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Statutory Construction September 4 Page |1

Republic of the Philippines 1. Respondent is enjoined from threatening to commit or committing


SUPREME COURT further acts of physical abuse and violence against the petitioner;
Manila
2. To stay away at a distance of at least 500 meters from petitioner,
FIRST DIVISION her residence or her place of work;

G.R. No. 201043 June 16, 2014 3. To refrain from harassing, annoying, intimidating, contacting or
communicating with petitioner; 4. Respondent is prohibited from
REPUBLIC OF THE PHILIPPINES, represented by the Armed Forces using or possessing any firearm or deadly weapon on occasions not
of the Philippines Finance Center (AFPFC), Petitioner, related to his job;
vs.
DAISY R. YAHON, Respondent. 5. To provide reasonable financial spousal support to the petitioner.

DECISION The Local Police Officers and the Barangay Officials through the Chairman in
the area where the petitioner and respondent live at Poblacion, Claveria,
VILLARAMA, JR., J.: Misamis Oriental and Bobuntogan, Jasaan, Misamis Oriental are directed to
respond to any request for assistance from the petitioner for the
Before the Court is a petition for review on certiorari under Rule 45 which implementation of this order. They are also directed to accompany the
seeks to nullify and set aside the Decision1 dated November 29, 2011 and petitioner to their conjugal abode at Purok 2, Bobuntogan, Jasaan, Misamis
Resolution2 dated March 9, 2012 of the Court of Appeals (CA) Mindanao Oriental to get her personal belongings in order to insure the safety of the
Station in CA-G.R. SP No. 02953-MIN. The CA affirmed the orders and petitioner.
decision of the Regional Trial Court (RTC) of Cagayan de Oro City, Branch 22
granting temporary and permanent protection orders, and denying the The Deputy Sheriff of this Court is ordered to immediately serve the
motion to lift the said temporary protection order (TPO). Temporary Protection Order (TPO) upon the respondent personally and to
seek and obtain the assistance of law enforcement agents, if needed, for
Daisy R. Yahon (respondent) filed a petition for the issuance of protection purposes of effecting the smooth implementation of this order.
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," In the meantime, let copy of this order and petition be served upon the
against her husband, S/Sgt. Charles A. Yahon (S/Sgt. Yahon), an enlisted respondent for him to file an OPPOSITION within a period of five (5) days
personnel of the Philippine Army who retired in January 2006. Respondent from receipt hereof and let a Preliminary Conference and hearing on the
and S/Sgt. Yahon were married on June 8, 2003. The couple did not have merits be set on October 17, 2006 at 2:00 o’clock in the afternoon.
any child but respondent has a daughter with her previous live-in partner.
To insure that petitioner can receive a fair share of respondent’s retirement
On September 28, 2006, the RTC issued a TPO, as follows: and other benefits, the following agencies thru their heads are directed to
WITHHOLD any retirement, pension and other benefits of respondent,
Finding the herein petition for the Issuance of Protection Order to be S/SGT. CHARLES A. YAHON, a member of the Armed Forces of the
sufficient in form and substance and to prevent great and irreparable injury Philippines assigned at 4ID, Camp Evangelista, Patag, Cagayan de Oro City
to the petitioner, a TEMPORARY PROTECTION ORDER is forthwith issued to until further orders from the court:
respondent, S/SGT. CHARLES A. YAHON directing him to do the following
acts: 1. Commanding General/Officer of the Finance Center of the Armed
Forces of the Philippines, Camp Emilio Aguinaldo, Quezon City;
Statutory Construction September 4 Page |2

2. The Management of RSBS, Camp Emilio Aguinaldo, Quezon City; 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
3. The Regional Manager of PAG-IBIG, Mortola St., Cagayan de Oro her person, and failed to give her spousal support as ordered by the court.
City.
On July 23, 2007, the RTC rendered its Decision,6 as follows:
VIOLATION OF THIS ORDER IS PUNISHABLE BY LAW.
After careful review and scrutiny of the evidence presented in this case, this
IF THE RESPONDENT APPEARS WITHOUT COUNSEL ON THE DATE OF THE court finds that there is a need to permanently protect the applicant, Daisy
PRELIMINARYCONFERENCE AND HEARING ON THE MERITS OF THE R. Yahon from further acts of violence that might be committed by
ISSUANCE OF A PERMANENT PROTECTION ORDER, THE COURT SHALL NOT respondent against her. Evidences showed that respondent who was a
RESCHEDULE OR POSTPONE THE PRELIMINARY CONFERENCE AND member of the Armed Forces of the Philippines assigned at the Headquarters
HEARING BUT SHALL APPOINT A LAWYER FOR THE RESPONDENT AND 4ID Camp Evangelista, Cagayan de Oro City had been repeatedly inflicting
IMMEDIATELY PROCEED WITH THE SAID HEARING. physical, verbal, emotional and economic abuse and violence upon the
petitioner. Respondent in several instances had slapped, mauled and
IF THE RESPONDENT FAILS TO APPEAR ON THE DATE OF THE punched petitioner causing her physical harm. Exhibits G and D are medical
PRELIMINARY CONFERENCE AND HEARING ON THE MERITS DESPITE certificates showing physical injuries suffered by petitioner inflicted by the
PROPER NOTICE, THE COURT SHALL ALLOW EX-PARTE PRESENTATION OF respondent at instances of their marital altercations. Respondent at the
EVIDENCE BY THE PETITIONER AND RENDER JUDGMENT ON THE BASIS OF height of his anger often poked a gun on petitioner and threatened to
THE PLEADINGS AND EVIDENCE ON RECORD. NO DELEGATION OF THE massacre her and her child causing them to flee for their lives and sought
RECEPTION OF EVIDENCE SHALL BE ALLOWED. 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
SO ORDERED.4 (Emphasis supplied.)
documenting the incidents when she was subjected to respondent’s ill
temper and ill treatment. Verbally, petitioner was not spared from
S/Sgt. Yahon, having been personally served with copy of the TPO, appeared respondent’s abuses by shouting at her that he was wishing she would die
during the scheduled pre-trial but informed the court that he did not yet and he would celebrate if it happens and by calling and sending her
have a counsel and requested for time to hire his own counsel. However, he threatening text messages. These incidents had caused petitioner great
did not hire a counsel nor file an opposition or answer to the petition. psychological trauma causing her [to] fear for her life and these forced her
Because of his failure to appear in the subsequent hearings of the case, the to seek refuge from the court for protection. Economically, petitioner was
RTC allowed the ex-parte presentation of evidence to determine the also deprived by respondent of her spousal support despite order of the
necessity of issuance of a Permanent Protection Order (PPO). 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
Meanwhile, as prayed for by respondent who manifested that S/Sgt. Yahon physically but also emotionally and psychologically.
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 Based on the evidence presented, both oral and documentary, and there
from her job and concentrate on keeping their house), the RTC issued being no controverting evidence presented by respondent, this Court finds
another order directing S/Sgt. Yahon to give respondent spousal support in that the applicant has established her case by preponderance of evidence.
the amount of ₱4,000.00 per month and fifty percent (50%) of his
retirement benefits which shall be automatically deducted and given directly
WHEREFORE, premises considered, judgment is hereby rendered GRANTING
to respondent.5
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,
Statutory Construction September 4 Page |3

S/Sgt. CHARLES A.YAHON is ordered to give to petitioner, DAISY R. YAHON petitioner lamented that it was not afforded due process and it was thus
the amount of FOUR THOUSAND PESOS (Php4,000.00) per month by way of improper to issue execution against the AFPFC. Consequently, petitioner
spousal support. emphasized its position that the AFPFC cannot be directed to comply with
the TPO without violating its right to procedural due process.
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 In its Order9 dated December 17, 2008, the RTC denied the aforesaid motion
retirement benefits and other claims that may be due or released to him for having been filed out of time. It noted that the September 28, 2006 TPO
from the government and the said share of petitioner shall be automatically and July 23, 2007 Decision granting Permanent Protection Order (PPO) to
deducted from respondent’s benefits and claims and be given directly to the respondent had long become final and executory.
petitioner, Daisy R. Yahon.
Petitioner’s motion for reconsideration was likewise denied under the RTC’s
Let copy of this decision be sent to the Commanding General/Officer of Order10 dated March 6, 2009.
Finance Center of the Armed Forces of the Philippines, Camp Emilio
Aguinaldo, Quezon City; the Management of RSBS, Camp Emilio Aguinaldo, On May 27, 2009, petitioner filed a petition for certiorari before the CA
Quezon City and the Regional Manager of PAG-IBIG, Mortola St., Cagayan de praying for the nullification of the aforesaid orders and decision insofar as it
Oro City for their guidance and strict compliance. directs the AFPFC to automatically deduct from S/Sgt. Yahon’s retirement
and pension benefits and directly give the same to respondent as spousal
SO ORDERED.7 (Emphasis supplied.) support, allegedly issued with grave abuse of discretion amounting to lack of
jurisdiction. Respondent filed her Comment with Prayer for Issuance of
Herein petitioner Armed Forces of the Philippines Finance Center (AFPFC), Preliminary Injunction, manifesting that there is no information as to
assisted by the Office of the Judge Advocate General (OTJAG), AFP, filed whether S/Sgt. Yahon already received his retirement benefit and that the
before the RTC a Manifestation and Motion (To Lift Temporary Protection latter has repeatedly violated the TPO, particularly on the provision of
Order Against the AFP)8 dated November 10, 2008. Stating that it was spousal support.
making a limited and special appearance, petitioner manifested that on
August 29, 2008, it furnished the AFP Pension and Gratuity Management After due hearing, the CA‘s Twenty-Second Division issued a
Center (PGMC) copy of the TPO for appropriate action. The PGMC, on Resolution11 granting respondent’s application, viz:
September 2, 2008, requested the Chief, AFPFC the temporary withholding
of the thirty-six (36) Months Lump Sum (MLS) due to S/Sgt. Yahon. Upon perusal of the respective pleadings filed by the parties, the Court finds
Thereafter, on October 29, 2008, PGMC forwarded a letter to the Chief of meritorious private respondent’s application for the issuance of an injunctive
Staff, AFP for the OTJAG for appropriate action on the TPO, and requesting relief. While the 36-month lump sum retirement benefits of S/Sgt. Charles A.
for legal opinion as to the propriety of releasing the 36 MLS of S/Sgt. Yahon. Yahon has already been given to him, yet as admitted by petitioner itself, the
Petitioner informed the RTC that S/Sgt. Yahon’s check representing his 36 monthly pension after the mentioned retirement benefits has not yet been
MLS had been processed and is ready for payment by the AFPFC, but to date released to him. It appears that the release of such pension could render
said check has not been claimed by respondent. ineffectual the eventual ruling of the Court in this Petition.

Petitioner further asserted that while it has initially discharged its obligation IN VIEW OF THE FOREGOING, let a WRIT OF PRELIMINARY INJUNCTION
under the TPO, the RTC had not acquired jurisdiction over the military issue enjoining the Armed Forces of the Philippines Finance Center, its
institution due to lack of summons, and hence the AFPFC cannot be bound employees, agents, representatives, and any all persons acting on its behalf,
by the said court order. Additionally, petitioner contended that the AFPFC is from releasing the remaining pension that may be due to S/Sgt. Charles A.
not a party-in-interest and is a complete stranger to the proceedings before Yahon.
the RTC on the issuance of TPO/PPO. Not being impleaded in the case,
Statutory Construction September 4 Page |4

SO ORDERED.12 (d) Directing the respondent to stay away from petitioner and any
designated family or household member at a distance specified by
By Decision dated November 29, 2011, the CA denied the petition for the court, and to stay away from the residence, school, place of
certiorari and affirmed the assailed orders and decision of the RTC. The CA employment, or any specified place frequented by the petitioner and
likewise denied petitioner’s motion for reconsideration. any designated family or household member;

In this petition, the question of law presented is whether petitioner military (e) Directing lawful possession and use by petitioner of an
institution may be ordered to automatically deduct a percentage from the automobile and other essential personal effects, regardless of
retirement benefits of its enlisted personnel, and to give the same directly to ownership, and directing the appropriate law enforcement officer to
the latter’s lawful wife as spousal support in compliance with a protection accompany the petitioner to the residence of the parties to ensure
order issued by the RTC pursuant to R.A. No. 9262. that the petitioner is safely restored to the possession of the
automobile and other essential personal effects, or to supervise the
A protection order is an order issued by the court to prevent further acts of petitioner’s or respondent’s removal of personal belongings;
violence against women and their children, their family or household
members, and to grant other necessary relief. Its purpose is to safeguard the (f) Granting a temporary or permanent custody of a child/children to
offended parties from further harm, minimize any disruption in their daily life the petitioner;
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 (g) Directing the respondent to provide support to the woman
(TPO) or a Permanent Protection Order (PPO), while a protection order that and/or her child if entitled to legal support. Notwithstanding other
may be issued by the barangay shall be known as a Barangay Protection laws to the contrary, the court shall order an appropriate percentage
Order (BPO).14 of the income or salary of the respondent to be withheld regularly by
the respondent's employer for the same to be automatically remitted
Section 8 of R.A. No. 9262 enumerates the reliefs that may be included in directly to the woman. Failure to remit and/or withhold or any delay
the TPO, PPO or BPO, to wit: in the remittance of support to the woman and/or her child without
justifiable cause shall render the respondent or his employer liable
(a) Prohibition of the respondent from threatening to commit or for indirect contempt of court;
committing, personally or through another, any of the acts
mentioned in Section 5 of this Act; (h) Prohibition of the respondent from any use or possession of any
firearm or deadly weapon and order him to surrender the same to
(b) Prohibition of the respondent from harassing, annoying, the court for appropriate disposition by the court, including
telephoning, contacting or otherwise communicating with the revocation of license and disqualification to apply for any license to
petitioner, directly or indirectly; 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
(c) Removal and exclusion of the respondent from the residence of
take appropriate action on matter;
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 (i) Restitution for actual damages caused by the violence inflicted,
respondent must remove personal effects from the residence, the including, but not limited to, property damage, medical expenses,
court shall direct a law enforcement agent to accompany the child care expenses and loss of income;
respondent to the residence, remain there until respondent has
gathered his things and escort respondent from the residence;
Statutory Construction September 4 Page |5

(j) Directing the DSWD or any appropriate agency to provide or occasioned by his exercise or performance of his official functions or
petitioner temporary shelter and other social services that the duties, or incurred relative to or in connection with his position or work
petitioner may need; and except when his monetary liability, contractual or otherwise, is in favor of the
GSIS.
(k) Provision of such other forms of relief as the court deems
necessary to protect and provide for the safety of the petitioner and In Sarmiento v. Intermediate Appellate Court,16 we held that a court order
any designated family or household member, provided petitioner and directing the Philippine National Bank to refrain from releasing to petitioner
any designated family or household member consents to such relief. all his retirement benefits and to deliver one-half of such monetary benefits
(Emphasis supplied.) 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
Petitioner argues that it cannot comply with the RTC’s directive for the execution.
automatic deduction of 50% from S/Sgt. Yahon’s retirement benefits and
pension to be given directly to respondent, as it contravenes an explicit The foregoing exemptions have been incorporated in the 1997 Rules of Civil
mandate under the law governing the retirement and separation of military Procedure, as amended, which governs execution of judgments and court
personnel. orders. Section 13 of Rule 39 enumerates those properties which are exempt
from execution:
The assailed provision is found in Presidential Decree (P.D.) No.
1638,15 which states: Section 31. The benefits authorized under this Decree, SEC. 13. Property exempt from execution.– Except as otherwise expressly
except as provided herein, shall not be subject to attachment, garnishment, provided by law, the following property, and no other, shall be exempt from
levy, execution or any tax whatsoever; neither shall they be assigned, ceded, execution:
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 xxxx
unsettled money and/or property accountabilities incurred while in the active
service, not more than fifty per centum of the pension gratuity or other (l) The right to receive legal support, or money or property obtained as such
payment due such officer or enlisted man or his survivors under this Decree support, or any pension or gratuity from the Government;(Emphasis
may be withheld and be applied to settle such accountabilities. (Emphasis supplied.)
supplied.)
It is basic in statutory construction that in case of irreconcilable conflict
A similar provision is found in R.A. No. 8291, otherwise known as the between two laws, the later enactment must prevail, being the more recent
"Government Service Insurance System Act of 1997," which reads: expression of legislative will.17 Statutes must be so construed and
harmonized with other statutes as to form a uniform system of
SEC. 39. Exemption from Tax, Legal Process and Lien -- x x x jurisprudence.18 However, if several laws cannot be harmonized, the earlier
statute must yield to the later enactment. The later law is the latest
xxxx expression of the legislative will.19

The funds and/or the properties referred to herein as well as the benefits, We hold that Section 8(g) of R.A. No. 9262, being a later enactment, should
sums or monies corresponding to the benefits under this Act shall be exempt be construed as laying down an exception to the general rule above-stated
from attachment, garnishment, execution, levy or other processes issued by that retirement benefits are exempt from execution. The law itself declares
the courts, quasi-judicial agencies or administrative bodies including that the court shall order the withholding of a percentage of the income or
Commission on Audit (COA) disallowances and from all financial obligations salary of the respondent by the employer, which shall be automatically
of the members, including his pecuniary accountability arising from or caused
Statutory Construction September 4 Page |6

remitted directly to the woman "[n]otwithstanding other laws to the immunity problems" and provide that "moneys payable by the Government
contrary." to any individual are subject to child support enforcement proceedings," the
law is clearly intended to "create a limited waiver of sovereign immunity so
Petitioner further contends that the directive under the TPO to segregate a that state courts could issue valid orders directed against Government
portion of S/Sgt. Yahon’s retirement benefits was illegal because said agencies attaching funds in their possession."25
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 This Court has already ruled that R.A. No. 9262 is constitutional and does
garnishment of the amount of ₱10,500 payable to BML Trading and Supply not violate the equal protection clause. In Garcia v. Drilon26 the issue of
while it was still in the possession of the Bureau of Telecommunications was constitutionality was raised by a husband after the latter failed to obtain an
illegal and therefore, null and void. The CA therein relied on the previous injunction from the CA to enjoin the implementation of a protection order
rulings in Director of Commerce and Industry v. Concepcion21 and Avendano issued against him by the RTC. We ruled that R.A. No. 9262 rests on real
v. Alikpala, et al.22 wherein this Court declared null and void the garnishment substantial distinctions which justify the classification under the law: the
of the salaries of government employees. 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
Citing the two aforementioned cases, we thus declared in Pacific Products: and prejudice against women.

A rule, which has never been seriously questioned, is that money in the We further held in Garcia that the classification is germane to the purpose of
hands of public officers, although it may be due government employees, is the law, viz:
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 The distinction between men and women is germane to the purpose of R.A.
its own courts except by express authorization by the Legislature, and to 9262, which is to address violence committed against women and children,
subject its officers to garnishment would be to permit indirectly what is spelled out in its Declaration of Policy, as follows:
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 SEC. 2. Declaration of Policy.– It is hereby declared that the State values the
Government, belong to the latter, although the defendant in garnishment dignity of women and children and guarantees full respect for human rights.
may be entitled to a specific portion thereof. And still another reason which The State also recognizes the need to protect the family and its members
covers both of the foregoing is that every consideration of public policy particularly women and children, from violence and threats to their personal
forbids it.23 safety and security.

We disagree. Towards this end, the State shall exert efforts to address violence committed
against women and children in keeping with the fundamental freedoms
Section 8(g) of R.A. No. 9262 used the general term "employer," which guaranteed under the Constitution and the provisions of the Universal
includes in its coverage the military institution, S/Sgt. Yahon’s employer. Declaration of Human Rights, the Convention on the Elimination of All Forms
Where the law does not distinguish, courts should not distinguish. Thus, of Discrimination Against Women, Convention on the Rights of the Child and
Section 8(g) applies to all employers, whether private or government. other international human rights instruments of which the Philippines is a
party.27
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 Under R.A. No. 9262, the provision of spousal and child support specifically
the Child Support Enforcement Act24 allow garnishment of certain federal address one form of violence committed against women – economic abuse.
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 |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).
Statutory Construction September 4 Page |9

It shall be the duty of every city or municipal election The same prohibition shall apply if the political party which
registrar to advise in writing, by personal delivery or nominated the winning candidates fails to file the statement
registered mail, within five (5) days from the date of required within the period prescribed by law.
election all candidates residing in his jurisdiction to comply
with their obligation to file their statements of contributions (b) Except candidates for elective barangay office, failure to
and expenditures. file statements or reports in connection with the electoral
contributions and expenditures as required herein shall
For the commission of a second or subsequent offense constitute an administrative offense for which the offenders
under this Section, the administrative fine shall be from Two shall be liable to pay an administrative fine ranging from
Thousand Pesos (P2,000.00) to Sixty Thousand Pesos One Thousand Pesos (P1,000) to Thirty Thousand Pesos
(P60,000.00), in the discretion of the Commission. In (P30,000), in the discretion of the Commission.
addition, the offender shall be subject to perpetual
disqualification to hold public office (Emphasis supplied). The fine shall be paid within thirty (30) days from receipt of
notice of such failure; otherwise, it shall be enforceable by a
To implement the provisions of law relative to election contributions and writ of execution issued by the Commission against the
expenditures, the COMELEC promulgated on January 13, 1992 Resolution properties of the offender.
No. 2348 (Re: Rules and Regulations Governing Electoral Contributions and
Expenditures in Connection with the National and Local Elections on For the commission of a second or subsequent offense
May 11, 1992). The pertinent provisions of said Resolution are: under this section, the administrative fine shall be from Two
Thousand Pesos (P2,000) to Sixty Thousand Pesos
Sec. 13. Statement of contributions and (P60,000), in the discretion of the Commission. In addition,
expenditures: Reminders to candidates to file statements. the offender shall be subject to perpetual disqualification to
Within five (5) days from the day of the election, the Law hold public office.
Department of the Commission, the regional election director
of the National Capital Region, the provincial election Petitioner argues that he cannot be held liable for failure to file a statement
supervisors and the election registrars shall advise in writing of contributions and expenditures because he was a "non-candidate," having
by personal delivery or registered mail all candidates who withdrawn his certificates of candidacy three days after its filing. Petitioner
filed their certificates of candidacy with them to comply with posits that "it is . . . clear from the law that candidate must have entered the
their obligation to file their statements of contributions and political contest, and should have either won or lost" (Rollo, p. 39).
expenditures in connection with the elections. Every election
registrar shall also advise all candidates residing in his Petitioner's argument is without merit.
jurisdiction to comply with said obligation (Emphasis
supplied).
Section 14 of R.A. No. 7166 states that "every candidate" has the obligation
to file his statement of contributions and expenditures.
Sec. 17. Effect of failure to file statement. (a) No person
elected to any public office shall enter upon the duties of his
Well-recognized is the rule that where the law does not distinguish, courts
office until he has filed the statement of contributions and
should not distinguish, Ubi lex non distinguit nec nos distinguere
expenditures herein required.
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]).
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

In the case at bench, as the law makes no distinction or qualification as to devoted by candidates to the furtherance of their ambitions (26 Am Jur 2d,
whether the candidate pursued his candidacy or withdrew the same, the Elections § 289). These statutes also enable voters to evaluate the influences
term "every candidate" must be deemed to refer not only to a candidate who exerted on behalf of candidates by the contributors, and to furnish evidence
pursued his campaign, but also to one who withdrew his candidacy. of corrupt practices for annulment of elections (Sparkman v. Saylor [Court of
Appeals of Kentucky], 180 Ky. 263, 202 S.W. 649 [1918]).
The COMELEC, the body tasked with the enforcement and administration of
all laws and regulations relative to the conduct of an election, plebiscite, State courts have also ruled that such provisions are mandatory as to the
initiative, referendum, and recall (The Constitution of the Republic of the requirement of filing (State ex rel. Butchofsky v. Crawford [Court of Civil
Philippines, Art. IX(C), Sec. 2[1]), issued Resolution No. 2348 in Appeals of Texas], 269 S.W. 2d 536 [1954]; Best v. Sidebottom, 270 Ky.
implementation or interpretation of the provisions of Republic Act No. 7166 423,109 S.W. 2d 826 [1937]; Sparkman v. Saylor, supra.)
on election contributions and expenditures. Section 13 of Resolution No.
2348 categorically refers to "all candidates who filed their certificates of It is not improbable that a candidate who withdrew his candidacy has
candidacy." 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
Furthermore, Section 14 of the law uses the word "shall." As a general rule, remote.
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 It is notesworthy that Resolution No. 2348 even contemplates the situation
favor of this meaning or where public interest is involved. We apply the where a candidate may not have received any contribution or made any
general rule (Baranda v. Gustilo, 165 SCRA 757 [1988]; Diokno v. expenditure. Such a candidate is not excused from filing a statement, and is
Rehabilitation Finance Corporation, 91 Phil. 608 [1952]). 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
The state has an interest in seeing that the electoral process is clean, and party has received no contribution, made no expenditure, or has no pending
ultimately expressive of the true will of the electorate. One way of attaining obligation, the statement shall reflect such fact."
such objective is to pass legislation regulating contributions and expenditures
of candidates, and compelling the publication of the same. Admittedly, Lastly, we note that under the fourth paragraph of Section 73 of the B.P.
contributions and expenditures are made for the purpose of influencing the Blg. 881 or the Omnibus Election Code of the Philippines, it is provided that
results of the elections (B.P. Blg. 881, Sec. 94; Resolution No. 2348, Sec. 1). "[t]he filing or withdrawal of certificate of candidacy shall not affect
Thus, laws and regulations prescribe what contributions are prohibited (B.P. whatever civil, criminal or administrative liabilities which a candidate may
Blg. 881, Sec. 95, Resolution No. 2348, Sec. 4), or unlawful (B.P. Blg. 881, have incurred." Petitioner's withdrawal of his candidacy did not extinguish his
Sec. 96), and what expenditures are authorized (B.P. Blg. 881, Sec. 102; liability for the administrative fine.
R.A. No. 7166, Sec. 13; Resolution No. 2348, Sec. 7) or lawful (Resolution
No. 2348, Sec. 8). WHEREFORE, the petition is DISMISSED.

Such statutes are not peculiar to the Philippines. In "corrupt and illegal Narvasa, C.J., Feliciano, Regalado, Davide, Jr., Romero, Bellosillo, Puno,
practices acts" of several states in the United States, as well as in federal Vitug, Mendoza and Francisco, JJ., concur.
statutes, expenditures of candidates are regulated by requiring the filing of
statements of expenses and by limiting the amount of money that may be
Kapunan, J., is on leave.
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 | 11

Separate Opinions 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
MELO, J., dissenting: 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
The majority opinion is to the effect that every candidate, including one who a person who actually submits himself and is voted for at our election
has withdrawn his certificate of candidacy, is obliged to file his statement of (Santos vs. Miranda, 35 Phil. 643, 648 (1916) citing State vs. Hirsch, 125
contributions and expenditures in line with Section 14 of Republic Act No. Ind., 207; 9 L.R.A. 107; Moreno, Philippine Law Dictionary, 1972 2nd ed., p.
7166 vis-a-vis the pertinent portions of Comelec Resolution No. 2348. I must 84) Certainly, one who withdraws his certificate of candidacy 3 days after the
concede that the use of the word "shall" in the main statute as well as the filing thereof, can not be voted for at an election. And considering the
implementing rules generally suggest mandatoriness as to cover all shortness of the period of 3 days from the filing to the withdrawal of the
candidates. 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.
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 I, therefore, vote to grant the petition.
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 Padilla, J., concurs.
(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. SECOND DIVISION
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 [G.R. No. 110898. February 20, 1996]
shortness of the period of 3 days from the filing to the withdrawal of the PEOPLE OF THE PHILIPPINES, petitioner, vs. HON. JUDGE ANTONIO
certificate of candidacy, petitioner cannot be accused, as indeed there is no C. EVANGELISTA, as Presiding Judge of Branch XXI, 10th Judicial
such charge, of utilizing his aborted candidacy for purposes to raise funds or Region, RTC of Misamis Oriental, Cagayan de Oro City, and GRILDO
to extort money from other candidates in exchange for the withdrawal. S. TUGONON, respondents.

I, therefore, vote to grant the petition. DECISION

Padilla, J., concurs. MENDOZA, J.:

Separate Opinions 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
MELO, J., dissenting:

That on or about the 26th day of May, 1988, at more or less 9:00 oclock in
The majority opinion is to the effect that every candidate, including one who
the evening at Barangay Poblacion, Municipality of Villanueva, Province of
has withdrawn his certificate of candidacy, is obliged to file his statement of
Misamis Oriental, Republic of the Philippines and within the jurisdiction of
contributions and expenditures in line with Section 14 of Republic Act No.
this Honorable Court, the abovenamed accused with intent to kill and with
7166 vis-a-vis the pertinent portions of Comelec Resolution No. 2348. I must
the use of a knife, which he was then conveniently provided of, did then and
concede that the use of the word "shall" in the main statute as well as the
there willfully, unlawfully and feloniously assault, attack and stab Roque T.
implementing rules generally suggest mandatoriness as to cover all
Bade thereby inflicting upon him the following injuries, to wit:
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 | 12

Stab wound, right iliac area, On February 2, 1993, the RTC ordered private respondent to report for
interview to the Provincial Probation Officer. The Provincial Probation Officer
0.5 cm. penetrating non on the other hand was required to submit his report with recommendation to
the court within 60 days.4
perforating lacerating posterior On February 18, 1993, Chief Probation and Parole Officer Isias B.
Valdehueza recommended denial of private respondents application for
peritoneum, 0.5 cm. probation on the ground that by appealing the sentence of the trial court,
when he could have then applied for probation, private respondent waived
thus performing all the acts of execution which would produce the crime of the right to make his application. The Probation Officer thought the present
Homicide as a consequence but which, nevertheless, did not produce it by case to be distinguishable from Santos To v. Pao in the sense that in this
reason of causes independent of the will of the accused, that is by timely case the original sentence imposed on private respondent by the trial court
medical attendance which prevented his death. (1 year of imprisonment) was probationable and there was no reason for
private respondent not to have filed his application for probation then,
CONTRARY TO and in violation of Article 249 in relation to Article 6 of the whereas in Santos To v. Pao the penalty only became probationable after it
Revised Penal Code. had been reduced as a result of the appeal.
On April 16, 1993 Valdehueza reiterated5 his respectful recommendation
After trial he was found guilty and sentenced to one year of prision that private respondents application for probation be denied and that a
correccional in its minimum period and ordered to pay to the offended party warrant of arrest be issued for him to serve his sentence in jail.
P5,000.00 for medical expense, without subsidiary imprisonment, and the
costs. The RTC appreciated in his favor the privileged mitigating The RTC set aside the Probation Officers recommendation and granted
circumstances of incomplete self-defense and the mitigating circumstance of private respondents application for probation in its order of April 23,
voluntary surrender. 1993.6 Hence this petition by the prosecution.

