the statute, where a literal meaning would lead to
absurdity, contradiction, injustice, or would defeat the clear purpose of the
lawmakers.59

WHEREFORE, the petition is GRANTED. The Decision of the Court of CERTIFICATION

Appeals is partly REVERSED. The Decision of the Regional Trial Court in
Ilocos Norte is Reinstated. Pursuant to Section 13, Article VIII of the Constitution, I certify that the
conclusions in the above Decision had been reached in consultation before
SO ORDERED. the case was assigned to the writer of the opinion of the Court.

RUBEN T. REYES REYNATO S. PUNO

Associate Justice Chief Justice

Republic of the Philippines

SUPREME COURT
Manila
WE CONCUR:
EN BANC

REYNATO S. PUNO
Chief Justice
G.R. No. 106719 September 21, 1993
*LEONARDO A. QUISUMBING **CONSUELO YNARES-SANTIAGO
Associate Justice Associate Justice
DRA. BRIGIDA S. BUENASEDA, Lt. Col. ISABELO BANEZ, JR., ENGR.
ANGELINA SANDOVAL-GUTIERREZ ANTONIO T. CARPIO CONRADO REY MATIAS, Ms. CORA S. SOLIS and Ms. ENYA N.
Associate Justice Associate Justice LOPEZ, petitioners,
vs.
MA. ALICIA M. AUSTRIA-MARTINEZ RENATO C. CORONA SECRETARY JUAN FLAVIER, Ombudsman CONRADO M. VASQUEZ,
Associate Justice Associate Justice and NCMH NURSES ASSOCIATION, represented by RAOULITO
GAYUTIN, respondents.
CONCHITA CARPIO MORALES ADOLFO S. AZCUNA
Associate Justice Associate Justice Renato J. Dilag and Benjamin C. Santos for petitioners.
DANTE O. TINGA MINITA V. CHICO-NAZARIO
Danilo C. Cunanan for respondent Ombudsman.
Associate Justice Associate Justice

PRESBITERO J. VELASCO, JR. ANTONIO EDUARDO B. NACHURA Crispin T. Reyes and Florencio T. Domingo for private respondent.

QUIASON, J.:
This is a Petition for Certiorari, Prohibition and Mandamus, with Prayer for
Preliminary Injunction or Temporary Restraining Order, under Rule 65 of the
Revised Rules of Court.
Principally, the petition seeks to nullify the Order of the Ombudsman dated
January 7, 1992, directing the preventive suspension of petitioners,
Dr. Brigida S. Buenaseda, Chief of Hospital III; Isabelo C. Banez, Jr.,
Administrative Officer III; Conrado Rey Matias, Technical Assistant to the
Chief of Hospital; Cora C. Solis, Accountant III; and Enya N. Lopez, Supply
Officer III, all of the National Center for Mental Health. The petition also asks
for an order directing the Ombudsman to disqualify Director Raul Arnaw and
Investigator Amy de Villa-Rosero, of the Office of the Ombudsman, from
participation in the preliminary investigation of the charges against petitioner
(Rollo, pp. 2-17; Annexes to Petition, Rollo, pp. 19-21).
The questioned order was issued in connection with the administrative
complaint filed with the Ombudsman (OBM-ADM-0-91-0151) by the private
respondents against the petitioners for violation of the Anti-Graft and Corrupt
Practices Act.
According to the petition, the said order was issued upon the
recommendation of Director Raul Arnaw and Investigator Amy de Villa-
Rosero, without affording petitioners the opportunity to controvert the
charges filed against them. Petitioners had sought to disqualify Director
Arnaw and Investigator Villa-Rosero for manifest partiality and bias (Rollo,
pp. 4-15).
On September 10, 1992, this Court required respondents' Comment on the
petition.
On September 14 and September 22, 1992, petitioners filed a "Supplemental
Petition (Rollo, pp. 124-130); Annexes to Supplemental Petition; Rollo pp.
140-163) and an "Urgent Supplemental Manifestation" ( Rollo,
pp. 164-172; Annexes to Urgent Supplemental Manifestation; Rollo, pp. 173-
176), respectively, averring developments that transpired after the filing of
the petition and stressing the urgency for the issuance of the writ of
preliminary injunction or temporary restraining order.
S t a t u t o r y C o n s t r u c t i o n S e p t e m b e r 4 P a g e | 46
On September 22, 1992, this Court ". . . Resolved to REQUIRE the
respondents to MAINTAIN in the meantime, the STATUS QUO pending filing
of comments by said respondents on the original supplemental
manifestation" (Rollo, p. 177).
On September 29, 1992, petitioners filed a motion to direct respondent
Secretary of Health to comply with the Resolution dated September 22, 1992
(Rollo, pp. 182-192, Annexes, pp. 192-203). In a Resolution dated October
1, 1992, this Court required respondent Secretary of Health to comment on
the said motion.
On September 29, 1992, in a pleading entitled "Omnibus Submission,"
respondent NCMH Nurses Association submitted its Comment to the Petition,
Supplemental Petition and Urgent Supplemental Manifestation. Included in
said pleadings were the motions to hold the lawyers of petitioners in
contempt and to disbar them (Rollo, pp. 210-267). Attached to the "Omnibus
Submission" as annexes were the orders and pleadings filed in Administrative
Case No. OBM-ADM-0-91-1051 against petitioners (Rollo, pp. 268-480).
The Motion for Disbarment charges the lawyers of petitioners with:
(1) unlawfully advising or otherwise causing or inducing their clients —
petitioners Buenaseda, et al., to openly defy, ignore, disregard, disobey or
otherwise violate, maliciously evade their preventive suspension by Order of
July 7, 1992 of the Ombudsman . . ."; (2) "unlawfully interfering with and
obstructing the implementation of the said order (Omnibus Submission, pp.
50-52; Rollo, pp. 259-260); and (3) violation of the Canons of the Code of
Professional Responsibility and of unprofessional and unethical conduct "by
foisting blatant lies, malicious falsehood and outrageous deception" and by
committing subornation of perjury, falsification and fabrication in their
pleadings (Omnibus Submission, pp. 52-54; Rollo, pp. 261-263).
On November 11, 1992, petitioners filed a "Manifestation and Supplement to
'Motion to Direct Respondent Secretary of Health to Comply with 22
September 1992 Resolution'" (Manifestation attached to Rollo without
pagination between pp. 613 and 614 thereof).
On November 13, 1992, the Solicitor General submitted its Comment dated
November 10, 1992, alleging that: (a) "despite the issuance of the
September 22, 1992 Resolution directing respondents to maintain the status
quo, respondent Secretary refuses to hold in abeyance the implementation of
petitioners' preventive suspension; (b) the clear intent and spirit of the

Resolution dated September 22, 1992 is to hold in abeyance the
implementation of petitioners' preventive suspension, the status
quo obtaining the time of the filing of the instant petition; (c) respondent
Secretary's acts in refusing to hold in abeyance implementation of
petitioners' preventive suspension and in tolerating and approving the acts of
Dr. Abueva, the OIC appointed to replace petitioner Buenaseda, are in
violation of the Resolution dated September 22, 1992; and
(d) therefore, respondent Secretary should be directed to comply with the
Resolution dated September 22, 1992 immediately, by restoring the status
quo ante contemplated by the aforesaid resolution" (Comment attached
to Rollowithout paginations between pp. 613-614 thereof).
In the Resolution dated November 25, 1992, this Court required respondent
Secretary to comply with the aforestated status quo order, stating inter alia,
that:
It appearing that the status quo ante litem motam, or the
last peaceable uncontested status which preceded the
present controversy was the situation obtaining at the time
of the filing of the petition at bar on September 7, 1992
wherein petitioners were then actually occupying their
respective positions, the Court hereby ORDERS that
petitioners be allowed to perform the duties of their
respective positions and to receive such salaries and benefits
as they may be lawfully entitled to, and that respondents
and/or any and all persons acting under their authority
desist and refrain from performing any act in violation of the
aforementioned Resolution of September 22, 1992 until
further orders from the Court (Attached to Rollo after p. 615
thereof).
On December 9, 1992, the Solicitor General, commenting on the Petition,
Supplemental Petition and Supplemental Manifestation, stated that (a) "The
authority of the Ombudsman is only to recommend suspension and he has
no direct power to suspend;" and (b) "Assuming the Ombudsman has the
power to directly suspend a government official or employee, there are
conditions required by law for the exercise of such powers; [and] said
conditions have not been met in the instant case" (Attached to Rollo without
pagination).
S t a t u t o r y C o n s t r u c t i o n S e p t e m b e r 4 P a g e | 47
In the pleading filed on January 25, 1993, petitioners adopted the position of
the Solicitor General that the Ombudsman can only suspend government
officials or employees connected with his office. Petitioners also refuted
private respondents' motion to disbar petitioners' counsel and to cite them
for contempt (Attached to Rollo without pagination).
The crucial issue to resolve is whether the Ombudsman has the power to
suspend government officials and employees working in offices other than
the Office of the Ombudsman, pending the investigation of the
administrative complaints filed against said officials and employees.
In upholding the power of the Ombudsman to preventively suspend
petitioners, respondents (Urgent Motion to Lift Status Quo, etc, dated
January 11, 1993, pp. 10-11), invoke Section 24 of R.A. No. 6770, which
provides:
Sec. 24. Preventive Suspension. — The Ombudsman or his
Deputy may preventively suspend any officer or employee
under his authority pending an investigation, if in his
judgment the evidence of guilt is strong, and (a) the charge
against such officer or employee involves dishonesty,
oppression or grave misconduct or neglect in the
performance of duty; (b) the charge would warrant removal
from the service; or (c) the respondent's continued stay in
office may prejudice the case filed against him.
The preventive suspension shall continue until the case is
terminated by the Office of Ombudsman but not more than
six months, without pay, except when the delay in the
disposition of the case by the Office of the Ombudsman is
due to the fault, negligence or petition of the respondent, in
which case the period of such delay shall not be counted in
computing the period of suspension herein provided.
Respondents argue that the power of preventive suspension given the
Ombudsman under Section 24 of R.A. No. 6770 was contemplated by
Section 13 (8) of Article XI of the 1987 Constitution, which provides that the
Ombudsman shall exercise such other power or perform such functions or
duties as may be provided by law."

On the other hand, the Solicitor General and the petitioners claim that under
the 1987 Constitution, the Ombudsman can only recommend to the heads of
the departments and other agencies the preventive suspension of officials
and employees facing administrative investigation conducted by his office.
Hence, he cannot order the preventive suspension himself.
They invoke Section 13(3) of the 1987 Constitution which provides that the
Office of the Ombudsman shall have inter alia the power, function, and duty
to:
Direct the officer concerned to take appropriate action
against a public official or employee at fault, and
recommend his removal, suspension, demotion, fine,
censure or prosecution, and ensure compliance therewith.
The Solicitor General argues that under said provision of the Constitutions,
the Ombudsman has three distinct powers, namely: (1) direct the officer
concerned to take appropriate action against public officials or employees at
fault; (2) recommend their removal, suspension, demotion fine, censure, or
prosecution; and (3) compel compliance with the recommendation
(Comment dated December 3, 1992, pp. 9-10).
The line of argument of the Solicitor General is a siren call that can easily
mislead, unless one bears in mind that what the Ombudsman imposed on
petitioners was not a punitive but only a preventive suspension.
When the constitution vested on the Ombudsman the power "to recommend
the suspension" of a public official or employees (Sec. 13 [3]), it referred to
"suspension," as a punitive measure. All the words associated with the word
"suspension" in said provision referred to penalties in administrative
cases, e.g. removal, demotion, fine, censure. Under the rule of Noscitor a
sociis, the word "suspension" should be given the same sense as the other
words with which it is associated. Where a particular word is equally
susceptible of various meanings, its correct construction may be made
specific by considering the company of terms in which it is found or with
which it is associated (Co Kim Chan v. Valdez Tan Keh, 75 Phil. 371 [1945];
Caltex (Phils.) Inc. v. Palomar, 18 SCRA 247 [1966]).
Section 24 of R.A. No. 6770, which grants the Ombudsman the power to
preventively suspend public officials and employees facing administrative
charges before him, is a procedural, not a penal statute. The preventive
S t a t u t o r y C o n s t r u c t i o n S e p t e m b e r 4 P a g e | 48
suspension is imposed after compliance with the requisites therein set forth,
as an aid in the investigation of the administrative charges.
Under the Constitution, the Ombudsman is expressly authorized to
recommend to the appropriate official the discipline or prosecution of erring
public officials or employees. In order to make an intelligent determination
whether to recommend such actions, the Ombudsman has to conduct an
investigation. In turn, in order for him to conduct such investigation in an
expeditious and efficient manner, he may need to suspend the respondent.
The need for the preventive suspension may arise from several causes,
among them, the danger of tampering or destruction of evidence in the
possession of respondent; the intimidation of witnesses, etc. The
Ombudsman should be given the discretion to decide when the persons
facing administrative charges should be preventively suspended.
Penal statutes are strictly construed while procedural statutes are liberally
construed (Crawford, Statutory Construction, Interpretation of Laws, pp.
460-461; Lacson v. Romero, 92 Phil. 456 [1953]). The test in determining if
a statute is penal is whether a penalty is imposed for the punishment of a
wrong to the public or for the redress of an injury to an individual (59 Corpuz
Juris, Sec. 658; Crawford, Statutory Construction, pp. 496-497). A Code
prescribing the procedure in criminal cases is not a penal statute and is to be
interpreted liberally (People v. Adler, 140 N.Y. 331; 35 N.E. 644).
The purpose of R.A. No. 6770 is to give the Ombudsman such powers as he
may need to perform efficiently the task committed to him by the
Constitution. Such being the case, said statute, particularly its provisions
dealing with procedure, should be given such interpretation that will
effectuate the purposes and objectives of the Constitution. Any interpretation
that will hamper the work of the Ombudsman should be avoided.
A statute granting powers to an agency created by the Constitution should
be liberally construed for the advancement of the purposes and objectives
for which it was created (Cf. Department of Public Utilities v. Arkansas
Louisiana Gas. Co., 200 Ark. 983, 142 S.W. (2d) 213 [1940]; Wallace v.
Feehan, 206 Ind. 522, 190 N.E., 438 [1934]).
In Nera v. Garcia, 106 Phil. 1031 [1960], this Court, holding that a
preventive suspension is not a penalty, said:

Suspension is a preliminary step in an administrative
investigation. If after such investigation, the charges are
established and the person investigated is found guilty of
acts warranting his removal, then he is removed or
dismissed. This is the penalty.
To support his theory that the Ombudsman can only preventively suspend
respondents in administrative cases who are employed in his office, the
Solicitor General leans heavily on the phrase "suspend any officer or
employee under his authority" in Section 24 of R.A. No. 6770.
The origin of the phrase can be traced to Section 694 of the Revised
Administrative Code, which dealt with preventive suspension and which
authorized the chief of a bureau or office to "suspend any subordinate or
employee in his bureau or under his authority pending an investigation . . . ."
Section 34 of the Civil Service Act of 1959 (R.A. No. 2266), which
superseded Section 694 of the Revised Administrative Code also authorized
the chief of a bureau or office to "suspend any subordinate officer or
employees, in his bureau or under his authority."
However, when the power to discipline government officials and employees
was extended to the Civil Service Commission by the Civil Service Law of
1975 (P.D. No. 805), concurrently with the President, the Department
Secretaries and the heads of bureaus and offices, the phrase "subordinate
officer and employee in his bureau" was deleted, appropriately leaving the
phrase "under his authority." Therefore, Section 41 of said law only mentions
that the proper disciplining authority may preventively suspend "any
subordinate officer or employee under his authority pending an investigation
. . ." (Sec. 41).
The Administrative Code of 1987 also empowered the proper disciplining
authority to "preventively suspend any subordinate officer or employee
under his authority pending an investigation" (Sec. 51).
The Ombudsman Law advisedly deleted the words "subordinate" and "in his
bureau," leaving the phrase to read "suspend any officer or employee under
his authority pending an investigation . . . ." The conclusion that can be
deduced from the deletion of the word "subordinate" before and the words
"in his bureau" after "officer or employee" is that the Congress intended to
empower the Ombudsman to preventively suspend all officials and
S t a t u t o r y C o n s t r u c t i o n S e p t e m b e r 4 P a g e | 49
employees under investigation by his office, irrespective of whether they are
employed "in his office" or in other offices of the government. The moment a
criminal or administrative complaint is filed with the Ombudsman, the
respondent therein is deemed to be "in his authority" and he can proceed to
determine whether said respondent should be placed under preventive
suspension.
In their petition, petitioners also claim that the Ombudsman committed
grave abuse of discretion amounting to lack of jurisdiction when he issued
the suspension order without affording petitioners the opportunity to
confront the charges against them during the preliminary conference and
even after petitioners had asked for the disqualification of Director Arnaw
and Atty. Villa-Rosero (Rollo, pp. 6-13). Joining petitioners, the Solicitor
General contends that assuming arguendo that the Ombudsman has the
power to preventively suspend erring public officials and employees who are
working in other departments and offices, the questioned order remains null
and void for his failure to comply with the requisites in Section 24 of the
Ombudsman Law (Comment dated December 3, 1992, pp. 11-19).
Being a mere order for preventive suspension, the questioned order of the
Ombudsman was validly issued even without a full-blown hearing and the
formal presentation of evidence by the parties. In Nera, supra, petitioner
therein also claimed that the Secretary of Health could not preventively
suspend him before he could file his answer to the administrative complaint.
The contention of petitioners herein can be dismissed perfunctorily by
holding that the suspension meted out was merely preventive and therefore,
as held in Nera, there was "nothing improper in suspending an officer
pending his investigation and before tho charges against him are heard . . .
(Nera v. Garcia., supra).
There is no question that under Section 24 of R.A. No. 6770, the
Ombudsman cannot order the preventive suspension of a respondent unless
the evidence of guilt is strong and (1) the charts against such officer or
employee involves dishonesty, oppression or grave misconduct or neglect in
the performance of duty; (2) the charge would warrant removal from the
service; or (3) the respondent's continued stay in office may prejudice the
case filed against him.
The same conditions for the exercise of the power to preventively suspend
officials or employees under investigation were found in Section 34 of R.A.
No. 2260.

The import of the Nera decision is that the disciplining authority is given the
discretion to decide when the evidence of guilt is strong. This fact is
bolstered by Section 24 of R.A. No. 6770, which expressly left such
determination of guilt to the "judgment" of the Ombudsman on the basis of
the administrative complaint. In the case at bench, the Ombudsman issued
the order of preventive suspension only after: (a) petitioners had filed their
answer to the administrative complaint and the "Motion for the Preventive
Suspension" of petitioners, which incorporated the charges in the criminal
complaint against them (Annex 3, Omnibus Submission, Rollo, pp. 288-289;
Annex 4, Rollo,
pp. 290-296); (b) private respondent had filed a reply to the answer of
petitioners, specifying 23 cases of harassment by petitioners of the members
of the private respondent (Annex 6, Omnibus Submission, Rollo, pp. 309-
333); and (c) a preliminary conference wherein the complainant and the
respondents in the administrative case agreed to submit their list of
witnesses and documentary evidence.
Petitioners herein submitted on November 7, 1991 their list of exhibits
(Annex 8 of Omnibus Submission, Rollo, pp. 336-337) while private
respondents submitted their list of exhibits (Annex 9 of Omnibus
Submission, Rollo, pp. 338-348).
Under these circumstances, it can not be said that Director Raul Arnaw and
Investigator Amy de Villa-Rosero acted with manifest partiality and bias in
recommending the suspension of petitioners. Neither can it be said that the
Ombudsman had acted with grave abuse of discretion in acting favorably on
their recommendation.
The Motion for Contempt, which charges the lawyers of petitioners with
unlawfully causing or otherwise inducing their clients to openly defy and
disobey the preventive suspension as ordered by the Ombudsman and the
Secretary of Health can not prosper (Rollo, pp. 259-261). The Motion should
be filed, as in fact such a motion was filed, with the Ombudsman. At any
rate, we find that the acts alleged to constitute indirect contempt were
legitimate measures taken by said lawyers to question the validity and
propriety of the preventive suspension of their clients.
On the other hand, we take cognizance of the intemperate language used by
counsel for private respondents hurled against petitioners and their counsel
(Consolidated: (1) Comment on Private Respondent" "Urgent Motions, etc.;
S t a t u t o r y C o n s t r u c t i o n S e p t e m b e r 4 P a g e | 50
(2) Adoption of OSG's Comment; and (3) Reply to Private Respondent's
Comment and Supplemental Comment, pp. 4-5).
A lawyer should not be carried away in espousing his client's cause. The
language of a lawyer, both oral or written, must be respectful and restrained
in keeping with the dignity of the legal profession and with his behavioral
attitude toward his brethren in the profession (Lubiano v. Gordolla, 115
SCRA 459 [1982]). The use of abusive language by counsel against the
opposing counsel constitutes at the same time a disrespect to the dignity of
the court of justice. Besides, the use of impassioned language in pleadings,
more often than not, creates more heat than light.
The Motion for Disbarment (Rollo, p. 261) has no place in the instant special
civil action, which is confined to questions of jurisdiction or abuse of
discretion for the purpose of relieving persons from the arbitrary acts of
judges and quasi-judicial officers. There is a set of procedure for the
discipline of members of the bar separate and apart from the present special
civil action.
WHEREFORE, the petition is DISMISSED and the Status quo ordered to be
maintained in the Resolution dated September 22, 1992 is LIFTED and SET
ASIDE.
SO ORDERED.
Narvasa, C.J., Cruz, Padilla, Bidin, Griño-Aquino, Regalado, Davide, Jr.,
Romero, Nocon, Melo, Puno and Vitug, JJ., concur.
Feliciano, J., is on leave.
Separate Opinions
BELLOSILLO, J., concurring:
I agree that the Ombudsman has the authority, under Sec. 24 of R.A.
No. 6770, to preventively suspend any government official or employee
administratively charged before him pending the investigation of the
complaint, the reason being that respondent's continued stay in office may
prejudice the prosecution of the case.

However, in the case before us, I am afraid that the facts thus far presented
may not provide adequate basis to reasonably place petitioners under
preventive suspension. For, it is not enough to rule that the Ombudsman has
authority to suspend petitioners preventively while the case is in progress
before him. Equally important is the determination whether it is necessary to
issue the preventive suspension under the circumstances. Regretfully, I
cannot see any sufficient basis to justify the preventive suspension. That is
why, I go for granting oral argument to the parties so that we can truthfully
determine whether the preventive suspension of respondents are warranted
by the facts. We may be suspending key government officials and employees
on the basis merely of speculations which may not serve the ends of justice
but which, on the other hand, deprive them of their right to due process.
The simultaneous preventive suspension of top officials and employees of
the National Center for Mental Health may just disrupt, the hospital's normal
operations, much to the detriment of public service. We may safely assume
that it is not easy to replace them in their respective functions as those
substituting them may be taking over for the first time. The proper care of
mental patients may thus be unduly jeopardized and their lives and limbs
imperilled.
I would be amenable to holding oral argument to hear the parties if only to
have enough factual and legal bases to justify the preventive suspension of
petitioners.
# Separate Opinions
BELLOSILLO, J., concurring:
I agree that the Ombudsman has the authority, under Sec. 24 of R.A.
No. 6770, to preventively suspend any government official or employee
administratively charged before him pending the investigation of the
complaint, the reason being that respondent's continued stay in office may
prejudice the prosecution of the case.
However, in the case before us, I am afraid that the facts thus far presented
may not provide adequate basis to reasonably place petitioners under
preventive suspension. For, it is not enough to rule that the Ombudsman has
authority to suspend petitioners preventively while the case is in progress
before him. Equally important is the determination whether it is necessary to
S t a t u t o r y C o n s t r u c t i o n S e p t e m b e r 4 P a g e | 51
issue the preventive suspension under the circumstances. Regretfully, I
cannot see any sufficient basis to justify the preventive suspension. That is
why, I go for granting oral argument to the parties so that we can truthfully
determine whether the preventive suspension of respondents are warranted
by the facts. We may be suspending key government officials and employees
on the basis merely of speculations which may not serve the ends of justice
but which, on the other hand, deprive them of their right to due process.
The simultaneous preventive suspension of top officials and employees of
the National Center for Mental Health may just disrupt, the hospital's normal
operations, much to the detriment of public service. We may safely assume
that it is not easy to replace them in their respective functions as those
substituting them may be taking over for the first time. The proper care of
mental patients may thus be unduly jeopardized and their lives and limbs
imperilled.
I would be amenable to holding oral argument to hear the parties if only to
have enough factual and legal bases to justify the preventive suspension of
petitioners.
THIRD DIVISION
[G.R. No. 112212. March 2, 1998]
GREGORIO FULE, petitioner, vs. COURT OF APPEALS,
NINEVETCH CRUZ and JUAN BELARMINO, respondents.
DECISION
ROMERO, J.:
This petition for review on certiorari questions the affirmance by the
Court of Appeals of the decision[1] of the Regional Trial Court of San Pablo
City, Branch 30, dismissing the complaint that prayed for the nullification of a
contract of sale of a 10-hectare property in Tanay, Rizal in consideration of
the amount of P40,000.00 and a 2.5 carat emerald-cut diamond (Civil Case
No. SP-2455). The lower courts decision disposed of the case as follows:
WHEREFORE, premises considered, the Court hereby renders judgment
dismissing the complaint for lack of merit and ordering plaintiff to pay:
1. Defendant Dra. Ninevetch M. Cruz the sum of P300,000.00 as and for
moral damages and the sum of P100,000.00 as and for exemplary damages;

