You are on page 1of 79

Republic of the Philippines SUPREME COURT Manila EN BANC G.R. No.

L-19650 September 29, 1966

CALTEX (PHILIPPINES), INC., petitioner-appellee, vs. ENRICO PALOMAR, in his capacity as THE POSTMASTER GENERAL, respondent-appellant. Office of the Solicitor General for respondent and appellant. Ross, Selph and Carrascoso for petitioner and appellee.

CASTRO, J.: In the year 1960 the Caltex (Philippines) Inc. (hereinafter referred to as Caltex) conceived and laid the groundwork for a promotional scheme calculated to drum up patronage for its oil products. Denominated "Caltex Hooded Pump Contest", it calls for participants therein to estimate the actual number of liters a hooded gas pump at each Caltex station will dispense during a specified period. Employees of the Caltex (Philippines) Inc., its dealers and its advertising agency, and their immediate families excepted, participation is to be open indiscriminately to all "motor vehicle owners and/or licensed drivers". For the privilege to participate, no fee or consideration is required to be paid, no purchase of Caltex products required to be made. Entry forms are to be made available upon request at each Caltex station where a sealed can will be provided for the deposit of accomplished entry stubs. A three-staged winner selection system is envisioned. At the station level, called "Dealer Contest", the contestant whose estimate is closest to the actual number of liters dispensed by the hooded pump thereat is to be awarded the first prize; the next closest, the second; and the next, the third. Prizes at this level consist of a 3-burner kerosene stove for first; a thermos bottle and a Ray-O-Vac hunter lantern for second; and an Everready Magnet-lite flashlight with batteries and a screwdriver set for third. The first-prize winner in each station will then be qualified to join in the "Regional Contest" in seven different regions. The winning stubs of the qualified contestants in each region will be deposited in a sealed can from which the first-prize, second-prize and third-prize winners of that region will be drawn. The regional first-prize winners will be entitled to make a three-day all-expenses-paid round trip to Manila, accompanied by their respective Caltex dealers, in order to take part in the "National Contest". The regional second-prize and third-prize winners will receive cash prizes of P500 and P300, respectively. At the national level, the stubs of the seven regional first-prize winners will be placed inside a sealed can from which the drawing for the final first-prize, second-prize and third-prize winners will be made. Cash prizes in store for winners at this final stage are: P3,000 for first; P2,000 for second; Pl,500 for third; and P650 as consolation prize for each of the remaining four participants. Foreseeing the extensive use of the mails not only as amongst the media for publicizing the contest but also for the transmission of communications relative thereto, representations were made by Caltex with the postal authorities for the contest to be cleared in advance for mailing, having in view sections 1954(a), 1982 and 1983 of the Revised Administrative Code, the pertinent provisions of which read as follows: SECTION 1954. Absolutely non-mailable matter. No matter belonging to any of the following classes, whether sealed as first-class matter or not, shall be imported into the Philippines through the mails, or to be deposited in or carried by the mails of the Philippines, or be delivered to its addressee by any officer or employee of the Bureau of Posts:

Written or printed matter in any form advertising, describing, or in any manner pertaining to, or conveying or purporting to convey any information concerning any lottery, gift enterprise, or similar scheme depending in whole or in part upon lot or chance, or any scheme, device, or enterprise for obtaining any money or property of any kind by means of false or fraudulent pretenses, representations, or promises. "SECTION 1982. Fraud orders.Upon satisfactory evidence that any person or company is engaged in conducting any lottery, gift enterprise, or scheme for the distribution of money, or of any real or personal property by lot, chance, or drawing of any kind, or that any person or company is conducting any scheme, device, or enterprise for obtaining money or property of any kind through the mails by means of false or fraudulent pretenses, representations, or promises, the Director of Posts may instruct any postmaster or other officer or employee of the Bureau to return to the person, depositing the same in the mails, with the word "fraudulent" plainly written or stamped upon the outside cover thereof, any mail matter of whatever class mailed by or addressed to such person or company or the representative or agent of such person or company. SECTION 1983. Deprivation of use of money order system and telegraphic transfer service.The Director of Posts may, upon evidence satisfactory to him that any person or company is engaged in conducting any lottery, gift enterprise or scheme for the distribution of money, or of any real or personal property by lot, chance, or drawing of any kind, or that any person or company is conducting any scheme, device, or enterprise for obtaining money or property of any kind through the mails by means of false or fraudulent pretenses, representations, or promise, forbid the issue or payment by any postmaster of any postal money order or telegraphic transfer to said person or company or to the agent of any such person or company, whether such agent is acting as an individual or as a firm, bank, corporation, or association of any kind, and may provide by regulation for the return to the remitters of the sums named in money orders or telegraphic transfers drawn in favor of such person or company or its agent. The overtures were later formalized in a letter to the Postmaster General, dated October 31, 1960, in which the Caltex, thru counsel, enclosed a copy of the contest rules and endeavored to justify its position that the contest does not violate the anti-lottery provisions of the Postal Law. Unimpressed, the then Acting Postmaster General opined that the scheme falls within the purview of the provisions aforesaid and declined to grant the requested clearance. In its counsel's letter of December 7, 1960, Caltex sought a reconsideration of the foregoing stand, stressing that there being involved no consideration in the part of any contestant, the contest was not, under controlling authorities, condemnable as a lottery. Relying, however, on an opinion rendered by the Secretary of Justice on an unrelated case seven years before (Opinion 217, Series of 1953), the Postmaster General maintained his view that the contest involves consideration, or that, if it does not, it is nevertheless a "gift enterprise" which is equally banned by the Postal Law, and in his letter of December 10, 1960 not only denied the use of the mails for purposes of the proposed contest but as well threatened that if the contest was conducted, "a fraud order will have to be issued against it (Caltex) and all its representatives". Caltex thereupon invoked judicial intervention by filing the present petition for declaratory relief against Postmaster General Enrico Palomar, praying "that judgment be rendered declaring its 'Caltex Hooded Pump Contest' not to be violative of the Postal Law, and ordering respondent to allow petitioner the use of the mails to bring the contest to the attention of the public". After issues were joined and upon the respective memoranda of the parties, the trial court rendered judgment as follows: In view of the foregoing considerations, the Court holds that the proposed 'Caltex Hooded Pump Contest' announced to be conducted by the petitioner under the rules marked as Annex B of the petitioner does not violate the Postal Law and the respondent has no right to bar the public distribution of said rules by the mails. The respondent appealed.

The parties are now before us, arrayed against each other upon two basic issues: first, whether the petition states a sufficient cause of action for declaratory relief; and second, whether the proposed "Caltex Hooded Pump Contest" violates the Postal Law. We shall take these up in seriatim. 1. By express mandate of section 1 of Rule 66 of the old Rules of Court, which was the applicable legal basis for the remedy at the time it was invoked, declaratory relief is available to any person "whose rights are affected by a statute . . . to determine any question of construction or validity arising under the . . . statute and for a declaration of his rights thereunder" (now section 1, Rule 64, Revised Rules of Court). In amplification, this Court, conformably to established jurisprudence on the matter, laid down certain conditions sine qua non therefor, to wit: (1) there must be a justiciable controversy; (2) the controversy must be between persons whose interests are adverse; (3) the party seeking declaratory relief must have a legal interest in the controversy; and (4) the issue involved must be ripe for judicial determination (Tolentino vs. The Board of Accountancy, et al., G.R. No. L-3062, September 28, 1951; Delumen, et al. vs. Republic of the Philippines, 50 O.G., No. 2, pp. 576, 578-579; Edades vs. Edades, et al., G.R. No. L-8964, July 31, 1956). The gravamen of the appellant's stand being that the petition herein states no sufficient cause of action for declaratory relief, our duty is to assay the factual bases thereof upon the foregoing crucible. As we look in retrospect at the incidents that generated the present controversy, a number of significant points stand out in bold relief. The appellee (Caltex), as a business enterprise of some consequence, concededly has the unquestioned right to exploit every legitimate means, and to avail of all appropriate media to advertise and stimulate increased patronage for its products. In contrast, the appellant, as the authority charged with the enforcement of the Postal Law, admittedly has the power and the duty to suppress transgressions thereof particularly thru the issuance of fraud orders, under Sections 1982 and 1983 of the Revised Administrative Code, against legally nonmailable schemes. Obviously pursuing its right aforesaid, the appellee laid out plans for the sales promotion scheme hereinbefore detailed. To forestall possible difficulties in the dissemination of information thereon thru the mails, amongst other media, it was found expedient to request the appellant for an advance clearance therefor. However, likewise by virtue of his jurisdiction in the premises and construing the pertinent provisions of the Postal Law, the appellant saw a violation thereof in the proposed scheme and accordingly declined the request. A point of difference as to the correct construction to be given to the applicable statute was thus reached. Communications in which the parties expounded on their respective theories were exchanged. The confidence with which the appellee insisted upon its position was matched only by the obstinacy with which the appellant stood his ground. And this impasse was climaxed by the appellant's open warning to the appellee that if the proposed contest was "conducted, a fraud order will have to be issued against it and all its representatives." Against this backdrop, the stage was indeed set for the remedy prayed for. The appellee's insistent assertion of its claim to the use of the mails for its proposed contest, and the challenge thereto and consequent denial by the appellant of the privilege demanded, undoubtedly spawned a live controversy. The justiciability of the dispute cannot be gainsaid. There is an active antagonistic assertion of a legal right on one side and a denial thereof on the other, concerning a real not a mere theoretical question or issue. The contenders are as real as their interests are substantial. To the appellee, the uncertainty occasioned by the divergence of views on the issue of construction hampers or disturbs its freedom to enhance its business. To the appellant, the suppression of the appellee's proposed contest believed to transgress a law he has sworn to uphold and enforce is an unavoidable duty. With the appellee's bent to hold the contest and the appellant's threat to issue a fraud order therefor if carried out, the contenders are confronted by the ominous shadow of an imminent and inevitable litigation unless their differences are settled and stabilized by a tranquilizing declaration (Pablo y Sen, et al. vs. Republic of the Philippines, G.R. No. L-6868, April 30, 1955). And, contrary to the insinuation of the appellant, the time is long past when it can rightly be said that merely the appellee's "desires are thwarted by its own doubts, or by the fears of others" which admittedly does not confer a cause of action. Doubt, if any there was, has ripened into a justiciable controversy when, as in the case at bar, it was translated into a positive claim of right which is actually contested (III Moran, Comments on the Rules of Court, 1963 ed., pp. 132-133, citing: Woodward vs. Fox West Coast Theaters, 36 Ariz., 251, 284 Pac. 350). We cannot hospitably entertain the appellant's pretense that there is here no question of construction because the said appellant "simply applied the clear provisions of the law to a given set of facts as embodied in the rules of the contest", hence, there is no room for declaratory relief. The infirmity of this pose lies in the fact that it proceeds from the assumption that, if the circumstances here presented, the construction of the legal provisions can be divorced from the matter of their application to the appellee's contest. This is not feasible. Construction, verily, is the

art or process of discovering and expounding the meaning and intention of the authors of the law with respect to its application to a given case, where that intention is rendered doubtful, amongst others, by reason of the fact that the given case is not explicitly provided for in the law (Black, Interpretation of Laws, p. 1). This is precisely the case here. Whether or not the scheme proposed by the appellee is within the coverage of the prohibitive provisions of the Postal Law inescapably requires an inquiry into the intended meaning of the words used therein. To our mind, this is as much a question of construction or interpretation as any other. Nor is it accurate to say, as the appellant intimates, that a pronouncement on the matter at hand can amount to nothing more than an advisory opinion the handing down of which is anathema to a declaratory relief action. Of course, no breach of the Postal Law has as yet been committed. Yet, the disagreement over the construction thereof is no longer nebulous or contingent. It has taken a fixed and final shape, presenting clearly defined legal issues susceptible of immediate resolution. With the battle lines drawn, in a manner of speaking, the propriety nay, the necessity of setting the dispute at rest before it accumulates the asperity distemper, animosity, passion and violence of a full-blown battle which looms ahead (III Moran, Comments on the Rules of Court, 1963 ed., p. 132 and cases cited), cannot but be conceded. Paraphrasing the language in Zeitlin vs. Arnebergh 59 Cal., 2d., 901, 31 Cal. Rptr., 800, 383 P. 2d., 152, cited in 22 Am. Jur., 2d., p. 869, to deny declaratory relief to the appellee in the situation into which it has been cast, would be to force it to choose between undesirable alternatives. If it cannot obtain a final and definitive pronouncement as to whether the anti-lottery provisions of the Postal Law apply to its proposed contest, it would be faced with these choices: If it launches the contest and uses the mails for purposes thereof, it not only incurs the risk, but is also actually threatened with the certain imposition, of a fraud order with its concomitant stigma which may attach even if the appellee will eventually be vindicated; if it abandons the contest, it becomes a self-appointed censor, or permits the appellant to put into effect a virtual fiat of previous censorship which is constitutionally unwarranted. As we weigh these considerations in one equation and in the spirit of liberality with which the Rules of Court are to be interpreted in order to promote their object (section 1, Rule 1, Revised Rules of Court) which, in the instant case, is to settle, and afford relief from uncertainty and insecurity with respect to, rights and duties under a law we can see in the present case any imposition upon our jurisdiction or any futility or prematurity in our intervention. The appellant, we apprehend, underrates the force and binding effect of the ruling we hand down in this case if he believes that it will not have the final and pacifying function that a declaratory judgment is calculated to subserve. At the very least, the appellant will be bound. But more than this, he obviously overlooks that in this jurisdiction, "Judicial decisions applying or interpreting the law shall form a part of the legal system" (Article 8, Civil Code of the Philippines). In effect, judicial decisions assume the same authority as the statute itself and, until authoritatively abandoned, necessarily become, to the extent that they are applicable, the criteria which must control the actuations not only of those called upon to abide thereby but also of those in duty bound to enforce obedience thereto. Accordingly, we entertain no misgivings that our resolution of this case will terminate the controversy at hand. It is not amiss to point out at this juncture that the conclusion we have herein just reached is not without precedent. In Liberty Calendar Co. vs. Cohen, 19 N.J., 399, 117 A. 2d., 487, where a corporation engaged in promotional advertising was advised by the county prosecutor that its proposed sales promotion plan had the characteristics of a lottery, and that if such sales promotion were conducted, the corporation would be subject to criminal prosecution, it was held that the corporation was entitled to maintain a declaratory relief action against the county prosecutor to determine the legality of its sales promotion plan. In pari materia, see also: Bunis vs. Conway, 17 App. Div. 2d., 207, 234 N.Y.S. 2d., 435; Zeitlin vs. Arnebergh, supra; Thrillo, Inc. vs. Scott, 15 N.J. Super. 124, 82 A. 2d., 903. In fine, we hold that the appellee has made out a case for declaratory relief. 2. The Postal Law, chapter 52 of the Revised Administrative Code, using almost identical terminology in sections 1954(a), 1982 and 1983 thereof, supra, condemns as absolutely non-mailable, and empowers the Postmaster General to issue fraud orders against, or otherwise deny the use of the facilities of the postal service to, any information concerning "any lottery, gift enterprise, or scheme for the distribution of money, or of any real or personal property by lot, chance, or drawing of any kind". Upon these words hinges the resolution of the second issue posed in this appeal.

Happily, this is not an altogether untrodden judicial path. As early as in 1922, in "El Debate", Inc. vs. Topacio, 44 Phil., 278, 283-284, which significantly dwelt on the power of the postal authorities under the abovementioned provisions of the Postal Law, this Court declared that While countless definitions of lottery have been attempted, the authoritative one for this jurisdiction is that of the United States Supreme Court, in analogous cases having to do with the power of the United States Postmaster General, viz.: The term "lottery" extends to all schemes for the distribution of prizes by chance, such as policy playing, gift exhibitions, prize concerts, raffles at fairs, etc., and various forms of gambling. The three essential elements of a lottery are: First, consideration; second, prize; and third, chance. (Horner vs. States [1892], 147 U.S. 449; Public Clearing House vs. Coyne [1903], 194 U.S., 497; U.S. vs. Filart and Singson [1915], 30 Phil., 80; U.S. vs. Olsen and Marker [1917], 36 Phil., 395; U.S. vs. Baguio [1919], 39 Phil., 962; Valhalla Hotel Construction Company vs. Carmona, p. 233, ante.) Unanimity there is in all quarters, and we agree, that the elements of prize and chance are too obvious in the disputed scheme to be the subject of contention. Consequently as the appellant himself concedes, the field of inquiry is narrowed down to the existence of the element of consideration therein. Respecting this matter, our task is considerably lightened inasmuch as in the same case just cited, this Court has laid down a definitive yard-stick in the following terms In respect to the last element of consideration, the law does not condemn the gratuitous distribution of property by chance, if no consideration is derived directly or indirectly from the party receiving the chance, but does condemn as criminal schemes in which a valuable consideration of some kind is paid directly or indirectly for the chance to draw a prize. Reverting to the rules of the proposed contest, we are struck by the clarity of the language in which the invitation to participate therein is couched. Thus No puzzles, no rhymes? You don't need wrappers, labels or boxtops? You don't have to buy anything? Simply estimate the actual number of liter the Caltex gas pump with the hood at your favorite Caltex dealer will dispense from to , and win valuable prizes . . . ." . Nowhere in the said rules is any requirement that any fee be paid, any merchandise be bought, any service be rendered, or any value whatsoever be given for the privilege to participate. A prospective contestant has but to go to a Caltex station, request for the entry form which is available on demand, and accomplish and submit the same for the drawing of the winner. Viewed from all angles or turned inside out, the contest fails to exhibit any discernible consideration which would brand it as a lottery. Indeed, even as we head the stern injunction, "look beyond the fair exterior, to the substance, in order to unmask the real element and pernicious tendencies which the law is seeking to prevent" ("El Debate", Inc. vs. Topacio, supra, p. 291), we find none. In our appraisal, the scheme does not only appear to be, but actually is, a gratuitous distribution of property by chance. There is no point to the appellant's insistence that non-Caltex customers who may buy Caltex products simply to win a prize would actually be indirectly paying a consideration for the privilege to join the contest. Perhaps this would be tenable if the purchase of any Caltex product or the use of any Caltex service were a pre-requisite to participation. But it is not. A contestant, it hardly needs reiterating, does not have to buy anything or to give anything of value.1awphl.nt Off-tangent, too, is the suggestion that the scheme, being admittedly for sales promotion, would naturally benefit the sponsor in the way of increased patronage by those who will be encouraged to prefer Caltex products "if only to get the chance to draw a prize by securing entry blanks". The required element of consideration does not consist of the benefit derived by the proponent of the contest. The true test, as laid down in People vs. Cardas, 28 P. 2d., 99, 137 Cal. App. (Supp.) 788, is whether the participant pays a valuable consideration for the chance, and not whether those conducting the enterprise receive something of value in return for the distribution of the prize. Perspective properly oriented, the standpoint of the contestant is all that matters, not that of the sponsor. The following, culled from Corpus Juris Secundum, should set the matter at rest:

The fact that the holder of the drawing expects thereby to receive, or in fact does receive, some benefit in the way of patronage or otherwise, as a result of the drawing; does not supply the element of consideration. Griffith Amusement Co. vs. Morgan, Tex. Civ. App., 98 S.W., 2d., 844" (54 C.J.S., p. 849). Thus enlightened, we join the trial court in declaring that the "Caltex Hooded Pump Contest" proposed by the appellee is not a lottery that may be administratively and adversely dealt with under the Postal Law. But it may be asked: Is it not at least a "gift enterprise, or scheme for the distribution of money, or of any real or personal property by lot, chance, or drawing of any kind", which is equally prescribed? Incidentally, while the appellant's brief appears to have concentrated on the issue of consideration, this aspect of the case cannot be avoided if the remedy here invoked is to achieve its tranquilizing effect as an instrument of both curative and preventive justice. Recalling that the appellant's action was predicated, amongst other bases, upon Opinion 217, Series 1953, of the Secretary of Justice, which opined in effect that a scheme, though not a lottery for want of consideration, may nevertheless be a gift enterprise in which that element is not essential, the determination of whether or not the proposed contest wanting in consideration as we have found it to be is a prohibited gift enterprise, cannot be passed over sub silencio. While an all-embracing concept of the term "gift enterprise" is yet to be spelled out in explicit words, there appears to be a consensus among lexicographers and standard authorities that the term is commonly applied to a sporting artifice of under which goods are sold for their market value but by way of inducement each purchaser is given a chance to win a prize (54 C.J.S., 850; 34 Am. Jur., 654; Black, Law Dictionary, 4th ed., p. 817; Ballantine, Law Dictionary with Pronunciations, 2nd ed., p. 55; Retail Section of Chamber of Commerce of Plattsmouth vs. Kieck, 257 N.W., 493, 128 Neb. 13; Barker vs. State, 193 S.E., 605, 56 Ga. App., 705; Bell vs. State, 37 Tenn. 507, 509, 5 Sneed, 507, 509). As thus conceived, the term clearly cannot embrace the scheme at bar. As already noted, there is no sale of anything to which the chance offered is attached as an inducement to the purchaser. The contest is open to all qualified contestants irrespective of whether or not they buy the appellee's products. Going a step farther, however, and assuming that the appellee's contest can be encompassed within the broadest sweep that the term "gift enterprise" is capable of being extended, we think that the appellant's pose will gain no added comfort. As stated in the opinion relied upon, rulings there are indeed holding that a gift enterprise involving an award by chance, even in default of the element of consideration necessary to constitute a lottery, is prohibited (E.g.: Crimes vs. States, 235 Ala 192, 178 So. 73; Russell vs. Equitable Loan & Sec. Co., 129 Ga. 154, 58 S.E., 88; State ex rel. Stafford vs. Fox-Great Falls Theater Corporation, 132 P. 2d., 689, 694, 698, 114 Mont. 52). But this is only one side of the coin. Equally impressive authorities declare that, like a lottery, a gift enterprise comes within the prohibitive statutes only if it exhibits the tripartite elements of prize, chance and consideration (E.g.: Bills vs. People, 157 P. 2d., 139, 142, 113 Colo., 326; D'Orio vs. Jacobs, 275 P. 563, 565, 151 Wash., 297; People vs. Psallis, 12 N.Y.S., 2d., 796; City and County of Denver vs. Frueauff, 88 P., 389, 394, 39 Colo., 20, 7 L.R.A., N.S., 1131, 12 Ann. Cas., 521; 54 C.J.S., 851, citing: Barker vs. State, 193 S.E., 605, 607, 56 Ga. App., 705; 18 Words and Phrases, perm. ed., pp. 590-594). The apparent conflict of opinions is explained by the fact that the specific statutory provisions relied upon are not identical. In some cases, as pointed out in 54 C.J.S., 851, the terms "lottery" and "gift enterprise" are used interchangeably (Bills vs. People, supra); in others, the necessity for the element of consideration or chance has been specifically eliminated by statute. (54 C.J.S., 351-352, citing Barker vs. State, supra; State ex rel. Stafford vs. Fox-Great Falls Theater Corporation, supra). The lesson that we derive from this state of the pertinent jurisprudence is, therefore, that every case must be resolved upon the particular phraseology of the applicable statutory provision. Taking this cue, we note that in the Postal Law, the term in question is used in association with the word "lottery". With the meaning of lottery settled, and consonant to the well-known principle of legal hermeneutics noscitur a sociis which Opinion 217 aforesaid also relied upon although only insofar as the element of chance is concerned it is only logical that the term under a construction should be accorded no other meaning than that which is consistent with the nature of the word associated therewith. Hence, if lottery is prohibited only if it involves a consideration, so also must the term "gift enterprise" be so construed. Significantly, there is not in the law the slightest indicium of any intent to eliminate that element of consideration from the "gift enterprise" therein included.

This conclusion firms up in the light of the mischief sought to be remedied by the law, resort to the determination thereof being an accepted extrinsic aid in statutory construction. Mail fraud orders, it is axiomatic, are designed to prevent the use of the mails as a medium for disseminating printed matters which on grounds of public policy are declared non-mailable. As applied to lotteries, gift enterprises and similar schemes, justification lies in the recognized necessity to suppress their tendency to inflame the gambling spirit and to corrupt public morals (Com. vs. Lund, 15 A. 2d., 839, 143 Pa. Super. 208). Since in gambling it is inherent that something of value be hazarded for a chance to gain a larger amount, it follows ineluctably that where no consideration is paid by the contestant to participate, the reason behind the law can hardly be said to obtain. If, as it has been held Gratuitous distribution of property by lot or chance does not constitute "lottery", if it is not resorted to as a device to evade the law and no consideration is derived, directly or indirectly, from the party receiving the chance, gambling spirit not being cultivated or stimulated thereby. City of Roswell vs. Jones, 67 P. 2d., 286, 41 N.M., 258." (25 Words and Phrases, perm. ed., p. 695, emphasis supplied). we find no obstacle in saying the same respecting a gift enterprise. In the end, we are persuaded to hold that, under the prohibitive provisions of the Postal Law which we have heretofore examined, gift enterprises and similar schemes therein contemplated are condemnable only if, like lotteries, they involve the element of consideration. Finding none in the contest here in question, we rule that the appellee may not be denied the use of the mails for purposes thereof. Recapitulating, we hold that the petition herein states a sufficient cause of action for declaratory relief, and that the "Caltex Hooded Pump Contest" as described in the rules submitted by the appellee does not transgress the provisions of the Postal Law. ACCORDINGLY, the judgment appealed from is affirmed. No costs. Concepcion, C.J., Reyes, J.B.L., Barrera, Dizon, Regala, Makalintal, Bengzon, J.P., Zaldivar and Sanchez, JJ., concur.

Republic of the Philippines SUPREME COURT Manila EN BANC G.R. No. L-61236 January 31, 1984 NATIONAL FEDERATION OF LABOR and ZAMBOWOOD MONTHLY EMPLOYEES UNION, ITS OFFICERS AND MEMBERS, petitioners, vs. THE HONORABLE CARLITO A. EISMA, LT. COL. JACOB CARUNCHO, COMMANDING OFFICER, ZAMBOANGA DISTRICT COMMAND, PC, AFP, and ZAMBOANGA WOOD PRODUCTS, respondents. Jose C. Espina and Potenciano Flores for petitioners. The Solicitor General for public respondents. Gaspar V. Tagalo for private respondent Zamboanga Wood Products.