On appeal the Court of Appeals affirmed private respondents conviction The issue in this case is whether the RTC committed a grave abuse of
but modified his sentence by imposing on him an indeterminate penalty of 2 its discretion by granting private respondents application for probation
months of arresto mayor, as minimum, to 2 years and 4 months of prision despite the fact that he had appealed from the judgment of his conviction of
correccional, as maximum.1 the trial court.

On December 21., 1992, respondent Judge Antonio C. Evangelista of The Court holds that it did.
the RTC set the case for repromulgation of January 4, 1993.
Until its amendment by P.D. No. 1990 in 1986, it was possible under
On December 28, 1992, private respondent filed a petition for P.D. No. 986, otherwise known as the Probation Law, for the accused to take
probation,2 alleging that (1) he possessed all the qualifications and none of his chances on appeal by allowing probation to be granted even after an
the disqualifications for probation under P.D. No. 968, as amended; (2) the accused had appealed his sentence and failed to obtain an acquittal, just so
Court of Appeals had in fact reduced the penalty imposed on him by the trial long as he had not yet started to serve the sentence.7 Accordingly, in Santos
court; (3) in its resolution, the Court of Appeals took no action on a petition To v. Pao, it was held that the fact that the accused had appealed did not
for probation which he had earlier filed with it so that the petition could be bar him from applying for probation especially because it was as a result of
filed with the trial court; (4) in the trial courts decision, two mitigating the appeal that his sentencewas reduced and made the probationable limit.
circumstances of incomplete self-defense and voluntary surrender were
The law was, however, amended by P.D. No. 1990 which took effect
appreciated in his favor; and (5) in Santos To v. Pao,3 the Supreme Court
on January 15, 19868 precisely put a stop to the practice of appealing from
upheld the right of the accused to probation notwithstanding the fact that he
judgments of conviction even if the sentence is probationable for the
had appealed from his conviction by the trial court.
purpose of securing an acquittal and applying for probation only if 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

accused fails in his bid. Thus, as amended by P.D. No. 1990, 4 of the preamble to the amendatory law, probation was not intended as an escape
Probation Law now reads: 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
4. Grant of Probation. Subject to the provisions of this Decree, the trial court willing to be reformed and rehabilitated.
may, after it shall have convicted and sentenced a defendant, and upon
The ruling of the RTC that [h]aving not perfected an appeal against the
application by said defendant within the period for perfecting an
Court of Appeals decision, [private respondent] is, therefore, not covered by
appeal, suspend the execution of the sentence and place the defendant on
[the amendment in] P.D. 1990 is an obvious misreading of the law. The
probation for such period and upon such terms and conditions as it may
perfection of the appeal referred in the law refers to the appeal taken from a
deem best; Provided, That no application for probation shall be entertained
judgment of conviction by the trial court and not that of the appellate court,
or granted if the defendant has perfected the appeal from the judgment of
since under the law an application for probation is filed with the trial court
conviction.
which can only grant the same after it shall have convicted and sentenced
[the] defendant, and upon application by said defendant within the period
Probation may be granted whether the sentence imposes a term of for perfecting an appeal. Accordingly, in Llamado v. Court of Appeals,10 it
imprisonment or a fine only. An application for probation shall be filed with was held that the petitioner who had appealed his sentence could not
the trial court. The filing of the application shall be deemed a waiver of the subsequently apply for probation.
right to appeal.
WHEREFORE, the petition is GRANTED and the order of April 23,
An order granting or denying probation shall not be appealable. (Italics 1993 of the Regional Trial Court of Misamis Oriental (Branch 21) granting
added) probation to private respondent Grildo S. Tugonon is SET ASIDE.
SO ORDERED.
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 Regalado (Chairman), Romero, and Puno, JJ., concur.
prohibition that no application for probation shall be entertained or granted if
the defendant has perfected the appeal from the judgment of conviction and Republic of the Philippines
that the filing of the application shall be deemed a waiver of the right to SUPREME COURT
appeal. Having appealed from the judgment of the trial court and having Manila
applied for probation only after the Court of Appeals had affirmed his
conviction, private respondent was clearly precluded from the benefits of SECOND DIVISION
probation.
Private respondent argues, however, that a distinction should be drawn G.R. No. 87416 April 8, 1991
between meritorious appeals (like his appeal notwithstanding the appellate
courts affirmance of his conviction) and unmeritorious appeals. But the law CECILIO S. DE VILLA, petitioner,
does not make any distinction and so neither should the Court. In fact if an vs.
appeal is truly meritorious the accused would be set free and not only given THE HONORABLE COURT OF APPEALS, PEOPLE OF THE
probation. Private respondents original sentence (1 year of prision PHILIPPINES, HONORABLE JOB B. MADAYAG, and ROBERTO Z.
correccional in its minimum period) and the modified sentence imposed by LORAYES, respondents.
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 San Jose Enriquez, Lacas Santos & Borje for petitioner.
the fact that he appealed meant that private respondent was taking his Eduardo R. Robles for private respondent.
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 | 14

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
PARAS, J.: Assure Uniform Value of Philippine Coin and Currency).

This petition for review on certiorari seeks to reverse and set aside the On July 19, 1988, respondent court issued its first questioned orders
decision* of the Court of Appeals promulgated on February 1, 1989 in CA- stating:
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. Accused's motion to dismiss dated July 5, 1988, is denied for
lack of merit.
The factual backdrop of this case, as found by the Court of Appeals, is as
follows: Under the Bouncing Checks Law (B.P. Blg. 22), foreign
checks, provided they are either drawn and issued in the
On October 5, 1987, petitioner Cecilio S. de Villa was charged before Philippines though payable outside thereof, or made payable
the Regional Trial Court of the National Capital Judicial Region and dishonored in the Philippines though drawn and issued
(Makati, Branch 145) with violation of Batas Pambansa Bilang 22, outside thereof, are within the coverage of said law. The law
allegedly committed as follows: likewise applied to checks drawn against current accounts in
foreign currency.
That on or about the 3rd day of April 1987, in the
municipality of Makati, Metro Manila, Philippines and within Petitioner moved for reconsideration but his motion was
the jurisdiction of this Honorable Court, the above-named subsequently denied by respondent court in its order dated
accused, did, then and there willfully, unlawfully and September 6, 1988, and which reads:
feloniously make or draw and issue to ROBERTO Z.
LORAYEZ, to apply on account or for value a Depositors Accused's motion for reconsideration, dated August 9, 1988,
Trust Company Check No. 3371 antedated March 31, 1987, which was opposed by the prosecution, is denied for lack of
payable to herein complainant in the total amount of U.S. merit.1âwphi1
$2,500.00 equivalent to P50,000.00, said accused well
knowing that at the time of issue he had no sufficient funds The Bouncing Checks Law is applicable to checks drawn
in or credit with drawee bank for payment of such check in against current accounts in foreign currency (Proceedings of
full upon its presentment which check when presented to the Batasang Pambansa, February 7, 1979, p. 1376, cited in
the drawee bank within ninety (90) days from the date Makati RTC Judge (now Manila City Fiscal) Jesus F.
thereof was subsequently dishonored for the reason Guerrero's The Ramifications of the Law on Bouncing
"INSUFFICIENT FUNDS" and despite receipt of notice of Checks, p. 5). (Rollo, Annex "A", Decision, pp. 20-22).
such dishonor said accused failed to pay said ROBERTO Z.
LORAYEZ the amount of P50,000.00 of said check or to A petition for certiorari seeking to declare the nullity of the
make arrangement for full payment of the same within five aforequoted orders dated July 19, 1988 and September 6, 1988 was
(5) banking days after receiving said notice. filed by the petitioner in the Court of Appeals wherein he contended:

After arraignment and after private respondent had testified on (a) That since the questioned check was drawn against the
direct examination, petitioner moved to dismiss the Information on dollar account of petitioner with a foreign bank, respondent
the following grounds: (a) Respondent court has no jurisdiction over 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 The petition is without merit.
Batas Pambansa Bilang 22 could have not contemplated
extending its coverage over dollar accounts; Jurisdiction is the power with which courts are invested for
administering justice, that is, for hearing and deciding cases (Velunta
(b) That assuming that the subject check was issued in vs. Philippine Constabulary, 157 SCRA 147 [1988]).
connection with a private transaction between petitioner and
private respondent, the payment could not be legally paid in Jurisdiction in general, is either over the nature of the action, over
dollars as it would violate Republic Act No. 529; and the subject matter, over the person of the defendant, or over the
issues framed in the pleadings (Balais vs. Balais, 159 SCRA 37
(c) That the obligation arising from the issuance of the [1988]).
questioned check is null and void and is not enforceable with
the Philippines either in a civil or criminal suit. Upon such Jurisdiction over the subject matter is determined by the statute in
premises, petitioner concludes that the dishonor of the force at the time of commencement of the action (De la Cruz vs.
questioned check cannot be said to have violated the Moya, 160 SCRA 538 [1988]).
provisions of Batas Pambansa Bilang 22. (Rollo, Annex "A",
Decision, p. 22). The trial court's jurisdiction over the case, subject of this review, can
not be questioned.
On February 1, 1989, the Court of Appeals rendered a decision, the
decretal portion of which reads: Sections 10 and 15(a), Rule 110 of the Rules of Court specifically
provide that:
WHEREFORE, the petition is hereby dismissed. Costs against
petitioner. Sec. 10. Place of the commission of the offense. The
complaint or information is sufficient if it can be understood
SO ORDERED. (Rollo, Annex "A", Decision, p. 5) therefrom that the offense was committed or some of the
essential ingredients thereof occured at some place within
A motion for reconsideration of the said decision was filed by the the jurisdiction of the court, unless the particular place
petitioner on February 7, 1989 (Rollo, Petition, p. 6) but the same wherein it was committed constitutes an essential element
was denied by the Court of Appeals in its resolution dated March 3, of the offense or is necessary for identifying the offense
1989 (Rollo, Annex "B", p. 26). charged.

Hence, this petition. Sec. 15. Place where action is to be instituted. (a) Subject to
existing laws, in all criminal prosecutions the action shall be
In its resolution dated November 13, 1989, the Second Division of instituted and tried in the court of the municipality or
this Court gave due course to the petition and required the parties to territory where the offense was committed or any of the
submit simultaneously their respective memoranda (Rollo, essential ingredients thereof took place.
Resolution, p. 81).
In the case of People vs. Hon. Manzanilla (156 SCRA 279 [1987]
The sole issue in this case is whether or not the Regional Trial Court cited in the case of Lim vs. Rodrigo, 167 SCRA 487 [1988]), the
of Makati has jurisdiction over the case in question. 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 Under the Bouncing Checks Law (B.P. Blg. 22), foreign
offense was committed in Makati, Metro Manila and therefore, the checks, provided they are either drawn and issued in the
same is controlling and sufficient to vest jurisdiction upon the Philippines though payable outside thereof . . . are within
Regional Trial Court of Makati. The Court acquires jurisdiction over the coverage of said law.
the case and over the person of the accused upon the filing of a
complaint or information in court which initiates a criminal action It is a cardinal principle in statutory construction that where the law
(Republic vs. Sunga, 162 SCRA 191 [1988]). does not distinguish courts should not
distinguish.1âwphi1 Parenthetically, the rule is that where the law
Moreover, it has been held in the case of Que v. People of the does not make any exception, courts may not except something
Philippines (154 SCRA 160 [1987] cited in the case of People vs. unless compelling reasons exist to justify it (Phil. British Assurance
Grospe, 157 SCRA 154 [1988]) that "the determinative factor (in Co., Inc. vs. IAC, 150 SCRA 520 [1987]).
determining venue) is the place of the issuance of the check."
More importantly, it is well established that courts may avail
On the matter of venue for violation of Batas Pambansa Bilang 22, themselves of the actual proceedings of the legislative body to assist
the Ministry of Justice, citing the case of People vs. Yabut (76 SCRA in determining the construction of a statute of doubtful meaning
624 [1977], laid down the following guidelines in Memorandum (Palanca vs. City of Manila, 41 Phil. 125 [1920]). Thus, where there
Circular No. 4 dated December 15, 1981, the pertinent portion of is doubts as to what a provision of a statute means, the meaning put
which reads: to the provision during the legislative deliberation or discussion on
the bill may be adopted (Arenas vs. City of San Carlos, 82 SCRA 318
(1) Venue of the offense lies at the place where the check [1978]).
was executed and delivered; (2) the place where the check
was written, signed or dated does not necessarily fix the The records of the Batasan, Vol. III, unmistakably show that the
place where it was executed, as what is of decisive intention of the lawmakers is to apply the law to whatever currency
importance is the delivery thereof which is the final act may be the subject thereof. The discussion on the floor of the then
essential to its consummation as an obligation; . . . (Res. No. Batasang Pambansa fully sustains this view, as follows:
377, s. 1980, Filtex Mfg. Corp. vs. Manuel Chua, October 28,
1980)." (See The Law on Bouncing Checks Analyzed by xxx xxx xxx
Judge Jesus F. Guerrero, Philippine Law Gazette, Vol. 7. Nos.
11 & 12, October-December, 1983, p. 14). THE SPEAKER. The Gentleman from Basilan is recognized.

It is undisputed that the check in question was executed and MR. TUPAY. Parliamentary inquiry, Mr. Speaker.
delivered by the petitioner to herein private respondent at Makati,
Metro Manila.
THE SPEAKER. The Gentleman may proceed.

However, petitioner argues that the check in question was drawn


MR. TUPAY. Mr. Speaker, it has been mentioned by one of
against the dollar account of petitioner with a foreign bank, and is
the Gentlemen who interpellated that any check may be
therefore, not covered by the Bouncing Checks Law (B.P. Blg. 22).
involved, like U.S. dollar checks, etc. We are talking about
checks in our country. There are U.S. dollar checks, checks,
But it will be noted that the law does not distinguish the currency in our currency, and many others.
involved in the case. As the trial court correctly ruled in its order
dated July 5, 1988:
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 SPEAKER. The Sponsor may answer that inquiry. The petitioner Colgate-Palmolive Philippines, Inc. is a corporation duly
organized and existing under Philippine laws engaged in the manufacture of
MR. MENDOZA. The bill refers to any check, Mr. Speaker, toilet preparations and household remedies. On several occasions, it
and this check may be a check in whatever currency. This imported from abroad various materials such as irish moss extract, sodium
would not even be limited to U.S. dollar checks. The check benzoate, sodium saccharinate precipitated calcium carbonate and dicalcium
may be in French francs or Japanese yen or deutschunorhs. phosphate, for use as stabilizers and flavoring of the dental cream it
(sic.) If drawn, then this bill will apply. 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
MR TUPAY. So it include U.S. dollar checks. 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.
MR. MENDOZA. Yes, Mr. Speaker.

On March 14, 1956, the petitioner filed with the Central Bank three
xxx xxx xxx
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
(p. 1376, Records of the Batasan, Volume III; Emphasis supplied). of Republic Act 601, which provides that "foreign exchange used for the
payment of the cost, transportation and/or other charges incident to the
PREMISES CONSIDERED, the petition is DISMISSED for lack of merit. importation into the Philippines of . . . stabilizer and flavors . . . shall be
refunded to any importer making application therefor, upon satisfactory
Melencio-Herrera, Padilla, Sarmiento and Regalado, JJ., concur. proof of actual importation under the rules and regulations to be
promulgated pursuant to section seven thereof." After the applications were
Republic of the Philippines processed by the officer-in-charge of the Exchange Tax Administration of the
SUPREME COURT Central Bank, that official advised, the petitioner that of the total sum of
Manila 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
EN BANC 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-
G.R. No. L-14787 January 28, 1961
Charge of the Exchange Tax Administration, on the theory that toothpaste
stabilizers and flavors are not exempt under section 2 of the Exchange Tax
COLGATE-PALMOLIVE PHILIPPINE, INC., petitioner, Law.
vs.
HON. PEDRO M. GIMENEZ as Auditor General and ISMAEL MATHAY
Petitioner appealed to the Auditor General, but the latter or, December 4,
as AUDITOR OF THE CENTRAL BANK OF THE
1958 affirmed the ruling of the auditor of the Central Bank, maintaining that
PHILIPPINES, respondents.
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
Ross, Selph and Carrascoso for petitioner. food products. Not satisfied, the petitioner brought the case to this Court
Office of the Solicitor General for respondents. thru the present petition for review.

GUTIERREZ DAVID, J.: 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
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

is exempt from the 17% special excise tax imposed by the Exchange Tax flavors" is preceded by a number of articles that may be classified as food or
Law, (Republic Act No. 601) so as to entitle it to refund under section 2 food products, but it is likewise true that the other items immediately
thereof, which reads as follows: 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
SEC, 2. The tax collected under the preceding section on foreign because they are used in the farming and poultry industries, respectively.
exchange used for the payment of the cost, transportation and/or "Vitamin concentrate" appears to be more of a medicine than food or food
other charges incident to importation into the Philippines of rice, product, for, as matter of fact, vitamins are among those enumerated in the
flour, canned milk, cattle and beef, canned fish, soya beans, list of medicines and drugs appearing in the appendix to the law. It should
butterfat, chocolate, malt syrup, tapioca, stabilizer and flavors, also here be stated that "cattle", which is among those listed preceding the
vitamin concentrate, fertilizer, poultry feed; textbooks, reference term in question, includes not only those intended for slaughter but also
books, and supplementary readers approved by the Board of those for breeding purposes. Again, it is noteworthy that under, Republic Act
Textbooks and/or established public or private educational No. 814 amending the above-quoted section of Republic Act No. 601,
institutions; newsprint imported by or for publishers for use in the "industrial starch", which does not always refer to food for human
publication of books, pamphlets, magazines and newspapers; book consumption, was added among the items grouped with "stabilizer and
paper, book cloth, chip board imported for the printing of flavors". Thus, on the basis of the grouping of the articles alone, it cannot
supplementary readers (approved by the Board of Textbooks) to be validly be maintained that the term "stabilizer and flavors" as used in the
supplied to the Government under contracts perfected before the above-quoted provision of the Exchange Tax Law refers only to those used in
approval of this Act, the quantity thereof to be certified by the the manufacture of food and food products. This view is supported by the
Director of Printing; anesthetics, anti-biotics, vitamins, hormones, x- principle "Ubi lex non distinguish nec nos distinguire debemos", or "where
ray films, laboratory reagents, biologicals, dental supplies, and the law does not distinguish, neither do we distinguish". (Ligget & Myers
pharmaceutical drugs necessary for compounding medicines; Tobacco Company vs. Collector of Internal Revenue, 53 Off. Gaz. No. 15,
medical and hospital supplies listed in the appendix to this Act, in page 4831). Since the law does not distinguish between "stabilizer and
quantities to be certified by the Director of Hospitals as actually flavors" used in the preparation of food and those used in the manufacture
needed by the hospitals applying therefor; drugs and medicines of toothpaste or dental cream, we are not authorized to make any distinction
listed in the said appendix; and such other drugs and medicines as and must construe the words in their general sense. The rule of construction
may be certified by the Secretary of Health from time to time to that general and unlimited terms are restrained and limited by particular
promote and protect the health of the people of the Philippines shall recitals when used in connection with them, does not require the rejection of
be refunded to any importer making application therefor, upon general terms entirely. It is intended merely as an aid in ascertaining the
satisfactory proof of actual importation under the rules and intention of the legislature and is to be taken in connection with other rules
regulations to be promulgated pursuant to section seven thereof." of construction. (See Handbook of the Construction and Interpretation of
(Emphasis supplied.) Laws by Black, p. 215.216, 2nd ed.)

The ruling of the Auditor General that the term "stabilizer and flavors" as Having arrived at the above conclusion, we deem it now idle to pass upon
used in the law refers only to those materials actually used in the the other questions raised by the parties.
preparation or manufacture of food and food products is based, apparently,
on the principle of statutory construction that "general terms may be WHEREFORE, the decision under review is reversed and the respondents are
restricted by specific words, with the result that the general language will be hereby ordered to audit petitioners applications for refund which were
limited by the specific language which indicates the statute's object and approved by the Officer-in-Charge of the Exchange Tax Administration in the
purpose." (Statutory Construction by Crawford, 1940 ed. p. 324-325.) The total amount of P23,958.13.
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 | 19

Bengzon, Bautista Angelo, Concepcion, Reyes, J.B.L., Barrera, Paredes and


Dizon, JJ., concur. The controversy traces its roots to the order of then PCGG Chairman Jovito
Labrador, J., reserves his vote. 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
EN BANC unexplained wealth and corrupt practices of AFP personnel, both retired and
in active service." The order further stated that" [t]he Board shall be
[G.R. No. 89483. August 30, 1990.] primarily charged with the task of investigating cases of alleged violations of
the Anti-Graft and Corrupt Practices Act (Republic Act No. 3019, as
REPUBLIC OF THE PHILIPPINES THRU: THE PRESIDENTIAL amended) and shall make the necessary recommendations to appropriate
COMMISSION ON GOOD GOVERNMENT (PCGG), AFP ANTI-GRAFT government agencies and instrumentalities with respect to the action to be
BOARD, COL. ERNESTO A. PUNSALANG and PETER T. taken thereon based on its findings."cralaw virtua1aw library
TABANG, Petitioners, v. HON. EUTROPIO MIGRINO, as Presiding
Judge, Regional Trial Court, NCJR, Branch 151, Pasig, Metro Manila Acting on information received by the Board, which indicated the acquisition
and TROADIO TECSON, Respondents. of wealth beyond his lawful income, private respondent Lt. Col. Troadio
Tecson (ret.) was required by the Board to submit his explanation/comment
The Solicitor General, for Petitioners. together with his supporting evidence by October 31, 1987 [Annex "B",
Petition]. Private respondent requested, and was granted, several
Pacifico B. Advincula for Private Respondent. postponements, but was unable to produce his supporting evidence because
they were allegedly in the custody of his bookkeeper who had gone abroad.

DECISION 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
CORTES, J.: Rep. Act No. 1379, as amended.chanrobles lawlibrary : rednad

The case was set for preliminary investigation by the PCGG. Private
This case puts in issue the authority of the Presidential Commission on Good respondent moved to dismiss the case on the following grounds: (1) that the
Government (PCGG), through the New Armed Forces of the Philippines Anti- PCGG has no jurisdiction over his person; (2) that the action against him
Graft Board (hereinafter referred to as the "Board"), to investigate and cause under Rep. Act No. 1379 has already prescribed; (3) that E.O. No. 14,
the prosecution of petitioner, a retired military officer, for violation of insofar as it suspended the provisions of Rep. Act No. 1379 on prescription of
Republic Acts Nos. 3019 and 1379. 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.
Assailed by the Republic in this petition for certiorari, prohibition and/or The Board opposed the motion to dismiss.
mandamus with prayer for the issuance of a writ of preliminary injunction
and/or temporary restraining order are the orders of respondent judge in In a resolution dated February 8, 1989, the PCGG denied the motion to
Civil Case No. 57092 Branch 151 of the Regional Trial Court of Pasig, Metro dismiss for lack of merit. Private respondent moved for reconsideration but
Manila: (1) dated June 23, 1989, denying petitioners’ Motion to Dismiss and this was denied by the PCGG in a resolution dated March 8, 1989. Private
Opposition, and (2) dated June 26, 1989, granting private respondent’s respondent was directed to submit his counter-affidavit and other
application for the issuance of a writ of preliminary injunction. Thus, the controverting evidence on March 20, 1989 at 2:00 p.m.
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, On March 13, 1989, private respondent filed a petition for prohibition with
finally, the dismissal of the case before the trial court. preliminary injunction with the Regional Trial Court in Pasig, Metro Manila.
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

The case was docketed as Case No. 57092 and raffled to Branch 151, ISSUING THE ASSAILED ORDER DATED JUNE 26, 1989 ENJOINING
respondent judge’s court. Petitioner filed a motion to dismiss and opposed PETITIONERS FROM INVESTIGATING AND PROSECUTING PRIVATE
the application for the issuance of a writ of preliminary injunction on the RESPONDENT FOR VIOLATION OF REPUBLIC ACT NO. 3019, OTHERWISE
principal ground that the Regional Trial Court had no jurisdiction over the KNOWN AS ANTI-GRAFT AND CORRUPT PRACTICES ACT AND REPUBLIC
Board, citing the case of PCGG v. Peña, G.R. No. 77663, April 12, 1988, 159 ACT NO. 1379, OTHERWISE KNOWN AS AN ACT FOR THE FORFEITURE OF
SCRA 556. Private respondent opposed the motion to dismiss. Petitioner UNLAWFULLY ACQUIRED PROPERTY [Rollo, p. 19].
replied to the opposition.
As to the first issue, petitioner contends that following the ruling of the Court
On June 23, 1989, respondent judge denied petitioner’s motion to dismiss. in PCGG v. Peña the Board, being a creation and/or extension of the PCGG,
On June 26, 1989, respondent judge granted the application for the issuance is beyond the jurisdiction of the Regional Trial Court. On the second issue,
of a writ of preliminary injunction, enjoining petitioners from investigating or petitioner strongly argues that the private respondent’s case falls within the
prosecuting private respondent under Rep. Acts Nos. 3019 and 1379 upon jurisdiction of the PCGG.
the filing of a bond in the amount of Twenty Thousand Pesos (P20,000.00).
The pivotal issue is the second one. On this point, private respondent’s
Hence, the instant petition. position is as follows:chanrob1es virtual 1aw library

On August 29, 1989, the Court issued a restraining order enjoining 1. . . . he is not one of the subordinates contemplated in Executive Orders 1
respondent judge from enforcing his orders dated June 23, 1989 and June , 2 , 14 and 14-A as the alleged illegal acts being imputed to him, that of
26, 1989 and from proceeding with Civil Case No. 57092. alleged amassing wealth beyond his legal means while Finance Officer of the
Philippine Constabulary, are acts of his own alone, not connected with his
Private respondent filed his comment, to which petitioners filed a reply. A being a crony, business associate, etc. or subordinate as the petition does
rejoinder to the reply was filed by private Respondent. The Court gave due not allege so. Hence the PCGG has no jurisdiction to investigate him.
course to the petition and the parties filed their memoranda. Thereafter, the
case was deemed submitted. If indeed private respondent amassed wealth beyond his legal means, the
procedure laid down by Rep. Act 1379 as already pointed out before be
The issues raised in the petition are as follows:chanrob1es virtual 1aw library 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
I. prescribed.

2. . . . no action can be filed anymore against him now under Republic Act
WHETHER OR NOT RESPONDENT JUDGE GRAVELY ABUSED HIS 1379 for recovery of unexplained wealth for the reason that he has retired
DISCRETION OR ACTED WITHOUT OR IN EXCESS OF JURISDICTION IN more than four years ago.
ASSUMING JURISDICTION OVER AND INTERFERING WITH THE ORDERS
AND FUNCTIONS OF THE PRESIDENTIAL COMMISSION ON GOOD 3. . . . The order creating the AFP Anti-Graft Board (Annex "A", Petition) is
GOVERNMENT. 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
II. 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


WHETHER, OR NOT RESPONDENT JUDGE GRAVELY ABUSED HIS private respondent may be investigated and caused to be prosecuted by the
DISCRETION OR ACTED WITHOUT OR IN EXCESS OF JURISDICTION IN Board, an agency of the PCGG, for violation of Rep. Acts Nos. 3019 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 | 21

1379. According to petitioners, the PCGG has the power to investigate and wife, similar to the immediate family member, relative, and close associate in
cause the prosecution of private respondent because he is a "subordinate" of E.O. No. 1 and the close relative, business associate, dummy, agent, or
former President Marcos. They cite the PCGG’s jurisdiction over — nominee in E.O. No. 2.