2. Defendant Atty. Juan Belarmino the sum of P250,000.00 as and for moral
damages and the sum of P150,000.00 as and for exemplary damages;
3. Defendant Dra. Cruz and Atty. Belarmino the sum of P25,000.00 each as
and for attorneys fees and litigation expenses; and
4. The costs of suit.
SO ORDERED.
As found by the Court of Appeals and the lower court, the antecedent
facts of this case are as follows:
Petitioner Gregorio Fule, a banker by profession and a jeweler at the same
time, acquired a 10-hectare property in Tanay, Rizal (hereinafter Tanay
property), covered by Transfer Certificate of Title No. 320725 which used to
be under the name of Fr. Antonio Jacobe. The latter had mortgaged it earlier
to the Rural Bank of Alaminos (the Bank), Laguna, Inc. to secure a loan in
the amount of P10,000.00, but the mortgage was later foreclosed and the
property offered for public auction upon his default.
In July 1984, petitioner, as corporate secretary of the bank, asked
Remelia Dichoso and Oliva Mendoza to look for a buyer who might be
interested in the Tanay property. The two found one in the person of herein
private respondent Dr. Ninevetch Cruz. It so happened that at the time,
petitioner had shown interest in buying a pair of emerald-cut diamond
earrings owned by Dr. Cruz which he had seen in January of the same year
when his mother examined and appraised them as genuine. Dr. Cruz,
however, declined petitioners offer to buy the jewelry
for P100,000.00. Petitioner then made another bid to buy them for
US$6,000.00 at the exchange rate of $1.00 to P25.00. At this point,
petitioner inspected said jewelry at the lobby of the Prudential Bank branch
in San Pablo City and then made a sketch thereof. Having sketched the
jewelry for twenty to thirty minutes, petitioner gave them back to Dr. Cruz
who again refused to sell them since the exchange rate of the peso at the
time appreciated to P19.00 to a dollar.
Subsequently, however, negotiations for the barter of the jewelry and
the Tanay property ensued. Dr. Cruz requested herein private respondent
Atty. Juan Belarmino to check the property who, in turn, found out that no
S t a t u t o r y C o n s t r u c t i o n S e p t e m b e r 4 P a g e | 52
sale or barter was feasible because the one-year period for redemption of
the said property had not yet expired at the time.
In an effort to cut through any legal impediment, petitioner executed on
October 19, 1984, a deed of redemption on behalf of Fr. Jacobe purportedly
in the amount of P15,987.78, and on even date, Fr. Jacobe sold the property
to petitioner for P75,000.00. The haste with which the two deeds were
executed is shown by the fact that the deed of sale was notarized ahead of
the deed of redemption. As Dr. Cruz had already agreed to the proposed
barter, petitioner went to Prudential Bank once again to take a look at the
jewelry.
In the afternoon of October 23, 1984, petitioner met Atty. Belarmino at
the latters residence to prepare the documents of sale. [2] Dr. Cruz herself
was not around but Atty. Belarmino was aware that she and petitioner had
previously agreed to exchange a pair of emerald-cut diamond earrings for
the Tanay property. Atty. Belarmino accordingly caused the preparation of a
deed of absolute sale while petitioner and Dr. Cruz attended to the
safekeeping of the jewelry.
The following day, petitioner, together with Dichoso and Mendoza,
arrived at the residence of Atty. Belarmino to finally execute a deed of
absolute sale. Petitioner signed the deed and gave Atty. Belarmino the
amount of P13,700.00 for necessary expenses in the transfer of title over the
Tanay property. Petitioner also issued a certification to the effect that the
actual consideration of the sale was P200,000.00 and not P80,000.00 as
indicated in the deed of absolute sale. The disparity between the actual
contract price and the one indicated on the deed of absolute sale was
purportedly aimed at minimizing the amount of the capital gains tax that
petitioner would have to shoulder. Since the jewelry was appraised only
at P160,000.00, the parties agreed that the balance of P40,000.00 would just
be paid later in cash.
As pre-arranged, petitioner left Atty. Belarminos residence with Dichoso
and Mendoza and headed for the bank, arriving there at past 5:00 p.m. Dr.
Cruz also arrived shortly thereafter, but the cashier who kept the other key
to the deposit box had already left the bank. Dr. Cruz and Dichoso,
therefore, looked for said cashier and found him having a haircut. As soon as
his haircut was finished, the cashier returned to the bank and arrived there
at 5:48 p.m., ahead of Dr. Cruz and Dichoso who arrived at 5:55 p.m. Dr.
Cruz and the cashier then opened the safety deposit box, the former
retrieving a transparent plastic or cellophane bag with the jewelry inside and
handing over the same to petitioner. The latter took the jewelry from the
bag, went near the electric light at the banks lobby, held the jewelry against

the light and examined it for ten to fifteen minutes. After a while, Dr. Cruz
asked, Okay na ba iyan? Petitioner expressed his satisfaction by nodding his
head.
For services rendered, petitioner paid the agents, Dichoso and Mendoza,
the amount of US$300.00 and some pieces of jewelry. He did not, however,
give them half of the pair of earrings in question which he had earlier
promised.
Later, at about 8:00 oclock in the evening of the same day, petitioner
arrived at the residence of Atty. Belarmino complaining that the jewelry
given to him was fake. He then used a tester to prove the alleged
fakery. Meanwhile, at 8:30 p.m., Dichoso and Mendoza went to the
residence of Dr. Cruz to borrow her car so that, with Atty. Belarmino, they
could register the Tanay property. After Dr. Cruz had agreed to lend her car,
Dichoso called up Atty. Belarmino. The latter, however, instructed Dichoso to
proceed immediately to his residence because petitioner was there. Believing
that petitioner had finally agreed to give them half of the pair of earrings,
Dichoso went posthaste to the residence of Atty. Belarmino only to find
petitioner already demonstrating with a tester that the earrings were
fake. Petitioner then accused Dichoso and Mendoza of deceiving him which
they, however, denied. They countered that petitioner could not have been
fooled because he had vast experience regarding jewelry. Petitioner
nonetheless took back the US$300.00 and jewelry he had given them.
Thereafter, the group decided to go to the house of a certain Macario
Dimayuga, a jeweler, to have the earrings tested. Dimayuga, after taking
one look at the earrings, immediately declared them counterfeit. At around
9:30 p.m., petitioner went to one Atty. Reynaldo Alcantara residing at
Lakeside Subdivision in San Pablo City, complaining about the fake
jewelry. Upon being advised by the latter, petitioner reported the matter to
the police station where Dichoso and Mendoza likewise executed sworn
statements.
On October 26, 1984, petitioner filed a complaint before the Regional
Trial Court of San Pablo City against private respondents praying, among
other things, that the contract of sale over the Tanay property be declared
null and void on the ground of fraud and deceit.
On October 30, 1984, the lower court issued a temporary restraining
order directing the Register of Deeds of Rizal to refrain from acting on the
pertinent documents involved in the transaction. On November 20, 1984,
however, the same court lifted its previous order and denied the prayer for a
writ of preliminary injunction.
S t a t u t o r y C o n s t r u c t i o n S e p t e m b e r 4 P a g e | 53
After trial, the lower court rendered its decision on March 7, 1989.
Confronting the issue of whether or not the genuine pair of earrings used as
consideration for the sale was delivered by Dr. Cruz to petitioner, the lower
court said:
The Court finds that the answer is definitely in the affirmative. Indeed, Dra.
Cruz delivered (the) subject jewelries (sic) into the hands of plaintiff who
even raised the same nearer to the lights of the lobby of the bank near the
door. When asked by Dra. Cruz if everything was in order, plaintiff even
nodded his satisfaction (Hearing of Feb. 24, 1988). At that instance, plaintiff
did not protest, complain or beg for additional time to examine further the
jewelries (sic). Being a professional banker and engaged in the jewelry
business plaintiff is conversant and competent to detect a fake diamond from
the real thing. Plaintiff was accorded the reasonable time and opportunity to
ascertain and inspect the jewelries (sic) in accordance with Article 1584 of
the Civil Code. Plaintiff took delivery of the subject jewelries (sic) before 6:00
p.m. of October 24, 1984. When he went at 8:00 p.m. that same day to the
residence of Atty. Belarmino already with a tester complaining about some
fake jewelries (sic), there was already undue delay because of the lapse of a
considerable length of time since he got hold of subject jewelries (sic). The
lapse of two (2) hours more or less before plaintiff complained is considered
by the Court as unreasonable delay.[3]
The lower court further ruled that all the elements of a valid contract
under Article 1458 of the Civil Code were present, namely: (a) consent or
meeting of the minds; (b) determinate subject matter, and (c) price certain
in money or its equivalent. The same elements, according to the lower court,
were present despite the fact that the agreement between petitioner and Dr.
Cruz was principally a barter contract. The lower court explained thus:
x x x. Plaintiffs ownership over the Tanay property passed unto Dra. Cruz
upon the constructive delivery thereof by virtue of the Deed of Absolute Sale
(Exh. D). On the other hand, the ownership of Dra. Cruz over the subject
jewelries (sic) transferred to the plaintiff upon her actual personal delivery to
him at the lobby of the Prudential Bank. It is expressly provided by law that
the thing sold shall be understood as delivered, when it is placed in the
control and possession of the vendee (Art. 1497, Civil Code; Kuenzle & Straff
vs. Watson & Co. 13 Phil. 26). The ownership and/or title over the jewelries
(sic) was transmitted immediately before 6:00 p.m. of October 24, 1984.
Plaintiff signified his approval by nodding his head. Delivery or tradition, is
one of the modes of acquiring ownership (Art. 712, Civil Code).

Similarly, when Exhibit D was executed, it was equivalent to the delivery
of the Tanay property in favor of Dra. Cruz. The execution of the public
instrument (Exh. D) operates as a formal or symbolic delivery of the Tanay
property and authorizes the buyer, Dra. Cruz to use the document as proof
of ownership (Florendo v. Foz, 20 Phil. 399). More so, since Exhibit D does
not contain any proviso or stipulation to the effect that title to the property is
reserved with the vendor until full payment of the purchase price, nor is
there a stipulation giving the vendor the right to unilaterally rescind the
contract the moment the vendee fails to pay within a fixed period (Taguba v.
Vda. De Leon, 132 SCRA 722; Luzon Brokerage Co. Inc. vs. Maritime Building
Co. Inc. 86 SCRA 305; Froilan v. Pan Oriental Shipping Co. et al. 12 SCRA
276).[4]
Aside from concluding that the contract of barter or sale had in fact
been consummated when petitioner and Dr. Cruz parted ways at the bank,
the trial court likewise dwelt on the unexplained delay with which petitioner
complained about the alleged fakery. Thus:
x x x. Verily, plaintiff is already estopped to come back after the lapse of
considerable length of time to claim that what he got was fake. He is a
Business Management graduate of La Salle University, Class 1978-79, a
professional banker as well as a jeweler in his own right. Two hours is more
than enough time to make a switch of a Russian diamond with the real
diamond. It must be remembered that in July 1984 plaintiff made a sketch of
the subject jewelries (sic) at the Prudential Bank. Plaintiff had a tester at
8:00 p.m. at the residence of Atty. Belarmino. Why then did he not bring it
out when he was examining the subject jewelries (sic) at about 6:00 p.m. in
the banks lobby? Obviously, he had no need for it after being satisfied of the
genuineness of the subject jewelries (sic). When Dra. Cruz and plaintiff left
the bank both of them had fully performed their respective prestations. Once
a contract is shown to have been consummated or fully performed by the
parties thereto, its existence and binding effect can no longer be disputed. It
is irrelevant and immaterial to dispute the due execution of a contract if both
of them have in fact performed their obligations thereunder and their
respective signatures and those of their witnesses appear upon the face of
the document (Weldon Construction v. CA G.R. No. L-35721, Oct. 12,
1987).[5]
Finally, in awarding damages to the defendants, the lower court
remarked:
The Court finds that plaintiff acted in wanton bad faith. Exhibit 2-Belarmino
purports to show that the Tanay property is worth P25,000.00. However,
S t a t u t o r y C o n s t r u c t i o n S e p t e m b e r 4 P a g e | 54
also on that same day it was executed, the propertys worth was magnified
at P75,000.00 (Exh. 3-Belarmino). How could in less than a day (Oct. 19,
1984) the value would (sic) triple under normal circumstances? Plaintiff, with
the assistance of his agents, was able to exchange the Tanay property which
his bank valued only at P25,000.00 in exchange for a genuine pair of
emerald cut diamond worth P200,000.00 belonging to Dra. Cruz. He also
retrieved the US$300.00 and jewelries (sic) from his agents. But he was not
satisfied in being able to get subject jewelries for a song. He had to file a
malicious and unfounded case against Dra. Cruz and Atty. Belarmino who are
well known, respected and held in high esteem in San Pablo City where
everybody practically knows everybody. Plaintiff came to Court with unclean
hands dragging the defendants and soiling their clean and good name in the
process. Both of them are near the twilight of their lives after maintaining
and nurturing their good reputation in the community only to be stunned
with a court case. Since the filing of this case on October 26, 1984 up to the
present they were living under a pall of doubt. Surely, this affected not only
their earning capacity in their practice of their respective professions, but
also they suffered besmirched reputations. Dra. Cruz runs her own hospital
and defendant Belarmino is a well respected legal practitioner.
The length of time this case dragged on during which period their
reputation were (sic) tarnished and their names maligned by the pendency
of the case, the Court is of the belief that some of the damages they prayed
for in their answers to the complaint are reasonably proportionate to the
sufferings they underwent (Art. 2219, New Civil Code). Moreover, because of
the falsity, malice and baseless nature of the complaint defendants were
compelled to litigate. Hence, the award of attorneys fees is warranted under
the circumstances (Art. 2208, New Civil Code).[6]
From the trial courts adverse decision, petitioner elevated the matter to
the Court of Appeals. On October 20, 1992, the Court of Appeals, however,
rendered a decision[7]affirming in toto the lower courts decision. His motion
for reconsideration having been denied on October 19, 1993, petitioner now
files the instant petition alleging that:
I. THE TRIAL COURT ERRED IN DISMISSING PLAINTIFFS
COMPLAINT AND IN HOLDING THAT THE PLAINTIFF ACTUALLY
RECEIVED A GENUINE PAIR OF EMERALD CUT DIAMOND
EARRING(S) FROM DEFENDANT CRUZ x x x;
II. THE TRIAL COURT ERRED IN AWARDING MORAL AND
EXEMPLARY DAMAGES AND ATTORNEYS FEES IN FAVOR OF