FERNANDO, C.J.: This Court is confronted once again with the question of whether or not it is a court or a labor arbiter that can pass on a suit for damages filed by the employer, here private respondent Zamboanga Wood Products. Respondent Judge Carlito A. Eisma 1 then of the Court of First Instance, now of the Regional Trial Court of Zamboanga City, was of the view that it is a court and denied a motion to dismiss filed by petitioners National Federation of labor and Zambowood Monthly Employees Union, its officers and members. It was such an order dated July 20, 1982 that led to the filing of this certiorari and prohibition proceeding. In the order assailed, it was required that the officers and members of petitioner union appear before the court to show cause why a writ of preliminary injunction should not be issued against them and in the meanwhile such persons as well as any other persons acting under their command and on their behalf were "temporarily restrained and ordered to desist and refrain from further obstructing, impeding and impairing plaintiff's use of its property and free ingress to or egress from plaintiff's Manufacturing Division facilities at Lumbayao, Zamboanga City and on its road right of way leading to and from said plaintiff's facilities, pending the determination of the litigation, and unless a contrary order is issued by this Court." 2 The record discloses that petitioner National Federation of Labor, on March 5, 1982, filed with the Ministry of Labor and Employment, Labor Relations Division, Zamboanga City, a petition for direct certification as the sole exclusive collective bargaining representative of the monthly paid employees of the respondent Zamboanga Wood Products, Inc. at its manufacturing plant in Lumbayao, Zamboanga City. 3 Such employees, on April 17, 1982 charged respondent firm before the same office of the Ministry of Labor for underpayment of monthly living allowances. 4 Then came, on May 3, 1982, from petitioner union, a notice of strike against private respondent, alleging illegal termination of Dionisio Estioca, president of the said local union; unfair labor practice, non-payment of living allowances; and "employment of oppressive alien management personnel without proper permit. 5 It was followed by the union submitting the minutes of the declaration of strike, "including the ninety (90) ballots, of which 79 voted for yes and three voted for no." 6 The strike began on May 23, 1982. 7 On July 9, 1982, private respondent Zambowood filed a complaint with respondent Judge against the officers and members of petitioners union, for "damages for obstruction of private property with prayer for preliminary injunction and/or restraining order." 8 It was alleged that defendants, now petitioners, blockaded the road leading to its manufacturing division, thus preventing customers and suppliers free ingress to or egress from such premises. 9 Six days later, there was a motion for the dismissal and for the dissolution of the restraining order and opposition to the issuance of the writ of preliminary injunction filed by petitioners. It was contended that the acts complained of were incidents of picketing

by defendants then on strike against private respondent, and that therefore the exclusive jurisdiction belongs to the Labor Arbiter pursuant to Batas Pambansa Blg. 227, not to a court of first instance.10 There was, as noted earlier, a motion to dismiss, which was denied. Hence this petition for certiorari. Four days after such petition was filed, on August 3, 1982, this Court required respondents to answer and set the plea for a preliminary injunction to be heard on Thursday, August 5, 1982. 11 After such hearing, a temporary restraining order was issued, "directing respondent Judge and the commanding officer in Zamboanga and his agents from enforcing the ex-parte order of injunction dated July 20, 1982; and to restrain the respondent Judge from proceeding with the hearing of the until otherwise case effective as of [that] date and continuing ordered by [the] Court. In the exercise of the right to peaceful picketing, petitioner unions must abide strictly with Batas Pambansa Blg. 227, specifically Section 6 thereof, amending Article 265 of the Labor Code, which now reads: '(e) No person engaged in picketing shall commit any act of violence, coercion or intimidation or obstruct the free ingress to or egress from the employer's premises for lawful purposes, or obstruct public thoroughfares.' " 12 On August 13, 1982, the answer of private respondent was filed sustaining the original jurisdiction of respondent Judge and maintaining that the order complained of was not in excess of such jurisdiction, or issued with grave abuse of discretion. Solicitor General Estelito P. Mendoza, 13 on the other hand, instead of filing an answer, submitted a Manifestation in lieu thereof. He met squarely the issue of whether or not respondent Judge had jurisdiction, and answered in the negative. He (i)ncluded that "the instant petition has merit and should be given due course." He traced the changes undergone by the Labor Code, citing at the same time the decisions issued by this Court after each of such changes. As pointed out, the original wording of Article 217 vested the labor arbiters with jurisdictional. 14 So it was applied by this Court in Garcia v. Martinez 15 and in Bengzon v. Inciong. 16 On May 1, 1978, however, Presidential Decree No. 1367 was issued, amending Article 217, and provided "that the Regional Directors shall not indorse and Labor Arbiters shall not entertain claims for moral and other forms of damages." 17 The ordinary courts were thus vested with jurisdiction to award actual and moral damages in the case of illegal dismissal of employees. 18 That is not, as pointed out by the Solicitor General, the end of the story, for on May 1, 1980, Presidential Decree No. 1691 was issued, further amending Article 217, returning the original jurisdiction to the labor arbiters, thus enabling them to decide "3. All money claims of workers, including those based on nonpayment or underpayment of wages, overtime compensation, separation pay and other benefits provided by law or appropriate agreement, except claims for employees compensation, social security, medicare and maternity benefits; [and] (5) All other claims arising from employer-employee relations unless expressly excluded by tills Code." 19 An equally conclusive manifestation of the lack of jurisdiction of a court of first instance then, a regional trial court now, is Batas Pambansa Blg. 130, amending Article 217 of the Labor Code. It took effect on August 21, 1981. Subparagraph 2, paragraph (a) is now worded thus: "(2) those that involve wages, hours of work and other terms and conditions of employment." 20 This is to be compared with the former phraseology "(2) unresolved issue in collective bargaining, including those that involve wages, hours of work and other terms and conditions of employment." 21 It is to be noted that Batas Pambansa Blg. 130 made no change with respect to the original and exclusive jurisdiction of Labor Arbiters with respect to money claims of workers or claims for damages arising from employer-employee relations. Nothing becomes clearer, therefore, than the meritorious character of this petition. certiorari and prohibition lie, respondent Judge being devoid of jurisdiction to act on the matter. 1. Article 217 is to be applied the way it is worded. The exclusive original jurisdiction of a labor arbiter is therein provided for explicitly. It means, it can only mean, that a court of first instance judge then, a regional trial court judge now, certainly acts beyond the scope of the authority conferred on him by law when he entertained the suit for damages, arising from picketing that accompanied a strike. That was squarely within the express terms of the law. Any deviation cannot therefore be tolerated. So it has been the constant ruling of this Court even prior to Lizarraga Hermanos v. Yap Tico, 22 a 1913 decision. The ringing words of the ponencia of Justice Moreland still call for obedience. Thus, "The first and fundamental duty of courts, in our judgment, is to apply the law. Construction and interpretation come only after it has been demonstrated that application is impossible or inadequate without them." 23 It is so even after the lapse of sixty years. 24

2. On the precise question at issue under the law as it now stands, this Court has spoken in three decisions. They all reflect the utmost fidelity to the plain command of the law that it is a labor arbiter, not a court, that ossesses original and exclusive jurisdiction to decide a claim for damages arising from picketing or a strike. In Pepsi-Cola Bottling Co. v. Martinez, 25 the issue was set forth in the opening paragraph, in the ponencia of Justice Escolin: "This petition for certiorari, prohibition and mandamus raises anew the legal question often brought to this Court: Which tribunal has exclusive jurisdiction over an action filed by an employee against his employer for recovery of unpaid salaries, separation benefits and damages the court of general jurisdiction or the Labor Arbiter of the National Labor Relations Commission [NLRC]?" 26 It was categorically held: "We rule that the Labor Arbiter has exclusive jurisdiction over the case." 27 Then came this portion of the opinion: "Jurisdiction over the subject matter in a judicial proceeding is conferred by the sovereign authority which organizes the court; and it is given only by law. Jurisdiction is never presumed; it must be conferred by law in words that do not admit of doubt. Since the jurisdiction of courts and judicial tribunals is derived exclusively from the statutes of the forum, the issue before us should be resolved on the basis of the law or statute now in force. We find that law in presidential Decree 1691 which took effect on May 1, 1980, Section 3 of which reads as follows: ... Article 217. Jurisdiction of Labor Arbiters and the Commission. (a) The Labor Arbiters shall have the original and exclusive jurisdiction to hear and decide the following cases involving all workers, whether agricultural or non-agricultural: ... 3. All money claims of workers, including those based on nonpayment or underpayment of wages, overtime compensation, separation pay and other benefits provided by law or appropriate agreement, except claims for employees' compensation, social security, medicare and maternity benefits; 4. Cases involving household services; and 5. All other claims arising from employer-employee relations, unless expressly excluded by this Code." 28 That same month, two other cases were similarly decided, Ebon v. De Guzman 29 and Aguda v. Vallejos. 30 3. It is regrettable that the ruling in the above three decisions, decided in March of 1982, was not followed by private respondent when it filed the complaint for damages on July 9, 1982, more than four months later. 31 On this point, reference may be made to our decision in National Federation of Labor, et al. v. The Honorable Minister of Labor and Employment, 32 promulgated on September 15, 1983. In that case, the question involved was the failure of the same private respondent, Zamboanga Wood Products, Inc., to admit the striking petitioners, eighty-one in number, back to work after an order of Minister Blas F. Ople certifying to the National Labor Relations Commission the labor dispute for compulsory arbitration pursuant to Article 264 (g) of the Labor Code of the Philippines. It was noted in the first paragraph of our opinion in that case: "On the face of it, it seems difficult to explain why private respondent would not comply with such order considering that the request for compulsory arbitration came from it. It ignored this notification by the presidents of the labor unions involved to its resident manager that the striking employees would lift their picket line and start returning to work on August 20, 1982. Then, too, Minister Ople denied a partial motion for reconsideration insofar as the return-to-work aspect is concerned which reads: 'We find no merit in the said Motion for Reconsideration. The Labor code, as amended, specifically Article 264 (g), mandates that whenever a labor dispute is certified by the Minister of Labor and Employment to the National Labor Relations Commission for compulsory arbitration and a strike has already taken place at the time of certification, "all striking employees shall immediately return to work and the employees shall immediately resume operations and readmit all workers under the same terms and conditions prevailing before the strike." ' " 33 No valid distinction can be made between the exercise of compulsory arbitration vested in the Ministry of Labor and the jurisdiction of a labor arbiter to pass over claims for damages in the light of the express provision of the Labor Code as set forth in Article 217. In both cases, it is the Ministry, not a court of justice, that is vested by law with competence to act on the matter. 4. The issuance of Presidential Decree No. 1691 and the enactment of Batas Pambansa Blg. 130, made clear that the exclusive and original jurisdiction for damages would once again be vested in labor arbiters. It can be affirmed that even if they were not that explicit, history has vindicated the view that in the appraisal of what was referred to by Philippine American Management & Financing Co., Inc. v. Management & Supervisors Association of the Philippine-American Management & Financing Co., Inc. 34 as "the rather thorny question as to where in labor matters the dividing line is to be drawn" 35 between the power lodged in an administrative body and a court, the unmistakable trend has been to refer it to the former. Thus: "Increasingly, this Court has been committed to the view that unless the law speaks clearly and unequivocally, the choice should fall on [an administrative agency]." 36 Certainly, the present Labor Code is even more committed to the view that on policy grounds, and equally so in the interest of greater promptness in the disposition of labor matters, a court is spared the often onerous task of determining what essentially is a factual matter, namely, the damages that may be incurred by either labor or management as a result of disputes or controversies arising from employer-employee relations.

WHEREFORE, the writ of certiorari is granted and the order of July 20, 1982, issued by respondent Judge, is nullified and set aside. The writ of prohibition is likewise granted and respondent Judge, or whoever acts in his behalf in the Regional Trial Court to which this case is assigned, is enjoin from taking any further action on Civil Case No. 716 (2751), except for the purpose of dismissing it. The temporary restraining order of August 5, 1982 is hereby made permanent. Teehankee, Makasiar, Aquino, Guerrero, Melencio-Herrera, Plana, Escolin Relova and Gutierrez, Jr., JJ., concur. Concepcion Jr., J., took no part. De Castro, J., is on leave.

Republic of the Philippines SUPREME COURT Manila EN BANC G.R. No. L-26100 February 28, 1969

CITY OF BAGUlO, REFORESTATION ADMINISTRATION, FRANCISCO G. JOAQUIN, SR., FRANCISCO G. JOAQUIN, JR., and TERESITA J. BUCHHOLZ petitioners, vs. HON. PIO R. MARCOS, Judge of the Court of First Instance of Baguio, BELONG LUTES, and the HONORABLE COURT OF APPEALS, respondents. 1st Assistant City Fiscal Dionisio C. Claridad, Augusto Tobias and Feria, Feria, Lugtu and La'O for petitioners. Bernardo C. Ronquillo for respondents. SANCHEZ, J.: Petitioners attack the jurisdiction of the Court of First Instance of Baguio to reopen cadastral proceedings under Republic Act 931. Private petitioner's specifically question the ruling of the Court of Appeals that they have no personality to oppose reopening. The three-pronged contentions of all the petitioners are: (1) the reopening petition was filed outside the 40-year period next preceding the approval of Republic Act 931; (2) said petition was not published; and (3) private petitioners, as lessees of the public land in question, have court standing under Republic Act 931. The facts follow: On April 12, 1912, the cadastral proceedings sought to be reopened, Civil Reservation Case No. 1, GLRO Record No. 211, Baguio Townsite, were instituted by the Director of Lands in the Court of First Instance of Baguio. It is not disputed that the land here involved (described in Plan Psu-186187) was amongst those declared public lands by final decision rendered in that case on November 13, 1922. On July 25, 1961, respondent Belong Lutes petitioned the cadastral court to reopen said Civil Reservation Case No. 1 as to the parcel of land he claims. His prayer was that the land be registered in his name upon the grounds that: (1) he and his predecessors have been in actual, open, adverse, peaceful and continuous possession and cultivation of the land since Spanish times, or before July 26, 1894, paying the taxes thereon; and (2) his predecessors were illiterate Igorots without personal notice of the cadastral proceedings aforestated and were not able to file their claim to the land in question within the statutory period. On December 18, 1961, private petitioners Francisco G. Joaquin, Sr., Francisco G. Joaquin, Jr., and Teresita J. Buchholz registered opposition to the reopening. Ground: They are tree farm lessees upon agreements executed by the Bureau of Forestry in their favor for 15,395.65 square meters on March. 16, 1959, for 12,108 square meters on July 24, 1959, and for 14,771 square meters on July 17, 1959, respectively. On May 5, 1962, the City of Baguio likewise opposed reopening. On May 8, 1962, upon Lutes' opposition, the cadastral court denied private petitioners' right to intervene in the case because of a final declaratory relief judgment dated March 9, 1962 in Yaranon vs. Castrillo [Civil Case 946, Court of First Instance of Baguio] which declared that such tree farm leases were null and void. On May 18, 1962, private petitioners moved to reconsider. They averred that said declaratory relief judgment did not bind them, for they were not parties to that action.

On September 14, 1962, the cadastral court reversed its own ruling of May 8, 1962, allowed petitioners to cross-examine the witnesses of respondent Lutes. On October 16, 1962, Lutes replied to and moved to dismiss private petitioners' opposition to his reopening petition. On October 25, 1962, private petitioners' rejoinder was filed. On August 5, 1963, the cadastral court dismissed private petitioners' opposition to the reopening. A motion to reconsider was rejected by the court on November 5, 1963. On January 6, 1964, it was the turn of the City of Baguio to lodge a motion to dismiss the petition to reopen. This motion was adopted as its own by the Reforestation Administration. They maintained the position that the declaratory judgment in Civil Case 946 was not binding on those not parties thereto. Respondent Lutes opposed on February 24, 1964. On April 6, 1964, private petitioners reiterated their motion to dismiss on jurisdictional grounds. On September 17, 1964, the court denied for lack of merit the City's motion as well as the April 6, 1964 motion to dismiss made by private petitioners. On November 13, 1964, all the petitioners went to the Court of Appeals on certiorari, prohibition, and mandamus with preliminary injunction. 1 They then questioned the cadastral court's jurisdiction over the petition to reopen and the latter's order of August 5, 1963 dismissing private petitioners' opposition. The appellate court issued a writ of preliminary injunction upon a P500-bond. Then came the judgment of the Court of Appeals of September 30, 1965. The court held that petitioners were not bound by the declaratory judgment heretofore hated. Nevertheless, the appellate court ruled that as lessees, private petitioners had no right to oppose the reopening of the cadastral case. Petitioners moved to reconsider. It was thwarted on May 6, 1966. Petitioners now seek redress from this Court. On July 6, 1966, respondents moved to dismiss the petition before us. On August 5, 1966, petitioners opposed. On August 12, 1966, we gave due course. 1. Do private petitioners have personality to appear in the reopening proceedings? First, to the controlling statute, Republic Act 931, effective June 20, 1953. The title of the Act reads AN ACT TO AUTHORIZE THE FILING IN THE PROPER COURT, UNDER CERTAIN CONDITIONS, OF CERTAIN CLAIMS OF TITLE TO PARCELS OF LAND THAT HAVE BEEN DECLARED PUBLIC LAND, BY VIRTUE OF JUDICIAL DECISIONS RENDERED WITHIN THE FORTY YEARS NEXT PRECEDING THE APPROVAL OF THIS ACT. Section 1 thereof provides SECTION 1. All persons claiming title to parcels of land that have been the object of cadastral proceedings, who at the time of the survey were in actual possession of the same, but for some justifiable reason had been unable to file their claim in the proper court during the time limit established by law, in case such parcels of land, on account of their failure to file such claims, have been, or are about to be declared land of the public domain by virtue of judicial proceedings instituted within the forty years next preceding the approval of this Act, are hereby granted the right within five years 2 after the date on which this Act shall take effect, to petition for a reopening of the judicial proceedings under the provisions of Act Numbered Twenty-two hundred and fifty-nine, as amended, only with respect to such of said parcels of land as have not been alienated, reserved, leased, granted, or otherwise provisionally or permanently disposed of by the Government, and the competent Court of First Instance, upon receiving such petition,

shall notify the Government through the Solicitor General, and if after hearing the parties, said court shall find that all conditions herein established have been complied with, and that all taxes, interests and penalties thereof have been paid from the time when land tax should have been collected until the day when the motion is presented, it shall order said judicial proceedings reopened as if no action has been taken on such parcels. 3 We concede that in Leyva vs. Jandoc, L-16965, February 28, 1962, a land registration case where oppositors were "foreshore lessees of public land", a principle was hammered out that although Section 34, Land Registration Act, 4 "apparently authorizes any person claiming any kind of interest to file an opposition to an application for registration, ... nevertheless ... the opposition must be based on a right of dominion or some other real right independent of, and not at all subordinate to, the rights of the Government." 5 The opposition, according to the Leyva decision, "must necessarily be predicated upon the property in question being part of the public domain." Leyva thus pronounced that "it is incumbent upon the duly authorized representatives of the Government to represent its interests as well as private claims intrinsically dependent upon it." But the Leyva case concerned an ordinary land registration proceeding under the provisions of the Land Registration Act. Normally and logically, lessees cannot there present issues of ownership. The case at bar, however, stands on a different footing. It involves a special statute R.A. 931, which allows a petition for reopening on lands "about to be declared" or already "declared land of the public domain" by virtue of judicial proceedings. Such right, however, is made to cover limited cases, i.e., "only with respect to such of said parcels of land as have not been alienated, reserved, leased, granted, or otherwise provisionally or permanently disposed of by the Government." 6 The lessee's right is thus impliedly recognized by R.A. 931. This statutory phrase steers the present case clear from the impact of the precept forged by Leyva. So it is, that if the land subject of a petition to reopen has already been leased by the government, that petition can no longer prosper. This was the holding in Director of Land vs. Benitez, L-21368, March 31, 1966. The reopening petition there filed was opposed by the Director of Lands in behalf of 62 lessees of public land holding revocable permits issued by the government. We struck down the petition in that Case because the public land, subject-matter of the suit, had already been leased by the government to private persons. Of course, the Benitez ruling came about not by representations of the lessees alone, but through the Director of Lands. But we may well scale the heights of injustice or abet violations of R.A. 931 if we entertain the view that only the Director of Lands 7 can here properly oppose the reopening petition. Suppose the lands office fails to do so? Will legitimate lessees be left at the mercy of government officials? Should the cadastral court close its eyes to the fact of lease that may be proved by the lessees themselves, and which is enough to bar the reopening petition? R.A. 931 could not have intended that this situation should happen. The point is that, with the fact of lease, no question of ownership need be inquired into pursuant to R.A. 931. From this standpoint, lessees have sufficient legal interest in the proceedings. The right of private petitioners to oppose a reopening petition here becomes the more patent when we take stock of their averment that they have introduced improvements on the land affected. It would seem to us that lessees insofar as R.A. 931 is concerned, come within the purview of those who, according to the Rules of Court, 8 may intervene in an action. For, they are persons who have "legal interest in the matter in litigation, or in the success of either of the parties." 9 In the event herein private petitioners are able to show that they are legitimate lessees, then their lease will continue. And this because it is sufficient that it be proven that the land is leased to withdraw it from the operation of Republic Act 931 and place it beyond the reach of a petition for reopening. 10 In line with the Court of Appeals' conclusion, not disputed by respondent Lutes herein, the cadastral court should have ruled on the validity of private petitioners 'tree farm leases on the merits. Because there is need for Lutes' right to reopen and petitioners' right to continue as lessees to be threshed out in that court. We, accordingly, hold that private petitioners, who aver that they are lessees, have the necessary personality to intervene in and oppose respondent Lutes' petition for reopening.

2. Petitioners next contend that the reopening petition below, filed under R.A. 931, should have been published in accordance with the Cadastral Act. To resolve this contention, we need but refer to a very recent decision of this Court in De Castro vs. Marcos, supra, involving exactly the same set of facts bearing upon the question. We there held, after a discussion of law and jurisprudence, that: "In sum, the subject matter of the petition for reopening a parcel of land claimed by respondent Akia was already embraced in the cadastral proceedings filed by the Director of Lands. Consequently, the Baguio cadastral court already acquired jurisdiction over the said property. The petition, therefore, need not be published." We find no reason to break away from such conclusion. Respondent Lutes attached to the record a certified true copy of the November 13, 1922 decision in the Baguio Townsite Reservation case to show, amongst others, that the land here involved was part of that case. Petitioners do not take issue with respondent Lutes on this point of fact. We here reiterate our ruling in De Castro, supra, that the power of the cadastral court below over petitions to reopen, as in this case, is not jurisdictionally tainted by want of publication. 3. A question of transcendental importance is this: Does the cadastral court have power to reopen the cadastral proceedings upon the application of respondent Lutes? The facts are: The cadastral proceedings sought to be reopened were instituted on April 12, 1912. Final decision was rendered on November 13, 1922. Lutes filed the petition to reopen on July 25, 1961. It will be noted that the title of R.A. 931, heretofore transcribed, authorizes "the filing in the proper court, under certain conditions, of certain claims of title to parcels of land that have been declared public land, by virtue of judicial decisions rendered within the forty years next preceding the approval of this Act." The body of the statute, however, in its Section 1, speaks of parcels of land that "have been, or are about to be declared land of the public domain, by virtue of judicial proceedings instituted within the forty years next preceding the approval of this Act." There thus appears to be a seeming inconsistency between title and body. It must be stressed at this point that R.A. 931 is not under siege on constitutional grounds. No charge has been made hero or in the courts below that the statute offends the constitutional injunction that the subject of legislation must be expressed in the title thereof. Well-entrenched in constitutional law is the precept that constitutional questions will not be entertained by courts unless they are "specifically raised, insisted upon and adequately argued." 11 At any rate it cannot be seriously disputed that the subject of R.A. 931 is expressed in its title. This narrows our problem down to one of legal hermeneutics. Many are the principles evolved in the interpretation of laws. It is thus not difficult to stray away from the true path of construction, unless we constantly bear in mind the goal we seek. The office of statutory interpretation, let us not for a moment forget, is to determine legislative intent. In the words of a well-known authority, "[t]he true object of all interpretation is to ascertain the meaning and will of the law-making body, to the end that it may be enforced." 12 In varying language, "the, purpose of all rules or maxims" in interpretation "is to discover the true intention of the law." 13 They "are only valuable when they subserve this purpose." 14 In fact, "the spirit or intention of a statute prevails over the letter thereof." 15 A statute "should be construed according to its spirit and reason, disregarding as far as necessary, the letter of the law." 16 By this, we do not "correct the act of the Legislature, but rather ... carry out and give due course to" its true intent. 17 It should be certain by now that when engaged in the task of construing an obscure expression in the law 18 or where exact or literal rendering of the words would not carry out the legislative intent, 19 the title thereof may be resorted to in the ascertainment of congressional will. Reason therefor is that the title of the law may properly be regarded as an index of or clue or guide to legislative intention. 20 This is especially true in this jurisdiction. For the reason that by specific constitutional precept, "[n]o bill which may be enacted into law shall embrace more than one

subject which shall be expressed in the title of the bill." 21 In such case, courts "are compelled by the Constitution to consider both the body and the title in order to arrive at the legislative intention." 22 With the foregoing guideposts on hand, let us go back to the situation that confronts us. We take another look at the title of R.A. 931, viz: "AN ACT TO AUTHORIZE THE FILING IN THE PROPER COURT, UNDER CERTAIN CONDITIONS, OF CERTAIN CLAIMS OF TITLE TO PARCELS OF LAND THAT HAVE BEEN DECLARED PUBLIC LAND, BY VIRTUE OF JUDICIAL DECISIONS RENDERED WITHIN THE FORTY YEARS NEXT PRECEDING THE APPROVAL OF THIS ACT." Readily to be noted is that the title is not merely composed of catchwords. 23 It expresses in language clear the very substance of the law itself. From this, it is easy to see that Congress intended to give some effect to the title of R.A. 931. To be carefully noted is that the same imperfection in the language of R.A. 931 aforesaid from which surfaces a seeming inconsistency between the title and the body attended Commonwealth Act 276, the present statute's predecessor. That prior law used the very same language in the body thereof and in its title. We attach meaning to this circumstance. Had the legislature meant to shake off any legal effects that the title of the statute might have, it had a chance to do so in the reenactment of the law. Congress could have altered with great facility the wording of the title of R.A. 931. The fact is that it did not. It has been observed that "in modern practice the title is adopted by the Legislature, more thoroughly read than the act itself, and in many states is the subject of constitutional regulation." 24 The constitutional in jurisdiction that the subject of the statute must be expressed in the title of the bill, breathes the spirit of command because "the Constitution does not exact of Congress the obligation to read during its deliberations the entire text of the bill." 25 Reliance, therefore, may be placed on the title of a bill, which, while not an enacting part, no doubt "is in some sort a part of the act, although only a formal part." 26 These considerations are all the more valid here because R.A. 931 was passed without benefit of congressional debate in the House from which it originated as House Bill 1410, 27 and in the Senate. 28 The title now under scrutiny possesses the strength of clarity and positiveness. It recites that it authorizes court proceedings of claims to parcels of land declared public land "by virtue of judicial decisions rendered within the forty years next preceding the approval of this Act." That title is written "in capital letters" by Congress itself; such kind of a title then "is not to be classed with words or titles used by compilers of statutes" because "it is the legislature speaking." 29 Accordingly, it is not hard to come to a deduction that the phrase last quoted from R.A. 931 "by virtue of judicial decisions rendered" was but inadvertently omitted from the body. Parting from this premise, there is, at bottom, no contradiction between title and body. In line with views herein stated, the title belongs to that type of titles which; should be regarded as part of the rules or provisions expressed in the body. 30 At the very least, the words "by virtue of judicial decisions rendered" in the title of the law stand in equal importance to the phrase in Section 1 thereof, "by virtue of judicial proceedings instituted." Given the fact then that there are two phrases to consider the choice of construction we must give to the statute does not need such reflection. We lean towards a liberal view. And this, because of the principle long accepted that remedial legislation should receive the blessings of liberal construction. 31 And, there should be no quibbling as to the fact that R.A. 931 is a piece of remedial legislation. In essence, it provides a mode of relief to landowners who, before the Act, had no legal means of perfecting their titles. This is plainly evident from the explanatory note thereof, which reads: This bill is intended to give an opportunity to any person or claimant who has any interest in any parcel of land which has been declared as public land in cadastral proceeding for failure of said person or claimant to present his claim within the time prescribed by law. There are many meritorious cases wherein claimants to certain parcels of land have not had the opportunity to answer or appear at the hearing of cases affecting their claims in the corresponding cadastral proceedings for lack of sufficient notice or for other reasons and circumstances which are beyond their control. Under C.A. No. 276, said persons or claimants have no more legal remedy as the effectivity of said Act expired in 1940.

This measure seeks to remedy the lack of any existing law within said persons or claimants with meritorious claims or interests in parcels of land may seek justice and protection. This bill proposes to give said persons or claimants their day in court. Approval of this bill is earnestly requested. In fine, we say that lingual imperfections in the drafting of a statute should never be permitted to hamstring judicial search for legislative intent, which can otherwise be discovered. Legal technicalities should not abort the beneficent effects intended by legislation. The sum of all the foregoing is that, as we now view Republic Act 931, claims of title that may be filed thereunder embrace those parcels of land that have been declared public land "by virtue of judicial decisions rendered within the forty years next preceding the approval of this Act." Therefore, by that statute, the July 25, 1961 petition of respondent Belong Lutes to reopen Civil Reservation Case No. 1, GLRO Record No. 211 of the cadastral court of Baguio, the decision on which was rendered on November 13, 1922, comes within the 40-year period.lawphi1.nt FOR THE REASONS GIVEN, the petition for certiorari is hereby granted; the cadastral court's orders of August 5, 1963, November 5, 1963 and September 17, 1964 are hereby declared null and void and the cadastral court is hereby directed to admit petitioners' oppositions and proceed accordingly. No costs. So ordered. Reyes, J.B.L., Dizon, Makalintal, Zaldivar, Fernando, Concepcion, C.J., Castro and Capistrano, JJ., took no part.. Teehankee and Barredo, JJ., concur.

Republic of the Philippines SUPREME COURT Manila EN BANC G.R. No. L-30642 April 30, 1985 PERFECTO S. FLORESCA, in his own behalf and on behalf of the minors ROMULO and NESTOR S. FLORESCA; and ERLINDA FLORESCA-GABUYO, PEDRO S. FLORESCA, JR., CELSO S. FLORESCA, MELBA S. FLORESCA, JUDITH S. FLORESCA and CARMEN S. FLORESCA; LYDIA CARAMAT VDA. DE MARTINEZ in her own behalf and on behalf of her minor children LINDA, ROMEO, ANTONIO JEAN and ELY, all surnamed Martinez; and DANIEL MARTINEZ and TOMAS MARTINEZ; SALUSTIANA ASPIRAS VDA. DE OBRA, in her own behalf and on behalf of her minor children JOSE, ESTELA, JULITA SALUD and DANILO, all surnamed OBRA; LYDIA CULBENGAN VDA. DE VILLAR, in her own behalf and on behalf of her minor children EDNA, GEORGE and LARRY III, all surnamed VILLAR; DOLORES LOLITA ADER VDA. DE LANUZA, in her own behalf and on behalf of her minor children EDITHA, ELIZABETH, DIVINA, RAYMUNDO, NESTOR and AURELIO, JR. all surnamed LANUZA; EMERENCIANA JOSE VDA. DE ISLA, in her own behalf and on behalf of her minor children JOSE, LORENZO, JR., MARIA, VENUS and FELIX, all surnamed ISLA, petitioners, vs. PHILEX MINING CORPORATION and HON. JESUS P. MORFE, Presiding Judge of Branch XIII, Court of First Instance of Manila, respondents. Rodolfo C. Pacampara for petitioners. Tito M. Villaluna for respondents.