(a) The recovery of all ill-gotten wealth accumulated by former President Thus, as stated by the Court in Bataan Shipyard & Engineering Co., Inc. v.
Ferdinand E. Marcos, his immediate family, relatives, subordinates and close PCGG, G.R. No. 75885, May 27, 1987, 150 SCRA 181, 205-206.
associates, whether located in the Philippines or abroad, including the
takeover or sequestration of all business enterprises and entities owned or The situations envisaged and sought to be governed [by Proclamation No. 3
controlled by them, during his administration, directly or through nominees, and E.O. Nos. 1, 2 and 14] are self-evident, these being:chanrob1es virtual
by taking undue advantage of their public office and/or using their powers, 1aw library
authority, influence, connections or relationship. [E.O. No. 1, sec. 2.].
1) that" (i)ll gotten properties (were) amassed by the leaders and supporters
Undoubtedly, the alleged unlawful accumulation of wealth was done during of the previous regime" ;
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 a) more particularly, that" (i)ll-gotten wealth (was) accumulated by former
within the contemplation of E.O. No. 1, the law creating the PCGG, when he President Ferdinand E. Marcos, his immediate family, relatives, subordinates,
allegedly unlawfully acquired the properties. and close associates, . . . located in the Philippines or abroad, xx (and)
business enterprises and entities (came to be) owned or controlled by them,
A close reading of E. O. No. 1 and related executive orders will readily show during . . . (the Marcos) administration, directly or through nominees, by
what is contemplated within the term "subordinate."cralaw virtua1aw library taking undue advantage of their public office and/or using their powers,
authority, influence, connections or relationship;"
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 b) otherwise stated, that "there are assets and properties pertaining to
immediate family, relatives, and close associates both here and abroad. former President Ferdinand E. Marcos, and/or his wife Mrs. Imelda
Romualdez Marcos, their close relatives, subordinates, business associates,
E.O. No. 2 freezes "all assets and properties in the Philippines in which dummies, agents or nominees which had been or were acquired by them
former President Marcos and/or his wife, Mrs. Imelda Romualdez Marcos, directly or indirectly, through or as a result of the improper or illegal use of
their close relatives, subordinates, business associates, dummies, agents, or funds or properties owned by the Government of the Philippines or any of its
nominees have any interest or participation."cralaw virtua1aw library branches, instrumentalities, enterprises, banks or financial institutions, or by
taking undue advantage of their office, authority, influence, connections or
Applying the rule in statutory construction known as ejusdem generis, that is relationship, resulting in their unjust enrichment and causing grave damage
— 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 c) that "said assets and properties are in the form of bank accounts,
of a particular and specific meaning, such general words are not to be deposits, trust accounts, shares of stocks, buildings, shopping centers,
construed in their widest extent, but are to be held as applying only to condominiums, mansions, residences, estates, and other kinds of real and
persons or things of the same kind or class as those specifically mentioned personal properties in the Philippines and in various countries of the world;"
[Smith, Bell & Co., Ltd. v. Register of Deeds of Davao, 96 Phil. 53, 58 (1954), and.
citing Black on Interpretation of Laws, 2nd Ed., 203].
2) that certain "business enterprises and properties (were) taken over by the
the term "subordinate" as used in E.O. Nos. 1 and 2 would refer to one who government of the Marcos Administration or by entities or persons close to
enjoys a close association or relation with former Pres. Marcos and/or his former President Marcos." [Footnotes deleted].
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
It does not suffice, as in this case, that the respondent is or was a known as the "Act for Forfeiture of Unlawfully Acquired Property." [Rollo, p.
government official or employee during the administration of former Pres. 43].
Marcos. There must be a prima facie showing that the respondent unlawfully
accumulated wealth by virtue of his close association or relation with former The resolution alleges that private respondent unlawfully accumulated wealth
Pres. Marcos and/or his wife. This is so because otherwise the respondent’s by taking advantage of his office as Finance Officer of the Philippine
case will fall under existing general laws and procedures on the matter. Rep. Constabulary. No attempt is made in the Board’s resolution to link him or his
Act No. 3019, the Anti-Graft and Corrupt Practices Act, penalizes the corrupt accumulation of wealth to former Pres. Marcos and/or his wife.
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 (c) The letter of the Board chairman to the chairman of the PCGG, dated July
Acquired By Any Public Officer or Employee and Providing for the Procedure 28, 1988, is clear:chanrob1es virtual 1aw library
Therefor), whenever any public officer or employee has acquired during his
incumbency an amount of property which is manifestly out of proportion to Respectfully transmitted herewith for the prosecution before the
his salary as such public officer or employee and to his other lawful income Sandiganbayan is the case folder of COLONEL TROADIO TECSON (Ret) who
and the income from legitimately acquired property, said property shall be after preliminary investigation of the case by the Board, found a prima facie
presumed prima facie to have been unlawfully acquired [Sec. 2]. The evidence against subject officer for violating Section 8, R.A. 3019, as
Solicitor General shall file the petition and prosecute the case in behalf of the amended by BP 195, otherwise known as the Anti-Graft and Corrupt
Republic, after preliminary investigation by the provincial or city prosecutor Practices Act and R.A. 1379, otherwise known as an Act for the Forfeiture of
[Ibid]. Unlawfully Acquired Property." [Rollo, p. 46].

Moreover, the record shows that private respondent was being investigated Moreover, from the allegations of petitioner in its memorandum, it would
for unlawfully acquired wealth under Rep. Acts Nos. 3019 and 1379, and not appear that private respondent accumulated his wealth for his own account.
under E.O. Nos. 1, 2, 14 and 14-A. Petitioner quoted the letter of Ignacio Datahan, a retired PC sergeant, to
General Fidel Ramos, the material portion of which reads:chanrob1es virtual
Since private respondent was being investigated by the PCGG through the 1aw library
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 . . . After an official in the military unit received an Allotment Advice the
record itself belies this presumption:chanrob1es virtual 1aw library 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
(a) The letter of the chairman of the AFP Anti-Graft Board to private concerned was also made to sign the receipt portion on the voucher the
respondent, dated October 16, 1987, states: "This letter is in connection with amount of which was left blank. Before the voucher is passed for routine
the alleged information received by the AFP Anti-Graft Board indicating your processing by Mrs. Leonor Cagas, clerk of Col. Tecson and its facilitator, the
acquisition of wealth beyond legal means of income in violation of Rep. Act maneuver began. The amount on the face of the cash advance voucher is
No. 3019 known as the Anti-Graft and Corrupt Practices Act." [Rollo, p. 39]. 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
(b) The Resolution dated June 30, 1988 of the Board categorically on the records. The difference of P90,000.00 went to the syndicate.
states:chanrob1es virtual 1aw library
. . . Boy Tanyag, bookkeeper in Col. Tecson’s office took care of the work.
I. PRELIMINARY STATEMENT:chanrob1es virtual 1aw library
. . . In the liquidation of the altered cash advance amount, names of persons
This refers to the case against Col Troadio B. Tecson PC (Ret) for alleged found in the Metropolitan Manila Telephone Directory with fictitious
unexplained wealth pursuant to R.A. 3019, as amended, otherwise known as addresses appeared as recipients or payees. Leonor and Boy got their shares
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

on commission basis of the looted amount while the greater part went to be enjoined from proceeding with Civil Case No. 57092.
Col. Tecson. [Rollo, pp. 184-185.].
But in view of the patent lack of authority of the PCGG to investigate and
Clearly, this alleged unlawful accumulation of wealth is not that cause the prosecution of private respondent for violation of Rep. Acts Nos.
contemplated in E.O. Nos. 1, 2, 14 and 14-A. 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
2. It will not do to cite the order of the PCGG Chairman, dated May 13, 1986, prosecutory agency. The rule of law mandates that an agency of government
creating the Board and authorizing it to investigate the unexplained wealth be allowed to exercise only the powers granted it.
and corrupt practices of AFP personnel, both retired and in active service, to
support the contention that PCGG has jurisdiction over the case of 5. The pronouncements made above should not be taken to mean that the
private Respondent. The PCGG cannot do more than what it was empowered PCGG’s creation of the AFP Anti-Graft Board is a nullity and that the PCGG
to do. Its powers are limited. Its task is limited to the recovery of the ill- has no authority to investigate and cause the prosecution of members and
gotten wealth of the Marcoses, their relatives and cronies. The PCGG cannot, former members of the Armed Forces of the Philippines for violations of Rep.
through an order of its chairman, grant itself additional powers — powers Acts Nos. 3019 and 1379. The PCGG may investigate and cause the
not contemplated in its enabling law. 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.,
3. Petitioner assails the trial court’s cognizance of the petition filed by insofar as they involve the recovery of the ill-gotten wealth of former Pres.
private Respondent. Particularly, petitioner argues that the trial court cannot Marcos and his family and "cronies." But the PCGG would not have
acquire jurisdiction over the PCGG. This matter has already been settled in jurisdiction over an ordinary case falling under Rep. Acts Nos. 3019 and
Peña, supra, where the Court ruled that those who wish to question or 1379, as in the case at bar. E.O. Nos. 1, 2, 14 and 14-A did not envision the
challenge the PCGG’s acts or orders must seek recourse in the PCGG as the investigator and prosecutor of all unlawful accumulations of
Sandiganbayan, which is vested with exclusive and original jurisdiction. The wealth. The PCGG was created for a specific and limited purpose, as we have
Sandiganbayan’s decisions and final orders are in turn subject to review explained earlier, and necessarily its powers must be construed with this in
on certiorari exclusively by this Court. [Ibid, at pp. 564-565]. mind.

The ruling in Peña was applied in PCGG v. Aquino, G.R. No. 77816, June 30, 6. n his pleadings, private respondent contends that he may no longer be
1988, 163 SCRA 363, Soriano III v. Yuson, G.R. No. 74910 (and five other prosecuted because of prescription. He relies on section 2 of Rep. Act No.
cases), August 10, 1988, 164 SCRA 226 and Olaguer v. RTC, NCJR, Br. 48, 1379 which provides that" [t]he right to file such petition [for forfeiture of
G.R. No. 81385, February 21, 1989, 170 SCRA 478, among others, to enjoin unlawfully acquired wealth] shall prescribe within four years from the date of
the regional trial courts from interfering with the actions of the PCGG. 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
Respondent judge clearly acted without or in excess of his jurisdiction when ago. However, it must be pointed out that section 2 of Rep. Act No. 1379
he took cognizance of Civil Case No. 57092 and issued the writ of preliminary should be deemed amended or repealed by Article XI, section 15 of the 1987
injunction against the PCGG. Constitution which provides that" [t]he right of the State to recover
properties unlawfully acquired by public officials or employees, from them or
4. Thus, we are confronted with a situation wherein the PCGG acted in from their nominees or transferees, shall not be barred by prescription,
excess of its jurisdiction and, hence, may be enjoined from doing so, but the laches, or estoppel." Considering that sec. 2 of Rep. Act No. 1379 was
court that issued the injunction against the PCGG has not been vested by law deemed amended or repealed before the prescriptive period provided therein
with jurisdiction over it and, thus, the injunction issued was null and void. 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
The nullification of the assailed order of respondent judge issuing the writ of subsequent enactment.
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 | 24

Moreover, to bar the Government from recovering ill-gotten wealth would Republic of the Philippines
result in the validation or legitimization of the unlawful acquisition, a SUPREME COURT
consequence at variance with the clear intent of Rep. Act No. 1379, which Manila
provides:chanrobles virtual lawlibrary
SECOND DIVISION
SEC. 11. Laws on prescription. — The laws concerning acquisitive
prescription and limitation of actions cannot be invoked by, nor shall they G.R. No. L-47757-61 January 28, 1980
benefit the respondent, in respect to any property unlawfully acquired by
him.
THE PEOPLE OF THE PHILIPPINES, ABUNDIO R. ELLO, As 4th
Assistant of Provincial Bohol VICENTE DE LA SERNA. JR., as
Thus, we hold that the appropriate prosecutory agencies, i.e., the city or
complainant all private prosecutor, petitioners,
provincial prosecutor and the Solicitor General under sec. 2 of Rep. Act No.
vs.
1379, may still investigate the case and file the petition for the forfeiture of
HON. VICENTE B. ECHAVES, JR., as Judge of the Court of First
unlawfully acquired wealth against private respondent, now a private citizen.
Instance of Bohol Branch II, ANO DACULLO, GERONIMO OROYAN,
(On the other hand, as regards respondents for violations of Rep. Acts Nos.
MARIO APARICI, RUPERTO CAJES and MODESTO S
3019 and 1379 who are still in the government service, the agency granted
SUELLO, respondents.
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.
AQUINO, J.:p
7. The Court hastens to add that this decision is without prejudice to the
prosecution of private respondent under the pertinent provisions of the The legal issue in this case is whether Presidential Decree No. 772, which
Revised Penal Code and other related penal laws. penalizes squatting and similar acts, applies to agricultural lands. The decree
(which took effect on August 20, 1975) provides:
WHEREFORE, the order of respondent judge dated June 26, 1989 in Civil
Case No. 57092 is NULLIFIED and SET ASIDE. Respondent judge is SECTION 1. Any person who, with the use of force,
ORDERED to dismiss Civil Case No. 57092. The temporary restraining order intimidation or threat, or taking advantage of the absence or
issued by the Court on August 29, 1989 is MADE PERMANENT. The PCGG is tolerance of the landowner, succeeds in occupying or
ENJOINED from proceeding with the investigation and prosecution of private possessing the property of the latter against his will for
respondent in I.S. No. 37, without prejudice to his investigation and residential, commercial or any other purposes, shall be
prosecution by the appropriate prosecutory agency. punished by an imprisonment ranging from six months to
one year or a fine of not less than one thousand nor more
SO ORDERED. than five thousand pesos at the discretion of the court, with
subsidiary imprisonment in case of insolvency. (2nd
Fernan, C.J., Narvasa, Melencio-Herrera, Gutierrez, Jr., Cruz, Paras, paragraph is omitted.)
Feliciano, Gancayco, Padilla, Bidin, Griño-Aquino, Medialdea and
Regalado, JJ., concur. The record shows that on October 25, 1977 Fiscal Abundio R. Ello filed with
the lower court separate informations against sixteen persons charging them
Sarmiento, J., on leave. with squatting as penalized by Presidential Decree No. 772. The information
against Mario Aparici which is similar to the other fifteen informations, reads:
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

That sometime in the year 1974 continuously up to the preamble does not mention the Secretary of Agriculture and makes reference
present at barangay Magsaysay, municipality of Talibon, to the affluent class.
province of Bohol, Philippines and within the jurisdiction of
this Honorable Court, the above-named accused, with From the order of dismissal, the fiscal appealed to this Court under Republic
stealth and strategy, enter into, occupy and cultivate a Act No. 5440. The appeal is devoid of merit.
portion of a grazing land physically occupied, possessed and
claimed by Atty. Vicente de la Serna, Jr. as successor to the We hold that the lower court correctly ruled that the decree does not apply
pasture applicant Celestino de la Serna of Pasture Lease to pasture lands because its preamble shows that it was intended to apply to
Application No. 8919, accused's entrance into the area has squatting in urban communities or more particularly to illegal constructions in
been and is still against the win of the offended party; did squatter areas made by well-to-do individuals. The squating complained of
then and there willfully, unlawfully, and feloniously squat involves pasture lands in rural areas.
and cultivate a portion of the said grazing land; said
cultivating has rendered a nuisance to and has deprived the
The preamble of the decree is quoted below:
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 WHEREAS, it came to my knowledge that despite the
and prejudice to the said applicant-possessor-occupant, Atty. issuance of Letter of Instruction No. 19 dated October 2,
Vicente de la Serna, Jr. (sic) 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
Five of the informations, wherein Ano Dacullo, Geronimo Oroyan, Mario
Presidential Assistant on Housing and Rehabilitation Agency,
Aparici, Ruperto Cajes and Modesto Suello were the accused, were raffled to
Governors, City and Municipal Mayors, and City and District
Judge Vicente B. Echaves, Jr. of Branch II (Criminal Cases Nos. 1824, 1828,
Engineers, "to remove an illegal constructions including
1832, 1833 and 1839, respectively).
buildings on and along esteros and river banks, those along
railroad tracks and those built without permits on public and
Before the accused could be arraigned, Judge Echaves motu proprio issued private property." squatting is still a major problem in urban
an omnibus order dated December 9, 1977 dismissing the five informations communities all over the country;
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
WHEREAS, many persons or entities found to have been
be effected "with the use of force, intimidation or threat, or taking advantage
unlawfully occupying public and private lands belong to the
of the absence or tolerance of the landowner", and (2) that under the rule
affluent class;
of ejusdem generis the decree does not apply to the cultivation of a grazing
land.
WHEREAS, there is a need to further intensify the
government's drive against this illegal and nefarious
Because of that order, the fiscal amended the informations by using in lieu of
practice.
"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 It should be stressed that Letter of Instruction No. 19 refers to illegal
amended informations be admitted. 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.
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 | 26

On the other hand, it should be noted that squatting on public agricultural ALTA VISTA GOLF AND COUNTRY CLUB, Petitioner, v. THE CITY OF
lands, like the grazing lands involved in this case, is punished by Republic Act CEBU, HON. MAYOR TOMAS R. OSME�A, IN HIS CAPACITY AS
No. 947 which makes it unlawful for any person, corporation or association MAYOR OF CEBU, AND TERESITA C. CAMARILLO, IN HER CAPACITY
to forcibly enter or occupy public agricultural lands. That law provides: AS THE CITY TREASURER, Respondents.

SECTION 1. It shall be unlawful for any person corporation DECISION


or association to enter or occupy, through force,
intimidation, threat, strategy or stealth, any public LEONARDO-DE CASTRO, J.:
agriculture land including such public lands as are granted to
private individuals under the provision of the Public Land Act Before the Court is a Petition for Review on Certiorari of the
or any other laws providing for the of public agriculture Resolution1 dated March 14, 2007 and the Order2 dated October 3, 2007 of
lands in the Philippines and are duly covered by the the Regional Trial Court (RTC), Cebu City, Branch 9 in Civil Case No. CEB-
corresponding applications for the notwithstanding standing 31988, dismissing the Petition for Injunction, Prohibition, Mandamus,
the fact that title thereto still remains in the Government or Declaration of Nullity of Closure Order, Declaration of Nullity of Assessment,
for any person, natural or judicial to investigate induce or and Declaration of Nullity of Section 42 of Cebu City Tax Ordinance, with
force another to commit such acts. Prayer for Temporary Restraining Order and Writ of Preliminary
Injunction3 filed by petitioner Alta Vista Golf and Country Club against
Violations of the law are punished by a fine of not exceeding one thousand respondents City of Cebu (Cebu City), then Cebu City Mayor Tomas R.
or imprisonment for not more than one year, or both such fine and Osme�a (Osme�a), and then Cebu City Treasurer Teresita Camarillo
imprisonment in the discretion of the court, with subsidiary imprisonment in (Camarillo).
case of insolvency. (See People vs. Lapasaran 100 Phil. 40.)
Petitioner is a non-stock and non-profit corporation operating a golf course in
The rule of ejusdem generis (of the same kind or species) invoked by the Cebu City.
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 On June 21, 1993, the Sangguniang Panlungsod of Cebu City enacted City
to illegal constructions. The rule of ejusdem generis is merely a tool of Tax Ordinance No. LXIX, otherwise known as the "Revised Omnibus Tax
statutory construction which is resorted to when the legislative intent is Ordinance of the City of Cebu" (Revised Omnibus Tax Ordinance).
uncertain (Genato Commercial Corp. vs. Court of Tax Appeals, 104 Phil.
615,618; 28 C.J.S. 1049-50). Section 42 of the said tax ordinance on amusement tax was amended by City
Tax Ordinance Nos. LXXXII4and LXXXIV5 (which were enacted by
WHEREFORE, the trial court's order of dismissal is affirmed. No costs. the Sangguniang Panlungsod of Cebu City on December 2, 1996 and April
20, 1998, respectively6) to read as follows:
SO ORDERED.
Section 42. Rate of Tax. - There shall be paid to the Office of the City
Barredo, Antonio, Concepcion Jr. and Abad Santos, J., concur. Treasurer by the proprietors, lessees or operators of theaters, cinemas,
concert halls, circuses and other similar places of entertainment, an
FIRST DIVISION 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,
G.R. No. 180235, January 20, 2016
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
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
Amount Due P 27,854.85
letter dated July 9, 2004 affirming respondent Camarillo's position that
Add: Amusement Tax on golf P petitioner was liable to pay amusement tax on its golf course.13Ultimately,
course 1,373,761.24 respondent Camarillo held:

25% surcharge (P6,868,806.20 x 343,440.31 WHEREFORE, upon consideration of the legal grounds as above-mentioned,
20%) 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
72% Interest ��� 2,953,586.67 FINAL DEMAND for immediate settlement and payment of your amusement
1,236,385.12 tax liabilities and/or delinquencies otherwise we will constrained (sic) the
non-issuance of a Mayor's Business Permit for nonpayment of the said
GRAND TOTAL P2,981,441.5210 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
(Emphasis supplied.) the said tax liability and the letter treated as a Protest of Assessment that
was duly submitted before this office is hereby DENIED.14chanrobleslaw
Petitioner, through counsel, wrote respondent Camarillo a letter 11 dated
October 17, 2005 still disputing the amusement tax assessment on its golf Shortly after, on January 12, 2006, petitioner was served with a Closure
course for 1998 for being illegal. Petitioner, in a subsequent letter dated Order15 dated December 28, 2005 issued by respondent City Mayor Osmefia.
November 30, 2005, proposed that: According to the Closure Order, petitioner committed blatant violations of the
laws and Cebu City Ordinances, to wit:

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 1. Operating a business without a business permit for five (5)
first the other assessments contained in your Assessment Sheet issued on years, from year 2001-2005, in relation to Chapters I and II and
October 11, 2005. 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
At this early stage, we also request that pending resolution of the legality of ORDINANCE OF THE CITY OF CEBU, as amended by CO. 75;
the amusement tax imposition on golf courses in [the Revised Omnibus Tax
Ordinance, as amended], Alta Vista Golf and Country Club be issued the 2. Nonpayment of deficiency on Business Taxes and Fees
required Mayor's and/or Business Permit.12chanrobleslaw amounting to Seventeen Thousand Four Hundred Ninety-
Nine Pesos and Sixty-Four Centavos (Php17,499.64), as
Respondent Camarillo treated the letter dated October 17, 2005 of petitioner adjusted, despite repeated demands in violation [of] Sections 4 and
as a Protest of Assessment and rendered on December 5, 2005 her ruling 8 of City Tax Ordinance No. 69, as amended;
denying said Protest on the following grounds: (a) a more thorough and
comprehensive reading of the PBA case would reveal that the Court actually 3. Nonpayment of deficiency on Amusement Tax and the
ruled therein that PBA was liable to pay amusement tax, but to the national penalties relative therewith totaling Two Million Nine
government, not the local government; (b) Section 42 of the Revised Hundred Fifty-Three Thousand Five Hundred Eighty-Six
Omnibus Tax Ordinance, as amended, enjoyed the presumption of Pesos and Eighty-Six Centavos (Php2,953,586.86) in violation
constitutionality and petitioner failed to avail itself of the remedy under of Sections 4 and 8 in relation to Section 42 of City Tax Ordinance
Section 187 of the Local Government Code to challenge the legality or No. 69, as amended, business permit-violation of the Article 172,
validity of Section 42 of the Revised Omnibus Tax Ordinance, as amended, Revised Penal Code of the Philippines. (Emphases supplied.)
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 | 29

business permit and order the closure of a business for nonpayment of


The Closure Order established respondent Mayor Osme�a's authority for taxes; Section 42 of the Revised Omnibus Tax Ordinance, as amended, is
issuance of the same and contained the following directive: null and void for being ultra vires or beyond the taxing authority of
respondent Cebu City, and consequently, the assessment against petitioner
As the chief executive of the City, the Mayor has the power and duty to: for amusement tax for 1998 based on said Section 42 is illegal and
Enforce all laws and ordinances relative to the governance of the city x x x unconstitutional; and assuming arguendothat respondent Cebu City has the
and, in addition to the foregoing, shall x x x Issue such executive orders for power to impose amusement tax on petitioner, such tax for 1998 already
the faithful and appropriate enforcement and execution of laws and prescribed and could no longer be enforced.
ordinances x x x. These are undeniable in the LOCAL GOVERNMENT CODE,
Section 455, par. (2) and par. (2)(iii). 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
Not only that, these powers can be exercised under the general welfare administrative remedies; (c) noncompliance with Section 187 of the Local
clause of the Code, particularly Section 16 thereof, where it is irrefutable that Government Code, which provides the procedure and prescriptive periods for
"every government unit shall exercise the powers expressly granted, those challenging the validity of a local tax ordinance; (d) noncompliance with
necessarily implied therefrom, as well as powers necessary, appropriate, or Section 252 of the Local Government Code and Section 75 of Republic Act
incidental of its efficient and effective governance, and those which are No. 3857, otherwise known as the Revised Charter of the City of Cebu,
essential to the promotion of the general welfare." 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
This CLOSURE ORDER precisely satisfies these legal precedents. Hence now, behalf of petitioner.19chanroblesvirtuallawlibrary
in view whereof, your business establishment is hereby declared closed in
direct contravention of the above-specified laws and city ordinances. Please In its Opposition to the Motion to Dismiss, petitioner countered that the RTC,
cease and desist from further operating your business immediately upon a court of general jurisdiction, could take cognizance of its Petition in Civil
receipt of this order. 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
This closure order is without prejudice to the constitutional/statutory right of Order and the issuance of writs of injunction and prohibition. Petitioner
the City to file criminal cases against corporate officers, who act for and its likewise asserted that Section 195 of the Local Government Code on the
behalf, for violations of Section 114 of the REVISED CITY TAX ORDINANCE protest of assessment does, not require payment under protest. Section 252
OF THE CITY OF CEBU and Section 516 of the LOCAL GOVERNMENT CODE, of the same Code invoked by respondents applies only to real property
with penalties of imprisonment and/or fine. 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
FOR STRICT AND IMMEDIATE COMPLIANCE.16chanrobleslaw 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 foregoing developments prompted petitioner to file with the RTC on the constitutional duty of the courts to pass upon the validity of a tax
January 13, 2006 a Petition for Injunction, Prohibition, Mandamus, ordinance and such duty cannot be limited or restricted. Petitioner further
Declaration of Nullity of Closure Order, Declaration of Nullity of Assessment, contended that there is no need for exhaustion of administrative remedies
and Declaration of Nullity of Section 42 of Cebu City Tax Ordinance, with given that the issues involved are purely legal; the notice of closure is
Prayer for Temporary Restraining Order and Writ of Preliminary Injunction, patently illegal for having been issued without due process; and there is an
against respondents, which was docketed as Civil Case No. CEB- urgent need for judicial intervention. Lastly, petitioner pointed out that there
31988.17 Petitioner eventually filed an Amended Petition on January 19, were sufficient allegations in the Petition that its filing was duly authorized by
2006.18Petitioner argued that the Closure Order is unconstitutional as it had petitioner. At any rate, petitioner already attached to its Opposition its Board
been summarily issued in violation of its right to due process; a city mayor Resolution No. 104 authorizing Ozoa to file a case to nullify the Closure
has no power under the Local Government Code to deny the issuance of a Order. Thus, petitioner prayed for the denial of the Motion 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 | 30

Dismiss.20chanroblesvirtuallawlibrary 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
Respondents, in their Rejoinder to Petitioner's Opposition to the Motion to green fees even under protest and despite payment and [respondent] Mayor
Dismiss,21 asserted that the Closure Order was just a necessary consequence refused the issuance of the business permit because all the requisites for the
of the nonpayment by petitioner of the amusement tax assessed against it. issuance of the said permit are all complied with.24chanroblesvirtuallawlibrary
The Revised Omnibus Tax Ordinance of respondent Cebu City directs that no
permit shall be issued to a business enterprise which made no proper On March 20, 2006, petitioner paid under protest to respondent Cebu City,
payment of tax and, correspondingly, no business enterprise may be allowed through respondent Camarillo, the assessed amusement tax, plus penalties,
to operate or continue to operate without a business permit. The interest, and surcharges, in the total amount of P2,750,249.17. 25cralawred
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 Since the parties agreed that the issues raised in Civil Case No. CEB-31988
the Court categorically ruled that the prescriptive periods fixed in Section 187 were all legal in nature, the RTC already considered the case submitted for
of the Local Government Code are mandatory and prerequisites before resolution after the parties filed their respective
seeking redress from a competent court. Section 42 of the Revised Omnibus Memorandum.26chanroblesvirtuallawlibrary
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, On March 14, 2007, the RTC issued a Resolution granting the Motion to
2006 - without payment under protest of the assessed amusement tax and Dismiss of respondents. Quoting from Reyes and Hagonoy Market Vendor
filing of an appeal before the Secretary of Justice within 30 days from the Association v. Municipality of Hagonoy, Bulacan,27 the RTC sustained the
effectivity of the Ordinance - was long barred by prescription. position of respondents that Section 187 of the Local Government Code is
mandatory. Thus, the RTC adjudged:
After filing by the parties of their respective Memorandum, the RTC issued
an Order23 dated March 16, 2006 denying the prayer of petitioner for From the above cited cases, it can be gleaned that the period in the filing of
issuance of a Temporary Restraining Order (TRO). The RTC found that when the protests is important. In other words, it is the considered opinion of this
the business permit of petitioner expired and it was operating without a court [that] when a taxpayer questions the validity of a tax ordinance passed
business permit, it ceased to have a legal right to do business. The RTC by a local government legislative body, a different procedure directed in
affirmed respondent Mayor Osme�a's authority to issue or grant business Section 187 is to be followed. The reason for this could be because the tax
licenses and permits pursuant to the police power inherent in his office; and ordinance is clearly different from a law passed by Congress. The local
such authority to issue or grant business licenses and permits necessarily government code has set several limitations on the taxing power of the local
included the authority to suspend or revoke or even refuse the issuance of government legislative bodies including the issue of what should be taxed.
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: 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
[Petitioner] was given opportunities to be heard when it filed a protest [of] filed way beyond the period to file a case in court, then this court believes
the assessment which was subsequently denied. To the mind of this court, that the action must fail.
this already constitutes the observance of due process and that [petitioner]
had already been given the opportunity to be heard. Due process and Because of the procedural infirmity in bringing about this case to the court,
opportunity to be heard does not necessarily mean winning the argument in then the substantial issue of the propriety of imposing amusement taxes on
one's favor but to be given the fair chance to explain one's side or views with the green fees could no longer be determined.
regards [to] the matter in issue, which in this case is the legality of the tax
assessment. WHEREFORE, in view of the aforegoing, this case is hereby
DISMISSED.28chanrobleslaw
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 | 31

not iron-clad, however, as it admits of certain exceptions.


The RTC denied the Motion for Reconsideration of petitioner in an Order
dated October 3, 2007. Thus, a strict application of the rule is unnecessary when cases brought
before the appellate courts do not involve factual but purely legal questions.
Petitioner is presently before the Court on pure questions of law, viz.: (Citations omitted.)

