Cases For Statutory Construction

Statutory Construction September 4 Page |1
G.R. No. 201043 June 16, 2014 enforcement agents, if needed, for purposes of effecting the smooth implementation of this
REPUBLIC OF THE PHILIPPINES, represented by the Armed Forces of the order.
Philippines Finance Center (AFPFC), Petitioner, In the meantime, let copy of this order and petition be served upon the respondent for him
vs. to file an OPPOSITION within a period of five (5) days from receipt hereof and let a
DAISY R. YAHON, Respondent. Preliminary Conference and hearing on the merits be set on October 17, 2006 at 2:00 o’clock
DECISION in the afternoon.
VILLARAMA, JR., J.:
Before the Court is a petition for review on certiorari under Rule 45 which seeks to nullify and To insure that petitioner can receive a fair share of respondent’s retirement and other
set aside the Decision1 dated November 29, 2011 and Resolution2 dated March 9, 2012 of the benefits, the following agencies thru their heads are directed to WITHHOLD any retirement,
Court of Appeals (CA) Mindanao Station in CA-G.R. SP No. 02953-MIN. The CA affirmed the pension and other benefits of respondent, S/SGT. CHARLES A. YAHON, a member of the
orders and decision of the Regional Trial Court (RTC) of Cagayan de Oro City, Branch 22 Armed Forces of the Philippines assigned at 4ID, Camp Evangelista, Patag, Cagayan de Oro
granting temporary and permanent protection orders, and denying the motion to lift the said City until further orders from the court:
temporary protection order (TPO). 1. Commanding General/Officer of the Finance Center of the Armed Forces of the
Philippines, Camp Emilio Aguinaldo, Quezon City;
Daisy R. Yahon (respondent) filed a petition for the issuance of protection order under the 2. The Management of RSBS, Camp Emilio Aguinaldo, Quezon City;
provisions of Republic Act (R.A.) No. 9262,3 otherwise known as the "Anti-Violence Against 3. The Regional Manager of PAG-IBIG, Mortola St., Cagayan de Oro City.
Women and Their Children Act of 2004," against her husband, S/Sgt. Charles A. Yahon
(S/Sgt. Yahon), an enlisted personnel of the Philippine Army who retired in January 2006. VIOLATION OF THIS ORDER IS PUNISHABLE BY LAW.
Respondent and S/Sgt. Yahon were married on June 8, 2003. The couple did not have any
IF THE RESPONDENT APPEARS WITHOUT COUNSEL ON THE DATE OF THE
child but respondent has a daughter with her previous live-in partner.
PRELIMINARYCONFERENCE AND HEARING ON THE MERITS OF THE ISSUANCE OF A PERMANENT
On September 28, 2006, the RTC issued a TPO, as follows: PROTECTION ORDER, THE COURT SHALL NOT RESCHEDULE OR POSTPONE THE PRELIMINARY
CONFERENCE AND HEARING BUT SHALL APPOINT A LAWYER FOR THE RESPONDENT AND
Finding the herein petition for the Issuance of Protection Order to be sufficient in form and
IMMEDIATELY PROCEED WITH THE SAID HEARING.
substance and to prevent great and irreparable injury to the petitioner, a TEMPORARY
IF THE RESPONDENT FAILS TO APPEAR ON THE DATE OF THE PRELIMINARY CONFERENCE AND
PROTECTION ORDER is forthwith issued to respondent, S/SGT. CHARLES A. YAHON directing
HEARING ON THE MERITS DESPITE PROPER NOTICE, THE COURT SHALL ALLOW EX-PARTE
him to do the following acts:
PRESENTATION OF EVIDENCE BY THE PETITIONER AND RENDER JUDGMENT ON THE BASIS OF THE
1. Respondent is enjoined from threatening to commit or committing further acts of PLEADINGS AND EVIDENCE ON RECORD. NO DELEGATION OF THE RECEPTION OF EVIDENCE SHALL
physical abuse and violence against the petitioner; BE ALLOWED.
2. To stay away at a distance of at least 500 meters from petitioner, her residence or
her place of work; SO ORDERED.4 (Emphasis supplied.)
3. To refrain from harassing, annoying, intimidating, contacting or communicating S/Sgt. Yahon, having been personally served with copy of the TPO, appeared during the
with petitioner; scheduled pre-trial but informed the court that he did not yet have a counsel and requested
4. Respondent is prohibited from using or possessing any firearm or deadly weapon for time to hire his own counsel. However, he did not hire a counsel nor file an opposition or
on occasions not related to his job; answer to the petition. Because of his failure to appear in the subsequent hearings of the
5. To provide reasonable financial spousal support to the petitioner. case, the RTC allowed the ex-parte presentation of evidence to determine the necessity of
The Local Police Officers and the Barangay Officials through the Chairman in the area where issuance of a Permanent Protection Order (PPO).
the petitioner and respondent live at Poblacion, Claveria, Misamis Oriental and Bobuntogan, Meanwhile, as prayed for by respondent who manifested that S/Sgt. Yahon deliberately
Jasaan, Misamis Oriental are directed to respond to any request for assistance from the refused to give her spousal support as directed in the TPO (she claimed that she had no
petitioner for the implementation of this order. They are also directed to accompany the source of livelihood since he had told her to resign from her job and concentrate on keeping
petitioner to their conjugal abode at Purok 2, Bobuntogan, Jasaan, Misamis Oriental to get their house), the RTC issued another order directing S/Sgt. Yahon to give respondent spousal
her personal belongings in order to insure the safety of the petitioner. support in the amount of ₱4,000.00 per month and fifty percent (50%) of his retirement
The Deputy Sheriff of this Court is ordered to immediately serve the Temporary Protection benefits which shall be automatically deducted and given directly to respondent. 5
Order (TPO) upon the respondent personally and to seek and obtain the assistance of law
In her testimony, respondent also said that S/Sgt. Yahon never complied with the TPO as he Let copy of this decision be sent to the Commanding General/Officer of Finance Center of the
continued making threats and inflicting physical abuse on her person, and failed to give her Armed Forces of the Philippines, Camp Emilio Aguinaldo, Quezon City; the Management of
spousal support as ordered by the court. RSBS, Camp Emilio Aguinaldo, Quezon City and the Regional Manager of PAG-IBIG, Mortola
On July 23, 2007, the RTC rendered its Decision,6 as follows: St., Cagayan de Oro City for their guidance and strict compliance.
After careful review and scrutiny of the evidence presented in this case, this court finds that SO ORDERED.7 (Emphasis supplied.)
there is a need to permanently protect the applicant, Daisy R. Yahon from further acts of Herein petitioner Armed Forces of the Philippines Finance Center (AFPFC), assisted by the
violence that might be committed by respondent against her. Evidences showed that Office of the Judge Advocate General (OTJAG), AFP, filed before the RTC a Manifestation and
respondent who was a member of the Armed Forces of the Philippines assigned at the Motion (To Lift Temporary Protection Order Against the AFP) 8 dated November 10, 2008.
Headquarters 4ID Camp Evangelista, Cagayan de Oro City had been repeatedly inflicting Stating that it was making a limited and special appearance, petitioner manifested that on
physical, verbal, emotional and economic abuse and violence upon the petitioner. August 29, 2008, it furnished the AFP Pension and Gratuity Management Center (PGMC) copy
Respondent in several instances had slapped, mauled and punched petitioner causing her of the TPO for appropriate action. The PGMC, on September 2, 2008, requested the Chief,
physical harm. Exhibits G and D are medical certificates showing physical injuries suffered by AFPFC the temporary withholding of the thirty-six (36) Months Lump Sum (MLS) due to
petitioner inflicted by the respondent at instances of their marital altercations. Respondent at S/Sgt. Yahon. Thereafter, on October 29, 2008, PGMC forwarded a letter to the Chief of
the height of his anger often poked a gun on petitioner and threatened to massacre her and Staff, AFP for the OTJAG for appropriate action on the TPO, and requesting for legal opinion
her child causing them to flee for their lives and sought refuge from other people. He had as to the propriety of releasing the 36 MLS of S/Sgt. Yahon. Petitioner informed the RTC that
demanded sex from petitioner at an unreasonable time when she was sick and chilling and S/Sgt. Yahon’s check representing his 36 MLS had been processed and is ready for payment
when refused poked a gun at her. Several police blotters were offered as evidence by by the AFPFC, but to date said check has not been claimed by respondent.
petitioner documenting the incidents when she was subjected to respondent’s ill temper and Petitioner further asserted that while it has initially discharged its obligation under the TPO,
ill treatment. Verbally, petitioner was not spared from respondent’s abuses by shouting at her the RTC had not acquired jurisdiction over the military institution due to lack of summons,
that he was wishing she would die and he would celebrate if it happens and by calling and and hence the AFPFC cannot be bound by the said court order. Additionally, petitioner
sending her threatening text messages. These incidents had caused petitioner great contended that the AFPFC is not a party-in-interest and is a complete stranger to the
psychological trauma causing her [to] fear for her life and these forced her to seek refuge proceedings before the RTC on the issuance of TPO/PPO. Not being impleaded in the case,
from the court for protection. Economically, petitioner was also deprived by respondent of petitioner lamented that it was not afforded due process and it was thus improper to issue
her spousal support despite order of the court directing him to give a monthly support of execution against the AFPFC. Consequently, petitioner emphasized its position that the AFPFC
Php4,000.00. In view of the foregoing, this court finds a need to protect the life of the cannot be directed to comply with the TPO without violating its right to procedural due
petitioner not only physically but also emotionally and psychologically. process.
Based on the evidence presented, both oral and documentary, and there being no In its Order9 dated December 17, 2008, the RTC denied the aforesaid motion for having been
controverting evidence presented by respondent, this Court finds that the applicant has filed out of time. It noted that the September 28, 2006 TPO and July 23, 2007 Decision
established her case by preponderance of evidence. granting Permanent Protection Order (PPO) to respondent had long become final and
WHEREFORE, premises considered, judgment is hereby rendered GRANTING the petition, executory.
thus, pursuant to Sec. 30 of A.M. No. 04-10-1-SC, let a PERMANENT PROTECTION ORDER be Petitioner’s motion for reconsideration was likewise denied under the RTC’s Order 10 dated
issued immediately and respondent, S/Sgt. CHARLES A.YAHON is ordered to give to March 6, 2009.
petitioner, DAISY R. YAHON the amount of FOUR THOUSAND PESOS (Php4,000.00) per On May 27, 2009, petitioner filed a petition for certiorari before the CA praying for the
month by way of spousal support. nullification of the aforesaid orders and decision insofar as it directs the AFPFC to
Pursuant to the order of the court dated February 6, 2007, respondent, S/Sgt. Charles A. automatically deduct from S/Sgt. Yahon’s retirement and pension benefits and directly give
Yahon is directed to give it to petitioner 50% of whatever retirement benefits and other the same to respondent as spousal support, allegedly issued with grave abuse of discretion
claims that may be due or released to him from the government and the said share of amounting to lack of jurisdiction. Respondent filed her Comment with Prayer for Issuance of
petitioner shall be automatically deducted from respondent’s benefits and claims and be Preliminary Injunction, manifesting that there is no information as to whether S/Sgt. Yahon
given directly to the petitioner, Daisy R. Yahon. already received his retirement benefit and that the latter has repeatedly violated the TPO,
particularly on the provision of spousal support.
After due hearing, the CA‘s Twenty-Second Division issued a Resolution11 granting (d) Directing the respondent to stay away from petitioner and any designated family
respondent’s application, viz: or household member at a distance specified by the court, and to stay away from the
Upon perusal of the respective pleadings filed by the parties, the Court finds meritorious residence, school, place of employment, or any specified place frequented by the
private respondent’s application for the issuance of an injunctive relief. While the 36-month petitioner and any designated family or household member;
lump sum retirement benefits of S/Sgt. Charles A. Yahon has already been given to him, yet (e) Directing lawful possession and use by petitioner of an automobile and other
as admitted by petitioner itself, the monthly pension after the mentioned retirement benefits essential personal effects, regardless of ownership, and directing the appropriate law
has not yet been released to him. It appears that the release of such pension could render enforcement officer to accompany the petitioner to the residence of the parties to
ineffectual the eventual ruling of the Court in this Petition. ensure that the petitioner is safely restored to the possession of the automobile and
other essential personal effects, or to supervise the petitioner’s or respondent’s
IN VIEW OF THE FOREGOING, let a WRIT OF PRELIMINARY INJUNCTION issue enjoining the removal of personal belongings;
Armed Forces of the Philippines Finance Center, its employees, agents, representatives, and (f) Granting a temporary or permanent custody of a child/children to the petitioner;
any all persons acting on its behalf, from releasing the remaining pension that may be due to (g) Directing the respondent to provide support to the woman and/or her child if
S/Sgt. Charles A. Yahon. entitled to legal support. Notwithstanding other laws to the contrary, the court shall
SO ORDERED.12 order an appropriate percentage of the income or salary of the respondent to be
By Decision dated November 29, 2011, the CA denied the petition for certiorari and affirmed withheld regularly by the respondent's employer for the same to be automatically
the assailed orders and decision of the RTC. The CA likewise denied petitioner’s motion for remitted directly to the woman. Failure to remit and/or withhold or any delay in the
reconsideration. remittance of support to the woman and/or her child without justifiable cause shall
render the respondent or his employer liable for indirect contempt of court;
In this petition, the question of law presented is whether petitioner military institution may be (h) Prohibition of the respondent from any use or possession of any firearm or
ordered to automatically deduct a percentage from the retirement benefits of its enlisted deadly weapon and order him to surrender the same to the court for appropriate
personnel, and to give the same directly to the latter’s lawful wife as spousal support in disposition by the court, including revocation of license and disqualification to apply
compliance with a protection order issued by the RTC pursuant to R.A. No. 9262. for any license to use or possess a firearm. If the offender is a law enforcement
A protection order is an order issued by the court to prevent further acts of violence against agent, the court shall order the offender to surrender his firearm and shall direct the
women and their children, their family or household members, and to grant other necessary appropriate authority to investigate on the offender and take appropriate action on
relief. Its purpose is to safeguard the offended parties from further harm, minimize any matter;
disruption in their daily life and facilitate the opportunity and ability to regain control of their (i) Restitution for actual damages caused by the violence inflicted, including, but not
life.13 The protection orders issued by the court may be a Temporary Protection Order (TPO) limited to, property damage, medical expenses, child care expenses and loss of
or a Permanent Protection Order (PPO), while a protection order that may be issued by the income;
barangay shall be known as a Barangay Protection Order (BPO).14 (j) Directing the DSWD or any appropriate agency to provide petitioner temporary
Section 8 of R.A. No. 9262 enumerates the reliefs that may be included in the TPO, PPO or shelter and other social services that the petitioner may need; and
BPO, to wit: (k) Provision of such other forms of relief as the court deems necessary to protect
(a) Prohibition of the respondent from threatening to commit or committing, and provide for the safety of the petitioner and any designated family or household
personally or through another, any of the acts mentioned in Section 5 of this Act; member, provided petitioner and any designated family or household member
(b) Prohibition of the respondent from harassing, annoying, telephoning, contacting consents to such relief. (Emphasis supplied.)
or otherwise communicating with the petitioner, directly or indirectly; Petitioner argues that it cannot comply with the RTC’s directive for the automatic deduction
(c) Removal and exclusion of the respondent from the residence of the petitioner, of 50% from S/Sgt. Yahon’s retirement benefits and pension to be given directly to
regardless of ownership of the residence, either temporarily for the purpose of respondent, as it contravenes an explicit mandate under the law governing the retirement
protecting the petitioner, or permanently where no property rights are violated, and and separation of military personnel.
if respondent must remove personal effects from the residence, the court shall direct The assailed provision is found in Presidential Decree (P.D.) No. 1638, 15 which states: Section
a law enforcement agent to accompany the respondent to the residence, remain 31. The benefits authorized under this Decree, except as provided herein, shall not be
there until respondent has gathered his things and escort respondent from the subject to attachment, garnishment, levy, execution or any tax whatsoever; neither shall
residence; they be assigned, ceded, or conveyed to any third person: Provided, That if a retired or
separated officer or enlisted man who is entitled to any benefit under this Decree has Petitioner further contends that the directive under the TPO to segregate a portion of S/Sgt.
unsettled money and/or property accountabilities incurred while in the active service, not Yahon’s retirement benefits was illegal because said moneys remain as public funds, citing
more than fifty per centum of the pension gratuity or other payment due such officer or the case of Pacific Products v. Ong.20 In that case, this Court sustained the CA when it held
enlisted man or his survivors under this Decree may be withheld and be applied to settle that the garnishment of the amount of ₱10,500 payable to BML Trading and Supply while it
such accountabilities. (Emphasis supplied.) was still in the possession of the Bureau of Telecommunications was illegal and therefore,
A similar provision is found in R.A. No. 8291, otherwise known as the "Government Service null and void. The CA therein relied on the previous rulings in Director of Commerce and
Insurance System Act of 1997," which reads: Industry v. Concepcion21 and Avendano v. Alikpala, et al.22 wherein this Court declared null
and void the garnishment of the salaries of government employees.
SEC. 39. Exemption from Tax, Legal Process and Lien -- x x x
The funds and/or the properties referred to herein as well as the benefits, sums or monies Citing the two aforementioned cases, we thus declared in Pacific Products:
corresponding to the benefits under this Act shall be exempt from attachment, garnishment, A rule, which has never been seriously questioned, is that money in the hands of public
execution, levy or other processes issued by the courts, quasi-judicial agencies or officers, although it may be due government employees, is not liable to the creditors of these
administrative bodies including Commission on Audit (COA) disallowances and from all employees in the process of garnishment. One reason is, that the State, by virtue of its
financial obligations of the members, including his pecuniary accountability arising from or sovereignty may not be sued in its own courts except by express authorization by the
caused or occasioned by his exercise or performance of his official functions or duties, or Legislature, and to subject its officers to garnishment would be to permit indirectly what is
incurred relative to or in connection with his position or work except when his monetary prohibited directly. Another reason is that moneys sought to be garnished, as long as they
liability, contractual or otherwise, is in favor of the GSIS. remain in the hands of the disbursing officer of the Government, belong to the latter,
although the defendant in garnishment may be entitled to a specific portion thereof. And still
In Sarmiento v. Intermediate Appellate Court,16 we held that a court order directing the another reason which covers both of the foregoing is that every consideration of public policy
Philippine National Bank to refrain from releasing to petitioner all his retirement benefits and forbids it.23
to deliver one-half of such monetary benefits to plaintiff as the latter’s conjugal share is We disagree.
illegal and improper, as it violates Section 26 of CA 186 (old GSIS Law) which exempts
retirement benefits from execution. Section 8(g) of R.A. No. 9262 used the general term "employer," which includes in its
coverage the military institution, S/Sgt. Yahon’s employer. Where the law does not
The foregoing exemptions have been incorporated in the 1997 Rules of Civil Procedure, as distinguish, courts should not distinguish. Thus, Section 8(g) applies to all employers,
amended, which governs execution of judgments and court orders. Section 13 of Rule 39 whether private or government.
enumerates those properties which are exempt from execution:
SEC. 13. Property exempt from execution.– Except as otherwise expressly provided by law, It bears stressing that Section 8(g) providing for spousal and child support, is a support
the following property, and no other, shall be exempt from execution: enforcement legislation.1âwphi1 In the United States, provisions of the Child Support
xxxx Enforcement Act24 allow garnishment of certain federal funds where the intended recipient
(l) The right to receive legal support, or money or property obtained as such support, or any has failed to satisfy a legal obligation of child support. As these provisions were designed "to
pension or gratuity from the Government;(Emphasis supplied.) avoid sovereign immunity problems" and provide that "moneys payable by the Government
It is basic in statutory construction that in case of irreconcilable conflict between two laws, to any individual are subject to child support enforcement proceedings," the law is clearly
the later enactment must prevail, being the more recent expression of legislative intended to "create a limited waiver of sovereign immunity so that state courts could issue
will.17 Statutes must be so construed and harmonized with other statutes as to form a valid orders directed against Government agencies attaching funds in their possession."25
uniform system of jurisprudence.18 However, if several laws cannot be harmonized, the This Court has already ruled that R.A. No. 9262 is constitutional and does not violate the
earlier statute must yield to the later enactment. The later law is the latest expression of the equal protection clause. In Garcia v. Drilon26 the issue of constitutionality was raised by a
legislative will.19 husband after the latter failed to obtain an injunction from the CA to enjoin the
We hold that Section 8(g) of R.A. No. 9262, being a later enactment, should be construed as implementation of a protection order issued against him by the RTC. We ruled that R.A. No.
laying down an exception to the general rule above-stated that retirement benefits are 9262 rests on real substantial distinctions which justify the classification under the law: the
exempt from execution. The law itself declares that the court shall order the withholding of a unequal power relationship between women and men; the fact that women are more likely
percentage of the income or salary of the respondent by the employer, which shall be than men to be victims of violence; and the widespread bias and prejudice against women.
automatically remitted directly to the woman "[n]otwithstanding other laws to the contrary." We further held in Garcia that the classification is germane to the purpose of the law, viz:
The distinction between men and women is germane to the purpose of R.A. 9262, which is to MARTIN S. VILLARAMA, JR.
address violence committed against women and children, spelled out in its Declaration of Associate Justice
Policy, as follows: G.R. No. 115245 July 11, 1995
SEC. 2. Declaration of Policy.– It is hereby declared that the State values the dignity of JUANITO C. PILAR, petitioner,
women and children and guarantees full respect for human rights. The State also recognizes vs.
the need to protect the family and its members particularly women and children, from COMMISSION ON ELECTIONS, respondent.
violence and threats to their personal safety and security.
Towards this end, the State shall exert efforts to address violence committed against women QUIASON, J.:
and children in keeping with the fundamental freedoms guaranteed under the Constitution This is a petition for certiorari under Rule 65 of the Revised Rules of Court assailing the
and the provisions of the Universal Declaration of Human Rights, the Convention on the Resolution dated April 28, 1994 of the Commission on Elections (COMELEC) in UND No. 94-
Elimination of All Forms of Discrimination Against Women, Convention on the Rights of the 040.I
Child and other international human rights instruments of which the Philippines is a party. 27 On March 22, 1992, petitioner Juanito C. Pilar filed his certificate of candidacy for the position
Under R.A. No. 9262, the provision of spousal and child support specifically address one form of member of the Sangguniang Panlalawigan of the Province of Isabela.
of violence committed against women – economic abuse. On March 25, 1992, petitioner withdrew his certificate of candidacy.
D. "Economic abuse" refers to acts that make or attempt to make a woman financially In M.R. Nos. 93-2654 and 94-0065 dated November 3, 1993 and February 13, 1994
dependent which includes, but is not limited to the following: respectively, the COMELEC imposed upon petitioner the fine of Ten Thousand Pesos
1. Withdrawal of financial support or preventing the victim from engaging in any (P10,000.00) for failure to file his statement of contributions and expenditures.
legitimate profession, occupation, business or activity, except in cases wherein the
other spouse/partner objects on valid, serious and moral grounds as defined in In M.R. No. 94-0594 dated February 24, 1994, the COMELEC denied the motion for
Article 73 of the Family Code; reconsideration of petitioner and deemed final M.R. Nos. 93-2654 and 94-0065 (Rollo, p. 14).
2. Deprivation or threat of deprivation of financial resources and the right to the use Petitioner went to the COMELEC En Banc (UND No. 94-040), which denied the petition in a
and enjoyment of the conjugal, community or property owned in common; Resolution dated April 28, 1994 (Rollo, pp. 10-13).
3. Destroying household property; Hence, this petition for certiorari.
4. Controlling the victims' own money or properties or solely controlling the conjugal We dismiss the petition.
money or properties.28 II
The relief provided in Section 8(g) thus fulfills the objective of restoring the dignity of women Section 14 of R.A. No. 7166 entitled "An Act Providing for Synchronized National and Local
who are victims of domestic violence and provide them continued protection against threats Elections and for Electoral Reforms, Authorizing Appropriations Therefor, and for Other
to their personal safety and security. Purposes" provides as follows:
Statement of Contributions and Expenditures: Effect of Failure to File Statement.
"The scope of reliefs in protection orders is broadened to ensure that the victim or offended Every candidate and treasurer of the political party shall, within thirty (30) days after
party is afforded all the remedies necessary to curtail access by a perpetrator to the victim. the day of the election, file in duplicate with the offices of the Commission the full,
This serves to safeguard the victim from greater risk of violence; to accord the victim and true and itemized statement of all contributions and expenditures in connection with
any designated family or household member safety in the family residence, and to prevent the election.
the perpetrator from committing acts that jeopardize the employment and support of the No person elected to any public office shall enter upon the duties of his office until he
victim. It also enables the court to award temporary custody of minor children to protect the has filed the statement of contributions and expenditures herein required.
The same prohibition shall apply if the political party which nominated the winning
children from violence, to prevent their abduction by the perpetrator and to ensure their
candidate fails to file the statement required herein within the period prescribed by
financial support."29
this Act.
WHEREFORE, the petition is DENIED for lack of merit. The Decision dated November 29, Except candidates for elective barangay office, failure to file the statements or reports
2011 and Resolution dated March 9, 2012 of the Court of Appeals Mindanao Station in CA- in connection with electoral contributions and expenditures as required herein shall
G.R. SP No. 02953-MIN are AFFIRMED and UPHELD. constitute an administrative offense for which the offenders shall be liable to pay an
administrative fine ranging from One Thousand Pesos ( P1,000.00) to Thirty
No costs.
Thousand Pesos (P30,000.00), in the discretion of the Commission.
SO ORDERED.
The fine shall be paid within thirty (30) days from receipt of notice of such failure; candidate must have entered the political contest, and should have either won or lost" ( Rollo,
otherwise, it shall be enforceable by a writ of execution issued by the Commission p. 39).
against the properties of the offender.
It shall be the duty of every city or municipal election registrar to advise in writing, by Petitioner's argument is without merit.
personal delivery or registered mail, within five (5) days from the date of election all Section 14 of R.A. No. 7166 states that "every candidate" has the obligation to file his
candidates residing in his jurisdiction to comply with their obligation to file their statement of contributions and expenditures.
statements of contributions and expenditures.
For the commission of a second or subsequent offense under this Section, the Well-recognized is the rule that where the law does not distinguish, courts should not
administrative fine shall be from Two Thousand Pesos (P2,000.00) to Sixty Thousand distinguish, Ubi lex non distinguit nec nos distinguere debemos (Philippine British Assurance
Pesos (P60,000.00), in the discretion of the Commission. In addition, the offender Co. Inc. v. Intermediate Appellate Court, 150 SCRA 520 [1987]; cf Olfato v. Commission on
shall be subject to perpetual disqualification to hold public office (Emphasis supplied). Elections, 103 SCRA 741 [1981]). No distinction is to be made in the application of a law
To implement the provisions of law relative to election contributions and expenditures, the where none is indicated (Lo Cham v. Ocampo, 77 Phil. 636 [1946]).
COMELEC promulgated on January 13, 1992 Resolution No. 2348 (Re: Rules and Regulations In the case at bench, as the law makes no distinction or qualification as to whether the
Governing Electoral Contributions and Expenditures in Connection with the National and Local candidate pursued his candidacy or withdrew the same, the term "every candidate" must be
Elections on deemed to refer not only to a candidate who pursued his campaign, but also to one who
May 11, 1992). The pertinent provisions of said Resolution are: withdrew his candidacy.
Sec. 13. Statement of contributions and expenditures: Reminders to candidates to file
The COMELEC, the body tasked with the enforcement and administration of all laws and
statements. Within five (5) days from the day of the election, the Law Department of
the Commission, the regional election director of the National Capital Region, the regulations relative to the conduct of an election, plebiscite, initiative, referendum, and recall
provincial election supervisors and the election registrars shall advise in writing by (The Constitution of the Republic of the Philippines, Art. IX(C), Sec. 2[1]), issued Resolution
personal delivery or registered mail all candidates who filed their certificates of No. 2348 in implementation or interpretation of the provisions of Republic Act No. 7166 on
candidacy with them to comply with their obligation to file their statements of election contributions and expenditures. Section 13 of Resolution No. 2348 categorically
contributions and expenditures in connection with the elections. Every election refers to "all candidates who filed their certificates of candidacy."
registrar shall also advise all candidates residing in his jurisdiction to comply with said Furthermore, Section 14 of the law uses the word "shall." As a general rule, the use of the
obligation (Emphasis supplied). word "shall" in a statute implies that the statute is mandatory, and imposes a duty which
Sec. 17. Effect of failure to file statement. (a) No person elected to any public office
may be enforced , particularly if public policy is in favor of this meaning or where public
shall enter upon the duties of his office until he has filed the statement of
interest is involved. We apply the general rule (Baranda v. Gustilo, 165 SCRA 757 [1988];
contributions and expenditures herein required.
The same prohibition shall apply if the political party which nominated the winning Diokno v. Rehabilitation Finance Corporation, 91 Phil. 608 [1952]).
candidates fails to file the statement required within the period prescribed by law. The state has an interest in seeing that the electoral process is clean, and ultimately
(b) Except candidates for elective barangay office, failure to file statements or reports expressive of the true will of the electorate. One way of attaining such objective is to pass
in connection with the electoral contributions and expenditures as required herein
legislation regulating contributions and expenditures of candidates, and compelling the
shall constitute an administrative offense for which the offenders shall be liable to
publication of the same. Admittedly, contributions and expenditures are made for the
pay an administrative fine ranging from One Thousand Pesos (P1,000) to Thirty
Thousand Pesos (P30,000), in the discretion of the Commission. purpose of influencing the results of the elections (B.P. Blg. 881, Sec. 94; Resolution No.