MAKASIAR, J.: This is a petition to review the order of the former Court of First Instance of Manila, Branch XIII, dated December 16, 1968 dismissing petitioners' complaint for damages on the ground of lack of jurisdiction. Petitioners are the heirs of the deceased employees of Philex Mining Corporation (hereinafter referred to as Philex), who, while working at its copper mines underground operations at Tuba, Benguet on June 28, 1967, died as a result of the cave-in that buried them in the tunnels of the mine. Specifically, the complaint alleges that Philex, in violation of government rules and regulations, negligently and deliberately failed to take the required precautions for the protection of the lives of its men working underground. Portion of the complaint reads: xxx xxx xxx 9. That for sometime prior and up to June 28,1967, the defendant PHILEX, with gross and reckless negligence and imprudence and deliberate failure to take the required precautions for the

due protection of the lives of its men working underground at the time, and in utter violation of the laws and the rules and regulations duly promulgated by the Government pursuant thereto, allowed great amount of water and mud to accumulate in an open pit area at the mine above Block 43-S-1 which seeped through and saturated the 600 ft. column of broken ore and rock below it, thereby exerting tremendous pressure on the working spaces at its 4300 level, with the result that, on the said date, at about 4 o'clock in the afternoon, with the collapse of all underground supports due to such enormous pressure, approximately 500,000 cubic feet of broken ores rocks, mud and water, accompanied by surface boulders, blasted through the tunnels and flowed out and filled in, in a matter of approximately five (5) minutes, the underground workings, ripped timber supports and carried off materials, machines and equipment which blocked all avenues of exit, thereby trapping within its tunnels of all its men above referred to, including those named in the next preceding paragraph, represented by the plaintiffs herein; 10. That out of the 48 mine workers who were then working at defendant PHILEX's mine on the said date, five (5) were able to escape from the terrifying holocaust; 22 were rescued within the next 7 days; and the rest, 21 in number, including those referred to in paragraph 7 hereinabove, were left mercilessly to their fate, notwithstanding the fact that up to then, a great many of them were still alive, entombed in the tunnels of the mine, but were not rescued due to defendant PHILEX's decision to abandon rescue operations, in utter disregard of its bounden legal and moral duties in the premises; xxx xxx xxx 13. That defendant PHILEX not only violated the law and the rules and regulations duly promulgated by the duly constituted authorities as set out by the Special Committee above referred to, in their Report of investigation, pages 7-13, Annex 'B' hereof, but also failed completely to provide its men working underground the necessary security for the protection of their lives notwithstanding the fact that it had vast financial resources, it having made, during the year 1966 alone, a total operating income of P 38,220,254.00, or net earnings, after taxes of P19,117,394.00, as per its llth Annual Report for the year ended December 31, 1966, and with aggregate assets totalling P 45,794,103.00 as of December 31, 1966; xxx xxx xxx (pp. 42-44, rec.) A motion to dismiss dated May 14, 1968 was filed by Philex alleging that the causes of action of petitioners based on an industrial accident are covered by the provisions of the Workmen's Compensation Act (Act 3428, as amended by RA 772) and that the former Court of First Instance has no jurisdiction over the case. Petitioners filed an opposition dated May 27, 1968 to the said motion to dismiss claiming that the causes of action are not based on the provisions of the Workmen's Compensation Act but on the provisions of the Civil Code allowing the award of actual, moral and exemplary damages, particularly: Art. 2176. Whoever by act or omission causes damage to another, there being fault or negligence, is obliged to pay for the damage done. Such fault or negligence, if there is no pre- existing contractual relation between the parties, is called a quasi-delict and is governed by the provisions of this Chapter. Art. 2178. The provisions of articles 1172 to 1174 are also applicable to a quasi-delict. (b) Art. 1173The fault or negligence of the obligor consists in the omission of that diligence which is required by the nature of the obligation and corresponds with the circumstances of the persons, of the time and of the place. When negligence shows bad faith, the provisions of Articles 1171 and 2201, paragraph 2 shall apply.

Art. 2201. x x x x x x x x x In case of fraud, bad faith, malice or wanton attitude, the obligor shall be responsible for all damages which may be reasonably attributed to the non-performance of the obligation. Art. 2231. In quasi-delicts, exemplary damages may be granted if the defendant acted with gross negligence. After a reply and a rejoinder thereto were filed, respondent Judge issued an order dated June 27, 1968 dismissing the case on the ground that it falls within the exclusive jurisdiction of the Workmen's Compensation Commission. On petitioners' motion for reconsideration of the said order, respondent Judge, on September 23, 1968, reconsidered and set aside his order of June 27, 1968 and allowed Philex to file an answer to the complaint. Philex moved to reconsider the aforesaid order which was opposed by petitioners. On December 16, 1968, respondent Judge dismissed the case for lack of jurisdiction and ruled that in accordance with the established jurisprudence, the Workmen's Compensation Commission has exclusive original jurisdiction over damage or compensation claims for work-connected deaths or injuries of workmen or employees, irrespective of whether or not the employer was negligent, adding that if the employer's negligence results in work-connected deaths or injuries, the employer shall, pursuant to Section 4-A of the Workmen's Compensation Act, pay additional compensation equal to 50% of the compensation fixed in the Act. Petitioners thus filed the present petition. In their brief, petitioners raised the following assignment of errors: I THE LOWER COURT ERRED IN DISMISSING THE PLAINTIFFS- PETITIONERS' COMPLAINT FOR LACK OF JURISDICTION. II THE LOWER COURT ERRED IN FAILING TO CONSIDER THE CLEAR DISTINCTION BETWEEN CLAIMS FOR DAMAGES UNDER THE CIVIL CODE AND CLAIMS FOR COMPENSATION UNDER THE WORKMEN'S COMPENSATION ACT. A In the first assignment of error, petitioners argue that the lower court has jurisdiction over the cause of action since the complaint is based on the provisions of the Civil Code on damages, particularly Articles 2176, 2178, 1173, 2201 and 2231, and not on the provisions of the Workmen's Compensation Act. They point out that the complaint alleges gross and brazen negligence on the part of Philex in failing to take the necessary security for the protection of the lives of its employees working underground. They also assert that since Philex opted to file a motion to dismiss in the court a quo, the allegations in their complaint including those contained in the annexes are deemed admitted. In the second assignment of error, petitioners asseverate that respondent Judge failed to see the distinction between the claims for compensation under the Workmen's Compensation Act and the claims for damages based on gross negligence of Philex under the Civil Code. They point out that workmen's compensation refers to liability for compensation for loss resulting from injury, disability or death of the working man through industrial accident or disease, without regard to the fault or negligence of the employer, while the claim for damages under the Civil Code which petitioners pursued in the regular court, refers to the employer's liability for reckless and wanton negligence resulting in the death of the employees and for which the regular court has jurisdiction to adjudicate the same.

On the other hand, Philex asserts that work-connected injuries are compensable exclusively under the provisions of Sections 5 and 46 of the Workmen's Compensation Act, which read: SEC. 5. Exclusive right to compensation.The rights and remedies granted by this Act to an employee by reason of a personal injury entitling him to compensation shall exclude all other rights and remedies accruing to the employee, his personal representatives, dependents or nearest of kin against the employer under the Civil Code and other laws because of said injury ... SEC. 46. Jurisdiction. The Workmen's Compensation Commissioner shall have exclusive jurisdiction to hear and decide claims for compensation under the Workmen's Compensation Act, subject to appeal to the Supreme Court, ... Philex cites the case of Manalo vs. Foster Wheeler (98 Phil. 855 [1956]) where it was held that "all claims of workmen against their employer for damages due to accident suffered in the course of employment shall be investigated and adjudicated by the Workmen's Compensation Commission," subject to appeal to the Supreme Court. Philex maintains that the fact that an employer was negligent, does not remove the case from the exclusive character of recoveries under the Workmen's Compensation Act; because Section 4-A of the Act provides an additional compensation in case the employer fails to comply with the requirements of safety as imposed by law to prevent accidents. In fact, it points out that Philex voluntarily paid the compensation due the petitioners and all the payments have been accepted in behalf of the deceased miners, except the heirs of Nazarito Floresca who insisted that they are entitled to a greater amount of damages under the Civil Code. In the hearing of this case, then Undersecretary of Labor Israel Bocobo, then Atty. Edgardo Angara, now President of the University of the Philippines, Justice Manuel Lazaro, as corporate counsel and Assistant General Manager of the GSIS Legal Affairs Department, and Commissioner on Elections, formerly UP Law Center Director Froilan Bacungan, appeared as amici curiae and thereafter, submitted their respective memoranda. The issue to be resolved as WE stated in the resolution of November 26, 1976, is: Whether the action of an injured employee or worker or that of his heirs in case of his death under the Workmen's Compensation Act is exclusive, selective or cumulative, that is to say, whether his or his heirs' action is exclusively restricted to seeking the limited compensation provided under the Workmen's Compensation Act or whether they have a right of selection or choice of action between availing of the worker's right under the Workmen's Compensation Act and suing in the regular courts under the Civil Code for higher damages (actual, moral and/or exemplary) from the employer by virtue of negligence (or fault) of the employer or of his other employees or whether they may avail cumulatively of both actions, i.e., collect the limited compensation under the Workmen's Compensation Act and sue in addition for damages in the regular courts. There are divergent opinions in this case. Justice Lazaro is of the opinion that an injured employee or worker, or the heirs in case of his death, may initiate a complaint to recover damages (not compensation under the Workmen's Compensation Act) with the regular court on the basis of negligence of an employer pursuant to the Civil Code provisions. Atty. Angara believes otherwise. He submits that the remedy of an injured employee for work-connected injury or accident is exclusive in accordance with Section 5 of the Workmen's Compensation Act, while Atty. Bacungan's position is that the action is selective. He opines that the heirs of the employee in case of his death have a right of choice to avail themselves of the benefits provided under the Workmen's Compensation Act or to sue in the regular court under the Civil Code for higher damages from the employer by virtue of negligence of the latter. Atty. Bocobo's stand is the same as that of Atty. Bacungan and adds that once the heirs elect the remedy provided for under the Act, they are no longer entitled to avail themselves of the remedy provided for under the Civil Code by filing an action for higher damages in the regular court, and vice versa.

On August 3, 1978, petitioners-heirs of deceased employee Nazarito Floresca filed a motion to dismiss on the ground that they have amicably settled their claim with respondent Philex. In the resolution of September 7, 1978, WE dismissed the petition only insofar as the aforesaid petitioners are connected, it appearing that there are other petitioners in this case. WE hold that the former Court of First Instance has jurisdiction to try the case, It should be underscored that petitioners' complaint is not for compensation based on the Workmen's Compensation Act but a complaint for damages (actual, exemplary and moral) in the total amount of eight hundred twenty-five thousand (P825,000.00) pesos. Petitioners did not invoke the provisions of the Workmen's Compensation Act to entitle them to compensation thereunder. In fact, no allegation appeared in the complaint that the employees died from accident arising out of and in the course of their employments. The complaint instead alleges gross and reckless negligence and deliberate failure on the part of Philex to protect the lives of its workers as a consequence of which a cave-in occurred resulting in the death of the employees working underground. Settled is the rule that in ascertaining whether or not the cause of action is in the nature of workmen's compensation claim or a claim for damages pursuant to the provisions of the Civil Code, the test is the averments or allegations in the complaint (Belandres vs. Lopez Sugar Mill, Co., Inc., 97 Phil. 100). In the present case, there exists between Philex and the deceased employees a contractual relationship. The alleged gross and reckless negligence and deliberate failure that amount to bad faith on the part of Philex, constitute a breach of contract for which it may be held liable for damages. The provisions of the Civil Code on cases of breach of contract when there is fraud or bad faith, read: Art. 2232. In contracts and quasi-contracts, the court may award exemplary damages if the defendant acted in a wanton, fraudulent, reckless, oppressive or malevolent manner. Art. 2201. In contracts and quasi-contracts, the damages for which the obligor who acted in good faith is able shall be those that are the natural and probable consequences of the breach of the obligation, and which the parties have foreseen or could have reasonably foreseen at the time the obligation was constituted. In cases of fraud, bad faith, malice or wanton attitude, the obligor shall be responsible for all damages which may be reasonably attributed to the non-performance of the obligation. Furthermore, Articles 2216 et seq., Civil Code, allow the payment of all kinds of damages, as assessed by the court. The rationale in awarding compensation under the Workmen's Compensation Act differs from that in giving damages under the Civil Code. The compensation acts are based on a theory of compensation distinct from the existing theories of damages, payments under the acts being made as compensation and not as damages (99 C.J.S. 53). Compensation is given to mitigate the harshness and insecurity of industrial life for the workman and his family. Hence, an employer is liable whether negligence exists or not since liability is created by law. Recovery under the Act is not based on any theory of actionable wrong on the part of the employer (99 C.J.S. 36). In other words, under the compensation acts, the employer is liable to pay compensation benefits for loss of income, as long as the death, sickness or injury is work-connected or work-aggravated, even if the death or injury is not due to the fault of the employer (Murillo vs. Mendoza, 66 Phil. 689). On the other hand, damages are awarded to one as a vindication of the wrongful invasion of his rights. It is the indemnity recoverable by a person who has sustained injury either in his person, property or relative rights, through the act or default of another (25 C.J.S. 452). The claimant for damages under the Civil Code has the burden of proving the causal relation between the defendant's negligence and the resulting injury as well as the damages suffered. While under the Workmen's Compensation Act, there is a presumption in favor of the deceased or injured employee that the death or injury is

work-connected or work-aggravated; and the employer has the burden to prove otherwise (De los Angeles vs. GSIS, 94 SCRA 308; Carino vs. WCC, 93 SCRA 551; Maria Cristina Fertilizer Corp. vs. WCC, 60 SCRA 228). The claim of petitioners that the case is not cognizable by the Workmen's Compensation Commission then, now Employees Compensation Commission, is strengthened by the fact that unlike in the Civil Code, the Workmen's Compensation Act did not contain any provision for an award of actual, moral and exemplary damages. What the Act provided was merely the right of the heirs to claim limited compensation for the death in the amount of six thousand (P6,000.00) pesos plus burial expenses of two hundred (P200.00) pesos, and medical expenses when incurred (Sections 8, 12 and 13, Workmen's Compensation Act), and an additional compensation of only 50% if the complaint alleges failure on the part of the employer to "install and maintain safety appliances or to take other precautions for the prevention of accident or occupational disease" (Section 4-A, Ibid.). In the case at bar, the amount sought to be recovered is over and above that which was provided under the Workmen's Compensation Act and which cannot be granted by the Commission. Moreover, under the Workmen's Compensation Act, compensation benefits should be paid to an employee who suffered an accident not due to the facilities or lack of facilities in the industry of his employer but caused by factors outside the industrial plant of his employer. Under the Civil Code, the liability of the employer, depends on breach of contract or tort. The Workmen's Compensation Act was specifically enacted to afford protection to the employees or workmen. It is a social legislation designed to give relief to the workman who has been the victim of an accident causing his death or ailment or injury in the pursuit of his employment (Abong vs. WCC, 54 SCRA 379). WE now come to the query as to whether or not the injured employee or his heirs in case of death have a right of selection or choice of action between availing themselves of the worker's right under the Workmen's Compensation Act and suing in the regular courts under the Civil Code for higher damages (actual, moral and exemplary) from the employers by virtue of that negligence or fault of the employers or whether they may avail themselves cumulatively of both actions, i.e., collect the limited compensation under the Workmen's Compensation Act and sue in addition for damages in the regular courts. In disposing of a similar issue, this Court in Pacana vs. Cebu Autobus Company, 32 SCRA 442, ruled that an injured worker has a choice of either to recover from the employer the fixed amounts set by the Workmen's Compensation Act or to prosecute an ordinary civil action against the tortfeasor for higher damages but he cannot pursue both courses of action simultaneously. In Pacaa WE said: In the analogous case of Esguerra vs. Munoz Palma, involving the application of Section 6 of the Workmen's Compensation Act on the injured workers' right to sue third- party tortfeasors in the regular courts, Mr. Justice J.B.L. Reyes, again speaking for the Court, pointed out that the injured worker has the choice of remedies but cannot pursue both courses of action simultaneously and thus balanced the relative advantage of recourse under the Workmen's Compensation Act as against an ordinary action. As applied to this case, petitioner Esguerra cannot maintain his action for damages against the respondents (defendants below), because he has elected to seek compensation under the Workmen's Compensation Law, and his claim (case No. 44549 of the Compensation Commission) was being processed at the time he filed this action in the Court of First Instance. It is argued for petitioner that as the damages recoverable under the Civil Code are much more extensive than the amounts that may be awarded under the Workmen's Compensation Act, they should not be deemed incompatible. As already indicated, the injured laborer was initially free to choose either to recover from the employer the fixed amounts set by the Compensation Law or else, to prosecute an ordinary civil action against the tortfeasor for higher damages. While perhaps not as profitable, the smaller indemnity obtainable by the first course is balanced by the claimant's being relieved of the burden of proving the causal connection between the defendant's negligence and the resulting injury, and of having to establish the extent of the damage suffered; issues that are apt to be

troublesome to establish satisfactorily. Having staked his fortunes on a particular remedy, petitioner is precluded from pursuing the alternate course, at least until the prior claim is rejected by the Compensation Commission. Anyway, under the proviso of Section 6 aforequoted, if the employer Franklin Baker Company recovers, by derivative action against the alleged tortfeasors, a sum greater than the compensation he may have paid the herein petitioner, the excess accrues to the latter. Although the doctrine in the case of Esguerra vs. Munoz Palma (104 Phil. 582), applies to third-party tortfeasor, said rule should likewise apply to the employer-tortfeasor. Insofar as the heirs of Nazarito Floresca are concerned, as already stated, the petition has been dismissed in the resolution of September 7, 1978 in view of the amicable settlement reached by Philex and the said heirs. With regard to the other petitioners, it was alleged by Philex in its motion to dismiss dated May 14, 1968 before the court a quo, that the heirs of the deceased employees, namely Emerito Obra, Larry Villar, Jr., Aurelio Lanuza, Lorenzo Isla and Saturnino Martinez submitted notices and claims for compensation to the Regional Office No. 1 of the then Department of Labor and all of them have been paid in full as of August 25, 1967, except Saturnino Martinez whose heirs decided that they be paid in installments (pp. 106-107, rec.). Such allegation was admitted by herein petitioners in their opposition to the motion to dismiss dated May 27, 1968 (pp. 121-122, rec.) in the lower court, but they set up the defense that the claims were filed under the Workmen's Compensation Act before they learned of the official report of the committee created to investigate the accident which established the criminal negligence and violation of law by Philex, and which report was forwarded by the Director of Mines to the then Executive Secretary Rafael Salas in a letter dated October 19, 1967 only (p. 76, rec.). WE hold that although the other petitioners had received the benefits under the Workmen's Compensation Act, such may not preclude them from bringing an action before the regular court because they became cognizant of the fact that Philex has been remiss in its contractual obligations with the deceased miners only after receiving compensation under the Act. Had petitioners been aware of said violation of government rules and regulations by Philex, and of its negligence, they would not have sought redress under the Workmen's Compensation Commission which awarded a lesser amount for compensation. The choice of the first remedy was based on ignorance or a mistake of fact, which nullifies the choice as it was not an intelligent choice. The case should therefore be remanded to the lower court for further proceedings. However, should the petitioners be successful in their bid before the lower court, the payments made under the Workmen's Compensation Act should be deducted from the damages that may be decreed in their favor. B Contrary to the perception of the dissenting opinion, the Court does not legislate in the instant case. The Court merely applies and gives effect to the constitutional guarantees of social justice then secured by Section 5 of Article 11 and Section 6 of Article XIV of the 1935 Constitution, and now by Sections 6, 7, and 9 of Article 11 of the DECLARATION OF PRINCIPLES AND STATE POLICIES of the 1973 Constitution, as amended, and as implemented by Articles 2176, 2177, 2178, 1173, 2201, 2216, 2231 and 2232 of the New Civil Code of 1950. To emphasize, the 1935 Constitution declares that: Sec. 5. The promotion of social justice to insure the well-being and economic security of all the people should be the concern of the State (Art. II). Sec. 6. The State shall afford protection to labor, especially to working women, and minors, and shall regulate the relations between landowner and tenant, and between labor and capital in industry and in agriculture. The State may provide for compulsory arbitration (Art. XIV).

The 1973 Constitution likewise commands the State to "promote social justice to insure the dignity, welfare, and security of all the people "... regulate the use ... and disposition of private property and equitably diffuse property ownership and profits "establish, maintain and ensure adequate social services in, the field of education, health, housing, employment, welfare and social security to guarantee the enjoyment by the people of a decent standard of living" (Sections 6 and 7, Art. II, 1973 Constitution); "... afford protection to labor, ... and regulate the relations between workers and employers ..., and assure the rights of workers to ... just and humane conditions of work" (Sec. 9, Art. II, 1973 Constitution, emphasis supplied). The foregoing constitutional guarantees in favor of labor institutionalized in Section 9 of Article 11 of the 1973 Constitution and re-stated as a declaration of basic policy in Article 3 of the New Labor Code, thus: Art. 3. Declaration of basic policy.The State shall afford protection to labor, promote full employment, ensure equal work opportunities regardless of sex, race or creed, and regulate the relations between workers and employers. The State shall assure the rights of workers to selforganization, collective bargaining, security of tenure, and just and humane conditions of work. (emphasis supplied). The aforestated constitutional principles as implemented by the aforementioned articles of the New Civil Code cannot be impliedly repealed by the restrictive provisions of Article 173 of the New Labor Code. Section 5 of the Workmen's Compensation Act (before it was amended by R.A. No. 772 on June 20, 1952), predecessor of Article 173 of the New Labor Code, has been superseded by the aforestated provisions of the New Civil Code, a subsequent law, which took effect on August 30, 1950, which obey the constitutional mandates of social justice enhancing as they do the rights of the workers as against their employers. Article 173 of the New Labor Code seems to diminish the rights of the workers and therefore collides with the social justice guarantee of the Constitution and the liberal provisions of the New Civil Code. The guarantees of social justice embodied in Sections 6, 7 and 9 of Article II of the 1973 Constitution are statements of legal principles to be applied and enforced by the courts. Mr. Justice Robert Jackson in the case of West Virginia State Board of Education vs. Barnette, with characteristic eloquence, enunciated: The very purpose of a Bill of Rights was to withdraw certain subjects from the vicissitudes of political controversy, to place them beyond the reach of majorities and officials and to establish them as legal principles to be applied by the courts. One's right to life, liberty, and property, to free speech, a free press, freedom of worship and assembly, and other fundamental rights may not be submitted to vote; they depend on the outcome of no elections (319 U.S. 625, 638, 87 L.ed. 1638, emphasis supplied). In case of any doubt which may be engendered by Article 173 of the New Labor Code, both the New Labor Code and the Civil Code direct that the doubts should be resolved in favor of the workers and employees. Thus, Article 4 of the New Labor Code, otherwise known as Presidential Decree No. 442, as amended, promulgated on May 1, 1974, but which took effect six months thereafter, provides that "all doubts in the implementation and interpretation of the provisions of this Code, including its implementing rules and regulations, shall be resolved in favor of labor" (Art. 2, Labor Code). Article 10 of the New Civil Code states: "In case of doubt in the interpretation or application of laws, it is presumed that the law-making body intended right and justice to prevail. " More specifically, Article 1702 of the New Civil Code likewise directs that. "In case of doubt, all labor legislation and all labor contracts shall be construed in favor of the safety and decent living of the laborer." Before it was amended by Commonwealth Act No. 772 on June 20, 1952, Section 5 of the Workmen's Compensation Act provided:

Sec. 5. Exclusive right to compensation.- The rights and remedies granted by this Act to an employee by reason of a personal injury entitling him to compensation shall exclude all other rights and remedies accruing to the employee, his personal representatives, dependents or nearest of kin against the employer under the Civil Code and other laws, because of said injury (emphasis supplied). Employers contracting laborecsrs in the Philippine Islands for work outside the same may stipulate with such laborers that the remedies prescribed by this Act shall apply exclusively to injuries received outside the Islands through accidents happening in and during the performance of the duties of the employment; and all service contracts made in the manner prescribed in this section shall be presumed to include such agreement. Only the second paragraph of Section 5 of the Workmen's Compensation Act No. 3428, was amended by Commonwealth Act No. 772 on June 20, 1952, thus: Sec. 5. Exclusive right to compensation.- The rights and remedies granted by this Act to an employee by reason of a personal injury entitling him to compensation shall exclude all other rights and remedies accruing to the employee, his personal representatives, dependents or nearest of kin against the employer under the Civil Code and other laws, because of said injury. Employers contracting laborers in the Philippine Islands for work outside the same shall stipulate with such laborers that the remedies prescribed by this Act shall apply to injuries received outside the Island through accidents happening in and during the performance of the duties of the employment. Such stipulation shall not prejudice the right of the laborers to the benefits of the Workmen's Compensation Law of the place where the accident occurs, should such law be more favorable to them (As amended by section 5 of Republic Act No. 772). Article 173 of the New Labor Code does not repeal expressly nor impliedly the applicable provisions of the New Civil Code, because said Article 173 provides: Art. 173. Exclusiveness of liability.- Unless otherwise provided, the liability of the State Insurance Fund under this Title shall be exclusive and in place of all other liabilities of the employer to the employee, his dependents or anyone otherwise entitled to receive damages on behalf of the employee or his dependents. The payment of compensation under this Title shall bar the recovery of benefits as provided for in Section 699 of the Revised Administrative Code, Republic Act Numbered Eleven hundred sixty-one, as amended, Commonwealth Act Numbered One hundred eighty- six, as amended, Commonwealth Act Numbered Six hundred ten, as amended, Republic Act Numbered Forty-eight hundred Sixty-four, as amended, and other laws whose benefits are administered by the System during the period of such payment for the same disability or death, and conversely (emphasis supplied). As above-quoted, Article 173 of the New Labor Code expressly repealed only Section 699 of the Revised Administrative Code, R.A. No. 1161, as amended, C.A. No. 186, as amended, R.A. No. 610, as amended, R.A. No. 4864, as amended, and all other laws whose benefits are administered by the System (referring to the GSIS or SSS). Unlike Section 5 of the Workmen's Compensation Act as aforequoted, Article 173 of the New Labor Code does not even remotely, much less expressly, repeal the New Civil Code provisions heretofore quoted. It is patent, therefore, that recovery under the New Civil Code for damages arising from negligence, is not barred by Article 173 of the New Labor Code. And the damages recoverable under the New Civil Code are not administered by the System provided for by the New Labor Code, which defines the "System" as referring to the Government Service Insurance System or the Social Security System (Art. 167 [c], [d] and [e] of the New Labor Code).