DEFENDANTS AND AGAINST THE PLAINTIFF IN THIS CASE;
and
III.THE TRIAL COURT ERRED IN NOT DECLARING THE DEED OF
SALE OF THE TANAY PROPERTY (EXH. `D) AS NULL AND VOID
OR IN NOT ANNULLING THE SAME, AND IN FAILING TO
GRANT REASONABLE DAMAGES IN FAVOR OF THE
PLAINTIFF.[8]
As to the first allegation, the Court observes that petitioner is essentially
raising a factual issue as it invites us to examine and weigh anew the facts
regarding the genuineness of the earrings bartered in exchange for the
Tanay property. This, of course, we cannot do without unduly transcending
the limits of our review power in petitions of this nature which are confined
merely to pure questions of law. We accord, as a general rule,
conclusiveness to a lower courts findings of fact unless it is shown, inter alia,
that: (1) the conclusion is a finding grounded on speculations, surmises or
conjectures; (2) the inference is manifestly mistaken, absurd and impossible;
(3) when there is a grave abuse of discretion; (4) when the judgment is
based on a misapprehension of facts; (5) when the findings of fact are
conflicting; and (6) when the Court of Appeals, in making its findings, went
beyond the issues of the case and the same is contrary to the admission of
both parties.[9] We find nothing, however, that warrants the application of
any of these exceptions.
Consequently, this Court upholds the appellate courts findings of fact
especially because these concur with those of the trial court which, upon a
thorough scrutiny of the records, are firmly grounded on evidence presented
at the trial.[10] To reiterate, this Courts jurisdiction is only limited to reviewing
errors of law in the absence of any showing that the findings complained of
are totally devoid of support in the record or that they are glaringly
erroneous as to constitute serious abuse of discretion. [11]
Nonetheless, this Court has to closely delve into petitioners allegation
that the lower courts decision of March 7, 1989 is a ready-made one because
it was handed down a day after the last date of the trial of the
case.[12] Petitioner, in this regard, finds it incredible that Judge J. Ausberto
Jaramillo was able to write a 12-page single-spaced decision, type it and
release it on March 7, 1989, less than a day after the last hearing on March
6, 1989. He stressed that Judge Jaramillo replaced Judge Salvador de
Guzman and heard only his rebuttal testimony.
This allegation is obviously no more than a desperate effort on the part
of petitioner to disparage the lower courts findings of fact in order to
S t a t u t o r y C o n s t r u c t i o n S e p t e m b e r 4 P a g e | 55
convince this Court to review the same. It is noteworthy that Atty. Belarmino
clarified that Judge Jaramillo had issued the first order in the case as early as
March 9, 1987 or two years before the rendition of the decision. In fact, Atty.
Belarmino terminated presentation of evidence on October 13, 1987, while
Dr. Cruz finished hers on February 4, 1989, or more than a month prior to
the rendition of the judgment. The March 6, 1989 hearing was conducted
solely for the presentation of petitioner's rebuttal testimony. [13] In other
words, Judge Jaramillo had ample time to study the case and write the
decision because the rebuttal evidence would only serve to confirm or verify
the facts already presented by the parties.
The Court finds nothing anomalous in the said situation. No proof has
been adduced that Judge Jaramillo was motivated by a malicious or sinister
intent in disposing of the case with dispatch. Neither is there proof that
someone else wrote the decision for him. The immediate rendition of the
decision was no more than Judge Jaramillos compliance with his duty as a
judge to dispose of the courts business promptly and decide cases within the
required periods.[14] The two-year period within which Judge Jaramillo
handled the case provided him with all the time to study it and even write
down its facts as soon as these were presented to court. In fact, this Court
does not see anything wrong in the practice of writing a decision days before
the scheduled promulgation of judgment and leaving the dispositive portion
for typing at a time close to the date of promulgation, provided that no
malice or any wrongful conduct attends its adoption. [15] The practice serves
the dual purposes of safeguarding the confidentiality of draft decisions and
rendering decisions with promptness. Neither can Judge Jaramillo be made
administratively answerable for the immediate rendition of the decision. The
acts of a judge which pertain to his judicial functions are not subject to
disciplinary power unless they are committed with fraud, dishonesty,
corruption or bad faith.[16] Hence, in the absence of sufficient proof to the
contrary, Judge Jaramillo is presumed to have performed his job in
accordance with law and should instead be commended for his close
attention to duty.
Having disposed of petitioners first contention, we now come to the
core issue of this petition which is whether the Court of Appeals erred in
upholding the validity of the contract of barter or sale under the
circumstances of this case.
The Civil Code provides that contracts are perfected by mere
consent. From this moment, the parties are bound not only to the fulfillment
of what has been expressly stipulated but also to all the consequences
which, according to their nature, may be in keeping with good faith, usage

and law.[17] A contract of sale is perfected at the moment there is a meeting
of the minds upon the thing which is the object of the contract and upon the
price.[18] Being consensual, a contract of sale has the force of law between
the contracting parties and they are expected to abide in good faith by their
respective contractual commitments. Article 1358 of the Civil Code which
requires the embodiment of certain contracts in a public instrument, is only
for convenience,[19] and registration of the instrument only adversely affects
third parties.[20] Formal requirements are, therefore, for the benefit of third
parties. Non-compliance therewith does not adversely affect the validity of
the contract nor the contractual rights and obligations of the parties
thereunder.
It is evident from the facts of the case that there was a meeting of the
minds between petitioner and Dr. Cruz. As such, they are bound by the
contract unless there are reasons or circumstances that warrant its
nullification. Hence, the problem that should be addressed in this case is
whether or not under the facts duly established herein, the contract can be
voided in accordance with law so as to compel the parties to restore to each
other the things that have been the subject of the contract with their fruits,
and the price with interest.[21]
Contracts that are voidable or annullable, even though there may have
been no damage to the contracting parties are: (1) those where one of the
parties is incapable of giving consent to a contract; and (2) those where the
consent is vitiated by mistake, violence, intimidation, undue influence or
fraud.[22] Accordingly, petitioner now stresses before this Court that he
entered into the contract in the belief that the pair of emerald-cut diamond
earrings was genuine. On the pretext that those pieces of jewelry turned out
to be counterfeit, however, petitioner subsequently sought the nullification of
said contract on the ground that it was, in fact, tainted with fraud [23] such
that his consent was vitiated.
There is fraud when, through the insidious words or machinations of
one of the contracting parties, the other is induced to enter into a contract
which, without them, he would not have agreed to.[24] The records, however,
are bare of any evidence manifesting that private respondents employed
such insidious words or machinations to entice petitioner into entering the
contract of barter. Neither is there any evidence showing that Dr. Cruz
induced petitioner to sell his Tanay property or that she cajoled him to take
the earrings in exchange for said property.On the contrary, Dr. Cruz did not
initially accede to petitioners proposal to buy the said jewelry. Rather, it
appears that it was petitioner, through his agents, who led Dr. Cruz to
believe that the Tanay property was worth exchanging for her jewelry as he
S t a t u t o r y C o n s t r u c t i o n S e p t e m b e r 4 P a g e | 56
represented that its value was P400,000.00 or more than double that of the
jewelry which was valued only at P160,000.00. If indeed petitioners property
was truly worth that much, it was certainly contrary to the nature of a
businessman-banker like him to have parted with his real estate for half its
price. In short, it was in fact petitioner who resorted to machinations to
convince Dr. Cruz to exchange her jewelry for the Tanay property.
Moreover, petitioner did not clearly allege mistake as a ground for
nullification of the contract of sale. Even assuming that he did, petitioner
cannot successfully invoke the same. To invalidate a contract, mistake must
refer to the substance of the thing that is the object of the contract, or to
those conditions which have principally moved one or both parties to enter
into the contract.[25] An example of mistake as to the object of the contract is
the substitution of a specific thing contemplated by the parties with
another.[26] In his allegations in the complaint, petitioner insinuated that an
inferior one or one that had only Russian diamonds was substituted for the
jewelry he wanted to exchange with his 10-hectare land. He, however, failed
to prove the fact that prior to the delivery of the jewelry to him, private
respondents endeavored to make such substitution.
Likewise, the facts as proven do not support the allegation that
petitioner himself could be excused for the mistake. On account of his work
as a banker-jeweler, it can be rightfully assumed that he was an expert on
matters regarding gems. He had the intellectual capacity and the business
acumen as a banker to take precautionary measures to avert such a mistake,
considering the value of both the jewelry and his land. The fact that he had
seen the jewelry before October 24, 1984 should not have precluded him
from having its genuineness tested in the presence of Dr. Cruz. Had he done
so, he could have avoided the present situation that he himself brought
about. Indeed, the finger of suspicion of switching the genuine jewelry for a
fake inevitably points to him. Such a mistake caused by manifest negligence
cannot invalidate a juridical act.[27] As the Civil Code provides, (t)here is no
mistake if the party alleging it knew the doubt, contingency or risk affecting
the object of the contract.[28]
Furthermore, petitioner was afforded the reasonable opportunity
required in Article 1584 of the Civil Code within which to examine the jewelry
as he in fact accepted them when asked by Dr. Cruz if he was satisfied with
the same.[29] By taking the jewelry outside the bank, petitioner executed an
act which was more consistent with his exercise of ownership over it. This
gains credence when it is borne in mind that he himself had earlier delivered
the Tanay property to Dr. Cruz by affixing his signature to the contract of
sale. That after two hours he later claimed that the jewelry was not the one