The fine shall be paid within thirty (30) days from receipt of notice of such failure; 2348, Sec. 1). Thus, laws and regulations prescribe what contributions are prohibited (B.P.
otherwise, it shall be enforceable by a writ of execution issued by the Commission Blg. 881, Sec. 95, Resolution No. 2348, Sec. 4), or unlawful (B.P. Blg. 881, Sec. 96), and
against the properties of the offender. what expenditures are authorized (B.P. Blg. 881, Sec. 102; R.A. No. 7166, Sec. 13;
For the commission of a second or subsequent offense under this section, the Resolution No. 2348, Sec. 7) or lawful (Resolution No. 2348, Sec. 8). Such statutes are not
administrative fine shall be from Two Thousand Pesos (P2,000) to Sixty Thousand peculiar to the Philippines. In "corrupt and illegal practices acts" of several states in the
Pesos (P60,000), in the discretion of the Commission. In addition, the offender shall United States, as well as in federal statutes, expenditures of candidates are regulated by
be subject to perpetual disqualification to hold public office.
requiring the filing of statements of expenses and by limiting the amount of money that may
Petitioner argues that he cannot be held liable for failure to file a statement of contributions be spent by a candidate. Some statutes also regulate the solicitation of campaign
and expenditures because he was a "non-candidate," having withdrawn his certificates of contributions (26 Am Jur 2d, Elections § 287). These laws are designed to compel publicity
candidacy three days after its filing. Petitioner posits that "it is . . . clear from the law that with respect to matters contained in the statements and to prevent, by such publicity, the
improper use of moneys devoted by candidates to the furtherance of their ambitions (26 Am
Jur 2d, Elections § 289). These statutes also enable voters to evaluate the influences exerted no such charge, of utilizing his aborted candidacy for purposes to raise funds or to extort money from
on behalf of candidates by the contributors, and to furnish evidence of corrupt practices for other candidates in exchange for the withdrawal.
annulment of elections (Sparkman v. Saylor [Court of Appeals of Kentucky], 180 Ky. 263, 202 I, therefore, vote to grant the petition.
S.W. 649 [1918]). Padilla, J., concurs.
Separate Opinions
State courts have also ruled that such provisions are mandatory as to the requirement of MELO, J., dissenting:
filing (State ex rel. Butchofsky v. Crawford [Court of Civil Appeals of Texas], 269 S.W. 2d 536 The majority opinion is to the effect that every candidate, including one who has withdrawn his
[1954]; Best v. Sidebottom, 270 Ky. 423,109 S.W. 2d 826 [1937]; Sparkman v. certificate of candidacy, is obliged to file his statement of contributions and expenditures in line with
Saylor, supra.) Section 14 of Republic Act No. 7166 vis-a-vis the pertinent portions of Comelec Resolution No. 2348. I
must concede that the use of the word "shall" in the main statute as well as the implementing rules
It is not improbable that a candidate who withdrew his candidacy has accepted contributions generally suggest mandatoriness as to cover all candidates.
and incurred expenditures, even in the short span of his campaign. The evil sought to be But is an aspirant for public office who had a sudden change of heart, so to speak, still considered a
prevented by the law is not all too remote. candidate to begin with? I am of the impression that he is not and is thus not bound to render an
It is notesworthy that Resolution No. 2348 even contemplates the situation where a accounting subsequent to election for the simple reason that the term 'candidate' is used to designate a
candidate may not have received any contribution or made any expenditure. Such a person who actually submits himself and is voted for at our election (Santos vs. Miranda, 35 Phil. 643,
648 (1916) citing State vs. Hirsch, 125 Ind., 207; 9 L.R.A. 107; Moreno, Philippine Law Dictionary, 1972
candidate is not excused from filing a statement, and is in fact required to file a statement to
2nd ed., p. 84) Certainly, one who withdraws his certificate of candidacy 3 days after the filing thereof,
that effect. Under Section 15 of Resolution No. 2348, it is provided that "[i]f a candidate or
can not be voted for at an election. And considering the shortness of the period of 3 days from the
treasurer of the party has received no contribution, made no expenditure, or has no pending filing to the withdrawal of the certificate of candidacy, petitioner cannot be accused, as indeed there is
obligation, the statement shall reflect such fact." no such charge, of utilizing his aborted candidacy for purposes to raise funds or to extort money from
Lastly, we note that under the fourth paragraph of Section 73 of the B.P. Blg. 881 or the other candidates in exchange for the withdrawal.
Omnibus Election Code of the Philippines, it is provided that "[t]he filing or withdrawal of I, therefore, vote to grant the petition.
certificate of candidacy shall not affect whatever civil, criminal or administrative liabilities Padilla, J., concurs.
which a candidate may have incurred." Petitioner's withdrawal of his candidacy did not
extinguish his liability for the administrative fine.
WHEREFORE, the petition is DISMISSED. SECOND DIVISION
Narvasa, C.J., Feliciano, Regalado, Davide, Jr., Romero, Bellosillo, Puno, Vitug, Mendoza and [G.R. No. 110898. February 20, 1996]
Francisco, JJ., concur. PEOPLE OF THE PHILIPPINES, petitioner, vs. HON. JUDGE ANTONIO C.
Kapunan, J., is on leave. EVANGELISTA, as Presiding Judge of Branch XXI, 10th Judicial Region, RTC of
Misamis Oriental, Cagayan de Oro City, and GRILDO S. TUGONON, respondents.
DECISION
Separate Opinions MENDOZA, J.:
MELO, J., dissenting: Private respondent Grildo S. Tugonan was charged with frustrated homicide in the
The majority opinion is to the effect that every candidate, including one who has withdrawn his
Regional Trial Court of Misamis Oriental (Branch 21), the information against him alleging
certificate of candidacy, is obliged to file his statement of contributions and expenditures in line with
Section 14 of Republic Act No. 7166 vis-a-vis the pertinent portions of Comelec Resolution No. 2348. I That on or about the 26th day of May, 1988, at more or less 9:00 oclock in the evening at
must concede that the use of the word "shall" in the main statute as well as the implementing rules Barangay Poblacion, Municipality of Villanueva, Province of Misamis Oriental, Republic of the
generally suggest mandatoriness as to cover all candidates. Philippines and within the jurisdiction of this Honorable Court, the abovenamed accused with
But is an anspirant for public office who had a sudden change of heart, so to speak, still considered a intent to kill and with the use of a knife, which he was then conveniently provided of, did
candidate to begin with? I am of the impression that he is not and is thus not bound to render an then and there willfully, unlawfully and feloniously assault, attack and stab Roque T. Bade
accounting subsequent to election for the simple reason that the term 'candidate' is used to designate a thereby inflicting upon him the following injuries, to wit:
person who actually submits himself and is voted for at our election (Santos vs. Miranda, 35 Phil. 643,
648 (1916) citing State vs. Hirsch, 125 Ind., 207; 9 L.R.A. 107; Moreno, Philippine Law Dictionary, 1972 Stab wound, right iliac area,
2nd ed., p. 84) Certainly, one who withdraws his certificate of candidacy 3 days after the filing thereof, 0.5 cm. penetrating non
can not be voted for at an election. And considering the shortness of the period of 3 days from the perforating lacerating posterior
filing to the withdrawal of the certificate of candidacy, petitioner cannot be accused, as indeed there is peritoneum, 0.5 cm.
thus performing all the acts of execution which would produce the crime of Homicide as a The RTC set aside the Probation Officers recommendation and granted private
consequence but which, nevertheless, did not produce it by reason of causes independent of respondents application for probation in its order of April 23, 1993.6 Hence this petition by
the will of the accused, that is by timely medical attendance which prevented his death. the prosecution.
CONTRARY TO and in violation of Article 249 in relation to Article 6 of the Revised Penal The issue in this case is whether the RTC committed a grave abuse of its discretion by
Code. granting private respondents application for probation despite the fact that he had appealed
After trial he was found guilty and sentenced to one year of prision correccional in its from the judgment of his conviction of the trial court.
minimum period and ordered to pay to the offended party P5,000.00 for medical expense, The Court holds that it did. Until its amendment by P.D. No. 1990 in 1986, it was
without subsidiary imprisonment, and the costs. The RTC appreciated in his favor the possible under P.D. No. 986, otherwise known as the Probation Law, for the accused to take
privileged mitigating circumstances of incomplete self-defense and the mitigating his chances on appeal by allowing probation to be granted even after an accused had
circumstance of voluntary surrender. appealed his sentence and failed to obtain an acquittal, just so long as he had not yet started
On appeal the Court of Appeals affirmed private respondents conviction but modified his to serve the sentence.7 Accordingly, in Santos To v. Pao, it was held that the fact that the
sentence by imposing on him an indeterminate penalty of 2 months of arresto mayor, as accused had appealed did not bar him from applying for probation especially because it was
minimum, to 2 years and 4 months of prision correccional, as maximum.1 as a result of the appeal that his sentencewas reduced and made the probationable limit.
On December 21., 1992, respondent Judge Antonio C. Evangelista of the RTC set the The law was, however, amended by P.D. No. 1990 which took effect
case for repromulgation of January 4, 1993. on January 15, 19868 precisely put a stop to the practice of appealing from judgments of
On December 28, 1992, private respondent filed a petition for probation,2 alleging that conviction even if the sentence is probationable for the purpose of securing an acquittal and
(1) he possessed all the qualifications and none of the disqualifications for probation under applying for probation only if the accused fails in his bid. Thus, as amended by P.D. No.
P.D. No. 968, as amended; (2) the Court of Appeals had in fact reduced the penalty imposed 1990, 4 of the Probation Law now reads:
on him by the trial court; (3) in its resolution, the Court of Appeals took no action on a 4. Grant of Probation. Subject to the provisions of this Decree, the trial court may, after it
petition for probation which he had earlier filed with it so that the petition could be filed with shall have convicted and sentenced a defendant, and upon application by said
the trial court; (4) in the trial courts decision, two mitigating circumstances of incomplete defendant within the period for perfecting an appeal, suspend the execution of the sentence
self-defense and voluntary surrender were appreciated in his favor; and (5) in Santos To v. and place the defendant on probation for such period and upon such terms and conditions as
Pao,3 the Supreme Court upheld the right of the accused to probation notwithstanding the it may deem best; Provided, That no application for probation shall be entertained or granted
fact that he had appealed from his conviction by the trial court. if the defendant has perfected the appeal from the judgment of conviction. Probation may be
On February 2, 1993, the RTC ordered private respondent to report for interview to the granted whether the sentence imposes a term of imprisonment or a fine only. An application
Provincial Probation Officer. The Provincial Probation Officer on the other hand was required for probation shall be filed with the trial court. The filing of the application shall be deemed a
to submit his report with recommendation to the court within 60 days.4 waiver of the right to appeal. An order granting or denying probation shall not be appealable.
(Italics added)
On February 18, 1993, Chief Probation and Parole Officer Isias B. Valdehueza
recommended denial of private respondents application for probation on the ground that by Since private respondent filed his application for probation on December 28, 1992, after
appealing the sentence of the trial court, when he could have then applied for probation, P.D. No. 1990 had taken effect, 9 it is covered by the prohibition that no application for
private respondent waived the right to make his application. The Probation Officer probation shall be entertained or granted if the defendant has perfected the appeal from the
thought the present case to be distinguishable from Santos To v. Pao in the sense that in this judgment of conviction and that the filing of the application shall be deemed a waiver of the
case the original sentence imposed on private respondent by the trial court (1 year of right to appeal. Having appealed from the judgment of the trial court and having applied for
imprisonment) was probationable and there was no reason for private respondent not to probation only after the Court of Appeals had affirmed his conviction, private respondent was
have filed his application for probation then, whereas in Santos To v. Pao the penalty only clearly precluded from the benefits of probation.
became probationable after it had been reduced as a result of the appeal. Private respondent argues, however, that a distinction should be drawn between
On April 16, 1993 Valdehueza reiterated his respectful recommendation that private
5 meritorious appeals (like his appeal notwithstanding the appellate courts affirmance of his
respondents application for probation be denied and that a warrant of arrest be issued for conviction) and unmeritorious appeals. But the law does not make any distinction and so
him to serve his sentence in jail. neither should the Court. In fact if an appeal is truly meritorious the accused would be set
free and not only given probation. Private respondents original sentence (1 year of prision
correccional in its minimum period) and the modified sentence imposed by the Court of named accused, did, then and there willfully, unlawfully and feloniously make or draw
Appeals (2 months of arresto mayor, as minimum, to 2 years and 4 months of prision and issue to ROBERTO Z. LORAYEZ, to apply on account or for value a Depositors
correccional, as maximum) are probationable. Thus the fact that he appealed meant that Trust Company Check No. 3371 antedated March 31, 1987, payable to herein
complainant in the total amount of U.S. $2,500.00 equivalent to P50,000.00, said
private respondent was taking his chances which the law precisely frowns upon. This is
accused well knowing that at the time of issue he had no sufficient funds in or credit
precisely the evil that the amendment in P.D. No. 1990 sought to correct, since in the words
with drawee bank for payment of such check in full upon its presentment which
of the preamble to the amendatory law, probation was not intended as an escape hatch and check when presented to the drawee bank within ninety (90) days from the date
should not be used to obstruct and delay the administration of justice, but should be availed thereof was subsequently dishonored for the reason "INSUFFICIENT FUNDS" and
of at the first opportunity by offenders who are willing to be reformed and rehabilitated. despite receipt of notice of such dishonor said accused failed to pay said ROBERTO Z.
LORAYEZ the amount of P50,000.00 of said check or to make arrangement for full
The ruling of the RTC that [h]aving not perfected an appeal against the Court of Appeals
payment of the same within five (5) banking days after receiving said notice.
decision, [private respondent] is, therefore, not covered by [the amendment in] P.D. 1990 is
an obvious misreading of the law. The perfection of the appeal referred in the law refers to After arraignment and after private respondent had testified on direct examination, petitioner
the appeal taken from a judgment of conviction by the trial court and not that of the moved to dismiss the Information on the following grounds: (a) Respondent court has no
appellate court, since under the law an application for probation is filed with the trial court jurisdiction over the offense charged; and (b) That no offense was committed since the
which can only grant the same after it shall have convicted and sentenced [the] defendant, check involved was payable in dollars, hence, the obligation created is null and void pursuant
and upon application by said defendant within the period for perfecting an appeal. to Republic Act No. 529 (An Act to Assure Uniform Value of Philippine Coin and Currency).
Accordingly, in Llamado v. Court of Appeals,10 it was held that the petitioner who had On July 19, 1988, respondent court issued its first questioned orders stating:
appealed his sentence could not subsequently apply for probation. Accused's motion to dismiss dated July 5, 1988, is denied for lack of merit.
WHEREFORE, the petition is GRANTED and the order of April 23, 1993 of the Regional Under the Bouncing Checks Law (B.P. Blg. 22), foreign checks, provided they are
Trial Court of Misamis Oriental (Branch 21) granting probation to private respondent Grildo S. either drawn and issued in the Philippines though payable outside thereof, or made
Tugonon is SET ASIDE. payable and dishonored in the Philippines though drawn and issued outside thereof,
SO ORDERED. are within the coverage of said law. The law likewise applied to checks drawn against
current accounts in foreign currency.
Petitioner moved for reconsideration but his motion was subsequently denied by respondent
G.R. No. 87416 April 8, 1991 court in its order dated September 6, 1988, and which reads:
CECILIO S. DE VILLA, petitioner, Accused's motion for reconsideration, dated August 9, 1988, which was opposed by
the prosecution, is denied for lack of merit.1âwphi1
vs.
The Bouncing Checks Law is applicable to checks drawn against current accounts in
THE HONORABLE COURT OF APPEALS, PEOPLE OF THE PHILIPPINES, HONORABLE foreign currency (Proceedings of the Batasang Pambansa, February 7, 1979, p. 1376,
JOB B. MADAYAG, and ROBERTO Z. LORAYES, respondents. cited in Makati RTC Judge (now Manila City Fiscal) Jesus F. Guerrero's The
San Jose Enriquez, Lacas Santos & Borje for petitioner. Ramifications of the Law on Bouncing Checks, p. 5). (Rollo, Annex "A", Decision, pp.
Eduardo R. Robles for private respondent. 20-22).
A petition for certiorari seeking to declare the nullity of the aforequoted orders dated July 19,
PARAS, J.: 1988 and September 6, 1988 was filed by the petitioner in the Court of Appeals wherein he
This petition for review on certiorari seeks to reverse and set aside the decision* of the Court contended:
of Appeals promulgated on February 1, 1989 in CA-G.R. SP No. 16071 entitled "Cecilio S. de (a) That since the questioned check was drawn against the dollar account of
Villa vs. Judge Job B. Madayag, etc. and Roberto Z. Lorayes," dismissing the petition petitioner with a foreign bank, respondent court has no jurisdiction over the same or
for certiorari filed therein. with accounts outside the territorial jurisdiction of the Philippines and that Batas
The factual backdrop of this case, as found by the Court of Appeals, is as follows: Pambansa Bilang 22 could have not contemplated extending its coverage over dollar
On October 5, 1987, petitioner Cecilio S. de Villa was charged before the Regional Trial Court accounts;
of the National Capital Judicial Region (Makati, Branch 145) with violation of Batas Pambansa (b) That assuming that the subject check was issued in connection with a private
Bilang 22, allegedly committed as follows: transaction between petitioner and private respondent, the payment could not be
That on or about the 3rd day of April 1987, in the municipality of Makati, Metro legally paid in dollars as it would violate Republic Act No. 529; and
Manila, Philippines and within the jurisdiction of this Honorable Court, the above- (c) That the obligation arising from the issuance of the questioned check is null and
void and is not enforceable with the Philippines either in a civil or criminal suit. Upon
S t a t u t o r y C o n s t r u c t i o n S e p t e m b e r 4 P a g e | 10
such premises, petitioner concludes that the dishonor of the questioned check cannot over the person of the accused upon the filing of a complaint or information in court which
be said to have violated the provisions of Batas Pambansa Bilang 22. (Rollo, Annex initiates a criminal action (Republic vs. Sunga, 162 SCRA 191 [1988]).
"A", Decision, p. 22). Moreover, it has been held in the case of Que v. People of the Philippines (154 SCRA 160
On February 1, 1989, the Court of Appeals rendered a decision, the decretal portion of which [1987] cited in the case of People vs. Grospe, 157 SCRA 154 [1988]) that "the determinative
reads: factor (in determining venue) is the place of the issuance of the check."
WHEREFORE, the petition is hereby dismissed. Costs against petitioner. On the matter of venue for violation of Batas Pambansa Bilang 22, the Ministry of
SO ORDERED. (Rollo, Annex "A", Decision, p. 5) Justice, citing the case of People vs. Yabut (76 SCRA 624 [1977], laid down the following
A motion for reconsideration of the said decision was filed by the petitioner on February 7, guidelines in Memorandum Circular No. 4 dated December 15, 1981, the pertinent portion of
1989 (Rollo, Petition, p. 6) but the same was denied by the Court of Appeals in its resolution which reads:
dated March 3, 1989 (Rollo, Annex "B", p. 26). (1) Venue of the offense lies at the place where the check was executed and
delivered; (2) the place where the check was written, signed or dated does not
Hence, this petition. necessarily fix the place where it was executed, as what is of decisive importance is
In its resolution dated November 13, 1989, the Second Division of this Court gave due course the delivery thereof which is the final act essential to its consummation as an
obligation; . . . (Res. No. 377, s. 1980, Filtex Mfg. Corp. vs. Manuel Chua, October 28,
to the petition and required the parties to submit simultaneously their respective memoranda
1980)." (See The Law on Bouncing Checks Analyzed by Judge Jesus F. Guerrero,
(Rollo, Resolution, p. 81).
Philippine Law Gazette, Vol. 7. Nos. 11 & 12, October-December, 1983, p. 14).
The sole issue in this case is whether or not the Regional Trial Court of Makati has It is undisputed that the check in question was executed and delivered by the petitioner to
jurisdiction over the case in question. herein private respondent at Makati, Metro Manila. However, petitioner argues that the check
The petition is without merit. Jurisdiction is the power with which courts are invested for in question was drawn against the dollar account of petitioner with a foreign bank, and is
administering justice, that is, for hearing and deciding cases (Velunta vs. Philippine therefore, not covered by the Bouncing Checks Law (B.P. Blg. 22).
Constabulary, 157 SCRA 147 [1988]). But it will be noted that the law does not distinguish the currency involved in the case. As the
trial court correctly ruled in its order dated July 5, 1988:
Jurisdiction in general, is either over the nature of the action, over the subject matter, over Under the Bouncing Checks Law (B.P. Blg. 22), foreign checks, provided they are either drawn
the person of the defendant, or over the issues framed in the pleadings (Balais vs. Balais, and issued in the Philippines though payable outside thereof . . . are within the coverage of
159 SCRA 37 [1988]). said law.
Jurisdiction over the subject matter is determined by the statute in force at the time of It is a cardinal principle in statutory construction that where the law does not distinguish
commencement of the action (De la Cruz vs. Moya, 160 SCRA 538 [1988]). courts should not distinguish.1âwphi1 Parenthetically, the rule is that where the law does not
make any exception, courts may not except something unless compelling reasons exist to
The trial court's jurisdiction over the case, subject of this review, can not be questioned.
justify it (Phil. British Assurance Co., Inc. vs. IAC, 150 SCRA 520 [1987]).
Sections 10 and 15(a), Rule 110 of the Rules of Court specifically provide that:
More importantly, it is well established that courts may avail themselves of the actual
Sec. 10. Place of the commission of the offense. The complaint or information is
proceedings of the legislative body to assist in determining the construction of a statute of
sufficient if it can be understood therefrom that the offense was committed or some
doubtful meaning (Palanca vs. City of Manila, 41 Phil. 125 [1920]). Thus, where there is
of the essential ingredients thereof occured at some place within the jurisdiction of
doubts as to what a provision of a statute means, the meaning put to the provision during the
the court, unless the particular place wherein it was committed constitutes an
legislative deliberation or discussion on the bill may be adopted (Arenas vs. City of San Carlos,
essential element of the offense or is necessary for identifying the offense charged.
82 SCRA 318 [1978]).
Sec. 15. Place where action is to be instituted. (a) Subject to existing laws, in all
The records of the Batasan, Vol. III, unmistakably show that the intention of the lawmakers is
criminal prosecutions the action shall be instituted and tried in the court of the
to apply the law to whatever currency may be the subject thereof. The discussion on the floor
municipality or territory where the offense was committed or any of the essential
of the then Batasang Pambansa fully sustains this view, as follows:
ingredients thereof took place.
xxx xxx xxx
In the case of People vs. Hon. Manzanilla (156 SCRA 279 [1987] cited in the case of Lim vs. THE SPEAKER. The Gentleman from Basilan is recognized.
Rodrigo, 167 SCRA 487 [1988]), the Supreme Court ruled "that jurisdiction or venue is MR. TUPAY. Parliamentary inquiry, Mr. Speaker.
determined by the allegations in the information." THE SPEAKER. The Gentleman may proceed.
The information under consideration specifically alleged that the offense was committed in MR. TUPAY. Mr. Speaker, it has been mentioned by one of the Gentlemen who
Makati, Metro Manila and therefore, the same is controlling and sufficient to vest jurisdiction interpellated that any check may be involved, like U.S. dollar checks, etc. We are
upon the Regional Trial Court of Makati. The Court acquires jurisdiction over the case and talking about checks in our country. There are U.S. dollar checks, checks, in our
currency, and many others.
THE SPEAKER. The Sponsor may answer that inquiry. pass in audit its claims for refund even for the reduced amount fixed by the Officer-in-Charge
MR. MENDOZA. The bill refers to any check, Mr. Speaker, and this check may be a of the Exchange Tax Administration, on the theory that toothpaste stabilizers and flavors are
check in whatever currency. This would not even be limited to U.S. dollar checks. The not exempt under section 2 of the Exchange Tax Law.
check may be in French francs or Japanese yen or deutschunorhs. (sic.) If drawn,
then this bill will apply. Petitioner appealed to the Auditor General, but the latter or, December 4, 1958 affirmed the
MR TUPAY. So it include U.S. dollar checks. ruling of the auditor of the Central Bank, maintaining that the term "stabilizer and flavors"
MR. MENDOZA. Yes, Mr. Speaker. mentioned in section 2 of the Exchange Tax Law refers only to those used in the preparation
xxx xxx xxx or manufacture of food or food products. Not satisfied, the petitioner brought the case to this
(p. 1376, Records of the Batasan, Volume III; Emphasis supplied). Court thru the present petition for review.
PREMISES CONSIDERED, the petition is DISMISSED for lack of merit.
The decisive issue to be resolved is whether or not the foreign exchange used by petitioner
Melencio-Herrera, Padilla, Sarmiento and Regalado, JJ., concur.
for the importation of dental cream stabilizers and flavors is exempt from the 17% special
excise tax imposed by the Exchange Tax Law, (Republic Act No. 601) so as to entitle it to
refund under section 2 thereof, which reads as follows:
SEC, 2. The tax collected under the preceding section on foreign exchange used for the
G.R. No. L-14787 January 28, 1961 payment of the cost, transportation and/or other charges incident to importation into the
COLGATE-PALMOLIVE PHILIPPINE, INC., petitioner, Philippines of rice, flour, canned milk, cattle and beef, canned fish, soya beans, butterfat,
vs. chocolate, malt syrup, tapioca, stabilizer and flavors, vitamin concentrate, fertilizer, poultry
HON. PEDRO M. GIMENEZ as Auditor General and ISMAEL MATHAY as AUDITOR feed; textbooks, reference books, and supplementary readers approved by the Board of
OF THE CENTRAL BANK OF THE PHILIPPINES, respondents. Textbooks and/or established public or private educational institutions; newsprint imported by
or for publishers for use in the publication of books, pamphlets, magazines and newspapers;
Ross, Selph and Carrascoso for petitioner.
book paper, book cloth, chip board imported for the printing of supplementary readers
Office of the Solicitor General for respondents. (approved by the Board of Textbooks) to be supplied to the Government under contracts
GUTIERREZ DAVID, J.: perfected before the approval of this Act, the quantity thereof to be certified by the Director of
The petitioner Colgate-Palmolive Philippines, Inc. is a corporation duly organized and existing Printing; anesthetics, anti-biotics, vitamins, hormones, x-ray films, laboratory reagents,
under Philippine laws engaged in the manufacture of toilet preparations and household biologicals, dental supplies, and pharmaceutical drugs necessary for compounding medicines;
remedies. On several occasions, it imported from abroad various materials such as irish moss medical and hospital supplies listed in the appendix to this Act, in quantities to be certified by
extract, sodium benzoate, sodium saccharinate precipitated calcium carbonate and dicalcium the Director of Hospitals as actually needed by the hospitals applying therefor; drugs and
phosphate, for use as stabilizers and flavoring of the dental cream it manufactures. For every medicines listed in the said appendix; and such other drugs and medicines as may be certified
importation made of these materials, the petitioner paid to the Central Bank of the by the Secretary of Health from time to time to promote and protect the health of the people
of the Philippines shall be refunded to any importer making application therefor, upon
Philippines the 17% special excise tax on the foreign exchange used for the payment of the
satisfactory proof of actual importation under the rules and regulations to be promulgated
cost, transportation and other charges incident thereto, pursuant to Republic Act No. 601, as pursuant to section seven thereof." (Emphasis supplied.)
amended, commonly known as the Exchange Tax Law.
The ruling of the Auditor General that the term "stabilizer and flavors" as used in the law
On March 14, 1956, the petitioner filed with the Central Bank three applications for refund of refers only to those materials actually used in the preparation or manufacture of food and
the 17% special excise tax it had paid in the aggregate sum of P113,343.99. The claim for food products is based, apparently, on the principle of statutory construction that "general
refund was based on section 2 of Republic Act 601, which provides that "foreign exchange terms may be restricted by specific words, with the result that the general language will be
used for the payment of the cost, transportation and/or other charges incident to the limited by the specific language which indicates the statute's object and purpose." (Statutory
importation into the Philippines of . . . stabilizer and flavors . . . shall be refunded to any Construction by Crawford, 1940 ed. p. 324-325.) The rule, however, is, in our opinion,
importer making application therefor, upon satisfactory proof of actual importation under the applicable only to cases where, except for one general term, all the items in an enumeration
rules and regulations to be promulgated pursuant to section seven thereof." After the belong to or fall under one specific class. In the case at bar, it is true that the term "stabilizer
applications were processed by the officer-in-charge of the Exchange Tax Administration of and flavors" is preceded by a number of articles that may be classified as food or food
the Central Bank, that official advised, the petitioner that of the total sum of P113,343.99 products, but it is likewise true that the other items immediately following it do not belong to
claimed by it for refund, the amount of P23,958.13 representing the 17% special excise tax the same classification. Thus "fertilizer" and "poultry feed" do not fall under the category of
on the foreign exchange used to import irish moss extract, sodium benzoate and precipitated food or food products because they are used in the farming and poultry industries,
calcium carbonate had been approved. The auditor of the Central Bank, however, refused to respectively. "Vitamin concentrate" appears to be more of a medicine than food or food
product, for, as matter of fact, vitamins are among those enumerated in the list of medicines
and drugs appearing in the appendix to the law. It should also here be stated that "cattle", This case puts in issue the authority of the Presidential Commission on Good Government
which is among those listed preceding the term in question, includes not only those intended (PCGG), through the New Armed Forces of the Philippines Anti-Graft Board (hereinafter
for slaughter but also those for breeding purposes. Again, it is noteworthy that under, referred to as the "Board"), to investigate and cause the prosecution of petitioner, a retired
Republic Act No. 814 amending the above-quoted section of Republic Act No. 601, "industrial military officer, for violation of Republic Acts Nos. 3019 and 1379.
starch", which does not always refer to food for human consumption, was added among the
items grouped with "stabilizer and flavors". Thus, on the basis of the grouping of the articles Assailed by the Republic in this petition for certiorari, prohibition and/or mandamus with
alone, it cannot validly be maintained that the term "stabilizer and flavors" as used in the prayer for the issuance of a writ of preliminary injunction and/or temporary restraining order
above-quoted provision of the Exchange Tax Law refers only to those used in the are the orders of respondent judge in Civil Case No. 57092 Branch 151 of the Regional Trial
manufacture of food and food products. This view is supported by the principle "Ubi lex non Court of Pasig, Metro Manila: (1) dated June 23, 1989, denying petitioners’ Motion to Dismiss
distinguish nec nos distinguire debemos", or "where the law does not distinguish, neither do and Opposition, and (2) dated June 26, 1989, granting private respondent’s application for
we distinguish". (Ligget & Myers Tobacco Company vs. Collector of Internal Revenue, 53 Off. the issuance of a writ of preliminary injunction. Thus, the petition seeks the annulment of the
Gaz. No. 15, page 4831). Since the law does not distinguish between "stabilizer and flavors" two orders, the issuance of an injunction to enjoin respondent judge from proceeding with
used in the preparation of food and those used in the manufacture of toothpaste or dental Civil Case No. 57092 and, finally, the dismissal of the case before the trial court.
cream, we are not authorized to make any distinction and must construe the words in their The controversy traces its roots to the order of then PCGG Chairman Jovito R. Salonga, dated
general sense. The rule of construction that general and unlimited terms are restrained and May 13, 1986, which created the New Armed Forces of the Philippines Anti-Graft Board. The
limited by particular recitals when used in connection with them, does not require the Board was created to "investigate the unexplained wealth and corrupt practices of AFP
rejection of general terms entirely. It is intended merely as an aid in ascertaining the personnel, both retired and in active service." The order further stated that" [t]he Board shall
intention of the legislature and is to be taken in connection with other rules of construction. be primarily charged with the task of investigating cases of alleged violations of the Anti-
(See Handbook of the Construction and Interpretation of Laws by Black, p. 215.216, 2nd ed.) Graft and Corrupt Practices Act (Republic Act No. 3019, as amended) and shall make the
Having arrived at the above conclusion, we deem it now idle to pass upon the other necessary recommendations to appropriate government agencies and instrumentalities with
questions raised by the parties. respect to the action to be taken thereon based on its findings."cralaw virtua1aw library
WHEREFORE, the decision under review is reversed and the respondents are hereby ordered Acting on information received by the Board, which indicated the acquisition of wealth
to audit petitioners applications for refund which were approved by the Officer-in-Charge of beyond his lawful income, private respondent Lt. Col. Troadio Tecson (ret.) was required by
the Exchange Tax Administration in the total amount of P23,958.13. the Board to submit his explanation/comment together with his supporting evidence by
Bengzon, Bautista Angelo, Concepcion, Reyes, J.B.L., Barrera, Paredes and Dizon, October 31, 1987 [Annex "B", Petition]. Private respondent requested, and was granted,
JJ., concur. several postponements, but was unable to produce his supporting evidence because they
Labrador, J., reserves his vote. were allegedly in the custody of his bookkeeper who had gone abroad.