Furthermore, under Article 8 of the New Civil Code, decisions of the Supreme Court form part of the law of the land. Article 8 of the New Civil Code provides: Art. 8. Judicial decisions applying or interpreting the laws or the Constitution shall form a part of the legal system of the Philippines. The Court, through the late Chief Justice Fred Ruiz Castro, in People vs. Licera ruled: Article 8 of the Civil Code of the Philippines decrees that judicial decisions applying or interpreting the laws or the Constitution form part of this jurisdiction's legal system. These decisions, although in themselves not laws, constitute evidence of what the laws mean. The application or interpretation placed by the Court upon a law is part of the law as of the date of the enactment of the said law since the Court's application or interpretation merely establishes the contemporaneous legislative intent that the construed law purports to carry into effect" (65 SCRA 270, 272-273 [1975]). WE ruled that judicial decisions of the Supreme Court assume the same authority as the statute itself (Caltex vs. Palomer, 18 SCRA 247; 124 Phil. 763). The aforequoted provisions of Section 5 of the Workmen's Compensation Act, before and after it was amended by Commonwealth Act No. 772 on June 20, 1952, limited the right of recovery in favor of the deceased, ailing or injured employee to the compensation provided for therein. Said Section 5 was not accorded controlling application by the Supreme Court in the 1970 case of Pacana vs. Cebu Autobus Company (32 SCRA 442) when WE ruled that an injured worker has a choice of either to recover from the employer the fixed amount set by the Workmen's Compensation Act or to prosecute an ordinary civil action against the tortfeasor for greater damages; but he cannot pursue both courses of action simultaneously. Said Pacana case penned by Mr. Justice Teehankee, applied Article 1711 of the Civil Code as against the Workmen's Compensation Act, reiterating the 1969 ruling in the case of Valencia vs. Manila Yacht Club (28 SCRA 724, June 30,1969) and the 1958 case of Esguerra vs. Munoz Palma (104 Phil. 582), both penned by Justice J.B.L. Reyes. Said Pacana case was concurred in by Justices J.B.L. Reyes, Dizon, Makalintal, Zaldivar, Castro, Fernando and Villamor. Since the first sentence of Article 173 of the New Labor Code is merely a re-statement of the first paragraph of Section 5 of the Workmen's Compensation Act, as amended, and does not even refer, neither expressly nor impliedly, to the Civil Code as Section 5 of the Workmen's Compensation Act did, with greater reason said Article 173 must be subject to the same interpretation adopted in the cases of Pacana, Valencia and Esguerra aforementioned as the doctrine in the aforesaid three (3) cases is faithful to and advances the social justice guarantees enshrined in both the 1935 and 1973 Constitutions. It should be stressed likewise that there is no similar provision on social justice in the American Federal Constitution, nor in the various state constitutions of the American Union. Consequently, the restrictive nature of the American decisions on the Workmen's Compensation Act cannot limit the range and compass of OUR interpretation of our own laws, especially Article 1711 of the New Civil Code, vis-a-vis Article 173 of the New Labor Code, in relation to Section 5 of Article II and Section 6 of Article XIV of the 1935 Constitution then, and now Sections 6, 7 and 9 of the Declaration of Principles and State Policies of Article II of the 1973 Constitution. The dissent seems to subordinate the life of the laborer to the property rights of the employer. The right to life is guaranteed specifically by the due process clause of the Constitution. To relieve the employer from liability for the death of his workers arising from his gross or wanton fault or failure to provide safety devices for the protection of his employees or workers against the dangers which are inherent in underground mining, is to deprive the deceased worker and his heirs of the right to recover indemnity for the loss of the life of the worker and the consequent loss to his family without due process of law. The dissent in effect condones and therefore encourages such gross or wanton

neglect on the part of the employer to comply with his legal obligation to provide safety measures for the protection of the life, limb and health of his worker. Even from the moral viewpoint alone, such attitude is un-Christian. It is therefore patent that giving effect to the social justice guarantees of the Constitution, as implemented by the provisions of the New Civil Code, is not an exercise of the power of law-making, but is rendering obedience to the mandates of the fundamental law and the implementing legislation aforementioned. The Court, to repeat, is not legislating in the instant case. It is axiomatic that no ordinary statute can override a constitutional provision. The words of Section 5 of the Workmen's Compensation Act and of Article 173 of the New Labor Code subvert the rights of the petitioners as surviving heirs of the deceased mining employees. Section 5 of the Workmen's Compensation Act and Article 173 of the New Labor Code are retrogressive; because they are a throwback to the obsolete laissez-faire doctrine of Adam Smith enunciated in 1776 in his treatise Wealth of Nations (Collier's Encyclopedia, Vol. 21, p. 93, 1964), which has been discarded soon after the close of the 18th century due to the Industrial Revolution that generated the machines and other mechanical devices (beginning with Eli Whitney's cotton gin of 1793 and Robert Fulton's steamboat of 1807) for production and transportation which are dangerous to life, limb and health. The old socio-political-economic philosophy of live-and-let-live is now superdesed by the benign Christian shibboleth of live-and-help others to live. Those who profess to be Christians should not adhere to Cain's selfish affirmation that he is not his brother's keeper. In this our civilization, each one of us is our brother's keeper. No man is an island. To assert otherwise is to be as atavistic and ante-deluvian as the 1837 case of Prisley vs. Fowler (3 MN 1,150 reprint 1030) invoked by the dissent, The Prisley case was decided in 1837 during the era of economic royalists and robber barons of America. Only ruthless, unfeeling capitalistics and egoistic reactionaries continue to pay obeisance to such un-Christian doctrine. The Prisley rule humiliates man and debases him; because the decision derisively refers to the lowly worker as "servant" and utilizes with aristocratic arrogance "master" for "employer." It robs man of his inherent dignity and dehumanizes him. To stress this affront to human dignity, WE only have to restate the quotation from Prisley, thus: "The mere relation of the master and the servant never can imply an obligation on the part of the master to take more care of the servant than he may reasonably be expected to do himself." This is the very selfish doctrine that provoked the American Civil War which generated so much hatred and drew so much precious blood on American plains and valleys from 1861 to 1864. "Idolatrous reverence" for the letter of the law sacrifices the human being. The spirit of the law insures man's survival and ennobles him. In the words of Shakespeare, "the letter of the law killeth; its spirit giveth life." C It is curious that the dissenting opinion clings to the myth that the courts cannot legislate. That myth had been exploded by Article 9 of the New Civil Code, which provides that "No judge or court shall decline to render judgment by reason of the silence, obscurity or insufficiency of the laws. " Hence, even the legislator himself, through Article 9 of the New Civil Code, recognizes that in certain instances, the court, in the language of Justice Holmes, "do and must legislate" to fill in the gaps in the law; because the mind of the legislator, like all human beings, is finite and therefore cannot envisage all possible cases to which the law may apply Nor has the human mind the infinite capacity to anticipate all situations. But about two centuries before Article 9 of the New Civil Code, the founding fathers of the American Constitution foresaw and recognized the eventuality that the courts may have to legislate to supply the omissions or to clarify the ambiguities in the American Constitution and the statutes. 'Thus, Alexander Hamilton pragmatically admits that judicial legislation may be justified but denies that the power of the Judiciary to nullify statutes may give rise to Judicial tyranny (The Federalist, Modern Library, pp. 503-511,

1937 ed.). Thomas Jefferson went farther to concede that the court is even independent of the Nation itself (A.F.L. vs. American Sash Company, 1949 335 US 538). Many of the great expounders of the American Constitution likewise share the same view. Chief Justice Marshall pronounced: "It is emphatically the province and duty of the Judicial department to say what the law is (Marbury vs. Madison I Cranch 127 1803), which was re-stated by Chief Justice Hughes when he said that "the Constitution is what the judge says it is (Address on May 3, 1907, quoted by President Franklin Delano Roosevelt on March 9, 1937). This was reiterated by Justice Cardozo who pronounced that "No doubt the limits for the judge are narrower. He legislates only between gaps. He fills the open spaces in the law. " (The Nature of the Judicial Process, p. 113). In the language of Chief Justice Harlan F. Stone, "The only limit to the judicial legislation is the restraint of the judge" (U.S. vs. Butler 297 U.S. 1 Dissenting Opinion, p. 79), which view is also entertained by Justice Frankfurter and Justice Robert Jackson. In the rhetoric of Justice Frankfurter, "the courts breathe life, feeble or strong, into the inert pages of the Constitution and all statute books." It should be stressed that the liability of the employer under Section 5 of the Workmen's Compensation Act or Article 173 of the New Labor Code is limited to death, ailment or injury caused by the nature of the work, without any fault on the part of the employers. It is correctly termed no fault liability. Section 5 of the Workmen's Compensation Act, as amended, or Article 173 of the New Labor Code, does not cover the tortious liability of the employer occasioned by his fault or culpable negligence in failing to provide the safety devices required by the law for the protection of the life, limb and health of the workers. Under either Section 5 or Article 173, the employer remains liable to pay compensation benefits to the employee whose death, ailment or injury is work-connected, even if the employer has faithfully and diligently furnished all the safety measures and contrivances decreed by the law to protect the employee. The written word is no longer the "sovereign talisman." In the epigrammatic language of Mr. Justice Cardozo, "the law has outgrown its primitive stage of formalism when the precise word was the sovereign talisman, and every slip was fatal" (Wood vs. Duff Gordon 222 NW 88; Cardozo, The Nature of the Judicial Process 100). Justice Cardozo warned that: "Sometimes the conservatism of judges has threatened for an interval to rob the legislation of its efficacy. ... Precedents established in those items exert an unhappy influence even now" (citing Pound, Common Law and Legislation 21 Harvard Law Review 383, 387). Finally, Justice Holmes delivered the coup de grace when he pragmatically admitted, although with a cautionary undertone: "that judges do and must legislate, but they can do so only interstitially they are confined from molar to molecular motions" (Southern Pacific Company vs. Jensen, 244 US 204 1917). And in the subsequent case of Springer vs. Government (277 US 188, 210-212, 72 L.ed. 845, 852- 853), Justice Holmes pronounced: The great ordinances of the Constitution do not establish and divide fields of black and white. Even the more specific of them are found to terminate in a penumbra shading gradually from one extreme to the other. x x x. When we come to the fundamental distinctions it is still more obvious that they must be received with a certain latitude or our government could not go on. To make a rule of conduct applicable to an individual who but for such action would be free from it is to legislate yet it is what the judges do whenever they determine which of two competing principles of policy shall prevail. xxx xxx xxx It does not seem to need argument to show that however we may disguise it by veiling words we do not and cannot carry out the distinction between legislative and executive action with mathematical precision and divide the branches into waterlight compartments, were it ever so desirable to do so, which I am far from believing that it is, or that the Constitution requires. True, there are jurists and legal writers who affirm that judges should not legislate, but grudgingly concede that in certain cases judges do legislate. They criticize the assumption by the courts of such law-making power as

dangerous for it may degenerate into Judicial tyranny. They include Blackstone, Jeremy Bentham, Justice Black, Justice Harlan, Justice Roberts, Justice David Brewer, Ronald Dworkin, Rolf Sartorious, Macklin Fleming and Beryl Harold Levy. But said Justices, jurists or legal commentators, who either deny the power of the courts to legislate inbetween gaps of the law, or decry the exercise of such power, have not pointed to examples of the exercise by the courts of such law-making authority in the interpretation and application of the laws in specific cases that gave rise to judicial tyranny or oppression or that such judicial legislation has not protected public interest or individual welfare, particularly the lowly workers or the underprivileged. On the other hand, there are numerous decisions interpreting the Bill of Rights and statutory enactments expanding the scope of such provisions to protect human rights. Foremost among them is the doctrine in the cases of Miranda vs. Arizona (384 US 436 1964), Gideon vs. Wainright (372 US 335), Escubedo vs. Illinois (378 US 478), which guaranteed the accused under custodial investigation his rights to remain silent and to counsel and to be informed of such rights as even as it protects him against the use of force or intimidation to extort confession from him. These rights are not found in the American Bill of Rights. These rights are now institutionalized in Section 20, Article IV of the 1973 Constitution. Only the peace-and-order adherents were critical of the activism of the American Supreme Court led by Chief Justice Earl Warren. Even the definition of Identical offenses for purposes of the double jeopardy provision was developed by American judicial decisions, not by amendment to the Bill of Rights on double jeopardy (see Justice Laurel in People vs. Tarok, 73 Phil. 260, 261-268). And these judicial decisions have been re-stated in Section 7 of Rule 117 of the 1985 Rules on Criminal Procedure, as well as in Section 9 of Rule 117 of the 1964 Revised Rules of Court. In both provisions, the second offense is the same as the first offense if the second offense is an attempt to commit the first or frustration thereof or necessarily includes or is necessarily included in the first offense. The requisites of double jeopardy are not spelled out in the Bill of Rights. They were also developed by judicial decisions in the United States and in the Philippines even before people vs. Ylagan (58 Phil. 851-853). Again, the equal protection clause was interpreted in the case of Plessy vs. Ferguson (163 US 537) as securing to the Negroes equal but separate facilities, which doctrine was revoked in the case of Brown vs. Maryland Board of Education (349 US 294), holding that the equal protection clause means that the Negroes are entitled to attend the same schools attended by the whites-equal facilities in the same school-which was extended to public parks and public buses. De-segregation, not segregation, is now the governing principle. Among other examples, the due process clause was interpreted in the case of People vs. Pomar (46 Phil. 440) by a conservative, capitalistic court to invalidate a law granting maternity leave to working women-according primacy to property rights over human rights. The case of People vs. Pomar is no longer the rule. As early as 1904, in the case of Lochner vs. New York (198 US 45, 76, 49 L. ed. 937, 949), Justice Holmes had been railing against the conservatism of Judges perverting the guarantee of due process to protect property rights as against human rights or social justice for the working man. The law fixing maximum hours of labor was invalidated. Justice Holmes was vindicated finally in 1936 in the case of West Coast Hotel vs. Parish (300 US 377-79; 81 L. ed. 703) where the American Supreme Court upheld the rights of workers to social justice in the form of guaranteed minimum wage for women and minors, working hours not exceeding eight (8) daily, and maternity leave for women employees. The power of judicial review and the principle of separation of powers as well as the rule on political questions have been evolved and grafted into the American Constitution by judicial decisions (Marbury vs. Madison, supra Coleman vs. Miller, 307 US 433, 83 L. ed. 1385; Springer vs. Government, 277 US 210-212, 72 L. ed. 852, 853). It is noteworthy that Justice Black, who seems to be against judicial legislation, penned a separate concurring opinion in the case of Coleman vs. Miller, supra, affirming the doctrine of political question as beyond the ambit of judicial review. There is nothing in both the American and Philippine Constitutions expressly providing that the

power of the courts is limited by the principle of separation of powers and the doctrine on political questions. There are numerous cases in Philippine jurisprudence applying the doctrines of separation of powers and political questions and invoking American precedents. Unlike the American Constitution, both the 1935 and 1973 Philippine Constitutions expressly vest in the Supreme Court the power to review the validity or constitutionality of any legislative enactment or executive act. WHEREFORE, THE TRIAL COURT'S ORDER OF DISMISSAL IS HEREBY REVERSED AND SET ASIDE AND THE CASE IS REMANDED TO IT FOR FURTHER PROCEEDINGS. SHOULD A GREATER AMOUNT OF DAMAGES BE DECREED IN FAVOR OF HEREIN PETITIONERS, THE PAYMENTS ALREADY MADE TO THEM PURSUANT TO THE WORKMEN'S COMPENSATION ACT SHALL BE DEDUCTED. NO COSTS. SO ORDERED. Fernando, C.J., Teehankee, Plana, Escolin, De la Fuente, Cuevas and Alampay JJ., concur. Concepcion, Jr., J., is on leave. Abad Santos and Relova, JJ., took no part.

Separate Opinions

MELENCIO-HERRERA, J., dissenting: A This case involves a complaint for damages for the death of five employees of PHILEX Mining Corporation under the general provisions of the Civil Code. The Civil Code itself, however, provides for its non-applicability to the complaint. It is specifically provided in Article 2196 of the Code, found in Title XVIII-Damages that: COMPENSATION FOR WORKMEN AND OTHER EMPLOYEES IN CASE OF DEATH, INJURY OR ILLNESS IS REGULATED BY SPECIAL LAWS. Compensation and damages are synonymous. In Esguerra vs. Muoz Palma, etc., et al., 104 Phil. 582, 586, Justice J.B.L. Reyes had said: Petitioner also avers that compensation is not damages. This argument is but a play on words. The term compensation' is used in the law (Act 3812 and Republic Act 772) in the sense of indemnity for damages suffered, being awarded for a personal injury caused or aggravated by or in the course of employment. ... By the very provisions of the Civil Code, it is a "special law", not the Code itself, which has to apply to the complaint involved in the instant case. That "special law", in reference to the complaint, can be no other than the Workmen's Compensation

Even assuming, without conceding, that an employee is entitled to an election of remedies, as the majority rules, both options cannot be exercised simultaneously, and the exercise of one will preclude the exercise of the other. The petitioners had already exercised their option to come under the Workmen's Compensation Act, and they have already received compensation payable to them under that Act. Stated differently, the remedy under the Workmen's Compensation Act had already become a "finished transaction". There are two considerations why it is believed petitioners should no longer be allowed to exercise the option to sue under the Civil Code. In the first place, the proceedings under the Workmen's Compensation Act have already become the law in regards to" the "election of remedies", because those proceedings had become a "finished transaction". In the second place, it should be plainly equitable that, if a person entitled to an "election of remedies" makes a first election and accepts the benefits thereof, he should no longer be allowed to avail himself of the second option. At the very least, if he wants to make a second election, in disregard of the first election he has made, when he makes the second election he should surrender the benefits he had obtained under the first election, This was not done in the case before the Court. B. 'There is full concurrence on my part with the dissenting opinion of Mr. Justice Gutierrez upholding "the exclusory provision of the Workmen's Compensation Act." I may further add: 1. The Workmen's Compensation Act (Act No. 3428) was approved on December 10, 1927 and took effect on June 10, 1928. It was patterned from Minnesota and Hawaii statutes. Act No. 3428 was adopted by the Philippine legislature, in Spanish and some sections of the law were taken from the statutes of Minnesota and Hawaii, (Chapter 209 of the Revised Laws of Hawaii, 1925). [Morabe & Inton, Workmen's Compensation Act, p. 2] Under the Workmen's Compensation Act of Hawaii, when the Act is applicable, the remedy under the Act is exclusive The following is stated in 1 Schneider Workmen's Compensation Text, pp. 266, 267. Sec. 112. Hawaii Statutory Synopsis. The act is compulsory as to employees in 'all industrial employment' and employees of the territory and its political subdivisions. (Sections 7480-7481, S.S., Vol. 1, p. 713.) Compensation is not payable when injury is due to employee's willful intention to injure himself or another or to his intoxication. (Sec. 7482, S.S., p. 713.) When the act is applicable the remedy thereunder is exclusive (Sec. 7483, S.S., p. 714.) 2. In providing for exclusiveness of the remedy under our Workmen's Compensation Act, the Philippine Legislature worded the first paragraph of Section 5 of the Act as follows: SEC. 5. Exclusive right to compensation.-The rights and remedies granted by this Act to an employee by reason of a personal injury entitling him to compensation shall exclude all other rights and remedies accruing to the employee, his personal representatives, dependents or nearest of kin against the employer

under the Civil Code and other laws, because of said injury (Paragraphing and emphasis supplied) In regards to the intent of the Legislature under the foregoing provision: A cardinal rule in the interpretation of statutes is that the meaning and intention of the law-making body must be sought, first of all in the words of the statute itself, read and considered in their natural, ordinary, commonly-accepted and most obvious significations, according to good and approved usage and without resorting to forced or subtle construction Courts, therefore, as a rule, cannot presume that the law-making body does not know the meaning of words and the rules of grammar. Consequently, the grammatical reading of a statute must be presumed to yield its correct sense. (Espino vs. Cleofe 52 SCRA 92, 98) [Italics supplied] 3. The original second paragraph of Section 5 provided: Employers contracting laborers in the Philippine Islands for work outside the same shall stipulate with such laborers that the remedies prescribed by this Act shall apply exclusively to injuries received outside the Islands through accidents happening in and during the performance of the duties of the employment. (Italics supplied) The use of the word "exclusively is a further confirmation of the exclusory provision of the Act, subject only to exceptions which may be provided in the Act itself. 4. It might be mentioned that, within the Act itself, provision is made for remedies other than within the Act itself. Thus, Section 6, in part, provides: SEC. 6. Liability of third parties.-In case an employee suffers an injury for which compensation is due under this Act by any other person besides his employer, it shall be optional with such injured employee either to claim compensation from his employer, under this Act, or sue such other person for damages, in accordance with law; ... (Emphasis supplied) If the legislative intent under the first paragraph of Section 5 were to allow the injured employee to sue his employer under the Civil Code, the legislator could very easily have formulated the said first paragraph of Section 5 according to the pattern of Section 6. That that was not done shows the legislative intent not to allow any option to an employee to sue the employer under the Civil Code for injuries compensable under the Act. 5. There should be no question but that the original first paragraph of Section 5 of the Workmen's Compensation Act, formulated in 1927, provided that an injured worker or employee, or his heirs, if entitled to compensation under the Act, cannot have independent recourse neither to the Civil Code nor to any other law relative to the liability of the employer. After 1927, there were occasions when the legislator had the opportunity to amend the first paragraph of Section 5 such that the remedies under the Act would not be exclusive; yet, the legislator refrained from doing so. That shows the legislatives continuing intent to maintain the exclusory provision of the first paragraph of Section 5 unless otherwise provided in the Act itself. (a) The original second paragraph of Section 5 provided: Employers contracting laborers in the Philippine Islands for work outside the same shall stipulate with such laborers that the remedies prescribed by this Act shall apply (exclusively) to injuries received outside the Islands through accidents happening in and during the performance of the duties of the employment (and all service contracts made in the manner prescribed in this section be presumed to include such agreement). On June 20, 1952, through RA 772, the foregoing second paragraph was amended with the elimination of the underlined words in parentheses, and the addition of this sentence at the end of the paragraph:

Such stipulation shall not prejudice the right of the laborers to the benefits of the Workmen's Compensation Law of the place where the accident occurs, should such law be more favorable to them. (Emphasis supplied) It will be seen that, within the Act itself, the exclusory character of the Act was amended. At that time, if he had so desired, the legislator could have amended the first paragraph of Section 5 so that the employee would have the option to sue the employer under the Act, or under the Civil Code, should the latter be more favorable to him. (b) The Workmen's Compensation Act, which took effect in 1927, grants compensation to an injured employee without regard to the presence or absence of negligence on the part of the employer. The compensation is deemed an expense chargeable to the industry (Murillo vs. Mendoza, 66 Phil. 689 [1938]). In time, it must have been thought that it was inequitable to have the amount of compensation, caused by negligence on the part of the employer, to be the same amount payable when the employer was not negligent. Based on that thinking, Section 4-A 1 was included into the Act, on June 20, 1952, through RA 772. Said Section 4-A increased the compensation payable by 50% in case there was negligence on the part of the employer. That additional section evidenced the intent of the legislator not to give an option to an employee, injured with negligence on the part of the employer, to sue the latter under the provisions of the Civil Code. On June 20, 1964, Section 4-A was amended (insubstantially) by RA 4119. The legislator was again given the opportunity to provide, but he did not, the option to an employee to sue under the Act or under the Civil Code. When a Court gives effect to a statute not in accordance with the intent of the law-maker, the Court is unjustifiably legislating. It is in view of the foregoing that I vote for affirmation of the trial Court's dismissal of the Complaint. GUTIERREZ, JR., J., dissenting: To grant the petition and allow the victims of industrial accidents to file damages suits based on torts would be a radical innovation not only contrary to the express provisions of the Workmen's Compensation Act but a departure from the principles evolved in the long history of workmen's compensation. At the very least, it should be the legislature and not this Court which should remove the exclusory provision of the Workmen's Compensation Act, a provision reiterated in the present Labor Code on employees' compensation. Workmen's compensation evolved to remedy the evils associated with the situation in the early years of the industrial revolution when injured workingmen had to rely on damage suits to get recompense. Before workmen's compensation, an injured worker seeking damages would have to prove in a tort suit that his employer was either negligent or in bad faith, that his injury was caused by the employer and not a fellow worker, and that he was not guilty of contributory negligence. The employer could employ not only his wealth in defeating the claim for damages but a host of common law defenses available to him as well. The worker was supposed to know what he entered into when he accepted employment. As stated in the leading case of Priestley u. Fowler (3 M. & W. 1, 150 Reprint 1030) decided in 1837 "the mere relation of the master and the servant never can imply an obligation on the part of the master to take more care of the servant than he may reasonably be expected to do of himself." By entering into a contract of employment, the worker was deemed to accept the risks of employment that he should discover and guard against himself. The problems associated with the application of the fellow servant rule, the assumption of risk doctrine, the principle of contributory negligence, and the many other defenses so easily raised in protracted damage suits illustrated the need for a system whereby workers had only to prove the fact of covered employment and the fact of injury arising from employment in order to be compensated.

The need for a compensation scheme where liability is created solely by statute and made compulsory and where the element of fault-either the fault of the employer or the fault of the employee-disregarded became obvious. Another objective was to have simplified, expeditious, inexpensive, and non-litigious procedures so that victims of industrial accidents could more readily, if not automatically, receive compensation for work-related injuries. Inspite of common law defenses to defeat a claim being recognized, employers' liability acts were a major step in the desired direction. However, employers liability legislation proved inadequate. Legislative reform led to the workmen's compensation. I cite the above familiar background because workmen's compensation represents a compromise. In return for the near certainty of receiving a sum of money fixed by law, the injured worker gives up the right to subject the employer to a tort suit for huge amounts of damages. Thus, liability not only disregards the element of fault but it is also a pre- determined amount based on the wages of the injured worker and in certain cases, the actual cost of rehabilitation. The worker does not receive the total damages for his pain and suffering which he could otherwise claim in a civil suit. The employer is required to act swiftly on compensation claims. An administrative agency supervises the program. And because the overwhelming mass of workingmen are benefited by the compensation system, individual workers who may want to sue for big amounts of damages must yield to the interests of their entire working class. The nature of the compensation principle is explained as follows: An appreciation of the nature of the compensation principle is essential to an understanding of the acts and the cases interpreting them. By the turn of the century it was apparent that the toll of industrial accidents of both the avoidable and unavoidable variety had become enormous, and government was faced with the problem of who was to pay for the human wreckage wrought by the dangers of modern industry. If the accident was avoidable and could be attributed to the carelessness of the employer, existing tort principles offered some measure of redress. Even here, however, the woeful inadequacy of the fault principle was manifest. The uncertainty of the outcome of torts litigation in court placed the employee at a substantial disadvantage. So long as liability depended on fault there could be no recovery until the finger of blame had been pointed officially at the employer or his agents. In most cases both the facts and the law were uncertain. The witnesses, who were usually fellow workers of the victim, were torn between friendship or loyalty to their class, on the one hand, and fear of reprisal by the employer, on the other. The expense and delay of litigation often prompted the injured employee to accept a compromise settlement for a fraction of the full value of his claim. Even if suit were successfully prosecuted, a large share of the proceeds of the judgment were exacted as contingent fees by counsel. Thus the employer against whom judgment was cast often paid a substantial damage bill, while only a part of this enured to the benefit of the injured employee or his dependents. The employee's judgment was nearly always too little and too late. xxx xxx xxx Workmen's Compensation rests upon the economic principle that those persons who enjoy the product of a business- whether it be in the form of goods or services- should ultimately bear the cost of the injuries or deaths that are incident to the manufacture, preparation and distribution of the product. ... xxx xxx xxx Under this approach the element of personal fault either disappears entirely or is subordinated to broader economic considerations. The employer absorbs the cost of accident loss only initially; it is expected that this cost will eventually pass down the stream of commerce in the form of increase price until it is spread in dilution among the ultimate consumers. So long as each

competing unit in a given industry is uniformly affected, no producer can gain any substantial competitive advantage or suffer any appreciable loss by reason of the general adoption of the compensation principle. In order that the compensation principle may operate properly and with fairness to all parties it is essential that the anticipated accident cost be predictable and that it be fixed at a figure that will not disrupt too violently the traffic in the product of the industry affected. Thus predictability and moderateness of cost are necessary from the broad economic viewpoint. .... Compensation, then, differs from the conventional damage suit in two important respects: Fault on the part of either employer or employee is eliminated; and compensation payable according to a definitely limited schedule is substituted for damages. All compensation acts alike work these two major changes, irrespective of how they may differ in other particulars. Compensation, when regarded from the viewpoint of employer and employee represents a compromise in which each party surrenders certain advantages in order to gain others which are of more importance both to him and to society. The employer gives up the immunity he otherwise would enjoy in cases where he is not at fault, and the employee surrenders his former right to full damages and accepts instead a more modest claim for bare essentials, represented by compensation. The importance of the compromise character of compensation cannot be overemphasized. The statutes vary a great deal with reference to the proper point of balance. The amount of weekly compensation payments and the length of the period during which compensation is to be paid are matters concerning which the acts differ considerably. The interpretation of any compensation statute will be influenced greatly by the court's reaction to the basic point of compromise established in the Act. If the court feels that the basic compromise unduly favors the employer, it will be tempted to restore what it regards as a proper balance by adopting an interpretation that favors the worker. In this way, a compensation act drawn in a spirit of extreme conservatism may be transformed by a sympathetic court into a fairly liberal instrument; and conversely, an act that greatly favors the laborer may be so interpreted by the courts that employers can have little reason to complain. Much of the unevenness and apparent conflict in compensation decisions throughout the various jurisdictions must be attributed to this." (Malone & Plant, Workmen's Compensation American Casebook Series, pp. 63-65). The schedule of compensation, the rates of payments, the compensable injuries and diseases, the premiums paid by employers to the present system, the actuarial stability of the trust fund and many other interrelated parts have all been carefully studied before the integrated scheme was enacted in to law. We have a system whose parts must mesh harmonious with one another if it is to succeed. The basic theory has to be followed. If this Court disregards this totality of the scheme and in a spirit of generosity recasts some parts of the system without touching the related others, the entire structure is endangered. For instance, I am personally against stretching the law and allowing payment of compensation for contingencies never envisioned to be compensable when the law was formulated. Certainly, only harmful results to the principle of workmen's compensation can arise if workmen, whom the law allows to receive employment compensation, can still elect to file damage suits for industrial accidents. It was precisely for this reason that Section 5 of the Workmen's Compensation Act, which reads: SEC. 5. Exclusive right to compensation.-The rights and remedies granted by this Act to an employee by reason of a personal injury entitling him to compensation shall exclude all other rights and remedies accruing to the employee, his personal representatives, dependents or nearest of kin against the employer under the Civil Code and other laws because of said injury. ... Article 173 of the labor Code also provides:

ART. 173. Exclusivenesss of liability.Unless otherwise provided, the liability of the State Insurance Fund under this Title shall be exclusive and in place of all other liabilities of the employer to the employee his dependents or anyone otherwise entitled to receive damages on behalf of the employee or his dependents. I am against the Court assuming the role of legislator in a matter calling for actuarial studies and public hearings. If employers already required to contribute to the State Insurance Fund will still have to bear the cost of damage suits or get insurance for that purpose, a major study will be necessary. The issue before us is more far reaching than the interests of the poor victims and their families. All workers covered by workmen's compensation and all employers who employ covered employees are affected. Even as I have deepest sympathies for the victims, I regret that I am constrained to dissent from the majority opinion.

Separate Opinions

MELENCIO-HERRERA, J., dissenting: A This case involves a complaint for damages for the death of five employees of PHILEX Mining Corporation under the general provisions of the Civil Code. The Civil Code itself, however, provides for its non-applicability to the complaint. It is specifically provided in Article 2196 of the Code, found in Title XVIII-Damages that: COMPENSATION FOR WORKMEN AND OTHER EMPLOYEES IN CASE OF DEATH, INJURY OR ILLNESS IS REGULATED BY SPECIAL LAWS. Compensation and damages are synonymous. In Esguerra vs. Muoz Palma, etc., et al., 104 Phil. 582, 586, Justice J.B.L. Reyes had said: Petitioner also avers that compensation is not damages. This argument is but a play on words. The term compensation' is used in the law (Act 3812 and Republic Act 772) in the sense of indemnity for damages suffered, being awarded for a personal injury caused or aggravated by or in the course of employment. ... By the very provisions of the Civil Code, it is a "special law", not the Code itself, which has to apply to the complaint involved in the instant case. That "special law", in reference to the complaint, can be no other than the Workmen's Compensation Even assuming, without conceding, that an employee is entitled to an election of remedies, as the majority rules, both options cannot be exercised simultaneously, and the exercise of one will preclude the exercise of the other. The petitioners had already exercised their option to come under the Workmen's Compensation Act, and they have already received compensation payable to them under that Act. Stated differently, the remedy under the Workmen's Compensation Act had already become a "finished transaction". There are two considerations why it is believed petitioners should no longer be allowed to exercise the option to sue under the Civil Code. In the first place, the proceedings under the Workmen's Compensation Act have already become the law in regards to" the "election of remedies", because those proceedings had become a "finished transaction".