I. WHETHER OR NOT THE POWER OF JUDICIAL REVIEW OVER THE "A question of law exists when the doubt or controversy concerns the correct
VALIDITY OF A LOCAL TAX ORDINANCE HAS BEEN RESTRICTED BY application of law or jurisprudence to a certain set of facts; or when the
SECTION 187 OF THE LOCAL GOVERNMENT CODE. 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
II. WHETHER OR NOT THE CITY OF CEBU OR ANY LOCAL questions of law.31chanroblesvirtuallawlibrary
GOVERNMENT CAN VALIDLY IMPOSE AMUSEMENT TAX TO THE ACT
OF PLAYING GOLF.29 The present case is an exception
to Section 187 of the Local Government
Code and the doctrine of exhaustion of
There is merit in the instant Petition. administrative remedies.

The RTC judgment on pure Section 187 of the Local Government Code reads:
questions of law may be directly
appealed to this Court via a petition
Sec. 187. Procedure for Approval and Effectivity of Tax Ordinances and
for review on certiorari.
Revenue Measures; Mandatory Public Hearings. - The procedure for approval
of local tax ordinances and revenue measures shall be in accordance with
Even before the RTC, the parties already acknowledged that the case
the provisions of this Code: Provided, That public hearings shall be
between them involved only questions of law; hence, they no longer
conducted for the purpose prior to the enactment thereof: Provided,
presented evidence and agreed to submit the case for resolution upon
further, That any question on the constitutionality or legality of tax
submission of their respective memorandum.
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
It is incontestable that petitioner may directly appeal to this Court from the
a decision within sixty (60) days from the date of receipt of the
judgment of the RTC on pure questions of law via its Petition for Review
appeal: Provided, however, That such appeal shall not have the effect of
on Certiorari. Rule 41, Section 2(c) of the Rules of Court provides that "[i]n
suspending the effectivity of the ordinance and the accrual and payment of
all cases where only questions of law are raised or involved, the appeal shall
the tax, fee, or charge levied therein: Provided, finally, That within thirty
be to the Supreme Court by petition for review on certiorari in accordance
(30) days after receipt of the decision or the lapse of the sixty-day period
with Rule 45." As the Court declared in Bonifacio v. Regional Trial Court of
without the Secretary of Justice acting upon the appeal, the aggrieved party
Makati, Branch 14930:
may file appropriate proceedings with a court of competent jurisdiction.

The established policy of strict observance of the judicial hierarchy of courts, Indeed, the Court established in Reyes that the aforequoted provision is a
as a rule, requires that recourse must first be made to the lower-ranked significant procedural requisite and, therefore, mandatory:
court exercising concurrent jurisdiction with a higher court. A regard for
judicial hierarchy clearly indicates that petitions for the issuance of
Clearly, the law requires that the dissatisfied taxpayer who questions the
extraordinary writs against first level courts should be filed in the RTC and
validity or legality of a tax ordinance must file his appeal to the Secretary of
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 | 32

Justice, within 30 days from effectivity thereof. In case the Secretary decides It is true that the general rule is that before a party is allowed to seek the
the appeal, a period also of 30 days is allowed for an aggrieved party to go intervention of the court, he or she should have availed himself or herself of
to court. But if the Secretary does not act thereon, after the lapse of 60 all the means of administrative processes afforded him or her. Hence, if
days, a party could already proceed to seek relief in court. These three resort to a remedy within the administrative machinery can still be made by
separate periods are clearly given for compliance as a prerequisite before giving the administrative officer concerned every opportunity to decide on a
seeking redress in a competent court. Such statutory periods are set to matter that comes within his or her jurisdiction, then such remedy should be
prevent delays as well as enhance the orderly and speedy discharge of exhausted first before the court's judicial power can be sought. The
judicial functions. For this reason the courts construe these provisions of premature invocation of the intervention of the court is fatal to one's cause
statutes as mandatory. of action. The doctrine of exhaustion of administrative remedies is based on
practical and legal reasons. The availment of administrative remedy entails
A municipal tax ordinance empowers a local government unit to impose lesser expenses and provides for a speedier disposition of controversies.
taxes. The power to tax is the most effective instrument to raise needed Furthermore, the courts of justice, for reasons of comity and convenience,
revenues to finance and support the myriad activities of local government will shy away from a dispute until the system of administrative redress has
units for the delivery of basic services essential to the promotion of the been completed and complied with, so as to give the administrative agency
general welfare and enhancement of peace, progress, and prosperity of the concerned every opportunity to correct its error and dispose of the case.
people. Consequently, any delay in implementing tax measures would be to However, there are several exceptions to this rule.
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 The rule on the exhaustion of administrative remedies is intended to
case, it is our view that the failure of petitioners to appeal to the Secretary of preclude a court from arrogating unto itself the authority to resolve a
Justice within 30 days as required by Sec. 187 of R.A. 7160 is fatal to their controversy, the jurisdiction over which is initially lodged with an
cause.32 (Citations omitted.) administrative body of special competence. Thus, a case where the issue
raised is a purely legal question, well within the competence; and
The Court further affirmed in Hagonoy that: the jurisdiction of the court and not the administrative agency,
would clearly constitute an exception. Resolving questions of law,
At this point, it is apropos to state that the timeframe fixed by law for parties which involve the interpretation and application of laws,
to avail of their legal remedies before competent courts is not a "mere constitutes essentially an exercise of judicial power that is
technicality" that can be easily brushed aside. The periods stated in Section exclusively allocated to the Supreme Court and such lower courts
187 of the Local Government Code are mandatory. Ordinance No. 28 is a the Legislature may establish.
revenue measure adopted by the municipality of Hagonoy to fix and collect
public market stall rentals. Being its lifeblood, collection of revenues by the In this case, the parties are not disputing any factual matter on
government is of paramount importance. The funds for the operation of its which they still need to present evidence. The sole issue petitioners
agencies and provision of basic services to its inhabitants are largely derived raised before the RTC in Civil Case No. 25843 was whether Municipal
from its revenues and collections. Thus, it is essential that the validity of Ordinance No. 98-01 was valid and enforceable despite the absence, prior to
revenue measures is not left uncertain for a considerable length of its enactment, of a public hearing held in accordance with Article 276 of the
time. Hence, the law provided a time limit for an aggrieved party to assail Implementing Rules and Regulations of the Local Government Code. This is
the legality of revenue measures and tax ordinances.33 (Citations omitted.) undoubtedly a pure question of law, within the competence and
jurisdiction of the RTC to resolve.
Nevertheless, in later cases, the Court recognized exceptional circumstances
that justify noncompliance by a taxpayer with Section 187 of the Local Paragraph 2(a) of Section 5, Article VIII of the Constitution, expressly
Government Code. establishes the appellate jurisdiction of this Court, and impliedly recognizes
the original jurisdiction of lower courts over cases involving the
The Court ratiocinated in Ongsuco v. Malones,34 thus: constitutionality or validity of an ordinance:ChanRoblesVirtualawlibrary
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

Section 5. The Supreme Court shall have the following powers: Sec. 140. Amusement Tax. - (a) The province may levy an amusement tax to
be collected from the proprietors, lessees, or operators of theaters,
xxxx cinemas, concert halls, circuses, boxing stadia, and other places of
amusement at a rate of not more than thirty percent (30%) of the gross
(2) Review, revise, reverse, modify or affirm on appeal or certiorari, as the receipts from admission fees.
law or the Rules of Court may provide, final judgments and orders of lower
courts in: (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
(a) All cases in which the constitutionality or validity of any treaty, treasurer before the gross receipts are divided between said proprietors,
international or executive agreement, law, presidential decree, proclamation, lessees, or operators and the distributors of the cinematographic films.
order, instruction, ordinance, or regulation is in question.
(c) The holding of operas, concerts, dramas, recitals, painting, and art
In J.M. Tuason and Co., Inc. v. Court of Appeals, Ynot v. Intermediate exhibitions, flower shows, musical programs, literary and oratorical
Appellate Court, and Commissioner of Internal Revenue v. Santos, the Court presentations, except pop, rock, or similar concerts shall be exempt from the
has affirmed the jurisdiction of the RTC to resolve questions of payment of the tax hereon imposed.
constitutionality and validity of laws (deemed to include local ordinances) in
the first instance, without deciding questions which pertain to legislative (d) The sangguniang panlalawigan may prescribe the time, manner, terms
policy. (Emphases supplied, citations omitted.) 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
In Cagayan Electric Power and Light Co., Inc. (CEPALCO) v. City of Cagayan and penalties as it may deem appropriate.
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 (e) The proceeds from the amusement tax shall be shared equally by the
period of 30 days from the effectivity of the ordinance should have been province and the municipality where such amusement places are located.
fatal to its cause. However, the Court purposefully relaxed the application of (Emphasis supplied.)
the rules in view of the more substantive matters.
"Amusement places," as defined in Section 131 (c) of the Local Government
Similar to Ongsuco and CEPALCO, the case at bar constitutes an exception to Code, "include theaters, cinemas, concert halls, circuses and other places of
the general rule. Not only does the instant Petition raise pure questions of amusement where one seeks admission to entertain oneself by seeing or
law, but it also involves substantive matters imperative for the Court to viewing the show or performance."
resolve.
The pronouncements of the Court in Pelizloy Realty Corporation v. The
Section 42 of the Revised Omnibus Province of Benguet36 are of particular significance to this case. The Court,
Tax Ordinance, as amended, imposing in Pelizloy Realty, declared null and void the second paragraph of Article X,
amusement tax on golf courses is null Section 59 of the Benguet Provincial Code, in so far as it imposes
and void as it is beyond the authority of amusement taxes on admission fees to resorts, swimming pools, bath
respondent Cebu City to enact under the houses, hot springs, and tourist spots. Applying the principle of ejusdem
Local Government Code. 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
The Local Government Code authorizes the imposition by local government 140, in relation to Section 131(c), of the Local Government Code, as follows:
units of amusement tax under Section 140, which provides:
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
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

where the latter follow the former, the general word or phrase is to be already mentioned in PD No. 231. Also, 'artistic expression' as a
construed to include, or to be restricted to persons, things or cases akin to, characteristic does not pertain to 'boxing stadia'.
resembling, or of the same kind or class as those specifically mentioned."
In the present case, the Court need not embark on a laborious effort at
The purpose and rationale of the principle was explained by the Court statutory construction. Section 131 (c) of the LGC already provides a clear
in National Power Corporation v. Angas as definition of 'amusement places':
follows:ChanRoblesVirtualawlibrary
The purpose of the rule on ejusdem generis is to give effect to both the xxxx
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 Indeed, theaters, cinemas, concert halls, circuses, and boxing
class, although not specifically named by the particular words. This is stadia are bound by a common typifying characteristic in that they
justified on the ground that if the lawmaking body intended the general are all venues primarily for the staging of spectacles or the holding
terms to be used in their unrestricted sense, it would have not made an of public shows, exhibitions, performances, and other events meant
enumeration of particular subjects but would have used only general terms. to be viewed by an audience. Accordingly, 'other places of
[2 Sutherland, Statutory Construction, 3rd ed., pp. 395-400]. amusement' must be interpreted in light of the typifying
In Philippine Basketball Association v. Court of Appeals, the Supreme Court characteristic of being venues "where one seeks admission to
had an opportunity to interpret a starkly similar provision or the counterpart entertain oneself by seeing or viewing the show or performances"
provision of Section 140 of the LGC in the Local Tax Code then in effect. or being venues primarily used to stage spectacles or hold public
Petitioner Philippine Basketball Association (PBA) contended that it was shows, exhibitions, performances, and other events meant to be
subject to the imposition by LGUs of amusement taxes (as opposed to viewed by an audience.
amusement taxes imposed by the national government). In support of its
contentions, it cited Section 13 of Presidential Decree No. 231, otherwise As defined in The New Oxford American Dictionary, 'show' means "a
known as the Local Tax Code of 1973, (which is analogous to Section 140 of spectacle or display of something, typically an impressive one"; while
the LGC) providing the following:ChanRoblesVirtualawlibrary 'performance' means "an act of staging or presenting a play, a conceit, or
Section 13. Amusement tax on admission. � The province shall impose a tax other form of entertainment." As such, the ordinary definitions of the
on admission to be collected from the proprietors, lessees, or operators of words 'show' and 'performance' denote not only visual engagement
theaters, cinematographs, concert halls, circuses and other places of (i.e., the seeing or viewing of things) but also active doing (e.g.,
amusement xxx. displaying, staging or presenting) such that actions are manifested
Applying the principle of ejusdem generis, the Supreme Court rejected PBA's to, and (correspondingly) perceived by an audience.
assertions and noted that:ChanRoblesVirtualawlibrary
[I]n determining the meaning of the phrase 'other places of amusement', Considering these, it is clear that resorts, swimming pools, bath houses, hot
one must refer to the prior enumeration of theaters, cinematographs, springs and tourist spots cannot be considered venues primarily "where one
concert halls and circuses with artistic expression as their common seeks admission to entertain oneself by seeing or viewing the show or
characteristic. Professional basketball games do not fall under the same performances". While it is true that they may be venues where people are
category as theaters, cinematographs, concert halls and circuses as the latter visually engaged, they are not primarily venues for their proprietors or
basically belong to artistic forms of entertainment while the former caters to operators to actively display, stage or present shows and/or performances.
sports and gaming.
However, even as the phrase 'other places of amusement' was already Thus, resorts, swimming pools, bath houses, hot springs and tourist spots do
clarified in Philippine Basketball Association, Section 140 of the LGC adds to not belong to the same category or class as theaters, cinemas, concert halls,
the enumeration of 'places of amusement' which may properly be subject to circuses, and boxing stadia. It follows that they cannot be considered as
amusement tax. Section 140 specifically mentions 'boxing stadia' in addition among the 'other places of amusement' contemplated by Section 140 of the
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 | 35

LGC and which may properly be subject to amusement taxes.37 (Emphases charges are not otherwise specifically enumerated in the Local Government
supplied, citations omitted.) 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
In light of Pelizloy Realty, a golf course cannot be considered a place of Local Government Code already explicitly and clearly cover amusement tax
amusement. As petitioner asserted, people do not enter a golf course to see and respondent Cebu City must exercise its authority to impose amusement
or view a show or performance. Petitioner also, as proprietor or operator of tax within the limitations and guidelines as set forth in said statutory
the golf course, does not actively display, stage, or present a show or provisions.
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 WHEREFORE, in view of all the foregoing, the Court GRANTS the instant
court to play badminton or tennis or to a shooting range for target practice, Petition, and REVERSES and SETS ASIDE the Resolution dated March 14,
yet there is no showing herein that such gym, court, or shooting range is 2007 and the Order dated October 3, 2007 of the Regional Trial Court, Cebu
similarly considered an amusement place subject to amusement tax. There is City, Branch 9 in Civil Case No. CEB-31988. The Court DECLARES NULL
no basis for singling out golf courses for amusement tax purposes from other and VOID the following: (a) Section 42 of the Revised Omnibus Tax
places where people go to play sports. This is in contravention of one of the Ordinance of the City of Cebu, as amended by City Tax Ordinance Nos.
fundamental principles of local taxation: that the "[taxation shall be uniform LXXXII and LXXXIV, insofar as it imposes amusement tax of 20% on the
in each local government unit."38 Uniformity of taxation, like the kindred gross receipts on entrance, playing green, and/or admission fees of golf
concept of equal protection, requires that all subjects or objects of taxation, courses; (b) the tax assessment against petitioner for amusement tax on its
similarly situated, are to be treated alike both in privileges and golf course for the year 1998 in the amount of Pl,373,761.24, plus
liabilities.39chanroblesvirtuallawlibrary 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
Not lost on the Court is its declaration in Manila Electric Co. v. Province of 28, 2005 issued against Alta Vista Golf and Country Club by the Office of the
Laguna40 that under the 1987 Constitution, "where there is neither a grant Mayor, City of Cebu. The Court also ORDERS the City of Cebu to refund to
nor a prohibition by statute, the tax power [of local government units] must Alta Vista Golf and Country Club the amusement tax, penalties, surcharge,
be deemed to exist although Congress may provide statutory limitations and and interest paid under protest by the latter in the total amount of
guidelines." Section 186 of the Local Government Code also expressly grants P2,750,249.17 or to apply the same amount as tax credit against existing or
local government units the following residual power to tax: future tax liability of said Club.

Sec. 186. Power to Levy Other Taxes, Fees, or Charges. - Local government SO ORDERED
units may exercise the power to levy taxes, fees, or charges on any
base or subject not otherwise specifically enumerated herein or Sereno, C.J., (Chairperson), Bersamin, Perlas-Bernabe, and Jardeleza, JJ.,
taxed under the provisions of the National Internal Revenue Code, concur.
as amended, or other applicable laws: Provided,that the taxes, fees, or
charges shall not be unjust, excessive, oppressive, confiscatory or contrary Republic of the Philippines
to declared national policy: Provided, further, That the ordinance levying SUPREME COURT
such taxes, fees or charges shall not be enacted without any prior public Manila
hearing conducted for the purpose. (Emphasis supplied.)
EN BANC
Respondents, however, cannot claim that Section 42 of the Revised Omnibus
Tax Ordinance, as amended, imposing amusement tax on golf courses, was G.R. No. 169435 February 27, 2008
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 | 36

MUNICIPALITY OF NUEVA ERA, ILOCOS NORTE, represented by its The Municipality of Marcos, on the other hand, was created on June 22,
Municipal Mayor, CAROLINE ARZADON-GARVIDA, petitioner, 1963 pursuant to Republic Act (R.A.) No. 3753 entitled "An Act Creating the
vs. Municipality of Marcos in the Province of Ilocos Norte." Section 1 of R.A. No.
MUNICIPALITY OF MARCOS, ILOCOS NORTE, represented by its 3753 provides:
Municipal Mayor, SALVADOR PILLOS, and the HONORABLE COURT
OF APPEALS, respondents. SECTION 1. The barrios of Capariaan, Biding, Escoda, Culao,
Alabaan, Ragas and Agunit in the Municipality of Dingras, Province of
DECISION Ilocos Norte, are hereby separated from the said municipality and
constituted into a new and separate municipality to be known as the
REYES, R.T., J.: Municipality of Marcos, with the following boundaries:

AS the law creating a municipality fixes its boundaries, settlement of On the Northwest, by the barrios Biding-Rangay boundary going
boundary disputes between municipalities is facilitated by carrying into effect down to the barrios Capariaan-Gabon boundary consisting of foot
the law that created them. path and feeder road; on the Northeast, by the Burnay River which
is the common boundary of barrios Agunit and Naglayaan; on the
Any alteration of boundaries that is not in accordance with the law creating a East, by the Ilocos Norte-Mt. Province boundary; on the South, by
municipality is not the carrying into effect of that law but its amendment, the Padsan River which is at the same time the boundary between
which only the Congress can do.1 the municipalities of Banna and Dingras; on the West and
Southwest, by the boundary between the municipalities of Batac and
Dingras.
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 The Municipality of Marcos shall have its seat of government in the
Panlalawigan (SP) of Ilocos Norte about the boundary dispute between the barrio of Biding.
Municipalities of Marcos and Nueva Era in Ilocos Norte.
Based on the first paragraph of the said Section 1 of R.A. No. 3753, it is clear
The CA declared that Marcos is entitled to have its eastern boundary that Marcos shall be derived from the listed barangays of Dingras, namely:
extended up "to the boundary line between the province of Ilocos Norte and Capariaan, Biding, Escoda, Culao, Alabaan, Ragas and Agunit. The
Kalinga-Apayao."4 By this extension of Marcos' eastern boundary, the CA Municipality of Nueva Era or any of its barangays was not mentioned. Hence,
allocated to Marcos a portion of Nueva Era's territory. if based only on said paragraph, it is clear that Nueva Era may not be
considered as a source of territory of Marcos.
The Facts
There is no issue insofar as the first paragraph is concerned which named
only Dingras as the mother municipality of Marcos. The problem, however,
The Municipality of Nueva Era was created from the settlements of
lies in the description of Marcos' boundaries as stated in the second
Bugayong, Cabittaoran, Garnaden, Padpadon, Padsan, Paorpatoc, Tibangran,
paragraph, particularly in the phrase: "on the East, by the Ilocos Norte-Mt.
and Uguis which were previously organized as rancherias, each of which was
Province boundary."
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 It must be noted that the term "Mt. Province" stated in the above phrase
by virtue of Executive Order (E.O.) No. 66 5 dated September 30, 1916. refers to the present adjoining provinces of Benguet, Mountain Province,
Ifugao, Kalinga and Apayao, which were then a single province.
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

Mt. Province was divided into the four provinces of Benguet, Mountain land area of a municipality must be compact and contiguous, Nueva Era's
Province, Ifugao, and Kalinga-Apayao by virtue of R.A. No. 4695 which was northern isolated portion could no longer be considered as its territory but
enacted on June 18, 1966. On February 14, 1995, the province of Kalinga- that of Marcos'. Thus, Marcos claimed that it was entitled not only to the
Apayao, which comprises the sub-provinces of Kalinga and Apayao, was middle portion11 of Nueva Era but also to Nueva Era's isolated northern
further converted into the regular provinces of Kalinga and Apayao pursuant portion. These areas claimed by Marcos were within Barangay Sto. Niño,
to R.A. No. 7878. Nueva Era.

The part of then Mt. Province which was at the east of Marcos is now the Nueva Era reacted to the claim of Marcos through its Resolution No. 1, Series
province of Apayao. Hence, the eastern boundary referred to by the second of 1993. It alleged that since time immemorial, its entire land area was an
paragraph of Section 1 of R.A. No. 3753 is the present Ilocos Norte-Apayao ancestral domain of the "tinguians," an indigenous cultural community. It
boundary. 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
On the basis of the said phrase, which described Marcos' eastern boundary,
Marcos claimed that the middle portion of Nueva Era, which adjoins its According to Nueva Era, Marcos was created out of the territory of Dingras
eastern side, formed part of its territory. Its reasoning was founded upon the only. And since R.A. No. 3753 specifically mentioned seven (7) barrios of
fact that Nueva Era was between Marcos and the Ilocos Norte-Apayao Dingras to become Marcos, the area which should comprise Marcos should
boundary such that if Marcos was to be bounded on the east by the Ilocos not go beyond the territory of said barrios.13
Norte-Apayao boundary, part of Nueva Era would consequently be obtained
by it.6 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
Marcos did not claim any part of Nueva Era as its own territory until after adjacent municipality of Dingras. However, based on a re-survey in 1992,
almost 30 years,7 or only on March 8, 1993, when its Sangguniang Bayan supposedly done to conform to the second paragraph of Section 1 of R.A.
passed Resolution No. 93-015.8 Said resolution was entitled: "Resolution No. 3753, an area of 15,400 hectares of Nueva Era was alleged to form part
Claiming an Area which is an Original Part of Nueva Era, But Now Separated of Marcos.14 This was the area of Barangay Sto. Niño, Nueva Era that Marcos
Due to the Creation of Marcos Town in the Province of Ilocos Norte." claimed in its position paper.

Marcos submitted its claim to the SP of Ilocos Norte for its consideration and On March 29, 2000, the SP of Ilocos Norte ruled in favor of Nueva Era.
approval. The SP, on the other hand, required Marcos to submit its position The fallo of its decision15 reads:
paper.9
WHEREFORE, in view of all the foregoing, this Body has no
In its position paper, Marcos alleged that since its northeastern and eastern alternative but to dismiss, as it hereby DISMISSES said petition for
boundaries under R.A. No. 3753 were the Burnay River and the Ilocos Norte- lack of merit. The disputed area consisting of 15,400 hectares, more
Mountain Province boundary, respectively, its eastern boundary should not or less, is hereby declared as part and portion of the territorial
be limited to the former Dingras-Nueva Era boundary, which was jurisdiction of respondent Nueva Era.16
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 R.A. No. 3753 expressly named the barangays that would comprise Marcos,
Ilocos-Norte-Mt. Province boundary pursuant to the description of its eastern but none of Nueva Era's barangayswere mentioned. The SP thus construed,
boundary under R.A. No. 3753.10 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
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 | 38

The SP ratiocinated that if Marcos was to be bounded by Mt. Province, it Nueva Era have proudly claimed to be a part of this rich culture.
would encroach upon a portion, not only of Nueva Era but also of Abra. With this common ancestral heritage which unfortunately is absent
Thus: with Marcos, let it not be disturbed.19 (Emphasis ours and citations
omitted)
x x x Even granting, for the sake of argument, that the eastern
boundary of Marcos is indeed Mountain Province, Marcos will then be RTC Decision
claiming a portion of Abra because the province, specifically
Barangay Sto. Niño, Nueva Era, is actually bounded on the East by On appeal by Marcos, the RTC affirmed the decision of the SP in its
the Province of Abra. Abra is situated between and separates the decision20 of March 19, 2001. The dispositive part of the RTC decision reads:
Provinces of Ilocos Norte and Mountain Province.
WHEREFORE, the instant appeal is hereby DISMISSED. The
This is precisely what this body would like to avoid. Statutes should questioned decision of the Sangguniang Panlalawigan of Ilocos Norte
be construed in the light of the object to be achieved and the evil or is hereby AFFIRMED.
mischief to be suppressed, and they should be given such
construction as will advance the object, suppress the mischief and No costs.
secure the benefits intended.18 (Citations omitted)
SO ORDERED.21
The SP further explained:
The RTC reasoned out in this wise:
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
The position of the Municipality of Marcos is that the provision of
statute according to the exact and literal import of its words would
R.A. 3753 as regards its boundary on the East which is the "Ilocos
lead to absurdity, it should be construed according to the spirit and
Norte-Mt. Province" should prevail.
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 On the other hand, the Municipality of Nueva Era posits the theory
mandate given to it by the RA 7160 otherwise known Local that only the barrios of the Municipality of Dingras as stated in R.A.
Government Code, so believes that respondent Nueva Era or any 3753 should be included in the territorial jurisdiction of the
portion thereof has been excluded from the ambit of RA 3753. Under Municipality of Marcos. The Sangguniang Panlalawigan agreed with
the principle of "espressio (sic) unios (sic) est exclusio alterius," by the position of Nueva Era.
expressly naming the barangays that will comprise the town of
Marcos, those not mentioned are deemed excluded. In Republic Act xxxx
4354, where Section 2 thereof enumerated the barrios comprising
the City of Davao excluding the petitioner Barrio Central as part of An examination of the Congressional Records during the
the said City, the court held that there arose a prima facie conclusion deliberations of the R.A. 3753 (House Bill No. 3721) shows the
that the said law abolished Barrio Central as part of Davao City. Explanatory Note of Congressman Simeon M. Valdez, 2nd District,
Ilocos Norte, to wit:
Historically, the hinterlands of Nueva Era have been known to be the
home of our brothers and sisters belonging to peculiar groups of EXPLANATORY NOTE
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 | 39

This bill seeks to create in the Province of Ilocos Norte a Still determined to have a more extensive eastern boundary, Marcos filed a
new municipality to be known as the Municipality of Marcos, petition for review24 of the RTC decision before the CA. The issues raised by
to be comprised by the present barrios of Capariaan, Biding Marcos before the CA were:
Escoda, Culao, Alabaan, Ragas and Agunit, all in the
Municipality of Dingras of the same province. The seat of 1. Whether or not the site of Hercules Minerals and Oil, Inc. which is
government will be in the sitio of San Magro in the present within a Government Forest Reservation in Barangay Sto. Niño,
barrio of Ragas. formerly of Nueva Era, is a part of the newly created Municipality of
Marcos, Ilocos Norte.
xxxx
2. Whether or not the portion of Barangay Sto. Niño on the East
On the other hand, the Municipality of Dingras will not be which is separated from Nueva Era as a result of the full
adversely affected too much because its finances will still be implementation of the boundaries of the new Municipality of Marcos
sound and stable. Its capacity to comply with its obligations, belongs also to Marcos or to Nueva Era.25
especially to its employees and personnel, will not be
diminished nor its operations paralyzed. On the contrary, The twin issues involved two portions of Nueva Era, viz.: (1) middle portion,
economic development in both the mother and the proposed where Hercules Minerals and Oil, Inc. is located; and (2) northern portion of
municipalities will be accelerated. Nueva Era, which, according to Marcos, was isolated from Nueva Era in view
of the integration to Marcos of said middle portion.
In view of the foregoing, approval of this bill is earnestly
requested. 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
(Sgd.) SIMEON M. VALDEZ middle portion of Nueva Era in view of the description of Marcos' eastern
Congressman, 2nd District boundary under R.A. No. 3753. Marcos likewise contended that it was
Ilocos Norte22 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
Parenthetically, the legislative intent was for the creation of territory was contrary to law because the law required that a municipality
the Municipality of Marcos, Ilocos Norte from the barrios must have a compact and contiguous territory.26
(barangays) of the Municipality of Dingras, Ilocos Norte only.
Hence, the Municipality of Marcos cannot add any area In a Decision27 dated June 6, 2005, the CA partly reversed the RTC decision
beyond the territorial jurisdiction of the Municipality of with the following disposition:
Dingras, Ilocos Norte. This conclusion might have been
different only if the area being claimed by the Municipality of WHEREFORE, we partially GRANT the petition treated as one
Marcos is within the territorial jurisdiction of the Municipality for certiorari. The Decisions of both the Sangguniang
of Dingras and not the Municipality of Nueva Era. In such Panlalawigan and Regional Trial Court of Ilocos
case, the two conflicting provisions may be harmonized by Norte are REVERSED and SET ASIDEinsofar as they made the
including such area within the territorial jurisdiction of the eastern boundary of the municipality of Marcos co-terminous with
Municipality of Dingras as within the territorial jurisdiction of the eastern boundary of Dingras town, and another is rendered
the Municipality of Marcos.23 (Emphasis ours) extending the said boundary of Marcos to the boundary line between
the province of Ilocos Norte and Kalinga-Apayao, but the same
CA Disposition Decisions are AFFIRMED with respect to the denial of the claim of
Marcos to the detached northern portion of barangay Sto. Niño
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

which should, as it is hereby ordered to, remain with the municipality of Nueva Era. As the law is written so must it be applied. Dura lex
of Nueva Era. No costs. sed lex!29