Just the same, the Board proceeded with its investigation and submitted its resolution, dated
June 30, 1988, recommending that private respondent be prosecuted and tried for violation
of Rep. Act No. 3019, as amended, and Rep. Act No. 1379, as amended.chanrobles lawlibrary
[G.R. No. 89483. August 30, 1990.]
: rednad
REPUBLIC OF THE PHILIPPINES THRU: THE PRESIDENTIAL COMMISSION ON
GOOD GOVERNMENT (PCGG), AFP ANTI-GRAFT BOARD, COL. ERNESTO A. The case was set for preliminary investigation by the PCGG. Private respondent moved to
PUNSALANG and PETER T. TABANG, Petitioners, v. HON. EUTROPIO MIGRINO, as dismiss the case on the following grounds: (1) that the PCGG has no jurisdiction over his
Presiding Judge, Regional Trial Court, NCJR, Branch 151, Pasig, Metro Manila and person; (2) that the action against him under Rep. Act No. 1379 has already prescribed; (3)
TROADIO TECSON, Respondents. that E.O. No. 14, insofar as it suspended the provisions of Rep. Act No. 1379 on prescription
The Solicitor General, for Petitioners. of actions, was inapplicable to his case; and (4) that having retired from the AFP on May 9,
Pacifico B. Advincula for Private Respondent. 1984, he was now beyond the reach of Rep. Act No. 3019. The Board opposed the motion to
dismiss.
DECISION In a resolution dated February 8, 1989, the PCGG denied the motion to dismiss for lack of
CORTES, J.: merit. Private respondent moved for reconsideration but this was denied by the PCGG in a
resolution dated March 8, 1989. Private respondent was directed to submit his counter- The pivotal issue is the second one. On this point, private respondent’s position is as
affidavit and other controverting evidence on March 20, 1989 at 2:00 p.m. follows:chanrob1es virtual 1aw library
On March 13, 1989, private respondent filed a petition for prohibition with preliminary 1. . . . he is not one of the subordinates contemplated in Executive Orders 1 , 2 , 14 and 14-
injunction with the Regional Trial Court in Pasig, Metro Manila. The case was docketed as A as the alleged illegal acts being imputed to him, that of alleged amassing wealth beyond
Case No. 57092 and raffled to Branch 151, respondent judge’s court. Petitioner filed a motion his legal means while Finance Officer of the Philippine Constabulary, are acts of his own
to dismiss and opposed the application for the issuance of a writ of preliminary injunction on alone, not connected with his being a crony, business associate, etc. or subordinate as the
the principal ground that the Regional Trial Court had no jurisdiction over the Board, citing petition does not allege so. Hence the PCGG has no jurisdiction to investigate him.
the case of PCGG v. Peña, G.R. No. 77663, April 12, 1988, 159 SCRA 556. Private respondent If indeed private respondent amassed wealth beyond his legal means, the procedure laid
opposed the motion to dismiss. Petitioner replied to the opposition. down by Rep. Act 1379 as already pointed out before be applied. And since, he has been
On June 23, 1989, respondent judge denied petitioner’s motion to dismiss. On June 26, separated from the government more than four years ago, the action against him under
1989, respondent judge granted the application for the issuance of a writ of preliminary Republic Act 1379 has already prescribed.
injunction, enjoining petitioners from investigating or prosecuting private respondent under 2. . . . no action can be filed anymore against him now under Republic Act 1379 for recovery
Rep. Acts Nos. 3019 and 1379 upon the filing of a bond in the amount of Twenty Thousand of unexplained wealth for the reason that he has retired more than four years ago.
Pesos (P20,000.00).
3. . . . The order creating the AFP Anti-Graft Board (Annex "A", Petition) is null and void.
Hence, the instant petition. Nowhere in Executive Orders 1, 2, 14 and 14-A is there any authority given to the
On August 29, 1989, the Court issued a restraining order enjoining respondent judge from commission, its chairman and members, to create Boards or bodies to be invested with
enforcing his orders dated June 23, 1989 and June 26, 1989 and from proceeding with Civil powers similar to the powers invested with the commission .. [Comment, pp. 6-7; Rollo, pp.
Case No. 57092. 117-118].
Private respondent filed his comment, to which petitioners filed a reply. A rejoinder to the 1. The most important question to be resolved in this case is whether or not private
reply was filed by private Respondent. The Court gave due course to the petition and the respondent may be investigated and caused to be prosecuted by the Board, an agency of the
parties filed their memoranda. Thereafter, the case was deemed submitted. PCGG, for violation of Rep. Acts Nos. 3019 and 1379. According to petitioners, the PCGG has
The issues raised in the petition are as follows:chanrob1es virtual 1aw library the power to investigate and cause the prosecution of private respondent because he is a
I. "subordinate" of former President Marcos. They cite the PCGG’s jurisdiction over —
WHETHER OR NOT RESPONDENT JUDGE GRAVELY ABUSED HIS DISCRETION OR ACTED (a) The recovery of all ill-gotten wealth accumulated by former President Ferdinand E.
WITHOUT OR IN EXCESS OF JURISDICTION IN ASSUMING JURISDICTION OVER AND Marcos, his immediate family, relatives, subordinates and close associates, whether located
INTERFERING WITH THE ORDERS AND FUNCTIONS OF THE PRESIDENTIAL COMMISSION in the Philippines or abroad, including the takeover or sequestration of all business
ON GOOD GOVERNMENT. enterprises and entities owned or controlled by them, during his administration, directly or
II. through nominees, by taking undue advantage of their public office and/or using their
WHETHER, OR NOT RESPONDENT JUDGE GRAVELY ABUSED HIS DISCRETION OR ACTED powers, authority, influence, connections or relationship. [E.O. No. 1, sec. 2.].
WITHOUT OR IN EXCESS OF JURISDICTION IN ISSUING THE ASSAILED ORDER DATED Undoubtedly, the alleged unlawful accumulation of wealth was done during the
JUNE 26, 1989 ENJOINING PETITIONERS FROM INVESTIGATING AND PROSECUTING administration of Pres. Marcos. However, what has to be inquired into is whether or not
PRIVATE RESPONDENT FOR VIOLATION OF REPUBLIC ACT NO. 3019, OTHERWISE KNOWN private respondent acted as a "subordinate" of Pres. Marcos within the contemplation of E.O.
AS ANTI-GRAFT AND CORRUPT PRACTICES ACT AND REPUBLIC ACT NO. 1379, OTHERWISE No. 1, the law creating the PCGG, when he allegedly unlawfully acquired the properties.
KNOWN AS AN ACT FOR THE FORFEITURE OF UNLAWFULLY ACQUIRED PROPERTY [Rollo,
p. 19]. A close reading of E. O. No. 1 and related executive orders will readily show what is
contemplated within the term "subordinate."cralaw virtua1aw library
As to the first issue, petitioner contends that following the ruling of the Court in PCGG v.
Peña the Board, being a creation and/or extension of the PCGG, is beyond the jurisdiction of The Whereas Clauses of E. O. No. 1 express the urgent need to recover the ill-gotten wealth
the Regional Trial Court. On the second issue, petitioner strongly argues that the private amassed by former President Ferdinand E. Marcos, his immediate family, relatives, and close
respondent’s case falls within the jurisdiction of the PCGG. associates both here and abroad.
E.O. No. 2 freezes "all assets and properties in the Philippines in which former President the world;" and.
Marcos and/or his wife, Mrs. Imelda Romualdez Marcos, their close relatives, subordinates, 2) that certain "business enterprises and properties (were) taken over by the government of
business associates, dummies, agents, or nominees have any interest or participation."cralaw the Marcos Administration or by entities or persons close to former President Marcos."
virtua1aw library [Footnotes deleted].
It does not suffice, as in this case, that the respondent is or was a government official or
Applying the rule in statutory construction known as ejusdem generis, that is — employee during the administration of former Pres. Marcos. There must be a prima facie
[W]here general words follow an enumeration of persons or things, by words of a particular showing that the respondent unlawfully accumulated wealth by virtue of his close association
and specific meaning, such general words are not to be construed in their widest extent, but or relation with former Pres. Marcos and/or his wife. This is so because otherwise the
are to be held as applying only to persons or things of the same kind or class as those respondent’s case will fall under existing general laws and procedures on the matter. Rep.
specifically mentioned [Smith, Bell & Co., Ltd. v. Register of Deeds of Davao, 96 Phil. 53, 58 Act No. 3019, the Anti-Graft and Corrupt Practices Act, penalizes the corrupt practices of any
(1954), citing Black on Interpretation of Laws, 2nd Ed., 203]. public officer. Under Rep. Act No. 1379 (An Act Declaring Forfeited in Favor of the State Any
the term "subordinate" as used in E.O. Nos. 1 and 2 would refer to one who enjoys a close Property Found to Have Been Unlawfully Acquired By Any Public Officer or Employee and
association or relation with former Pres. Marcos and/or his wife, similar to the immediate Providing for the Procedure Therefor), whenever any public officer or employee has acquired
family member, relative, and close associate in E.O. No. 1 and the close relative, business during his incumbency an amount of property which is manifestly out of proportion to his
associate, dummy, agent, or nominee in E.O. No. 2. salary as such public officer or employee and to his other lawful income and the income from
legitimately acquired property, said property shall be presumed prima facie to have been
Thus, as stated by the Court in Bataan Shipyard & Engineering Co., Inc. v. PCGG, G.R. No. unlawfully acquired [Sec. 2]. The Solicitor General shall file the petition and prosecute the
75885, May 27, 1987, 150 SCRA 181, 205-206. case in behalf of the Republic, after preliminary investigation by the provincial or city
The situations envisaged and sought to be governed [by Proclamation No. 3 and E.O. Nos. 1, prosecutor [Ibid].
2 and 14] are self-evident, these being:chanrob1es virtual 1aw library Moreover, the record shows that private respondent was being investigated for unlawfully
1) that" (i)ll gotten properties (were) amassed by the leaders and supporters of the previous acquired wealth under Rep. Acts Nos. 3019 and 1379, and not under E.O. Nos. 1, 2, 14 and
regime" ; 14-A.
a) more particularly, that" (i)ll-gotten wealth (was) accumulated by former President Since private respondent was being investigated by the PCGG through the AFP Anti-Graft
Ferdinand E. Marcos, his immediate family, relatives, subordinates, and close associates, . . . Board it would have been presumed that this was under Rep. Acts Nos. 3019 and 1379 in
located in the Philippines or abroad, xx (and) business enterprises and entities (came to be) relation to E.O. Nos. 1, 2, 14 and 14-A. But the record itself belies this
owned or controlled by them, during . . . (the Marcos) administration, directly or through presumption:chanrob1es virtual 1aw library
nominees, by taking undue advantage of their public office and/or using their powers, (a) The letter of the chairman of the AFP Anti-Graft Board to private respondent, dated
authority, influence, connections or relationship;" October 16, 1987, states: "This letter is in connection with the alleged information received
b) otherwise stated, that "there are assets and properties pertaining to former President by the AFP Anti-Graft Board indicating your acquisition of wealth beyond legal means of
Ferdinand E. Marcos, and/or his wife Mrs. Imelda Romualdez Marcos, their close relatives, income in violation of Rep. Act No. 3019 known as the Anti-Graft and Corrupt Practices Act."
subordinates, business associates, dummies, agents or nominees which had been or were (b) The Resolution dated June 30, 1988 of the Board categorically states:chanrob1es virtual
acquired by them directly or indirectly, through or as a result of the improper or illegal use of 1aw library
funds or properties owned by the Government of the Philippines or any of its branches,
instrumentalities, enterprises, banks or financial institutions, or by taking undue advantage of I. PRELIMINARY STATEMENT:chanrob1es virtual 1aw library
their office, authority, influence, connections or relationship, resulting in their unjust
enrichment and causing grave damage and prejudice to the Filipino people and the Republic This refers to the case against Col Troadio B. Tecson PC (Ret) for alleged unexplained wealth
of the Philippines" ; pursuant to R.A. 3019, as amended, otherwise known as Anti-Graft and Corrupt Practices Act
and R.A. 1379, as amended, otherwise known as the "Act for Forfeiture of Unlawfully
c) that "said assets and properties are in the form of bank accounts, deposits, trust accounts, Acquired Property." [Rollo, p. 43].
shares of stocks, buildings, shopping centers, condominiums, mansions, residences, estates,
and other kinds of real and personal properties in the Philippines and in various countries of The resolution alleges that private respondent unlawfully accumulated wealth by taking
advantage of his office as Finance Officer of the Philippine Constabulary. No attempt is made
in the Board’s resolution to link him or his accumulation of wealth to former Pres. Marcos 3. Petitioner assails the trial court’s cognizance of the petition filed by private Respondent.
and/or his wife. Particularly, petitioner argues that the trial court cannot acquire jurisdiction over the PCGG.
This matter has already been settled in Peña, supra, where the Court ruled that those who
(c) The letter of the Board chairman to the chairman of the PCGG, dated July 28, 1988, is wish to question or challenge the PCGG’s acts or orders must seek recourse in the
clear:chanrob1es virtual 1aw library Sandiganbayan, which is vested with exclusive and original jurisdiction. The Sandiganbayan’s
Respectfully transmitted herewith for the prosecution before the Sandiganbayan is the case decisions and final orders are in turn subject to review on certiorari exclusively by this Court.
folder of COLONEL TROADIO TECSON (Ret) who after preliminary investigation of the case [Ibid, at pp. 564-565].
by the Board, found a prima facie evidence against subject officer for violating Section 8, The ruling in Peña was applied in PCGG v. Aquino, G.R. No. 77816, June 30, 1988, 163 SCRA
R.A. 3019, as amended by BP 195, otherwise known as the Anti-Graft and Corrupt Practices 363, Soriano III v. Yuson, G.R. No. 74910 (and five other cases), August 10, 1988, 164 SCRA
Act and R.A. 1379, otherwise known as an Act for the Forfeiture of Unlawfully Acquired 226 and Olaguer v. RTC, NCJR, Br. 48, G.R. No. 81385, February 21, 1989, 170 SCRA 478,
Property." [Rollo, p. 46]. among others, to enjoin the regional trial courts from interfering with the actions of the
Moreover, from the allegations of petitioner in its memorandum, it would appear that private PCGG.
respondent accumulated his wealth for his own account. Petitioner quoted the letter of Respondent judge clearly acted without or in excess of his jurisdiction when he took
Ignacio Datahan, a retired PC sergeant, to General Fidel Ramos, the material portion of cognizance of Civil Case No. 57092 and issued the writ of preliminary injunction against the
which reads:chanrob1es virtual 1aw library PCGG.
. . . After an official in the military unit received an Allotment Advice the same signed a cash 4. Thus, we are confronted with a situation wherein the PCGG acted in excess of its
advance voucher, let us say in the amount of P5,000.00. Without much ado, outright, Col. jurisdiction and, hence, may be enjoined from doing so, but the court that issued the
Tecson paid the amount. The official concerned was also made to sign the receipt portion on injunction against the PCGG has not been vested by law with jurisdiction over it and, thus,
the voucher the amount of which was left blank. Before the voucher is passed for routine the injunction issued was null and void.
processing by Mrs. Leonor Cagas, clerk of Col. Tecson and its facilitator, the maneuver The nullification of the assailed order of respondent judge issuing the writ of preliminary
began. The amount on the face of the cash advance voucher is altered or superimposed. The injunction is therefore in order. Likewise, respondent judge must be enjoined from
original amount of P5,000.00 was now made say, P95,000.00. So it was actually the amount proceeding with Civil Case No. 57092.
of P95,000.00 that appeared on the records. The difference of P90,000.00 went to the
syndicate. But in view of the patent lack of authority of the PCGG to investigate and cause the
prosecution of private respondent for violation of Rep. Acts Nos. 3019 and 1379, the PCGG
. . . Boy Tanyag, bookkeeper in Col. Tecson’s office took care of the work. must also be enjoined from proceeding with the case, without prejudice to any action that
may be taken by the proper prosecutory agency. The rule of law mandates that an agency of
. . . In the liquidation of the altered cash advance amount, names of persons found in the government be allowed to exercise only the powers granted it.
Metropolitan Manila Telephone Directory with fictitious addresses appeared as recipients or
payees. Leonor and Boy got their shares on commission basis of the looted amount while the 5. The pronouncements made above should not be taken to mean that the PCGG’s creation
greater part went to Col. Tecson. [Rollo, pp. 184-185.]. of the AFP Anti-Graft Board is a nullity and that the PCGG has no authority to investigate and
cause the prosecution of members and former members of the Armed Forces of the
Clearly, this alleged unlawful accumulation of wealth is not that contemplated in E.O. Nos. 1, Philippines for violations of Rep. Acts Nos. 3019 and 1379. The PCGG may investigate and
2, 14 and 14-A. cause the prosecution of active and retired members of the AFP for violations of Rep. Acts
2. It will not do to cite the order of the PCGG Chairman, dated May 13, 1986, creating the Nos. 3019 and 1379 only in relation to E.O. Nos. 1, 2, 14 and 14-A, i.e., insofar as they
Board and authorizing it to investigate the unexplained wealth and corrupt practices of AFP involve the recovery of the ill-gotten wealth of former Pres. Marcos and his family and
personnel, both retired and in active service, to support the contention that PCGG has "cronies." But the PCGG would not have jurisdiction over an ordinary case falling under Rep.
jurisdiction over the case of private Respondent. The PCGG cannot do more than what it was Acts Nos. 3019 and 1379, as in the case at bar. E.O. Nos. 1, 2, 14 and 14-A did not envision
empowered to do. Its powers are limited. Its task is limited to the recovery of the ill-gotten the PCGG as the investigator and prosecutor of all unlawful accumulations of wealth. The
wealth of the Marcoses, their relatives and cronies. The PCGG cannot, through an order of its PCGG was created for a specific and limited purpose, as we have explained earlier, and
chairman, grant itself additional powers — powers not contemplated in its enabling law. necessarily its powers must be construed with this in mind.
6. n his pleadings, private respondent contends that he may no longer be prosecuted G.R. No. L-47757-61 January 28, 1980
because of prescription. He relies on section 2 of Rep. Act No. 1379 which provides that" THE PEOPLE OF THE PHILIPPINES, ABUNDIO R. ELLO, As 4th Assistant of
[t]he right to file such petition [for forfeiture of unlawfully acquired wealth] shall prescribe Provincial Bohol VICENTE DE LA SERNA. JR., as complainant all private
within four years from the date of resignation, dismissal or separation or expiration of the prosecutor, petitioners,
term of the officer or employee concerned." He retired on May 9, 1984, or more than six (6) vs.
years ago. However, it must be pointed out that section 2 of Rep. Act No. 1379 should be HON. VICENTE B. ECHAVES, JR., as Judge of the Court of First Instance of Bohol
deemed amended or repealed by Article XI, section 15 of the 1987 Constitution which Branch II, ANO DACULLO, GERONIMO OROYAN, MARIO APARICI, RUPERTO
provides that" [t]he right of the State to recover properties unlawfully acquired by public CAJES and MODESTO S SUELLO, respondents.
officials or employees, from them or from their nominees or transferees, shall not be barred
by prescription, laches, or estoppel." Considering that sec. 2 of Rep. Act No. 1379 was AQUINO, J.:p
deemed amended or repealed before the prescriptive period provided therein had lapsed The legal issue in this case is whether Presidential Decree No. 772, which penalizes squatting
insofar as private respondent is concerned, we cannot say that he had already acquired a and similar acts, applies to agricultural lands. The decree (which took effect on August 20,
vested right that may not be prejudiced by a subsequent enactment. 1975) provides:
SECTION 1. Any person who, with the use of force, intimidation or threat, or taking
Moreover, to bar the Government from recovering ill-gotten wealth would result in the
advantage of the absence or tolerance of the landowner, succeeds in occupying or
validation or legitimization of the unlawful acquisition, a consequence at variance with the possessing the property of the latter against his will for residential, commercial or any
clear intent of Rep. Act No. 1379, which provides:chanrobles virtual lawlibrary other purposes, shall be punished by an imprisonment ranging from six months to
SEC. 11. Laws on prescription. — The laws concerning acquisitive prescription and limitation one year or a fine of not less than one thousand nor more than five thousand pesos
at the discretion of the court, with subsidiary imprisonment in case of insolvency.
of actions cannot be invoked by, nor shall they benefit the respondent, in respect to any
(2nd paragraph is omitted.)
property unlawfully acquired by him.
The record shows that on October 25, 1977 Fiscal Abundio R. Ello filed with the lower court
Thus, we hold that the appropriate prosecutory agencies, i.e., the city or provincial
separate informations against sixteen persons charging them with squatting as penalized by
prosecutor and the Solicitor General under sec. 2 of Rep. Act No. 1379, may still investigate
Presidential Decree No. 772. The information against Mario Aparici which is similar to the
the case and file the petition for the forfeiture of unlawfully acquired wealth against private
other fifteen informations, reads:
respondent, now a private citizen. (On the other hand, as regards respondents for violations
That sometime in the year 1974 continuously up to the present at barangay
of Rep. Acts Nos. 3019 and 1379 who are still in the government service, the agency granted Magsaysay, municipality of Talibon, province of Bohol, Philippines and within the
the power to investigate and prosecute them is the Office of the Ombudsman [Rep. Act No. jurisdiction of this Honorable Court, the above-named accused, with stealth and
6770]). Under Presidential Decree No. 1606, as amended, and Batas Pambansa Blg. 195 strategy, enter into, occupy and cultivate a portion of a grazing land physically
violations of Rep. Acts Nos. 3019 and 1379 shall be tried by the Sandiganbayan. occupied, possessed and claimed by Atty. Vicente de la Serna, Jr. as successor to the
pasture applicant Celestino de la Serna of Pasture Lease Application No. 8919,
7. The Court hastens to add that this decision is without prejudice to the prosecution of
accused's entrance into the area has been and is still against the win of the offended
private respondent under the pertinent provisions of the Revised Penal Code and other party; did then and there willfully, unlawfully, and feloniously squat and cultivate a
related penal laws. portion of the said grazing land; said cultivating has rendered a nuisance to and has
WHEREFORE, the order of respondent judge dated June 26, 1989 in Civil Case No. 57092 is deprived the pasture applicant from the full use thereof for which the land applied for
has been intended, that is preventing applicant's cattle from grazing the whole area,
NULLIFIED and SET ASIDE. Respondent judge is ORDERED to dismiss Civil Case No. 57092.
thereby causing damage and prejudice to the said applicant-possessor-occupant,
The temporary restraining order issued by the Court on August 29, 1989 is MADE
Atty. Vicente de la Serna, Jr. (sic)
PERMANENT. The PCGG is ENJOINED from proceeding with the investigation and prosecution
of private respondent in I.S. No. 37, without prejudice to his investigation and prosecution by Five of the informations, wherein Ano Dacullo, Geronimo Oroyan, Mario Aparici, Ruperto
the appropriate prosecutory agency. Cajes and Modesto Suello were the accused, were raffled to Judge Vicente B. Echaves, Jr. of
Branch II (Criminal Cases Nos. 1824, 1828, 1832, 1833 and 1839, respectively).
SO ORDERED. Before the accused could be arraigned, Judge Echaves motu proprio issued an omnibus order
dated December 9, 1977 dismissing the five informations on the grounds (1) that it was
alleged that the accused entered the land through "stealth and strategy", whereas under the
decree the entry should be effected "with the use of force, intimidation or threat, or taking
advantage of the absence or tolerance of the landowner", and (2) that under the rule applications for the notwithstanding standing the fact that title thereto still remains in
of ejusdem generis the decree does not apply to the cultivation of a grazing land. the Government or for any person, natural or judicial to investigate induce or force
Because of that order, the fiscal amended the informations by using in lieu of "stealth and another to commit such acts.
strategy" the expression "with threat, and taking advantage of the absence of the Violations of the law are punished by a fine of not exceeding one thousand or imprisonment
ranchowner and/or tolerance of the said ranchowner". The fiscal asked that the dismissal for not more than one year, or both such fine and imprisonment in the discretion of the
order be reconsidered and that the amended informations be admitted. court, with subsidiary imprisonment in case of insolvency. (See People vs. Lapasaran 100
The lower court denied the motion. It insisted that the phrase "and for other purposes" in the Phil. 40.)
decree does not include agricultural purposes because its preamble does not mention the
The rule of ejusdem generis (of the same kind or species) invoked by the trial court does not
Secretary of Agriculture and makes reference to the affluent class.
apply to this case. Here, the intent of the decree is unmistakable. It is intended to apply only
From the order of dismissal, the fiscal appealed to this Court under Republic Act No. 5440.
to urban communities, particularly to illegal constructions. The rule of ejusdem generis is
The appeal is devoid of merit.
merely a tool of statutory construction which is resorted to when the legislative intent is
We hold that the lower court correctly ruled that the decree does not apply to pasture lands
uncertain (Genato Commercial Corp. vs. Court of Tax Appeals, 104 Phil. 615,618; 28 C.J.S.
because its preamble shows that it was intended to apply to squatting in urban
1049-50).
communities or more particularly to illegal constructions in squatter areas made by well-to-do
individuals. The squating complained of involves pasture lands in rural areas. WHEREFORE, the trial court's order of dismissal is affirmed. No costs.
The preamble of the decree is quoted below: SO ORDERED.
WHEREAS, it came to my knowledge that despite the issuance of Letter of
Instruction No. 19 dated October 2, 1972, directing the Secretaries of
National Defense, Public Work. 9 and communications, Social Welfare and G.R. No. 180235, January 20, 2016
the Director of Public Works, the PHHC General Manager, the Presidential ALTA VISTA GOLF AND COUNTRY CLUB, Petitioner, v. THE CITY OF CEBU, HON.
Assistant on Housing and Rehabilitation Agency, Governors, City and MAYOR TOMAS R. OSME�A, IN HIS CAPACITY AS MAYOR OF CEBU, AND
Municipal Mayors, and City and District Engineers, "to remove an illegal TERESITA C. CAMARILLO, IN HER CAPACITY AS THE CITY
constructions including buildings on and along esteros and river banks, those TREASURER, Respondents.
along railroad tracks and those built without permits on public and private DECISION
property." squatting is still a major problem in urban communities all over LEONARDO-DE CASTRO, J.:
the country; Before the Court is a Petition for Review on Certiorari of the Resolution1 dated March 14,
WHEREAS, many persons or entities found to have been unlawfully 2007 and the Order2 dated October 3, 2007 of the Regional Trial Court (RTC), Cebu City,
occupying public and private lands belong to the affluent class; Branch 9 in Civil Case No. CEB-31988, dismissing the Petition for Injunction, Prohibition,
WHEREAS, there is a need to further intensify the government's drive against Mandamus, Declaration of Nullity of Closure Order, Declaration of Nullity of Assessment, and
this illegal and nefarious practice. Declaration of Nullity of Section 42 of Cebu City Tax Ordinance, with Prayer for Temporary
It should be stressed that Letter of Instruction No. 19 refers to illegal constructions on public Restraining Order and Writ of Preliminary Injunction3 filed by petitioner Alta Vista Golf and
and private property. It is complemented by Letter of Instruction No. 19-A which provides for Country Club against respondents City of Cebu (Cebu City), then Cebu City Mayor Tomas R.
the relocation of squatters in the interest of public health, safety and peace and order. Osme�a (Osme�a), and then Cebu City Treasurer Teresita Camarillo (Camarillo).