he intended in exchange for his Tanay property, could not sever the juridical
tie that now bound him and Dr. Cruz. The nature and value of the thing he
had taken preclude its return after that supervening period within which
anything could have happened, not excluding the alteration of the jewelry or
its being switched with an inferior kind.
Both the trial and appellate courts, therefore, correctly ruled that there
were no legal bases for the nullification of the contract of sale. Ownership
over the parcel of land and the pair of emerald-cut diamond earrings had
been transferred to Dr. Cruz and petitioner, respectively, upon the actual and
constructive delivery thereof.[30] Said contract of sale being absolute in
nature, title passed to the vendee upon delivery of the thing sold since there
was no stipulation in the contract that title to the property sold has been
reserved in the seller until full payment of the price or that the vendor has
the right to unilaterally resolve the contract the moment the buyer fails to
pay within a fixed period.[31] Such stipulations are not manifest in the
contract of sale.
While it is true that the amount of P40,000.00 forming part of the
consideration was still payable to petitioner, its nonpayment by Dr. Cruz is
not a sufficient cause to invalidate the contract or bar the transfer of
ownership and possession of the things exchanged considering the fact that
their contract is silent as to when it becomes due and demandable. [32]
Neither may such failure to pay the balance of the purchase price result
in the payment of interest thereon. Article 1589 of the Civil Code prescribes
the payment of interest by the vendee for the period between the delivery of
the thing and the payment of the price in the following cases:
(1) Should it have been so stipulated;
(2) Should the thing sold and delivered produce fruits or income;
(3) Should he be in default, from the time of judicial or extrajudicial
demand for the payment of the price.
Not one of these cases obtains here. This case should, of course, be
distinguished from De la Cruz v. Legaspi,[33] where the court held that failure
to pay the consideration after the notarization of the contract as previously
promised resulted in the vendees liability for payment of interest. In the case
at bar, there is no stipulation for the payment of interest in the contract of
sale nor proof that the Tanay property produced fruits or income. Neither did
petitioner demand payment of the price as in fact he filed an action to nullify
the contract of sale.
S t a t u t o r y C o n s t r u c t i o n S e p t e m b e r 4 P a g e | 57
All told, petitioner appears to have elevated this case to this Court for
the principal reason of mitigating the amount of damages awarded to both
private respondents which petitioner considers as exorbitant. He contends
that private respondents do not deserve at all the award of damages. In fact,
he pleads for the total deletion of the award as regards private respondent
Belarmino whom he considers a mere nominal party because no specific
claim for damages against him was alleged in the complaint. When he filed
the case, all that petitioner wanted was that Atty. Belarmino should return to
him the owners duplicate copy of TCT No. 320725, the deed of sale executed
by Fr. Antonio Jacobe, the deed of redemption and the check alloted for
expenses. Petitioner alleges further that Atty. Belarmino should not have
delivered all those documents to Dr. Cruz because as the lawyer for both the
seller and the buyer in the sale contract, he should have protected the rights
of both parties. Moreover, petitioner asserts that there was no firm basis for
damages except for Atty. Belarminos uncorroborated testimony.[34]
Moral and exemplary damages may be awarded without proof of
pecuniary loss. In awarding such damages, the court shall take into account
the circumstances obtaining in the case and assess damages according to its
discretion.[35] To warrant the award of damages, it must be shown that the
person to whom these are awarded has sustained injury. He must likewise
establish sufficient data upon which the court can properly base its estimate
of the amount of damages. [36] Statements of facts should establish such data
rather than mere conclusions or opinions of witnesses. [37] Thus:
x x x. For moral damages to be awarded, it is essential that the
claimant must have satisfactorily proved during the trial the
existence of the factual basis of the damages and its causal
connection with the adverse partys acts. If the court has no proof
or evidence upon which the claim for moral damages could be
based, such indemnity could not be outrightly awarded. The same
holds true with respect to the award of exemplary damages where
it must be shown that the party acted in a wanton, oppressive or
malevolent manner.[38]
In this regard, the lower court appeared to have awarded damages on a
ground analogous to malicious prosecution under Article 2219(8) of the Civil
Code[39] as shown by (1) petitioners wanton bad faith in bloating the value of
the Tanay property which he exchanged for a genuine pair of emerald-cut
diamond worth P200,000.00; and (2) his filing of a malicious and unfounded
case against private respondents who were well known, respected and held
in high esteem in San Pablo City where everybody practically knows
everybody and whose good names in the twilight of their lives were soiled by

petitioners coming to court with unclean hands, thereby affecting their
earning capacity in the exercise of their respective professions and
besmirching their reputation.
For its part, the Court of Appeals affirmed the award of damages to
private respondents for these reasons:
The malice with which Fule filed this case is apparent. Having taken
possession of the genuine jewelry of Dra. Cruz, Fule now wishes to
return a fake jewelry to Dra. Cruz and, more than that, get back
the real property, which his bank owns. Fule has obtained a
genuine jewelry which he could sell anytime, anywhere and to
anybody, without the same being traced to the original owner for
practically nothing. This is plain and simple, unjust enrichment.[40]
While, as a rule, moral damages cannot be recovered from a person
who has filed a complaint against another in good faith because it is not
sound policy to place a penalty on the right to litigate,[41] the same, however,
cannot apply in the case at bar. The factual findings of the courts a quo to
the effect that petitioner filed this case because he was the victim of fraud;
that he could not have been such a victim because he should have examined
the jewelry in question before accepting delivery thereof, considering his
exposure to the banking and jewelry businesses; and that he filed the action
for the nullification of the contract of sale with unclean hands, all deserve full
faith and credit to support the conclusion that petitioner was motivated more
by ill will than a sincere attempt to protect his rights in commencing suit
against respondents.
As pointed out earlier, a closer scrutiny of the chain of events
immediately prior to and on October 24, 1984 itself would amply
demonstrate that petitioner was not simply negligent in failing to exercise
due diligence to assure himself that what he was taking in exchange for his
property were genuine diamonds. He had rather placed himself in a situation
from which it preponderantly appears that his seeming ignorance was
actually just a ruse. Indeed, he had unnecessarily dragged respondents to
face the travails of litigation in speculating at the possible favorable outcome
of his complaint when he should have realized that his supposed
predicament was his own making. We, therefore, see here no semblance of
an honest and sincere belief on his part that he was swindled by respondents
which would entitle him to redress in court. It must be noted that before
petitioner was able to convince Dr. Cruz to exchange her jewelry for the
Tanay property, petitioner took pains to thoroughly examine said jewelry,
even going to the extent of sketching their appearance. Why at the precise
moment when he was about to take physical possession thereof he failed to
S t a t u t o r y C o n s t r u c t i o n S e p t e m b e r 4 P a g e | 58
exert extra efforts to check their genuineness despite the large consideration
involved has never been explained at all by petitioner.His acts thus failed to
accord with what an ordinary prudent man would have done in the same
situation. Being an experienced banker and a businessman himself who
deliberately skirted a legal impediment in the sale of the Tanay property and
to minimize the capital gains tax for its exchange, it was actually gross
recklessness for him to have merely conducted a cursory examination of the
jewelry when every opportunity for doing so was not denied him. Apparently,
he carried on his person a tester which he later used to prove the alleged
fakery but which he did not use at the time when it was most needed.
Furthermore, it took him two more hours of unexplained delay before he
complained that the jewelry he received were counterfeit.Hence, we stated
earlier that anything could have happened during all the time that petitioner
was in complete possession and control of the jewelry, including the
possibility of substituting them with fake ones, against which respondents
would have a great deal of difficulty defending themselves. The truth is that
petitioner even failed to successfully prove during trial that the jewelry he
received from Dr. Cruz were not genuine. Add to that the fact that he had
been shrewd enough to bloat the Tanay propertys price only a few days
after he purchased it at a much lower value. Thus, it is our considered view
that if this slew of circumstances were connected, like pieces of fabric sewn
into a quilt, they would sufficiently demonstrate that his acts were not
merely negligent but rather studied and deliberate.
We do not have here, therefore, a situation where petitioners complaint
was simply found later to be based on an erroneous ground which, under
settled jurisprudence, would not have been a reason for awarding moral and
exemplary damages.[42] Instead, the cause of action of the instant case
appears to have been contrived by petitioner himself. In other words, he was
placed in a situation where he could not honestly evaluate whether his cause
of action has a semblance of merit, such that it would require the expertise
of the courts to put it to a test. His insistent pursuit of such case then
coupled with circumstances showing that he himself was guilty in bringing
about the supposed wrongdoing on which he anchored his cause of action
would render him answerable for all damages the defendant may suffer
because of it. This is precisely what took place in the petition at bar and we
find no cogent reason to disturb the findings of the courts below that
respondents in this case suffered considerable damages due to petitioners
unwarranted action.
WHEREFORE, the decision of the Court of Appeals dated October 20,
1992 is hereby AFFIRMED in toto. Dr. Cruz, however, is ordered to pay
 S t a t u t o r y C o n s t r u c t i o n S e p t e m b e r 4 P a g e | 59

petitioner the balance of the purchase price of P40,000.00 within ten (10) It appears that private respondents Tan That and Ong Pin
days from the finality of this decision. Costs against petitioner. Tee filed an ejectment suit, docketed as Civil Case No. 6926
in the City Court of Caloocan City, against the petitioner. A
SO ORDERED. decision was rendered by said Court on November 25, 1970,
Narvasa, CJ. (Chairman), Kapunan and Purisima, JJ., concur. which decision was appealed by the petitioner to the
respondent Court and docketed therein as Civil Case No. C-
2036.
Republic of the Philippines
SUPREME COURT During the pendency of the appeal the respondent court
Manila issued on March 23, 1971 an order which reads:

FIRST DIVISION Pursuant to the provisions of Rep. Act No.

6031, the Clerk of Court of Caloocan City, is
G.R. No. L-35910 July 21, 1978 hereby directed to transmit to this Court
within fifteen (15) days from receipt hereof
the transcripts of stenographic notes taken
PURITA BERSABAL, petitioner,
down during the hearing of this case before
vs.
the City Court of Caloocan City, and
HONORABLE JUDGE SERAFIN SALVADOR, as Judge of the Court of
likewise, counsels for both parties are given
First Instance of Caloocan City, Branch XIV, TAN THAT and ONG
thirty (30) days from receipt of this order
PIN TEE, respondents.
within which to file their respective
memoranda, and thereafter, this case shall
be deemed submitted for decision by this
Court.
MAKASIAR, J.:
which order was apparently received by petitioner on April
On March 23, 1972, petitioner Purita Bersabal seeks to annul the orders of 17, 1971.
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 The transcript of stenographic notes not having yet been
on the basis of the evidence and records of the case submitted by the City forwarded to the respondent court, petitioner filed on May 5,
Court of Caloocan City plus the memorandum already submitted by the 1971 a 'MOTION EX-PARTE TO SUBMIT MEMORANDUM
petitioner and respondents. WITHIN 30 DAYS FROM RECEIPT OF NOTICE OF
SUBMISSION OF THE TRANSCRIPT OF STENOGRAPHIC
Since only questions of law were raised therein, the Court of Appeals, on NOTES TAKEN DURING THE HEARING OF THE CASE
October 13, 1972, issued a resolution certifying said case to this Court BEFORE THE CITY COURT OF CALOOCAN CITY' which was
pursuant to Section 17, paragraph (4) of the Judiciary Act of 1948, as granted by respondent court on May 7, 1971. However,
amended. before the petitioner could receive any such notice from the
respondent court, the respondent Judge issued an order on
As found by the Court of Appeals, the facts of this case are as follows: 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
S t a t u t o r y C o n s t r u c t i o n S e p t e m b e r 4 P a g e | 60
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
S t a t u t o r y C o n s t r u c t i o n S e p t e m b e r 4 P a g e | 61
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
 S t a t u t o r y C o n s t r u c t i o n S e p t e m b e r 4 P a g e | 62

appellate courts and taking into account that Rule 40, section 9 of the Rules Chairman, with respondent Manuela T. Waquiz and Dominador C. Ferrer, Jr. (Ferrer),
of Court now expressly authorizes the court of first instance to dismiss an as members, submitted a recommendation to Henson for the approval of the award of
appeal before it "for failure to prosecute." said contract to Brand Asia, Ltd. On the same day, Henson approved the
recommendation and issued a Notice of Award to Brand Asia, Ltd.
THIRD DIVISION
On November 23, 1992, a contract of service to produce a video documentary
on Intramuros for TV program airing was executed between Henson and Brand Asia,
OFFICE OF THE OMBUDSMAN. G.R. No. 167982 Ltd. On December 1, 1992, a Notice to Proceed was issued to Brand Asia, Ltd.
Petitioner,
Present: On June 2, 1993, the BAC, with Augusto P. Rustia (Rustia) as additional member,
recommended to Henson the approval of the award of contract for print collaterals to
YNARES-SANTIAGO, J., Brand Asia, Ltd. On the same day, Henson approved the recommendation and issued
Chairperson, a Notice of Award/Notice to Proceed to Brand Asia, Ltd.
AUSTRIA-MARTINEZ,
CHICO-NAZARIO, On June 22, 1993, a contract of services to produce print collaterals was entered
NACHURA, and between Henson and Brand Asia, Ltd.
MERCEDITAS DE SAHAGUN, REYES, JJ.
MANUELA T. WAQUIZ and On March 7, 1995, an anonymous complaint was filed with the Presidential
RAIDIS J. BASSIG, Promulgated: Commission Against Graft and Corruption (PGAC) against Henson in relation to the
Respondents.* August 13, 2008 contracts entered into with Brand Asia, Ltd.
x---------------------------------------------------------- On November 30, 1995, Henson was dismissed from the service by the Office of the
x President upon recommendation of the PGAC which found that the contracts were
entered into without the required public bidding and in violation of Section 3 (a) and
DECISION (e) of Republic Act (R.A.) No. 3019, or the Anti-Graft and Corrupt Practices Act.