In the second place, it should be plainly equitable that, if a person entitled to an "election of remedies" makes a first election and accepts the benefits thereof, he should no longer be allowed to avail himself of the second option. At the very least, if he wants to make a second election, in disregard of the first election he has made, when he makes the second election he should surrender the benefits he had obtained under the first election, This was not done in the case before the Court. B. 'There is full concurrence on my part with the dissenting opinion of Mr. Justice Gutierrez upholding "the exclusory provision of the Workmen's Compensation Act." I may further add: 1. The Workmen's Compensation Act (Act No. 3428) was approved on December 10, 1927 and took effect on June 10, 1928. It was patterned from Minnesota and Hawaii statutes. Act No. 3428 was adopted by the Philippine legislature, in Spanish and some sections of the law were taken from the statutes of Minnesota and Hawaii, (Chapter 209 of the Revised Laws of Hawaii, 1925). [Morabe & Inton, Workmen's Compensation Act, p. 2] Under the Workmen's Compensation Act of Hawaii, when the Act is applicable, the remedy under the Act is exclusive The following is stated in 1 Schneider Workmen's Compensation Text, pp. 266, 267. Sec. 112. Hawaii Statutory Synopsis. The act is compulsory as to employees in 'all industrial employment' and employees of the territory and its political subdivisions. (Sections 7480-7481, S.S., Vol. 1, p. 713.) Compensation is not payable when injury is due to employee's willful intention to injure himself or another or to his intoxication. (Sec. 7482, S.S., p. 713.) When the act is applicable the remedy thereunder is exclusive (Sec. 7483, S.S., p. 714.) 2. In providing for exclusiveness of the remedy under our Workmen's Compensation Act, the Philippine Legislature worded the first paragraph of Section 5 of the Act as follows: SEC. 5. Exclusive right to compensation.-The rights and remedies granted by this Act to an employee by reason of a personal injury entitling him to compensation shall exclude all other rights and remedies accruing to the employee, his personal representatives, dependents or nearest of kin against the employer under the Civil Code and other laws, because of said injury (Paragraphing and emphasis supplied) In regards to the intent of the Legislature under the foregoing provision: A cardinal rule in the interpretation of statutes is that the meaning and intention of the law-making body must be sought, first of all in the words of the statute itself, read and considered in their natural, ordinary, commonly-accepted and most obvious significations, according to good and approved usage and without resorting to forced or subtle construction Courts, therefore, as a rule, cannot presume that the law-making body does not know the meaning of words and the rules of

grammar. Consequently, the grammatical reading of a statute must be presumed to yield its correct sense. (Espino vs. Cleofe 52 SCRA 92, 98) [Italics supplied] 3. The original second paragraph of Section 5 provided: Employers contracting laborers in the Philippine Islands for work outside the same shall stipulate with such laborers that the remedies prescribed by this Act shall apply exclusively to injuries received outside the Islands through accidents happening in and during the performance of the duties of the employment. (Italics supplied) The use of the word "exclusively is a further confirmation of the exclusory provision of the Act, subject only to exceptions which may be provided in the Act itself. 4. It might be mentioned that, within the Act itself, provision is made for remedies other than within the Act itself. Thus, Section 6, in part, provides: SEC. 6. Liability of third parties.-In case an employee suffers an injury for which compensation is due under this Act by any other person besides his employer, it shall be optional with such injured employee either to claim compensation from his employer, under this Act, or sue such other person for damages, in accordance with law; ... (Emphasis supplied) If the legislative intent under the first paragraph of Section 5 were to allow the injured employee to sue his employer under the Civil Code, the legislator could very easily have formulated the said first paragraph of Section 5 according to the pattern of Section 6. That that was not done shows the legislative intent not to allow any option to an employee to sue the employer under the Civil Code for injuries compensable under the Act. 5. There should be no question but that the original first paragraph of Section 5 of the Workmen's Compensation Act, formulated in 1927, provided that an injured worker or employee, or his heirs, if entitled to compensation under the Act, cannot have independent recourse neither to the Civil Code nor to any other law relative to the liability of the employer. After 1927, there were occasions when the legislator had the opportunity to amend the first paragraph of Section 5 such that the remedies under the Act would not be exclusive; yet, the legislator refrained from doing so. That shows the legislatives continuing intent to maintain the exclusory provision of the first paragraph of Section 5 unless otherwise provided in the Act itself. (a) The original second paragraph of Section 5 provided: Employers contracting laborers in the Philippine Islands for work outside the same shall stipulate with such laborers that the remedies prescribed by this Act shall apply (exclusively) to injuries received outside the Islands through accidents happening in and during the performance of the duties of the employment (and all service contracts made in the manner prescribed in this section be presumed to include such agreement). On June 20, 1952, through RA 772, the foregoing second paragraph was amended with the elimination of the underlined words in parentheses, and the addition of this sentence at the end of the paragraph: Such stipulation shall not prejudice the right of the laborers to the benefits of the Workmen's Compensation Law of the place where the accident occurs, should such law be more favorable to them. (Emphasis supplied) It will be seen that, within the Act itself, the exclusory character of the Act was amended. At that time, if he had so desired, the legislator could have amended the first paragraph of Section 5 so that the employee would have the option to sue the employer under the Act, or under the Civil Code, should the latter be more favorable to him.

(b) The Workmen's Compensation Act, which took effect in 1927, grants compensation to an injured employee without regard to the presence or absence of negligence on the part of the employer. The compensation is deemed an expense chargeable to the industry (Murillo vs. Mendoza, 66 Phil. 689 [1938]). In time, it must have been thought that it was inequitable to have the amount of compensation, caused by negligence on the part of the employer, to be the same amount payable when the employer was not negligent. Based on that thinking, Section 4-A 1 was included into the Act, on June 20, 1952, through RA 772. Said Section 4-A increased the compensation payable by 50% in case there was negligence on the part of the employer. That additional section evidenced the intent of the legislator not to give an option to an employee, injured with negligence on the part of the employer, to sue the latter under the provisions of the Civil Code. On June 20, 1964, Section 4-A was amended (insubstantially) by RA 4119. The legislator was again given the opportunity to provide, but he did not, the option to an employee to sue under the Act or under the Civil Code. When a Court gives effect to a statute not in accordance with the intent of the law-maker, the Court is unjustifiably legislating. It is in view of the foregoing that I vote for affirmation of the trial Court's dismissal of the Complaint. GUTIERREZ, JR., J., dissenting: To grant the petition and allow the victims of industrial accidents to file damages suits based on torts would be a radical innovation not only contrary to the express provisions of the Workmen's Compensation Act but a departure from the principles evolved in the long history of workmen's compensation. At the very least, it should be the legislature and not this Court which should remove the exclusory provision of the Workmen's Compensation Act, a provision reiterated in the present Labor Code on employees' compensation. Workmen's compensation evolved to remedy the evils associated with the situation in the early years of the industrial revolution when injured workingmen had to rely on damage suits to get recompense. Before workmen's compensation, an injured worker seeking damages would have to prove in a tort suit that his employer was either negligent or in bad faith, that his injury was caused by the employer and not a fellow worker, and that he was not guilty of contributory negligence. The employer could employ not only his wealth in defeating the claim for damages but a host of common law defenses available to him as well. The worker was supposed to know what he entered into when he accepted employment. As stated in the leading case of Priestley u. Fowler (3 M. & W. 1, 150 Reprint 1030) decided in 1837 "the mere relation of the master and the servant never can imply an obligation on the part of the master to take more care of the servant than he may reasonably be expected to do of himself." By entering into a contract of employment, the worker was deemed to accept the risks of employment that he should discover and guard against himself. The problems associated with the application of the fellow servant rule, the assumption of risk doctrine, the principle of contributory negligence, and the many other defenses so easily raised in protracted damage suits illustrated the need for a system whereby workers had only to prove the fact of covered employment and the fact of injury arising from employment in order to be compensated. The need for a compensation scheme where liability is created solely by statute and made compulsory and where the element of fault-either the fault of the employer or the fault of the employee-disregarded became obvious. Another objective was to have simplified, expeditious, inexpensive, and non-litigious procedures so that victims of industrial accidents could more readily, if not automatically, receive compensation for work-related injuries. Inspite of common law defenses to defeat a claim being recognized, employers' liability acts were a major step in the desired direction. However, employers liability legislation proved inadequate. Legislative reform led to the workmen's compensation.

I cite the above familiar background because workmen's compensation represents a compromise. In return for the near certainty of receiving a sum of money fixed by law, the injured worker gives up the right to subject the employer to a tort suit for huge amounts of damages. Thus, liability not only disregards the element of fault but it is also a pre- determined amount based on the wages of the injured worker and in certain cases, the actual cost of rehabilitation. The worker does not receive the total damages for his pain and suffering which he could otherwise claim in a civil suit. The employer is required to act swiftly on compensation claims. An administrative agency supervises the program. And because the overwhelming mass of workingmen are benefited by the compensation system, individual workers who may want to sue for big amounts of damages must yield to the interests of their entire working class. The nature of the compensation principle is explained as follows: An appreciation of the nature of the compensation principle is essential to an understanding of the acts and the cases interpreting them. By the turn of the century it was apparent that the toll of industrial accidents of both the avoidable and unavoidable variety had become enormous, and government was faced with the problem of who was to pay for the human wreckage wrought by the dangers of modern industry. If the accident was avoidable and could be attributed to the carelessness of the employer, existing tort principles offered some measure of redress. Even here, however, the woeful inadequacy of the fault principle was manifest. The uncertainty of the outcome of torts litigation in court placed the employee at a substantial disadvantage. So long as liability depended on fault there could be no recovery until the finger of blame had been pointed officially at the employer or his agents. In most cases both the facts and the law were uncertain. The witnesses, who were usually fellow workers of the victim, were torn between friendship or loyalty to their class, on the one hand, and fear of reprisal by the employer, on the other. The expense and delay of litigation often prompted the injured employee to accept a compromise settlement for a fraction of the full value of his claim. Even if suit were successfully prosecuted, a large share of the proceeds of the judgment were exacted as contingent fees by counsel. Thus the employer against whom judgment was cast often paid a substantial damage bill, while only a part of this enured to the benefit of the injured employee or his dependents. The employee's judgment was nearly always too little and too late. xxx xxx xxx Workmen's Compensation rests upon the economic principle that those persons who enjoy the product of a business- whether it be in the form of goods or services- should ultimately bear the cost of the injuries or deaths that are incident to the manufacture, preparation and distribution of the product. ... xxx xxx xxx Under this approach the element of personal fault either disappears entirely or is subordinated to broader economic considerations. The employer absorbs the cost of accident loss only initially; it is expected that this cost will eventually pass down the stream of commerce in the form of increase price until it is spread in dilution among the ultimate consumers. So long as each competing unit in a given industry is uniformly affected, no producer can gain any substantial competitive advantage or suffer any appreciable loss by reason of the general adoption of the compensation principle. In order that the compensation principle may operate properly and with fairness to all parties it is essential that the anticipated accident cost be predictable and that it be fixed at a figure that will not disrupt too violently the traffic in the product of the industry affected. Thus predictability and moderateness of cost are necessary from the broad economic viewpoint. ....

Compensation, then, differs from the conventional damage suit in two important respects: Fault on the part of either employer or employee is eliminated; and compensation payable according to a definitely limited schedule is substituted for damages. All compensation acts alike work these two major changes, irrespective of how they may differ in other particulars. Compensation, when regarded from the viewpoint of employer and employee represents a compromise in which each party surrenders certain advantages in order to gain others which are of more importance both to him and to society. The employer gives up the immunity he otherwise would enjoy in cases where he is not at fault, and the employee surrenders his former right to full damages and accepts instead a more modest claim for bare essentials, represented by compensation. The importance of the compromise character of compensation cannot be overemphasized. The statutes vary a great deal with reference to the proper point of balance. The amount of weekly compensation payments and the length of the period during which compensation is to be paid are matters concerning which the acts differ considerably. The interpretation of any compensation statute will be influenced greatly by the court's reaction to the basic point of compromise established in the Act. If the court feels that the basic compromise unduly favors the employer, it will be tempted to restore what it regards as a proper balance by adopting an interpretation that favors the worker. In this way, a compensation act drawn in a spirit of extreme conservatism may be transformed by a sympathetic court into a fairly liberal instrument; and conversely, an act that greatly favors the laborer may be so interpreted by the courts that employers can have little reason to complain. Much of the unevenness and apparent conflict in compensation decisions throughout the various jurisdictions must be attributed to this." (Malone & Plant, Workmen's Compensation American Casebook Series, pp. 63-65). The schedule of compensation, the rates of payments, the compensable injuries and diseases, the premiums paid by employers to the present system, the actuarial stability of the trust fund and many other interrelated parts have all been carefully studied before the integrated scheme was enacted in to law. We have a system whose parts must mesh harmonious with one another if it is to succeed. The basic theory has to be followed. If this Court disregards this totality of the scheme and in a spirit of generosity recasts some parts of the system without touching the related others, the entire structure is endangered. For instance, I am personally against stretching the law and allowing payment of compensation for contingencies never envisioned to be compensable when the law was formulated. Certainly, only harmful results to the principle of workmen's compensation can arise if workmen, whom the law allows to receive employment compensation, can still elect to file damage suits for industrial accidents. It was precisely for this reason that Section 5 of the Workmen's Compensation Act, which reads: SEC. 5. Exclusive right to compensation.-The rights and remedies granted by this Act to an employee by reason of a personal injury entitling him to compensation shall exclude all other rights and remedies accruing to the employee, his personal representatives, dependents or nearest of kin against the employer under the Civil Code and other laws because of said injury. ... Article 173 of the labor Code also provides: ART. 173. Exclusivenesss of liability.Unless otherwise provided, the liability of the State Insurance Fund under this Title shall be exclusive and in place of all other liabilities of the employer to the employee his dependents or anyone otherwise entitled to receive damages on behalf of the employee or his dependents. I am against the Court assuming the role of legislator in a matter calling for actuarial studies and public hearings. If employers already required to contribute to the State Insurance Fund will still have to bear the cost of damage suits or get insurance for that purpose, a major study will be necessary. The issue before us is more far reaching than the

interests of the poor victims and their families. All workers covered by workmen's compensation and all employers who employ covered employees are affected. Even as I have deepest sympathies for the victims, I regret that I am constrained to dissent from the majority opinion. Footnotes 1 SEC. 4-A. Right to additional compensation.- In case of the employee's death, injury or sickness due to the failure of the to comply with any law, or with any order, rule or regulation of the Workmen's Compensation Commission or the Bureau of Labor Standards or should the employer violate the provisions of Republic Act Numbered Six hundred seventy-nine and its amendments or fail to install and maintain safety appliances, or take other precautions for the prevention of accidents or occupational disease, he shall be liable to pay an additional compensation equal to fifty per centum of the compensation fixed in this Act.

FIRST DIVISION [G.R. No. 155344. January 20, 2004] ROLANDO N. CANET, petitioner, vs. MAYOR JULIETA A. DECENA, respondent. DECISION YNARES-SANTIAGO, J.: On July 27, 1998, the Sangguniang Bayan of Bula, Camarines Sur, passed Resolution No. 049, Series of 1998,1[1] authorizing petitioner Rolando N. Canet to establish, operate and maintain a cockpit in Sitio, Cabaya, San Roque, Bula, Camarines Sur. Subsequently, the Sangguniang Bayan passed Ordinance No. 001, Series of 1999, entitled An Ordinance Regulating the Operation of Cockpits and Other Related Game-Fowl Activities in the Municipality of Bula, Camarines Sur and Providing Penalties for any Violation to (sic) the Provisions Thereof.2[2] Upon transmittal to respondent Mayor Julieta A. Decena of the said municipality, it was noted that the Ordinance does not contain rules and regulations on cockfighting and other related game fowl activities and a separability clause. The Ordinance was returned to the Sangguniang Bayan. In Resolution No. 078, Series of 1999, Sangguniang Bayan resolved to withdraw, set aside and shelf indefinitely Ordinance No. 001, Series of 1999.3[3] Meanwhile, petitioner, relying on Resolution No. 049, Series of 1998, of the Sangguniang Bayan, filed an application for a mayors permit to operate, establish and maintain a cockpit in Sitio Cabuya, San Roque, Bula, Camarines Sur. Respondent Mayor Julieta Decena denied the application on the ground, among others, that under the Local Government Code of 1991, the authority to give licenses for the establishment, operation and maintenance of cockpits as well as the regulation of cockfighting and commercial breeding of gamecocks is vested in the Sangguniang Bayan.4[4] Therefore, she cannot issue the said permit inasmuch as there was no ordinance passed by the Sangguniang Bayan authorizing the same. On July 26, 1999, petitioner filed a complaint5[5] against respondent Mayor with the Regional Trial Court of Pili, Camarines Sur, Branch XXXI, which was docketed as Special Civil Action No. P-84-99, for Mandamus and Damages with Application for Preliminary Mandatory Injunction. Respondent moved for the dismissal of the complaint. A Resolution was issued by the trial court on January 27, 2000, the dispositive portion of which reads: WHEREFORE, in view of the foregoing, the motion to dismiss is hereby denied. Let a writ of preliminary mandatory injunction issue upon the posting of an injunction bond by the plaintiff in the amount of FIFTY THOUSAND PESOS (P50,000.00) executed to defendant to stand for all the damages which she may sustain if it should be finally found that plaintiff is not entitled thereto, said mandatory injunction ordering and commanding

1 2 3 4 5

herein defendant, incumbent Mayor of the Municipality of Bula, Camarines Sur to approve and issue forthwith the Mayors Permit and to accept the fees therefor for plaintiff to establish, maintain and operate a cockpit in Cabaya, San Roque, Bula, Camarines Sur. Upon finality of this resolution, let the main case be set for further proceedings. SO ORDERED.6[6] The writ of preliminary mandatory injunction was issued on February 1, 2000.7[7] Respondent filed a petition for certiorari and prohibition with the Court of Appeals, docketed as CA-G.R. SP No. 57797.8[8] On April 3, 2000, the Court of Appeals issued a temporary restraining order,9[9] directing petitioner and the presiding judge to temporarily cease and desist from enforcing the writ of preliminary mandatory injunction issued on February 1, 2000 in Special Civil Action No. P-84-99. On June 3, 2002, the Court of Appeals rendered the assailed Decision, the dispositive portion of which reads: WHEREFORE, the petition is granted and the questioned January 27, 2000 Resolution and February 1, 2000 writ of preliminary mandatory injunction issued by respondent Judge are ANNULLED AND SET ASIDE while the writ of preliminary injunction heretofore issued by this Court on July 10, 2000 is made permanent. No costs. SO ORDERED.10[10] Petitioner filed a Motion for Reconsideration which was denied for lack of merit in a Resolution dated August 2002.11[11] Hence, this petition for review. The core issue in this petition is whether or not respondent, in her capacity as Municipal Mayor, can be compelled to issue the necessary business permit to petitioner absent a municipal ordinance which would empower her to do so. The pertinent provision of law in contention is Section 447 (a) (3) (v) of the Local Government Code of 1991 (Republic Act No. 7160), which reads: SEC. 447. Powers, Functions and Compensation. (a) The Sangguniang Bayan as the legislative body of the municipality shall enact ordinances, approve resolutions and appropriate funds for the general welfare of the municipality and its inhabitants pursuant to Section 16 of this Code and in the proper exercise of the corporate powers of the municipality as provided for under Section 22, and shall: xxx xxx xxx.

6 7 8 9 10 11

(3) Subject to the provisions of Book II of this Code, grant franchises, enact ordinances levying taxes, fees and charges upon such conditions and for such purposes intended to promote the general welfare of the inhabitants of the municipality, and pursuant to this legislative authority shall: xxx xxx xxx.

(v) Any law to the contrary notwithstanding, authorize and license the establishment, operation and maintenance of cockpits and regulate cockfighting and commercial breeding of gamecocks: Provided, That existing rights should not be prejudiced. Petitioner admits that there is no ordinance in Bula, Camarines Sur which authorizes the grant of a mayors permit to operate and maintain a cockfighting arena. However, he invokes Resolution No. 049, S. 1998, wherein the Sangguniang Bayan authorized him to operate a cockpit. Furthermore, he cites Municipal Tax Ordinances Nos. 01, S. 1989, and 05, S. 1993, which generally provide for the issuance of a mayors permit for the operation of businesses. Municipal Tax Ordinances Nos. 01, S. 1989 and 05, S. 1993 contain general provisions for the issuance of business permits but do not contain specific provisions prescribing the reasonable fees to be paid in the operation of cockpits and other game fowl activities. It was Ordinance No. 001, S. 1999 which provided for the collection of application filing fees, ocular inspection fees, mayors permit fees, filing fees for the institution of complaints, entrance fees and special derby assessments for the operation of cockpits.12[12] This Ordinance, however, was withdrawn by the Sangguniang Bayan. Hence, there being in effect no ordinance allowing the operation of a cockpit, Resolution No. 049, S. 1998, authorizing petitioner to establish, operate and maintain a cockpit in Bula, Camarines Sur cannot be implemented. Suffice it to state in this regard that to compel respondent to issue the mayors permit would not only be a violation of the explicit provisions of Section 447 of the Local Government Code of 1991, but would also be an undue encroachment on respondents administrative prerogatives. Along the same vein, to read into the ordinances relied upon by petitioner objects which were neither specifically mentioned nor enumerated would be to run afoul of the dictum that where a statute, by its terms, is expressly limited to certain matters, it may not, by interpretation or construction, be extended to other matters. 13[13] In other words, it is a basic precept of statutory construction that the express mention of one person, thing, act, or consequence excludes all others, as expressed in the oft-repeated maxim expression unius est exlusio alterius.14[14] Elsewise stated, expressium facit cessare tacitum what is expressed puts an end to what is implied.15[15] The rule proceeds from the premise that the legislative body would not have made specific enumerations in a statute, if it had the intention not to restrict its meaning and confine its terms to those expressly mentioned. Even on the assumption that there is in fact a legislative gap caused by such an omission, neither could the Court presume otherwise and supply the details thereof, because a legislative lacuna cannot be filled by judicial fiat.16[16] Indeed, courts may not, in the guise of interpretation, enlarge the scope of a statute and include therein situations not provided nor intended by the lawmakers. An omission at the time of the enactment, whether careless or calculated,

12 13 14 15 16

cannot be judicially supplied however after later wisdom may recommend the inclusion.17[17] Courts are not authorized to insert into the law what they think should be in it or to supply what they think the legislature would have supplied if its attention has been called to the omission.18[18] Courts should not, by construction, revise even the most arbitrary and unfair action of the legislature, nor rewrite the law to conform with what they think should be the law.19[19] Nor may they interpret into the law a requirement which the law does not prescribe.20[20] Where a statute contains no limitations in its operation or scope, courts should not engraft any.21[21] And where a provision of law expressly limits its application to certain transactions, it cannot be extended to other transactions by interpretation.22[22] To do any of such things would be to do violence to the language of the law and to invade the legislative sphere.23[23] It should, furthermore, be borne in mind that cockfighting although authorized by law is still a form of gambling. Gambling is essentially antagonistic to the aims of enhancing national productivity and self-reliance. 24[24] As has been previously said, a statute which authorizes a gambling activity or business should be strictly construed, and every reasonable doubt resolved so as to limit rather than expand the powers and rights claimed by franchise holders under its authority.25[25] WHEREFORE, in view of all the foregoing, the petition is hereby DENIED for lack of merit. The Decision of the Court of Appeals dated June 3, 2002 in CA-G.R. SP No. 57797 is AFFIRMED in toto. SO ORDERED. Davide, Jr., C.J., (Chairman),Panganiban, Carpio, and Azcuna, JJ., concur,

Republic of the Philippines SUPREME COURT Manila

17 18 19 20 21 22 23 24 25

THIRD DIVISION G.R. No. 170735 December 17, 2007

IMMACULADA L. GARCIA, petitioner, vs. SOCIAL SECURITY COMMISSION LEGAL AND COLLECTION, SOCIAL SECURITY SYSTEM, respondents. DECISION CHICO-NAZARIO, J.: This is petition for review on Certiorari under Rule 45 of the Rules of Court is assailing the 2 June 2005 Decision 1 and 8 December 2005 Resolution2 both of the Court of Appeals in CA-G.R. SP No. 85923. the appellate court affirmed the --- Order and --- Resolution both of the Social Security Commission (SSC) in SSC Case No. 10048, finding Immaculada L. Garcia (Garcia), the sole surviving director of Impact Corporation, petitioner herein, liable for unremitted, albeit collected, SSS contributions. Petitioner Immaculada L. Garcia, Eduardo de Leon, Ricardo de Leon, Pacita Fernandez, and Consuelo Villanueva were directors3 of Impact Corporation. The corporation was engaged in the business of manufacturing aluminum tube containers and operated two factories. One was a "slug" foundry-factory located in Cuyapo, Nueva Ecija, while the other was an Extrusion Plant in Cainta, Metro Manila, which processed the "slugs" into aluminum collapsible tubes and similar containers for toothpaste and other related products. Records show that around 1978, Impact Corporation started encountering financial problems. By 1980, labor unrest besieged the corporation. In March 1983, Impact Corporation filed with the Securities and Exchange Commission (SEC) a Petition for Suspension of Payments,4 docketed as SEC Case No. 02423, in which it stated that: [Impact Corporation] has been and still is engaged in the business of manufacturing aluminum tube containers x x x. xxxx In brief, it is an on-going, viable, and profitable enterprise. On 8 May 1985, the union of Impact Corporation filed a Notice of Strike with the Ministry of Labor which was followed by a declaration of strike on 28 July 1985. Subsequently, the Ministry of Labor certified the labor dispute for compulsory arbitration to the National Labor Relations Commission (NLRC) in an Order5 dated 25 August 1985. The Ministry of Labor, in the same Order, noted the inability of Impact Corporation to pay wages, 13th month pay, and SSS remittances due to cash liquidity problems. A portion of the order reads: On the claims of unpaid wages, unpaid 13th month pay and non-remittance of loan amortization and SSS premiums, we are for directing the company to pay the same to the workers and to remit loan amortizations and SSS premiums previously deducted from their wages to the Social Security System. Such claims were never contested by the company both during the hearing below and in our office. In fact, such claims were admitted by the company although it alleged cash liquidity as the main reason for such non-payment. WHEREFORE, the dispute at Impact Corporation is hereby certified to the National Labor Relations Commission for compulsory arbitration in accordance with Article 264 (g) of the Labor Code, as amended.

xxxx The company is directed to pay all the entitled workers unpaid wages, unpaid 13 th month pay and to remit to the Social Security System loan amortizations and SSS premiums previously deducted from the wages of the workers.6 On 3 July 1985, the Social Security System (SSS), through its Legal and Collection Division (LCD), filed a case before the SSC for the collection of unremitted SSS premium contributions withheld by Impact Corporation from its employees. The case which impleaded Impact Corporation as respondent was docketed as SSC Case No. 10048.7 Impact Corporation was compulsorily covered by the SSS as an employer effective 15 July 1963 and was assigned Employer I.D. No. 03-2745100-21. In answer to the allegations raised in SSC Case No. 10048, Impact Corporation, through its then Vice President Ricardo de Leon, explained in a letter dated 18 July 1985 that it had been confronted with strikes in 1984 and layoffs were effected thereafter. It further argued that the P402,988.93 is erroneous. It explained among other things, that its operations had been suspended and that it was waiting for the resolution on its Petition for Suspension of Payments by the SEC under SEC Case No. 2423. Despite due notice, the corporation failed to appear at the hearings. The SSC ordered the investigating team of the SSS to determine if it can still file its claim for unpaid premium contributions against the corporation under the Petition for Suspension of Payments. In the meantime, the Petition for Suspension of Payments was dismissed which was pending before the SEC in an Order8 dated 12 December 1985. Impact Corporation resumed operations but only for its winding up and dissolution.9 Due to Impact Corporations liability and cash flow problems, all of its assets, namely, its machineries, equipment, office furniture and fixtures, were sold to scrap dealers to answer for its arrears in rentals. On 1 December 1995, the SSS-LCD filed an amended Petition10 in SSC Case No. 10048 wherein the directors of Impact Corporation were directly impleaded as respondents, namely: Eduardo de Leon, Ricardo de Leon, 11 Pacita Fernandez, Consuelo Villanueva, and petitioner. The amounts sought to be collected totaled P453,845.78 and P10,856.85 for the periods August 1980 to December 1984 and August 1981 to July 1984, respectively, and the penalties for late remittance at the rate of 3% per month from the date the contributions fell due until fully paid pursuant to Section 22(a) of the Social Security Law, 12 as amended, in the amounts of P49,941.67 and P2,474,662.82. Period August 1980 to December 1984 August 1981 to July 1984 Unremitted Amount P 453,845.78 P 10,856.85 Penalties (3% Interest Per Month) P49, 941.67 P2, 474, 662.82 Total 503,787.45 2,485,519.67

Summonses were not served upon Eduardo de Leon, Pacita Fernandez, and Consuelo Villanueva, their whereabouts unknown. They were all later determined to be deceased. On the other hand, due to failure to file his responsive pleading, Ricardo de Leon was declared in default. Petitioner filed with the SSC a Motion to Dismiss13 on grounds of prescription, lack of cause of action and cessation of business, but the Motion was denied for lack of merit. 14 In her Answer with Counterclaim 15 dated 20 May 1999, petitioner averred that Impact Corporation had ceased operations in 1980. In her defense, she insisted that she was a mere director without managerial functions, and she ceased to be such in 1982. Even as a stockholder and director of Impact Corporation, petitioner contended that she cannot be made personally liable for the corporate obligations of Impact Corporation since her liability extended only up to the extent of her unpaid subscription, of which she had none since her subscription was already fully paid. The petitioner raised the same arguments in her Position Paper. 16

On 23 January 1998, Ricardo de Leon died following the death, too, of Pacita Fernandez died on 7 February 2000. In an Order dated 11 April 2000, the SSC directed the System to check if Impact Corporation had leviable properties to which the investigating team of respondent SSS manifested that the Impact Corporation had already been dissolved and its assets disposed of.17 In a Resolution dated 28 May 2003, the Social Security Commission ruled in favor of SSS and declared petitioner liable to pay the unremitted contributions and penalties, stating the following: WHEREFORE, premises considered, this Commission finds, and so holds, that respondents Impact Corporation and/or Immaculada L. Garcia, as director and responsible officer of the said corporation, is liable to pay the SSS the amounts of P442,988.93, representing the unpaid SS contributions of their employees for the period August 1980 to December 1984, not inclusive, and P10,856.85, representing the balance of the unpaid SS contributions in favor of Donato Campos, Jaime Mascarenas, Bonifacio Franco and Romeo Fullon for the period August 1980 to December 1984, not inclusive, as well as the 3% per month penalty imposed thereon for late payment in the amounts of P3,194,548.63 and P78,441.33, respectively, computed as of April 30, 2003. This is without prejudice to the right of the SSS to collect the penalties accruing after April 30, 2003 and to institute other appropriate actions against the respondent corporation and/or its responsible officers. Should the respondents pay their liability for unpaid SSS contributions within sixty (60) days from receipt of a copy of this Resolution, the 3% per month penalty for late payment thereof shall be deemed condoned pursuant to SSC Res. No. 397-S.97, as amended by SSC Res. Nos. 112-S.98 and 982-S.99, implementing the provision on condonation of penalty under Section 30 of R.A. No. 8282. In the event the respondents fail to pay their liabilities within the aforestated period, let a writ of execution be issued, pursuant to Section 22 (c) [2] of the SS Law, as amended, for the satisfaction of their liabilities to the SSS.18 Petitioner filed a Motion for Reconsideration19 of the afore-quoted Decision but it was denied for lack of merit in an Order20 dated 4 August 2004, thus: Nowhere in the questioned Resolution dated May 28, 2003 is it stated that the other directors of the defunct Impact Corporation are absolved from their contribution and penalty liabilities to the SSS. It is certainly farthest from the intention of the petitioner SSS or this Commission to pin the entire liability of Impact Corporation on movant Immaculada L. Garcia, to the exclusion of the directors of the corporation namely: Eduardo de Leon, Ricardo de Leon, Pacita Fernandez and Conzuelo Villanueva, who were all impleaded as parties-respondents in this case. The case record shows that there was failure of service of summonses upon respondents Eduardo de Leon, Pacita Fernandez and Conzuelo Villanueva, who are all deceased, for the reason that their whereabouts are unknown. Moreover, neither the legal heirs nor the estate of the defaulted respondent Ricardo de Leon were substituted as parties-respondents in this case when he died on January 23, 1998. Needless to state, the Commission did not acquire jurisdiction over the persons or estates of the other directors of Impact Corporation, hence, it could not validly render any pronouncement as to their liabilities in this case. Furthermore, the movant cannot raise in a motion for reconsideration the defense that she was no longer a director of Impact Corporation in 1982, when she was allegedly eased out by the managing directors of Impact Corporation as purportedly shown in the Deed of Sale and Assignment of Shares of Stock dated January 22, 1982. This defense was neither pleaded in her Motion to Dismiss dated January 17, 1996 nor in her Answer with Counterclaim dated May 18, 1999 and is, thus, deemed waived pursuant to Section 1, Rule 9 of the 1997 Rules of Civil Procedure, which has suppletory application to the Revised Rules of Procedure of the Commission.