On the other hand, it should be noted that squatting on public agricultural lands, like the Petitioner is a non-stock and non-profit corporation operating a golf course in Cebu City.
grazing lands involved in this case, is punished by Republic Act No. 947 which makes it
On June 21, 1993, the Sangguniang Panlungsod of Cebu City enacted City Tax Ordinance No.
unlawful for any person, corporation or association to forcibly enter or occupy public
LXIX, otherwise known as the "Revised Omnibus Tax Ordinance of the City of Cebu" (Revised
agricultural lands. That law provides:
SECTION 1. It shall be unlawful for any person corporation or association to enter or Omnibus Tax Ordinance).
occupy, through force, intimidation, threat, strategy or stealth, any public agriculture Section 42 of the said tax ordinance on amusement tax was amended by City Tax Ordinance
land including such public lands as are granted to private individuals under the Nos. LXXXII4and LXXXIV5 (which were enacted by the Sangguniang Panlungsod of Cebu City
provision of the Public Land Act or any other laws providing for the of public on December 2, 1996 and April 20, 1998, respectively 6) to read as follows:
agriculture lands in the Philippines and are duly covered by the corresponding
Section 42. Rate of Tax. - There shall be paid to the Office of the City Treasurer by Through a letter dated October 11, 2005, respondent Camarillo sought to collect once more
the proprietors, lessees or operators of theaters, cinemas, concert halls, circuses and from petitioner deficiency business taxes, fees, and charges for the year 1998, totaling
other similar places of entertainment, an amusement tax at the rate of thirty percent P2,981,441.52, computed as follows:
(30%), golf courses and polo grounds at the rate of twenty percent (20%), of their
Restaurant - P4,021,830.65 P 40,950.00
gross receipts on entrance, playing green, and/or admission fees; PROVIDED,
HOWEVER, That in case of movie premieres or gala shows for the benefit of a charitable Permit Fee 2,000.00
institution/foundation or any government institution where higher admission fees are
charged, the aforementioned rate of thirty percent (30%) shall be levied against the gross Liquor-P1,940,283.80 20,160.00
receipts based on the regular admission fees, subject to the approval of the Sangguniang
Permit Fee 2,000.00
Panlungsod; PROVIDED FURTHER, That in case payment of the amusement tax is made
promptly on or before the date hereinbelow prescribed, a rebate of five percent (5%) on the Commission/Other Income 14,950.00
aforementioned gross receipts shall be given to the proprietors, lessees or operators of
theaters; PROVIDED FURTHERMORE, that as an incentive to theater operators who own the P1,262,764.28
real property and/or building where the theater is located, an additional one percent (1%)
rebate shall be given to said operator/real property owner concerned for as long as their Permit Fee 1,874.00
theater/movie houses are then (10) years old or older or the theater or movie house is
Retail Cigarettes - P42,076.11 - Permit 84.15
located at the city's redevelopment area bounded on the north by Gen. Maxilom Street up to
the port area; on the south by V. Rama Avenue up to San Nicolas area; and on the west by Non-Securing of Permit ��
B. Rodriguez St. and General Maxilom Avenue; PROVIDED FINALLY, that the proceeds of this 979.33
additional one percent (1%) rebate shall be used by the building/property owner-theater
operator to modernize their theater facilities. (Emphases supplied.) Sub-Total P 82,997.98
In an Assessment Sheet7 dated August 6, 1998, prepared by Cebu City Assessor Sandra I. Less: Payment based on computer assessment �� 74,858.61
Po, petitioner was originally assessed deficiency business taxes, fees, and other charges for
the year 1998, in the total amount of P3,820,095.68, which included amusement tax on its Short payment P 12,723.18
golf course amounting to P2,612,961.24 based on gross receipts of
25% surcharge 3,180.80
P13,064,806.20.8chanroblesvirtuallawlibrary
Through the succeeding years, respondent Cebu City repeatedly attempted to collect from 72% interest 11,450.00
petitioner its deficiency business taxes, fees, and charges for 1998, a substantial portion of
Penalty for understatement 500.00
which consisted of the amusement tax on the golf course. Petitioner steadfastly refused to
pay the amusement tax arguing that the imposition of said tax by Section 42 of the Revised Amount Due P 27,854.85
Omnibus Tax Ordinance, as amended, was irregular, improper, and illegal.
Add: Amusement Tax on golf course P 1,373,761.24
Petitioner reasoned that under the Local Government Code, amusement tax can only be
imposed on operators of theaters, cinemas, concert halls, or places where one seeks to 25% surcharge (P6,868,806.20 x 20%) 343,440.31
entertain himself by seeing or viewing a show or performance. Petitioner further cited the
ruling in Philippine Basketball Association (PBA) v. Court of Appeals9 that under Presidential 72% Interest �� 1,236,385.12 2,953,586.67
Decree No. 231, otherwise known as the Local Tax Code of 1973, the province could only
impose amusement tax on admission from the proprietors, lessees, or operators of theaters, GRAND TOTAL P2,981,441.5210
cinematographs, concert halls, circuses, and other places of amusement, but not professional Petitioner, through counsel, wrote respondent Camarillo a letter11 dated October 17, 2005
basketball games. Professional basketball games did not fall under the same category as still disputing the amusement tax assessment on its golf course for 1998 for being illegal.
theaters, cinematographs, concert halls, and circuses as the latter basically belong to artistic Petitioner, in a subsequent letter dated November 30, 2005, proposed that:
forms of entertainment while the former catered to sports and gaming.
While the question of the legality of the amusement tax on golf courses is still unresolved, 3. Nonpayment of deficiency on Amusement Tax and the penalties relative
may we propose that Alta Vista Golf and Country Club settle first the other assessments therewith totaling Two Million Nine Hundred Fifty-Three Thousand Five
contained in your Assessment Sheet issued on October 11, 2005. Hundred Eighty-Six Pesos and Eighty-Six Centavos (Php2,953,586.86) in
At this early stage, we also request that pending resolution of the legality of the amusement violation of Sections 4 and 8 in relation to Section 42 of City Tax Ordinance No. 69,
tax imposition on golf courses in [the Revised Omnibus Tax Ordinance, as amended], Alta as amended, business permit-violation of the Article 172, Revised Penal Code of the
Vista Golf and Country Club be issued the required Mayor's and/or Business Philippines. (Emphases supplied.)
4.
Permit.12chanrobleslaw The Closure Order established respondent Mayor Osme�a's authority for issuance of the
Respondent Camarillo treated the letter dated October 17, 2005 of petitioner as a Protest of same and contained the following directive:
Assessment and rendered on December 5, 2005 her ruling denying said Protest on the As the chief executive of the City, the Mayor has the power and duty to: Enforce all laws and
following grounds: (a) a more thorough and comprehensive reading of the PBA case would ordinances relative to the governance of the city x x x and, in addition to the foregoing, shall
reveal that the Court actually ruled therein that PBA was liable to pay amusement tax, but to x x x Issue such executive orders for the faithful and appropriate enforcement and execution
the national government, not the local government; (b) Section 42 of the Revised Omnibus of laws and ordinances x x x. These are undeniable in the LOCAL GOVERNMENT CODE,
Tax Ordinance, as amended, enjoyed the presumption of constitutionality and petitioner Section 455, par. (2) and par. (2)(iii).
failed to avail itself of the remedy under Section 187 of the Local Government Code to Not only that, these powers can be exercised under the general welfare clause of the Code,
challenge the legality or validity of Section 42 of the Revised Omnibus Tax Ordinance, as particularly Section 16 thereof, where it is irrefutable that "every government unit shall
amended, by filing an appeal with the Secretary of Justice within 30 days from effectivity of exercise the powers expressly granted, those necessarily implied therefrom, as well as
said ordinance; and (c) the Office of the City Attorney issued a letter dated July 9, 2004 powers necessary, appropriate, or incidental of its efficient and effective governance, and
affirming respondent Camarillo's position that petitioner was liable to pay amusement tax on those which are essential to the promotion of the general welfare."
its golf course.13Ultimately, respondent Camarillo held: This CLOSURE ORDER precisely satisfies these legal precedents. Hence now, in view
WHEREFORE, upon consideration of the legal grounds as above-mentioned, we reiterate whereof, your business establishment is hereby declared closed in direct contravention of the
our previous stand on the validity of the ASSESSMENT SHEET pertaining to the Tax above-specified laws and city ordinances. Please cease and desist from further operating
Deficiencies for CY 1998 and this ruling serve as the FINAL DEMAND for immediate your business immediately upon receipt of this order.
settlement and payment of your amusement tax liabilities and/or delinquencies otherwise we
will constrained (sic) the non-issuance of a Mayor's Business Permit for nonpayment of the This closure order is without prejudice to the constitutional/statutory right of the City to file
said deficiency on amusement tax and/or other tax liabilities as well as to file the appropriate criminal cases against corporate officers, who act for and its behalf, for violations of Section
filing of administrative and judicial remedies for the collection of the said tax liability and the 114 of the REVISED CITY TAX ORDINANCE OF THE CITY OF CEBU and Section 516 of the
letter treated as a Protest of Assessment that was duly submitted before this office is LOCAL GOVERNMENT CODE, with penalties of imprisonment and/or fine.
hereby DENIED.14chanrobleslaw FOR STRICT AND IMMEDIATE COMPLIANCE.16chanrobleslaw
15
Shortly after, on January 12, 2006, petitioner was served with a Closure Order dated The foregoing developments prompted petitioner to file with the RTC on January 13, 2006 a
December 28, 2005 issued by respondent City Mayor Osmefia. According to the Closure Petition for Injunction, Prohibition, Mandamus, Declaration of Nullity of Closure Order,
Order, petitioner committed blatant violations of the laws and Cebu City Ordinances, to wit: Declaration of Nullity of Assessment, and Declaration of Nullity of Section 42 of Cebu City Tax
1. Operating a business without a business permit for five (5) years, from Ordinance, with Prayer for Temporary Restraining Order and Writ of Preliminary Injunction,
year 2001-2005, in relation to Chapters I and II and the penalty clauses under against respondents, which was docketed as Civil Case No. CEB-31988.17 Petitioner
Sections 4, 6, 8, 66 (f) and 114 of the City Tax Ordinance No. 69, otherwise known eventually filed an Amended Petition on January 19, 2006.18Petitioner argued that the
as the REVISED CITY TAX ORDINANCE OF THE CITY OF CEBU, as amended by CO. Closure Order is unconstitutional as it had been summarily issued in violation of its right to
75; due process; a city mayor has no power under the Local Government Code to deny the
2. Nonpayment of deficiency on Business Taxes and Fees amounting to issuance of a business permit and order the closure of a business for nonpayment of taxes;
Seventeen Thousand Four Hundred Ninety-Nine Pesos and Sixty-Four Section 42 of the Revised Omnibus Tax Ordinance, as amended, is null and void for
Centavos (Php17,499.64), as adjusted, despite repeated demands in violation being ultra vires or beyond the taxing authority of respondent Cebu City, and consequently,
[of] Sections 4 and 8 of City Tax Ordinance No. 69, as amended; the assessment against petitioner for amusement tax for 1998 based on said Section 42 is
illegal and unconstitutional; and assuming arguendothat respondent Cebu City has the power
to impose amusement tax on petitioner, such tax for 1998 already prescribed and could no assessed amusement tax and filing of an appeal before the Secretary of Justice within 30
longer be enforced. days from the effectivity of the Ordinance - was long barred by prescription.
Respondents filed a Motion to Dismiss based on the grounds of (a) lack of jurisdiction of the After filing by the parties of their respective Memorandum, the RTC issued an Order 23 dated
RTC over the subject matter; (b) non-exhaustion of administrative remedies; (c) March 16, 2006 denying the prayer of petitioner for issuance of a Temporary Restraining
noncompliance with Section 187 of the Local Government Code, which provides the Order (TRO). The RTC found that when the business permit of petitioner expired and it was
procedure and prescriptive periods for challenging the validity of a local tax ordinance; (d) operating without a business permit, it ceased to have a legal right to do business. The RTC
noncompliance with Section 252 of the Local Government Code and Section 75 of Republic affirmed respondent Mayor Osme�a's authority to issue or grant business licenses and
Act No. 3857, otherwise known as the Revised Charter of the City of Cebu, requiring permits pursuant to the police power inherent in his office; and such authority to issue or
payment under protest of the tax assessed; and (e) failure to establish the authority of Ma. grant business licenses and permits necessarily included the authority to suspend or revoke
Theresa Ozoa (Ozoa) to institute the case on behalf of petitioner.19chanroblesvirtuallawlibrary or even refuse the issuance of the said business licenses and permits in case of violation of
In its Opposition to the Motion to Dismiss, petitioner countered that the RTC, a court of the conditions for the issuance of the same. The RTC went on to hold that:
general jurisdiction, could take cognizance of its Petition in Civil Case No. CEB-31988, which [Petitioner] was given opportunities to be heard when it filed a protest [of] the assessment
not only involved the issue of legality or illegality of a tax ordinance, but also sought the which was subsequently denied. To the mind of this court, this already constitutes the
declaration of nullity of the Closure Order and the issuance of writs of injunction and observance of due process and that [petitioner] had already been given the opportunity to be
prohibition. Petitioner likewise asserted that Section 195 of the Local Government Code on heard. Due process and opportunity to be heard does not necessarily mean winning the
the protest of assessment does, not require payment under protest. Section 252 of the same argument in one's favor but to be given the fair chance to explain one's side or views with
Code invoked by respondents applies only to real property taxes. In addition, petitioner regards [to] the matter in issue, which in this case is the legality of the tax assessment.
maintained that its Petition in Civil Case No. CEB-31988 could not be barred by prescription. It is therefore clear that when this case was filed, [petitioner] had no more legal right in its
There is nothing in the Local Government Code that could deprive the courts of the power to favor for the courts to protect. It would have been a different story altogether had
determine the constitutionality or validity of a tax ordinance due to prescription. It is the [petitioner] paid the tax assessment for the green fees even under protest and despite
constitutional duty of the courts to pass upon the validity of a tax ordinance and such duty payment and [respondent] Mayor refused the issuance of the business permit because all the
cannot be limited or restricted. Petitioner further contended that there is no need for requisites for the issuance of the said permit are all complied
exhaustion of administrative remedies given that the issues involved are purely legal; the with.24chanroblesvirtuallawlibrary
notice of closure is patently illegal for having been issued without due process; and there is On March 20, 2006, petitioner paid under protest to respondent Cebu City, through
an urgent need for judicial intervention. Lastly, petitioner pointed out that there were respondent Camarillo, the assessed amusement tax, plus penalties, interest, and surcharges,
sufficient allegations in the Petition that its filing was duly authorized by petitioner. At any in the total amount of P2,750,249.17. Since the parties agreed that the issues raised in Civil
rate, petitioner already attached to its Opposition its Board Resolution No. 104 authorizing Case No. CEB-31988 were all legal in nature, the RTC already considered the case submitted
Ozoa to file a case to nullify the Closure Order. Thus, petitioner prayed for the denial of the for resolution after the parties filed their respective
Motion to Dismiss.20chanroblesvirtuallawlibrary Memorandum.26chanroblesvirtuallawlibrary
Respondents, in their Rejoinder to Petitioner's Opposition to the Motion to Dismiss,21 asserted On March 14, 2007, the RTC issued a Resolution granting the Motion to Dismiss of
that the Closure Order was just a necessary consequence of the nonpayment by petitioner of respondents. Quoting from Reyes and Hagonoy Market Vendor Association v. Municipality of
the amusement tax assessed against it. The Revised Omnibus Tax Ordinance of respondent Hagonoy, Bulacan,27 the RTC sustained the position of respondents that Section 187 of the
Cebu City directs that no permit shall be issued to a business enterprise which made no Local Government Code is mandatory. Thus, the RTC adjudged:
proper payment of tax and, correspondingly, no business enterprise may be allowed to From the above cited cases, it can be gleaned that the period in the filing of the protests is
operate or continue to operate without a business permit. The fundamental issue in the case important. In other words, it is the considered opinion of this court [that] when a taxpayer
was still the nonpayment by petitioner of amusement tax. Respondents relied on Reyes v. questions the validity of a tax ordinance passed by a local government legislative body, a
Court of Appeals,22 in which the Court categorically ruled that the prescriptive periods fixed in different procedure directed in Section 187 is to be followed. The reason for this could be
Section 187 of the Local Government Code are mandatory and prerequisites before seeking because the tax ordinance is clearly different from a law passed by Congress. The local
redress from a competent court. Section 42 of the Revised Omnibus Tax Ordinance, as government code has set several limitations on the taxing power of the local government
amended, was passed on April 20, 1998, so the institution by petitioner of Civil Case No. legislative bodies including the issue of what should be taxed.
CEB-31988 before the RTC on January 13, 2006 - without payment under protest of the
In this case, since the Petitioner failed to comply with the procedure outlined in Section 187 "A question of law exists when the doubt or controversy concerns the correct application of
of the Local Government Code and the fact that this case was filed way beyond the period to law or jurisprudence to a certain set of facts; or when the issue does not call for an
file a case in court, then this court believes that the action must fail. examination of the probative value of the evidence presented, the truth or falsehood of facts
Because of the procedural infirmity in bringing about this case to the court, then the being admitted[;]" and it may be brought directly before this Court, the undisputed final
substantial issue of the propriety of imposing amusement taxes on the green fees could no arbiter of all questions of law.31chanroblesvirtuallawlibrary
longer be determined. The present case is an exception to Section 187 of the Local Government
WHEREFORE, in view of the aforegoing, this case is hereby DISMISSED. 28chanrobleslaw Code and the doctrine of exhaustion of administrative remedies.
The RTC denied the Motion for Reconsideration of petitioner in an Order dated October 3, Section 187 of the Local Government Code reads:
Sec. 187. Procedure for Approval and Effectivity of Tax Ordinances and Revenue Measures; Mandatory
2007.
Public Hearings. - The procedure for approval of local tax ordinances and revenue measures shall be in
Petitioner is presently before the Court on pure questions of law, viz.: accordance with the provisions of this Code: Provided, That public hearings shall be conducted for the
I. WHETHER OR NOT THE POWER OF JUDICIAL REVIEW OVER THE VALIDITY OF A purpose prior to the enactment thereof: Provided, further, That any question on the constitutionality or
LOCAL TAX ORDINANCE HAS BEEN RESTRICTED BY SECTION 187 OF THE LOCAL legality of tax ordinances or revenue measures may be raised on appeal within thirty (30) days from
the effectivity thereof to the Secretary of Justice who shall render a decision within sixty (60) days from
GOVERNMENT CODE.
the date of receipt of the appeal: Provided, however, That such appeal shall not have the effect of
II. WHETHER OR NOT THE CITY OF CEBU OR ANY LOCAL GOVERNMENT CAN VALIDLY
suspending the effectivity of the ordinance and the accrual and payment of the tax, fee, or charge
IMPOSE AMUSEMENT TAX TO THE ACT OF PLAYING GOLF.29 levied therein: Provided, finally, That within thirty (30) days after receipt of the decision or the lapse of
III.
There is merit in the instant Petition. the sixty-day period without the Secretary of Justice acting upon the appeal, the aggrieved party may
file appropriate proceedings with a court of competent jurisdiction.
The RTC judgment on pure questions of law may be directly appealed to this Indeed, the Court established in Reyes that the aforequoted provision is a significant
Court via a petition for review on certiorari. procedural requisite and, therefore, mandatory:
Clearly, the law requires that the dissatisfied taxpayer who questions the validity or legality of
Even before the RTC, the parties already acknowledged that the case between them involved a tax ordinance must file his appeal to the Secretary of Justice, within 30 days from
only questions of law; hence, they no longer presented evidence and agreed to submit the effectivity thereof. In case the Secretary decides the appeal, a period also of 30 days is
case for resolution upon submission of their respective memorandum. allowed for an aggrieved party to go to court. But if the Secretary does not act thereon, after
It is incontestable that petitioner may directly appeal to this Court from the judgment of the the lapse of 60 days, a party could already proceed to seek relief in court. These three
RTC on pure questions of law via its Petition for Review on Certiorari. Rule 41, Section 2(c) of separate periods are clearly given for compliance as a prerequisite before seeking redress in
the Rules of Court provides that "[i]n all cases where only questions of law are raised or a competent court. Such statutory periods are set to prevent delays as well as enhance the
involved, the appeal shall be to the Supreme Court by petition for review on certiorari in orderly and speedy discharge of judicial functions. For this reason the courts construe these
accordance with Rule 45." As the Court declared in Bonifacio v. Regional Trial Court of provisions of statutes as mandatory.
Makati, Branch 14930: A municipal tax ordinance empowers a local government unit to impose taxes. The power to
The established policy of strict observance of the judicial hierarchy of courts, as a rule, tax is the most effective instrument to raise needed revenues to finance and support the
requires that recourse must first be made to the lower-ranked court exercising concurrent myriad activities of local government units for the delivery of basic services essential to the
jurisdiction with a higher court. A regard for judicial hierarchy clearly indicates that petitions promotion of the general welfare and enhancement of peace, progress, and prosperity of the
for the issuance of extraordinary writs against first level courts should be filed in the RTC and people. Consequently, any delay in implementing tax measures would be to the detriment of
those against the latter should be filed in the Court of Appeals. The rule is not iron-clad, the public. It is for this reason that protests over tax ordinances are required to be done
however, as it admits of certain exceptions. within certain time frames. In the instant case, it is our view that the failure of petitioners to
appeal to the Secretary of Justice within 30 days as required by Sec. 187 of R.A. 7160 is fatal
Thus, a strict application of the rule is unnecessary when cases brought before the appellate to their cause.32 (Citations omitted.)
courts do not involve factual but purely legal questions. (Citations omitted.) The Court further affirmed in Hagonoy that:
At this point, it is apropos to state that the timeframe fixed by law for parties to avail of their
legal remedies before competent courts is not a "mere technicality" that can be easily
brushed aside. The periods stated in Section 187 of the Local Government Code are Paragraph 2(a) of Section 5, Article VIII of the Constitution, expressly establishes the
mandatory. Ordinance No. 28 is a revenue measure adopted by the municipality of Hagonoy appellate jurisdiction of this Court, and impliedly recognizes the original jurisdiction of lower
to fix and collect public market stall rentals. Being its lifeblood, collection of revenues by the courts over cases involving the constitutionality or validity of an
government is of paramount importance. The funds for the operation of its agencies and ordinance:ChanRoblesVirtualawlibrary
provision of basic services to its inhabitants are largely derived from its revenues and Section 5. The Supreme Court shall have the following powers:
collections. Thus, it is essential that the validity of revenue measures is not left uncertain for xxxx
a considerable length of time. Hence, the law provided a time limit for an aggrieved party to (2) Review, revise, reverse, modify or affirm on appeal or certiorari, as the law or the Rules
assail the legality of revenue measures and tax ordinances. 33 (Citations omitted.) of Court may provide, final judgments and orders of lower courts in:
Nevertheless, in later cases, the Court recognized exceptional circumstances that justify (a) All cases in which the constitutionality or validity of any treaty, international or
noncompliance by a taxpayer with Section 187 of the Local Government Code. executive agreement, law, presidential decree, proclamation, order, instruction, ordinance,
The Court ratiocinated in Ongsuco v. Malones,34 thus: or regulation is in question.
It is true that the general rule is that before a party is allowed to seek the intervention of the In J.M. Tuason and Co., Inc. v. Court of Appeals, Ynot v. Intermediate Appellate Court, and
court, he or she should have availed himself or herself of all the means of administrative Commissioner of Internal Revenue v. Santos, the Court has affirmed the jurisdiction of the
processes afforded him or her. Hence, if resort to a remedy within the administrative RTC to resolve questions of constitutionality and validity of laws (deemed to include local
machinery can still be made by giving the administrative officer concerned every opportunity ordinances) in the first instance, without deciding questions which pertain to legislative
to decide on a matter that comes within his or her jurisdiction, then such remedy should be policy. (Emphases supplied, citations omitted.)
exhausted first before the court's judicial power can be sought. The premature invocation of In Cagayan Electric Power and Light Co., Inc. (CEPALCO) v. City of Cagayan De Oro ,35 the
the intervention of the court is fatal to one's cause of action. The doctrine of exhaustion of Court initially conceded that as in Reyes, the failure of taxpayer CEPALCO to appeal to the
administrative remedies is based on practical and legal reasons. The availment of Secretary of Justice within the statutory period of 30 days from the effectivity of the
administrative remedy entails lesser expenses and provides for a speedier disposition of ordinance should have been fatal to its cause. However, the Court purposefully relaxed the
controversies. Furthermore, the courts of justice, for reasons of comity and convenience, will application of the rules in view of the more substantive matters.
shy away from a dispute until the system of administrative redress has been completed and
complied with, so as to give the administrative agency concerned every opportunity to Similar to Ongsuco and CEPALCO, the case at bar constitutes an exception to the general
correct its error and dispose of the case. However, there are several exceptions to this rule. rule. Not only does the instant Petition raise pure questions of law, but it also involves
substantive matters imperative for the Court to resolve.
The rule on the exhaustion of administrative remedies is intended to preclude a court from
arrogating unto itself the authority to resolve a controversy, the jurisdiction over which is Section 42 of the Revised Omnibus Tax Ordinance, as amended, imposing
initially lodged with an administrative body of special competence. Thus, a case where the amusement tax on golf courses is null and void as it is beyond the authority of
issue raised is a purely legal question, well within the competence; and the respondent Cebu City to enact under the Local Government Code.
jurisdiction of the court and not the administrative agency, would clearly The Local Government Code authorizes the imposition by local government units of
constitute an exception. Resolving questions of law, which involve the amusement tax under Section 140, which provides:
interpretation and application of laws, constitutes essentially an exercise of Sec. 140. Amusement Tax. –
judicial power that is exclusively allocated to the Supreme Court and such lower (a) The province may levy an amusement tax to be collected from the proprietors, lessees, or
courts the Legislature may establish. operators of theaters, cinemas, concert halls, circuses, boxing stadia, and other places of
amusement at a rate of not more than thirty percent (30%) of the gross receipts from admission fees.
In this case, the parties are not disputing any factual matter on which they still (b) In the case of theaters or cinemas, the tax shall first be deducted and withheld by their proprietors,
need to present evidence. The sole issue petitioners raised before the RTC in Civil Case lessees, or operators and paid to the provincial treasurer before the gross receipts are divided between
No. 25843 was whether Municipal Ordinance No. 98-01 was valid and enforceable despite the said proprietors, lessees, or operators and the distributors of the cinematographic films.
absence, prior to its enactment, of a public hearing held in accordance with Article 276 of the
Implementing Rules and Regulations of the Local Government Code. This is undoubtedly a (c) The holding of operas, concerts, dramas, recitals, painting, and art exhibitions, flower shows,
musical programs, literary and oratorical presentations, except pop, rock, or similar concerts shall be
pure question of law, within the competence and jurisdiction of the RTC to
exempt from the payment of the tax hereon imposed.
resolve.
(d) The sangguniang panlalawigan may prescribe the time, manner, terms and conditions for the Section 13. Amusement tax on admission. � The province shall impose a tax on admission to
payment of tax. In case of fraud or failure to pay the tax, the sangguniang panlalawigan may impose be collected from the proprietors, lessees, or operators of theaters, cinematographs, concert
such surcharges, interests and penalties as it may deem appropriate. halls, circuses and other places of amusement xxx.
(e) The proceeds from the amusement tax shall be shared equally by the province and the municipality Applying the principle of ejusdem generis, the Supreme Court rejected PBA's assertions and
where such amusement places are located. (Emphasis supplied.) noted that:ChanRoblesVirtualawlibrary
"Amusement places," as defined in Section 131 (c) of the Local Government Code, "include [I]n determining the meaning of the phrase 'other places of amusement', one must refer to
theaters, cinemas, concert halls, circuses and other places of amusement where one seeks the prior enumeration of theaters, cinematographs, concert halls and circuses with artistic
admission to entertain oneself by seeing or viewing the show or performance." expression as their common characteristic. Professional basketball games do not fall under
the same category as theaters, cinematographs, concert halls and circuses as the latter
The pronouncements of the Court in Pelizloy Realty Corporation v. The Province of basically belong to artistic forms of entertainment while the former caters to sports and
Benguet36 are of particular significance to this case. The Court, in Pelizloy Realty, declared gaming.
null and void the second paragraph of Article X, Section 59 of the Benguet Provincial Code, in
so far as it imposes amusement taxes on admission fees to resorts, swimming pools, bath However, even as the phrase 'other places of amusement' was already clarified in Philippine
houses, hot springs, and tourist spots. Applying the principle of ejusdem generis, as well as Basketball Association, Section 140 of the LGC adds to the enumeration of 'places of
the ruling in the PBA case, the Court expounded on the authority of local government units to amusement' which may properly be subject to amusement tax. Section 140 specifically
impose amusement tax under Section 140, in relation to Section 131(c), of the Local mentions 'boxing stadia' in addition to "theaters, cinematographs, concert halls [and]
Government Code, as follows: circuses" which were already mentioned in PD No. 231. Also, 'artistic expression' as a
Under the principle of ejusdem generis, "where a general word or phrase follows an characteristic does not pertain to 'boxing stadia'.
enumeration of particular and specific words of the same class or where the latter follow the In the present case, the Court need not embark on a laborious effort at statutory
former, the general word or phrase is to be construed to include, or to be restricted to construction. Section 131 (c) of the LGC already provides a clear definition of 'amusement
persons, things or cases akin to, resembling, or of the same kind or class as those specifically places':
mentioned."
xxxx
The purpose and rationale of the principle was explained by the Court in National Power
Indeed, theaters, cinemas, concert halls, circuses, and boxing stadia are bound by
Corporation v. Angas as follows:
a common typifying characteristic in that they are all venues primarily for the
The purpose of the rule on ejusdem generis is to give effect to both the particular and staging of spectacles or the holding of public shows, exhibitions, performances,
general words, by treating the particular words as indicating the class and the general words and other events meant to be viewed by an audience. Accordingly, 'other places of
as including all that is embraced in said class, although not specifically named by the amusement' must be interpreted in light of the typifying characteristic of being
particular words. This is justified on the ground that if the lawmaking body intended the venues "where one seeks admission to entertain oneself by seeing or viewing the
general terms to be used in their unrestricted sense, it would have not made an enumeration show or performances" or being venues primarily used to stage spectacles or hold
of particular subjects but would have used only general terms. [2 Sutherland, Statutory public shows, exhibitions, performances, and other events meant to be viewed by
Construction, 3rd ed., pp. 395-400]. an audience.