AUSTRIA-MARTINEZ, J.:
Before the Court is a Petition for Review on Certiorari under Rule 45 of the Rules of
Court assailing the Decision[1] dated April 28, 2005 of the Court of Appeals (CA) in CA-
G.R. SP No. 78008 which set aside the Orders dated March 10, 2003 and June 24,
2003 of the petitioner Office of the Ombudsman in OMB-ADM-0-00-0721.
The material antecedents are as follows:
On November 13, 1992, respondent Raidis J. Bassig, Chief of the Research and
Publications Division of the Intramuros Administration, submitted a Memorandum to
then IntramurosAdministrator Edda V. Henson (Henson) recommending that Brand
Asia, Ltd. be commissioned to produce a video documentary for a television program,
as well implement a media plan and marketing support services for Intramuros.
On November 17, 1992, the Bids and Awards Committee (BAC) of
the Intramuros Administration, composed of respondent Merceditas de Sahagun, as
On August 8, 1996, an anonymous complaint was filed with the Ombudsman against
the BAC in relation to the latters participation in the contracts with Brand Asia, Ltd. for
which Henson was dismissed from service.
On September 5, 2000, Fact-Finding Intelligence Bureau (FFIB) filed criminal and
administrative charges against respondents, along with Ferrer and Rustia, for violation
of Section 3 (a) and (c) of R.A. No. 3019 in relation to Section 1 of Executive Order No.
302 and grave misconduct, conduct grossly prejudicial to the best interest of the
service and gross violation of Rules and Regulations pursuant to the Administrative
Code of 1987, docketed as OMB-0-00-1411 and OMB-ADM-0-00-0721,
respectively.[2] OMB-0-00-1411 was dismissed on February 27, 2002 for lack of
probable cause.[3]
In his proposed Decision[4] dated June 19, 2002, Graft Investigation Officer
II Joselito P. Fangon recommended the dismissal of OMB-ADM-0-00-0721.

However, then Ombudsman Simeon V. Marcelo disapproved the recommendation. In
an Order[5] dated March 10, 2003, he held that there was substantial evidence to hold
respondents administratively liable since the contracts awarded to Brand Asia, Ltd.
failed to go through the required procedure for public bidding under Executive Order
No. 301 dated July 26, 1987.Respondents and Ferrer were found guilty of grave
misconduct and dismissed from service. Rustia was found guilty of simple misconduct
and suspended for six months without pay.
On March 17, 2003, respondents, along with Rustia, filed a Motion for
Reconsideration.[6]
On June 24, 2003, Ombudsman Marcelo issued an Order[7] partially granting the
motion for reconsideration. Respondents and Ferrer were found guilty of the lesser
offense of simple misconduct and suspended for six months without
pay. Rustia's suspension was reduced to three months.
Dissatisfied, respondents filed a Petition for Review[8] with the CA assailing the Orders
dated March 10, 2003 and June 24, 2003 of the Ombudsman.
On April 28, 2005, the CA rendered a Decision[9] setting aside the Orders dated March
10, 2003 and June 24, 2003 of the Ombudsman. The CA held that respondents may
no longer be prosecuted since the complaint was filed more than seven years after the
imputed acts were committed which was beyond the one year period provided for by
Section 20 (5) of Republic Act (R.A.) No. 6770, otherwise known as The Ombudsman
Act of 1989; and that the nature of the function of the Ombudsman was purely
recommendatory and it did not have the power to penalize erring government officials
and employees. The CA relied on the following statement made by the Court
in Tapiador v. Office of the Ombudsman,[10] to wit:
x x x Besides, assuming arguendo, that petitioner [Tapiador] was
administratively liable, the Ombudsman has no authority to
directly dismiss the petitioner from the government
service, more particularly from his position in the BID. Under
Section 13, subparagraph 3, of Article XI of the 1987
Constitution, the Ombudsman can only recommend the
removal of the public official or employee found to be at
fault, to the public official concerned.[11] (Emphasis supplied)
Hence, the present petition raising the following issues (1) whether Section 20 (5) of
R.A. No. 6770 prohibits administrative investigations in cases filed more than one year
after commission, and (2) whether the Ombudsman only has recommendatory, not
punitive, powers against erring government officials and employees.
S t a t u t o r y C o n s t r u c t i o n S e p t e m b e r 4 P a g e | 63
The Court rules in favor of the petitioner.
The issues in the present case are settled by precedents.
On the first issue, well-entrenched is the rule that administrative offenses do
not prescribe.[12] Administrative offenses by their very nature pertain to the character
of public officers and employees. In disciplining public officers and employees, the
object sought is not the punishment of the officer or employee but the improvement
of the public service and the preservation of the publics faith and confidence in our
government.[13]
Respondents insist that Section 20 (5) of R.A. No. 6770, to wit:
SEC. 20. Exceptions. The Office of the Ombudsman may not
conduct the necessary investigation of any administrative act or
omission complained of if it believes that:
xxx
(5) The complaint was filed after one year from the occurrence of
the act or omission complained of. (Emphasis supplied)
proscribes the investigation of any administrative act or omission if the complaint was
filed after one year from the occurrence of the complained act or omission.
In Melchor v. Gironella,[14] the Court held that the period stated
in Section 20(5) of R.A. No. 6770 does not refer to the prescription of the offense but
to the discretion given to the Ombudsman on whether it would investigate a particular
administrative offense. The use of the word may in the provision is construed as
permissive and operating to confer discretion.[15] Where the words of a statute are
clear, plain and free from ambiguity, they must be given their literal meaning and
applied without attempted interpretation.[16]
In Filipino v. Macabuhay,[17] the Court interpreted Section 20 (5) of R.A. No.
6770 in this manner:
Petitioner argues that based on the abovementioned
provision [Section 20(5) of RA 6770)], respondent's complaint is
barred by prescription considering that it was filed more than one
year after the alleged commission of the acts complained of.
Petitioner's argument is without merit.

The use of the word "may" clearly shows that it is directory
in nature and not mandatory as petitioner contends. When used in a
statute, it is permissive only and operates to confer discretion; while
the word "shall" is imperative, operating to impose a duty which
may be enforced. Applying Section 20(5), therefore, it is
discretionary upon the Ombudsman whether or not to
conduct an investigation on a complaint even if it was filed
after one year from the occurrence of the act or omission
complained of. In fine, the complaint is not barred by
prescription.[18] (Emphasis supplied)
The declaration of the CA in its assailed decision that while as a general rule
the word may is directory, the negative phrase may not is mandatory in tenor; that a
directory word, when qualified by the word not, becomes prohibitory and therefore
becomes mandatory in character, is not plausible. It is not supported by jurisprudence
on statutory construction.
As the Court recently held in Office of the Ombudsman v. Court of
Appeals,[19] Section 20 of R.A. No. 6770 has been clarified by Administrative Order No.
17,[20] which amended Administrative Order No. 07, otherwise known as the Rules of
Procedure of the Office of the Ombudsman. Section 4, Rule III[21] of the amended
Rules of Procedure of the Office of the Ombudsman reads:
Section 4. Evaluation. - Upon receipt of the complaint,
the same shall be evaluated to determine whether the same may
be:
a) dismissed outright for any grounds stated under
Section 20 of Republic Act No. 6770, provided, however,
that the dismissal thereof is not mandatory and shall be
discretionary on the part of the Ombudsman or the Deputy
Ombudsman concerned;
b) treated as a grievance/request for assistance which may
be referred to the Public Assistance Bureau, this Office, for
appropriate action under Section 2, Rule IV of this Rules;
c) referred to other disciplinary authorities under paragraph
2, Section 23, R.A. 6770 for the taking of appropriate administrative
proceedings;
d) referred to the appropriate office/agency or official for the
conduct of further fact-finding investigation; or
S t a t u t o r y C o n s t r u c t i o n S e p t e m b e r 4 P a g e | 64
e) docketed as an administrative case for the purpose of
administrative adjudication by the Office of the
Ombudsman. (Emphasis supplied)
It is, therefore, discretionary upon the Ombudsman whether or not to
conduct an investigation of a complaint even if it was filed after one year from the
occurrence of the act or omission complained of.
Thus, while the complaint herein was filed only on September 5, 2000, or more than
seven years after the commission of the acts imputed against respondents in
November 1992 and June 1993, it was within the authority of the Ombudsman to
conduct the investigation of the subject complaint.
On the second issue, the authority of the Ombudsman to determine the administrative
liability of a public official or employee, and to direct and compel the head of the office
or agency concerned to implement the penalty imposed is likewise settled.
In Ledesma v. Court of Appeals,[22] the Court has ruled that the statement
in Tapiador that made reference to the power of the Ombudsman to impose an
administrative penalty was merely an obiter dictum and could not be cited as a
doctrinal declaration of this Court, thus:
x x x [A] cursory reading of Tapiador reveals that the main point of
the case was the failure of the complainant therein to present
substantial evidence to prove the charges of the administrative
case. The statement that made reference to the power of
the Ombudsman is, at best, merely an obiter dictum and, as
it is unsupported by sufficient explanation, is susceptible to varying
interpretations, as what precisely is before us in this case. Hence, it
cannot be cited as a doctrinal declaration of this Court nor
is it safe from judicial examination.[23] (Emphasis supplied)
In Estarija v. Ranada,[24] the Court reiterated its pronouncements in Ledesma and
categorically stated:
x x x [T]he Constitution does not restrict the powers of the
Ombudsman in Section 13, Article XI of the 1987 Constitution, but
allows the Legislature to enact a law that would spell out the powers
of the Ombudsman. Through the enactment of Rep. Act No. 6770,
specifically Section 15, par. 3, the lawmakers gave the Ombudsman
such powers to sanction erring officials and employees, except
members of Congress, and the Judiciary. To conclude, we hold that
 S t a t u t o r y C o n s t r u c t i o n S e p t e m b e r 4 P a g e | 65

Sections 15, 21, 22 and 25 of Republic Act No. 6770 are Chairperson
constitutionally sound. The powers of the Ombudsman are not
merely recommendatory. His office was given teeth to render
this constitutional body not merely functional but also
effective. Thus, we hold that under Republic Act No. 6770
and the 1987 Constitution, the Ombudsman has the MINITA V. CHICO-NAZARIO ANTONIO EDUARDO B. NACHURA
constitutional power to directly remove from government Associate Justice Associate Justice
service an erring public official other than a member of
Congress and the Judiciary.[25] (Emphasis supplied)
The power of the Ombudsman to directly impose administrative sanctions
has been repeatedly reiterated in the subsequent cases of Barillo v. Gervasio,[26] Office
of the Ombudsman v. Madriaga,[27] Office of the Ombudsman v. Court of RUBEN T. REYES
Appeals,[28] Balbastro v. Junio,[29] Commission on Audit, Regional Office No. Associate Justice
13, Butuan City v. Hinampas,[30] Office of the Ombudsman v. Santiago,[31] Office of the
Ombudsman v. Lisondra,[32] and most recently in Deputy Ombudsman for
the Visayas v. Abugan[33] and continues to be the controlling doctrine.

In fine, it is already well-settled that the Ombudsman's power as regards the

administrative penalty to be imposed on an erring public officer or employee is not ATTESTATION
merely recommendatory. The Ombudsman has the power to directly impose the
penalty of removal, suspension, demotion, fine, censure, or prosecution of a public
officer or employee, other than a member of Congress and the Judiciary, found to be I attest that the conclusions in the above Decision had been reached in consultation
at fault, within the exercise of its administrative disciplinary authority as provided in the before the case was assigned to the writer of the opinion of the Courts Division.
Constitution, R.A. No. 6770, as well as jurisprudence. This power gives the said
constitutional office teeth to render it not merely functional, but also effective.[34]

Thus, the CA committed a reversible error in holding that the case had already CONSUELO YNARES-SANTIAGO
prescribed and that the Ombudsman does not have the power to penalize erring Associate Justice
government officials and employees. Chairperson, Third Division

WHEREFORE, the petition is GRANTED. The Decision dated April 28, 2005 of the
Court of Appeals in CA-G.R. SP No. 78008 is REVERSED and SET ASIDE. The Order CERTIFICATION
dated June 24, 2003 of the Office of the Ombudsman is REINSTATED.

SO ORDERED. Pursuant to Section 13, Article VIII of the Constitution, and the Division
Chairpersons Attestation, it is hereby certified that the conclusions in the above
MA. ALICIA AUSTRIA-MARTINEZ Decision had been reached in consultation before the case was assigned to the writer
Associate Justice of the opinion of the Courts Division.