SO ORDERED.28 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
In concluding that the eastern boundary of Marcos was the boundary line Abra for it to be bounded by Kalinga-Apayao, to wit:
between Ilocos Norte and Kalinga-Apayao, the CA gave the following
explanation: Nueva Era's contention that to lay out the eastern jurisdiction of
Marcos to the boundary line between Ilocos Norte and Mountain
Clearly then, both the SP and the RTC erred when they ruled that the Province (Kalinga-Apayao) would mean annexing part of the
eastern boundary of Marcos is only coterminous with the eastern boundary municipality of Itnig, province of Abra to Marcos as Abra is between
of the adjacent municipality of Dingras and refused to extend it up to the Ilocos Norte and Mountain Province is geographically erroneous.
boundary line between the provinces of Ilocos Norte and Mountain Province From Nueva Era's own map of Region 1, which also depicts the
(Kalinga-Apayao). R.A. No. 3753, the law creating Marcos, is very explicit locations of Kalinga-Apayao, Abra, Mountain Province, Benguet and
and leaves no room for equivocation that the boundaries of Marcos town Nueva Vizcaya after the partition of the old Mountain Province into
are: the provinces of Kalinga-Apayao, Ifugao, Mountain Province and
Benguet, the province of Abra is situated far to the south of Kalinga
"On the Northwest by the barrios Biding-Rangay boundary Apayao and is between the latter and the present Mountain
going down to the barrios Capariaan-Gabon boundary Province, which is farther south of Abra. Abra is part of the eastern
consisting of foot path and feeder road; on the Northeast, by boundary of Ilocos Sur while Kalinga-Apayao is the eastern boundary
the Burnay River which is the common boundary of barrios of Ilocos Norte. Hence, in no way will the eastern boundary of the
Agunit and Naglayaan; on the East, by the Ilocos Norte- municipality of Marcos encroach upon a portion of Abra.30
Mt. Province boundary; on the South by the Padsan
River, which is at the same time the boundary between the However, Marcos' claim over the alleged isolated northern portion of Nueva
municipalities of Banna and Dingras; on the West and Era was denied. The CA ruled:
Southwest by the boundary between the municipalities of
Batac and Dingras." 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
To stop short at the eastern boundary of Dingras as the eastern of the municipalities of Solsona and Dingras and north of Marcos, it
boundary also of Marcos and refusing to go farther to the boundary bears stressing that it is not included within the area of Marcos as
line between Ilocos Norte and Mountain Province (Kalinga-Apayao) is defined by law. But since it is already detached from Sto. Niño,
tantamount to amending the law which Congress alone can do. Both Marcos is laying claim to it to be integrated into its territory by the
the SP and RTC have no competence to undo a valid act of SP because it is contiguous to a portion of said municipality.
Congress.
We hold that the SP has no jurisdiction or authority to act on the
It is not correct to say that Congress did not intend to take away any claim, for it will necessarily substantially alter the north eastern and
part of Nueva Era and merge it with Marcos for it is chargeable with southern boundaries of Marcos from that defined by law and unduly
conclusive knowledge that when it provided that the eastern enlarge its area. Only Congress can do that. True, the SP may
boundary of Marcos is the boundary line between Ilocos Norte and substantially alter the boundary of a barangay within its jurisdiction.
Mountain Province, (by the time of both the SB and RTC Decision But this means the alteration of the boundary of a barangay in
was already Kalinga-Apayao), it would be cutting through a portion relation to another barangay within the same municipality for 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 | 41

long as that will not result in any change in the boundary of that Marcos town cannot exercise that right from the adverse decision of
municipality. The area in dispute therefore remains to be a part of the RTC of Ilocos Norte. Nonetheless, because of the transcendental
Sto. Niño, a barangay of Nueva Era although separated by the newly legal and jurisdictional issues involved, we solved our inceptive
created Marcos town pursuant to Section 7(c) of the 1991 Local dilemma by treating the petition at bar as a special civil action
Government Code which states: for certiorari.32

SEC. 7. Creation and Conversion. - As a general rule, the Nueva Era was not pleased with the decision of the CA. Hence, this petition
creation of a local government unit or its conversion from for review on certiorari under Rule 45.
one level to another shall be based on verifiable indicators of
viability and projected capacity to provide services, to wit: Issues

xxxx Nueva Era now raises the following issues:

(c) Land Area. - It must be contiguous, unless it comprises a) Whether or not, the Court of Appeals has jurisdiction on the
two or more islands or is separated by a local Petition for Review on Appeal, since Sec. 119 of the Local
government unit independent of the others; properly Government Code, which provides that "An appeal to the Decision of
identified by metes and bounds with technical descriptions; the Sangguniang Panlalawigan is exclusively vested to the Regional
and sufficient to provide for such basic services and facilities Trial Court, without further Appeal to the Court of Appeals";
to meet the requirements of its populace.31
b) Whether or not, the Court of Appeals gravely abused its
The CA also expressed the view that Marcos adopted the wrong mode of discretion, in treating the Petition for Review On Appeal, filed under
appeal in bringing the case to it. The case, according to the CA, was Rule 45, Revised Rules of Court, as a Petition for Certiorari, under
appealable only to the RTC. Nonetheless, despite its pronouncement that the Rule 65 of the Revised Rules of Court;
case was dismissible, the CA took cognizance of the same by treating it as
one for certiorari, to wit: c) Whether or not, the Court of Appeals erred in its appreciation of
facts, in declaring that MARCOS East is not coterminous with the
A final word. At the outset, we agonized over the dilemma of Eastern boundary of its mother town-Dingras. That it has no factual
choosing between dismissing outright the petition at bar or and legal basis to extend MARCOS territory beyond Brgys. Agunit
entertaining it. This is for the simple reason that a petition for review (Ferdinand) and Culao (Elizabeth) of Marcos, and to go further East,
is a mode of appeal and is not appropriate as the Local Government by traversing and disintegrating Brgy. Sto. Niño, and drawing parallel
Code provides for the remedy of appeal in boundary disputes only to lines from Sto. Niño, there lies Abra, not Mt. Province or Kalinga-
the Regional Trial Court but not any further appeal to this Court. Apayao.33
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 Basically, there are two (2) issues to resolve here: (1) whether or not the
supporting authority. 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
xxxx covers a portion of Nueva Era.

By the same token, since the Local Government Code does not Our Ruling
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 | 42

Marcos correctly appealed the RTC judgment via petition for review True, appeal is a purely statutory right and it cannot be exercised unless it is
under Rule 42. expressly granted by law. Nevertheless, the CA can pass upon the petition
for review precisely because the law allows it.
Under Section 118(b) of the Local Government Code, "(b)oundary disputes
involving two (2) or more municipalities within the same province shall be Batas Pambansa (B.P.) Blg. 129 or the Judiciary Reorganization Act of 1980,
referred for settlement to the sangguniang panlalawigan concerned." The as amended by R.A. No. 7902,38vests in the CA the appellate jurisdiction over
dispute shall be formally tried by the said sanggunian in case the disputing all final judgments, decisions, resolutions, orders or awards of Regional Trial
municipalities fail to effect an amicable settlement.34 Courts and quasi-judicial agencies, instrumentalities, boards or commissions,
among others.39 B.P. Blg. 129 has been further supplemented by the 1997
The SP of Ilocos validly took cognizance of the dispute between the parties. Rules of Civil Procedure, as amended, which provides for the remedy of
The appeal of the SP judgment to the RTC was likewise properly filed by appeal via petition for review under Rule 42 to the CA in cases decided by
Marcos before the RTC. The problem, however, lies in whether the RTC the RTC in the exercise of its appellate jurisdiction.
judgment may still be further appealed to the CA.
Thus, the CA need not treat the appeal via petition for review filed by Marcos
The CA pronounced that the RTC decision on the boundary dispute was not as a petition for certiorari to be able to pass upon the same. B.P. Blg. 129, as
appealable to it. It ruled that no further appeal of the RTC decision may be amended, which is supplemented by Rule 42 of the Rules of Civil Procedure,
made pursuant to Section 119 of the Local Government Code 35 which gives the CA the authority to entertain appeals of such judgments and final
provides: orders rendered by the RTC in the exercise of its appellate jurisdiction.

SECTION 119. Appeal. - Within the time and manner prescribed by At the time of creation of Marcos, approval in a plebiscite of the
the Rules of Court, any party may elevate the decision of creation of a local government unit is not required.
the sanggunian concerned to the proper Regional Trial Court having
jurisdiction over the area in dispute. The Regional Trial Court shall Section 10, Article X of the 1987 Constitution provides that:
decide the appeal within one (1) year from the filing thereof.
Pending final resolution of the disputed area prior to the dispute No province, city, municipality, or barangay may be created, divided,
shall be maintained and continued for all legal purposes. merged, abolished, or its boundary substantially altered, except in
accordance with the criteria established in the local government code
The CA concluded that since only the RTC was mentioned as appellate court, and subject to approval by a majority of the votes cast in a plebiscite
the case may no longer be further appealed to it. The CA stated that in the political units directly affected. 40
"(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 The purpose of the above constitutional provision was acknowledged by the
supporting authority."36 Court through Justice Reynato S. Puno in Miranda v. Aguirre,41 where it was
held that:
The CA, however, justified its taking cognizance of the case by declaring
that: "because of the transcendental legal and jurisdictional issues involved, The 1987 Constitution, more than any of our previous Constitutions,
we solved our inceptive dilemma by treating the petition at bar as a special gave more reality to the sovereignty of our people for it was borne
civil action for certiorari."37 out of the people power in the 1986 EDSA revolution. Its Section 10,
Article X addressed the undesirable practice in the past whereby
The CA erred in declaring that only the RTC has appellate jurisdiction over local government units were created, abolished, merged or divided
the judgment of the SP. 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
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

directly affected was required to serve as a checking mechanism to of the City of Mandaue which came into existence on June 21,
any exercise of legislative power creating, dividing, abolishing, 1969.47 (Citations omitted and underlining supplied).
merging or altering the boundaries of local government units. It is
one instance where the people in their sovereign capacity decide on Moreover, by deciding this case, We are not creating Marcos but merely
a matter that affects them - direct democracy of the people as interpreting the law that created it. Its creation was already a fait
opposed to democracy thru people's representatives. This plebiscite accompli. Therefore, there is no reason for Us to further require a plebiscite.
requirement is also in accord with the philosophy of the Constitution
granting more autonomy to local government units. 42 As pointed out by Justice Isagani Cruz, to wit:

Nueva Era contends that the constitutional and statutory43 plebiscite Finally, it should be observed that the provisions of the Constitution
requirement for the creation of a local government unit is applicable to this should be given only a prospective application unless the contrary is
case. It posits that the claim of Marcos to its territory should be denied due clearly intended. Were the rule otherwise, rights already acquired or
to lack of the required plebiscite. vested might be unduly disturbed or withdrawn even in the absence
of an unmistakable intention to place them within the scope of the
We agree with Nueva Era's contention that Marcos' claim over parts of its Constitution.48
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 No part of Nueva Era's territory was taken for the creation of
Code of 1991 but other reasons as will be discussed below. Marcos under R.A. No. 3753.

At the time Marcos was created, a plebiscite was not required by law to Only the barrios (now barangays) of Dingras from which Marcos obtained its
create a local government unit. Hence, Marcos was validly created without territory are named in R.A. No. 3753. To wit:
conducting a plebiscite. As a matter of fact, no plebiscite was conducted in
Dingras, where it was derived.
SECTION 1. The barrios of Capariaan, Biding, Escoda, Culao,
Alabaan, Ragas and Agunit in the Municipality of Dingras, Province of
Lex prospicit, non respicit. The law looks forward, not backward.44 It is the Ilocos Norte, are hereby separated from the said municipality and
basic norm that provisions of the fundamental law should be given constituted into a new and separate municipality to be known as the
prospective application only, unless legislative intent for its retroactive Municipality of Marcos, with the following boundaries:
application is so provided.45
Since only the barangays of Dingras are enumerated as Marcos' source of
In the comparable case of Ceniza v. Commission on Elections46 involving the territory, Nueva Era's territory is, therefore, excluded.
City of Mandaue, the Court has this to say:
Under the maxim expressio unius est exclusio alterius, the mention of one
Petitioners assail the charter of the City of Mandaue as thing implies the exclusion of another thing not mentioned. If a statute
unconstitutional for not having been ratified by the residents of the enumerates the things upon which it is to operate, everything else must
city in a plebiscite. This contention is untenable. The Constitutional necessarily and by implication be excluded from its operation and
requirement that the creation, division, merger, abolition, or effect.49 This rule, as a guide to probable legislative intent, is based upon the
alteration of the boundary of a province, city, municipality, or barrio rules of logic and natural workings of the human mind.50
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
Had the legislature intended other barangays from Nueva Era to become
requirement that came into being only with the 1973 Constitution. It
part of Marcos, it could have easily done so by clear and concise language.
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 | 44

Where the terms are expressly limited to certain matters, it may not by because, according to it, Nueva Era is between the Marcos and Ilocos Norte-
interpretation or construction be extended to other matters. 51 The rule Mt. Province boundary. Marcos posits that in order for its eastern side to
proceeds from the premise that the legislature would not have made reach the Ilocos Norte-Mt. Province boundary, it will necessarily traverse the
specified enumerations in a statute had the intention been not to restrict its middle portion of Nueva Era.
meaning and to confine its terms to those expressly mentioned. 52
Marcos further claims that it is entitled not only to the middle portion of
Moreover, since the barangays of Nueva Era were not mentioned in the Nueva Era but also to its northern portion which, as a consequence, was
enumeration of barangays out of which the territory of Marcos shall be set, isolated from the major part of Nueva Era.
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 We cannot accept the contentions of Marcos.
states that a person, object or thing omitted from an enumeration must be
held to have been omitted intentionally.53 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
Furthermore, this conclusion on the intention of the legislature is bolstered listed barangays of Dingras as a compact and contiguous territory.
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 Considering that the description of the eastern boundary of Marcos under
municipality of Marcos. R.A. No. 3753 is ambiguous, the same must be interpreted in light of the
legislative intent.
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 The law must be given a reasonable interpretation, to preclude absurdity in
intent of the statute.54 its application.55 We thus uphold the legislative intent to create Marcos out of
the territory of Dingras only.
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 Courts must give effect to the general legislative intent that can be
that based on the description of its boundaries, a portion of Nueva Era is discovered from or is unraveled by the four corners of the statute, and in
within its territory. order to discover said intent, the whole statute, and not only a particular
provision thereof, should be considered.56 Every section, provision or clause
The boundaries of Marcos under R.A. No. 3753 read: 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
On the Northwest, by the barrios Biding-Rangay boundary going legislator must be ascertained from the whole text of the law, and every part
down to the barrios Capariaan-Gabon boundary consisting of foot of the act is to be taken into view.57
path and feeder road; on the Northeast, by the Burnay River which
is the common boundary of barrios Agunit and Naglayaan; on the It is axiomatic that laws should be given a reasonable interpretation, not one
East, by the Ilocos Norte-Mt. Province boundary; on the South, by which defeats the very purpose for which they were passed. This Court has
the Padsan River which is at the same time the boundary between in many cases involving the construction of statutes always cautioned
the municipalities of Banna and Dingras; on the West and against narrowly interpreting a statute as to defeat the purpose of the
Southwest, by the boundary between the municipalities of Batac and legislature and stressed that it is of the essence of judicial duty to construe
Dingras. 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
Marcos contends that since it is "bounded on the East, by the Ilocos Norte- lead to absurd results."58
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 | 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.
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
QUIASON, J.: of comments by said respondents on the original supplemental
manifestation" (Rollo, p. 177).
This is a Petition for Certiorari, Prohibition and Mandamus, with Prayer for
Preliminary Injunction or Temporary Restraining Order, under Rule 65 of the On September 29, 1992, petitioners filed a motion to direct respondent
Revised Rules of Court. 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
Principally, the petition seeks to nullify the Order of the Ombudsman dated 1, 1992, this Court required respondent Secretary of Health to comment on
January 7, 1992, directing the preventive suspension of petitioners, the said motion.
Dr. Brigida S. Buenaseda, Chief of Hospital III; Isabelo C. Banez, Jr.,
Administrative Officer III; Conrado Rey Matias, Technical Assistant to the On September 29, 1992, in a pleading entitled "Omnibus Submission,"
Chief of Hospital; Cora C. Solis, Accountant III; and Enya N. Lopez, Supply respondent NCMH Nurses Association submitted its Comment to the Petition,
Officer III, all of the National Center for Mental Health. The petition also asks Supplemental Petition and Urgent Supplemental Manifestation. Included in
for an order directing the Ombudsman to disqualify Director Raul Arnaw and said pleadings were the motions to hold the lawyers of petitioners in
Investigator Amy de Villa-Rosero, of the Office of the Ombudsman, from contempt and to disbar them (Rollo, pp. 210-267). Attached to the "Omnibus
participation in the preliminary investigation of the charges against petitioner Submission" as annexes were the orders and pleadings filed in Administrative
(Rollo, pp. 2-17; Annexes to Petition, Rollo, pp. 19-21). Case No. OBM-ADM-0-91-1051 against petitioners (Rollo, pp. 268-480).

The questioned order was issued in connection with the administrative The Motion for Disbarment charges the lawyers of petitioners with:
complaint filed with the Ombudsman (OBM-ADM-0-91-0151) by the private (1) unlawfully advising or otherwise causing or inducing their clients —
respondents against the petitioners for violation of the Anti-Graft and Corrupt petitioners Buenaseda, et al., to openly defy, ignore, disregard, disobey or
Practices Act. otherwise violate, maliciously evade their preventive suspension by Order of
July 7, 1992 of the Ombudsman . . ."; (2) "unlawfully interfering with and
According to the petition, the said order was issued upon the obstructing the implementation of the said order (Omnibus Submission, pp.
recommendation of Director Raul Arnaw and Investigator Amy de Villa- 50-52; Rollo, pp. 259-260); and (3) violation of the Canons of the Code of
Rosero, without affording petitioners the opportunity to controvert the Professional Responsibility and of unprofessional and unethical conduct "by
charges filed against them. Petitioners had sought to disqualify Director foisting blatant lies, malicious falsehood and outrageous deception" and by
Arnaw and Investigator Villa-Rosero for manifest partiality and bias (Rollo, committing subornation of perjury, falsification and fabrication in their
pp. 4-15). pleadings (Omnibus Submission, pp. 52-54; Rollo, pp. 261-263).

On September 10, 1992, this Court required respondents' Comment on the On November 11, 1992, petitioners filed a "Manifestation and Supplement to
petition. '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 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, On November 13, 1992, the Solicitor General submitted its Comment dated
pp. 164-172; Annexes to Urgent Supplemental Manifestation; Rollo, pp. 173- November 10, 1992, alleging that: (a) "despite the issuance of the
176), respectively, averring developments that transpired after the filing of September 22, 1992 Resolution directing respondents to maintain the status
the petition and stressing the urgency for the issuance of the writ of quo, respondent Secretary refuses to hold in abeyance the implementation of
preliminary injunction or temporary restraining order. petitioners' preventive suspension; (b) the clear intent and spirit 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 | 47

Resolution dated September 22, 1992 is to hold in abeyance the In the pleading filed on January 25, 1993, petitioners adopted the position of
implementation of petitioners' preventive suspension, the status the Solicitor General that the Ombudsman can only suspend government
quo obtaining the time of the filing of the instant petition; (c) respondent officials or employees connected with his office. Petitioners also refuted
Secretary's acts in refusing to hold in abeyance implementation of private respondents' motion to disbar petitioners' counsel and to cite them
petitioners' preventive suspension and in tolerating and approving the acts of for contempt (Attached to Rollo without pagination).
Dr. Abueva, the OIC appointed to replace petitioner Buenaseda, are in
violation of the Resolution dated September 22, 1992; and The crucial issue to resolve is whether the Ombudsman has the power to
(d) therefore, respondent Secretary should be directed to comply with the suspend government officials and employees working in offices other than
Resolution dated September 22, 1992 immediately, by restoring the status the Office of the Ombudsman, pending the investigation of the
quo ante contemplated by the aforesaid resolution" (Comment attached administrative complaints filed against said officials and employees.
to Rollowithout paginations between pp. 613-614 thereof).
In upholding the power of the Ombudsman to preventively suspend
In the Resolution dated November 25, 1992, this Court required respondent petitioners, respondents (Urgent Motion to Lift Status Quo, etc, dated
Secretary to comply with the aforestated status quo order, stating inter alia, January 11, 1993, pp. 10-11), invoke Section 24 of R.A. No. 6770, which
that: provides:

It appearing that the status quo ante litem motam, or the Sec. 24. Preventive Suspension. — The Ombudsman or his
last peaceable uncontested status which preceded the Deputy may preventively suspend any officer or employee
present controversy was the situation obtaining at the time under his authority pending an investigation, if in his
of the filing of the petition at bar on September 7, 1992 judgment the evidence of guilt is strong, and (a) the charge
wherein petitioners were then actually occupying their against such officer or employee involves dishonesty,
respective positions, the Court hereby ORDERS that oppression or grave misconduct or neglect in the
petitioners be allowed to perform the duties of their performance of duty; (b) the charge would warrant removal
respective positions and to receive such salaries and benefits from the service; or (c) the respondent's continued stay in
as they may be lawfully entitled to, and that respondents office may prejudice the case filed against him.
and/or any and all persons acting under their authority
desist and refrain from performing any act in violation of the The preventive suspension shall continue until the case is
aforementioned Resolution of September 22, 1992 until terminated by the Office of Ombudsman but not more than
further orders from the Court (Attached to Rollo after p. 615 six months, without pay, except when the delay in the
thereof). disposition of the case by the Office of the Ombudsman is
due to the fault, negligence or petition of the respondent, in
On December 9, 1992, the Solicitor General, commenting on the Petition, which case the period of such delay shall not be counted in
Supplemental Petition and Supplemental Manifestation, stated that (a) "The computing the period of suspension herein provided.
authority of the Ombudsman is only to recommend suspension and he has
no direct power to suspend;" and (b) "Assuming the Ombudsman has the Respondents argue that the power of preventive suspension given the
power to directly suspend a government official or employee, there are Ombudsman under Section 24 of R.A. No. 6770 was contemplated by
conditions required by law for the exercise of such powers; [and] said Section 13 (8) of Article XI of the 1987 Constitution, which provides that the
conditions have not been met in the instant case" (Attached to Rollo without Ombudsman shall exercise such other power or perform such functions or
pagination). duties as may be provided by law."
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

On the other hand, the Solicitor General and the petitioners claim that under suspension is imposed after compliance with the requisites therein set forth,
the 1987 Constitution, the Ombudsman can only recommend to the heads of as an aid in the investigation of the administrative charges.
the departments and other agencies the preventive suspension of officials
and employees facing administrative investigation conducted by his office. Under the Constitution, the Ombudsman is expressly authorized to
Hence, he cannot order the preventive suspension himself. recommend to the appropriate official the discipline or prosecution of erring
public officials or employees. In order to make an intelligent determination
They invoke Section 13(3) of the 1987 Constitution which provides that the whether to recommend such actions, the Ombudsman has to conduct an
Office of the Ombudsman shall have inter alia the power, function, and duty investigation. In turn, in order for him to conduct such investigation in an
to: expeditious and efficient manner, he may need to suspend the respondent.

Direct the officer concerned to take appropriate action The need for the preventive suspension may arise from several causes,
against a public official or employee at fault, and among them, the danger of tampering or destruction of evidence in the
recommend his removal, suspension, demotion, fine, possession of respondent; the intimidation of witnesses, etc. The
censure or prosecution, and ensure compliance therewith. Ombudsman should be given the discretion to decide when the persons
facing administrative charges should be preventively suspended.
The Solicitor General argues that under said provision of the Constitutions,
the Ombudsman has three distinct powers, namely: (1) direct the officer Penal statutes are strictly construed while procedural statutes are liberally
concerned to take appropriate action against public officials or employees at construed (Crawford, Statutory Construction, Interpretation of Laws, pp.
fault; (2) recommend their removal, suspension, demotion fine, censure, or 460-461; Lacson v. Romero, 92 Phil. 456 [1953]). The test in determining if
prosecution; and (3) compel compliance with the recommendation a statute is penal is whether a penalty is imposed for the punishment of a
(Comment dated December 3, 1992, pp. 9-10). 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
The line of argument of the Solicitor General is a siren call that can easily prescribing the procedure in criminal cases is not a penal statute and is to be
mislead, unless one bears in mind that what the Ombudsman imposed on interpreted liberally (People v. Adler, 140 N.Y. 331; 35 N.E. 644).
petitioners was not a punitive but only a preventive suspension.
The purpose of R.A. No. 6770 is to give the Ombudsman such powers as he
When the constitution vested on the Ombudsman the power "to recommend may need to perform efficiently the task committed to him by the
the suspension" of a public official or employees (Sec. 13 [3]), it referred to Constitution. Such being the case, said statute, particularly its provisions
"suspension," as a punitive measure. All the words associated with the word dealing with procedure, should be given such interpretation that will
"suspension" in said provision referred to penalties in administrative effectuate the purposes and objectives of the Constitution. Any interpretation
cases, e.g. removal, demotion, fine, censure. Under the rule of Noscitor a that will hamper the work of the Ombudsman should be avoided.
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 A statute granting powers to an agency created by the Constitution should
susceptible of various meanings, its correct construction may be made be liberally construed for the advancement of the purposes and objectives
specific by considering the company of terms in which it is found or with for which it was created (Cf. Department of Public Utilities v. Arkansas
which it is associated (Co Kim Chan v. Valdez Tan Keh, 75 Phil. 371 [1945]; Louisiana Gas. Co., 200 Ark. 983, 142 S.W. (2d) 213 [1940]; Wallace v.
Caltex (Phils.) Inc. v. Palomar, 18 SCRA 247 [1966]). Feehan, 206 Ind. 522, 190 N.E., 438 [1934]).