In Philippine Basketball Association v. Court of Appeals, the Supreme Court had an As defined in The New Oxford American Dictionary, 'show' means "a spectacle or display of
opportunity to interpret a starkly similar provision or the counterpart provision of Section 140 something, typically an impressive one"; while 'performance' means "an act of staging or
of the LGC in the Local Tax Code then in effect. Petitioner Philippine Basketball Association presenting a play, a conceit, or other form of entertainment." As such, the ordinary
(PBA) contended that it was subject to the imposition by LGUs of amusement taxes (as definitions of the words 'show' and 'performance' denote not only visual
opposed to amusement taxes imposed by the national government). In support of its engagement (i.e., the seeing or viewing of things) but also active doing (e.g.,
contentions, it cited Section 13 of Presidential Decree No. 231, otherwise known as the Local displaying, staging or presenting) such that actions are manifested to, and
Tax Code of 1973, (which is analogous to Section 140 of the LGC) providing the (correspondingly) perceived by an audience.
following:ChanRoblesVirtualawlibrary
Considering these, it is clear that resorts, swimming pools, bath houses, hot springs and
tourist spots cannot be considered venues primarily "where one seeks admission to entertain
oneself by seeing or viewing the show or performances". While it is true that they may be
venues where people are visually engaged, they are not primarily venues for their proprietors impose amusement tax within the limitations and guidelines as set forth in said statutory
or operators to actively display, stage or present shows and/or performances. provisions.
Thus, resorts, swimming pools, bath houses, hot springs and tourist spots do not belong to WHEREFORE, in view of all the foregoing, the Court GRANTS the instant Petition,
the same category or class as theaters, cinemas, concert halls, circuses, and boxing stadia. It and REVERSES and SETS ASIDE the Resolution dated March 14, 2007 and the Order
follows that they cannot be considered as among the 'other places of amusement' dated October 3, 2007 of the Regional Trial Court, Cebu City, Branch 9 in Civil Case No. CEB-
contemplated by Section 140 of the LGC and which may properly be subject to amusement 31988. The Court DECLARES NULL and VOID the following: (a) Section 42 of the Revised
taxes.37 (Emphases supplied, citations omitted.) Omnibus Tax Ordinance of the City of Cebu, as amended by City Tax Ordinance Nos. LXXXII
In light of Pelizloy Realty, a golf course cannot be considered a place of amusement. As and LXXXIV, insofar as it imposes amusement tax of 20% on the gross receipts on entrance,
petitioner asserted, people do not enter a golf course to see or view a show or performance. playing green, and/or admission fees of golf courses; (b) the tax assessment against
Petitioner also, as proprietor or operator of the golf course, does not actively display, stage, petitioner for amusement tax on its golf course for the year 1998 in the amount of
or present a show or performance. People go to a golf course to engage themselves in a Pl,373,761.24, plus surcharges and interest pertaining to said amount, issued by the Office of
physical sport activity, i.e., to play golf; the same reason why people go to a gym or court to the City Treasurer, City of Cebu; and (c) the Closure Order dated December 28, 2005 issued
play badminton or tennis or to a shooting range for target practice, yet there is no showing against Alta Vista Golf and Country Club by the Office of the Mayor, City of Cebu. The Court
herein that such gym, court, or shooting range is similarly considered an amusement place also ORDERS the City of Cebu to refund to Alta Vista Golf and Country Club the amusement
subject to amusement tax. There is no basis for singling out golf courses for amusement tax tax, penalties, surcharge, and interest paid under protest by the latter in the total amount of
purposes from other places where people go to play sports. This is in contravention of one of P2,750,249.17 or to apply the same amount as tax credit against existing or future tax
the fundamental principles of local taxation: that the "[taxation shall be uniform in each local liability of said Club.
government unit."38 Uniformity of taxation, like the kindred concept of equal protection,
requires that all subjects or objects of taxation, similarly situated, are to be treated alike both SO ORDERED
in privileges and liabilities.39chanroblesvirtuallawlibrary Sereno, C.J., (Chairperson), Bersamin, Perlas-Bernabe, and Jardeleza, JJ., concur.
Not lost on the Court is its declaration in Manila Electric Co. v. Province of Laguna that
40
under the 1987 Constitution, "where there is neither a grant nor a prohibition by statute, the
tax power [of local government units] must be deemed to exist although Congress may EN BANC
provide statutory limitations and guidelines." Section 186 of the Local Government Code also G.R. No. 169435 February 27, 2008
expressly grants local government units the following residual power to tax: MUNICIPALITY OF NUEVA ERA, ILOCOS NORTE, represented by its Municipal
Sec. 186. Power to Levy Other Taxes, Fees, or Charges. - Local government units may Mayor, CAROLINE ARZADON-GARVIDA, petitioner,
exercise the power to levy taxes, fees, or charges on any base or subject not vs.
otherwise specifically enumerated herein or taxed under the provisions of the MUNICIPALITY OF MARCOS, ILOCOS NORTE, represented by its Municipal Mayor,
National Internal Revenue Code, as amended, or other applicable SALVADOR PILLOS, and the HONORABLE COURT OF APPEALS, respondents.
laws: Provided,that the taxes, fees, or charges shall not be unjust, excessive, oppressive, DECISION
confiscatory or contrary to declared national policy: Provided, further, That the ordinance REYES, R.T., J.:
levying such taxes, fees or charges shall not be enacted without any prior public hearing AS the law creating a municipality fixes its boundaries, settlement of boundary disputes
conducted for the purpose. (Emphasis supplied.) between municipalities is facilitated by carrying into effect the law that created them.
Any alteration of boundaries that is not in accordance with the law creating a municipality is
Respondents, however, cannot claim that Section 42 of the Revised Omnibus Tax Ordinance,
not the carrying into effect of that law but its amendment, which only the Congress can do. 1
as amended, imposing amusement tax on golf courses, was enacted pursuant to the residual
For Our review on certiorari is the Decision2 of the Court of Appeals (CA) reversing to a
power to tax of respondent Cebu City. A local government unit may exercise its residual
certain extent that3 of the Regional Trial Court (RTC), Branch 12, Laoag City, Ilocos Norte, in
power to tax when there is neither a grant nor a prohibition by statute; or when such taxes,
a case that originated from the Sangguniang Panlalawigan (SP) of Ilocos Norte about the
fees, or charges are not otherwise specifically enumerated in the Local Government Code,
boundary dispute between the Municipalities of Marcos and Nueva Era in Ilocos Norte.
National Internal Revenue Code, as amended, or other applicable laws. In the present case,
Section 140, in relation to Section 131(c), of the Local Government Code already explicitly
and clearly cover amusement tax and respondent Cebu City must exercise its authority to
The CA declared that Marcos is entitled to have its eastern boundary extended up "to the The part of then Mt. Province which was at the east of Marcos is now the province of
boundary line between the province of Ilocos Norte and Kalinga-Apayao."4 By this extension Apayao. Hence, the eastern boundary referred to by the second paragraph of Section 1 of
of Marcos' eastern boundary, the CA allocated to Marcos a portion of Nueva Era's territory. R.A. No. 3753 is the present Ilocos Norte-Apayao boundary.
The Facts On the basis of the said phrase, which described Marcos' eastern boundary, Marcos claimed
The Municipality of Nueva Era was created from the settlements of Bugayong, Cabittaoran, that the middle portion of Nueva Era, which adjoins its eastern side, formed part of its
Garnaden, Padpadon, Padsan, Paorpatoc, Tibangran, and Uguis which were previously territory. Its reasoning was founded upon the fact that Nueva Era was between Marcos and
organized as rancherias, each of which was under the independent control of a chief. the Ilocos Norte-Apayao boundary such that if Marcos was to be bounded on the east by the
Governor General Francis Burton Harrison, acting on a resolution passed by the provincial Ilocos Norte-Apayao boundary, part of Nueva Era would consequently be obtained by it.6
government of Ilocos Norte, united these rancherias and created the township of Nueva Era Marcos did not claim any part of Nueva Era as its own territory until after almost 30
by virtue of Executive Order (E.O.) No. 66 5 dated September 30, 1916. years,7 or only on March 8, 1993, when its Sangguniang Bayan passed Resolution No. 93-
The Municipality of Marcos, on the other hand, was created on June 22, 1963 pursuant to 015.8 Said resolution was entitled: "Resolution Claiming an Area which is an Original Part of
Republic Act (R.A.) No. 3753 entitled "An Act Creating the Municipality of Marcos in the Nueva Era, But Now Separated Due to the Creation of Marcos Town in the Province of Ilocos
Province of Ilocos Norte." Section 1 of R.A. No. 3753 provides: Norte."
SECTION 1. The barrios of Capariaan, Biding, Escoda, Culao, Alabaan, Ragas and Marcos submitted its claim to the SP of Ilocos Norte for its consideration and approval. The
Agunit in the Municipality of Dingras, Province of Ilocos Norte, are hereby separated SP, on the other hand, required Marcos to submit its position paper. 9
from the said municipality and constituted into a new and separate municipality to be In its position paper, Marcos alleged that since its northeastern and eastern boundaries
known as the Municipality of Marcos, with the following boundaries: under R.A. No. 3753 were the Burnay River and the Ilocos Norte-Mountain Province
On the Northwest, by the barrios Biding-Rangay boundary going down to the barrios boundary, respectively, its eastern boundary should not be limited to the former Dingras-
Capariaan-Gabon boundary consisting of foot path and feeder road; on the Nueva Era boundary, which was coterminous and aligned with the eastern boundary of
Northeast, by the Burnay River which is the common boundary of barrios Agunit and Dingras. According to Marcos, its eastern boundary should extend further to the east or up to
Naglayaan; on the East, by the Ilocos Norte-Mt. Province boundary; on the South, by the Ilocos-Norte-Mt. Province boundary pursuant to the description of its eastern boundary
the Padsan River which is at the same time the boundary between the municipalities under R.A. No. 3753.10
of Banna and Dingras; on the West and Southwest, by the boundary between the In view of its claim over the middle portion of Nueva Era, Marcos posited that Nueva Era was
municipalities of Batac and Dingras. cut into two parts. And since the law required that the land area of a municipality must be
The Municipality of Marcos shall have its seat of government in the barrio of Biding. compact and contiguous, Nueva Era's northern isolated portion could no longer be
Based on the first paragraph of the said Section 1 of R.A. No. 3753, it is clear that Marcos considered as its territory but that of Marcos'. Thus, Marcos claimed that it was entitled not
shall be derived from the listed barangays of Dingras, namely: Capariaan, Biding, Escoda, only to the middle portion11 of Nueva Era but also to Nueva Era's isolated northern portion.
Culao, Alabaan, Ragas and Agunit. The Municipality of Nueva Era or any of its barangays was These areas claimed by Marcos were within Barangay Sto. Niño, Nueva Era.
not mentioned. Hence, if based only on said paragraph, it is clear that Nueva Era may not be Nueva Era reacted to the claim of Marcos through its Resolution No. 1, Series of 1993. It
considered as a source of territory of Marcos. alleged that since time immemorial, its entire land area was an ancestral domain of
There is no issue insofar as the first paragraph is concerned which named only Dingras as the "tinguians," an indigenous cultural community. It argued to the effect that since the land
the mother municipality of Marcos. The problem, however, lies in the description of Marcos' being claimed by Marcos must be protected for the tinguians, it must be preserved as part of
boundaries as stated in the second paragraph, particularly in the phrase: "on the East, by the Nueva Era.12
Ilocos Norte-Mt. Province boundary." According to Nueva Era, Marcos was created out of the territory of Dingras only. And since
It must be noted that the term "Mt. Province" stated in the above phrase refers to the R.A. No. 3753 specifically mentioned seven (7) barrios of Dingras to become Marcos, the
present adjoining provinces of Benguet, Mountain Province, Ifugao, Kalinga and Apayao, area which should comprise Marcos should not go beyond the territory of said barrios.13
which were then a single province. From the time Marcos was created in 1963, its eastern boundary had been considered to be
Mt. Province was divided into the four provinces of Benguet, Mountain Province, Ifugao, and aligned and coterminous with the eastern boundary of the adjacent municipality of Dingras.
Kalinga-Apayao by virtue of R.A. No. 4695 which was enacted on June 18, 1966. On February However, based on a re-survey in 1992, supposedly done to conform to the second
14, 1995, the province of Kalinga-Apayao, which comprises the sub-provinces of Kalinga and paragraph of Section 1 of R.A. No. 3753, an area of 15,400 hectares of Nueva Era was
Apayao, was further converted into the regular provinces of Kalinga and Apayao pursuant to alleged to form part of Marcos.14 This was the area of Barangay Sto. Niño, Nueva Era that
R.A. No. 7878. Marcos claimed in its position paper.
On March 29, 2000, the SP of Ilocos Norte ruled in favor of Nueva Era. The fallo of its RTC Decision
decision15 reads: On appeal by Marcos, the RTC affirmed the decision of the SP in its decision20 of March 19,
WHEREFORE, in view of all the foregoing, this Body has no alternative but to dismiss, 2001. The dispositive part of the RTC decision reads:
as it hereby DISMISSES said petition for lack of merit. The disputed area consisting WHEREFORE, the instant appeal is hereby DISMISSED. The questioned decision of
of 15,400 hectares, more or less, is hereby declared as part and portion of the the Sangguniang Panlalawigan of Ilocos Norte is hereby AFFIRMED.
territorial jurisdiction of respondent Nueva Era.16 No costs.
SO ORDERED.21
R.A. No. 3753 expressly named the barangays that would comprise Marcos, but none of
Nueva Era's barangayswere mentioned. The SP thus construed, applying the rule of expressio The RTC reasoned out in this wise:
unius est exclusio alterius, that no part of Nueva Era was included by R.A. No. 3753 in The position of the Municipality of Marcos is that the provision of R.A. 3753 as
creating Marcos.17 regards its boundary on the East which is the "Ilocos Norte-Mt. Province" should
The SP ratiocinated that if Marcos was to be bounded by Mt. Province, it would encroach prevail. On the other hand, the Municipality of Nueva Era posits the theory that only
upon a portion, not only of Nueva Era but also of Abra. Thus: the barrios of the Municipality of Dingras as stated in R.A. 3753 should be included in
x x x Even granting, for the sake of argument, that the eastern boundary of Marcos the territorial jurisdiction of the Municipality of Marcos. The Sangguniang
is indeed Mountain Province, Marcos will then be claiming a portion of Abra because Panlalawigan agreed with the position of Nueva Era.
the province, specifically Barangay Sto. Niño, Nueva Era, is actually bounded on the xxxx
East by the Province of Abra. Abra is situated between and separates the Provinces An examination of the Congressional Records during the deliberations of the R.A.
of Ilocos Norte and Mountain Province. 3753 (House Bill No. 3721) shows the Explanatory Note of Congressman Simeon M.
This is precisely what this body would like to avoid. Statutes should be construed in Valdez, 2nd District, Ilocos Norte, to wit:
the light of the object to be achieved and the evil or mischief to be suppressed, and EXPLANATORY NOTE
they should be given such construction as will advance the object, suppress the This bill seeks to create in the Province of Ilocos Norte a new municipality to
mischief and secure the benefits intended. 18 (Citations omitted) be known as the Municipality of Marcos, to be comprised by the present
The SP further explained: barrios of Capariaan, Biding Escoda, Culao, Alabaan, Ragas and Agunit, all in
Invariably, it is not the letter, but the spirit of the law and the intent of the the Municipality of Dingras of the same province. The seat of government
legislature that is important. When the interpretation of the statute according to the will be in the sitio of San Magro in the present barrio of Ragas.
exact and literal import of its words would lead to absurdity, it should be construed xxxx
according to the spirit and reason, disregarding if necessary the letters of the law. It On the other hand, the Municipality of Dingras will not be adversely affected
is believed that congress did not intend to have this absurd situation to be created too much because its finances will still be sound and stable. Its capacity to
when it created the Municipality of Marcos. This body, by the mandate given to it by comply with its obligations, especially to its employees and personnel, will
the RA 7160 otherwise known Local Government Code, so believes that respondent not be diminished nor its operations paralyzed. On the contrary, economic
Nueva Era or any portion thereof has been excluded from the ambit of RA 3753. development in both the mother and the proposed municipalities will be
Under the principle of "espressio (sic) unios (sic) est exclusio alterius," by expressly accelerated.
naming the barangays that will comprise the town of Marcos, those not mentioned In view of the foregoing, approval of this bill is earnestly requested.
are deemed excluded. In Republic Act 4354, where Section 2 thereof enumerated the (Sgd.) SIMEON M. VALDEZ
barrios comprising the City of Davao excluding the petitioner Barrio Central as part of Congressman, 2nd District
the said City, the court held that there arose a prima facie conclusion that the said Ilocos Norte22
law abolished Barrio Central as part of Davao City. Parenthetically, the legislative intent was for the creation of the Municipality
Historically, the hinterlands of Nueva Era have been known to be the home of our of Marcos, Ilocos Norte from the barrios (barangays) of the Municipality of
brothers and sisters belonging to peculiar groups of non-(C)hristian inhabitants with Dingras, Ilocos Norte only. Hence, the Municipality of Marcos cannot add any
their own rich customs and traditions and this body takes judicial notice that the area beyond the territorial jurisdiction of the Municipality of Dingras, Ilocos
inhabitants of Nueva Era have proudly claimed to be a part of this rich culture. With Norte. This conclusion might have been different only if the area being
this common ancestral heritage which unfortunately is absent with Marcos, let it not claimed by the Municipality of Marcos is within the territorial jurisdiction of
be disturbed.19 (Emphasis ours and citations omitted) the Municipality of Dingras and not the Municipality of Nueva Era. In such
case, the two conflicting provisions may be harmonized by including such
area within the territorial jurisdiction of the Municipality of Dingras as within barrios Agunit and Naglayaan; on the East, by the Ilocos Norte-Mt.
the territorial jurisdiction of the Municipality of Marcos.23 (Emphasis ours) Province boundary; on the South by the Padsan River, which is at the
CA Disposition same time the boundary between the municipalities of Banna and Dingras;
Still determined to have a more extensive eastern boundary, Marcos filed a petition for on the West and Southwest by the boundary between the municipalities of
review24 of the RTC decision before the CA. The issues raised by Marcos before the CA were: Batac and Dingras."
1. Whether or not the site of Hercules Minerals and Oil, Inc. which is within a To stop short at the eastern boundary of Dingras as the eastern boundary also of
Government Forest Reservation in Barangay Sto. Niño, formerly of Nueva Era, is a Marcos and refusing to go farther to the boundary line between Ilocos Norte and
part of the newly created Municipality of Marcos, Ilocos Norte. Mountain Province (Kalinga-Apayao) is tantamount to amending the law which
2. Whether or not the portion of Barangay Sto. Niño on the East which is separated Congress alone can do. Both the SP and RTC have no competence to undo a valid
from Nueva Era as a result of the full implementation of the boundaries of the new act of Congress.
Municipality of Marcos belongs also to Marcos or to Nueva Era.25 It is not correct to say that Congress did not intend to take away any part of Nueva
The twin issues involved two portions of Nueva Era, viz.: (1) middle portion, where Hercules Era and merge it with Marcos for it is chargeable with conclusive knowledge that
Minerals and Oil, Inc. is located; and (2) northern portion of Nueva Era, which, according to when it provided that the eastern boundary of Marcos is the boundary line between
Marcos, was isolated from Nueva Era in view of the integration to Marcos of said middle Ilocos Norte and Mountain Province, (by the time of both the SB and RTC Decision
portion. was already Kalinga-Apayao), it would be cutting through a portion of Nueva Era. As
Marcos prayed before the CA that the above two portions of Nueva Era be declared as part of the law is written so must it be applied. Dura lex sed lex!29
its own territory. It alleged that it was entitled to the middle portion of Nueva Era in view of The CA likewise held that the province Abra was not located between Marcos and Kalinga-
the description of Marcos' eastern boundary under R.A. No. 3753. Marcos likewise contended Apayao; and that Marcos would not encroach upon a portion of Abra for it to be bounded by
that it was entitled to the northern portion of Nueva Era which was allegedly isolated from Kalinga-Apayao, to wit:
Nueva Era when Marcos was created. It posited that such isolation of territory was contrary Nueva Era's contention that to lay out the eastern jurisdiction of Marcos to the
to law because the law required that a municipality must have a compact and contiguous boundary line between Ilocos Norte and Mountain Province (Kalinga-Apayao) would
territory.26 mean annexing part of the municipality of Itnig, province of Abra to Marcos as Abra
In a Decision27 dated June 6, 2005, the CA partly reversed the RTC decision with the is between Ilocos Norte and Mountain Province is geographically erroneous. From
following disposition: Nueva Era's own map of Region 1, which also depicts the locations of Kalinga-
WHEREFORE, we partially GRANT the petition treated as one for certiorari. The Decisions Apayao, Abra, Mountain Province, Benguet and Nueva Vizcaya after the partition of
of both the Sangguniang Panlalawigan and Regional Trial Court of Ilocos the old Mountain Province into the provinces of Kalinga-Apayao, Ifugao, Mountain
Norte are REVERSED and SET ASIDEinsofar as they made the eastern boundary of the Province and Benguet, the province of Abra is situated far to the south of Kalinga
municipality of Marcos co-terminous with the eastern boundary of Dingras town, and another
Apayao and is between the latter and the present Mountain Province, which is farther
is rendered extending the said boundary of Marcos to the boundary line between the province
south of Abra. Abra is part of the eastern boundary of Ilocos Sur while Kalinga-
of Ilocos Norte and Kalinga-Apayao, but the same Decisions are AFFIRMED with respect
to the denial of the claim of Marcos to the detached northern portion of barangay Sto. Niño Apayao is the eastern boundary of Ilocos Norte. Hence, in no way will the eastern
which should, as it is hereby ordered to, remain with the municipality of Nueva Era. No costs. boundary of the municipality of Marcos encroach upon a portion of Abra.30
SO ORDERED.28 However, Marcos' claim over the alleged isolated northern portion of Nueva Era was denied.
In concluding that the eastern boundary of Marcos was the boundary line between Ilocos The CA ruled:
Norte and Kalinga-Apayao, the CA gave the following explanation: Going now to the other area involved, i.e., the portion of Sto. Niño that is separated
Clearly then, both the SP and the RTC erred when they ruled that the eastern boundary of from its mother town Nueva Era and now lies east of the municipalities of Solsona
Marcos is only coterminous with the eastern boundary of the adjacent municipality of Dingras and Dingras and north of Marcos, it bears stressing that it is not included within the
and refused to extend it up to the boundary line between the provinces of Ilocos Norte and area of Marcos as defined by law. But since it is already detached from Sto. Niño,
Mountain Province (Kalinga-Apayao). R.A. No. 3753, the law creating Marcos, is very explicit Marcos is laying claim to it to be integrated into its territory by the SP because it is
and leaves no room for equivocation that the boundaries of Marcos town are: contiguous to a portion of said municipality.
"On the Northwest by the barrios Biding-Rangay boundary going down to the We hold that the SP has no jurisdiction or authority to act on the claim, for it will
barrios Capariaan-Gabon boundary consisting of foot path and feeder road; necessarily substantially alter the north eastern and southern boundaries of Marcos
on the Northeast, by the Burnay River which is the common boundary of from that defined by law and unduly enlarge its area. Only Congress can do that.
True, the SP may substantially alter the boundary of a barangay within its
jurisdiction. But this means the alteration of the boundary of a barangay in relation c) Whether or not, the Court of Appeals erred in its appreciation of facts, in declaring
to another barangay within the same municipality for as long as that will not result that MARCOS East is not coterminous with the Eastern boundary of its mother town-
in any change in the boundary of that municipality. The area in dispute therefore Dingras. That it has no factual and legal basis to extend MARCOS territory
remains to be a part of Sto. Niño, a barangay of Nueva Era although separated by beyond Brgys. Agunit (Ferdinand) and Culao (Elizabeth) of Marcos, and to go further
the newly created Marcos town pursuant to Section 7(c) of the 1991 Local East, by traversing and disintegrating Brgy. Sto. Niño, and drawing parallel lines from
Government Code which states: Sto. Niño, there lies Abra, not Mt. Province or Kalinga-Apayao.33
SEC. 7. Creation and Conversion. - As a general rule, the creation of a local Basically, there are two (2) issues to resolve here: (1) whether or not the mode of appeal
government unit or its conversion from one level to another shall be based on adopted by Marcos in bringing the case to the CA is proper; and (2) whether or not the
verifiable indicators of viability and projected capacity to provide services, to wit: eastern boundary of Marcos extends over and covers a portion of Nueva Era.
xxxx
Our Ruling
(c) Land Area. - It must be contiguous, unless it comprises two or more islands or is
separated by a local government unit independent of the others; properly
Marcos correctly appealed the RTC judgment via petition for review under Rule
identified by metes and bounds with technical descriptions; and sufficient to provide 42.
for such basic services and facilities to meet the requirements of its populace.31 Under Section 118(b) of the Local Government Code, "(b)oundary disputes involving two (2)
The CA also expressed the view that Marcos adopted the wrong mode of appeal in bringing or more municipalities within the same province shall be referred for settlement to the
the case to it. The case, according to the CA, was appealable only to the RTC. Nonetheless, sangguniang panlalawigan concerned." The dispute shall be formally tried by the
despite its pronouncement that the case was dismissible, the CA took cognizance of the same said sanggunian in case the disputing municipalities fail to effect an amicable settlement. 34
by treating it as one for certiorari, to wit: The SP of Ilocos validly took cognizance of the dispute between the parties. The appeal of
A final word. At the outset, we agonized over the dilemma of choosing between the SP judgment to the RTC was likewise properly filed by Marcos before the RTC. The
dismissing outright the petition at bar or entertaining it. This is for the simple reason problem, however, lies in whether the RTC judgment may still be further appealed to the CA.
that a petition for review is a mode of appeal and is not appropriate as the Local The CA pronounced that the RTC decision on the boundary dispute was not appealable to it.
Government Code provides for the remedy of appeal in boundary disputes only to It ruled that no further appeal of the RTC decision may be made pursuant to Section 119 of
the Regional Trial Court but not any further appeal to this Court. Appeal is a purely the Local Government Code35 which provides:
statutory right. It cannot be exercised unless it is expressly granted by law. This is SECTION 119. Appeal. - Within the time and manner prescribed by the Rules of
too basic to require the citation of supporting authority. Court, any party may elevate the decision of the sanggunian concerned to the proper
xxxx Regional Trial Court having jurisdiction over the area in dispute. The Regional Trial
By the same token, since the Local Government Code does not explicitly grant the Court shall decide the appeal within one (1) year from the filing thereof. Pending
right of further appeal from decisions of the RTCs in boundary disputes between or final resolution of the disputed area prior to the dispute shall be maintained and
among local government units, Marcos town cannot exercise that right from the continued for all legal purposes.
adverse decision of the RTC of Ilocos Norte. Nonetheless, because of the The CA concluded that since only the RTC was mentioned as appellate court, the case may
transcendental legal and jurisdictional issues involved, we solved our inceptive no longer be further appealed to it. The CA stated that "(a)ppeal is a purely statutory right. It
dilemma by treating the petition at bar as a special civil action for certiorari.32 cannot be exercised unless it is expressly granted by law. This is too basic to require the
Nueva Era was not pleased with the decision of the CA. Hence, this petition for review on citation of supporting authority."36
certiorari under Rule 45. The CA, however, justified its taking cognizance of the case by declaring that: "because of
Issues the transcendental legal and jurisdictional issues involved, we solved our inceptive dilemma
Nueva Era now raises the following issues: by treating the petition at bar as a special civil action for certiorari."37
a) Whether or not, the Court of Appeals has jurisdiction on the Petition for Review on The CA erred in declaring that only the RTC has appellate jurisdiction over the judgment of
Appeal, since Sec. 119 of the Local Government Code, which provides that "An the SP.
appeal to the Decision of the Sangguniang Panlalawigan is exclusively vested to the True, appeal is a purely statutory right and it cannot be exercised unless it is expressly
Regional Trial Court, without further Appeal to the Court of Appeals"; granted by law. Nevertheless, the CA can pass upon the petition for review precisely because
b) Whether or not, the Court of Appeals gravely abused its discretion, in treating the the law allows it.
Petition for Review On Appeal, filed under Rule 45, Revised Rules of Court, as a Batas Pambansa (B.P.) Blg. 129 or the Judiciary Reorganization Act of 1980, as amended by
Petition for Certiorari, under Rule 65 of the Revised Rules of Court; R.A. No. 7902,38vests in the CA the appellate jurisdiction over all final judgments, decisions,
resolutions, orders or awards of Regional Trial Courts and quasi-judicial agencies,
instrumentalities, boards or commissions, among others.39 B.P. Blg. 129 has been further In the comparable case of Ceniza v. Commission on Elections46 involving the City of
supplemented by the 1997 Rules of Civil Procedure, as amended, which provides for the Mandaue, the Court has this to say:
remedy of appeal via petition for review under Rule 42 to the CA in cases decided by the RTC Petitioners assail the charter of the City of Mandaue as unconstitutional for not
in the exercise of its appellate jurisdiction. having been ratified by the residents of the city in a plebiscite. This contention is
Thus, the CA need not treat the appeal via petition for review filed by Marcos as a petition untenable. The Constitutional requirement that the creation, division, merger,
for certiorari to be able to pass upon the same. B.P. Blg. 129, as amended, which is abolition, or alteration of the boundary of a province, city, municipality, or barrio
supplemented by Rule 42 of the Rules of Civil Procedure, gives the CA the authority to should be subject to the approval by the majority of the votes cast in a plebiscite in
entertain appeals of such judgments and final orders rendered by the RTC in the exercise of the governmental unit or units affected is a new requirement that came into being
its appellate jurisdiction. only with the 1973 Constitution. It is prospective in character and therefore cannot
At the time of creation of Marcos, approval in a plebiscite of the creation of a local affect the creation of the City of Mandaue which came into existence on June 21,
government unit is not required. 1969.47 (Citations omitted and underlining supplied).