WE CONCUR:
CONSUELO YNARES-SANTIAGO REYNATO S. PUNO
Associate Justice Chief Justice

SECOND DIVISION
[G.R. No. 117188. August 7, 1997]
LOYOLA GRAND VILLAS HOMEOWNERS (SOUTH) ASSOCIATION,
INC., petitioner, vs. HON. COURT OF APPEALS,
HOME INSURANCE AND GUARANTY CORPORATION, EMDEN
ENCARNACION and HORATIO AYCARDO, respondents.
DECISION
ROMERO, J.:
May the failure of a corporation to file its by-laws within one month
from the date of its incorporation, as mandated by Section 46 of the
Corporation Code, result in its automatic dissolution?
This is the issue raised in this petition for review on certiorari of the
Decision[1] of the Court of Appeals affirming the decision of the Home
Insurance and Guaranty Corporation (HIGC).This quasi-judicial body
recognized Loyola Grand Villas Homeowners Association (LGVHA) as the sole
homeowners association in Loyola Grand Villas, a duly registered subdivision
in Quezon City and Marikina City that was owned and developed by Solid
Homes, Inc. It revoked the certificates of registration issued to Loyola Grand
Villas Homeowners (North) Association Incorporated (the North Association
for brevity) and Loyola Grand Villas Homeowners (South) Association
Incorporated (the South Association).
LGVHAI was organized on February 8, 1983 as the association of
homeowners and residents of the Loyola Grand Villas. It was registered with
the Home Financing Corporation, the predecessor of herein respondent
HIGC, as the sole homeowners organization in the said subdivision under
Certificate of Registration No. 04-197. It was organized by the developer of
the subdivision and its first president was Victorio V. Soliven, himself the
owner of the developer. For unknown reasons, however, LGVHAI did not file
its corporate by-laws.
Sometime in 1988, the officers of the LGVHAI tried to register its by-
laws. They failed to do so.[2] To the officers consternation, they discovered
that there were two other organizations within the subdivision the North
Association and the South Association. According to private respondents, a
non-resident and Soliven himself, respectively headed these
associations. They also discovered that these associations had five (5)
registered homeowners each who were also the incorporators, directors and
officers thereof. None of the members of the LGVHAI was listed as member
S t a t u t o r y C o n s t r u c t i o n S e p t e m b e r 4 P a g e | 66
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 associations 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 11. 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 LGVHAIs
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 LGVHAIs 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., Sections
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 associations. (Section 2 [a], E.O. 535, series 1979, transferred
the powers and authorities of the SEC over homeowners associations to the
HIGC.)
S t a t u t o r y C o n s t r u c t i o n S e p t e m b e r 4 P a g e | 67
We also do not agree with the petitioners 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 LGVHAIs 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 transactions
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:
x x x 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 intended 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 x x x 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,
S t a t u t o r y C o n s t r u c t i o n S e p t e m b e r 4 P a g e | 68
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 language 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
consequence is the dissolution of the corporation for its
inability, or perhaps, incurring certain penalties.
S t a t u t o r y C o n s t r u c t i o n S e p t e m b e r 4 P a g e | 69
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] (Italics 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 xxx
(l) 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:
S t a t u t o r y C o n s t r u c t i o n S e p t e m b e r 4 P a g e | 70
xxx xxx xxx xxx
5. Failure to file by-laws within the required period;
xxx xxx xxx xxx
In the exercise of the foregoing authority and jurisdiction of the Commissions
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
within 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:
x x x. 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.
S t a t u t o r y C o n s t r u c t i o n S e p t e m b e r 4 P a g e | 71
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, 1986. [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 x x x, 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.
Regalado, (Chairman), Puno, and Mendoza, JJ., concur.
Torres, Jr., J., on leave.
SECOND DIVISION
ROOS INDUSTRIAL CONSTRUCTION, G.R. No. 172409
INC. and OSCAR TOCMO,
Petitioners, Present:
QUISUMBING, J.,
 S t a t u t o r y C o n s t r u c t i o n S e p t e m b e r 4 P a g e | 72

Chairperson, Branch of the National Labor Relations Commission (NLRC), docketed as

NLRC NCR South Sector Case No. 30-04-01856-02.
CARPIO,
Respondent alleged that he had been hired as a driver-mechanic sometime
- versus - CARPIO MORALES, in 1988 but was not made to sign any employment contract by petitioners.
As driver mechanic, respondent was assigned to work at
TINGA, and Carmona, Cavite and he worked daily from 7:00 a.m. to 10:00 p.m. at the
rate of P200.00 a day. He was also required to work during legal holidays
VELASCO, JR., JJ.
but was only paid an additional 30% holiday pay. He likewise claimed that he
NATIONAL LABOR RELATIONS had not been paid service incentive leave and 13th month pay during the
entire course of his employment. On 16 March 2002, his employment was
COMMISSION and JOSE MARTILLOS, allegedly terminated without due process.[5]

Respondents. Promulgated:
February 4, 2008
x----------------------------------------------------------------------------x
DECISION
TINGA, J.:
In this Petition for Review on Certiorari[1] under Rule 45 of the 1997 Rules of
Civil Procedure, petitioners Roos Industrial Construction, Inc. and Oscar
Tocmo assail the Court of Appeals[2] Decision dated 12 January 2006 in C.A.
G.R. SP No. 87572 and its Resolution[3] dated 10 April 2006 denying their
Motion for Reconsideration.[4]
The following are the antecedents.
On 9 April 2002, private respondent Jose Martillos (respondent) filed a
complaint against petitioners for illegal dismissal and money claims such as
the payment of separation pay in lieu of reinstatement plus full backwages,
service incentive leave, 13th month pay, litigation expenses, underpayment of
holiday pay and other equitable reliefs before the National Capital Arbitration
Petitioners denied respondents allegations. They contended that respondent
had been hired on several occasions as a project employee and that his
employment was coterminous with the duration of the projects. They also
maintained that respondent was fully aware of this arrangement. Considering
that respondents employment had been validly terminated after the
completion of the projects, petitioners concluded that he is not entitled to
separation pay and other monetary claims, even attorneys fees. [6]
The Labor Arbiter ruled that respondent had been illegally dismissed after
finding that he had acquired the status of a regular employee as he was
hired as a driver with little interruption from one project to another, a task
which is necessary to the usual trade of his employer.[7] The Labor Arbiter
pertinently stated as follows:
x x x If it were true that complainant was hired as project
employee, then there should have been project employment
contracts specifying the project for which complainants
services were hired, as well as the duration of the project as
required in Art. 280 of the Labor Code. As there were four
(4) projects where complainant was allegedly assigned,
there should have been the equal number of project
employment contracts executed by the complainant. Further,
for every project termination, there should have been the
equal number of termination report submitted to the
Department of Labor and Employment. However, the record
shows that there is only one termination [report] submitted
to DOLE pertaining to the last project assignment of
complainant in Carmona, Cavite.

In the absence of said project employment contracts and the
corresponding Termination Report to DOLE at every project
termination, the inevitable conclusion is that the complainant
was a regular employee of the respondents.
In the case of Maraguinot, Jr. v. NLRC, 284 SCRA 539, 556
[1998], citing capital Industrial Construction Group v. NLRC,
221 SCRA 469, 473-474 [1993], it was ruled therein that a
project employee may acquire the status of a regular
employee when the following concurs: (1) there is a
continuous rehiring of project employees even after the
cessation of a project; and (2) the tasks performed by the
alleged project employee are vital, necessary and
indispensable to the usual business or trade of the employer.
Both factors are present in the instant case. Thus, even
granting that complainant was hired as a project employee,
he eventually became a regular employee as there was a
continuous rehiring of this services.
xxx
In the instant case, apart from the fact that complainant was
not made to sign any project employment contract x x x he
was successively transferred from one project after another,
and he was made to perform the same kind of work as
driver.[8]
The Labor Arbiter ordered petitioners to pay respondent the aggregate sum
of P224,647.17 representing backwages, separation pay, salary differential,
holiday pay, service incentive leave pay and 13th month pay.[9]
Petitioners received a copy of the Labor Arbiters decision on 17 December
2003. On 29 December 2003, the last day of the reglementary period for
perfecting an appeal, petitioners filed a Memorandum of Appeal [10] before
the NLRC and paid the appeal fee. However, instead of posting the required
S t a t u t o r y C o n s t r u c t i o n S e p t e m b e r 4 P a g e | 73
cash or surety bond within the reglementary period, petitioners filed a
Motion for Extension of Time to Submit/Post Surety Bond.[11] Petitioners
stated that they could not post and submit the required surety bond as the
signatories to the bond were on leave during the holiday season, and made a
commitment to post and submit the surety bond on or before 6 January
2004. The NLRC did not act on the motion. Thereafter, on 6 January 2004,
petitioners filed a surety bond equivalent to the award of the Labor
Arbiter.[12]
In a Resolution[13] dated July 29, 2004, the Second Division of the NLRC
dismissed petitioners appeal for lack of jurisdiction. The NLRC stressed that
the bond is an indispensable requisite for the perfection of an appeal by the
employer and that the perfection of an appeal within the reglementary
period and in the manner prescribed by law is mandatory and jurisdictional.
In addition, the NLRC restated that its Rules of Procedure proscribes the
filing of any motion for extension of the period within which to perfect an
appeal. The NLRC summed up that considering that petitioners appeal had
not been perfected, it had no jurisdiction to act on said appeal and the
assailed decision, as a consequence, has become final and executory. [14] The
NLRC likewise denied petitioners Motion for Reconsideration[15] for lack of
merit in another Resolution.[16] On 11 November 2004, the NLRC issued an
entry of judgment declaring its resolution final and executory as of 9 October
2004. On respondents motion, the Labor Arbiter ordered that the writ of
execution be issued to enforce the award. On 26 January 2005, a writ of
execution was issued.[17]
Petitioners elevated the dismissal of their appeal to the Court of Appeals by
way of a special civil action of certiorari. They argued that the filing of the
appeal bond evinced their willingness to comply and was in fact substantial
compliance with the Rules. They likewise maintained that the NLRC gravely
abused its discretion in failing to consider the meritorious grounds for their
motion for extension of time to file the appeal bond. Lastly, petitioners
contended that the NLRC gravely erred in issuing an entry of judgment as
the assailed resolution is still open for review.[18] On 12 January 2006, the
Court of Appeals affirmed the challenged resolution of the NLRC. Hence, the
instant petition.
Before this Court, petitioners reiterate their previous assertions. They insist
on the application of Star Angel Handicraft v. National Labor Relations
Commission, et al.[19] where it was held that a motion for reduction of bond
may be filed in lieu of the bond during the period for appeal. They aver

that Borja Estate v. Ballad,[20] which underscored the importance of the filing
of a cash or surety bond in the perfection of appeals in labor cases, had not
been promulgated yet in 2003 when they filed their appeal. As such, the
doctrine in Borja could not be given retroactive effect for to do so would
prejudice and impair petitioners right to appeal. Moreover, they point out
that judicial decisions have no retroactive effect.[21]
The Court denies the petition.
The Court reiterates the settled rule that an appeal from the decision of the
Labor Arbiter involving a monetary award is only deemed perfected upon the
posting of a cash or surety bond within ten (10) days from such
decision.[22] Article 223 of the Labor Code states:
ART. 223. Appeal.Decisions, awards or orders
of the Labor Arbiter are final and executory unless
appealed to the Commission by any or both parties
within ten (10) calendar days from receipt of such
decisions, awards, or orders.
In case of a judgment involving a monetary
award, an appeal by the employer may be perfected
only upon the posting of a cash or surety bond issued
by a reputable bonding company duly accredited by the
Commission in the amount equivalent to the monetary
award in the judgment appealed from.
xxx
Contrary to petitioners assertion, the appeal bond is not merely procedural
but jurisdictional. Without said bond, the NLRC does not acquire jurisdiction
over the appeal.[23]Indeed, non-compliance with such legal requirements is
fatal and has the effect of rendering the judgment final and executory. [24] It
must be stressed that there is no inherent right to an appeal in a labor case,
as it arises solely from the grant of statute.[25]
Evidently, the NLRC did not acquire jurisdiction over petitioners appeal within
the ten (10)-day reglementary period to perfect the appeal as the appeal
bond was filed eight (8) days after the last day thereof. Thus, the Court
S t a t u t o r y C o n s t r u c t i o n S e p t e m b e r 4 P a g e | 74
cannot ascribe grave abuse of discretion to the NLRC or error to the Court of
Appeals in refusing to take cognizance of petitioners belated appeal.
While indeed the Court has relaxed the application of this requirement in
cases where the failure to comply with the requirement was justified or
where there was substantial compliance with the rules,[26] the overpowering
legislative intent of Article 223 remains to be for a strict application of the
appeal bond requirement as a requisite for the perfection of an appeal and
as a burden imposed on the employer.[27] As the Court held in the case
of Borja Estate v. Ballad:[28]
The intention of the lawmakers to make the bond an
indispensable requisite for the perfection of an appeal by the
employer is underscored by the provision that an appeal
may be perfected only upon the posting of a cash or surety
bond. The word only makes it perfectly clear that the
LAWMAKERS intended the posting of a cash or surety bond
by the employer to be
the exclusive means by which an employers appeal may be
considered completed. The law however does not require its
outright payment, but only the posting of a bond to ensure
that the award will be eventually paid should the appeal fail.
What petitioners have to pay is a moderate and reasonable
sum for the premium of such bond.[29]
Moreover, no exceptional circumstances obtain in the case at bar which
would warrant a relaxation of the bond requirement as a condition for
perfecting the appeal. It is only in highly meritorious cases that this Court
opts not to strictly apply the rules and thus prevent a grave injustice from
being done[30] and this is not one of those cases.
In addition, petitioners cannot take refuge behind the Courts ruling in Star
Angel. Pertinently, the Court stated in Computer Innovations Center v.
National Labor Relations Commission:[31]
Moreover, the reference in Star Angel to the distinction
between the period to file the appeal and to perfect the
appeal has been pointedly made only once by this Court
 S t a t u t o r y C o n s t r u c t i o n S e p t e m b e r 4 P a g e | 75