Finally, this Commission has already ruled in the Order dated April 27, 1999 that since the original Petition was filed by the SSS on July 3, 1985, and was merely amended on December 1, 1995 to implead the responsible officers of Impact Corporation, without changing its causes of action, the same was instituted well within the 20-year prescriptive period provided under Section 22 (b) of the SS Law, as amended, considering that the contribution delinquency assessment covered the period August 1980 to December 1984. In view thereof, the instant Motion for Reconsideration is hereby denied for lack of merit. Petitioner elevated her case to the Court of Appeals via a Petition for Review. Respondent SSS filed its Comment dated 20 January 2005, and petitioner submitted her Reply thereto on 4 April 2005. The Court of Appeals, applying Section 28(f) of the Social Security Law, 21 again ruled against petitioner. It dismissed the petitioners Petition in a Decision dated 2 June 2005, the dispositive portion of which reads: WHEREFORE, premises considered, the petition is DISMISSED for lack of merit. The assailed Resolution dated 28 May 2003 and the Order dated 4 August 2004 of the Social Security Commission are AFFIRMED in toto.22 Aggrieved, petitioner filed a Motion for Reconsideration of the appellate courts Decision but her Motion was denied in a Resolution dated 8 December 2005. Hence, the instant Petition in which petitioner insists that the Court of Appeals committed grave error in holding her solely liable for the collected but unremitted SSS premium contributions and the consequent late penalty payments due thereon. Petitioner anchors her Petition on the following arguments: I. SECTION 28(F) OF THE SSS LAW PROVIDES THAT A MANAGING HEAD, DIRECTOR OR PARTNER IS LIABLE ONLY FOR THE PENALTIES OF THE EMPLOYER CORPORATION AND NOT FOR UNPAID SSS CONTRIBUTIONS OF THE EMPLOYER CORPORATION. II. UNDER THE SSS LAW, IT IS THE MANAGING HEADS, DIRECTORS OR PARTNERS WHO SHALL BE LIABLE TOGETHER WITH THE CORPORATION. IN THIS CASE, PETITIONER HAS CEASED TO BE A STOCKHOLDER OF IMPACT CORPORATION IN 1982. EVEN WHILE SHE WAS A STOCKHOLDER, SHE NEVER PARTICIPATED IN THE DAILY OPERATIONS OF IMPACT CORPORATION. III. UNDER SECTION 31 OF THE CORPORATION CODE, ONLY DIRECTORS, TRUSTEES OR OFFICERS WHO PARTICIPATE IN UNLAWFUL ACTS OR ARE GUILTY OF GROSS NEGLIGENCE AND BAD FAITH SHALL BE PERSONALLY LIABLE. OTHERWISE, BEING A MERE STOCKHOLDER, SHE IS LIABLE ONLY TO THE EXTENT OF HER SUBSCRIPTION. IV. IMPACT CORPORATION SUFFERED IRREVERSIBLE ECONOMIC LOSSES, EVENTS WHICH WERE NEITHER DESIRED NOR CAUSED BY ANY ACT OF THE PETITIONER. THUS, BY REASON OF FORTUITOUS EVENTS, THE PETITIONER SHOULD BE ABSOLVED FROM LIABILITY. V. RESPONDENT SOCIAL SECURITY SYSTEM FAILED MISERABLY IN EXERTING EFFORTS TO ACQUIRE JURISDICTION OVER THE LEVIABLE ASSETS OF IMPACT CORPORATION, PERSON/S AND/OR ESTATE/S OF THE OTHER DIRECTORS OR OFFICERS OF IMPACT CORPORATION. VI. THE HONORABLE COMMISSION SERIOUSLY ERRED IN NOT RENDERING A JUDGMENT BY DEFAULT AGAINST THE DIRECTORS UPON WHOM IT ACQUIRED JURISDICTION.

Based on the foregoing, petitioner prays that the Decision dated 2 June 2005 and the Resolution dated 8 December 2005 of the Court of Appeals be reversed and set aside, and a new one be rendered absolving her of any and all liabilities under the Social Security Law. In sum, the core issue to be resolved in this case is whether or not petitioner, as the only surviving director of Impact Corporation, can be made solely liable for the corporate obligations of Impact Corporation pertaining to unremitted SSS premium contributions and penalties therefore. As a covered employer under the Social Security Law, it is the obligation of Impact Corporation under the provisions of Sections 18, 19 and 22 thereof, as amended, to deduct from its duly covered employees monthly salaries their shares as premium contributions and remit the same to the SSS, together with the employers shares of the contributions to the petitioner, for and in their behalf. From all indications, the corporation has already been dissolved. Respondents are now going after petitioner who is the only surviving director of Impact Corporation. A cursory review of the alleged grave errors of law committed by the Court of Appeals above reveals there seems to be no dispute as to the assessed liability of Impact Corporation for the unremitted SSS premiums of its employees for the period January 1980 to December 1984. There is also no dispute as to the fact that the employees SSS premium contributions have been deducted from their salaries by Impact Corporation. Petitioner in assailing the Court of Appeals Decision, distinguishes the penalties from the unremitted or unpaid SSS premium contributions. She points out that although the appellate court is of the opinion that the concerned officers of an employer corporation are liable for the penalties for non-remittance of premiums, it still affirmed the SSC Resolution holding petitioner liable for the unpaid SSS premium contributions in addition to the penalties. Petitioner avers that under the aforesaid provision, the liability does not include liability for the unremitted SSS premium contributions. Petitioners argument is ridiculous. The interpretation petitioner would like us to adopt finds no support in law or in jurisprudence. While the Court of Appeals Decision provided that Section 28(f) refers to the liabilities pertaining to penalty for the non-remittance of SSS employee contributions, holding that it is distinct from the amount of the supposed SSS remittances, petitioner mistakenly concluded that Section 28(f) is applicable only to penalties and not to the liability of the employer for the unremitted premium contributions. Clearly, a simplistic interpretation of the law is untenable. It is a rule in statutory construction that every part of the statute must be interpreted with reference to the context, i.e., that every part of the statute must be considered together with the other parts, and kept subservient to the general intent of the whole enactment.23 The liability imposed as contemplated under the foregoing Section 28(f) of the Social Security Law does not preclude the liability for the unremitted amount. Relevant to Section 28(f) is Section 22 of the same law. SEC. 22. Remittance of Contributions. -- (a) The contributions imposed in the preceding Section shall be remitted to the SSS within the first ten (10) days of each calendar month following the month for which they are applicable or within such time as the Commission may prescribe. Every employer required to deduct and to remit such contributions shall be liable for their payment and if any contribution is not paid to the SSS as herein prescribed, he shall pay besides the contribution a penalty thereon of three percent (3%) per month from the date the contribution falls due until paid. If deemed expedient and advisable by the Commission, the collection and remittance of contributions shall be made quarterly or semi-annually in advance, the contributions payable by the employees to be advanced by their respective employers: Provided, That upon separation of an employee, any contribution so paid in advance but not due shall be credited or refunded to his employer.

Under Section 22(a), every employer is required to deduct and remit such contributions penalty refers to the 3% penalty that automatically attaches to the delayed SSS premium contributions. The spirit, rather than the letter of a law determines construction of a provision of law. It is a cardinal rule in statutory construction that in interpreting the meaning and scope of a term used in the law, a careful review of the whole law involved, as well as the intendment of the law, must be made.24 Nowhere in the provision or in the Decision can it be inferred that the persons liable are absolved from paying the unremitted premium contributions. Elementary is the rule that when laws or rules are clear, it is incumbent upon the judge to apply them regardless of personal belief or predilections - when the law is unambiguous and unequivocal, application not interpretation thereof is imperative.25 However, where the language of a statute is vague and ambiguous, an interpretation thereof is resorted to. An interpretation thereof is necessary in instances where a literal interpretation would be either impossible or absurd or would lead to an injustice. A law is deemed ambiguous when it is capable of being understood by reasonably well-informed persons in either of two or more senses. 26 The fact that a law admits of different interpretations is the best evidence that it is vague and ambiguous.27 In the instant case, petitioner interprets Section 28(f) of the Social Security Law as applicable only to penalties and not to the liability of the employer for the unremitted premium contributions. Respondents present a more logical interpretation that is consistent with the provisions as a whole and with the legislative intent behind the Social Security Law. This Court cannot be made to accept an interpretation that would defeat the intent of the law and its legislators.28 Petitioner also challenges the finding of the Court of Appeals that under Section 28(f) of the Social Security Law, a mere director or officer of an employer corporation, and not necessarily a "managing" director or officer, can be held liable for the unpaid SSS premium contributions. Section 28(f) of the Social Security Law provides the following: (f) If the act or omission penalized by this Act be committed by an association, partnership, corporation or any other institution, its managing head, directors or partners shall be liable to the penalties provided in this Act for the offense. This Court agrees in petitioners observation that the SSS did not even deny nor rebut the claim that petitioner was not the "managing head" of Impact Corporation. However, the Court of Appeals rightly held that petitioner, as a director of Impact Corporation, is among those officers covered by Section 28(f) of the Social Security Law. Petitioner invokes the rule in statutory construction called ejusdem generic; that is, where general words follow an enumeration of persons or things, by words of a particular and specific meaning, such general words are not to be construed in their widest extent, but are to be held as applying only to persons or things of the same kind or class as those specifically mentioned. According to petitioner, to be held liable under Section 28(f) of the Social Security Law, one must be the "managing head," "managing director," or "managing partner." This Court though finds no need to resort to statutory construction. Section 28(f) of the Social Security Law imposes penalty on: (1) the managing head; (2) directors; or (3) partners, for offenses committed by a juridical person The said provision does not qualify that the director or partner should likewise be a "managing director" or "managing partner."29 The law is clear and unambiguous. Petitioner nonetheless raises the defense that under Section 31 of the Corporation Code, only directors, trustees or officers who participate in unlawful acts or are guilty of gross negligence and bad faith shall be personally liable, and that being a mere stockholder, she is liable only to the extent of her subscription.

Section 31 of the Corporation Code, stipulating on the liability of directors, trustees, or officers, provides: SEC. 31. Liability of directors, trustees or officers. - Directors or trustees who willfully and knowingly vote for or assent to patently unlawful acts of the corporation or who are guilty of gross negligence or bad faith in directing the affairs of the corporation or acquire any personal or pecuniary interest in conflict with their duty as such directors, or trustees shall be liable jointly and severally for all damages resulting therefrom suffered by the corporation, its stockholders or members and other persons. Basic is the rule that a corporation is invested by law with a personality separate and distinct from that of the persons composing it as well as from that of any other legal entity to which it may be related. A corporation is a juridical entity with legal personality separate and distinct from those acting for and in its behalf and, in general, from the people comprising it. Following this, the general rule applied is that obligations incurred by the corporation, acting through its directors, officers and employees, are its sole liabilities.30 A director, officer, and employee of a corporation are generally not held personally liable for obligations incurred by the corporation. Being a mere fiction of law, however, there are peculiar situations or valid grounds that can exist to warrant the disregard of its independent being and the lifting of the corporate veil. This situation might arise when a corporation is used to evade a just and due obligation or to justify a wrong, to shield or perpetrate fraud, to carry out other similar unjustifiable aims or intentions, or as a subterfuge to commit injustice and so circumvent the law. 31 Thus, Section 31 of the Corporation Law provides: Taking a cue from the above provision, a corporate director, a trustee or an officer, may be held solidarily liable with the corporation in the following instances: 1. When directors a corporation-and trustees or, in appropriate cases, the officers of

(a) vote for or assent to patently unlawful acts of the corporation; (b) act in bad faith or with gross negligence in directing the corporate affairs; (c) are guilty of conflict of interest to the prejudice of the corporation, its stockholders or members, and other persons. 2. When a director or officer has consented to the issuance of watered stocks or who, having knowledge thereof, did not forthwith file with the corporate secretary his written objection thereto. 3. When a director, trustee or officer has contractually agreed or stipulated to hold himself personally and solidarily liable with the Corporation. 4. When a director, trustee or officer is made, by specific provision of law, personally liable for his corporate action. 32 The aforesaid provision states: SEC. 31. Liability of directors, trustees or officers. - Directors or trustees who willfully and knowingly vote for or assent to patently unlawful acts of the corporation or who are guilty of gross negligence or bad faith in directing the affairs of the corporation or acquire any personal or pecuniary interest in conflict with their duty as such directors, or trustees shall be liable jointly and severally for all damages resulting therefrom suffered by the corporation, its stockholders or members and other persons.

The situation of petitioner, as a director of Impact Corporation when said corporation failed to remit the SSS premium contributions falls exactly under the fourth situation. Section 28(f) of the Social Security Law imposes a civil liability for any act or omission pertaining to the violation of the Social Security Law, to wit: (f) If the act or omission penalized by this Act be committed by an association, partnership, corporation or any other institution, its managing head, directors or partners shall be liable to the penalties provided in this Act for the offense. In fact, criminal actions for violations of the Social Security Law are also provided under the Revised Penal Code. The Social Security Law provides, in Section 28 thereof, to wit: (h) Any employer who, after deducting the monthly contributions or loan amortizations from his employees compensation, fails to remit the said deductions to the SSS within thirty (30) days from the date they became due shall be presumed to have misappropriated such contributions or loan amortizations and shall suffer the penalties provided in Article Three hundred fifteen of the Revised Penal Code. (i) Criminal action arising from a violation of the provisions of this Act may be commenced by the SSS or the employee concerned either under this Act or in appropriate cases under the Revised Penal Code: x x x. Respondents would like this Court to apply another exception to the rule that the persons comprising a corporation are not personally liable for acts done in the performance of their duties. The Court of Appeals in the appealed Decision stated: Anent the unpaid SSS contributions of Impact Corporations employees, the officers of a corporation are liable in behalf of a corporation, which no longer exists or has ceased operations. Although as a rule, the officers and members of a corporation are not personally liable for acts done in performance of their duties, this rule admits of exception, one of which is when the employer corporation is no longer existing and is unable to satisfy the judgment in favor of the employee, the officers should be held liable for acting on behalf of the corporation. Following the foregoing pronouncement, petitioner, as one of the directors of Impact Corporation, together with the other directors of the defunct corporation, are liable for the unpaid SSS contributions of their employees.33 On the other hand, the SSC, in its Resolution, presented this discussion: Although as a rule, the officers and members of a corporation are not personally liable for acts done in the performance of their duties, this rule admits of exceptions, one of which is when the employer corporation is no longer existing and is unable to satisfy the judgment in favor of the employee, the officers should be held liable for acting on behalf of the corporation. x x x.34 The rationale cited by respondents in the two preceding paragraphs need not have been applied because the personal liability for the unremitted SSS premium contributions and the late penalty thereof attaches to the petitioner as a director of Impact Corporation during the period the amounts became due and demandable by virtue of a direct provision of law. Petitioners defense that since Impact Corporation suffered irreversible economic losses, and by reason of fortuitous events, she should be absolved from liability, is also untenable. The evidence adduced totally belies this claim. A reference to the copy of the Petition for Suspension of Payments filed by Impact Corporation on 18 March 1983 before the SEC contained an admission that: "[I]t has been and still is engaged in business" and "has been and still is engaged in the business of manufacturing aluminum tube containers" and "in brief, it is an on-going, viable, and profitable enterprise" which has "sufficient assets" and "actual and potential income-generation capabilities."

The foregoing document negates petitioners assertion and supports the contention that during the period involved Impact Corporation was still engaged in business and was an ongoing, viable, profitable enterprise. In fact, the latest SSS form RIA submitted by Impact Corporation is dated 7 May 1984. The assessed SSS premium contributions and penalty are obligations imposed upon Impact Corporation by law, and should have been remitted to the SSS within the first 10 days of each calendar month following the month for which they are applicable or within such time as the SSC prescribes.35 This Court also notes the evident failure on the part of SSS to issue a judgment in default against Ricardo de Leon, who was the vice-president and officer of the corporation, upon his non-filing of a responsive pleading after summons was served on him. As can be gleaned from Section 11 of the SSS Revised Rules of Procedure, the Commissioner is mandated to render a decision either granting or denying the petition. Under the aforesaid provision, if respondent fails to answer within the time prescribed, the Hearing Commissioner may, upon motion of petitioner, or motu proprio, declare respondent in default and proceed to receive petitioners evidence ex parte and thereafter recommend to the Commission either the granting or denial of the petition as the evidence may warrant.36 On a final note, this Court sees it proper to quote verbatim respondents prefatory statement in their Comment: The Social Security System is a government agency imbued with a salutary purpose to carry out the policy of the State to establish, develop, promote and perfect a sound and viable tax exempt social security system suitable to the needs of the people throughout the Philippines which shall promote social justice and provide meaningful protection to members and their beneficiaries against the hazards of disability, sickness, maternity, old-age, death and other contingencies resulting in loss of income or financial burden. The soundness and viability of the funds of the SSS in turn depends on the contributions of its covered employee and employer members, which it invests in order to deliver the basic social benefits and privileges to its members. The entitlement to and amount of benefits and privileges of the covered members are contribution-based. Both the soundness and viability of the funds of the SSS as well as the entitlement and amount of benefits and privileges of its members are adversely affected to a great extent by the nonremittance of the much-needed contributions.37 The sympathy of the law on social security is toward its beneficiaries. This Court will not turn a blind eye on the perpetration of injustice. This Court cannot and will not allow itself to be made an instrument nor be privy to any attempt at the perpetration of injustice. Following the doctrine laid down in Laguna Transportation Co., Inc. v. Social Security System,38 this Court rules that although a corporation once formed is conferred a juridical personality separate and distinct from the persons comprising it, it is but a legal fiction introduced for purposes of convenience and to subserve the ends of justice. The concept cannot be extended to a point beyond its reasons and policy, and when invoked in support of an end subversive of this policy, will be disregarded by the courts. WHEREFORE, pursuant to the foregoing, the Decision of the Court of Appeals dated 2 June 2005 in CA-G.R. SP No. 85923 is hereby AFFIRMED WITH FINALITY. Petitioner Immaculada L. Garcia, as sole surviving director of Impact Corporation is hereby ORDERED to pay for the collected and unremitted SSS contributions of Impact Corporation. The case is REMANDED to the SSS for computation of the exact amount and collection thereof. SO ORDERED. Ynares-Santiago, Chairperson, Austria-Martinez, Nachura, Reyes, JJ., concur.

Republic of the Philippines SUPREME COURT Manila SECOND DIVISION G.R. Nos. 115121-25 February 9, 1996

NATIONAL FOOD AUTHORITY and ROMEO G. DAVID, petitioners, vs. THE HON. COURT OF APPEALS, HON. BERNARDO P. ABESAMIS, Presiding Judge, Regional Trial Court, Branch 85, Quezon City, HON. RODOLFO ORTIZ, Presiding Judge, Regional trial Court, Branch 89, Quezon City, HON. TIRSO D. C. VELASCO, Presiding Judge, Regional Trial Court, Branch 88, Quezon City, HON. BENEDICTO B. ULEP, Presiding Judge, Branch 105, Quezon City, HON. JUSTO M. SULTAN, Presiding Judge, Branch 98, Quezon City, COL. FELIX M. MANUBAY, MASADA SECURITY AGENCY, CONTINENTAL WATCHMAN AND SECURITY AGENCY, ALBERTO T. LASALA, and NORMAN D. MAPAGAY, respondents. DECISION PUNO, J.: The case at bar involves the legality of negotiated security contracts awarded by the National Food Authority (NFA), a government-owned and controlled corporation and its Administrator, Romeo G. David, to several private security agencies, in default of a public bidding. Petitioners NFA and David seek a modification of the decision of the Court of Appeals insofar as it nullifies and enjoins the implementation of the said negotiated security contracts. The facts are not disputed. In 1990, the NFA, through then Administrator Pelayo J. Gabaldon, conducted a public bidding to award security contracts for the protection of its properties and facilities all over the country . Twelve security agencies were awarded one-year contracts, among whom were private respondents Col. Felix M. Manubay (doing business under the name Greenview Investigation and Security Agency), Continental Watchman and Security Agency, Alberto T. Lasala (doing business under the name PSF Watchman and Investigation Agency) and Norman D. Mapagay (doing business under the name People's Protective and Security Agency). In August 1992, petitioner Romeo G. David became NFA Administrator. He caused a review of all security service contracts, procedures on the accreditation of private security agencies and the bidding for security services. Pending this review, Administrator David extended the services of private respondents and the other incumbent security agencies on a periodic basis. The review was completed in March 1993 and new terms for accreditation, bidding and hiring of security agencies were made. The bidding areas were also reclassified and reduced from fourteen NFA regions to only five NFA areas nationwide. A special order was thereafter issued for the implementation of the new rules and procedure. On April 6, 1993, Special Order No. 04-07 was issued under which Administrator David created a Prequalification, Bids and Awards Committee (PBAC) to undertake the prequalification of prospective bidders, conduct the bidding, evaluate the bids tendered and recommend to the Administrator the bids accepted. Notices for prequalification and bidding for security services were published in a newspaper of national circulation. All incumbent security contractors were required to prequalify and only those prequalified were to be allowed to participate in the prebidding and bidding scheduled on June 4 and 18, 1993, respectively.

The prebidding and bidding dates were later reset to June 18 and 30, 1993 to give more time for the participants to comply with documentary requirements. Forty-one security agencies, composed of the incumbents and new applicants, including private respondent Masada Security Agency, submitted the necessary documents for prequalification. Upon a review of the documents submitted, the PBAC disqualified respondent Mapagay for failure to submit proof of his financial capability to support his bid. It also disqualified respondent Lasala for alleged failure to meet the five-year service requirement. Only respondents Manubay, Continental and Masada participated in the prebidding and were declared on June 17, 1993 prequalified to bid. Meanwhile, however, two of the applicants who failed to prequalify, namely Lanting Security and Watchman Agency and respondent Lasala, filed separate complaints with the Regional Trial Court, Quezon City to restrain Administrator David and the PBAC from proceeding with the public bidding. As prayed for, restraining orders were issued by the two courts on June 29, 1993 which the NFA received on June 30, 1993, the day of the scheduled bidding. No bidding thus took place on said date. On respondent Lasala's application, the Regional Trial Court, Branch 93, Quezon City issued on July 20, 1993 a preliminary injunction ordering the PBAC to refrain from proceeding with the bidding until the merits of the case shall have been heard and resolved. During the effectivity of the writ of preliminary injunction, Administrator David sent to all incumbent security agencies, including four of herein private respondents, notices of termination dated July 30, 1993. Private respondents .were informed that their services were to end on August 16, 1993 inasmuch as their respective contracts had expired and they no longer enjoyed the trust and confidence of the NFA. They were thus instructed to withdraw their security guards from all NFA installations. On August 4, 1993, Administrator David contracted the services of seven new security agencies starting August 16, 1993 on a month-to-month basis pending resolution of the injunction against the bidding. Private respondents forthwith filed separate complaints with the Regional Trial Court, Branches 85, 89, 88, 105 and 98, Quezon City for prohibition, mandamus and damages with a prayer for the issuance of a preliminary injunction and restraining order.1 The trial courts issued five separate restraining orders and injunctions ordering the NFA to desist from terminating the services of respondents, and from awarding and installing the new security agencies replacing them. These orders were challenged by NFA and David in separate petitions before the Court of Appeals alleging grave abuse of discretion by respondent judges. The Court of Appeals consolidated the petitions and on March 11, 1994 rendered a decision partially granting the same by annulling that part of the orders restraining NFA from terminating the contracts with the incumbent security agencies but affirming the orders insofar as they enjoined NFA from awarding the contracts to the seven new security agencies. The Court of Appeals ordered: WHEREFORE, premises considered, the petition is found meritorious in part and partially given DUE COURSE . The assailed orders and writs of preliminary injunction are ANNULLED and SET ASIDE insofar as they order petitioners to cease and desist from terminating or implementing the termination of private respondents' expired security contracts with NFA. The said assailed orders and writs of preliminary injunction issued are, however, declared LEGAL, VALID and NOT issued in excess of jurisdiction or with grave abuse of discretion insofar as they enjoin petitioners from awarding the security service contracts to the seven (7) security agencies named by petitioners and/or implementing said awards. To this extent the petitions are DISMISSED for lack of merit.2 Reconsideration was denied on April 15, 1994.