Section 24 of R.A. No. 6770, which grants the Ombudsman the power to In Nera v. Garcia, 106 Phil. 1031 [1960], this Court, holding that a
preventively suspend public officials and employees facing administrative preventive suspension is not a penalty, said:
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 | 49

Suspension is a preliminary step in an administrative employees under investigation by his office, irrespective of whether they are
investigation. If after such investigation, the charges are employed "in his office" or in other offices of the government. The moment a
established and the person investigated is found guilty of criminal or administrative complaint is filed with the Ombudsman, the
acts warranting his removal, then he is removed or respondent therein is deemed to be "in his authority" and he can proceed to
dismissed. This is the penalty. determine whether said respondent should be placed under preventive
suspension.
To support his theory that the Ombudsman can only preventively suspend
respondents in administrative cases who are employed in his office, the In their petition, petitioners also claim that the Ombudsman committed
Solicitor General leans heavily on the phrase "suspend any officer or grave abuse of discretion amounting to lack of jurisdiction when he issued
employee under his authority" in Section 24 of R.A. No. 6770. the suspension order without affording petitioners the opportunity to
confront the charges against them during the preliminary conference and
The origin of the phrase can be traced to Section 694 of the Revised even after petitioners had asked for the disqualification of Director Arnaw
Administrative Code, which dealt with preventive suspension and which and Atty. Villa-Rosero (Rollo, pp. 6-13). Joining petitioners, the Solicitor
authorized the chief of a bureau or office to "suspend any subordinate or General contends that assuming arguendo that the Ombudsman has the
employee in his bureau or under his authority pending an investigation . . . ." power to preventively suspend erring public officials and employees who are
working in other departments and offices, the questioned order remains null
Section 34 of the Civil Service Act of 1959 (R.A. No. 2266), which and void for his failure to comply with the requisites in Section 24 of the
superseded Section 694 of the Revised Administrative Code also authorized Ombudsman Law (Comment dated December 3, 1992, pp. 11-19).
the chief of a bureau or office to "suspend any subordinate officer or
employees, in his bureau or under his authority." Being a mere order for preventive suspension, the questioned order of the
Ombudsman was validly issued even without a full-blown hearing and the
However, when the power to discipline government officials and employees formal presentation of evidence by the parties. In Nera, supra, petitioner
was extended to the Civil Service Commission by the Civil Service Law of therein also claimed that the Secretary of Health could not preventively
1975 (P.D. No. 805), concurrently with the President, the Department suspend him before he could file his answer to the administrative complaint.
Secretaries and the heads of bureaus and offices, the phrase "subordinate The contention of petitioners herein can be dismissed perfunctorily by
officer and employee in his bureau" was deleted, appropriately leaving the holding that the suspension meted out was merely preventive and therefore,
phrase "under his authority." Therefore, Section 41 of said law only mentions as held in Nera, there was "nothing improper in suspending an officer
that the proper disciplining authority may preventively suspend "any pending his investigation and before tho charges against him are heard . . .
subordinate officer or employee under his authority pending an investigation (Nera v. Garcia., supra).
. . ." (Sec. 41).
There is no question that under Section 24 of R.A. No. 6770, the
The Administrative Code of 1987 also empowered the proper disciplining Ombudsman cannot order the preventive suspension of a respondent unless
authority to "preventively suspend any subordinate officer or employee the evidence of guilt is strong and (1) the charts against such officer or
under his authority pending an investigation" (Sec. 51). 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
The Ombudsman Law advisedly deleted the words "subordinate" and "in his
case filed against him.
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 The same conditions for the exercise of the power to preventively suspend
"in his bureau" after "officer or employee" is that the Congress intended to officials or employees under investigation were found in Section 34 of R.A.
empower the Ombudsman to preventively suspend all officials and No. 2260.
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

The import of the Nera decision is that the disciplining authority is given the (2) Adoption of OSG's Comment; and (3) Reply to Private Respondent's
discretion to decide when the evidence of guilt is strong. This fact is Comment and Supplemental Comment, pp. 4-5).
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 A lawyer should not be carried away in espousing his client's cause. The
the administrative complaint. In the case at bench, the Ombudsman issued language of a lawyer, both oral or written, must be respectful and restrained
the order of preventive suspension only after: (a) petitioners had filed their in keeping with the dignity of the legal profession and with his behavioral
answer to the administrative complaint and the "Motion for the Preventive attitude toward his brethren in the profession (Lubiano v. Gordolla, 115
Suspension" of petitioners, which incorporated the charges in the criminal SCRA 459 [1982]). The use of abusive language by counsel against the
complaint against them (Annex 3, Omnibus Submission, Rollo, pp. 288-289; opposing counsel constitutes at the same time a disrespect to the dignity of
Annex 4, Rollo, the court of justice. Besides, the use of impassioned language in pleadings,
pp. 290-296); (b) private respondent had filed a reply to the answer of more often than not, creates more heat than light.
petitioners, specifying 23 cases of harassment by petitioners of the members
of the private respondent (Annex 6, Omnibus Submission, Rollo, pp. 309- The Motion for Disbarment (Rollo, p. 261) has no place in the instant special
333); and (c) a preliminary conference wherein the complainant and the civil action, which is confined to questions of jurisdiction or abuse of
respondents in the administrative case agreed to submit their list of discretion for the purpose of relieving persons from the arbitrary acts of
witnesses and documentary evidence. 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
Petitioners herein submitted on November 7, 1991 their list of exhibits civil action.
(Annex 8 of Omnibus Submission, Rollo, pp. 336-337) while private
respondents submitted their list of exhibits (Annex 9 of Omnibus WHEREFORE, the petition is DISMISSED and the Status quo ordered to be
Submission, Rollo, pp. 338-348). maintained in the Resolution dated September 22, 1992 is LIFTED and SET
ASIDE.
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 SO ORDERED.
recommending the suspension of petitioners. Neither can it be said that the
Ombudsman had acted with grave abuse of discretion in acting favorably on
Narvasa, C.J., Cruz, Padilla, Bidin, Griño-Aquino, Regalado, Davide, Jr.,
their recommendation.
Romero, Nocon, Melo, Puno and Vitug, JJ., concur.
The Motion for Contempt, which charges the lawyers of petitioners with
Feliciano, J., is on leave.
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 Separate Opinions
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 BELLOSILLO, J., concurring:
legitimate measures taken by said lawyers to question the validity and
propriety of the preventive suspension of their clients. I agree that the Ombudsman has the authority, under Sec. 24 of R.A.
No. 6770, to preventively suspend any government official or employee
On the other hand, we take cognizance of the intemperate language used by administratively charged before him pending the investigation of the
counsel for private respondents hurled against petitioners and their counsel complaint, the reason being that respondent's continued stay in office may
(Consolidated: (1) Comment on Private Respondent" "Urgent Motions, etc.; prejudice the prosecution of the case.
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

However, in the case before us, I am afraid that the facts thus far presented issue the preventive suspension under the circumstances. Regretfully, I
may not provide adequate basis to reasonably place petitioners under cannot see any sufficient basis to justify the preventive suspension. That is
preventive suspension. For, it is not enough to rule that the Ombudsman has why, I go for granting oral argument to the parties so that we can truthfully
authority to suspend petitioners preventively while the case is in progress determine whether the preventive suspension of respondents are warranted
before him. Equally important is the determination whether it is necessary to by the facts. We may be suspending key government officials and employees
issue the preventive suspension under the circumstances. Regretfully, I on the basis merely of speculations which may not serve the ends of justice
cannot see any sufficient basis to justify the preventive suspension. That is but which, on the other hand, deprive them of their right to due process.
why, I go for granting oral argument to the parties so that we can truthfully The simultaneous preventive suspension of top officials and employees of
determine whether the preventive suspension of respondents are warranted the National Center for Mental Health may just disrupt, the hospital's normal
by the facts. We may be suspending key government officials and employees operations, much to the detriment of public service. We may safely assume
on the basis merely of speculations which may not serve the ends of justice that it is not easy to replace them in their respective functions as those
but which, on the other hand, deprive them of their right to due process. substituting them may be taking over for the first time. The proper care of
The simultaneous preventive suspension of top officials and employees of mental patients may thus be unduly jeopardized and their lives and limbs
the National Center for Mental Health may just disrupt, the hospital's normal imperilled.
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 I would be amenable to holding oral argument to hear the parties if only to
substituting them may be taking over for the first time. The proper care of have enough factual and legal bases to justify the preventive suspension of
mental patients may thus be unduly jeopardized and their lives and limbs petitioners.
imperilled.
THIRD DIVISION
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 [G.R. No. 112212. March 2, 1998]
petitioners. GREGORIO FULE, petitioner, vs. COURT OF APPEALS,
NINEVETCH CRUZ and JUAN BELARMINO, respondents.

DECISION
# Separate Opinions
ROMERO, J.:
BELLOSILLO, J., concurring:
This petition for review on certiorari questions the affirmance by the
I agree that the Ombudsman has the authority, under Sec. 24 of R.A. Court of Appeals of the decision[1] of the Regional Trial Court of San Pablo
No. 6770, to preventively suspend any government official or employee City, Branch 30, dismissing the complaint that prayed for the nullification of a
administratively charged before him pending the investigation of the contract of sale of a 10-hectare property in Tanay, Rizal in consideration of
complaint, the reason being that respondent's continued stay in office may the amount of P40,000.00 and a 2.5 carat emerald-cut diamond (Civil Case
prejudice the prosecution of the case. No. SP-2455). The lower courts decision disposed of the case as follows:

However, in the case before us, I am afraid that the facts thus far presented WHEREFORE, premises considered, the Court hereby renders judgment
may not provide adequate basis to reasonably place petitioners under dismissing the complaint for lack of merit and ordering plaintiff to pay:
preventive suspension. For, it is not enough to rule that the Ombudsman has
authority to suspend petitioners preventively while the case is in progress 1. Defendant Dra. Ninevetch M. Cruz the sum of P300,000.00 as and for
before him. Equally important is the determination whether it is necessary to moral damages and the sum of P100,000.00 as and for exemplary damages;
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

2. Defendant Atty. Juan Belarmino the sum of P250,000.00 as and for moral sale or barter was feasible because the one-year period for redemption of
damages and the sum of P150,000.00 as and for exemplary damages; the said property had not yet expired at the time.
In an effort to cut through any legal impediment, petitioner executed on
3. Defendant Dra. Cruz and Atty. Belarmino the sum of P25,000.00 each as
October 19, 1984, a deed of redemption on behalf of Fr. Jacobe purportedly
and for attorneys fees and litigation expenses; and
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
4. The costs of suit. 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
SO ORDERED. barter, petitioner went to Prudential Bank once again to take a look at the
jewelry.
As found by the Court of Appeals and the lower court, the antecedent
In the afternoon of October 23, 1984, petitioner met Atty. Belarmino at
facts of this case are as follows:
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
Petitioner Gregorio Fule, a banker by profession and a jeweler at the same previously agreed to exchange a pair of emerald-cut diamond earrings for
time, acquired a 10-hectare property in Tanay, Rizal (hereinafter Tanay the Tanay property. Atty. Belarmino accordingly caused the preparation of a
property), covered by Transfer Certificate of Title No. 320725 which used to deed of absolute sale while petitioner and Dr. Cruz attended to the
be under the name of Fr. Antonio Jacobe. The latter had mortgaged it earlier safekeeping of the jewelry.
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 The following day, petitioner, together with Dichoso and Mendoza,
property offered for public auction upon his default. arrived at the residence of Atty. Belarmino to finally execute a deed of
absolute sale. Petitioner signed the deed and gave Atty. Belarmino the
In July 1984, petitioner, as corporate secretary of the bank, asked amount of P13,700.00 for necessary expenses in the transfer of title over the
Remelia Dichoso and Oliva Mendoza to look for a buyer who might be Tanay property. Petitioner also issued a certification to the effect that the
interested in the Tanay property. The two found one in the person of herein actual consideration of the sale was P200,000.00 and not P80,000.00 as
private respondent Dr. Ninevetch Cruz. It so happened that at the time, indicated in the deed of absolute sale. The disparity between the actual
petitioner had shown interest in buying a pair of emerald-cut diamond contract price and the one indicated on the deed of absolute sale was
earrings owned by Dr. Cruz which he had seen in January of the same year purportedly aimed at minimizing the amount of the capital gains tax that
when his mother examined and appraised them as genuine. Dr. Cruz, petitioner would have to shoulder. Since the jewelry was appraised only
however, declined petitioners offer to buy the jewelry at P160,000.00, the parties agreed that the balance of P40,000.00 would just
for P100,000.00. Petitioner then made another bid to buy them for be paid later in cash.
US$6,000.00 at the exchange rate of $1.00 to P25.00. At this point,
As pre-arranged, petitioner left Atty. Belarminos residence with Dichoso
petitioner inspected said jewelry at the lobby of the Prudential Bank branch
and Mendoza and headed for the bank, arriving there at past 5:00 p.m. Dr.
in San Pablo City and then made a sketch thereof. Having sketched the
Cruz also arrived shortly thereafter, but the cashier who kept the other key
jewelry for twenty to thirty minutes, petitioner gave them back to Dr. Cruz
to the deposit box had already left the bank. Dr. Cruz and Dichoso,
who again refused to sell them since the exchange rate of the peso at the
therefore, looked for said cashier and found him having a haircut. As soon as
time appreciated to P19.00 to a dollar.
his haircut was finished, the cashier returned to the bank and arrived there
Subsequently, however, negotiations for the barter of the jewelry and at 5:48 p.m., ahead of Dr. Cruz and Dichoso who arrived at 5:55 p.m. Dr.
the Tanay property ensued. Dr. Cruz requested herein private respondent Cruz and the cashier then opened the safety deposit box, the former
Atty. Juan Belarmino to check the property who, in turn, found out that no 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
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

the light and examined it for ten to fifteen minutes. After a while, Dr. Cruz After trial, the lower court rendered its decision on March 7, 1989.
asked, Okay na ba iyan? Petitioner expressed his satisfaction by nodding his Confronting the issue of whether or not the genuine pair of earrings used as
head. consideration for the sale was delivered by Dr. Cruz to petitioner, the lower
court said:
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,
The Court finds that the answer is definitely in the affirmative. Indeed, Dra.
give them half of the pair of earrings in question which he had earlier
Cruz delivered (the) subject jewelries (sic) into the hands of plaintiff who
promised.
even raised the same nearer to the lights of the lobby of the bank near the
Later, at about 8:00 oclock in the evening of the same day, petitioner door. When asked by Dra. Cruz if everything was in order, plaintiff even
arrived at the residence of Atty. Belarmino complaining that the jewelry nodded his satisfaction (Hearing of Feb. 24, 1988). At that instance, plaintiff
given to him was fake. He then used a tester to prove the alleged did not protest, complain or beg for additional time to examine further the
fakery. Meanwhile, at 8:30 p.m., Dichoso and Mendoza went to the jewelries (sic). Being a professional banker and engaged in the jewelry
residence of Dr. Cruz to borrow her car so that, with Atty. Belarmino, they business plaintiff is conversant and competent to detect a fake diamond from
could register the Tanay property. After Dr. Cruz had agreed to lend her car, the real thing. Plaintiff was accorded the reasonable time and opportunity to
Dichoso called up Atty. Belarmino. The latter, however, instructed Dichoso to ascertain and inspect the jewelries (sic) in accordance with Article 1584 of
proceed immediately to his residence because petitioner was there. Believing the Civil Code. Plaintiff took delivery of the subject jewelries (sic) before 6:00
that petitioner had finally agreed to give them half of the pair of earrings, p.m. of October 24, 1984. When he went at 8:00 p.m. that same day to the
Dichoso went posthaste to the residence of Atty. Belarmino only to find residence of Atty. Belarmino already with a tester complaining about some
petitioner already demonstrating with a tester that the earrings were fake jewelries (sic), there was already undue delay because of the lapse of a
fake. Petitioner then accused Dichoso and Mendoza of deceiving him which considerable length of time since he got hold of subject jewelries (sic). The
they, however, denied. They countered that petitioner could not have been lapse of two (2) hours more or less before plaintiff complained is considered
fooled because he had vast experience regarding jewelry. Petitioner by the Court as unreasonable delay.[3]
nonetheless took back the US$300.00 and jewelry he had given them.
The lower court further ruled that all the elements of a valid contract
Thereafter, the group decided to go to the house of a certain Macario
under Article 1458 of the Civil Code were present, namely: (a) consent or
Dimayuga, a jeweler, to have the earrings tested. Dimayuga, after taking
meeting of the minds; (b) determinate subject matter, and (c) price certain
one look at the earrings, immediately declared them counterfeit. At around
in money or its equivalent. The same elements, according to the lower court,
9:30 p.m., petitioner went to one Atty. Reynaldo Alcantara residing at
were present despite the fact that the agreement between petitioner and Dr.
Lakeside Subdivision in San Pablo City, complaining about the fake
Cruz was principally a barter contract. The lower court explained thus:
jewelry. Upon being advised by the latter, petitioner reported the matter to
the police station where Dichoso and Mendoza likewise executed sworn
statements. 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
On October 26, 1984, petitioner filed a complaint before the Regional (Exh. D). On the other hand, the ownership of Dra. Cruz over the subject
Trial Court of San Pablo City against private respondents praying, among jewelries (sic) transferred to the plaintiff upon her actual personal delivery to
other things, that the contract of sale over the Tanay property be declared him at the lobby of the Prudential Bank. It is expressly provided by law that
null and void on the ground of fraud and deceit. 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
On October 30, 1984, the lower court issued a temporary restraining
vs. Watson & Co. 13 Phil. 26). The ownership and/or title over the jewelries
order directing the Register of Deeds of Rizal to refrain from acting on the
(sic) was transmitted immediately before 6:00 p.m. of October 24, 1984.
pertinent documents involved in the transaction. On November 20, 1984,
Plaintiff signified his approval by nodding his head. Delivery or tradition, is
however, the same court lifted its previous order and denied the prayer for a
one of the modes of acquiring ownership (Art. 712, Civil Code).
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 | 54

Similarly, when Exhibit D was executed, it was equivalent to the delivery also on that same day it was executed, the propertys worth was magnified
of the Tanay property in favor of Dra. Cruz. The execution of the public at P75,000.00 (Exh. 3-Belarmino). How could in less than a day (Oct. 19,
instrument (Exh. D) operates as a formal or symbolic delivery of the Tanay 1984) the value would (sic) triple under normal circumstances? Plaintiff, with
property and authorizes the buyer, Dra. Cruz to use the document as proof the assistance of his agents, was able to exchange the Tanay property which
of ownership (Florendo v. Foz, 20 Phil. 399). More so, since Exhibit D does his bank valued only at P25,000.00 in exchange for a genuine pair of
not contain any proviso or stipulation to the effect that title to the property is emerald cut diamond worth P200,000.00 belonging to Dra. Cruz. He also
reserved with the vendor until full payment of the purchase price, nor is retrieved the US$300.00 and jewelries (sic) from his agents. But he was not
there a stipulation giving the vendor the right to unilaterally rescind the satisfied in being able to get subject jewelries for a song. He had to file a
contract the moment the vendee fails to pay within a fixed period (Taguba v. malicious and unfounded case against Dra. Cruz and Atty. Belarmino who are
Vda. De Leon, 132 SCRA 722; Luzon Brokerage Co. Inc. vs. Maritime Building well known, respected and held in high esteem in San Pablo City where
Co. Inc. 86 SCRA 305; Froilan v. Pan Oriental Shipping Co. et al. 12 SCRA everybody practically knows everybody. Plaintiff came to Court with unclean
276).[4] 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
Aside from concluding that the contract of barter or sale had in fact and nurturing their good reputation in the community only to be stunned
been consummated when petitioner and Dr. Cruz parted ways at the bank, with a court case. Since the filing of this case on October 26, 1984 up to the
the trial court likewise dwelt on the unexplained delay with which petitioner present they were living under a pall of doubt. Surely, this affected not only
complained about the alleged fakery. Thus: their earning capacity in their practice of their respective professions, but
x x x. Verily, plaintiff is already estopped to come back after the lapse of also they suffered besmirched reputations. Dra. Cruz runs her own hospital
considerable length of time to claim that what he got was fake. He is a and defendant Belarmino is a well respected legal practitioner.
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 The length of time this case dragged on during which period their
than enough time to make a switch of a Russian diamond with the real reputation were (sic) tarnished and their names maligned by the pendency
diamond. It must be remembered that in July 1984 plaintiff made a sketch of of the case, the Court is of the belief that some of the damages they prayed
the subject jewelries (sic) at the Prudential Bank. Plaintiff had a tester at for in their answers to the complaint are reasonably proportionate to the
8:00 p.m. at the residence of Atty. Belarmino. Why then did he not bring it sufferings they underwent (Art. 2219, New Civil Code). Moreover, because of
out when he was examining the subject jewelries (sic) at about 6:00 p.m. in the falsity, malice and baseless nature of the complaint defendants were
the banks lobby? Obviously, he had no need for it after being satisfied of the compelled to litigate. Hence, the award of attorneys fees is warranted under
genuineness of the subject jewelries (sic). When Dra. Cruz and plaintiff left the circumstances (Art. 2208, New Civil Code).[6]
the bank both of them had fully performed their respective prestations. Once
From the trial courts adverse decision, petitioner elevated the matter to
a contract is shown to have been consummated or fully performed by the
the Court of Appeals. On October 20, 1992, the Court of Appeals, however,
parties thereto, its existence and binding effect can no longer be disputed. It
rendered a decision[7]affirming in toto the lower courts decision. His motion
is irrelevant and immaterial to dispute the due execution of a contract if both
for reconsideration having been denied on October 19, 1993, petitioner now
of them have in fact performed their obligations thereunder and their
files the instant petition alleging that:
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, I. THE TRIAL COURT ERRED IN DISMISSING PLAINTIFFS
1987).[5] COMPLAINT AND IN HOLDING THAT THE PLAINTIFF ACTUALLY
RECEIVED A GENUINE PAIR OF EMERALD CUT DIAMOND
Finally, in awarding damages to the defendants, the lower court
EARRING(S) FROM DEFENDANT CRUZ x x x;
remarked:
II. THE TRIAL COURT ERRED IN AWARDING MORAL AND
The Court finds that plaintiff acted in wanton bad faith. Exhibit 2-Belarmino EXEMPLARY DAMAGES AND ATTORNEYS FEES IN FAVOR OF
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 | 55

DEFENDANTS AND AGAINST THE PLAINTIFF IN THIS CASE; convince this Court to review the same. It is noteworthy that Atty. Belarmino
and 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.
III.THE TRIAL COURT ERRED IN NOT DECLARING THE DEED OF Belarmino terminated presentation of evidence on October 13, 1987, while
SALE OF THE TANAY PROPERTY (EXH. `D) AS NULL AND VOID Dr. Cruz finished hers on February 4, 1989, or more than a month prior to
OR IN NOT ANNULLING THE SAME, AND IN FAILING TO the rendition of the judgment. The March 6, 1989 hearing was conducted
GRANT REASONABLE DAMAGES IN FAVOR OF THE solely for the presentation of petitioner's rebuttal testimony. [13] In other
PLAINTIFF.[8] words, Judge Jaramillo had ample time to study the case and write the
As to the first allegation, the Court observes that petitioner is essentially decision because the rebuttal evidence would only serve to confirm or verify
raising a factual issue as it invites us to examine and weigh anew the facts the facts already presented by the parties.
regarding the genuineness of the earrings bartered in exchange for the The Court finds nothing anomalous in the said situation. No proof has
Tanay property. This, of course, we cannot do without unduly transcending been adduced that Judge Jaramillo was motivated by a malicious or sinister
the limits of our review power in petitions of this nature which are confined intent in disposing of the case with dispatch. Neither is there proof that
merely to pure questions of law. We accord, as a general rule, someone else wrote the decision for him. The immediate rendition of the
conclusiveness to a lower courts findings of fact unless it is shown, inter alia, decision was no more than Judge Jaramillos compliance with his duty as a
that: (1) the conclusion is a finding grounded on speculations, surmises or judge to dispose of the courts business promptly and decide cases within the
conjectures; (2) the inference is manifestly mistaken, absurd and impossible; required periods.[14] The two-year period within which Judge Jaramillo
(3) when there is a grave abuse of discretion; (4) when the judgment is handled the case provided him with all the time to study it and even write
based on a misapprehension of facts; (5) when the findings of fact are down its facts as soon as these were presented to court. In fact, this Court
conflicting; and (6) when the Court of Appeals, in making its findings, went does not see anything wrong in the practice of writing a decision days before
beyond the issues of the case and the same is contrary to the admission of the scheduled promulgation of judgment and leaving the dispositive portion
both parties.[9] We find nothing, however, that warrants the application of for typing at a time close to the date of promulgation, provided that no
any of these exceptions. malice or any wrongful conduct attends its adoption. [15] The practice serves
Consequently, this Court upholds the appellate courts findings of fact the dual purposes of safeguarding the confidentiality of draft decisions and
especially because these concur with those of the trial court which, upon a rendering decisions with promptness. Neither can Judge Jaramillo be made
thorough scrutiny of the records, are firmly grounded on evidence presented administratively answerable for the immediate rendition of the decision. The
at the trial.[10] To reiterate, this Courts jurisdiction is only limited to reviewing acts of a judge which pertain to his judicial functions are not subject to
errors of law in the absence of any showing that the findings complained of disciplinary power unless they are committed with fraud, dishonesty,
are totally devoid of support in the record or that they are glaringly corruption or bad faith.[16] Hence, in the absence of sufficient proof to the
erroneous as to constitute serious abuse of discretion. [11] contrary, Judge Jaramillo is presumed to have performed his job in
accordance with law and should instead be commended for his close
Nonetheless, this Court has to closely delve into petitioners allegation attention to duty.
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 Having disposed of petitioners first contention, we now come to the
case.[12] Petitioner, in this regard, finds it incredible that Judge J. Ausberto core issue of this petition which is whether the Court of Appeals erred in
Jaramillo was able to write a 12-page single-spaced decision, type it and upholding the validity of the contract of barter or sale under the
release it on March 7, 1989, less than a day after the last hearing on March circumstances of this case.
6, 1989. He stressed that Judge Jaramillo replaced Judge Salvador de The Civil Code provides that contracts are perfected by mere
Guzman and heard only his rebuttal testimony. consent. From this moment, the parties are bound not only to the fulfillment
This allegation is obviously no more than a desperate effort on the part of what has been expressly stipulated but also to all the consequences
of petitioner to disparage the lower courts findings of fact in order to which, according to their nature, may be in keeping with good faith, usage
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

and law.[17] A contract of sale is perfected at the moment there is a meeting represented that its value was P400,000.00 or more than double that of the
of the minds upon the thing which is the object of the contract and upon the jewelry which was valued only at P160,000.00. If indeed petitioners property
price.[18] Being consensual, a contract of sale has the force of law between was truly worth that much, it was certainly contrary to the nature of a
the contracting parties and they are expected to abide in good faith by their businessman-banker like him to have parted with his real estate for half its
respective contractual commitments. Article 1358 of the Civil Code which price. In short, it was in fact petitioner who resorted to machinations to
requires the embodiment of certain contracts in a public instrument, is only convince Dr. Cruz to exchange her jewelry for the Tanay property.
for convenience,[19] and registration of the instrument only adversely affects
third parties.[20] Formal requirements are, therefore, for the benefit of third Moreover, petitioner did not clearly allege mistake as a ground for
parties. Non-compliance therewith does not adversely affect the validity of nullification of the contract of sale. Even assuming that he did, petitioner
the contract nor the contractual rights and obligations of the parties cannot successfully invoke the same. To invalidate a contract, mistake must
thereunder. 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
It is evident from the facts of the case that there was a meeting of the into the contract.[25] An example of mistake as to the object of the contract is
minds between petitioner and Dr. Cruz. As such, they are bound by the the substitution of a specific thing contemplated by the parties with
contract unless there are reasons or circumstances that warrant its another.[26] In his allegations in the complaint, petitioner insinuated that an
nullification. Hence, the problem that should be addressed in this case is inferior one or one that had only Russian diamonds was substituted for the
whether or not under the facts duly established herein, the contract can be jewelry he wanted to exchange with his 10-hectare land. He, however, failed
voided in accordance with law so as to compel the parties to restore to each to prove the fact that prior to the delivery of the jewelry to him, private
other the things that have been the subject of the contract with their fruits, respondents endeavored to make such substitution.
and the price with interest.[21]
Likewise, the facts as proven do not support the allegation that
Contracts that are voidable or annullable, even though there may have petitioner himself could be excused for the mistake. On account of his work
been no damage to the contracting parties are: (1) those where one of the as a banker-jeweler, it can be rightfully assumed that he was an expert on
parties is incapable of giving consent to a contract; and (2) those where the matters regarding gems. He had the intellectual capacity and the business
consent is vitiated by mistake, violence, intimidation, undue influence or acumen as a banker to take precautionary measures to avert such a mistake,
fraud.[22] Accordingly, petitioner now stresses before this Court that he considering the value of both the jewelry and his land. The fact that he had
entered into the contract in the belief that the pair of emerald-cut diamond seen the jewelry before October 24, 1984 should not have precluded him
earrings was genuine. On the pretext that those pieces of jewelry turned out from having its genuineness tested in the presence of Dr. Cruz. Had he done
to be counterfeit, however, petitioner subsequently sought the nullification of so, he could have avoided the present situation that he himself brought
said contract on the ground that it was, in fact, tainted with fraud [23] such about. Indeed, the finger of suspicion of switching the genuine jewelry for a
that his consent was vitiated. 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
There is fraud when, through the insidious words or machinations of mistake if the party alleging it knew the doubt, contingency or risk affecting
one of the contracting parties, the other is induced to enter into a contract the object of the contract.[28]
which, without them, he would not have agreed to.[24] The records, however,
are bare of any evidence manifesting that private respondents employed Furthermore, petitioner was afforded the reasonable opportunity
such insidious words or machinations to entice petitioner into entering the required in Article 1584 of the Civil Code within which to examine the jewelry
contract of barter. Neither is there any evidence showing that Dr. Cruz as he in fact accepted them when asked by Dr. Cruz if he was satisfied with
induced petitioner to sell his Tanay property or that she cajoled him to take the same.[29] By taking the jewelry outside the bank, petitioner executed an
the earrings in exchange for said property.On the contrary, Dr. Cruz did not act which was more consistent with his exercise of ownership over it. This
initially accede to petitioners proposal to buy the said jewelry. Rather, it gains credence when it is borne in mind that he himself had earlier delivered
appears that it was petitioner, through his agents, who led Dr. Cruz to the Tanay property to Dr. Cruz by affixing his signature to the contract of
believe that the Tanay property was worth exchanging for her jewelry as he sale. That after two hours he later claimed that the jewelry was not the one
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

he intended in exchange for his Tanay property, could not sever the juridical All told, petitioner appears to have elevated this case to this Court for
tie that now bound him and Dr. Cruz. The nature and value of the thing he the principal reason of mitigating the amount of damages awarded to both
had taken preclude its return after that supervening period within which private respondents which petitioner considers as exorbitant. He contends
anything could have happened, not excluding the alteration of the jewelry or that private respondents do not deserve at all the award of damages. In fact,
its being switched with an inferior kind. he pleads for the total deletion of the award as regards private respondent
Belarmino whom he considers a mere nominal party because no specific
Both the trial and appellate courts, therefore, correctly ruled that there claim for damages against him was alleged in the complaint. When he filed
were no legal bases for the nullification of the contract of sale. Ownership the case, all that petitioner wanted was that Atty. Belarmino should return to
over the parcel of land and the pair of emerald-cut diamond earrings had him the owners duplicate copy of TCT No. 320725, the deed of sale executed
been transferred to Dr. Cruz and petitioner, respectively, upon the actual and by Fr. Antonio Jacobe, the deed of redemption and the check alloted for
constructive delivery thereof.[30] Said contract of sale being absolute in expenses. Petitioner alleges further that Atty. Belarmino should not have
nature, title passed to the vendee upon delivery of the thing sold since there delivered all those documents to Dr. Cruz because as the lawyer for both the
was no stipulation in the contract that title to the property sold has been seller and the buyer in the sale contract, he should have protected the rights
reserved in the seller until full payment of the price or that the vendor has of both parties. Moreover, petitioner asserts that there was no firm basis for
the right to unilaterally resolve the contract the moment the buyer fails to damages except for Atty. Belarminos uncorroborated testimony.[34]
pay within a fixed period.[31] Such stipulations are not manifest in the
contract of sale. Moral and exemplary damages may be awarded without proof of
pecuniary loss. In awarding such damages, the court shall take into account
While it is true that the amount of P40,000.00 forming part of the the circumstances obtaining in the case and assess damages according to its
consideration was still payable to petitioner, its nonpayment by Dr. Cruz is discretion.[35] To warrant the award of damages, it must be shown that the
not a sufficient cause to invalidate the contract or bar the transfer of person to whom these are awarded has sustained injury. He must likewise
ownership and possession of the things exchanged considering the fact that establish sufficient data upon which the court can properly base its estimate
their contract is silent as to when it becomes due and demandable. [32] of the amount of damages. [36] Statements of facts should establish such data
Neither may such failure to pay the balance of the purchase price result rather than mere conclusions or opinions of witnesses. [37] Thus:
in the payment of interest thereon. Article 1589 of the Civil Code prescribes x x x. For moral damages to be awarded, it is essential that the
the payment of interest by the vendee for the period between the delivery of claimant must have satisfactorily proved during the trial the
the thing and the payment of the price in the following cases: existence of the factual basis of the damages and its causal
(1) Should it have been so stipulated; connection with the adverse partys acts. If the court has no proof
or evidence upon which the claim for moral damages could be
(2) Should the thing sold and delivered produce fruits or income; based, such indemnity could not be outrightly awarded. The same
(3) Should he be in default, from the time of judicial or extrajudicial holds true with respect to the award of exemplary damages where
demand for the payment of the price. it must be shown that the party acted in a wanton, oppressive or
malevolent manner.[38]
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 In this regard, the lower court appeared to have awarded damages on a
to pay the consideration after the notarization of the contract as previously ground analogous to malicious prosecution under Article 2219(8) of the Civil
promised resulted in the vendees liability for payment of interest. In the case Code[39] as shown by (1) petitioners wanton bad faith in bloating the value of
at bar, there is no stipulation for the payment of interest in the contract of the Tanay property which he exchanged for a genuine pair of emerald-cut
sale nor proof that the Tanay property produced fruits or income. Neither did diamond worth P200,000.00; and (2) his filing of a malicious and unfounded
petitioner demand payment of the price as in fact he filed an action to nullify case against private respondents who were well known, respected and held
the contract of sale. 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
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