Section 10, Article X of the 1987 Constitution provides that: Moreover, by deciding this case, We are not creating Marcos but merely interpreting the law
No province, city, municipality, or barangay may be created, divided, merged, abolished, or its that created it. Its creation was already a fait accompli. Therefore, there is no reason for Us
boundary substantially altered, except in accordance with the criteria established in the local to further require a plebiscite.
government code and subject to approval by a majority of the votes cast in a plebiscite in the
As pointed out by Justice Isagani Cruz, to wit:
political units directly affected.40
Finally, it should be observed that the provisions of the Constitution should be given
The purpose of the above constitutional provision was acknowledged by the Court through
only a prospective application unless the contrary is clearly intended. Were the rule
Justice Reynato S. Puno in Miranda v. Aguirre,41 where it was held that:
otherwise, rights already acquired or vested might be unduly disturbed or withdrawn
The 1987 Constitution, more than any of our previous Constitutions, gave more
even in the absence of an unmistakable intention to place them within the scope of
reality to the sovereignty of our people for it was borne out of the people power in
the Constitution.48
the 1986 EDSA revolution. Its Section 10, Article X addressed the undesirable
No part of Nueva Era's territory was taken for the creation of Marcos under R.A.
practice in the past whereby local government units were created, abolished, merged
No. 3753.
or divided on the basis of the vagaries of politics and not of the welfare of the
Only the barrios (now barangays) of Dingras from which Marcos obtained its territory are
people. Thus, the consent of the people of the local government unit directly affected
named in R.A. No. 3753. To wit:
was required to serve as a checking mechanism to any exercise of legislative power
SECTION 1. The barrios of Capariaan, Biding, Escoda, Culao, Alabaan, Ragas and
creating, dividing, abolishing, merging or altering the boundaries of local government
Agunit in the Municipality of Dingras, Province of Ilocos Norte, are hereby separated
units. It is one instance where the people in their sovereign capacity decide on a
from the said municipality and constituted into a new and separate municipality to be
matter that affects them - direct democracy of the people as opposed to democracy
known as the Municipality of Marcos, with the following boundaries:
thru people's representatives. This plebiscite requirement is also in accord with the
Since only the barangays of Dingras are enumerated as Marcos' source of territory, Nueva
philosophy of the Constitution granting more autonomy to local government units.42
Era's territory is, therefore, excluded.
Nueva Era contends that the constitutional and statutory 43 plebiscite requirement for the
Under the maxim expressio unius est exclusio alterius, the mention of one thing implies the
creation of a local government unit is applicable to this case. It posits that the claim of
exclusion of another thing not mentioned. If a statute enumerates the things upon which it is
Marcos to its territory should be denied due to lack of the required plebiscite.
to operate, everything else must necessarily and by implication be excluded from its
We agree with Nueva Era's contention that Marcos' claim over parts of its territory is not
operation and effect.49 This rule, as a guide to probable legislative intent, is based upon the
tenable. However, the reason is not the lack of the required plebiscite under the 1987 and
rules of logic and natural workings of the human mind.50
1973 constitutions and the Local Government Code of 1991 but other reasons as will be
Had the legislature intended other barangays from Nueva Era to become part of Marcos, it
discussed below.
could have easily done so by clear and concise language. Where the terms are expressly
At the time Marcos was created, a plebiscite was not required by law to create a local
limited to certain matters, it may not by interpretation or construction be extended to other
government unit. Hence, Marcos was validly created without conducting a plebiscite. As a
matters.51 The rule proceeds from the premise that the legislature would not have made
matter of fact, no plebiscite was conducted in Dingras, where it was derived.
specified enumerations in a statute had the intention been not to restrict its meaning and to
Lex prospicit, non respicit. The law looks forward, not backward.44 It is the basic norm that
confine its terms to those expressly mentioned. 52
provisions of the fundamental law should be given prospective application only, unless
Moreover, since the barangays of Nueva Era were not mentioned in the enumeration
legislative intent for its retroactive application is so provided. 45
of barangays out of which the territory of Marcos shall be set, their omission must be held to
have been done intentionally. This conclusion finds support in the rule of casus omissus pro It is axiomatic that laws should be given a reasonable interpretation, not one which defeats
omisso habendus est, which states that a person, object or thing omitted from an the very purpose for which they were passed. This Court has in many cases involving the
enumeration must be held to have been omitted intentionally. 53 construction of statutes always cautioned against narrowly interpreting a statute as to defeat
Furthermore, this conclusion on the intention of the legislature is bolstered by the the purpose of the legislature and stressed that it is of the essence of judicial duty to
explanatory note of the bill which paved the way for the creation of Marcos. Said explanatory construe statutes so as to avoid such a deplorable result (of injustice or absurdity) and that
note mentioned only Dingras as the mother municipality of Marcos. therefore "a literal interpretation is to be rejected if it would be unjust or lead to absurd
Where there is ambiguity in a statute, as in this case, courts may resort to the explanatory results."58
note to clarify the ambiguity and ascertain the purpose and intent of the statute. 54 Statutes are to be construed in the light of the purposes to be achieved and the evils sought
Despite the omission of Nueva Era as a mother territory in the law creating Marcos, the latter to be remedied. Thus, in construing a statute, the reason for its enactment should be kept in
still contends that said law included Nueva Era. It alleges that based on the description of its mind and the statute should be construed with reference to the intended scope and purpose.
boundaries, a portion of Nueva Era is within its territory. The court may consider the spirit and reason of the statute, where a literal meaning would
The boundaries of Marcos under R.A. No. 3753 read: lead to absurdity, contradiction, injustice, or would defeat the clear purpose of the
On the Northwest, by the barrios Biding-Rangay boundary going down to the barrios lawmakers.59
Capariaan-Gabon boundary consisting of foot path and feeder road; on the WHEREFORE, the petition is GRANTED. The Decision of the Court of Appeals is
Northeast, by the Burnay River which is the common boundary of barrios Agunit and partly REVERSED. The Decision of the Regional Trial Court in Ilocos Norte is Reinstated.
Naglayaan; on the East, by the Ilocos Norte-Mt. Province boundary; on the South, by SO ORDERED.
the Padsan River which is at the same time the boundary between the municipalities RUBEN T. REYES
of Banna and Dingras; on the West and Southwest, by the boundary between the Associate Justice
municipalities of Batac and Dingras.
Marcos contends that since it is "bounded on the East, by the Ilocos Norte-Mt. Province
boundary," a portion of Nueva Era formed part of its territory because, according to it, Nueva
Era is between the Marcos and Ilocos Norte-Mt. Province boundary. Marcos posits that in G.R. No. 106719 September 21, 1993
order for its eastern side to reach the Ilocos Norte-Mt. Province boundary, it will necessarily DRA. BRIGIDA S. BUENASEDA, Lt. Col. ISABELO BANEZ, JR., ENGR. CONRADO REY
traverse the middle portion of Nueva Era. MATIAS, Ms. CORA S. SOLIS and Ms. ENYA N. LOPEZ, petitioners,
Marcos further claims that it is entitled not only to the middle portion of Nueva Era but also vs.
to its northern portion which, as a consequence, was isolated from the major part of Nueva SECRETARY JUAN FLAVIER, Ombudsman CONRADO M. VASQUEZ, and NCMH
Era. NURSES ASSOCIATION, represented by RAOULITO GAYUTIN, respondents.
We cannot accept the contentions of Marcos. Renato J. Dilag and Benjamin C. Santos for petitioners.
Only Dingras is specifically named by law as source territory of Marcos. Hence, the said Danilo C. Cunanan for respondent Ombudsman.
description of boundaries of Marcos is descriptive only of the listed barangays of Dingras as a Crispin T. Reyes and Florencio T. Domingo for private respondent.
compact and contiguous territory.
Considering that the description of the eastern boundary of Marcos under R.A. No. 3753 is QUIASON, J.:
ambiguous, the same must be interpreted in light of the legislative intent. This is a Petition for Certiorari, Prohibition and Mandamus, with Prayer for Preliminary
The law must be given a reasonable interpretation, to preclude absurdity in its Injunction or Temporary Restraining Order, under Rule 65 of the Revised Rules of Court.
application.55 We thus uphold the legislative intent to create Marcos out of the territory of Principally, the petition seeks to nullify the Order of the Ombudsman dated January 7, 1992,
Dingras only. directing the preventive suspension of petitioners,
Courts must give effect to the general legislative intent that can be discovered from or is Dr. Brigida S. Buenaseda, Chief of Hospital III; Isabelo C. Banez, Jr., Administrative Officer
unraveled by the four corners of the statute, and in order to discover said intent, the whole III; Conrado Rey Matias, Technical Assistant to the Chief of Hospital; Cora C. Solis,
statute, and not only a particular provision thereof, should be considered.56 Every section, Accountant III; and Enya N. Lopez, Supply Officer III, all of the National Center for Mental
provision or clause of the statute must be expounded by reference to each other in order to Health. The petition also asks for an order directing the Ombudsman to disqualify Director
arrive at the effect contemplated by the legislature. The intention of the legislator must be Raul Arnaw and Investigator Amy de Villa-Rosero, of the Office of the Ombudsman, from
ascertained from the whole text of the law, and every part of the act is to be taken into
view.57
participation in the preliminary investigation of the charges against petitioner ( Rollo, pp. 2- On November 13, 1992, the Solicitor General submitted its Comment dated November 10,
17; Annexes to Petition, Rollo, pp. 19-21). 1992, alleging that: (a) "despite the issuance of the September 22, 1992 Resolution directing
The questioned order was issued in connection with the administrative complaint filed with respondents to maintain the status quo, respondent Secretary refuses to hold in abeyance
the Ombudsman (OBM-ADM-0-91-0151) by the private respondents against the petitioners the implementation of petitioners' preventive suspension; (b) the clear intent and spirit of the
for violation of the Anti-Graft and Corrupt Practices Act. Resolution dated September 22, 1992 is to hold in abeyance the implementation of
According to the petition, the said order was issued upon the recommendation of Director petitioners' preventive suspension, the status quo obtaining the time of the filing of the
Raul Arnaw and Investigator Amy de Villa-Rosero, without affording petitioners the instant petition; (c) respondent Secretary's acts in refusing to hold in abeyance
opportunity to controvert the charges filed against them. Petitioners had sought to disqualify implementation of petitioners' preventive suspension and in tolerating and approving the acts
Director Arnaw and Investigator Villa-Rosero for manifest partiality and bias (Rollo, pp. 4-15). of Dr. Abueva, the OIC appointed to replace petitioner Buenaseda, are in violation of the
On September 10, 1992, this Court required respondents' Comment on the petition. Resolution dated September 22, 1992; and
On September 14 and September 22, 1992, petitioners filed a "Supplemental Petition (Rollo, (d) therefore, respondent Secretary should be directed to comply with the Resolution dated
pp. 124-130); Annexes to Supplemental Petition; Rollo pp. 140-163) and an "Urgent September 22, 1992 immediately, by restoring the status quo ante contemplated by the
Supplemental Manifestation" (Rollo, aforesaid resolution" (Comment attached to Rollowithout paginations between pp. 613-614
pp. 164-172; Annexes to Urgent Supplemental Manifestation; Rollo, pp. 173-176), thereof).
respectively, averring developments that transpired after the filing of the petition and In the Resolution dated November 25, 1992, this Court required respondent Secretary to
stressing the urgency for the issuance of the writ of preliminary injunction or temporary comply with the aforestated status quo order, stating inter alia, that:
restraining order. It appearing that the status quo ante litem motam, or the last peaceable
On September 22, 1992, this Court ". . . Resolved to REQUIRE the respondents to MAINTAIN uncontested status which preceded the present controversy was the situation
in the meantime, the STATUS QUO pending filing of comments by said respondents on the obtaining at the time of the filing of the petition at bar on September 7, 1992
original supplemental manifestation" (Rollo, p. 177). wherein petitioners were then actually occupying their respective positions,
On September 29, 1992, petitioners filed a motion to direct respondent Secretary of Health to the Court hereby ORDERS that petitioners be allowed to perform the duties
comply with the Resolution dated September 22, 1992 (Rollo, pp. 182-192, Annexes, pp. of their respective positions and to receive such salaries and benefits as they
192-203). In a Resolution dated October 1, 1992, this Court required respondent Secretary of may be lawfully entitled to, and that respondents and/or any and all persons
Health to comment on the said motion. acting under their authority desist and refrain from performing any act in
On September 29, 1992, in a pleading entitled "Omnibus Submission," respondent NCMH violation of the aforementioned Resolution of September 22, 1992 until
Nurses Association submitted its Comment to the Petition, Supplemental Petition and Urgent further orders from the Court (Attached to Rollo after p. 615 thereof).
Supplemental Manifestation. Included in said pleadings were the motions to hold the lawyers On December 9, 1992, the Solicitor General, commenting on the Petition, Supplemental
of petitioners in contempt and to disbar them (Rollo, pp. 210-267). Attached to the "Omnibus Petition and Supplemental Manifestation, stated that (a) "The authority of the Ombudsman is
Submission" as annexes were the orders and pleadings filed in Administrative Case No. OBM- only to recommend suspension and he has no direct power to suspend;" and (b) "Assuming
ADM-0-91-1051 against petitioners (Rollo, pp. 268-480). the Ombudsman has the power to directly suspend a government official or employee, there
The Motion for Disbarment charges the lawyers of petitioners with: are conditions required by law for the exercise of such powers; [and] said conditions have
(1) unlawfully advising or otherwise causing or inducing their clients — petitioners not been met in the instant case" (Attached to Rollo without pagination).
Buenaseda, et al., to openly defy, ignore, disregard, disobey or otherwise violate, maliciously In the pleading filed on January 25, 1993, petitioners adopted the position of the Solicitor
evade their preventive suspension by Order of July 7, 1992 of the Ombudsman . . ."; (2) General that the Ombudsman can only suspend government officials or employees connected
"unlawfully interfering with and obstructing the implementation of the said order (Omnibus with his office. Petitioners also refuted private respondents' motion to disbar petitioners'
Submission, pp. 50-52; Rollo, pp. 259-260); and (3) violation of the Canons of the Code of counsel and to cite them for contempt (Attached to Rollo without pagination).
Professional Responsibility and of unprofessional and unethical conduct "by foisting blatant The crucial issue to resolve is whether the Ombudsman has the power to suspend
lies, malicious falsehood and outrageous deception" and by committing subornation of government officials and employees working in offices other than the Office of the
perjury, falsification and fabrication in their pleadings (Omnibus Submission, pp. 52-54; Rollo, Ombudsman, pending the investigation of the administrative complaints filed against said
pp. 261-263). officials and employees.
On November 11, 1992, petitioners filed a "Manifestation and Supplement to 'Motion to In upholding the power of the Ombudsman to preventively suspend petitioners, respondents
Direct Respondent Secretary of Health to Comply with 22 September 1992 Resolution'" (Urgent Motion to Lift Status Quo, etc, dated January 11, 1993, pp. 10-11), invoke Section 24
(Manifestation attached to Rollo without pagination between pp. 613 and 614 thereof). of R.A. No. 6770, which provides:
Sec. 24. Preventive Suspension. — The Ombudsman or his Deputy may preventively procedural, not a penal statute. The preventive suspension is imposed after compliance with
suspend any officer or employee under his authority pending an investigation, if in his the requisites therein set forth, as an aid in the investigation of the administrative charges.
judgment the evidence of guilt is strong, and (a) the charge against such officer or Under the Constitution, the Ombudsman is expressly authorized to recommend to the
employee involves dishonesty, oppression or grave misconduct or neglect in the
appropriate official the discipline or prosecution of erring public officials or employees. In
performance of duty; (b) the charge would warrant removal from the service; or (c)
order to make an intelligent determination whether to recommend such actions, the
the respondent's continued stay in office may prejudice the case filed against him.
The preventive suspension shall continue until the case is terminated by the Office of Ombudsman has to conduct an investigation. In turn, in order for him to conduct such
Ombudsman but not more than six months, without pay, except when the delay in investigation in an expeditious and efficient manner, he may need to suspend the
the disposition of the case by the Office of the Ombudsman is due to the fault, respondent.
negligence or petition of the respondent, in which case the period of such delay shall The need for the preventive suspension may arise from several causes, among them, the
not be counted in computing the period of suspension herein provided. danger of tampering or destruction of evidence in the possession of respondent; the
Respondents argue that the power of preventive suspension given the Ombudsman under intimidation of witnesses, etc. The Ombudsman should be given the discretion to decide
Section 24 of R.A. No. 6770 was contemplated by Section 13 (8) of Article XI of the 1987 when the persons facing administrative charges should be preventively suspended.
Constitution, which provides that the Ombudsman shall exercise such other power or perform Penal statutes are strictly construed while procedural statutes are liberally construed
such functions or duties as may be provided by law." (Crawford, Statutory Construction, Interpretation of Laws, pp. 460-461; Lacson v. Romero,
On the other hand, the Solicitor General and the petitioners claim that under the 1987 92 Phil. 456 [1953]). The test in determining if a statute is penal is whether a penalty is
Constitution, the Ombudsman can only recommend to the heads of the departments and imposed for the punishment of a wrong to the public or for the redress of an injury to an
other agencies the preventive suspension of officials and employees facing administrative individual (59 Corpuz Juris, Sec. 658; Crawford, Statutory Construction, pp. 496-497). A Code
investigation conducted by his office. Hence, he cannot order the preventive suspension prescribing the procedure in criminal cases is not a penal statute and is to be interpreted
himself. liberally (People v. Adler, 140 N.Y. 331; 35 N.E. 644).
They invoke Section 13(3) of the 1987 Constitution which provides that the Office of the The purpose of R.A. No. 6770 is to give the Ombudsman such powers as he may need to
Ombudsman shall have inter alia the power, function, and duty to: perform efficiently the task committed to him by the Constitution. Such being the case, said
Direct the officer concerned to take appropriate action against a public statute, particularly its provisions dealing with procedure, should be given such interpretation
official or employee at fault, and recommend his removal, suspension, that will effectuate the purposes and objectives of the Constitution. Any interpretation that
demotion, fine, censure or prosecution, and ensure compliance therewith. will hamper the work of the Ombudsman should be avoided.
The Solicitor General argues that under said provision of the Constitutions, the Ombudsman A statute granting powers to an agency created by the Constitution should be liberally
has three distinct powers, namely: (1) direct the officer concerned to take appropriate action construed for the advancement of the purposes and objectives for which it was created (Cf.
against public officials or employees at fault; (2) recommend their removal, suspension, Department of Public Utilities v. Arkansas Louisiana Gas. Co., 200 Ark. 983, 142 S.W. (2d)
demotion fine, censure, or prosecution; and (3) compel compliance with the recommendation 213 [1940]; Wallace v. Feehan, 206 Ind. 522, 190 N.E., 438 [1934]).
(Comment dated December 3, 1992, pp. 9-10). In Nera v. Garcia, 106 Phil. 1031 [1960], this Court, holding that a preventive suspension is
The line of argument of the Solicitor General is a siren call that can easily mislead, unless one not a penalty, said:
bears in mind that what the Ombudsman imposed on petitioners was not a punitive but only Suspension is a preliminary step in an administrative investigation. If after
a preventive suspension. such investigation, the charges are established and the person investigated
When the constitution vested on the Ombudsman the power "to recommend the suspension" is found guilty of acts warranting his removal, then he is removed or
of a public official or employees (Sec. 13 [3]), it referred to "suspension," as a punitive dismissed. This is the penalty.
measure. All the words associated with the word "suspension" in said provision referred to To support his theory that the Ombudsman can only preventively suspend respondents in
penalties in administrative cases, e.g. removal, demotion, fine, censure. Under the rule administrative cases who are employed in his office, the Solicitor General leans heavily on the
of Noscitor a sociis, the word "suspension" should be given the same sense as the other phrase "suspend any officer or employee under his authority" in Section 24 of R.A. No. 6770.
words with which it is associated. Where a particular word is equally susceptible of various The origin of the phrase can be traced to Section 694 of the Revised Administrative Code,
meanings, its correct construction may be made specific by considering the company of which dealt with preventive suspension and which authorized the chief of a bureau or office
terms in which it is found or with which it is associated (Co Kim Chan v. Valdez Tan Keh, 75 to "suspend any subordinate or employee in his bureau or under his authority pending an
Phil. 371 [1945]; Caltex (Phils.) Inc. v. Palomar, 18 SCRA 247 [1966]). investigation . . . ."
Section 24 of R.A. No. 6770, which grants the Ombudsman the power to preventively
suspend public officials and employees facing administrative charges before him, is a
Section 34 of the Civil Service Act of 1959 (R.A. No. 2266), which superseded Section 694 of service; or (3) the respondent's continued stay in office may prejudice the case filed against
the Revised Administrative Code also authorized the chief of a bureau or office to "suspend him.
any subordinate officer or employees, in his bureau or under his authority." The same conditions for the exercise of the power to preventively suspend officials or
However, when the power to discipline government officials and employees was extended to employees under investigation were found in Section 34 of R.A. No. 2260.
the Civil Service Commission by the Civil Service Law of 1975 (P.D. No. 805), concurrently The import of the Nera decision is that the disciplining authority is given the discretion to
with the President, the Department Secretaries and the heads of bureaus and offices, the decide when the evidence of guilt is strong. This fact is bolstered by Section 24 of R.A. No.
phrase "subordinate officer and employee in his bureau" was deleted, appropriately leaving 6770, which expressly left such determination of guilt to the "judgment" of the Ombudsman
the phrase "under his authority." Therefore, Section 41 of said law only mentions that the on the basis of the administrative complaint. In the case at bench, the Ombudsman issued
proper disciplining authority may preventively suspend "any subordinate officer or employee the order of preventive suspension only after: (a) petitioners had filed their answer to the
under his authority pending an investigation . . ." (Sec. 41). administrative complaint and the "Motion for the Preventive Suspension" of petitioners, which
The Administrative Code of 1987 also empowered the proper disciplining authority to incorporated the charges in the criminal complaint against them (Annex 3, Omnibus
"preventively suspend any subordinate officer or employee under his authority pending an Submission, Rollo, pp. 288-289; Annex 4, Rollo,
investigation" (Sec. 51). pp. 290-296); (b) private respondent had filed a reply to the answer of petitioners, specifying
The Ombudsman Law advisedly deleted the words "subordinate" and "in his bureau," leaving 23 cases of harassment by petitioners of the members of the private respondent (Annex 6,
the phrase to read "suspend any officer or employee under his authority pending an Omnibus Submission, Rollo, pp. 309-333); and (c) a preliminary conference wherein the
investigation . . . ." The conclusion that can be deduced from the deletion of the word complainant and the respondents in the administrative case agreed to submit their list of
"subordinate" before and the words "in his bureau" after "officer or employee" is that the witnesses and documentary evidence.
Congress intended to empower the Ombudsman to preventively suspend all officials and Petitioners herein submitted on November 7, 1991 their list of exhibits (Annex 8 of Omnibus
employees under investigation by his office, irrespective of whether they are employed "in his Submission, Rollo, pp. 336-337) while private respondents submitted their list of exhibits
office" or in other offices of the government. The moment a criminal or administrative (Annex 9 of Omnibus Submission, Rollo, pp. 338-348).
complaint is filed with the Ombudsman, the respondent therein is deemed to be "in his Under these circumstances, it can not be said that Director Raul Arnaw and Investigator Amy
authority" and he can proceed to determine whether said respondent should be placed under de Villa-Rosero acted with manifest partiality and bias in recommending the suspension of
preventive suspension. In their petition, petitioners also claim that the Ombudsman petitioners. Neither can it be said that the Ombudsman had acted with grave abuse of
committed grave abuse of discretion amounting to lack of jurisdiction when he issued the discretion in acting favorably on their recommendation.
suspension order without affording petitioners the opportunity to confront the charges The Motion for Contempt, which charges the lawyers of petitioners with unlawfully causing or
against them during the preliminary conference and even after petitioners had asked for the otherwise inducing their clients to openly defy and disobey the preventive suspension as
disqualification of Director Arnaw and Atty. Villa-Rosero (Rollo, pp. 6-13). Joining petitioners, ordered by the Ombudsman and the Secretary of Health can not prosper ( Rollo, pp. 259-
the Solicitor General contends that assuming arguendo that the Ombudsman has the power 261). The Motion should be filed, as in fact such a motion was filed, with the Ombudsman. At
to preventively suspend erring public officials and employees who are working in other any rate, we find that the acts alleged to constitute indirect contempt were legitimate
departments and offices, the questioned order remains null and void for his failure to comply measures taken by said lawyers to question the validity and propriety of the preventive
with the requisites in Section 24 of the Ombudsman Law (Comment dated December 3, suspension of their clients.
1992, pp. 11-19).Being a mere order for preventive suspension, the questioned order of the On the other hand, we take cognizance of the intemperate language used by counsel for
Ombudsman was validly issued even without a full-blown hearing and the formal private respondents hurled against petitioners and their counsel (Consolidated: (1) Comment
presentation of evidence by the parties. In Nera, supra, petitioner therein also claimed that on Private Respondent" "Urgent Motions, etc.;
the Secretary of Health could not preventively suspend him before he could file his answer to (2) Adoption of OSG's Comment; and (3) Reply to Private Respondent's Comment and
the administrative complaint. The contention of petitioners herein can be dismissed Supplemental Comment, pp. 4-5).
perfunctorily by holding that the suspension meted out was merely preventive and therefore, A lawyer should not be carried away in espousing his client's cause. The language of a
as held in Nera, there was "nothing improper in suspending an officer pending his lawyer, both oral or written, must be respectful and restrained in keeping with the dignity of
investigation and before tho charges against him are heard . . . (Nera v. Garcia., supra). the legal profession and with his behavioral attitude toward his brethren in the profession
There is no question that under Section 24 of R.A. No. 6770, the Ombudsman cannot order (Lubiano v. Gordolla, 115 SCRA 459 [1982]). The use of abusive language by counsel against
the preventive suspension of a respondent unless the evidence of guilt is strong and (1) the the opposing counsel constitutes at the same time a disrespect to the dignity of the court of
charts against such officer or employee involves dishonesty, oppression or grave misconduct justice. Besides, the use of impassioned language in pleadings, more often than not, creates
or neglect in the performance of duty; (2) the charge would warrant removal from the more heat than light.
The Motion for Disbarment (Rollo, p. 261) has no place in the instant special civil action, the preventive suspension of respondents are warranted by the facts. We may be suspending key
which is confined to questions of jurisdiction or abuse of discretion for the purpose of government officials and employees on the basis merely of speculations which may not serve the ends
relieving persons from the arbitrary acts of judges and quasi-judicial officers. There is a set of of justice but which, on the other hand, deprive them of their right to due process. The simultaneous
preventive suspension of top officials and employees of the National Center for Mental Health may just
procedure for the discipline of members of the bar separate and apart from the present
disrupt, the hospital's normal operations, much to the detriment of public service. We may safely
special civil action.
assume that it is not easy to replace them in their respective functions as those substituting them may
WHEREFORE, the petition is DISMISSED and the Status quo ordered to be maintained in the be taking over for the first time. The proper care of mental patients may thus be unduly jeopardized
Resolution dated September 22, 1992 is LIFTED and SET ASIDE. and their lives and limbs imperilled.
SO ORDERED. I would be amenable to holding oral argument to hear the parties if only to have enough factual and
Narvasa, C.J., Cruz, Padilla, Bidin, Griño-Aquino, Regalado, Davide, Jr., Romero, Nocon, Melo, legal bases to justify the preventive suspension of petitioners.
Puno and Vitug, JJ., concur.
Feliciano, J., is on leave.
Separate Opinions [G.R. No. 112212. March 2, 1998]
BELLOSILLO, J., concurring: GREGORIO FULE, petitioner, vs. COURT OF APPEALS, NINEVETCH CRUZ and JUAN
I agree that the Ombudsman has the authority, under Sec. 24 of R.A.
BELARMINO, respondents.
No. 6770, to preventively suspend any government official or employee administratively charged before
him pending the investigation of the complaint, the reason being that respondent's continued stay in DECISION
office may prejudice the prosecution of the case. ROMERO, J.:
However, in the case before us, I am afraid that the facts thus far presented may not provide adequate This petition for review on certiorari questions the affirmance by the Court of Appeals of
basis to reasonably place petitioners under preventive suspension. For, it is not enough to rule that the the decision[1] of the Regional Trial Court of San Pablo City, Branch 30, dismissing the
Ombudsman has authority to suspend petitioners preventively while the case is in progress before him. complaint that prayed for the nullification of a contract of sale of a 10-hectare property in
Equally important is the determination whether it is necessary to issue the preventive suspension under Tanay, Rizal in consideration of the amount of P40,000.00 and a 2.5 carat emerald-cut
the circumstances. Regretfully, I cannot see any sufficient basis to justify the preventive suspension. diamond (Civil Case No. SP-2455). The lower courts decision disposed of the case as follows:
That is why, I go for granting oral argument to the parties so that we can truthfully determine whether WHEREFORE, premises considered, the Court hereby renders judgment dismissing the
the preventive suspension of respondents are warranted by the facts. We may be suspending key
complaint for lack of merit and ordering plaintiff to pay:
government officials and employees on the basis merely of speculations which may not serve the ends
of justice but which, on the other hand, deprive them of their right to due process. The simultaneous 1. Defendant Dra. Ninevetch M. Cruz the sum of P300,000.00 as and for moral damages and
preventive suspension of top officials and employees of the National Center for Mental Health may just the sum of P100,000.00 as and for exemplary damages;
disrupt, the hospital's normal operations, much to the detriment of public service. We may safely 2. Defendant Atty. Juan Belarmino the sum of P250,000.00 as and for moral damages and
assume that it is not easy to replace them in their respective functions as those substituting them may the sum of P150,000.00 as and for exemplary damages;
be taking over for the first time. The proper care of mental patients may thus be unduly jeopardized 3. Defendant Dra. Cruz and Atty. Belarmino the sum of P25,000.00 each as and for attorneys
and their lives and limbs imperilled. fees and litigation expenses; and
I would be amenable to holding oral argument to hear the parties if only to have enough factual and 4. The costs of suit.
legal bases to justify the preventive suspension of petitioners. SO ORDERED.