Petitioners now assail that part of the decision of the Court of Appeals nullifying and enjoining the implementation of the contracts with the new security agencies. They plead that we restrain the lower courts from enforcing the injunction as against the new security agencies. They argue that the new security agencies were hired as an "emergency measure" after the contracts with the incumbent security agencies expired. They claim that without the new security agencies, the properties of the NFA worth billions of pesos would be exposed to danger of loss and dissipation.3 On May 18, 1994, we issued a temporary restraining order enjoining respondents from enforcing the decision of the Court of Appeals and the writs of preliminary injunction issued by the trial courts "insofar as the same nullify or otherwise stop the implementation of the subject interim negotiated NFA security contracts." We however ordered petitioners to "proceed with the public bidding of the security contracts without delay and submit to us a report on the result of such bidding within 30 days from the holding thereof.4 On July 21, 1994, petitioners submitted a report dated July 19, 1994 informing the Court that a public bidding was held on June 21, 1994 but no contract had been awarded because the PBAC had to study and evaluate each and every bid proposal.5 A second report dated March 3, 1995 was filed by petitioners informing us that deliberation on the bids was prolonged by the necessity of passing upon the technical merits of each bid and by the discovery of collusion between two bidders "which spawned threats against the life of the members of the PBAC." The PBAC decided to conduct a rebidding in Areas 1, 2 and 3 and apprise the court of the results thereof.6 A third report dated July 13, 1995 was submitted where petitioners manifested that still no contract had been awarded because the minimum number of bidders per area was not met. Two bidders 7 for Areas 3, 4 and 5 submitted identical bids which were held collusive by the PBAC per advice of the Office of the Government Corporate Counsel. The rejection of the two agencies reduced the number of bidders in each area below the required minimum compelling the PBAC to recommend a failure of bidding in all five NFA areas. Petitioners, however, could not act on the PBAC's recommendation because a temporary restraining order was issued on April 10, 1995 by the Regional Trial Court, Branch 17, Davao. One of the bidders found in collusion8 filed a complaint with the said Regional Trial Court questioning the legality of the PBAC's rejection of its bids and enjoining NFA and the PBAC from awarding security contracts to any lowest or next lowest qualified bidder.9 We shall now resolve the contentions of petitioners that the Court of Appeals gravely erred: I IN FAILING TO CONSIDER THAT PRIVATE RESPONDENTS HAVE NO RIGHT AND CAUSE OF ACTION AGAINST PETITIONERS, AND THEREFORE, ARE NOT ENTITLED TO THE QUESTIONED RELIEF GRANTED THEM BY RESPONDENTS RTC JUDGES AND COURT OF APPEALS; II IN FAILING TO CONSIDER THAT PRIVATE RESPONDENTS DID NOT AVAIL OF, MUCH LESS EXHAUST, AVAILABLE ADMINISTRATIVE REMEDIES, THEREBY RENDERING THEIR COMPLAINT PREMATURE AND LEGALLY DEFICIENT TO MERIT THE GRANT OF JUDICIAL RELIEF; III IN ITS FAILURE TO RECOGNIZE THAT THE EXECUTION OF THE NEW INTERIM MONTHLY NEGOTIATED SECURITY CONTRACTS OF NFA, INTENDED TO PROVIDE NFA WITH AMPLE SECURITY DURING THE TEMPORARY EMERGENCY PERIOD THAT A PUBLIC BIDDING

CANNOT BE CONDUCTED BY REASON OF THE INJUNCTIVE ORDERS OF THE COURTS A QUO, ARE SANCTIONED BY LAW, BEING LEGITIMATE EXCEPTION TO THE GENERAL REQUIREMENT OF A PUBLIC BIDDING; IV IN ITS GENERAL FAILURE TO RECOGNIZE THAT THE EXECUTION OF THE INTERIM MONTHLY NEGOTIATED NFA SECURITY CONTRACTS ARE A VALID EXERCISE OF BUSINESS JUDGMENT WITHIN THE PERIMETERS OF NFA MANAGEMENT'S AREA OF COMPETENCE. THE CA, MOREOVER, SERIOUSLY ERRED WHEN IT FAILED TO CONSIDER THAT THE LAW AND THE SITUATIONAL FACTS OF THE CASE SANCTION AND EVEN CALL FOR THE IMMEDIATE IMPLEMENTATION OF SAID INTERIM CONTRACTS.10 We reject these contentions. The principle of exhaustion of administrative remedies is not a hard and fast rule. It is subject to some limitations and exceptions. In this case, private respondents' contracts were terminated in the midst of bidding preparations and their replacements hired barely five days after their termination. In fact, respondent Masada, a prequalified bidder, submitted all requirements and was preparing for the public bidding only to find out that contracts had already been awarded by negotiation. Indeed, an appeal to the NFA Board or Council of Trustees and the Secretary of Agriculture pursuant to the provisions of the Administrative Code of 1987 11 was not a plain, speedy and adequate remedy in the ordinary course of the law. 12 The urgency of the situation compelled private respondents to go to court to stop the implementation of these negotiated security contracts. We are neither impressed by petitioners' claim that the subject contracts were negotiated as a necessity to stave off a crisis that gripped the NFA, i.e., the loss, destruction and dissipation of their properties, warehouses, rice and corn stocks and facilities with an estimated value of P19 billion. Petitioners allege they were merely exercising their sound business judgment in an emergency situation brought about by respondent security agencies themselves who, in the first place, obtained the injunctions from the Quezon City trial courts. First of all, the restraining orders and writ of preliminary injunction issued by the two Quezon City trial courts on complaint by Lanting and respondent Lasala suspending the public bidding scheduled on June 30, 1993 did not result in the emergency situation petitioners alleged. The security vacuum was created when petitioners terminated the services of the incumbent security agencies after the issuance of the said orders and before the injunctions issued by respondent trial courts on application by private respondents. When the bidding did not take place on June 30, 1993, the incumbent security agencies continued rendering services to petitioners, albeit on a temporary and provisional basis. However, one month later, they were all terminated on grounds of expiration of contract and loss of trust and confidence. We agree with the Court of Appeals that it was well within the power of petitioners to discontinue the services of the incumbent security agencies. Their contracts with the NFA expired in 1992, hence, their services were deemed terminated on said date. 13 The fact that these agencies continued rendering services to NFA did not amount to an implied. renewal of their respective contracts. Respondents do not have any vested right to continue their contracts with NFA. They remained and continued performing their tasks at the tolerance of NFA who, by sending the notices of termination, simply reminded them of the expiration of their contracts. 14 These contracts can be renewed, revived or extended only by mutual consent of the parties. No court can compel a party to agree to a contract thru the instrumentality of a writ of preliminary injunction. Nevertheless, what causes eyebrows to arch is the act of petitioners in discontinuing the incumbents' services. Respondents Manubay and Lasala allege that their agencies had been rendering security services to the NFA since 1985 15 and 1988, 16 respectively. Moreover, Manubay and Continental passed the prequalification stage and were declared by the PBAC eligible to join the public bidding. Scarcely a month later, however, their services were terminated at the same time and for the same reasons as the rest of the incumbent security agencies. It is certainly

strange why petitioners chose to do away with the incumbents' services at a time when a "security void" would directly and most necessarily result from their withdrawal. The least petitioners could have done under the circumstances was to maintain the status quo until the writ of preliminary injunction obtained by respondent Lasala shall have been lifted. Assuming arguendo that an emergency actually existed and the negotiated contracts were justified, petitioners' continued failure to conduct a public bidding and select the bidder within a reasonable time casts doubts on the good faith behind the negotiated contracts. This Court, on May 18, 1994, specifically ordered petitioners to conduct a public bidding and report the results within thirty days from holding thereof. In compliance, a public bidding was conducted on June 21, 1994 but until now no bidder has been chosen and no contract has been awarded. Petitioners cited various reasons for the delay. They alleged that the minimum number of bidders in three of the five areas had not been met and that two bidders in the other two areas were in collusion. This suspicion of collusion generated so much controversy that the PBAC could not decide whether to include the bids of the two agencies. Finally, the PBAC excluded them and recommended that the Administrator declare a failure of bidding in all five areas of responsibility. The Administrator should have immediately acted upon the PBAC's recommendation and accordingly scheduled another public bidding but somehow petitioners chose to abide by a restraining order of the Davao trial court. It must be noted that what the Davao trial court issued was a temporary restraining order enjoining petitioners from awarding the contracts to the lowest or next lowest bidder at the June 21, 1994 public bidding. It was not a writ of preliminary injunction nor was an order restraining the holding of another bidding. Petitioners and the PBAC are obviously taking their sweet time to select and award security contracts to winning bidders. They took one year evaluating and deliberating on thirteen bid proposals only to declare a failure of bidding in all five areas of responsibility. Then they relied on a restraining order of a trial court after no less that this Highest Court specifically ordered them to conduct and conclude a public bidding. Litigants should be conscious of the position lower courts occupy in the operation of the integrated judicial system of the nation. 17 There is only one Supreme Court and all courts and litigants should take their bearings from this Court. 18 Petitioners' manifest reluctance to hold a public bidding and award a contract to the winning bidder smacks of favoritism and partiality toward the security agencies to whom it awarded the negotiated contracts and cannot be countenanced. A competitive public bidding aims to protect the public interest by giving the public the best possible advantages thru open competition. It is a mechanism that enables the government agency to avoid or preclude anomalies in the execution of public contracts. 19 The General Appropriations Act (GAA) of 1993 20 cannot be used by petitioners to justify their actuations. An appropriations act is primarily a special type of legislation whose content is limited to specified sums of money dedicated to a specific purpose or a separate fiscal unit. 21 Section 31 on the General Provisions of the GAA of 1993 merely authorizes the heads of departments, bureaus, offices or agencies of the national government to hire, through public bidding or negotiated contracts, contractual personnel to perform specific activities or services related or incidental to their functions. This law specifically authorizes expenditures for the hiring of these personnel. 22 It is not the governing law on the award of service contracts by government agencies nor does it do away with the general requirement of public bidding. 23 IN VIEW WHEREOF, the petition is dismissed and the decision dated March 11, 1994 and resolution dated April 15, 1994 of the Court of Appeals in CA-G.R. SP Nos. 32213, 32230 and 32274-76 are affirmed. The temporary restraining order issued by this Court on May 18, 1994 is hereby lifted. Treble costs against petitioners. SO ORDERED.

Regalado, Romero and Mendoza, JJ., concur. Republic of the Philippines SUPREME COURT Manila EN BANC G.R. Nos. L-16292-94, L-16309 and L-16317-18 October 31, 1960

KAPISANAN NG MGA MANGGAGAWA SA MANILA RAILROAD COMPANY, petitioner, vs. YARD CREW UNION, STATION EMPLOYEES UNION, RAILROAD ENGINEERING DEPARTMENT UNION, MANILA RAILROAD COMPANY, and COURT OF INDUSTRIAL RELATIONS, respondents. MANILA RAILROAD COMPANY, petitioner, -versusCOURT OF INDUSTRIAL RELATIONS, MANILA RAILROAD CREW UNION, STATION EMPLOYEES UNION and KAPISANAN NG MGA MANGGAGAWA SA MANILA RAILROAD COMPANY, respondents. L-16292-94. Jose Espinas for petitioner. F.A. Sambajon for respondent CIR. Government Corporate Counsel Simeon M. Gopengco and F.A. Umali for respondent MRR. Carlos E. Santiago for respondent Unions. F. Da. Bondoc for respondents (REDU). L-16309 and L-16217-18. Government Corporate Counsel Simeon M. Gopengco and F.A. Umali for petitioner. V.C. Magbanua for respondent CIR. F. Da. Bondoc for respondent (REDU). Jose R. Espinas for respondent Kap. Ng Manggagawa sa MRR. Carlos C. Santiago for the other respondent Unions. PAREDES, J.: In the Court of Industrial Relations, three separate petitions were registered: Case No. 491-MC, by Yard Crew Union, Case No. 494-MC, by Station Employees' Union; and Case No. 507-MC, by Railroad Engineering Department Union. The Kapisanan Ng Mga Manggagawa Sa Manila Railroad Company, intervened. They were treated jointly by the respondent Court because they involved identical questions. On appeal, three separate petitions for certiorari were presented by the Kapisanan Ng Mga Manggagawa Sa Manila Railroad Company (G.R. Nos. L16292-94) and three separate petitions for certiorari by the Manila Railroad Company (G.R. No. L-16309, L-16317 and L-16318.). We glean from the record the following facts: On March 7, 1955, the Kapisanan Ng Mga Manggagawa Sa Manila Railroad Company, hereinafter called Kapisanan, filed a petition (Case No. 237-MC), praying that it be certified as the exclusive bargaining agent in the Manila Railroad Company, hereinafter called Company. A decision was promulgated on September 29, 1956, affirmed by the Court en banc on January 16, 1957, in which the respondent Court found three unions appropriate for purposes of collective bargaining, to wit: (1) The unit of locomotive drivers, firemen, assistant firemen and motormen-otherwise known as the engine crew unit: (2) the unit of conductors, assistant conductors, unit agents, assistant route agents and train posters, otherwise known as the train crew unit, and (3) the unit of all the rest of the

company personnel, except the supervisors, temporary employees, the members of the Auditing Department, the members of the security guard and professional and technical employees, referred to by the respondent court as the unit of the rest of the employees. To these 3 units, the following unions were respectively certified as the exclusive bargaining agents: (1) The Union de Maquinistas, Fogoneros, Ayudantes y Motormen; (2) Union de Empleados de Trenes (conductors); and (3) the Kapisanan Ng Mga Manggagawa Sa Manila Railroad Company. After the decision had become final, Case No. 491-MC was filled on September 20, 1957, amended on August 13, 1958, by the Manila Railroad Yard Crew Union, praying that it be defined as a separate unit; Case No. 494-MC, on September 25, 1957, amended on August 13, 1958, by the Station Employees' Union, praying that it be constituted as a separate bargaining unit, and Case No. 507- MC, on November 30, 1957, by the Railroad Engineering Department Union, praying that it be defined as a separate bargaining unit. All asked that they be certified in the units sought to be separated. The respondent unions are legitimate labor organizations with certificates of registration in the Department of Labor. The Kapisanan and the Company opposed the separation of the said three units on the following grounds: (1) That the Kapisanan had been duly certified as the collective bargaining agent in the unit of all of the rest of the employees and it had entered into a collective bargaining agreement on November 4, 1957, and this agreement bars certification of a unit at least during the first 12 months after the finality of Case No. 237-MC (contract bar rule). (2) That the Court had denied similar petitions for separation of unit as was ordered in Case No. 488-MC, wherein the petition for the separation of Mechanical Department Labor Union was dismissed by the respondent Court on April 25, 1958 and in the case of the Benguet Auto Lines Union, Case No. 4-MC-PANG) dismissed on July 18, 1958. (3) That the three unions in question are barred from petitioning for separate units because they are bound by the decision in Case No. 237-MC, for having been represented therein by the Kapisanan. After due hearing, the respondent Court, through the Hon. Arsenio Martinez, Associate Judge, handed down an order, dated June 8, 1959, the dispositive portion of which recites as follows: Wherefore, all the foregoing considered, and without passing upon the basic questions raised herein and as part of its fact finding investigations, the Court orders a plebiscite to be conducted among the employees in the three proposed groups, namely: the Engineering Department, the Station Employees and the Yard Crew Personnel. The employee in the proposed groups minus the supervisors, temporary employees, members of the Auditing Department, members of the security group, professionals and technical employees, shall vote, in a secret ballot to be conducted by this Court, on the question of whether or not they desire to be separated from the unit of the rest of the employees being represented by the Kapisanan. In this connection, the Court requests the cooperation of the Manila Railroad Company to extend its facilities for the holding of this plebiscite, particularly the payrolls for the month to be agreed upon by the parties. . . . The respondent Court also declared that the collective bargaining agreement could not be a bar to another certification election because one of its signatories, the Kapisanan President, Vicente K. Olazo, was a supervisor: In considering however such existing contract between the Kapisanan and the Company, the Court cannot close its eyes and fail to observe that among the signatories thereto, on the part of the Kapisanan, is the President of the Union, Vicente K. Olazo. In case No. 237-MC. one of the important and fundamental questions raised was whether or not Vicente K. Olazo is a supervisor within the meaning of Section 2(k) of Republic Act 875. The Trial Court, as well as the majority of the Court en banc, reached the conclusion in same Case No. 237-MC that he is a supervisor.

. . . For this reason, the Court believes that his existing contract, through embodying terms and conditions of employment and with a reasonable period to run, would not be a bar to a certification proceeding. A motion for reconsideration of the order of June 8, 1959, was presented by the Kapisanan, and same was denied on August 20, 1959, in an order, concurred in by three Judges of the Court, with two Judges dissenting, against which the Kapisanan on November 28, 1959, filed its notice of appeal. Appeals by certiorari were filed by the Kapisanan and the Company. In this Court, respondents presented motion to dismiss the petitions, on the ground that the order of the respondent court on June 8, 1959 and the resolution of the respondent court en banc dated August 20, 1959, to hold a plebiscite, were interlocutory, not subject to appeal. They also allege the same in their answers, as one of the defenses. The case, therefore, poses three questions, to wit: 1. Are the appealed orders interlocutory in nature? 2. Is the order of the respondent court, granting groups of employees to choose whether or not they desire to be separated from the certified unit to which they belong, during the existence of a valid bargaining contract entered into by a union close to the heels of its certification, contrary to law? 3. Is it legal error for the respondent court to hold that the bargaining agreement in question does not bar certification proceedings, only because one of the signatories for the union was adjudged by the majority of such court to be supervisor, in a previous case? Wherefore, all the foregoing considered, and without passing upon the basic question raised herein and as part of its fact finding investigation, the Court orders a plebiscite to be conducted among the employees in the three proposed groups, namely: the Engineering Department, the Station Employees and the Yard Crew Personnel. The resolution en banc, dated August 20, 1959, partially states: It will be further noted that it is just a part of the investigatory power of the Court to determine by secret ballot the desire of the employees concerned. What has been ordered is merely a plebiscite and not the certification election itself. . . . Proceedings may still continue and an order whether denying the petition or not would necessarily ensue. In a word, something else has to be done within the premises and the order does not deny or grant petition in the above entitled case. In the case of Democratic Labor Association vs. Cebu Stevedoring Co., G.R. No. L-10321, February 28, 1958, we stated that because of the modern complexity of the relation between both employer and union structure, it becomes difficult to determine from the evidence alone which of the several claimant groups forms a proper bargaining unit; that it becomes necessary to give consideration to the express will or desire of the employees a practice designated as the "Globe doctrine," which sanctions the holding of a series of elections, not for the purpose of allowing the group receiving an over all majority of votes to represent all employees, but for the specific purpose of permitting the employees in each of the several categories to select the group which each chooses as a bargaining unit; that the factors which may be considered and weighed in fixing appropriate units are: the history, of their collective bargaining; the history, extent and type of organization of employees in other plants of the same employer, or other employers in the same industry; the skill, wages, work and working conditions of the employees; the desires of the employees; the eligibility of the employees for membership in the union or unions involved; and the relationship between the unit or units proposed and the employer's organization, management and operation, and the test in determining the appropriate bargaining unit is that a unit must effect a grouping of employees who have substantial, mutual interests in wages, hours, working conditions and other subjects of collective bargaining. It is manifest, therefore, that "the desires of the employees" is one of the factors in determining the appropriate bargaining unit. The respondent Court was simply interested "in the verification of the evidence already placed on record and submitted wherein the workers have signed manifestations and resolutions of their desire to be separated from Kapisanan." Certainly, no one would deny the respondent court's right of full investigation in arriving at a correct and conclusive finding of fact in order to deny or grant the conclusive findings of fact in order to deny or

grant the petitions for certification election. On the contrary, all respondent court, or any court for that matter, to investigate before acting, to do justice to the parties concerned. And one way of determining the will or desire of the employees is what the respondent court had suggested: a plebiscite carried by secret ballot. A plebiscite not to be conducted by the Department of Labor, as contemplated in a certification election under Sec. 12 of the Magna Charter of Labor, R.A. No. 875, but by the respondent court itself. As well as observed by the respondent court, "the votes of workers one way or the other, in these cases will not by any chance choose the agent or unit which will represent them anew, for precisely that is a matter that is within the issues raised in these petitions for certification". The test in determining whether an order or judgment is interlocutory or final is "Does it leave something to be done in the trial court with respect to the merits of the case? If it does, it is interlocutory; if it does not, it is final" (Moran's Comments on the Rules of Court, 1952 Ed., Vol. I, p. 41). Having in view the avowed purpose of the orders in question, as heretofore exposed, one should not stretch his imagination far to see that they are clearly interlocutory, as they leave something more to be done in the trial court and do not decide one way or the other the petitions of the respondent unions. We are, therefore, constrained to hold, as we do hereby hold, that the present appeals or petitions for review by certiorari, are not authorized by law and should be dismissed (Section 2, Rule 44, Rules of Court). There is, moreover, nothing, under the facts obtaining in these cases and the law on the subject, which would warrant this Court to declare the orders under consideration, illegal. The herein petitioners contend that the collective bargaining agreement, executed on November 4, 1957 (Case No. 237-MC), is a bar to the certification proceedings under consideration. The respondents counter that it is not so, because one of the signatories in the said agreement for the Kapisanan, Vicente K. Olazo, was found to be a supervisor under section 2(k) R.A. 875, in Kapisanan, etc. vs. CIR, etc., 106 Phil., 607; 57 Off. Gaz. (2) 254. Having, however, reached the conclusion that the orders in question are not appealable and that the respondent court has not as yet decided on whether the said collective bargaining agreement is a bar or not to the petitions for separate units and for certification election, which could properly be determined after the result of the plebiscite shall have been known by the respondent court, the consideration of this issue is premature. In view hereof, the petitions or appeals for review by certiorari are dismissed, without costs. Paras, C.J., Bengzon, Padilla, Bautista Angelo, Labrador, Concepcion, Reyes, J.B.L. Barrera and Gutierrez David, JJ., concur.

Republic of the Philippines SUPREME COURT Manila FIRST DIVISION G.R. No. L-47533 October 27, 1981 FORTUNATO AISPORNA, petitioner, vs. COURT OF APPEALS, AVELINO DE LA CRUZ and BENIGNO DE LA CRUZ, respondents.

GUERRERO, J.: In CAR Case No. 420-Gpn-NE'70, entitled "Fortunato Aisporna vs. Avelino De la Cruz", an action for reinstatement with damages, instituted before the Court of Agrarian Relations at Gapan, Nueva Ecija, where the complaint was later amended to include respondent Benigno de la Cruz, herein petitioner Fortunato Aisporna obtained judgment for reinstatement to the possession of a farm land as leasehold tenant by virtue of Section 36-1 of R.A. 3844, otherwise known as the Agricultural Land Reform Code of 1963. On appeal by respondents, the aforesaid judgment was set aside by the Court of Appeals 1 fundamentally on the ground that the remedy for the reinstatement of an ejected tenant secured under the above provision had been abolished or repealed by R.A. 6389 which amended R.A. 3844. Hence, this petition for review on certiorari of the latter judgment. The factual antecedents of this case are not disputed. The property involved is a farm land measuring approximately 23,756 square meters situated in Sto. Cristo, Gapan, Nueva Ecija, planted to palay. Private respondent Avelino de la Cruz acquired the land sometime in 1966. In a verbal contract of leasehold tenancy, he transferred possession of the land to petitioner Fortunato Aisporna as tenant, Shortly thereafter, in 1967, private respondent Avelino de la Cruz filed a complaint (CAR Case No. 4318) with the Court of Agrarian Relations for the ejectment of petitioner tenant on the ground that he (de la Cruz) will personally cultivate the farm. The agrarian court on July 7, 1967 rendered a decision which authorized the owner Avelino de la Cruz to dispossess his tenant. The decision was affirmed by the Court of Appeals on October 1, 1968, and after said judgment became final and executory, Fortunato Aisporna was ejected from the landholding and the owner, Avelino de la Cruz, assumed actual physical possession of the farmland on May 13, 1969. Subsequently, on April 11, 1970, Fortunato Aisporna filed CAR Case No. 420-Gpn-NE'70 for reinstatement with damages on the ground that the owner had failed to personally cultivate the landholding. He claimed that after his ejectment, the owner instituted co-respondent Benigno de la Cruz as tenant to work and cultivate the farm during the two successive crop years from 1969 to 1971, and that respondent owner allegedly had not performed any phase of farmwork but visited the landholding only during harvesting or threshing seasons. On the other hand, owner Avelino de la Cruz answered and asserted that he personally cultivated the farm, sometimes with the use of farm machinery, including the preparation of seedbed, broadcasting the seeds, plowing, harrowing and transplanting the seedlings. Trial was held on the issue of personal cultivation and upon the conflicting assertions, appearing in the testimonial evidence of the parties, the agrarian court found for the tenant Aisporna and rendered the following judgment on August 12, 1976, thus:

FOR ALL THE FOREGOING CONSIDERATIONS, judgment is hereby rendered in favor of Fortunato Aisporna and against Avelino de la Cruz, in the tenor and disposition herein below provided to wit: 1. Declaring that defendant Avelino de la Cruz has not personally and by himself undertaken the work and cultivate the landholding in question with an area of 23,756 square meters, situated at Sto. Cristo, Gapan, Nueva Ecija, since he has disposed plaintiff Fortunato Aisporna therefrom on May 12, 1969; 2. Ordering defendant Avelino de la Cruz to reinstate plaintiff immediately to the aforesaid landholding, 3. Denying plaintiff's claim for payment of actual or compensatory damages, as wen as exemplary or moral damages for insufficiency of evidence; 4. Ordering said defendant Avelino de la Cruz to pay plaintiff the amount of Two Thousand Pesos (P2,000.00) in the form of litigation expenses; and 5. Dismissing the complaint with respect to defendant Benigno de la Cruz. Defendant Avelino de la Cruz appealed to the Court of Appeals. In reversing the decision of the agrarian court, the Court of Appeals relied on the amendment to the first paragraph of section 36 introduced by Republic Act No. 6389 during the pendency of the action for reinstatement, the amendment abolishing personal cultivation as ground for ejecting an agricultural lessee. The appealed decision held that with the abolition of personal cultivation, with it was eliminated the corollary proviso on reinstatement of the ejected tenant. It further ruled that since the amending law is silent as regards those cases for ejectment and/or reinstatement authorized and filed in court under paragraph I of section 36, R.A. No. 3844, which are pending at the time of the amendment, the cause of action for reinstatement and the right to bring an action and pursue the remedy, albeit already started, are abated pursuant to the general rule that the repeal of a law defeats all actions and proceedings under the repealed statute at the time of its repeal, including those which are pending appeal. Accordingly, the Court of Appeals ordered the dismissal of the appealed case. From the above reversal, petitioner comes before Us and submits the following issues: I WHETHER OR NOT SECTION 36 OF REPUBLIC ACT NO. 3844 IS APPLICABLE TO THE CASE AT BAR. II WHETHER OR NOT THE REPEAL OF SECTION 36 OF REPUBLIC ACT NO. 3844 BY REPUBLIC ACT NO. 6389, PLAINTIFF- APPELLEE LOST HIS RIGHT OF ACTION FOR REINSTATEMENT. III WHETHER OR NOT THE TENANCY RIGHT OF PLAINTIFF-APPELLEE OVER THE LANDHOLDING IN QUESTION IS ANCHORED ON SECTION 36 OF REPUBLIC ACT NO. 3844. IV

WHETHER OR NOT THE DECISION OF THE HONORABLE COURT OF APPEALS REVERSING THE DECISION OF THE TRIAL COURT WOULD IN EFFECT NULLIFY SECTION 7 OF REPUBLIC ACT NO. 6389 ELIMINATING TOTALLY PERSONAL CULTIVATION AS A GROUND FOR DISPOSSESSION OF AN AGRICULTURAL TENANT. V WHETHER OR NOT THE DECISION OF THE HONORABLE COURT OF APPEALS CONTRAVENES THE SPIRIT AND INTENT OF PRESIDENTIAL DECREE NO. 27 AND RUNS COUNTER TO THE POLICY OF AGRARIAN REFORM AND THE EMANCIPATION OF TENANT-FARMERS. In amplification of the issues, petitioner maintains the view of the trial court that to sustain the right of the lessorowner to eject his tenant on ground of personal cultivation, the former's desire or intention must be honest, sincere, and must have been motivated by good faith, and bad faith is presumed if he does not cultivate the land himself within the period of three (3) years from the dispossession of the tenant, in which case, the latter shall have the right to be reinstated and recover damages. In line with the dissenting opinion in the appealed decision, petitioner further argues that his right to remain as tenant is not based on paragraph 1 of Section 36 of Republic Act No. 3844, nor that his right to reinstatement was created by the same, such that with the repeal of the said provision, the ejected tenant may no longer be reverted to the possession of the leasehold from which he was ejected. Petitioner contends that what the law actually repealed was the right of the landlord to eject his tenant on ground of personal cultivation; and that where there is bad faith on the part of the landowner consisting of a false representation on the said ground, Congress in repealing the paragraph did not intend to include the deprivation of the tenant's right to be reinstated. Finally, petitioner sees the reversal as contrary to the spirit and intent of the current agrarian reform policy to emancipate the tenant farmers from the bondage of the soil. Respondent landowner, on the other hand, asserts that in view of the amendment of Section 36 (1) of R.A. 3844 by R.A. 6389 and since Congress has not provided for any saving clause in R.A. No. 6389 with respect to cases pending in the courts for the ejectment of agricultural lessees on the ground that the agricultural lessor or a member of his immediate family will personally cultivate the landholding involved as authorized under Section 36, paragraph (1) of R.A. 3844, the repeal defeats all actions or proceedings pending under the repealed statute at the time of its repeal including those which are pending appeal, citing the case of Arambulo vs. Canicon CA-G.R. No. 46727-R, January 26, 1972, which was elevated to the Supreme Court in G.R. No. L-34816 but said petition was denied for lack of merit, in effect sustaining the Court of Appeals' ruling that R.A. 6389 abated pending appeals, according to private respondent's theory. And he concludes, thus: "Simply stated, the rights of the landowner and the tenant being reciprocal under Sec. 36 (1) of R.A. No. 3844, it follows of necessity that the repeal of said law by R.A. No. 6389 erases not only the rights of the landholder but also the rights of the tenant for reinstatement. Consequently, we cannot now disturb the vested right of Avelino de la Cruz." Finally, respondent claims that the action for reinstatement, assuming the remedy is still available, was filed prematurely on May 5, 1970 or before the lapse of three (3) years when no presumption of bad faith on the part of the landowner has yet arises. The central issue posed in these contentions is whether or not petitioner's action for reinstatement to enforce his right to demand possession of the leasehold pursuant to paragraph (1) of Section 36 of Republic Act No. 3844 is deemed abated by the repeal or abolition during the pendency thereof, of the aforesaid provision. Undoubtedly, the governing law then in force when petitioner filed his action for reinstatement to the land in question is paragraph (1) of Section 36 of R.A. 3844. This provision states: Sec. 36. Possession of Landholding; Exceptions. Notwithstanding any agreement as to the period or future surrender of the land, an agricultural lessee shall continue in the enjoyment and possession of his landholding except when his dispossession has been authorized by the Court in a judgment that is final and executory if after due hearing it is shown that:

(1) The agricultural lessor-owner or a member of his immediate family will personally cultivate the landholding or will convert the landholding, ff suitably located, into residential, factory, hospital or school site or other useful non-agricultural purposes; Provided That the agricultural lessee shall be entitled to disturbance compensation equivalent to five years rental on his landholding in addition to his rights under Sections twenty-five and thirty- four, except when the land owned and leased by the agricultural lessor is not more than five hectares, in which case instead of disturbance compensation the lessee may be entitled to advance notice of at least one agricultural year before ejectment proceedings are filed against him: Provided further, That should the landholder not cultivate the land himself for three years or fail to substantially carry out such conversion within one year after the dispossession of the tenant, it shall be presumed that he acted in bad faith and the tenant shall have the right to demand possession of the land and recover damages for any loss incurred by him because of said dispossession; The amendatory act is Republic Act No. 6389 entitled "An Act amending Republic Act numbered Thirty Eight Hundred and Forty Four as amended, otherwise known as the Agricultural Land Reform Code, and for other purposes," approved September 10, 1971, otherwise known as the Code of Agrarian Reforms of the Philippines. Section 7 thereof provides as follows: Sec. 7. Section 36 (1) of the same Code is hereby amended to read as follows: (1) The landholding is declared by the department head upon recommendation of the National Planning Commission to be suited for residential, commercial industrial or some other urban purposes: Provided, That the agricultural lessee shall be entitled to disturbance compensation equivalent to five times the average of the gross harvests on his landholding during the last five preceding calendar years. A cursory reading of Republic Act 6389, Sec. 7 quoted above clearly eliminated personal cultivation by the landowner as grounds for the ejectment of an agricultural tenant. The assailed decision of the respondent Court of Appeals, in dismissing the appeal, based its action in the following rationale: When this case was still pending in the court below, the Land Reform Code, otherwise known as Republic Act 6389, was passed by Congress which took effect on September 10, 1971. Its repealing clause, Sec. 38, paragraph 2, RA 6389, expressly repealed and/or modified all laws or parts of any law inconsistent with the provisions thereof'. Among the provisions thus repealed or amended was the aforequoted provision of See. 36, paragraph 1, of Republic Act 3844. Personal cultivation by the landowner as a ground for ejectment of the agricultural lessee was therein eliminated and with it, was likewise eliminated the corollary proviso on reinstatement of the ejected lessee. Our main task now is to determine the effect of the repeal of the provision under which this case was instituted, not any more the issue of whether or not defendant-appellant personally cultivated the landholding to determine the plaintiff's right to a reinstatement. Let it be noted that the repealing law Republic Act 6389 is silent as regards those cases for ejectment and/or reinstatement authorized and filed in court under Sec. 36, paragraph 1 of Republic Act 3844, and which are pending at the time of the repeal thereof. That being the case, we believe that the dismissal of the present case is in order. for this Court, and any court for that matter, is already powerless to grant the remedy sought by the plaintiff-appellee in view of the repeal of the law upon which his right was predicated. No valid judgment can be rendered in the pending case after the repeal of the act under which it was brought. (Re McCardle 7 Wall. 506.)