in Gensoli v. NLRC thus, it has not acquired the sheen of DANTE O. TINGA
venerability reserved for repeatedly-cited cases. The
distinction, if any, is not particularly evident or material in Associate Justice
the Labor Code; hence, the reluctance of the Court to adopt
such doctrine. Moreover, the present provision in the NLRC WE CONCUR:
Rules of Procedure, that the filing of a motion to reduce LEONARDO A. QUISUMBING
bond shall not stop the running of the period to perfect Associate Justice
appeal flatly contradicts the notion expressed in Star Chairperson
Angel that there is a distinction between filing an appeal and
perfecting an appeal. ANTONIO T. CARPIO CONCHITA CARPIO MORALES
Associate Justice Associate Justice
Ultimately, the disposition of Star Angel was premised on the
ruling that a motion for reduction of the appeal bond PRESBITERO J. VELASCO, JR.
necessarily stays the period for perfecting the appeal, and Associate Justice
that the employer cannot be expected to perfect the appeal
by posting the proper bond until such time the said motion
for reduction is resolved. The unduly stretched-out
distinction between the period to file an appeal and to ATTESTATION
perfect an appeal was not material to the resolution of Star
Angel, and thus could properly be considered as obiter I attest that the conclusions in the above Decision had been reached in
dictum.[32] consultation before the case was assigned to the writer of the opinion of the
Courts Division.
Lastly, the Court does not agree that the Borja doctrine should only
be applied prospectively. In the first place, Borja is not a ground-
breaking precedent as it is a reiteration, emphatic though, of long LEONARDO A. QUISUMBING
standing jurisprudence.[33] It is well to recall too our pronouncement Associate Justice
in Senarillos v. Hermosisima, et al.[34] that the judicial interpretation Chairperson, Second Division
of a statute constitutes part of the law as of the date it was originally
passed, since the Courts construction merely establishes the
contemporaneous legislative intent that the interpreted law carried
into effect. Such judicial doctrine does not amount to the passage of CERTIFICATION
a new law but consists merely of a construction or interpretation of a
pre-existing one, as is the situation in this case.[35] Pursuant to Section 13, Article VIII of the Constitution, and the Division
Chairpersons Attestation, it is hereby certified that the conclusions in the
At all events, the decision of the Labor Arbiter appears to be well-founded above Decision had been reached in consultation before the case was
and petitioners ill-starred appeal untenable. assigned to the writer of the opinion of the Courts Division.

WHEREFORE, the Petition is DENIED. Costs against petitioners.

REYNATO S. PUNO
SO ORDERED. Chief Justice

EN BANC
G.R. No. L-26001 October 29, 1968
PHILIPPINE NATIONAL BANK, petitioner,
vs.
THE COURT OF APPEALS and PHILIPPINE COMMERCIAL AND
INDUSTRIAL BANK, respondents.
Tomas Besa, Jose B. Galang and Juan C. Jimenez for petitioner.
San Juan, Africa & Benedicto for respondents.
CONCEPCION, C.J.:
The Philippine National Bank — hereinafter referred to as the PNB — seeks
the review by certiorari of a decision of the Court of Appeals, which affirmed
that of the Court of First Instance of Manila, dismissing plaintiff's complaint
against the Philippine Commercial and Industrial Bank — hereinafter referred
to as the PCIB — for the recovery of P57,415.00.
A partial stipulation of facts entered into by the parties and the decision of
the Court of Appeals show that, on about January 15, 1962, one Augusto
Lim deposited in his current account with the PCIB branch at Padre Faura,
Manila, GSIS Check No. 645915- B, in the sum of P57,415.00, drawn against
the PNB; that, following an established banking practice in the Philippines,
the check was, on the same date, forwarded, for clearing, through the
Central Bank, to the PNB, which did not return said check the next day, or at
any other time, but retained it and paid its amount to the PCIB, as well as
debited it against the account of the GSIS in the PNB; that, subsequently, or
on January 31, 1962, upon demand from the GSIS, said sum of P57,415.00
was re-credited to the latter's account, for the reason that the signatures of
its officers on the check were forged; and that, thereupon, or on February 2,
1962, the PNB demanded from the PCIB the refund of said sum, which the
PCIB refused to do. Hence, the present action against the PCIB, which was
dismissed by the Court of First Instance of Manila, whose decision was, in
turn, affirmed by the Court of Appeals.
S t a t u t o r y C o n s t r u c t i o n S e p t e m b e r 4 P a g e | 76
It is not disputed that the signatures of the General Manager and the Auditor
of the GSIS on the check, as drawer thereof, are forged; that the person
named in the check as its payee was one Mariano D. Pulido, who purportedly
indorsed it to one Manuel Go; that the check purports to have been indorsed
by Manuel Go to Augusto Lim, who, in turn, deposited it with the PCIB, on
January 15, 1962; that, thereupon, the PCIB stamped the following on the
back of the check: "All prior indorsements and/or Lack of Endorsement
Guaranteed, Philippine Commercial and Industrial Bank," Padre Faura
Branch, Manila; that, on the same date, the PCIB sent the check to the PNB,
for clearance, through the Central Bank; and that, over two (2) months
before, or on November 13, 1961, the GSIS had notified the PNB, which
acknowledged receipt of the notice, that said check had been lost, and,
accordingly, requested that its payment be stopped.
In its brief, the PNB maintains that the lower court erred: (1) in not finding
the PCIB guilty of negligence; (2) in not finding that the indorsements at the
back of the check are forged; (3) in not finding the PCIB liable to the PNB by
virtue of the former's warranty on the back of the check; (4) in not holding
that "clearing" is not "acceptance", in contemplation of the Negotiable
Instruments law; (5) in not finding that, since the check had not been
accepted by the PNB, the latter is entitled to reimbursement therefor; and
(6) in denying the PNB's right to recover from the PCIB.
The first assignment of error will be discussed later, together with the
last,with which it is interrelated.
As regards the second assignment of error, the PNB argues that, since the
signatures of the drawer are forged, so must the signatures of the supposed
indorsers be; but this conclusion does not necessarily follow from said
premise. Besides, there is absolutely no evidence, and the PNB has not even
tried to prove that the aforementioned indorsements are spurious. Again, the
PNB refunded the amount of the check to the GSIS, on account of the
forgery in the signatures, not of the indorsers or supposed indorsers, but of
the officers of the GSIS as drawer of the instrument. In other words, the
question whether or not the indorsements have been falsified is immaterial
to the PNB's liability as a drawee, or to its right to recover from the
PCIB,1 for, as against the drawee, the indorsement of an intermediate bank
does not guarantee the signature of the drawer,2 since the forgery of the
indorsement is notthe cause of the loss.3

With respect to the warranty on the back of the check, to which the third
assignment of error refers, it should be noted that the PCIB thereby
guaranteed "all prior indorsements," not the authenticity of the signatures of
the officers of the GSIS who signed on its behalf, because the GSIS is not an
indorser of the check, but its drawer.4 Said warranty is irrelevant, therefore,
to the PNB's alleged right to recover from the PCIB. It could have been
availed of by a subsequent indorsee5 or a holder in due course6 subsequent
to the PCIB, but, the PNB is neither.7 Indeed, upon payment by the PNB, as
drawee, the check ceased to be a negotiable instrument, and became a mere
voucher or proof of payment.8
Referring to the fourth and fifth assignments of error, we must bear in mind
that, in general, "acceptance", in the sense in which this term is used in the
Negotiable Instruments Law9 is not required for checks, for the same are
payable on demand.10 Indeed, "acceptance" and "payment" are, within the
purview of said Law, essentially different things, for the former is
"a promise to perform an act," whereas the latter is the "actual performance"
thereof.11 In the words of the Law,12 "the acceptance of a bill is the
signification by the drawee of his assent to the order of the drawer," which,
in the case of checks, is the payment, on demand, of a given sum of money.
Upon the other hand, actual payment of the amount of a check implies not
only an assent to said order of the drawer and a recognition of the drawer's
obligation to pay the aforementioned sum, but, also, a compliance with such
obligation.
Let us now consider the first and the last assignments of error. The PNB
maintains that the lower court erred in not finding that the PCIB had been
guilty of negligence in not discovering that the check was forged. Assuming
that there had been such negligence on the part of the PCIB, it is
undeniable, however, that the PNB has, also, been negligent, with the
particularity that the PNB had been guilty of a greater degree of negligence,
because it had a previous and formal notice from the GSIS that the check
had been lost, with the request that payment thereof be stopped. Just as
important, if not more important and decisive, is the fact that the PNB's
negligence was the main or proximate cause for the corresponding loss.
In this connection, it will be recalled that the PCIB did not cash the
check upon its presentation by Augusto Lim; that the latter had
merely deposited it in his current account with the PCIB; that, on the same
day, the PCIB sent it, through the Central Bank, to the PNB, for clearing; that
the PNB did not return the check to the PCIB the next day or at any other
S t a t u t o r y C o n s t r u c t i o n S e p t e m b e r 4 P a g e | 77
time; that said failure to return the check to the PCIB implied, under the
current banking practice, that the PNB considered the check good and would
honor it; that, in fact, the PNB honored the check and paid its amount to the
PCIB; and that only then did the PCIB allow Augusto Lim to draw said
amount from his aforementioned current account.
Thus, by not returning the check to the PCIB, by thereby indicating that the
PNB had found nothing wrong with the check and would honor the same,
and by actually paying its amount to the PCIB, the PNB induced the latter,
not only to believe that the check was genuine and good in every respect,
but, also, to pay its amount to Augusto Lim. In other words, the PNB was the
primary or proximate cause of the loss, and, hence, may not recover from
the PCIB.13
It is a well-settled maxim of law and equity that when one of two (2)
innocent persons must suffer by the wrongful act of a third person, the loss
must be borne by the one whose negligence was the proximate cause of the
loss or who put it into the power of the third person to perpetrate the
wrong.14
Then, again, it has, likewise, been held that, where the collecting (PCIB) and
the drawee (PNB) banks are equally at fault, the court will leave the parties
where it finds them.15
Lastly, Section 62 of Act No. 2031 provides:
The acceptor by accepting the instrument engages that he will pay it
according to the tenor of his acceptance; and admits:
(a) The existence of the drawer, the genuineness of his signature,
and his capacity and authority to draw the instrument; and
(b) The existence of the payee and his then capacity to indorse.
The prevailing view is that the same rule applies in the case of a drawee who
pays a bill without having previously accepted it.16
WHEREFORE, the decision appealed from is hereby affirmed, with costs
against the Philippine National Bank. It is so ordered.

Reyes, J.B.L., Dizon, Makalintal, Sanchez, Castro, Angeles, Fernando and
Capistrano, JJ., concur.
Zaldivar, J., took no part.
Republic of the Philippines
SUPREME COURT
Manila
EN BANC
G.R. No. 109902 August 2, 1994
ALU-TUCP, Representing Members: ALAN BARINQUE, with 13
others, namely: ENGR. ALAN G. BARINQUE, ENGR. DARRELL LEE
ELTAGONDE, EDUARD H. FOOKSON, JR., ROMEO R. SARONA,
RUSSELL GACUS, JERRY BONTILAO, EUSEBIO MARIN, JR.,
LEONIDO ECHAVEZ, BONIFACIO MEJOS, EDGAR S. BONTUYAN,
JOSE G. GARGUENA, JR., OSIAS B. DANDASAN, and GERRY I.
FETALVERO, petitioners,
vs.
NATIONAL LABOR RELATIONS COMMISSION and NATIONAL STEEL
CORPORATION (NSC), respondents.
Leonard U. Sawal for petitioners.
Saturnino Mejorada for private respondent.
FELICIANO, J.:
In this Petition for Certiorari, petitioners assail the Resolution of the National
Labor Relations Commission ("NLRC") dated 8 January 1993 which declared
petitioners to be project employees of private respondent National Steel
Corporation ("NSC"), and the NLRC's subsequent Resolution of 15 February
1993, denying petitioners' motion for reconsideration.
S t a t u t o r y C o n s t r u c t i o n S e p t e m b e r 4 P a g e | 78
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
S t a t u t o r y C o n s t r u c t i o n S e p t e m b e r 4 P a g e | 79
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.
S t a t u t o r y C o n s t r u c t i o n S e p t e m b e r 4 P a g e | 80
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.
 S t a t u t o r y C o n s t r u c t i o n S e p t e m b e r 4 P a g e | 81

xxx xxx xxx Narvasa, C.J., Cruz, Padilla, Bidin, Regalado, Davide, Jr., Romero,
Melo, Quiason, Puno, Vitug, Kapunan and Mendoza, JJ., concur.
The present case therefore strictly falls under the definition
of "project employees" on paragraph one of Article 280 of Bellosillo, J., is on leave.
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.