petitioners coming to court with unclean hands, thereby affecting their exert extra efforts to check their genuineness despite the large consideration
earning capacity in the exercise of their respective professions and involved has never been explained at all by petitioner.His acts thus failed to
besmirching their reputation. accord with what an ordinary prudent man would have done in the same
situation. Being an experienced banker and a businessman himself who
For its part, the Court of Appeals affirmed the award of damages to deliberately skirted a legal impediment in the sale of the Tanay property and
private respondents for these reasons: to minimize the capital gains tax for its exchange, it was actually gross
The malice with which Fule filed this case is apparent. Having taken recklessness for him to have merely conducted a cursory examination of the
possession of the genuine jewelry of Dra. Cruz, Fule now wishes to jewelry when every opportunity for doing so was not denied him. Apparently,
return a fake jewelry to Dra. Cruz and, more than that, get back he carried on his person a tester which he later used to prove the alleged
the real property, which his bank owns. Fule has obtained a fakery but which he did not use at the time when it was most needed.
genuine jewelry which he could sell anytime, anywhere and to Furthermore, it took him two more hours of unexplained delay before he
anybody, without the same being traced to the original owner for complained that the jewelry he received were counterfeit.Hence, we stated
practically nothing. This is plain and simple, unjust enrichment.[40] earlier that anything could have happened during all the time that petitioner
was in complete possession and control of the jewelry, including the
While, as a rule, moral damages cannot be recovered from a person possibility of substituting them with fake ones, against which respondents
who has filed a complaint against another in good faith because it is not would have a great deal of difficulty defending themselves. The truth is that
sound policy to place a penalty on the right to litigate,[41] the same, however, petitioner even failed to successfully prove during trial that the jewelry he
cannot apply in the case at bar. The factual findings of the courts a quo to received from Dr. Cruz were not genuine. Add to that the fact that he had
the effect that petitioner filed this case because he was the victim of fraud; been shrewd enough to bloat the Tanay propertys price only a few days
that he could not have been such a victim because he should have examined after he purchased it at a much lower value. Thus, it is our considered view
the jewelry in question before accepting delivery thereof, considering his that if this slew of circumstances were connected, like pieces of fabric sewn
exposure to the banking and jewelry businesses; and that he filed the action into a quilt, they would sufficiently demonstrate that his acts were not
for the nullification of the contract of sale with unclean hands, all deserve full merely negligent but rather studied and deliberate.
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 We do not have here, therefore, a situation where petitioners complaint
against respondents. 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
As pointed out earlier, a closer scrutiny of the chain of events exemplary damages.[42] Instead, the cause of action of the instant case
immediately prior to and on October 24, 1984 itself would amply appears to have been contrived by petitioner himself. In other words, he was
demonstrate that petitioner was not simply negligent in failing to exercise placed in a situation where he could not honestly evaluate whether his cause
due diligence to assure himself that what he was taking in exchange for his of action has a semblance of merit, such that it would require the expertise
property were genuine diamonds. He had rather placed himself in a situation of the courts to put it to a test. His insistent pursuit of such case then
from which it preponderantly appears that his seeming ignorance was coupled with circumstances showing that he himself was guilty in bringing
actually just a ruse. Indeed, he had unnecessarily dragged respondents to about the supposed wrongdoing on which he anchored his cause of action
face the travails of litigation in speculating at the possible favorable outcome would render him answerable for all damages the defendant may suffer
of his complaint when he should have realized that his supposed because of it. This is precisely what took place in the petition at bar and we
predicament was his own making. We, therefore, see here no semblance of find no cogent reason to disturb the findings of the courts below that
an honest and sincere belief on his part that he was swindled by respondents respondents in this case suffered considerable damages due to petitioners
which would entitle him to redress in court. It must be noted that before unwarranted action.
petitioner was able to convince Dr. Cruz to exchange her jewelry for the
Tanay property, petitioner took pains to thoroughly examine said jewelry, WHEREFORE, the decision of the Court of Appeals dated October 20,
even going to the extent of sketching their appearance. Why at the precise 1992 is hereby AFFIRMED in toto. Dr. Cruz, however, is ordered to pay
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 | 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:
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

For failure of the defendant-appellant to may so choose to waive submission of the memoranda. And as a logical
prosecute her appeal the same is hereby concomitant of the choice given to the Parties, the Court cannot dismiss the
ordered DISMISSED with costs against her. appeal of the party waiving the submission of said memorandum the
appellant so chooses not to submit the memorandum, the Court of First
Petitioner filed a motion for reconsideration of the order on Instance is left with no alternative but to decide the case on the basis of the
September 28, 1971, citing as a ground the granting of his evidence and records transmitted from the city or municipal courts. In other
ex-parte motion to submit memorandum within 30 days words, the Court is not empowered by law to dismiss the appeal on the mere
from notice of the submission of the stenographic notes failure of an appellant to submit his memorandum, but rather it is the Court's
taken before the City Court. Private respondents filed their mandatory duty to decide the case on the basis of the available evidence and
opposition to the motion on September 30,1971. In the records transmitted to it.
meantime, on October 20,1971, petitioner filed her
memorandum dated October 18, 1971. On October 30, 1971 As a general rule, the word "may" when used in a statute is permissive only
the respondent Court denied the motion for reconsideration. and operates to confer discretion; while the word "shall" is imperative,
Then on January 25, 1972, petitioner filed a motion for leave operating to impose a duty which may be enforced (Dizon vs. Encarnacion,
to file second motion for reconsideration which was likewise L-18615, Dec. 24, 1963, 9 SCRA 714, 716-717). The implication is that the
denied by the respondent court on March 15, 1972. Hence Court is left with no choice but to decide the appealed case either on the
this petition. 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
The sole inquiry in the case at bar can be stated thus: Whether, in the light and/or made on request.
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 Moreover, memoranda, briefs and oral arguments are not essential
submit on nine the memorandum mentioned in the same paragraph would requirements. They may be submitted and/or made only if so requested.
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 Finally, a contrary interpretation would be unjust and dangerous as it may
to decide the appealed case on the basis of the evidence and records defeat the litigant's right to appeal granted to him by law. In the case
transmitted to it, the failure of the appellant to submit a memorandum on of Republic vs. Rodriguez
time notwithstanding. (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
The second paragraph of Section 45 of R.A. No. 296, otherwise known as the appeal except for weighty reasons." Courts should heed the rule
Philippine Judiciary Act of 1948, as amended by R.A. No. 6031 provides, in in Municipality of Tiwi, Albay vs. Cirujales
part, as follows: (L-37520, Dec. 26, 1973, 54 SCRA 390, 395), thus:

Courts of First Instance shall decide such appealed cases on The appellate court's summary dismissal of the appeal even
the basis of the evidence and records transmitted from the before receipt of the records of the appealed case as
city or municipal courts: Provided, That the parties may ordered by it in a prior mandamus case must be set aside as
submit memoranda and/or brief with oral argument if so having been issued precipitously and without an opportunity
requested ... . (Emphasis supplied). to consider and appreciate unavoidable circumstances of
record not attributable to petitioners that caused the delay in
The foregoing provision is clear and leaves no room for doubt. It cannot be the elevation of the records of the case on appeal.
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 | 61

In the instant case, no notice was received by petitioner about the first instance "requests" the party-appellant to submit a memorandum or
submission of the transcript of the stenographic notes, so that his 30-day brief on appeal under the provisions of Republic Act No. 6031 amending
period to submit his memorandum would commence to run. Only after the section 45 of Republic Act No. 296, such "request" is tantamount to a
expiration of such period can the respondent Judge act on the case by requirement for the proper prosecution of the appeal; thus, when the
deciding it on the merits, not by dismissing the appeal of petitioner. appellant willfuly fails to file such memorandum or brief, the judge should be
empowered to dismiss the appeal, applying suppletorily the analogous
WHEREFORE, THE CHALLENGED ORDERS OF RESPONDENT JUDGE DATED provisions of Rule 50, section 1 for dismissal of appeal by the higher
AUGUST 4, 1971, OCTOBER 30, 1971 AND MARCH 15, 1971 ARE HEREBY appellate courts and taking into account that Rule 40, section 9 of the Rules
SET ASIDE AS NULL AND VOID AND THE RESPONDENT COURT IS HEREBY of Court now expressly authorizes the court of first instance to dismiss an
DIRECTED TO DECIDE CIVIL CASE NO. C-2036 ON THE MERITS. NO COSTS. appeal before it "for failure to prosecute."

Muñoz Palma, Fernandez and Guerrero, JJ., concur.

Separate Opinions

TEEHANKEE, J, Concurring:

Separate Opinions 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
TEEHANKEE, J, concurring:
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
I concur with the setting aside of the questioned dismissal of petitioner's the memorandum) even before she had received any such notice. Upon
appeal on the ground that the record shows quite clearly that there was no receipt of the dismissal order, petitioner had promptly moved for
failure on part of petitioner-appellant to prosecute her appeal in respondent reconsideration and filed her memorandum on appeal.
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
I am not prepared at this stage to concur with the ratio decidendi of the
which to file her memorandum on appeal, yet her appeal was dismissed per
decision penned by Mr. Justice Makasiar that the Court is not empowered by
his Order of August 4, 1971 for alleged failure to prosecute (by failure to file
law to dismiss the appeal on the mere failure of an appellant to submit his
the memorandum) even before she had received any such notice. Upon
memorandum, but rather it is the Court's mandatory duty to decide the case
receipt of the dismissal order, petitioner had promptly moved for
on the basis of the available evidence and records transmitted to it." I
reconsideration and filed her memorandum on appeal.
entertain serious doubts about such pronouncement, once when the court of
first instance "requests" the party-appellant to submit a memorandum or
I am not prepared at this stage to concur with the ratio decidendi of the brief on appeal under the provisions of Republic Act No. 6031 amending
decision penned by Mr. Justice Makasiar that the Court is not empowered by section 45 of Republic Act No. 296, such "request" is tantamount to a
law to dismiss the appeal on the mere failure of an appellant to submit his requirement for the proper prosecution of the appeal; thus, when the
memorandum, but rather it is the Court's mandatory duty to decide the case appellant willfuly fails to file such memorandum or brief, the judge should be
on the basis of the available evidence and records transmitted to it." I empowered to dismiss the appeal, applying suppletorily the analogous
entertain serious doubts about such pronouncement, once when the court of 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.: 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
Before the Court is a Petition for Review on Certiorari under Rule 45 of the Rules of which Henson was dismissed from service.
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, On September 5, 2000, Fact-Finding Intelligence Bureau (FFIB) filed criminal and
2003 of the petitioner Office of the Ombudsman in OMB-ADM-0-00-0721. 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.
The material antecedents are as follows: 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
On November 13, 1992, respondent Raidis J. Bassig, Chief of the Research and Code of 1987, docketed as OMB-0-00-1411 and OMB-ADM-0-00-0721,
Publications Division of the Intramuros Administration, submitted a Memorandum to respectively.[2] OMB-0-00-1411 was dismissed on February 27, 2002 for lack of
then IntramurosAdministrator Edda V. Henson (Henson) recommending that Brand probable cause.[3]
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. 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.
On November 17, 1992, the Bids and Awards Committee (BAC) of
the Intramuros Administration, composed of respondent Merceditas de Sahagun, 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 | 63

However, then Ombudsman Simeon V. Marcelo disapproved the recommendation. In The Court rules in favor of the petitioner.
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. The issues in the present case are settled by precedents.
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 On the first issue, well-entrenched is the rule that administrative offenses do
misconduct and dismissed from service. Rustia was found guilty of simple misconduct not prescribe.[12] Administrative offenses by their very nature pertain to the character
and suspended for six months without pay. 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
On March 17, 2003, respondents, along with Rustia, filed a Motion for of the public service and the preservation of the publics faith and confidence in our
Reconsideration.[6] government.[13]

On June 24, 2003, Ombudsman Marcelo issued an Order[7] partially granting the Respondents insist that Section 20 (5) of R.A. No. 6770, to wit:
motion for reconsideration. Respondents and Ferrer were found guilty of the lesser
offense of simple misconduct and suspended for six months without SEC. 20. Exceptions. The Office of the Ombudsman may not
pay. Rustia's suspension was reduced to three months. conduct the necessary investigation of any administrative act or
omission complained of if it believes that:
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. xxx

On April 28, 2005, the CA rendered a Decision[9] setting aside the Orders dated March (5) The complaint was filed after one year from the occurrence of
10, 2003 and June 24, 2003 of the Ombudsman. The CA held that respondents may the act or omission complained of. (Emphasis supplied)
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 proscribes the investigation of any administrative act or omission if the complaint was
Section 20 (5) of Republic Act (R.A.) No. 6770, otherwise known as The Ombudsman filed after one year from the occurrence of the complained act or omission.
Act of 1989; and that the nature of the function of the Ombudsman was purely In Melchor v. Gironella,[14] the Court held that the period stated
recommendatory and it did not have the power to penalize erring government officials in Section 20(5) of R.A. No. 6770 does not refer to the prescription of the offense but
and employees. The CA relied on the following statement made by the Court to the discretion given to the Ombudsman on whether it would investigate a particular
in Tapiador v. Office of the Ombudsman,[10] to wit: administrative offense. The use of the word may in the provision is construed as
x x x Besides, assuming arguendo, that petitioner [Tapiador] was permissive and operating to confer discretion.[15] Where the words of a statute are
administratively liable, the Ombudsman has no authority to clear, plain and free from ambiguity, they must be given their literal meaning and
directly dismiss the petitioner from the government applied without attempted interpretation.[16]
service, more particularly from his position in the BID. Under
Section 13, subparagraph 3, of Article XI of the 1987 In Filipino v. Macabuhay,[17] the Court interpreted Section 20 (5) of R.A. No.
Constitution, the Ombudsman can only recommend the 6770 in this manner:
removal of the public official or employee found to be at
fault, to the public official concerned.[11] (Emphasis supplied) Petitioner argues that based on the abovementioned
provision [Section 20(5) of RA 6770)], respondent's complaint is
Hence, the present petition raising the following issues (1) whether Section 20 (5) of barred by prescription considering that it was filed more than one
R.A. No. 6770 prohibits administrative investigations in cases filed more than one year year after the alleged commission of the acts complained of.
after commission, and (2) whether the Ombudsman only has recommendatory, not
punitive, powers against erring government officials and employees. Petitioner's argument is without merit.
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

The use of the word "may" clearly shows that it is directory e) docketed as an administrative case for the purpose of
in nature and not mandatory as petitioner contends. When used in a administrative adjudication by the Office of the
statute, it is permissive only and operates to confer discretion; while Ombudsman. (Emphasis supplied)
the word "shall" is imperative, operating to impose a duty which
may be enforced. Applying Section 20(5), therefore, it is It is, therefore, discretionary upon the Ombudsman whether or not to
discretionary upon the Ombudsman whether or not to conduct an investigation of a complaint even if it was filed after one year from the
conduct an investigation on a complaint even if it was filed occurrence of the act or omission complained of.
after one year from the occurrence of the act or omission
complained of. In fine, the complaint is not barred by Thus, while the complaint herein was filed only on September 5, 2000, or more than
prescription.[18] (Emphasis supplied) 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
The declaration of the CA in its assailed decision that while as a general rule conduct the investigation of the subject complaint.
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 On the second issue, the authority of the Ombudsman to determine the administrative
becomes mandatory in character, is not plausible. It is not supported by jurisprudence liability of a public official or employee, and to direct and compel the head of the office
on statutory construction. or agency concerned to implement the penalty imposed is likewise settled.

As the Court recently held in Office of the Ombudsman v. Court of In Ledesma v. Court of Appeals,[22] the Court has ruled that the statement
Appeals,[19] Section 20 of R.A. No. 6770 has been clarified by Administrative Order No. in Tapiador that made reference to the power of the Ombudsman to impose an
17,[20] which amended Administrative Order No. 07, otherwise known as the Rules of administrative penalty was merely an obiter dictum and could not be cited as a
Procedure of the Office of the Ombudsman. Section 4, Rule III[21] of the amended doctrinal declaration of this Court, thus:
Rules of Procedure of the Office of the Ombudsman reads:
x x x [A] cursory reading of Tapiador reveals that the main point of
Section 4. Evaluation. - Upon receipt of the complaint, the case was the failure of the complainant therein to present
the same shall be evaluated to determine whether the same may substantial evidence to prove the charges of the administrative
be: case. The statement that made reference to the power of
a) dismissed outright for any grounds stated under the Ombudsman is, at best, merely an obiter dictum and, as
Section 20 of Republic Act No. 6770, provided, however, it is unsupported by sufficient explanation, is susceptible to varying
that the dismissal thereof is not mandatory and shall be interpretations, as what precisely is before us in this case. Hence, it
discretionary on the part of the Ombudsman or the Deputy cannot be cited as a doctrinal declaration of this Court nor
Ombudsman concerned; is it safe from judicial examination.[23] (Emphasis supplied)
b) treated as a grievance/request for assistance which may
be referred to the Public Assistance Bureau, this Office, for In Estarija v. Ranada,[24] the Court reiterated its pronouncements in Ledesma and
appropriate action under Section 2, Rule IV of this Rules; categorically stated:
c) referred to other disciplinary authorities under paragraph
2, Section 23, R.A. 6770 for the taking of appropriate administrative x x x [T]he Constitution does not restrict the powers of the
proceedings; Ombudsman in Section 13, Article XI of the 1987 Constitution, but
allows the Legislature to enact a law that would spell out the powers
d) referred to the appropriate office/agency or official for the of the Ombudsman. Through the enactment of Rep. Act No. 6770,
conduct of further fact-finding investigation; or 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
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

SECOND DIVISION of the North Association while three (3) members of LGVHAI were listed as
[G.R. No. 117188. August 7, 1997] members of the South Association.[3] The North Association was registered
with the HIGC on February 13, 1989 under Certificate of Registration No. 04-
LOYOLA GRAND VILLAS HOMEOWNERS (SOUTH) ASSOCIATION, 1160 covering Phases West II, East III, West III and East IV. It submitted its
INC., petitioner, vs. HON. COURT OF APPEALS, by-laws on December 20, 1988.
HOME INSURANCE AND GUARANTY CORPORATION, EMDEN
ENCARNACION and HORATIO AYCARDO, respondents. 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
DECISION 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
ROMERO, J.: and, second, there was non-user of corporate charter because HIGC had not
received any report on the associations activities. Apparently, this
May the failure of a corporation to file its by-laws within one month information resulted in the registration of the South Association with the
from the date of its incorporation, as mandated by Section 46 of the HIGC on July 27, 1989 covering Phases West I, East I and East 11. It filed its
Corporation Code, result in its automatic dissolution? by-laws on July 26, 1989.
This is the issue raised in this petition for review on certiorari of the These developments prompted the officers of the LGVHAI to lodge a
Decision[1] of the Court of Appeals affirming the decision of the Home complaint with the HIGC. They questioned the revocation of LGVHAIs
Insurance and Guaranty Corporation (HIGC).This quasi-judicial body certificate of registration without due notice and hearing and concomitantly
recognized Loyola Grand Villas Homeowners Association (LGVHA) as the sole prayed for the cancellation of the certificates of registration of the North and
homeowners association in Loyola Grand Villas, a duly registered subdivision South Associations by reason of the earlier issuance of a certificate of
in Quezon City and Marikina City that was owned and developed by Solid registration in favor of LGVHAI.
Homes, Inc. It revoked the certificates of registration issued to Loyola Grand
Villas Homeowners (North) Association Incorporated (the North Association On January 26, 1993, after due notice and hearing, private respondents
for brevity) and Loyola Grand Villas Homeowners (South) Association obtained a favorable ruling from HIGC Hearing Officer Danilo C. Javier who
Incorporated (the South Association). disposed of HIGC Case No. RRM-5-89 as follows:

LGVHAI was organized on February 8, 1983 as the association of WHEREFORE, judgment is hereby rendered recognizing the Loyola Grand
homeowners and residents of the Loyola Grand Villas. It was registered with Villas Homeowners Association, Inc., under Certificate of Registration No. 04-
the Home Financing Corporation, the predecessor of herein respondent 197 as the duly registered and existing homeowners association for Loyola
HIGC, as the sole homeowners organization in the said subdivision under Grand Villas homeowners, and declaring the Certificates of Registration of
Certificate of Registration No. 04-197. It was organized by the developer of Loyola Grand Villas Homeowners (North) Association, Inc. and Loyola Grand
the subdivision and its first president was Victorio V. Soliven, himself the Villas Homeowners (South) Association, Inc. as hereby revoked or cancelled;
owner of the developer. For unknown reasons, however, LGVHAI did not file that the receivership be terminated and the Receiver is hereby ordered to
its corporate by-laws. render an accounting and turn-over to Loyola Grand Villas Homeowners
Association, Inc., all assets and records of the Association now under his
Sometime in 1988, the officers of the LGVHAI tried to register its by-
custody and possession.
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 The South Association appealed to the Appeals Board of the HIGC. In its
non-resident and Soliven himself, respectively headed these Resolution of September 8, 1993, the Board[4] dismissed the appeal for lack
associations. They also discovered that these associations had five (5) of merit.
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 | 67

Rebuffed, the South Association in turn appealed to the Court of We also do not agree with the petitioners interpretation that Section 46,
Appeals, raising two issues. First, whether or not LGVHAIs failure to file its Corporation Code prevails over Section 6, P.D. 902-A and that the latter is
by-laws within the period prescribed by Section 46 of the Corporation Code invalid because it contravenes the former. There is no basis for such
resulted in the automatic dissolution of LGVHAI. Second, whether or not two interpretation considering that these two provisions are not inconsistent with
homeowners associations may be authorized by the HIGC in one sprawling each other. They are, in fact, complementary to each other so that one
subdivision. However, in the Decision of August 23, 1994 being assailed cannot be considered as invalidating the other.
here, the Court of Appeals affirmed the Resolution of the HIGC Appeals
Board. 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
In resolving the first issue, the Court of Appeals held that under the
registered homeowners association in the Loyola Grand Villas. More
Corporation Code, a private corporation commences to have corporate
importantly, the South Association did not dispute the fact that LGVHAI had
existence and juridical personality from the date the Securities and Exchange
been organized and that, thereafter, it transacted business within the period
Commission (SEC) issues a certificate of incorporation under its official
prescribed by law.
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 On the second issue, the Court of Appeals reiterated its previous
certificate of incorporation presupposes that it is already incorporated, ruling[5] that the HIGC has the authority to order the holding of a referendum
although it may file its by-laws with its articles of incorporation. Elucidating to determine which of two contending associations should represent the
on the effect of a delayed filing of by-laws, the Court of Appeals said: entire community, village or subdivision.

We also find nothing in the provisions cited by the petitioner, i.e., Sections Undaunted, the South Association filed the instant petition for review
46 and 22, Corporation Code, or in any other provision of the Code and other on certiorari. It elevates as sole issue for resolution the first issue it had
laws which provide or at least imply that failure to file the by-laws results in raised before the Court of Appeals, i.e., whether or not the LGVHAIs failure
an automatic dissolution of the corporation. While Section 46, in prescribing to file its by-laws within the period prescribed by Section 46 of the
that by-laws must be adopted within the period prescribed therein, may be Corporation Code had the effect of automatically dissolving the said
interpreted as a mandatory provision, particularly because of the use of the corporation.
word must, its meaning cannot be stretched to support the argument that Petitioner contends that, since Section 46 uses the word must with
automatic dissolution results from non-compliance. 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
We realize that Section 46 or other provisions of the Corporation Code are occurrence of a resolutory condition under the hypothesis that (by) the
silent on the result of the failure to adopt and file the by-laws within the issuance of the certificate of registration alone the corporate personality is
required period. Thus, Section 46 and other related provisions of the deemed already formed. It asserts that the Corporation Code provides for a
Corporation Code are to be construed with Section 6 (1) of P.D. 902-A. This gradation of violations of requirements. Hence, Section 22 mandates that the
section empowers the SEC to suspend or revoke certificates of registration corporation must be formally organized and should commence transactions
on the grounds listed therein. Among the grounds stated is the failure to file within two years from date of incorporation. Otherwise, the corporation
by-laws (see also II Campos: The Corporation Code, 1990 ed., pp. 124-125). would be deemed dissolved. On the other hand, if the corporation
Such suspension or revocation, the same section provides, should be made commences operations but becomes continuously inoperative for five years,
upon proper notice and hearing. Although P.D. 902-A refers to the SEC, the then it may be suspended or its corporate franchise revoked.
same principles and procedures apply to the public respondent HIGC as it
exercises its power to revoke or suspend the certificates of registration or Petitioner concedes that Section 46 and the other provisions of the
homeowners associations. (Section 2 [a], E.O. 535, series 1979, transferred Corporation Code do not provide for sanctions for non-filing of the by-laws.
the powers and authorities of the SEC over homeowners associations to the However, it insists that no sanction need be provided because the mandatory
HIGC.) nature of the provision is so clear that there can be no doubt about its being
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

an essential attribute of corporate birth. To petitioner, its submission is even if the by-laws have not yet been filed, a corporation may be considered
buttressed by the facts that the period for compliance is spelled out a de facto corporation. To emphasize the fact the LGVHAI was registered as
distinctly; that the certification of the SEC/HIGC must show that the by-laws the sole homeowners association in the Loyola Grand Villas, private
are not inconsistent with the Code, and that a copy of the by-laws has to be respondents point out that membership in the LGVHAI was an unconditional
attached to the articles of incorporation. Moreover, no sanction is provided restriction in the deeds of sale signed by lot buyers.
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 In its reply to private respondents comment on the petition, petitioner
proclamation that non-compliance is fatal and no corporate existence had yet reiterates its argument that the word must in Section 46 of the Corporation
evolved, and therefore, there was no need to proclaim its demise. [6] In a bid Code is mandatory. It adds that, before the ruling in Chung Ka Bio v.
to convince the Court of its arguments, petitioner stresses that: 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
x x x the word MUST is used in Sec. 46 in its universal literal meaning and
can rise above and change the substantive provisions of the Code.
corollary human implication its compulsion is integrated in its very
essence MUST is always enforceable by the inevitable consequence that The pertinent provision of the Corporation Code that is the focal point of
is, OR ELSE. The use of the word MUST in Sec. 46 is no exception it means controversy in this case states:
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 Sec. 46. Adoption of by-laws. Every corporation formed under this Code,
part of MUST. Do this or if you do not you are Kaput. The importance of the must within one (1) month after receipt of official notice of the issuance of
by-laws to corporate existence compels such meaning for as decreed the by- its certificate of incorporation by the Securities and Exchange Commission,
laws is `the government of the corporation. Indeed, how can the corporation adopt a code of by-laws for its government not inconsistent with this
do any lawful act as such without by-laws. Surely, no law is intended to Code. For the adoption of by-laws by the corporation, the affirmative vote of
create chaos.[7] 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
Petitioner asserts that P.D. No. 902-A cannot exceed the scope and corporations, shall be necessary. The by-laws shall be signed by the
power of the Corporation Code which itself does not provide sanctions for stockholders or members voting for them and shall be kept in the principal
non-filing of by-laws. For the petitioner, it is not proper to assess the true office of the corporation, subject to the stockholders or members voting for
meaning of Sec. 46 x x x on an unauthorized provision on such matter them and shall be kept in the principal office of the corporation, subject to
contained in the said decree. inspection of the stockholders or members during office hours; and a copy
thereof, shall be filed with the Securities and Exchange Commission which
In their comment on the petition, private respondents counter that the
shall be attached to the original articles of incorporation.
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 Notwithstanding the provisions of the preceding paragraph, by-laws may be
Appellate Court,[8] private respondents contend that Section 6(I) of that adopted and filed prior to incorporation; in such case, such by-laws shall be
decree provides that non-filing of by-laws is only a ground for suspension or approved and signed by all the incorporators and submitted to the Securities
revocation of the certificate of registration of corporations and, therefore, it and Exchange Commission, together with the articles of incorporation.
may not result in automatic dissolution of the corporation.Moreover, the
adoption and filing of by-laws is a condition subsequent which does not In all cases, by-laws shall be effective only upon the issuance by the
affect the corporate personality of a corporation like the LGVHAI. This is so Securities and Exchange Commission of a certification that the by-laws are
because Section 9 of the Corporation Code provides that the corporate not inconsistent with this Code.
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 | 69