That a cause of action for reinstatement accrued under the old law in favor of the plaintiffappellee, on the assumption that defendant- appellant really did not personally cultivate his landholding, is not disputed. But the right to bring an action and pursue the remedy albeit already started, is already precluded by the repeal of paragraph 1, Sec. 36, of Republic Act 3844 from which the said right was deprived, the repealing law, not having provided any saving clause with respect thereto. The repealing clause is such an express enactment as necessarily divests all inchoate rights which have arisen under the statute which it destroys. These rights are but incident of the statute and fall with it, unless saved by express words in the repealing clause. (Dufus & Howard Purnace Co., 40 N.Y.S. 925, 830, 8 App. Div. 567.) In analogous cases, it had been held that: The powers derived wholly from a statute are extinguished by its repealed and no proceedings can be pursued under the repealed statute though begun before the repeal, unless such proceedings be authorized under a special clause in the repealing act. (Filanigan vs. Sierra Country, 196 U.S. 553; 25 Supreme Court Rep. 314.) A suit pending to enforce a right or remedy conferred solely by a statute, is abated by the unconditional repeal of the said statute (Globe Pub. Co. vs. State Bank, 27 L.R.A. 854.) This Court ordered the dismissal of an ejectment case, pending appeal herein when Republic Act 6489 took effect, advocating the principle that "the repeal of a law defeats all actions and proceedings under the repealed statute at the time of its repeal, including those which are pending appeal." (Canicon vs. Arambulo, CA-G.R. No. 46727-R, January 26, 1972.) Thus this Court, speaking through Honorable Justice Jesus Y. Perez, said: Since Congress has not provided for any saving clause in Republic Act No. 6389 with respect to cases pending in Court for the ejectment of agricultural lessee on the ground that the agricultural lessor-owner or a member of his immediate family will personally cultivate the landholding involved as authorized under Section 36, par. 1, Rep. Act 3844, then the instant case should be dismissed for it is settled that the repeal defeats all acts and proceedings pending under the repealed statute at the time of its repeal including those which are pending appeal, As a general rule the repeal of a statute without reservation takes away all remedies given by the repealed statute and defeats all actions and proceedings pending under it at the time of its repeal. Gates vs. Osborne, 19 L. Ed. 768; Louisville & N.R. Co. v. Western Union Telegraph Co., 268 F. 4 (cert den 41 S. Ct. 147, 254 U.S. 650, 6,5 L. Ed. 457.) The rule is especially applicable to the repeal of statutes creating a cause of action (Callet v. Alioto 290 p. 438; Western Union Tel. Co. vs. Lumpkin 26 S.E. 73), providing a remedy not known to the common law or conferring jurisdiction where it did not exist before, and abates proceedings pending even after judgment but before the entry thereof or pending appeal. A suit the continuance of which is dependent upon the statute repealed stops where the repeal finds it (South Carolina v. Caellard 101 U.S. 433) (59 C.J. 1189-1190) If upon the effectivity of Republic Act 6389 on September 10, 1971, a plaintiff landowner who has a pending case for ejectment of his tenant, has lost his right to do so, as above cited, then We see no reason why, under similar prevailing circumstances, We should reinstate the herein plaintiff-appellee to the landholding from where he had been ejected pursuant to a final and executory judgment of the same Agrarian Court in its CAR Case No. 4318.

We do not agree with respondent appellate court. What Republic Act 6389 abolished, eliminated or repealed is the right of the landowner to eject his tenant on the grounds that said landowner would personally cultivate the land. This amendatory Act did not abolish the right of the tenant to continue in the enjoyment and possession of his landholding. In fact, such right of the tenant to remain in the enjoyment and possession of the landholding was not created by paragraph (1) of Sec. 36, Rep. Act 3844 because the main proviso of Sec. 36 actually recognizes the tenant's right to continue in the enjoyment and possession of his landholding in these terms: "Notwithstanding any agreement as to the period or future surrender of the land, an agricultural lessee shall continue in the enjoyment and possession of his landholding ..." Such right to enjoy and possess is not only a contractual right but also arises from a status of tenancy or relationship duly recognized and protected by agrarian reform legislation. Hence, Rep. Act 6389 in its Section 7 specifically amending Sec. 36 (1) of Rep. Act 3844 cannot be considered to have repealed the tenant's right to enjoy and possess the landholding because such right is preserved and maintained in the main proviso of Sec. 36 which is not altered, amended or otherwise repealed. In other words, Sec. 36 of R.A. 3844 as amended by Sec. 7 of R.A. 6389 will read as follows: Sec. 36. Possession of Landholding; Exceptions. Notwithstanding and agreement as to the period or future surrender of the land, an agricultural lessee shall continue in the enjoyment and possession of his landholding except when his dispossession has been authorized by the Court in a judgment that is final and executory if after due hearing, it is shown that: (1) The landholding is declared by the department head upon recommendation of the National Planning Commission to be suited for residential, commercial, industrial or some other urban purposes: Provided, That the agricultural lessee shall be entitled to disturbance compensation equivalent to. five times the average of the gross harvests on his landholding during the last five preceding calendar years. That it was the intention of the legislature in amending paragraph (1), Sec. 36 of R.A. 3844 to deprive the landowner of the right to eject his tenant on the ground that the former would personally cultivate the land and also to abate cases brought by the landowner to eject the tenant on the same ground which were still pending at the time of the passage of the amendatory Act, is clear and evident from the deliberations and debate of Congress when Republic Act 6389 was being deliberated, as published in the Senate Journal, thus: SENATOR DIOKNO: Now I am very much interested in one other aspect of the existing law which has been the source of many problems, and that is, t ' he termination of the tenancy relationship because the landowner would want to cultivate the land himself. SENATOR LAUREL: We have eliminated that option on the part of the landowners, On p. 7, Your Honor you will notice that we have deleted from fine 3 to line 21. This is the basis of the owner's alibi in refusing to sell to the tenants, that he will convert it into a subdivision, a hospital site or a school site. We are deleting that portion of the Code. SENATOR DIOKNO: Now, what happens those cases which are now pending in court where this has been the excuse given In other words the landowner, under the existing law, has notified his tenants or lessess, 'You must vacate because I will personally cultivate the land.' That is under the existing law which gives him that right. But if these cases are not yet decided and then this bill is enacted into law, what would happen to those cases? "SENATOR LAUREL: It will not affect whatever contracts were entered into. SENATOR DIOKNO: There is no contract. No existing contract.

SENATOR LAUREL: Yes. SENATOR DIOKNO: It is just an old, old relationship between fathers and grandfathers, etc. of both parties, until they finally come down to the present parties. So the right of the agricultural lessor-owner is based upon a legal provision. And this legal provision in force now authorizes him, with of course, certain provision that this matter can be brought to court and so forth, to eject these tenants. Now, can he continue to exercise that right or can we say that he can no longer do so because the right so to speak has not become final and it has now disappeared? SENATOR LAUREL: In answer to Your Honor's question, the owner will lose the right to eject after the enactment of this measure even on cases as those cited by your Honor, because in those particular cases, the owner has not really succeeded yet in ejecting the tenants. SENATOR DIOKNO: In other words, where the ejectment is already a final case, or "yari na" then it is alright. SENATOR LAUREL: Yes. SENATOR DIOKNO: Well, I am glad Your Honor has the same view because that is the same view that I would have advocated on p. 8, Your Honor refers. " (Senate Journal, Nos. 43 & 44, March 30 & 31, 1971, 2nd Regular Session-7th Congress) Moreover, R.A. 6389 must be considered a remedial legislation enacted with the principal aim and purpose of curtailing and suppressing the pernicious practice of many landowners who resort to the filing of cases of ejectment against their tenants based on personal cultivation in retaliation to harrass tenants who were determined to enforce the rights granted them by law. Such justification is clearly expressed in the original Senate Bill No. 478, as quoted in The Code of Agrarian Reforms Annotated by Justice Guillermo S. Santos, 1973 Revised Edition, p. 157, to wit: Personal cultivation by the landowner of his land ... as a basis for dispossession is being abused. This provision is being availed of by landowners in driving their lessees out of their landholding on the pretext of personal cultivation ... which often causes tension and explodes as an agrarian unrest. SENATOR LAUREL. Well, Your Honor, just for the record, the Committee would like to state its reason for proposing the deletion of Section 36. First, based on statistics, 80 to 85 percent of the farm lands here in this country have also below 10 hectares. Second, the Idea of personal cultivation has been abused; it has become an alibi. It is the reason given always by landowners to prevent the conversion from tenancy into leasehold. And third, when it comes to the weighing of who needs it more, we felt that the tenants on the land need it more to survive than the owner who decides late in life to cultivate it himself or with his sons. In other words, he who needs the help more should receive it. Or "those who (have) less in life should have more in law borrowing" from President Magsaysay That is the entire reason or philosophy for our proposal to eliminate Section 36. (Congressional Record, Senate, Vol. 11, No. 48, April 13, 1971, p. 1844). In the light of this clear intention of the law, We hold that the Court of Appeals erred in dismissing the appeal of the petitioner-tenant whereby he seeks reinstatement and the exercise of his right to the enjoyment and possession of the landholding from which he had been previously ousted by the landowner-respondent on the latter's false representation and bad faith, which right of enjoyment and possession has not been repealed or abolished by the Amendatory Act.

The Court of Appeals' holding that the repeal of a statute defeats all actions and proceedings pending under the repealed statute at the time of its repeal, including those cases which are still pending appeal is, of course, correct as the general rule in statutory construction. And for this reason, the dismissal of pending cases including those on appeal where the landowner seeks the privilege or authority to oust his tenant on the ground of personal cultivation, is justified and warranted because the repeal had eliminated personal cultivation as a ground for eviction. But given the facts of the case at bar, where it is the tenant who, having been previously ousted by the landowner by false representation and bad faith, now comes on appeal as petitioner to enforce his right of security of tenure, We hold that the general rule stated above does not apply but the exceptions thereto which state that "a repealing statute must not interfere with vested rights or impair the obligation of contracts that if any other construction is possible, the act should not be construed so as to affect rights which have vested under the old law, or as requiring the abatement of actions instituted for the enforcement of such rights." (Statutory Construction by V.J. Francisco, p. 335; 23 Crawford, Statutory Construction, Sec. 296, pp. 599-600). The right of the petitioner-tenant to the enjoyment and possession of the landholding is a right granted, conferred and vested by law, in fact by and through the various legislations that have been passed by the legislature to improve the lot of the tillers of the soil and by progressive land reforms to emancipate them from bondage and poverty, even as the 1935 Philippine Constitution mandated that the State shall afford protection to labor, especially to working women and minors, and shall regulate the relations between landowner and tenant, and between labor and capital in industry and agriculture, " (Art. XIV, Sec. 6, Constitution of the Philippines). Thus, We find the right of security of tenure of the tenant recognized under Act No. 4054 otherwise known as "The Philippine Rice Share Tenancy Act" approved on February 27, 1933, under Section 19 thereof which provides as follows: Sec. 19. Landlord cannot dismiss his tenant except for good causes. The landlord shall not dismiss his tenant without just and reasonable cause, otherwise the former shall be liable to the latter for losses and damages to the extent of his share in the product of the farm entrusted to the dismissed tenant. Commonwealth Act No. 461 entitled "An Act to regulate the relations between landowner and tenant and to provide for compulsory arbitration of any controversy arising between them," approved June 9, 1939 further protected the security of tenure of the tenant under Section 1 thereof which states: Any agreement or provision of law to the contrary notwithstanding, in all cases where land is held under any system of tenancy the tenant shall not be dispossessed of the land cultivated by him except for any of the causes mentioned in section nineteen of Act Numbered Four thousand fiftyfour or for any just cause. and without the approval of a representative of the Department of Justice duly authorized for the purpose. Should the landowner or the tenant feel aggrieved by the action taken by this official, or in the event of any dispute between arising out of their relationship as landowner and tenant, either party may submit the matter to the Court of Industrial Relations which is given jurisdiction to determine the controversy in accordance with law. Under Republic Act No. 1199, the Agricultural Tenancy Act of the Philippines, enacted August 30, 1954, the tenancy relationship between a landowner and a tenant is clearly defined and under such relationship, the tenant acquires the right to continue working on and cultivating the land, until and unless he is dispossessed of his holdings for any of the just causes enumerated in Section 50 or the relationship is terminated in accordance with Section 9. Specifically, Sections 6 and 7 of Republic Act No. 1199 provide: Sec. 6. Tenancy Relationship; Its Definition. Tenancy relationship is a juridical tie which arises between a landholder and tenant once they agree, expressly or impliedly to undertake jointly the cultivation of land belonging to the former, either under the share tenancy or leasehold tenancy system, as a result of which relationship the tenant acquires the right to continue working on and cultivating the land, until and unless he is dispossessed of his holdings for any of the just causes enumerated in Section fifty or the relationship is terminated in accordance with Section nine.

(5) Sec. 7. Tenancy Relationship; How Established Security of Tenure. Tenancy relationship may be established either verbally or in writing, expressly or impliedly. Once such relationship is established, the tenant shall be entitled to security of tenure as hereinafter provided. (emphasis supplied). It is interesting to note that under Republic Act 1199, Part IV on Security of Tenure, the ejection of the tenant is provided under Section 49 and the causes for the dispossession of a tenant are enumerated (which are similar to Section 36 of Republic Act No. 3844) and these provisions read: Sec. 49. Ejectment of Tenant. Notwithstanding any agreement or provision of law as to the period, in all cases where land devoted to any agricultural purpose is held under any system of tenancy, the tenant shall not be dispossessed of his holdings except for any of the causes hereinafter enumerated and only after the same has been proved before, and the dispossession is authorized by the court. Sec. 50. Causes for the Dispossession of a Tenant. Any of the following shall be a sufficient cause for the dispossession of a tenant from this holdings: (a) The bona fide intention of the landholder to cultivate the land himself personally or through the employment of farm machinery and implements: Provided, however, That should the landholder not cultivate the land himself or should fail to employ mechanical farm implements for a period of one year after the dispossession of the tenant, it shall be presumed that he acted in bad faith and the tenant shall have the right to demand possession of the land and damages for any loss incurred by him because of said dispossession; Provided, further, That the landholder shall, at least one year but not more than two Years prior to the date of his petition to dispossess the tenant under this sub-section, file notice with the court and shall inform the tenant in writing in a language or dialect known to the latter of his intention to cultivate the land himself, either personally or through the employment of mechanical implements, together with a certification of the Secretary of Agriculture and Natural Resources that the land is suited for mechanization: Provided, further, That the dispossessed tenant and the members of his immediate household shall be preferred in the employment of necessary laborers under the new set-up. (b) ... Republic Act 2263, approved June 19, 1959, amended Section 49 of Republic Act I 1 99, the latter to read as follows: Sec. 49. Ejectment of Tenant. Notwithstanding any agreement or provision of law as to the period or future surrender of the land, in all cases where land devoted to any agricultural purpose is held under any system of tenancy, the tenant shall not be dispossessed of his landholdings by the landholder except for any of the causes hereinafter enumerated and only after the same has been proved before and the dispossession is authorized by the court. xxx xxx xxx Section 50 of Rep. Act 1199 was likewise amended to include among the causes for the dispossession of the tenant the bonafide intention of not only the landholder-owner but also his relative within the first degree of consanguinity to cultivate the land himself personally or through the employment of farm machinery and implements. The Agricultural Land Reform Code, which is Republic Act No. 3844 approved August 8, 1963, contains provisions establishing agricultural leasehold relation (Sec. 5) and conferring and protecting the security of tenure of the agricultural lessee (Sec. 7). Thus

Sec. 5. Establishment of Agricultural Leasehold Relation. The agricultural leasehold relation shall be established by operation of law in accordance with Section four of this Code and, in other cases, either orally or in writing, expressly or impliedly. Sec. 7. Tenure of Agricultural Leasehold Relation. The agricultural leasehold relation once established shall confer upon the agricultural lessee the right to continue working on the landholding until such leasehold relation is extinguished. The agricultural lessee shall be entitled to security of tenure on his landholding and cannot be ejected therefrom unless authorized by the Court for causes herein provided. The different laws cited and enumerated above clearly show that the right of the tenant to the enjoyment and possession of the farmholding had been created and conferred, protected and guaranteed therein previous to the enactment of R.A. 3844 and that par. (1) of Sec. 36 of said R.A. 3844 did not create such right. The security of tenure of the tenant had been enjoyed by him long before the passage of R.A. 3844. Hence, it is not correct for the Court of Appeals to assume that the right of the tenant to the security of his tenure was abolished by R.A. 6389 when the latter repealed by substitution paragraph (1) of Sec. 36,R.A.3844. And more than that, the Supreme Court has upheld the tenant's security of tenure on the police power of the State in compliance with the mandate of the Constitution expressed in Article II, Sec. 5, 193-0 Constitution of the Philippines, as against alleged impairment of the obligations of contract, a limitation to the freedom of contract and a denial of the equal protection of the laws, in Primers vs. Court of Agrarian Relations and Sinforoso Quion, L10594, May 29, 1957, 101 Phil. 675. The Supreme Court, speaking thru Justice Endencia said: The provisions of law assailed as unconstitutional do not impair the right of the landowner to dispose or alienate his property nor prohibit him to make such transfer or alienation; they only provide that in case of transfer or in case of lease, as in the instant case, the tenancy relationship between the landowner and his tenant should be preserved in order to insure the well-being of the tenant or protect him from being unjustly dispossessed by the transferee or purchaser of the land; in other words, the purpose of the law in question is to maintain the tenants in the peaceful possession and cultivation of the land or afford them protection against unjustified dismissal from their holdings. Republic Act 1199 is unquestionably a remedial legislation promulgated pursuant to the social justice precepts of the. Constitution and in the exercise of the police power of the State to promote the common weal. It is a statute relating to public subjects within the domain of the general legislative powers of the State and involving the public rights and public welfare of the entire community affected by it. Republic Act 1199, like the precious tenancy laws enacted by our lawmaking body, was passed by Congress in compliance with the constitutional mandates that the promotion of social justice to insure the well-being and economic security of all the people should be the concern of the State (Art. 11, see. 5 ) and that the State shall regulate the relations between landlord and tenant ... in agriculture ... . (Art XIV, Sec. 6). The constitutional guarantee afforded the tenant's right to security of tenure was further emphasized and strengthened in the case of Pineda vs. De Guzman and Feliciano, L-23773-74, December 29, 1967, 21 SCRA 1450, wherein the Supreme Court held Section 49 of the Agricultural Tenancy Act, Republic Act 1199, as amended, enunciates the principle of security of tenure of the tenant, such that it prescribes that the relationship of landholder and tenant can only be terminated for causes provided by law. The principle is epitomized by the axiom in land tenure that once a tenant, always a tenant. Attacks on the constitutionality of this guarantee have centered on the contention that it is a limitation on freedom of contract, a denial of the equal protection of the law, and an impairment of or a limitation on property rights. The assault is without reason. The law simply provides that the tenancy relationship between the landholder and his tenant should be preserved in order to insure the wellbeing of the tenant and protect him from being unjustly dispossessed of the land. Its termination can take place only for causes and reasons provided in the law. lt was established pursuant to the

social justice precept of the Constitution and in the exercise of the police power of the State to promote the common weal. (Primero v. Court of Industrial Relations, G.R. No. L-10594, May 29, 1957.) Indeed, We find no clear and cogent reason, no logical and legal ground to hold, as the Court of Appeals held, that Republic Act 6389 abolished the right of the tenant to be reinstated to the enjoyment and possession of the farmholding in question. There is one final point We cannot ignore, and that is, the undisputed finding of the agrarian court and not disturbed by the appellate court that the private respondent-landowner has foisted false representations and committed bad faith in successfully evicting the petitioner-tenant from the landholding. We are bound by such finding of fact. The authority given to said landowner to oust the tenant-petitioner was, therefore, vitiated with dishonesty and malice. We cannot and should not reward such malice and bad faith. On both justiciable and equitable grounds, the petitioner herein is entitled to reinstatement and possession such that it must be deemed that his possession has been continuous and uninterrupted. To dismiss the present appeal of the tenant is simply a backward step from the social justice and agrarian progress of the nation, and this Court will not allow nor sanction the same. WHEREFORE, IN VIEW OF ALL THE FOREGOING, the judgment of the Court of Appeals is hereby REVERSED and SET ASIDE. The decision of the Court of Agrarian Relations is hereby ordered reinstated. No costs. SO ORDERED. Teehankee (Chairman), Makasiar,Fernandez and Melencio-Herrera, JJ., concur.

Republic of the Philippines SUPREME COURT Manila EN BANC

G.R. No. 123169 November 4, 1996 DANILO E. PARAS, petitioner, vs. COMMISSION ON ELECTIONS, respondent. RESOLUTION

FRANCISCO, J.: Petitioner Danilo E. Paras is the incumbent Punong Barangay of Pula, Cabanatuan City who won during the last regular barangay election in 1994. A petition for his recall as Punong Barangay was filed by the registered voters of the barangay. Acting on the petition for recall, public respondent Commission on Elections (COMELEC) resolved to approve the petition, scheduled the petition signing on October 14, 1995, and set the recall election on November 13, 1995. 1 At least 29.30% of the registered voters signed the petition, well above the 25% requirement provided by law. The COMELEC, however, deferred the recall election in view of petitioner's opposition. On December 6, 1995, the COMELEC set anew the recall election, this time on December 16, 1995. To prevent the holding of the recall election, petitioner filed before the Regional Trial Court of Cabanatuan City a petition for injunction, docketed as SP Civil Action No. 2254-AF, with the trial court issuing a temporary restraining order. After conducting a summary hearing, the trial court lifted the restraining order, dismissed the petition and required petitioner and his counsel to explain why they should not be cited for contempt for misrepresenting that the barangay recall election was without COMELEC approval. 2 In a resolution dated January 5, 1996, the COMELEC, for the third time, re-scheduled the recall election an January 13, 1996; hence, the instant petition for certiorari with urgent prayer for injunction. On January 12, 1996, the Court issued a temporary restraining order and required the Office of the Solicitor General, in behalf of public respondent, to comment on the petition. In view of the Office of the Solicitor General's manifestation maintaining an opinion adverse to that of the COMELEC, the latter through its law department filed the required comment. Petitioner thereafter filed a reply. 3 Petitioner's argument is simple and to the point. Citing Section 74 (b) of Republic Act No. 7160, otherwise known as the Local Government Code, which states that "no recall shall take place within one (1) year from the date of the official's assumption to office or one (1) year immediately preceding a regular local election", petitioner insists that the scheduled January 13, 1996 recall election is now barred as the Sangguniang Kabataan (SK) election was set by Republic Act No. 7808 on the first Monday of May 1996, and every three years thereafter. In support thereof, petitioner cites Associated Labor Union v. Letrondo-Montejo, 237 SCRA 621, where the Court considered the SK election as a regular local election. Petitioner maintains that as the SK election is a regular local election, hence no recall election can be had for barely four months separate the SK election from the recall election. We do not agree. The subject provision of the Local Government Code provides:

Sec. 74. Limitations on Recall. (a) Any elective local official may be the subject of a recall election only once during his term of office for loss of confidence. (b) No recall shall take place within one (1) year from the date of the official's assumption to office or one (1) year immediately preceding a regular local election. [Emphasis added] It is a rule in statutory construction that every part of the statute must be interpreted with reference to the context, i.e., that every part of the statute must be considered together with the other parts, and kept subservient to the general intent of the whole enactment. 4 The evident intent of Section 74 is to subject an elective local official to recall election once during his term of office. Paragraph (b) construed together with paragraph (a) merely designates the period when such elective local official may be subject of a recall election, that is, during the second year of his term of office. Thus, subscribing to petitioner's interpretation of the phrase regular local election to include the SK election will unduly circumscribe the novel provision of the Local Government Code on recall, a mode of removal of public officers by initiation of the people before the end of his term. And if the SK election which is set by R.A No. 7808 to be held every three years from May 1996 were to be deemed within the purview of the phrase "regular local election", as erroneously insisted by petitioner, then no recall election can be conducted rendering inutile the recall provision of the Local Government Code. In the interpretation of a statute, the Court should start with the assumption that the legislature intended to enact an effective law, and the legislature is not presumed to have done a vain thing in the enactment of a statute. 5 An interpretation should, if possible, be avoided under which a statute or provision being construed is defeated, or as otherwise expressed, nullified, destroyed, emasculated, repealed, explained away, or rendered insignificant, meaningless, inoperative or nugatory. 6 It is likewise a basic precept in statutory construction that a statute should be interpreted in harmony with the Constitution. 7 Thus, the interpretation of Section 74 of the Local Government Code, specifically paragraph (b) thereof, should not be in conflict with the Constitutional mandate of Section 3 of Article X of the Constitution to "enact a local government code which shall provide for a more responsive and accountable local government structure instituted through a system of decentralization with effective mechanism of recall, initiative, and referendum . . . ." Moreover, petitioner's too literal interpretation of the law leads to absurdity which we cannot countenance. Thus, in a case, the Court made the following admonition: We admonish against a too-literal reading of the law as this is apt to constrict rather than fulfill its purpose and defeat the intention of its authors. That intention is usually found not in "the letter that killeth but in the spirit that vivifieth". . . 8 The spirit, rather than the letter of a law determines its construction; hence, a statute, as in this case, must be read according to its spirit and intent. Finally, recall election is potentially disruptive of the normal working of the local government unit necessitating additional expenses, hence the prohibition against the conduct of recall election one year immediately preceding the regular local election. The proscription is due to the proximity of the next regular election for the office of the local elective official concerned. The electorate could choose the official's replacement in the said election who certainly has a longer tenure in office than a successor elected through a recall election. It would, therefore, be more in keeping with the intent of the recall provision of the Code to construe regular local election as one referring to an election where the office held by the local elective official sought to be recalled will be contested and be filled by the electorate.

Nevertheless, recall at this time is no longer possible because of the limitation stated under Section 74 (b) of the Code considering that the next regular election involving the barangay office concerned is barely seven (7) months away, the same having been scheduled on May 1997. 9 ACCORDINGLY, the petition is hereby dismissed for having become moot and academic. The temporary restraining order issued by the Court on January 12, 1996, enjoining the recall election should be as it is hereby made permanent. SO ORDERED. Narvasa, C.J., Padilla, Regalado, Romero, Bellosillo, Melo, Puno, Vitug, Kapunan, Mendoza, Hermosisima, Jr., Panganiban and Torres, Jr., JJ., concur.