As found by the Court of Appeals and the lower court, the antecedent facts of this case
# Separate Opinions
BELLOSILLO, J., concurring: are as follows:
I agree that the Ombudsman has the authority, under Sec. 24 of R.A. Petitioner Gregorio Fule, a banker by profession and a jeweler at the same time, acquired a
No. 6770, to preventively suspend any government official or employee administratively charged before 10-hectare property in Tanay, Rizal (hereinafter Tanay property), covered by Transfer
him pending the investigation of the complaint, the reason being that respondent's continued stay in Certificate of Title No. 320725 which used to be under the name of Fr. Antonio Jacobe. The
office may prejudice the prosecution of the case. latter had mortgaged it earlier to the Rural Bank of Alaminos (the Bank), Laguna, Inc. to
However, in the case before us, I am afraid that the facts thus far presented may not provide adequate secure a loan in the amount of P10,000.00, but the mortgage was later foreclosed and the
basis to reasonably place petitioners under preventive suspension. For, it is not enough to rule that the property offered for public auction upon his default.
Ombudsman has authority to suspend petitioners preventively while the case is in progress before him. In July 1984, petitioner, as corporate secretary of the bank, asked Remelia Dichoso and
Equally important is the determination whether it is necessary to issue the preventive suspension under
Oliva Mendoza to look for a buyer who might be interested in the Tanay property. The two
the circumstances. Regretfully, I cannot see any sufficient basis to justify the preventive suspension.
That is why, I go for granting oral argument to the parties so that we can truthfully determine whether found one in the person of herein private respondent Dr. Ninevetch Cruz. It so happened that
at the time, petitioner had shown interest in buying a pair of emerald-cut diamond earrings took the jewelry from the bag, went near the electric light at the banks lobby, held the
owned by Dr. Cruz which he had seen in January of the same year when his mother jewelry against the light and examined it for ten to fifteen minutes. After a while, Dr. Cruz
examined and appraised them as genuine. Dr. Cruz, however, declined petitioners offer to asked, Okay na ba iyan? Petitioner expressed his satisfaction by nodding his head.
buy the jewelry for P100,000.00. Petitioner then made another bid to buy them for For services rendered, petitioner paid the agents, Dichoso and Mendoza, the amount of
US$6,000.00 at the exchange rate of $1.00 to P25.00. At this point, petitioner inspected said US$300.00 and some pieces of jewelry. He did not, however, give them half of the pair of
jewelry at the lobby of the Prudential Bank branch in San Pablo City and then made a sketch earrings in question which he had earlier promised.
thereof. Having sketched the jewelry for twenty to thirty minutes, petitioner gave them back Later, at about 8:00 oclock in the evening of the same day, petitioner arrived at the
to Dr. Cruz who again refused to sell them since the exchange rate of the peso at the time residence of Atty. Belarmino complaining that the jewelry given to him was fake. He then
appreciated to P19.00 to a dollar. used a tester to prove the alleged fakery. Meanwhile, at 8:30 p.m., Dichoso and Mendoza
Subsequently, however, negotiations for the barter of the jewelry and the Tanay went to the residence of Dr. Cruz to borrow her car so that, with Atty. Belarmino, they could
property ensued. Dr. Cruz requested herein private respondent Atty. Juan Belarmino to check register the Tanay property. After Dr. Cruz had agreed to lend her car, Dichoso called up
the property who, in turn, found out that no sale or barter was feasible because the one-year Atty. Belarmino. The latter, however, instructed Dichoso to proceed immediately to his
period for redemption of the said property had not yet expired at the time. residence because petitioner was there. Believing that petitioner had finally agreed to give
In an effort to cut through any legal impediment, petitioner executed on October 19, them half of the pair of earrings, Dichoso went posthaste to the residence of Atty. Belarmino
1984, a deed of redemption on behalf of Fr. Jacobe purportedly in the amount of P15,987.78, only to find petitioner already demonstrating with a tester that the earrings were
and on even date, Fr. Jacobe sold the property to petitioner for P75,000.00. The haste with fake. Petitioner then accused Dichoso and Mendoza of deceiving him which they, however,
which the two deeds were executed is shown by the fact that the deed of sale was notarized denied. They countered that petitioner could not have been fooled because he had vast
ahead of the deed of redemption. As Dr. Cruz had already agreed to the proposed barter, experience regarding jewelry. Petitioner nonetheless took back the US$300.00 and jewelry he
petitioner went to Prudential Bank once again to take a look at the jewelry. had given them.
In the afternoon of October 23, 1984, petitioner met Atty. Belarmino at the latters Thereafter, the group decided to go to the house of a certain Macario Dimayuga, a
residence to prepare the documents of sale.[2] Dr. Cruz herself was not around but Atty. jeweler, to have the earrings tested. Dimayuga, after taking one look at the earrings,
Belarmino was aware that she and petitioner had previously agreed to exchange a pair of immediately declared them counterfeit. At around 9:30 p.m., petitioner went to one Atty.
emerald-cut diamond earrings for the Tanay property. Atty. Belarmino accordingly caused the Reynaldo Alcantara residing at Lakeside Subdivision in San Pablo City, complaining about the
preparation of a deed of absolute sale while petitioner and Dr. Cruz attended to the fake jewelry. Upon being advised by the latter, petitioner reported the matter to the police
safekeeping of the jewelry. station where Dichoso and Mendoza likewise executed sworn statements.
The following day, petitioner, together with Dichoso and Mendoza, arrived at the On October 26, 1984, petitioner filed a complaint before the Regional Trial Court of San
residence of Atty. Belarmino to finally execute a deed of absolute sale. Petitioner signed the Pablo City against private respondents praying, among other things, that the contract of sale
deed and gave Atty. Belarmino the amount of P13,700.00 for necessary expenses in the over the Tanay property be declared null and void on the ground of fraud and deceit.
transfer of title over the Tanay property. Petitioner also issued a certification to the effect On October 30, 1984, the lower court issued a temporary restraining order directing the
that the actual consideration of the sale was P200,000.00 and not P80,000.00 as indicated in Register of Deeds of Rizal to refrain from acting on the pertinent documents involved in the
the deed of absolute sale. The disparity between the actual contract price and the one transaction. On November 20, 1984, however, the same court lifted its previous order and
indicated on the deed of absolute sale was purportedly aimed at minimizing the amount of denied the prayer for a writ of preliminary injunction.
the capital gains tax that petitioner would have to shoulder. Since the jewelry was appraised After trial, the lower court rendered its decision on March 7, 1989. Confronting the issue
only at P160,000.00, the parties agreed that the balance of P40,000.00 would just be paid of whether or not the genuine pair of earrings used as consideration for the sale was
later in cash. delivered by Dr. Cruz to petitioner, the lower court said:
As pre-arranged, petitioner left Atty. Belarminos residence with Dichoso and Mendoza The Court finds that the answer is definitely in the affirmative. Indeed, Dra. Cruz delivered
and headed for the bank, arriving there at past 5:00 p.m. Dr. Cruz also arrived shortly (the) subject jewelries (sic) into the hands of plaintiff who even raised the same nearer to
thereafter, but the cashier who kept the other key to the deposit box had already left the the lights of the lobby of the bank near the door. When asked by Dra. Cruz if everything was
bank. Dr. Cruz and Dichoso, therefore, looked for said cashier and found him having a in order, plaintiff even nodded his satisfaction (Hearing of Feb. 24, 1988). At that instance,
haircut. As soon as his haircut was finished, the cashier returned to the bank and arrived plaintiff did not protest, complain or beg for additional time to examine further the jewelries
there at 5:48 p.m., ahead of Dr. Cruz and Dichoso who arrived at 5:55 p.m. Dr. Cruz and the (sic). Being a professional banker and engaged in the jewelry business plaintiff is conversant
cashier then opened the safety deposit box, the former retrieving a transparent plastic or and competent to detect a fake diamond from the real thing. Plaintiff was accorded the
cellophane bag with the jewelry inside and handing over the same to petitioner. The latter reasonable time and opportunity to ascertain and inspect the jewelries (sic) in accordance
with Article 1584 of the Civil Code. Plaintiff took delivery of the subject jewelries (sic) before left the bank both of them had fully performed their respective prestations. Once a contract
6:00 p.m. of October 24, 1984. When he went at 8:00 p.m. that same day to the residence is shown to have been consummated or fully performed by the parties thereto, its
of Atty. Belarmino already with a tester complaining about some fake jewelries (sic), there existence and binding effect can no longer be disputed. It is irrelevant and immaterial to
was already undue delay because of the lapse of a considerable length of time since he got dispute the due execution of a contract if both of them have in fact performed their
hold of subject jewelries (sic). The lapse of two (2) hours more or less before plaintiff obligations thereunder and their respective signatures and those of their witnesses appear
complained is considered by the Court as unreasonable delay.[3] upon the face of the document (Weldon Construction v. CA G.R. No. L-35721, Oct. 12,
The lower court further ruled that all the elements of a valid contract under Article 1458 1987).[5]
of the Civil Code were present, namely: (a) consent or meeting of the minds; (b) determinate Finally, in awarding damages to the defendants, the lower court remarked:
subject matter, and (c) price certain in money or its equivalent. The same elements, The Court finds that plaintiff acted in wanton bad faith. Exhibit 2-Belarmino purports to show
according to the lower court, were present despite the fact that the agreement between that the Tanay property is worth P25,000.00. However, also on that same day it was
petitioner and Dr. Cruz was principally a barter contract. The lower court explained thus: executed, the propertys worth was magnified at P75,000.00 (Exh. 3-Belarmino). How could
x x x. Plaintiffs ownership over the Tanay property passed unto Dra. Cruz upon the in less than a day (Oct. 19, 1984) the value would (sic) triple under normal circumstances?
constructive delivery thereof by virtue of the Deed of Absolute Sale (Exh. D). On the other Plaintiff, with the assistance of his agents, was able to exchange the Tanay property which
hand, the ownership of Dra. Cruz over the subject jewelries (sic) transferred to the plaintiff his bank valued only at P25,000.00 in exchange for a genuine pair of emerald cut diamond
upon her actual personal delivery to him at the lobby of the Prudential Bank. It is expressly worth P200,000.00 belonging to Dra. Cruz. He also retrieved the US$300.00 and jewelries
provided by law that the thing sold shall be understood as delivered, when it is placed in the (sic) from his agents. But he was not satisfied in being able to get subject jewelries for a
control and possession of the vendee (Art. 1497, Civil Code; Kuenzle & Straff vs. Watson & song. He had to file a malicious and unfounded case against Dra. Cruz and Atty. Belarmino
Co. 13 Phil. 26). The ownership and/or title over the jewelries (sic) was transmitted who are well known, respected and held in high esteem in San Pablo City where everybody
immediately before 6:00 p.m. of October 24, 1984. Plaintiff signified his approval by nodding practically knows everybody. Plaintiff came to Court with unclean hands dragging the
his head. Delivery or tradition, is one of the modes of acquiring ownership (Art. 712, Civil defendants and soiling their clean and good name in the process. Both of them are near the
Code). twilight of their lives after maintaining and nurturing their good reputation in the community
Similarly, when Exhibit D was executed, it was equivalent to the delivery of the Tanay only to be stunned with a court case. Since the filing of this case on October 26, 1984 up to
property in favor of Dra. Cruz. The execution of the public instrument (Exh. D) operates as a the present they were living under a pall of doubt. Surely, this affected not only their earning
formal or symbolic delivery of the Tanay property and authorizes the buyer, Dra. Cruz to use capacity in their practice of their respective professions, but also they suffered besmirched
the document as proof of ownership (Florendo v. Foz, 20 Phil. 399). More so, since Exhibit D reputations. Dra. Cruz runs her own hospital and defendant Belarmino is a well respected
does not contain any proviso or stipulation to the effect that title to the property is reserved legal practitioner.
with the vendor until full payment of the purchase price, nor is there a stipulation giving the The length of time this case dragged on during which period their reputation were (sic)
vendor the right to unilaterally rescind the contract the moment the vendee fails to pay tarnished and their names maligned by the pendency of the case, the Court is of the belief
within a fixed period (Taguba v. Vda. De Leon, 132 SCRA 722; Luzon Brokerage Co. Inc. vs. that some of the damages they prayed for in their answers to the complaint are reasonably
Maritime Building Co. Inc. 86 SCRA 305; Froilan v. Pan Oriental Shipping Co. et al. 12 SCRA proportionate to the sufferings they underwent (Art. 2219, New Civil Code). Moreover,
276).[4] because of the falsity, malice and baseless nature of the complaint defendants were
Aside from concluding that the contract of barter or sale had in fact been consummated compelled to litigate. Hence, the award of attorneys fees is warranted under the
when petitioner and Dr. Cruz parted ways at the bank, the trial court likewise dwelt on the circumstances (Art. 2208, New Civil Code).[6]
unexplained delay with which petitioner complained about the alleged fakery. Thus: From the trial courts adverse decision, petitioner elevated the matter to the Court of
x x x. Verily, plaintiff is already estopped to come back after the lapse of considerable Appeals. On October 20, 1992, the Court of Appeals, however, rendered a
length of time to claim that what he got was fake. He is a Business Management graduate of decision[7]affirming in toto the lower courts decision. His motion for reconsideration having
La Salle University, Class 1978-79, a professional banker as well as a jeweler in his own right. been denied on October 19, 1993, petitioner now files the instant petition alleging that:
Two hours is more than enough time to make a switch of a Russian diamond with the real I. THE TRIAL COURT ERRED IN DISMISSING PLAINTIFFS COMPLAINT AND IN
diamond. It must be remembered that in July 1984 plaintiff made a sketch of the subject HOLDING THAT THE PLAINTIFF ACTUALLY RECEIVED A GENUINE PAIR OF
jewelries (sic) at the Prudential Bank. Plaintiff had a tester at 8:00 p.m. at the residence of EMERALD CUT DIAMOND EARRING(S) FROM DEFENDANT CRUZ x x x;
Atty. Belarmino. Why then did he not bring it out when he was examining the subject II. THE TRIAL COURT ERRED IN AWARDING MORAL AND EXEMPLARY DAMAGES
jewelries (sic) at about 6:00 p.m. in the banks lobby? Obviously, he had no need for it after AND ATTORNEYS FEES IN FAVOR OF DEFENDANTS AND AGAINST THE
being satisfied of the genuineness of the subject jewelries (sic). When Dra. Cruz and plaintiff PLAINTIFF IN THIS CASE; and
III.THE TRIAL COURT ERRED IN NOT DECLARING THE DEED OF SALE OF THE duty as a judge to dispose of the courts business promptly and decide cases within the
TANAY PROPERTY (EXH. `D) AS NULL AND VOID OR IN NOT ANNULLING THE required periods.[14] The two-year period within which Judge Jaramillo handled the case
SAME, AND IN FAILING TO GRANT REASONABLE DAMAGES IN FAVOR OF THE provided him with all the time to study it and even write down its facts as soon as these
PLAINTIFF.[8] were presented to court. In fact, this Court does not see anything wrong in the practice of
As to the first allegation, the Court observes that petitioner is essentially raising a factual writing a decision days before the scheduled promulgation of judgment and leaving the
issue as it invites us to examine and weigh anew the facts regarding the genuineness of the dispositive portion for typing at a time close to the date of promulgation, provided that no
earrings bartered in exchange for the Tanay property. This, of course, we cannot do without malice or any wrongful conduct attends its adoption.[15] The practice serves the dual
unduly transcending the limits of our review power in petitions of this nature which are purposes of safeguarding the confidentiality of draft decisions and rendering decisions with
confined merely to pure questions of law. We accord, as a general rule, conclusiveness to a promptness. Neither can Judge Jaramillo be made administratively answerable for the
lower courts findings of fact unless it is shown, inter alia, that: (1) the conclusion is a finding immediate rendition of the decision. The acts of a judge which pertain to his judicial
grounded on speculations, surmises or conjectures; (2) the inference is manifestly mistaken, functions are not subject to disciplinary power unless they are committed with fraud,
absurd and impossible; (3) when there is a grave abuse of discretion; (4) when the judgment dishonesty, corruption or bad faith.[16] Hence, in the absence of sufficient proof to the
is based on a misapprehension of facts; (5) when the findings of fact are conflicting; and (6) contrary, Judge Jaramillo is presumed to have performed his job in accordance with law and
when the Court of Appeals, in making its findings, went beyond the issues of the case and should instead be commended for his close attention to duty.
the same is contrary to the admission of both parties. [9] We find nothing, however, that Having disposed of petitioners first contention, we now come to the core issue of this
warrants the application of any of these exceptions. petition which is whether the Court of Appeals erred in upholding the validity of the contract
Consequently, this Court upholds the appellate courts findings of fact especially because of barter or sale under the circumstances of this case.
these concur with those of the trial court which, upon a thorough scrutiny of the records, are The Civil Code provides that contracts are perfected by mere consent. From this
firmly grounded on evidence presented at the trial.[10] To reiterate, this Courts jurisdiction is moment, the parties are bound not only to the fulfillment of what has been expressly
only limited to reviewing errors of law in the absence of any showing that the findings stipulated but also to all the consequences which, according to their nature, may be in
complained of are totally devoid of support in the record or that they are glaringly erroneous keeping with good faith, usage and law.[17] A contract of sale is perfected at the moment
as to constitute serious abuse of discretion.[11] there is a meeting of the minds upon the thing which is the object of the contract and upon
Nonetheless, this Court has to closely delve into petitioners allegation that the lower the price.[18] Being consensual, a contract of sale has the force of law between the
courts decision of March 7, 1989 is a ready-made one because it was handed down a day contracting parties and they are expected to abide in good faith by their respective
after the last date of the trial of the case. [12] Petitioner, in this contractual commitments. Article 1358 of the Civil Code which requires the embodiment of
regard, finds it incredible that Judge J. Ausberto Jaramillo was able to write a 12-page single- certain contracts in a public instrument, is only for convenience, [19] and registration of the
spaced decision, type it and release it on March 7, 1989, less than a day after the last instrument only adversely affects third parties.[20] Formal requirements are, therefore, for the
hearing on March 6, 1989. He stressed that Judge Jaramillo replaced Judge Salvador de benefit of third parties. Non-compliance therewith does not adversely affect the validity of
Guzman and heard only his rebuttal testimony. the contract nor the contractual rights and obligations of the parties thereunder.
This allegation is obviously no more than a desperate effort on the part of petitioner to It is evident from the facts of the case that there was a meeting of the minds between
disparage the lower courts findings of fact in order to convince this Court to review the petitioner and Dr. Cruz. As such, they are bound by the contract unless there are reasons or
same. It is noteworthy that Atty. Belarmino clarified that Judge Jaramillo had issued the first circumstances that warrant its nullification. Hence, the problem that should be addressed in
order in the case as early as March 9, 1987 or two years before the rendition of the this case is whether or not under the facts duly established herein, the contract can be
decision. In fact, Atty. Belarmino terminated presentation of evidence on October 13, 1987, voided in accordance with law so as to compel the parties to restore to each other the things
while Dr. Cruz finished hers on February 4, 1989, or more than a month prior to the rendition that have been the subject of the contract with their fruits, and the price with interest. [21]
of the judgment. The March 6, 1989 hearing was conducted solely for the presentation of Contracts that are voidable or annullable, even though there may have been no damage
petitioner's rebuttal testimony.[13] In other words, Judge Jaramillo had ample time to study to the contracting parties are: (1) those where one of the parties is incapable of giving
the case and write the decision because the rebuttal evidence would only serve to confirm or consent to a contract; and (2) those where the consent is vitiated by mistake, violence,
verify the facts already presented by the parties. intimidation, undue influence or fraud.[22] Accordingly, petitioner now stresses before this
The Court finds nothing anomalous in the said situation. No proof has been adduced Court that he entered into the contract in the belief that the pair of emerald-cut diamond
that Judge Jaramillo was motivated by a malicious or sinister intent in disposing of the case earrings was genuine. On the pretext that those pieces of jewelry turned out to be
with dispatch. Neither is there proof that someone else wrote the decision for him. The counterfeit, however, petitioner subsequently sought the nullification of said contract on the
immediate rendition of the decision was no more than Judge Jaramillos compliance with his ground that it was, in fact, tainted with fraud[23] such that his consent was vitiated.
There is fraud when, through the insidious words or machinations of one of the Tanay property, could not sever the juridical tie that now bound him and Dr. Cruz. The
contracting parties, the other is induced to enter into a contract which, without them, he nature and value of the thing he had taken preclude its return after that supervening period
would not have agreed to.[24] The records, however, are bare of any evidence manifesting within which anything could have happened, not excluding the alteration of the jewelry or its
that private respondents employed such insidious words or machinations to entice petitioner being switched with an inferior kind.
into entering the contract of barter. Neither is there any evidence showing that Dr. Cruz Both the trial and appellate courts, therefore, correctly ruled that there were no legal
induced petitioner to sell his Tanay property or that she cajoled him to take the earrings in bases for the nullification of the contract of sale. Ownership over the parcel of land and the
exchange for said property.On the contrary, Dr. Cruz did not initially accede to petitioners pair of emerald-cut diamond earrings had been transferred to Dr. Cruz and petitioner,
proposal to buy the said jewelry. Rather, it appears that it was petitioner, through his agents, respectively, upon the actual and constructive delivery thereof. [30] Said contract of sale being
who led Dr. Cruz to believe that the Tanay property was worth exchanging for her jewelry as absolute in nature, title passed to the vendee upon delivery of the thing sold since there was
he represented that its value was P400,000.00 or more than double that of the jewelry which no stipulation in the contract that title to the property sold has been reserved in the seller
was valued only at P160,000.00. If indeed petitioners property was truly worth that much, it until full payment of the price or that the vendor has the right to unilaterally resolve the
was certainly contrary to the nature of a businessman-banker like him to have parted with contract the moment the buyer fails to pay within a fixed period. [31] Such stipulations are not
his real estate for half its price. In short, it was in fact petitioner who resorted to manifest in the contract of sale.
machinations to convince Dr. Cruz to exchange her jewelry for the Tanay property. While it is true that the amount of P40,000.00 forming part of the consideration was still
Moreover, petitioner did not clearly allege mistake as a ground for nullification of the payable to petitioner, its nonpayment by Dr. Cruz is not a sufficient cause to invalidate the
contract of sale. Even assuming that he did, petitioner cannot successfully invoke the contract or bar the transfer of ownership and possession of the things exchanged considering
same. To invalidate a contract, mistake must refer to the substance of the thing that is the the fact that their contract is silent as to when it becomes due and demandable. [32]
object of the contract, or to those conditions which have principally moved one or both Neither may such failure to pay the balance of the purchase price result in the payment
parties to enter into the contract.[25] An example of mistake as to the object of the contract is of interest thereon. Article 1589 of the Civil Code prescribes the payment of interest by the
the substitution of a specific thing contemplated by the parties with another. [26] In his vendee for the period between the delivery of the thing and the payment of the price in the
allegations in the complaint, petitioner insinuated that an inferior one or one that had only following cases:
Russian diamonds was substituted for the jewelry he wanted to exchange with his 10-hectare (1) Should it have been so stipulated;
land. He, however, failed to prove the fact that prior to the delivery of the jewelry to him, (2) Should the thing sold and delivered produce fruits or income;
private respondents endeavored to make such substitution. (3) Should he be in default, from the time of judicial or extrajudicial demand for the
Likewise, the facts as proven do not support the allegation that petitioner himself could payment of the price.
be excused for the mistake. On account of his work as a banker-jeweler, it can be rightfully Not one of these cases obtains here. This case should, of course, be distinguished from De la
assumed that he was an expert on matters regarding gems. He had the intellectual capacity Cruz v. Legaspi,[33] where the court held that failure to pay the consideration after the
and the business acumen as a banker to take precautionary measures to avert such a notarization of the contract as previously promised resulted in the vendees liability for
mistake, considering the value of both the jewelry and his land. The fact that he had seen payment of interest. In the case at bar, there is no stipulation for the payment of interest in
the jewelry before October 24, 1984 should not have precluded him from having its the contract of sale nor proof that the Tanay property produced fruits or income. Neither did
genuineness tested in the presence of Dr. Cruz. Had he done so, he could have avoided the petitioner demand payment of the price as in fact he filed an action to nullify the contract of
present situation that he himself brought about. Indeed, the finger of suspicion of switching sale.
the genuine jewelry for a fake inevitably points to him. Such a mistake caused by manifest All told, petitioner appears to have elevated this case to this Court for the principal
negligence cannot invalidate a juridical act.[27] As the Civil Code provides, (t)here is no reason of mitigating the amount of damages awarded to both private respondents which
mistake if the party alleging it knew the doubt, contingency or risk affecting the object of the petitioner considers as exorbitant. He contends that private respondents do not deserve at all
contract.[28] the award of damages. In fact, he pleads for the total deletion of the award as regards
Furthermore, petitioner was afforded the reasonable opportunity required in Article 1584 private respondent Belarmino whom he considers a mere nominal party because no specific
of the Civil Code within which to examine the jewelry as he in fact accepted them when claim for damages against him was alleged in the complaint. When he filed the case, all that
asked by Dr. Cruz if he was satisfied with the same.[29] By taking the jewelry outside the petitioner wanted was that Atty. Belarmino should return to him the owners duplicate copy of
bank, petitioner executed an act which was more consistent with his exercise of ownership TCT No. 320725, the deed of sale executed by Fr. Antonio Jacobe, the deed of redemption
over it. This gains credence when it is borne in mind that he himself had earlier delivered the and the check alloted for expenses. Petitioner alleges further that Atty. Belarmino should not
Tanay property to Dr. Cruz by affixing his signature to the contract of sale. That after two have delivered all those documents to Dr. Cruz because as the lawyer for both the seller and
hours he later claimed that the jewelry was not the one he intended in exchange for his the buyer in the sale contract, he should have protected the rights of both parties. Moreover,
petitioner asserts that there was no firm basis for damages except for Atty. Belarminos As pointed out earlier, a closer scrutiny of the chain of events immediately prior to and
uncorroborated testimony.[34] on October 24, 1984 itself would amply demonstrate that petitioner was not simply negligent
Moral and exemplary damages may be awarded without proof of pecuniary loss. In in failing to exercise due diligence to assure himself that what he was taking in exchange for
awarding such damages, the court shall take into account the circumstances obtaining in the his property were genuine diamonds. He had rather placed himself in a situation from which
case and assess damages according to its discretion.[35] To warrant the award of damages, it it preponderantly appears that his seeming ignorance was actually just a ruse. Indeed, he
must be shown that the person to whom these are awarded has sustained injury. He must had unnecessarily dragged respondents to face the travails of litigation in speculating at the
likewise establish sufficient data upon which the court can properly base its estimate of the possible favorable outcome of his complaint when he should have realized that his supposed
amount of damages.[36] Statements of facts should establish such data rather than mere predicament was his own making. We, therefore, see here no semblance of an honest and
conclusions or opinions of witnesses.[37] Thus: sincere belief on his part that he was swindled by respondents which would entitle him to
x x x. For moral damages to be awarded, it is essential that the claimant must have redress in court. It must be noted that before petitioner was able to convince Dr. Cruz to
satisfactorily proved during the trial the existence of the factual basis of the exchange her jewelry for the Tanay property, petitioner took pains to thoroughly examine
damages and its causal connection with the adverse partys acts. If the court has no said jewelry, even going to the extent of sketching their appearance. Why at the precise
proof or evidence upon which the claim for moral damages could be based, such moment when he was about to take physical possession thereof he failed to exert extra
indemnity could not be outrightly awarded. The same holds true with respect to the efforts to check their genuineness despite the large consideration involved has never been
award of exemplary damages where it must be shown that the party acted in a explained at all by petitioner.His acts thus failed to accord with what an ordinary prudent
wanton, oppressive or malevolent manner.[38] man would have done in the same situation. Being an experienced banker and a
In this regard, the lower court appeared to have awarded damages on a ground businessman himself who deliberately skirted a legal impediment in the sale of the Tanay
analogous to malicious prosecution under Article 2219(8) of the Civil Code [39] as shown by (1) property and to minimize the capital gains tax for its exchange, it was actually gross
petitioners wanton bad faith in bloating the value of the Tanay property which he exchanged recklessness for him to have merely conducted a cursory examination of the jewelry when
for a genuine pair of emerald-cut diamond worth P200,000.00; and (2) his filing of a every opportunity for doing so was not denied him. Apparently, he carried on his person a
malicious and unfounded case against private respondents who were well known, respected tester which he later used to prove the alleged fakery but which he did not use at the time
and held in high esteem in San Pablo City where everybody practically knows everybody and when it was most needed. Furthermore, it took him two more hours of unexplained delay
whose good names in the twilight of their lives were soiled by petitioners coming to court before he complained that the jewelry he received were counterfeit.Hence, we stated earlier
with unclean hands, thereby affecting their earning capacity in the exercise of their that anything could have happened during all the time that petitioner was in complete
respective professions and besmirching their reputation. possession and control of the jewelry, including the possibility of substituting them with fake
For its part, the Court of Appeals affirmed the award of damages to private respondents ones, against which respondents would have a great deal of difficulty defending
for these reasons: themselves. The truth is that petitioner even failed to successfully prove during trial that the
The malice with which Fule filed this case is apparent. Having taken possession of jewelry he received from Dr. Cruz were not genuine. Add to that the fact that he had been
the genuine jewelry of Dra. Cruz, Fule now wishes to return a fake jewelry to Dra. shrewd enough to bloat the Tanay propertys price only a few days after he purchased it at a
Cruz and, more than that, get back the real property, which his bank owns. Fule much lower value. Thus, it is our considered view that if this slew of circumstances were
has obtained a genuine jewelry which he could sell anytime, anywhere and to connected, like pieces of fabric sewn into a quilt, they would sufficiently demonstrate that his
anybody, without the same being traced to the original owner for practically acts were not merely negligent but rather studied and deliberate.
nothing. This is plain and simple, unjust enrichment.[40] We do not have here, therefore, a situation where petitioners complaint was simply
While, as a rule, moral damages cannot be recovered from a person who has filed a found later to be based on an erroneous ground which, under settled jurisprudence, would
complaint against another in good faith because it is not sound policy to place a penalty on not have been a reason for awarding moral and exemplary damages. [42] Instead, the cause
the right to litigate,[41] the same, however, cannot apply in the case at bar. The factual of action of the instant case appears to have been contrived by petitioner himself. In other
findings of the courts a quo to the effect that petitioner filed this case because he was the words, he was placed in a situation where he could not honestly evaluate whether his cause
victim of fraud; that he could not have been such a victim because he should have examined of action has a semblance of merit, such that it would require the expertise of the courts to
the jewelry in question before accepting delivery thereof, considering his exposure to the put it to a test. His insistent pursuit of such case then coupled with circumstances showing
banking and jewelry businesses; and that he filed the action for the nullification of the that he himself was guilty in bringing about the supposed wrongdoing on which he anchored
contract of sale with unclean hands, all deserve full faith and credit to support the conclusion his cause of action would render him answerable for all damages the defendant may suffer
that petitioner was motivated more by ill will than a sincere attempt to protect his rights in because of it. This is precisely what took place in the petition at bar and we find no cogent
commencing suit against respondents.
reason to disturb the findings of the courts below that respondents in this case suffered The transcript of stenographic notes not having yet been forwarded to the respondent court,
considerable damages due to petitioners unwarranted action. petitioner filed on May 5, 1971 a 'MOTION EX-PARTE TO SUBMIT MEMORANDUM WITHIN 30
WHEREFORE, the decision of the Court of Appeals dated October 20, 1992 is hereby DAYS FROM RECEIPT OF NOTICE OF SUBMISSION OF THE TRANSCRIPT OF STENOGRAPHIC
NOTES TAKEN DURING THE HEARING OF THE CASE BEFORE THE CITY COURT OF
AFFIRMED in toto. Dr. Cruz, however, is ordered to pay petitioner the balance of the
CALOOCAN CITY' which was granted by respondent court on May 7, 1971. However, before
purchase price of P40,000.00 within ten (10) days from the finality of this decision. Costs
the petitioner could receive any such notice from the respondent court, the respondent Judge
against petitioner. issued an order on August 4, 1971 which says:
SO ORDERED.