The Securities and Exchange Commission shall not accept for filing the by- MR. FUENTEBELLA. But it will not automatically amount to
laws or any amendment thereto of any bank, banking institution, building a dissolution of the corporation by merely failing to file the by-
and loan association, trust company, insurance company, public utility, laws within one month. Supposing the corporation was late,
educational institution or other special corporations governed by special say, five days, what would be the mandatory penalty?
laws, unless accompanied by a certificate of the appropriate government
agency to the effect that such by-laws or amendments are in accordance MR. MENDOZA. I do not think it will necessarily result in
with law. 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
As correctly postulated by the petitioner, interpretation of this provision
takes into account the gravity of the violation committed. If
of law begins with the determination of the meaning and import of the
the by-laws were late the filing of the by-laws were late by,
word must in this section. Ordinarily, the word must connotes an imperative
perhaps, a day or two, I would suppose that might be a
act or operates to impose a duty which may be enforced. [9] It is synonymous
tolerable delay, but if they are delayed over a period of
with ought which connotes compulsion or mandatoriness. [10] However, the
months as is happening now because of the absence of a
word must in a statute, like shall, is not always imperative. It may be
clear requirement that by-laws must be completed within a
consistent with an exercise of discretion. In this jurisdiction, the tendency
specified period of time, the corporation must suffer certain
has been to interpret shall as the context or a reasonable construction of the
consequences.[13]
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 This exchange of views demonstrates clearly that automatic corporate
whole and with due regard to its nature and object reveals that the dissolution for failure to file the by-laws on time was never the intention of
legislature intended to use the words shall and must to be directory, they the legislature. Moreover, even without resorting to the records of
should be given that meaning.[12] deliberations of the Batasang Pambansa, the law itself provides the answer
to the issue propounded by petitioner.
In this respect, the following portions of the deliberations of the
Batasang Pambansa No. 68 are illuminating: Taken as a whole and under the principle that the best interpreter of a
statute is the statute itself (optima statuli interpretatix est ipsum
MR. FUENTEBELLA. Thank you, Mr. Speaker.
statutum),[14] Section 46 aforequoted reveals the legislative intent to attach
On page 34, referring to the adoption of by-laws, are we a directory, and not mandatory, meaning for the word must in the first
made to understand here, Mr. Speaker, that by-laws must sentence thereof. Note should be taken of the second paragraph of the law
immediately be filed within one month after the issuance? In which allows the filing of the by-laws even prior to incorporation. This
other words, would this be mandatory or directory in provision in the same section of the Code rules out mandatory compliance
character? 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
MR. MENDOZA. This is mandatory. Securities and Exchange Commission. It necessarily follows that failure to file
MR. FUENTEBELLA. It being mandatory, Mr. Speaker, the by-laws within that period does not imply the demise of the
what would be the effect of the failure of the corporation to corporation. By-laws may be necessary for the government of the
file these by-laws within one month? 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
MR. MENDOZA. There is a provision in the latter part of where by-laws are unnecessary to corporate existence or to the valid
the Code which identifies and describes the consequences of exercise of corporate powers, thus:
violations of any provision of this Code. One such
consequence is the dissolution of the corporation for its In the absence of charter or statutory provisions to the contrary, by-laws are
inability, or perhaps, incurring certain penalties. not necessary either to the existence of a corporation or to the valid exercise
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

of the powers conferred upon it, certainly in all cases where the charter xxx xxx xxx xxx
sufficiently provides for the government of the body; and even where the
governing statute in express terms confers upon the corporation the power 5. Failure to file by-laws within the required period;
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 xxx xxx xxx xxx
corporation which would otherwise be valid.[16] (Italics supplied.)
In the exercise of the foregoing authority and jurisdiction of the Commissions
As Fletcher aptly puts it: 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
It has been said that the by-laws of a corporation are the rule of its life, and purpose. The decision, ruling or order of any such Commissioner, bodies,
that until by-laws have been adopted the corporation may not be able to act boards, committees and/or officer may be appealed to the Commission
for the purposes of its creation, and that the first and most important duty of sitting en banc within thirty (30) days after receipt by the appellant of notice
the members is to adopt them. This would seem to follow as a matter of of such decision, ruling or order. The Commission shall promulgate rules of
principle from the office and functions of by-laws. Viewed in this light, the procedures to govern the proceedings, hearings and appeals of cases falling
adoption of by-laws is a matter of practical, if not one of legal, necessity. within its jurisdiction.
Moreover, the peculiar circumstances attending the formation of a
corporation may impose the obligation to adopt certain by-laws, as in the The aggrieved party may appeal the order, decision or ruling of the
case of a close corporation organized for specific purposes. And the statute Commission sitting en banc to the Supreme Court by petition for review in
or general laws from which the corporation derives its corporate existence accordance with the pertinent provisions of the Rules of Court.
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
Even under the foregoing express grant of power and authority, there
fact, however, of the existence of power in the corporation to adopt
can be no automatic corporate dissolution simply because the incorporators
by-laws does not ordinarily and of necessity make the exercise of
failed to abide by the required filing of by-laws embodied in Section 46 of the
such power essential to its corporate life, or to the validity of any of
Corporation Code. There is no outright demise of corporate existence. Proper
its acts.[17]
notice and hearing are cardinal components of due process in any
democratic institution, agency or society. In other words, the incorporators
Although the Corporation Code requires the filing of by-laws, it does not must be given the chance to explain their neglect or omission and remedy
expressly provide for the consequences of the non-filing of the same within the same.
the period provided for in Section 46. However, such omission has been
rectified by Presidential Decree No. 902-A, the pertinent provisions on the That the failure to file by-laws is not provided for by the Corporation
jurisdiction of the SEC of which state: 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
SEC. 6. In order to effectively exercise such jurisdiction, the Commission to the Code. Accordingly, the provisions abovequoted supply the law
shall possess the following powers: 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
xxx xxx xxx xxx 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]
(l) To suspend, or revoke, after proper notice and hearing, the
franchise or certificate of registration of corporations, partnerships or As the rules and regulations or private laws enacted by the corporation
associations, upon any of the grounds provided by law, including the to regulate, govern and control its own actions, affairs and concerns and its
following: stockholders or members and directors and officers with relation thereto 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 | 71

among themselves in their relation to it,[19] by-laws are indispensable to It should be stressed in this connection that substantial compliance with
corporations in this jurisdiction. These may not be essential to corporate conditions subsequent will suffice to perfect corporate personality.
birth but certainly, these are required by law for an orderly governance and Organization and commencement of transaction of corporate business are
management of corporations. Nonetheless, failure to file them within the but conditions subsequent and not prerequisites for acquisition of corporate
period required by law by no means tolls the automatic dissolution of a personality. The adoption and filing of by-laws is also a condition
corporation. subsequent. Under Section 19 of the Corporation Code, a corporation
commences its corporate existence and juridical personality and is deemed
In this regard, private respondents are correct in relying on the incorporated from the date the Securities and Exchange Commission issues
pronouncements of this Court in Chung Ka Bio v. Intermediate certificate of incorporation under its official seal. This may be done even
Appellate Court,[20] as follows: 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
x x x. Moreover, failure to file the by-laws does not automatically operate to the issuance of its certificate of incorporation.[21]
dissolve a corporation but is now considered only a ground for such
dissolution. 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
Section 19 of the Corporation Law, part of which is now Section 22 of the specialized functions of the former Home Financing Corporation by virtue of
Corporation Code, provided that the powers of the corporation would cease Executive Order No. 90 dated December 17, 1986. [22] With respect to
if it did not formally organize and commence the transaction of its business homeowners associations, the HIGC shall exercise all the powers, authorities
or the continuation of its works within two years from date of its and responsibilities that are vested on the Securities and Exchange
incorporation. Section 20, which has been reproduced with some Commission x x x, the provision of Act 1459, as amended by P.D. 902-A, to
modifications in Section 46 of the Corporation Code, expressly declared that the contrary notwithstanding.[23]
every corporation formed under this Act, must within one month after the
filing of the articles of incorporation with the Securities and Exchange WHEREFORE, the instant petition for review on certiorari is hereby
Commission, adopt a code of by-laws. Whether this provision should be DENIED and the questioned Decision of the Court of Appeals
given mandatory or only directory effect remained a controversial question AFFIRMED. This Decision is immediately executory.Costs against petitioner.
until it became academic with the adoption of PD 902-A. Under this decree,
SO ORDERED.
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 Regalado, (Chairman), Puno, and Mendoza, JJ., concur.
corporations. Torres, Jr., J., on leave.

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 SECOND DIVISION
certificate of registration of a corporation on the ground inter alia of failure ROOS INDUSTRIAL CONSTRUCTION, G.R. No. 172409
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, INC. and OSCAR TOCMO,
and secondly, assuming such finding, the penalty is not necessarily
revocation but may be only suspension of the charter. In fact, under the Petitioners, Present:
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. 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: Petitioners denied respondents allegations. They contended that respondent
had been hired on several occasions as a project employee and that his
February 4, 2008 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
x----------------------------------------------------------------------------x separation pay and other monetary claims, even attorneys fees. [6]
DECISION 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
TINGA, J.:
which is necessary to the usual trade of his employer.[7] The Labor Arbiter
In this Petition for Review on Certiorari[1] under Rule 45 of the 1997 Rules of pertinently stated as follows:
Civil Procedure, petitioners Roos Industrial Construction, Inc. and Oscar
x x x If it were true that complainant was hired as project
Tocmo assail the Court of Appeals[2] Decision dated 12 January 2006 in C.A.
employee, then there should have been project employment
G.R. SP No. 87572 and its Resolution[3] dated 10 April 2006 denying their
contracts specifying the project for which complainants
Motion for Reconsideration.[4]
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,
The following are the antecedents. 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
On 9 April 2002, private respondent Jose Martillos (respondent) filed a Department of Labor and Employment. However, the record
complaint against petitioners for illegal dismissal and money claims such as shows that there is only one termination [report] submitted
the payment of separation pay in lieu of reinstatement plus full backwages, to DOLE pertaining to the last project assignment of
service incentive leave, 13th month pay, litigation expenses, underpayment of complainant in Carmona, Cavite.
holiday pay and other equitable reliefs before the National Capital Arbitration
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

In the absence of said project employment contracts and the cash or surety bond within the reglementary period, petitioners filed a
corresponding Termination Report to DOLE at every project Motion for Extension of Time to Submit/Post Surety Bond.[11] Petitioners
termination, the inevitable conclusion is that the complainant stated that they could not post and submit the required surety bond as the
was a regular employee of the respondents. 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
In the case of Maraguinot, Jr. v. NLRC, 284 SCRA 539, 556 Arbiter.[12]
[1998], citing capital Industrial Construction Group v. NLRC,
221 SCRA 469, 473-474 [1993], it was ruled therein that a In a Resolution[13] dated July 29, 2004, the Second Division of the NLRC
project employee may acquire the status of a regular dismissed petitioners appeal for lack of jurisdiction. The NLRC stressed that
employee when the following concurs: (1) there is a the bond is an indispensable requisite for the perfection of an appeal by the
continuous rehiring of project employees even after the employer and that the perfection of an appeal within the reglementary
cessation of a project; and (2) the tasks performed by the period and in the manner prescribed by law is mandatory and jurisdictional.
alleged project employee are vital, necessary and In addition, the NLRC restated that its Rules of Procedure proscribes the
indispensable to the usual business or trade of the employer. filing of any motion for extension of the period within which to perfect an
Both factors are present in the instant case. Thus, even appeal. The NLRC summed up that considering that petitioners appeal had
granting that complainant was hired as a project employee, not been perfected, it had no jurisdiction to act on said appeal and the
he eventually became a regular employee as there was a assailed decision, as a consequence, has become final and executory. [14] The
continuous rehiring of this services. 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
xxx
execution be issued to enforce the award. On 26 January 2005, a writ of
execution was issued.[17]

In the instant case, apart from the fact that complainant was
not made to sign any project employment contract x x x he
Petitioners elevated the dismissal of their appeal to the Court of Appeals by
was successively transferred from one project after another,
way of a special civil action of certiorari. They argued that the filing of the
and he was made to perform the same kind of work as
appeal bond evinced their willingness to comply and was in fact substantial
driver.[8]
compliance with the Rules. They likewise maintained that the NLRC gravely
The Labor Arbiter ordered petitioners to pay respondent the aggregate sum abused its discretion in failing to consider the meritorious grounds for their
of P224,647.17 representing backwages, separation pay, salary differential, motion for extension of time to file the appeal bond. Lastly, petitioners
holiday pay, service incentive leave pay and 13th month pay.[9] 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.
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 Before this Court, petitioners reiterate their previous assertions. They insist
perfecting an appeal, petitioners filed a Memorandum of Appeal [10] before on the application of Star Angel Handicraft v. National Labor Relations
the NLRC and paid the appeal fee. However, instead of posting the required 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
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

that Borja Estate v. Ballad,[20] which underscored the importance of the filing cannot ascribe grave abuse of discretion to the NLRC or error to the Court of
of a cash or surety bond in the perfection of appeals in labor cases, had not Appeals in refusing to take cognizance of petitioners belated appeal.
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 While indeed the Court has relaxed the application of this requirement in
prejudice and impair petitioners right to appeal. Moreover, they point out cases where the failure to comply with the requirement was justified or
that judicial decisions have no retroactive effect.[21] 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
The Court denies the petition. 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 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 The intention of the lawmakers to make the bond an
decision.[22] Article 223 of the Labor Code states: 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
ART. 223. Appeal.Decisions, awards or orders LAWMAKERS intended the posting of a cash or surety bond
of the Labor Arbiter are final and executory unless by the employer to be
appealed to the Commission by any or both parties
within ten (10) calendar days from receipt of such the exclusive means by which an employers appeal may be
decisions, awards, or orders. considered completed. The law however does not require its
outright payment, but only the posting of a bond to ensure
In case of a judgment involving a monetary that the award will be eventually paid should the appeal fail.
award, an appeal by the employer may be perfected What petitioners have to pay is a moderate and reasonable
only upon the posting of a cash or surety bond issued sum for the premium of such bond.[29]
by a reputable bonding company duly accredited by the
Commission in the amount equivalent to the monetary
award in the judgment appealed from.
Moreover, no exceptional circumstances obtain in the case at bar which
xxx 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
Contrary to petitioners assertion, the appeal bond is not merely procedural opts not to strictly apply the rules and thus prevent a grave injustice from
but jurisdictional. Without said bond, the NLRC does not acquire jurisdiction being done[30] and this is not one of those cases.
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 In addition, petitioners cannot take refuge behind the Courts ruling in Star
must be stressed that there is no inherent right to an appeal in a labor case, Angel. Pertinently, the Court stated in Computer Innovations Center v.
as it arises solely from the grant of statute.[25] National Labor Relations Commission:[31]
Evidently, the NLRC did not acquire jurisdiction over petitioners appeal within Moreover, the reference in Star Angel to the distinction
the ten (10)-day reglementary period to perfect the appeal as the appeal between the period to file the appeal and to perfect the
bond was filed eight (8) days after the last day thereof. Thus, the Court 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
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
EN BANC 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
G.R. No. L-26001 October 29, 1968
Guaranteed, Philippine Commercial and Industrial Bank," Padre Faura
Branch, Manila; that, on the same date, the PCIB sent the check to the PNB,
PHILIPPINE NATIONAL BANK, petitioner, for clearance, through the Central Bank; and that, over two (2) months
vs. before, or on November 13, 1961, the GSIS had notified the PNB, which
THE COURT OF APPEALS and PHILIPPINE COMMERCIAL AND acknowledged receipt of the notice, that said check had been lost, and,
INDUSTRIAL BANK, respondents. accordingly, requested that its payment be stopped.

Tomas Besa, Jose B. Galang and Juan C. Jimenez for petitioner. In its brief, the PNB maintains that the lower court erred: (1) in not finding
San Juan, Africa & Benedicto for respondents. 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
CONCEPCION, C.J.: 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
The Philippine National Bank — hereinafter referred to as the PNB — seeks Instruments law; (5) in not finding that, since the check had not been
the review by certiorari of a decision of the Court of Appeals, which affirmed accepted by the PNB, the latter is entitled to reimbursement therefor; and
that of the Court of First Instance of Manila, dismissing plaintiff's complaint (6) in denying the PNB's right to recover from the PCIB.
against the Philippine Commercial and Industrial Bank — hereinafter referred
to as the PCIB — for the recovery of P57,415.00. The first assignment of error will be discussed later, together with the
last,with which it is interrelated.
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 As regards the second assignment of error, the PNB argues that, since the
Lim deposited in his current account with the PCIB branch at Padre Faura, signatures of the drawer are forged, so must the signatures of the supposed
Manila, GSIS Check No. 645915- B, in the sum of P57,415.00, drawn against indorsers be; but this conclusion does not necessarily follow from said
the PNB; that, following an established banking practice in the Philippines, premise. Besides, there is absolutely no evidence, and the PNB has not even
the check was, on the same date, forwarded, for clearing, through the tried to prove that the aforementioned indorsements are spurious. Again, the
Central Bank, to the PNB, which did not return said check the next day, or at PNB refunded the amount of the check to the GSIS, on account of the
any other time, but retained it and paid its amount to the PCIB, as well as forgery in the signatures, not of the indorsers or supposed indorsers, but of
debited it against the account of the GSIS in the PNB; that, subsequently, or the officers of the GSIS as drawer of the instrument. In other words, the
on January 31, 1962, upon demand from the GSIS, said sum of P57,415.00 question whether or not the indorsements have been falsified is immaterial
was re-credited to the latter's account, for the reason that the signatures of to the PNB's liability as a drawee, or to its right to recover from the
its officers on the check were forged; and that, thereupon, or on February 2, PCIB,1 for, as against the drawee, the indorsement of an intermediate bank
1962, the PNB demanded from the PCIB the refund of said sum, which the does not guarantee the signature of the drawer,2 since the forgery of the
PCIB refused to do. Hence, the present action against the PCIB, which was indorsement is notthe cause of the loss.3
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 | 77

With respect to the warranty on the back of the check, to which the third time; that said failure to return the check to the PCIB implied, under the
assignment of error refers, it should be noted that the PCIB thereby current banking practice, that the PNB considered the check good and would
guaranteed "all prior indorsements," not the authenticity of the signatures of honor it; that, in fact, the PNB honored the check and paid its amount to the
the officers of the GSIS who signed on its behalf, because the GSIS is not an PCIB; and that only then did the PCIB allow Augusto Lim to draw said
indorser of the check, but its drawer.4 Said warranty is irrelevant, therefore, amount from his aforementioned current account.
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 Thus, by not returning the check to the PCIB, by thereby indicating that the
to the PCIB, but, the PNB is neither.7 Indeed, upon payment by the PNB, as PNB had found nothing wrong with the check and would honor the same,
drawee, the check ceased to be a negotiable instrument, and became a mere and by actually paying its amount to the PCIB, the PNB induced the latter,
voucher or proof of payment.8 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
Referring to the fourth and fifth assignments of error, we must bear in mind primary or proximate cause of the loss, and, hence, may not recover from
that, in general, "acceptance", in the sense in which this term is used in the the PCIB.13
Negotiable Instruments Law9 is not required for checks, for the same are
payable on demand.10 Indeed, "acceptance" and "payment" are, within the It is a well-settled maxim of law and equity that when one of two (2)
purview of said Law, essentially different things, for the former is innocent persons must suffer by the wrongful act of a third person, the loss
"a promise to perform an act," whereas the latter is the "actual performance" must be borne by the one whose negligence was the proximate cause of the
thereof.11 In the words of the Law,12 "the acceptance of a bill is the loss or who put it into the power of the third person to perpetrate the
signification by the drawee of his assent to the order of the drawer," which, wrong.14
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 Then, again, it has, likewise, been held that, where the collecting (PCIB) and
only an assent to said order of the drawer and a recognition of the drawer's the drawee (PNB) banks are equally at fault, the court will leave the parties
obligation to pay the aforementioned sum, but, also, a compliance with such where it finds them.15
obligation.
Lastly, Section 62 of Act No. 2031 provides:
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
The acceptor by accepting the instrument engages that he will pay it
guilty of negligence in not discovering that the check was forged. Assuming
according to the tenor of his acceptance; and admits:
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, (a) The existence of the drawer, the genuineness of his signature,
because it had a previous and formal notice from the GSIS that the check and his capacity and authority to draw the instrument; and
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 (b) The existence of the payee and his then capacity to indorse.
negligence was the main or proximate cause for the corresponding loss.
The prevailing view is that the same rule applies in the case of a drawee who
In this connection, it will be recalled that the PCIB did not cash the pays a bill without having previously accepted it.16
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 WHEREFORE, the decision appealed from is hereby affirmed, with costs
day, the PCIB sent it, through the Central Bank, to the PNB, for clearing; that against the Philippine National Bank. It is so ordered.
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 | 78

Reyes, J.B.L., Dizon, Makalintal, Sanchez, Castro, Angeles, Fernando and Petitioners plead that they had been employed by respondent NSC in
Capistrano, JJ., concur. connection with its Five Year Expansion Program (FAYEP I & II) 1 for varying
Zaldivar, J., took no part. lengths of time when they were separated from NSC's service:

Republic of the Philippines Employee Date Nature of Separated


SUPREME COURT
Manila Employed Employment

EN BANC 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
G.R. No. 109902 August 2, 1994 5. Leonido Echavez 6-16-82 Eng. Assistant 6-30-92
6. Darrell Eltagonde 5-20-85 Engineer 1 8-31-91
ALU-TUCP, Representing Members: ALAN BARINQUE, with 13 7. Gerry Fetalvero 4-08-85 Mat. Expediter regularized
others, namely: ENGR. ALAN G. BARINQUE, ENGR. DARRELL LEE 8. Eduard Fookson 9-20-84 Eng. Assistant 8-31-91
ELTAGONDE, EDUARD H. FOOKSON, JR., ROMEO R. SARONA, 9. Russell Gacus 1-30-85 Engineer 1 6-30-92
RUSSELL GACUS, JERRY BONTILAO, EUSEBIO MARIN, JR., 10. Jose Garguena 3-02-81 Warehouseman to present
LEONIDO ECHAVEZ, BONIFACIO MEJOS, EDGAR S. BONTUYAN, 11. Eusebio Mejos 11-17-82 Survey Aide 8-31-91
JOSE G. GARGUENA, JR., OSIAS B. DANDASAN, and GERRY I. 12. Bonifacio Mejos 11-17-82 Surv. Party Head 1992
FETALVERO, petitioners, 13. Romeo Sarona 2-26-83 Machine Operator 8-31-912
vs.
NATIONAL LABOR RELATIONS COMMISSION and NATIONAL STEEL On 5 July 1990, petitioners filed separate complaints for unfair labor practice,
CORPORATION (NSC), respondents. regularization and monetary benefits with the NLRC, Sub-Regional Arbitration
Branch XII, Iligan City.
Leonard U. Sawal for petitioners.
The complaints were consolidated and after hearing, the Labor Arbiter in a
Saturnino Mejorada for private respondent. 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
FELICIANO, J.:
Both parties appealed to the NLRC from that decision. Petitioners argued
In this Petition for Certiorari, petitioners assail the Resolution of the National that they were regular, not project, employees. Private respondent, on the
Labor Relations Commission ("NLRC") dated 8 January 1993 which declared other hand, claimed that petitioners are project employees as they were
petitioners to be project employees of private respondent National Steel employed to undertake a specific project — NSC's Five Year Expansion
Corporation ("NSC"), and the NLRC's subsequent Resolution of 15 February Program (FAYEP I & II).
1993, denying petitioners' motion for reconsideration.
The NLRC in its questioned resolutions modified the Labor Arbiter's decision.
It affirmed the Labor Arbiter's holding that petitioners were project
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

employees since they were hired to perform work in a specific undertaking — The basic issue is thus whether or not petitioners are properly characterized
the Five Years Expansion Program, the completion of which had been as "project employees" rather than "regular employees" of NSC. This issue
determined at the time of their engagement and which operation was not relates, of course, to an important consequence: the services of project
directly related to the business of steel manufacturing. The NLRC, however, employees are co-terminous with the project and may be terminated upon
set aside the award to petitioners of the same benefits enjoyed the end or completion of the project for which they were hired. 5 Regular
by regular employees for lack of legal and factual basis. 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
Deliberating on the present Petition for Certiorari, the Court considers that modes of termination of service under the Labor Code. 6
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 It is evidently important to become clear about the meaning and scope of
questioned resolutions of 8 January 1993 and 15 February 1993. the term "project" in the present context. The "project" for the carrying out
of which "project employees" are hired would ordinarily have some
The law on the matter is Article 280 of the Labor Code which reads in full: relationship to the usual business of the employer. Exceptionally, the
"project" undertaking might not have an ordinary or normal relationship to
Art. 280. Regular and Casual Employment — The provisions the usual business of the employer. In this latter case, the determination of
of the written agreement to the contrary notwithstanding the scope and parameeters of the "project" becomes fairly easy. It is unusual
and regardless of the oral agreement of the parties, and (but still conceivable) for a company to undertake a project which has
employment shall be deemed to be regular where the absolutely no relationship to the usual business of the company; thus, for
employee has been engaged to perform activities which are instance, it would be an unusual steel-making company which would
usually necessary or desirable in the usual business or trade undertake the breeding and production of fish or the cultivation of
of the employer, except where the employment has been vegetables. From the viewpoint, however, of the legal characterization
fixed for a specific project or undertaking the completion or problem here presented to the Court, there should be no difficulty in
termination of which has been determined at the time of the designating the employees who are retained or hired for the purpose of
engagement of the employee or where the work or services undertaking fish culture or the production of vegetables as "project
to be performed is seasonal in nature and the employment is employees," as distinguished from ordinary or "regular employees," so long
for the duration of the season. 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
An employment shall be deemed to be casual if it is not
for determining whether particular employees are properly characterized as
covered by the preceding paragraph: Provided, That, any
"project employees" as distinguished from "regular employees," is whether
employee who has rendered at least one year service,
or not the "project employees" were assigned to carry out a "specific project
whether such service is continuous or broken, shall be
or undertaking," the duration (and scope) of which were specified at the
considered a regular employee with respect to the activity in
time the employees were engaged for that project.
which he is employed and his employment shall continue
while such actually exists. (Emphasis supplied)
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,
Petitioners argue that they are "regular" employees of NSC because: (i) their
a project could refer to a particular job or undertaking that is within the
jobs are "necessary, desirable and work-related to private respondent's main
regular or usual business of the employer company, but which is distinct and
business, steel-making"; and (ii) they have rendered service for six (6) or
separate, and identifiable as such, from the other undertakings of the
more years to private respondent NSC. 4
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
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

construction company ordinarily carries out two or more discrete identifiable Which ever type of project employment is found in a particular case, a
construction projects: e.g., a twenty-five- storey hotel in Makati; a residential common basic requisite is that the designation of named employees as
condominium building in Baguio City; and a domestic air terminal in Iloilo "project employees" and their assignment to a specific project, are effected
City. Employees who are hired for the carrying out of one of these separate and implemented in good faith, and not merely as a means of evading
projects, the scope and duration of which has been determined and made otherwise applicable requirements of labor laws.
known to the employees at the time of employment, are properly treated as
"project employees," and their services may be lawfully terminated at Thus, the particular component projects embraced in the Five Year
completion of the project. Expansion Program, to which petitioners were assigned, were distinguishable
from the regular or ordinary business of NSC which, of course, is the
The term "project" could also refer to, secondly, a particular job or production or making and marketing of steel products. During the time
undertaking that is not within the regular business of the corporation. Such a petitioners rendered services to NSC, their work was limited to one or
job or undertaking must also be identifiably separate and distinct from the another of the specific component projects which made up the FAYEP I and
ordinary or regular business operations of the employer. The job or II. There is nothing in the record to show that petitioners were hired for, or
undertaking also begins and ends at determined or determinable times. The in fact assigned to, other purposes, e.g., for operating or maintaining the
case at bar presents what appears to our mind as a typical example of this old, or previously installed and commissioned, steel-making machinery and
kind of "project." equipment, or for selling the finished steel products.

NSC undertook the ambitious Five Year Expansion Program I and II with the We, therefore, agree with the basic finding of the NLRC (and the Labor
ultimate end in view of expanding the volume and increasing the kinds of Arbiter) that the petitioners were indeed "project employees:"
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 It is well established by the facts and evidence on record
"Cold Rolling Mill Expansion Project"; (b) the establishment of a "Billet Steel- that herein 13 complainants were hired and engaged for
Making Plant" (BSP); (c) the acquisition and installation of a "Five Stand specific activities or undertaking the period of which has
TDM"; and (d) the "Cold Mill Peripherals Project." 8 Instead of contracting been determined at time of hiring or engagement. It is of
out to an outside or independent contractor the tasks of constructing the public knowledge and which this Commission can safely take
buildings with related civil and electrical works that would house the new judicial notice that the expansion program (FAYEP) of
machinery and equipment, the installation of the newly acquired mill or plant respondent NSC consist of various phases [of] project
machinery and equipment and the commissioning of such machinery and components which are being executed or implemented
equipment, NSC opted to execute and carry out its Five Yeear Expansion independently or simultaneously from each other . . .
Projects "in house," as it were, by administration. The carrying out of the
Five Year Expansion Program (or more precisely, each of its component In other words, the employment of each "project worker" is
projects) constitutes a distinct undertaking identifiable from the ordinary dependent and co-terminous with the completion or
business and activity of NSC. Each component project, of course, begins and termination of the specific activity or undertaking [for which]
ends at specified times, which had already been determined by the time he was hired which has been pre-determined at the time of
petitioners were engaged. We also note that NSC did the work here involved engagement. Since, there is no showing that they (13
— the construction of buildings and civil and electrical works, installation of complainants) were engaged to perform work-related
machinery and equipment and the commissioning of such machinery — only activities to the business of respondent which is steel-
for itself. Private respondent NSC was not in the business of constructing making, there is no logical and legal sense of applying to
buildings and installing plant machinery for the general business community, them the proviso under the second paragraph of Article 280
i.e., for unrelated, third party, corporations. NSC did not hold itself out to the of the Labor Code, as amended.
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 | 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.