Narvasa, CJ. (Chairman), Kapunan and Purisima, JJ., concur. For failure of the defendant-appellant to prosecute her appeal the same is hereby
ordered DISMISSED with costs against her.
Petitioner filed a motion for reconsideration of the order on September 28, 1971, citing as a
ground the granting of his ex-parte motion to submit memorandum within 30 days from
G.R. No. L-35910 July 21, 1978 notice of the submission of the stenographic notes taken before the City Court. Private
PURITA BERSABAL, petitioner, respondents filed their opposition to the motion on September 30,1971. In the meantime, on
vs. October 20,1971, petitioner filed her memorandum dated October 18, 1971. On October 30,
HONORABLE JUDGE SERAFIN SALVADOR, as Judge of the Court of First Instance 1971 the respondent Court denied the motion for reconsideration. Then on January 25, 1972,
of Caloocan City, Branch XIV, TAN THAT and ONG PIN TEE, respondents. petitioner filed a motion for leave to file second motion for reconsideration which was
likewise denied by the respondent court on March 15, 1972. Hence this petition.
MAKASIAR, J.: The sole inquiry in the case at bar can be stated thus: Whether, in the light of the provisions
On March 23, 1972, petitioner Purita Bersabal seeks to annul the orders of respondent Judge of the second paragraph of Section 45 of Republic Act No. 296, as amended by R.A. No.
of August 4, 1971, October 30, 1971 and March 15, 1972 and to compel said respondent 6031, the mere failure of an appellant to submit on nine the memorandum mentioned in the
Judge to decide petitioner's perfected appeal on the basis of the evidence and records of the same paragraph would empower the Court of First Instance to dismiss the appeal on the
case submitted by the City Court of Caloocan City plus the memorandum already submitted ground of failure to Prosecute; or, whether it is mandatory upon said Court to proceed to
by the petitioner and respondents. decide the appealed case on the basis of the evidence and records transmitted to it, the
Since only questions of law were raised therein, the Court of Appeals, on October 13, 1972, failure of the appellant to submit a memorandum on time notwithstanding.
issued a resolution certifying said case to this Court pursuant to Section 17, paragraph (4) of The second paragraph of Section 45 of R.A. No. 296, otherwise known as the Philippine
the Judiciary Act of 1948, as amended. Judiciary Act of 1948, as amended by R.A. No. 6031 provides, in part, as follows:
As found by the Court of Appeals, the facts of this case are as follows:
Courts of First Instance shall decide such appealed cases on the basis of the evidence
It appears that private respondents Tan That and Ong Pin Tee filed an ejectment suit, and records transmitted from the city or municipal courts: Provided, That the
docketed as Civil Case No. 6926 in the City Court of Caloocan City, against the petitioner. A parties may submit memoranda and/or brief with oral argument if so requested ... .
decision was rendered by said Court on November 25, 1970, which decision was appealed by (Emphasis supplied).
the petitioner to the respondent Court and docketed therein as Civil Case No. C-2036.
During the pendency of the appeal the respondent court issued on March 23, 1971 an order The foregoing provision is clear and leaves no room for doubt. It cannot be interpreted
which reads: otherwise than that the submission of memoranda is optional on the part of the parties.
Being optional on the part of the parties, the latter may so choose to waive submission of the
Pursuant to the provisions of Rep. Act No. 6031, the Clerk of Court of Caloocan City,
is hereby directed to transmit to this Court within fifteen (15) days from receipt
memoranda. And as a logical concomitant of the choice given to the Parties, the Court
hereof the transcripts of stenographic notes taken down during the hearing of this cannot dismiss the appeal of the party waiving the submission of said memorandum the
case before the City Court of Caloocan City, and likewise, counsels for both parties appellant so chooses not to submit the memorandum, the Court of First Instance is left with
are given thirty (30) days from receipt of this order within which to file their no alternative but to decide the case on the basis of the evidence and records transmitted
respective memoranda, and thereafter, this case shall be deemed submitted for from the city or municipal courts. In other words, the Court is not empowered by law to
decision by this Court. dismiss the appeal on the mere failure of an appellant to submit his memorandum, but rather
which order was apparently received by petitioner on April 17, 1971. it is the Court's mandatory duty to decide the case on the basis of the available evidence and
records transmitted to it.
As a general rule, the word "may" when used in a statute is permissive only and operates to Republic Act No. 296, such "request" is tantamount to a requirement for the proper prosecution of the
confer discretion; while the word "shall" is imperative, operating to impose a duty which may appeal; thus, when the appellant willfuly fails to file such memorandum or brief, the judge should be
be enforced (Dizon vs. Encarnacion, L-18615, Dec. 24, 1963, 9 SCRA 714, 716-717). The empowered to dismiss the appeal, applying suppletorily the analogous provisions of Rule 50, section 1
for dismissal of appeal by the higher appellate courts and taking into account that Rule 40, section 9 of
implication is that the Court is left with no choice but to decide the appealed case either on
the Rules of Court now expressly authorizes the court of first instance to dismiss an appeal before it
the basis of the evidence and records transmitted to it, or on the basis of the latter plus
"for failure to prosecute."
memoranda and/or brief with oral argument duly submitted and/or made on request.
Moreover, memoranda, briefs and oral arguments are not essential requirements. They may Separate Opinions
be submitted and/or made only if so requested. TEEHANKEE, J, Concurring:
Finally, a contrary interpretation would be unjust and dangerous as it may defeat the I concur with the setting aside of the questioned dismissal of petitioner's appeal on the ground that the
litigant's right to appeal granted to him by law. In the case of Republic vs. Rodriguez record shows quite clearly that there was no failure on part of petitioner-appellant to prosecute her
(L-26056, May 29, 1969, 28 SCRA 378) this Court underscored "the need of proceeding with appeal in respondent judge's court. Petitioner had been granted in respondent judge's Order of May 7,
caution so that a party may not be deprived of its right to appeal except for weighty 1971, 30 days from notice of submission of the transcripts within which to file her memorandum on
appeal, yet her appeal was dismissed per his Order of August 4, 1971 for alleged failure to prosecute
reasons." Courts should heed the rule in Municipality of Tiwi, Albay vs. Cirujales
(by failure to file the memorandum) even before she had received any such notice. Upon receipt of the
(L-37520, Dec. 26, 1973, 54 SCRA 390, 395), thus:
dismissal order, petitioner had promptly moved for reconsideration and filed her memorandum on
The appellate court's summary dismissal of the appeal even before receipt of the
appeal.
records of the appealed case as ordered by it in a prior mandamus case must be set
I am not prepared at this stage to concur with the ratio decidendi of the decision penned by Mr. Justice
aside as having been issued precipitously and without an opportunity to consider and
Makasiar that the Court is not empowered by law to dismiss the appeal on the mere failure of an
appreciate unavoidable circumstances of record not attributable to petitioners that
appellant to submit his memorandum, but rather it is the Court's mandatory duty to decide the case on
caused the delay in the elevation of the records of the case on appeal.
the basis of the available evidence and records transmitted to it." I entertain serious doubts about such
In the instant case, no notice was received by petitioner about the submission of the pronouncement, once when the court of first instance "requests" the party-appellant to submit a
transcript of the stenographic notes, so that his 30-day period to submit his memorandum memorandum or brief on appeal under the provisions of Republic Act No. 6031 amending section 45 of
would commence to run. Only after the expiration of such period can the respondent Judge Republic Act No. 296, such "request" is tantamount to a requirement for the proper prosecution of the
act on the case by deciding it on the merits, not by dismissing the appeal of petitioner. appeal; thus, when the appellant willfuly fails to file such memorandum or brief, the judge should be
WHEREFORE, THE CHALLENGED ORDERS OF RESPONDENT JUDGE DATED AUGUST 4, 1971, empowered to dismiss the appeal, applying suppletorily the analogous provisions of Rule 50, section 1
OCTOBER 30, 1971 AND MARCH 15, 1971 ARE HEREBY SET ASIDE AS NULL AND VOID AND for dismissal of appeal by the higher appellate courts and taking into account that Rule 40, section 9 of
THE RESPONDENT COURT IS HEREBY DIRECTED TO DECIDE CIVIL CASE NO. C-2036 ON the Rules of Court now expressly authorizes the court of first instance to dismiss an appeal before it
"for failure to prosecute."
THE MERITS. NO COSTS.
Muñoz Palma, Fernandez and Guerrero, JJ., concur.
Separate Opinions
TEEHANKEE, J, concurring: OFFICE OF THE OMBUDSMAN. G.R. No. 167982
I concur with the setting aside of the questioned dismissal of petitioner's appeal on the ground that the Petitioner,
record shows quite clearly that there was no failure on part of petitioner-appellant to prosecute her
appeal in respondent judge's court. Petitioner had been granted in respondent judge's Order of May 7, MERCEDITAS DE SAHAGUN,
1971, 30 days from notice of submission of the transcripts within which to file her memorandum on
MANUELA T. WAQUIZ and
appeal, yet her appeal was dismissed per his Order of August 4, 1971 for alleged failure to prosecute
(by failure to file the memorandum) even before she had received any such notice. Upon receipt of the RAIDIS J. BASSIG, Promulgated:
dismissal order, petitioner had promptly moved for reconsideration and filed her memorandum on Respondents.* August 13, 2008
appeal. x----------------------------------------------------------x
I am not prepared at this stage to concur with the ratio decidendi of the decision penned by Mr. Justice DECISION
Makasiar that the Court is not empowered by law to dismiss the appeal on the mere failure of an AUSTRIA-MARTINEZ, J.:
appellant to submit his memorandum, but rather it is the Court's mandatory duty to decide the case on
the basis of the available evidence and records transmitted to it." I entertain serious doubts about such Before the Court is a Petition for Review on Certiorari under Rule 45 of the Rules of Court assailing the
pronouncement, once when the court of first instance "requests" the party-appellant to submit a Decision[1] dated April 28, 2005 of the Court of Appeals (CA) in CA-G.R. SP No. 78008 which set aside the
memorandum or brief on appeal under the provisions of Republic Act No. 6031 amending section 45 of
Orders dated March 10, 2003 and June 24, 2003 of the petitioner Office of the Ombudsman in OMB- contracts awarded to Brand Asia, Ltd. failed to go through the required procedure for public bidding
ADM-0-00-0721. under Executive Order No. 301 dated July 26, 1987.Respondents and Ferrer were found guilty of grave
The material antecedents are as follows: misconduct and dismissed from service. Rustia was found guilty of simple misconduct and suspended for
six months without pay.
On November 13, 1992, respondent Raidis J. Bassig, Chief of the Research and Publications Division of
the Intramuros Administration, submitted a Memorandum to then IntramurosAdministrator Edda V. On March 17, 2003, respondents, along with Rustia, filed a Motion for Reconsideration.[6]
Henson (Henson) recommending that Brand Asia, Ltd. be commissioned to produce a video On June 24, 2003, Ombudsman Marcelo issued an Order[7] partially granting the motion for
documentary for a television program, as well implement a media plan and marketing support services reconsideration. Respondents and Ferrer were found guilty of the lesser offense of simple misconduct
for Intramuros. and suspended for six months without pay. Rustia's suspension was reduced to three months.
On November 17, 1992, the Bids and Awards Committee (BAC) of the Intramuros Administration, Dissatisfied, respondents filed a Petition for Review[8] with the CA assailing the Orders dated March 10,
composed of respondent Merceditas de Sahagun, as Chairman, with respondent Manuela 2003 and June 24, 2003 of the Ombudsman.
T. Waquiz and Dominador C. Ferrer, Jr. (Ferrer), as members, submitted a recommendation to Henson On April 28, 2005, the CA rendered a Decision[9] setting aside the Orders dated March 10, 2003 and June
for the approval of the award of said contract to Brand Asia, Ltd. On the same day, Henson approved the 24, 2003 of the Ombudsman. The CA held that respondents may no longer be prosecuted since the
recommendation and issued a Notice of Award to Brand Asia, Ltd. complaint was filed more than seven years after the imputed acts were committed which was beyond
On November 23, 1992, a contract of service to produce a video documentary on Intramuros for TV the one year period provided for by Section 20 (5) of Republic Act (R.A.) No. 6770, otherwise known as
program airing was executed between Henson and Brand Asia, Ltd. On December 1, 1992, a Notice to The Ombudsman Act of 1989; and that the nature of the function of the Ombudsman was purely
Proceed was issued to Brand Asia, Ltd.On June 2, 1993, the BAC, with Augusto P. Rustia (Rustia) as recommendatory and it did not have the power to penalize erring government officials and
additional member, recommended to Henson the approval of the award of contract for print collaterals to employees. The CA relied on the following statement made by the Court in Tapiador v. Office of the
Brand Asia, Ltd. On the same day, Henson approved the recommendation and issued a Notice of Ombudsman,[10] to wit:
Award/Notice to Proceed to Brand Asia, Ltd. On June 22, 1993, a contract of services to produce print x x x Besides, assuming arguendo, that petitioner [Tapiador] was administratively
collaterals was entered between Henson and Brand Asia, Ltd. liable, the Ombudsman has no authority to directly dismiss the petitioner
On March 7, 1995, an anonymous complaint was filed with the Presidential Commission Against Graft from the government service, more particularly from his position in the BID.
and Corruption (PGAC) against Henson in relation to the contracts entered into with Brand Asia, Ltd. Under Section 13, subparagraph 3, of Article XI of the 1987
On November 30, 1995, Henson was dismissed from the service by the Office of the President upon Constitution, the Ombudsman can only recommend the removal of the public
recommendation of the PGAC which found that the contracts were entered into without the required official or employee found to be at fault, to the public official
public bidding and in violation of Section 3 (a) and (e) of Republic Act (R.A.) No. 3019, or the Anti-Graft concerned.[11] (Emphasis supplied)
and Corrupt Practices Act.
Hence, the present petition raising the following issues (1) whether Section 20 (5) of R.A. No. 6770
On August 8, 1996, an anonymous complaint was filed with the Ombudsman against the BAC in relation prohibits administrative investigations in cases filed more than one year after commission, and (2)
to the latters participation in the contracts with Brand Asia, Ltd. for which Henson was dismissed from whether the Ombudsman only has recommendatory, not punitive, powers against erring government
service. officials and employees.
On September 5, 2000, Fact-Finding Intelligence Bureau (FFIB) filed criminal and administrative charges
against respondents, along with Ferrer and Rustia, for violation of Section 3 (a) and (c) of R.A. No. 3019 The Court rules in favor of the petitioner. The issues in the present case are settled by precedents.
in relation to Section 1 of Executive Order No. 302 and grave misconduct, conduct grossly prejudicial to On the first issue, well-entrenched is the rule that administrative offenses do not
the best interest of the service and gross violation of Rules and Regulations pursuant to the prescribe.[12] Administrative offenses by their very nature pertain to the character of public officers and
Administrative Code of 1987, docketed as OMB-0-00-1411 and OMB-ADM-0-00-0721, employees. In disciplining public officers and employees, the object sought is not the punishment of the
respectively.[2] OMB-0-00-1411 was dismissed on February 27, 2002 for lack of probable cause.[3] officer or employee but the improvement of the public service and the preservation of the publics faith
In his proposed Decision[4] dated June 19, 2002, Graft Investigation Officer and confidence in our government.[13]
II Joselito P. Fangon recommended the dismissal of OMB-ADM-0-00-0721. However, Respondents insist that Section 20 (5) of R.A. No. 6770, to wit:
then Ombudsman Simeon V. Marcelo disapproved the recommendation. In an Order[5] dated March 10,
SEC. 20. Exceptions. The Office of the Ombudsman may not conduct the necessary
2003, he held that there was substantial evidence to hold respondents administratively liable since the
investigation of any administrative act or omission complained of if it believes that:
xxx b) treated as a grievance/request for assistance which may be referred to the

(5) The complaint was filed after one year from the occurrence of the act or omission Public Assistance Bureau, this Office, for appropriate action under Section 2, Rule IV of
complained of. (Emphasis supplied) this Rules;
c) referred to other disciplinary authorities under paragraph 2, Section 23,
proscribes the investigation of any administrative act or omission if the complaint was filed after one year R.A. 6770 for the taking of appropriate administrative proceedings;
from the occurrence of the complained act or omission. d) referred to the appropriate office/agency or official for the conduct
In Melchor v. Gironella,[14] the Court held that the period stated in Section 20(5) of R.A. of further fact-finding investigation; or
No. 6770 does not refer to the prescription of the offense but to the discretion given to e) docketed as an administrative case for the purpose of administrative
the Ombudsman on whether it would investigate a particular administrative offense. The use of the word adjudication by the Office of the Ombudsman. (Emphasis supplied)
may in the provision is construed as permissive and operating to confer discretion.[15] Where the words of
a statute are clear, plain and free from ambiguity, they must be given their literal meaning and applied It is, therefore, discretionary upon the Ombudsman whether or not to conduct an investigation
without attempted interpretation.[16] of a complaint even if it was filed after one year from the occurrence of the act or omission complained
of.
In Filipino v. Macabuhay,[17] the Court interpreted Section 20 (5) of R.A. No. 6770 in this
manner: Thus, while the complaint herein was filed only on September 5, 2000, or more than seven years after
the commission of the acts imputed against respondents in November 1992 and June 1993, it was within
Petitioner argues that based on the abovementioned provision [Section 20(5) the authority of the Ombudsman to conduct the investigation of the subject complaint.
of RA 6770)], respondent's complaint is barred by prescription considering that it was
filed more than one year after the alleged commission of the acts complained of. On the second issue, the authority of the Ombudsman to determine the administrative liability of a public
official or employee, and to direct and compel the head of the office or agency concerned to implement
Petitioner's argument is without merit. the penalty imposed is likewise settled.
The use of the word "may" clearly shows that it is directory in nature and not In Ledesma v. Court of Appeals,[22] the Court has ruled that the statement in Tapiador that made
mandatory as petitioner contends. When used in a statute, it is permissive only and reference to the power of the Ombudsman to impose an administrative penalty was merely an obiter
operates to confer discretion; while the word "shall" is imperative, operating to impose dictum and could not be cited as a doctrinal declaration of this Court, thus:
a duty which may be enforced. Applying Section 20(5), therefore, it is discretionary x x x [A] cursory reading of Tapiador reveals that the main point of the case was the
upon the Ombudsman whether or not to conduct an investigation on a failure of the complainant therein to present substantial evidence to prove the charges
complaint even if it was filed after one year from the occurrence of the act of the administrative case. The statement that made reference to the power of
or omission complained of. In fine, the complaint is not barred by the Ombudsman is, at best, merely an obiter dictum and, as it is unsupported
prescription.[18] (Emphasis supplied) by sufficient explanation, is susceptible to varying interpretations, as what precisely is
The declaration of the CA in its assailed decision that while as a general rule the word may is before us in this case. Hence, it cannot be cited as a doctrinal declaration of
directory, the negative phrase may not is mandatory in tenor; that a directory word, when qualified by this Court nor is it safe from judicial examination.[23] (Emphasis supplied)
the word not, becomes prohibitory and therefore becomes mandatory in character, is not plausible. It is In Estarija v. Ranada,[24] the Court reiterated its pronouncements in Ledesma and categorically stated:
not supported by jurisprudence on statutory construction.
x x x [T]he Constitution does not restrict the powers of the Ombudsman in Section 13,
As the Court recently held in Office of the Ombudsman v. Court of Appeals,[19] Section 20 of Article XI of the 1987 Constitution, but allows the Legislature to enact a law that would
R.A. No. 6770 has been clarified by Administrative Order No. 17,[20] which amended Administrative Order spell out the powers of the Ombudsman. Through the enactment of Rep. Act No.
No. 07, otherwise known as the Rules of Procedure of the Office of the Ombudsman. Section 4, Rule 6770, specifically Section 15, par. 3, the lawmakers gave the Ombudsman such
III[21] of the amended Rules of Procedure of the Office of the Ombudsman reads: powers to sanction erring officials and employees, except members of Congress, and
Section 4. Evaluation. - Upon receipt of the complaint, the same shall be the Judiciary. To conclude, we hold that Sections 15, 21, 22 and 25 of Republic Act No.
evaluated to determine whether the same may be: 6770 are constitutionally sound. The powers of the Ombudsman are not merely
a) dismissed outright for any grounds stated under Section 20 of recommendatory. His office was given teeth to render this constitutional body not
Republic Act No. 6770, provided, however, that the dismissal thereof is not merely functional but also effective. Thus, we hold that under Republic Act No.
mandatory and shall be discretionary on the part of the Ombudsman or the 6770 and the 1987 Constitution, the Ombudsman has the constitutional
Deputy Ombudsman concerned;
power to directly remove from government service an erring public LGVHAI was organized on February 8, 1983 as the association of homeowners and
official other than a member of Congress and the Judiciary.[25] (Emphasis supplied) residents of the Loyola Grand Villas. It was registered with the Home Financing Corporation,
The power of the Ombudsman to directly impose administrative sanctions has been repeatedly the predecessor of herein respondent HIGC, as the sole homeowners organization in the said
reiterated in the subsequent cases of Barillo v. Gervasio,[26] Office of the Ombudsman subdivision under Certificate of Registration No. 04-197. It was organized by the developer of
v. Madriaga,[27] Office of the Ombudsman v. Court of Appeals,[28] Balbastro v. Junio,[29] Commission on the subdivision and its first president was Victorio V. Soliven, himself the owner of the
Audit, Regional Office No. 13, Butuan City v. Hinampas,[30] Office of the Ombudsman v. developer. For unknown reasons, however, LGVHAI did not file its corporate by-laws.
Santiago,[31] Office of the Ombudsman v. Lisondra,[32] and most recently in Deputy Ombudsman for Sometime in 1988, the officers of the LGVHAI tried to register its by-laws. They failed to
the Visayas v. Abugan[33] and continues to be the controlling doctrine. do so.[2] To the officers consternation, they discovered that there were two other
organizations within the subdivision the North Association and the South Association.
In fine, it is already well-settled that the Ombudsman's power as regards the administrative penalty to be According to private respondents, a non-resident and Soliven himself, respectively headed
imposed on an erring public officer or employee is not merely recommendatory. The Ombudsman has these associations. They also discovered that these associations had five (5) registered
the power to directly impose the penalty of removal, suspension, demotion, fine, censure, or prosecution homeowners each who were also the incorporators, directors and officers thereof. None of
of a public officer or employee, other than a member of Congress and the Judiciary, found to be at fault, the members of the LGVHAI was listed as member of the North Association while three (3)
within the exercise of its administrative disciplinary authority as provided in the Constitution, R.A. No. members of LGVHAI were listed as members of the South Association.[3] The North
6770, as well as jurisprudence. This power gives the said constitutional office teeth to render it not Association was registered with the HIGC on February 13, 1989 under Certificate of
merely functional, but also effective.[34] Registration No. 04-1160 covering Phases West II, East III, West III and East IV. It
Thus, the CA committed a reversible error in holding that the case had already prescribed and that submitted its by-laws on December 20, 1988.
the Ombudsman does not have the power to penalize erring government officials and employees. In July, 1989, when Soliven inquired about the status of LGVHAI, Atty. Joaquin A.
Bautista, the head of the legal department of the HIGC, informed him that LGVHAI had been
WHEREFORE, the petition is GRANTED. The Decision dated April 28, 2005 of the Court of Appeals in automatically dissolved for two reasons. First, it did not submit its by-laws within the period
CA-G.R. SP No. 78008 is REVERSED and SET ASIDE. The Order dated June 24, 2003 of the Office of required by the Corporation Code and, second, there was non-user of corporate charter
the Ombudsman is REINSTATED. because HIGC had not received any report on the associations activities. Apparently, this
SO ORDERED. information resulted in the registration of the South Association with the HIGC on July 27,
1989 covering Phases West I, East I and East 11. It filed its by-laws on July 26, 1989.
These developments prompted the officers of the LGVHAI to lodge a complaint with the
[G.R. No. 117188. August 7, 1997] HIGC. They questioned the revocation of LGVHAIs certificate of registration without due
LOYOLA GRAND VILLAS HOMEOWNERS (SOUTH) ASSOCIATION, INC., petitioner, notice and hearing and concomitantly prayed for the cancellation of the certificates of
vs. HON. COURT OF APPEALS, HOME INSURANCE AND GUARANTY registration of the North and South Associations by reason of the earlier issuance of a
CORPORATION, EMDEN ENCARNACION and HORATIO certificate of registration in favor of LGVHAI.
AYCARDO, respondents. On January 26, 1993, after due notice and hearing, private respondents obtained a
DECISION favorable ruling from HIGC Hearing Officer Danilo C. Javier who disposed of HIGC Case No.
ROMERO, J.: RRM-5-89 as follows:
May the failure of a corporation to file its by-laws within one month from the date of its WHEREFORE, judgment is hereby rendered recognizing the Loyola Grand Villas Homeowners
incorporation, as mandated by Section 46 of the Corporation Code, result in its automatic Association, Inc., under Certificate of Registration No. 04-197 as the duly registered and
dissolution? existing homeowners association for Loyola Grand Villas homeowners, and declaring the
This is the issue raised in this petition for review on certiorari of the Decision[1] of the Certificates of Registration of Loyola Grand Villas Homeowners (North) Association, Inc. and
Court of Appeals affirming the decision of the Home Insurance and Guaranty Corporation Loyola Grand Villas Homeowners (South) Association, Inc. as hereby revoked or cancelled;
(HIGC).This quasi-judicial body recognized Loyola Grand Villas Homeowners Association that the receivership be terminated and the Receiver is hereby ordered to render an
(LGVHA) as the sole homeowners association in Loyola Grand Villas, a duly registered accounting and turn-over to Loyola Grand Villas Homeowners Association, Inc., all assets and
subdivision in Quezon City and Marikina City that was owned and developed by Solid Homes, records of the Association now under his custody and possession.
Inc. It revoked the certificates of registration issued to Loyola Grand Villas Homeowners The South Association appealed to the Appeals Board of the HIGC. In its Resolution of
(North) Association Incorporated (the North Association for brevity) and Loyola Grand Villas September 8, 1993, the Board[4] dismissed the appeal for lack of merit.
Homeowners (South) Association Incorporated (the South Association).
Rebuffed, the South Association in turn appealed to the Court of Appeals, raising two On the second issue, the Court of Appeals reiterated its previous ruling [5] that the HIGC
issues. First, whether or not LGVHAIs failure to file its by-laws within the period prescribed by has the authority to order the holding of a referendum to determine which of two contending
Section 46 of the Corporation Code resulted in the automatic dissolution of associations should represent the entire community, village or subdivision.
LGVHAI. Second, whether or not two homeowners associations may be authorized by the Undaunted, the South Association filed the instant petition for review on certiorari. It
HIGC in one sprawling subdivision. However, in the Decision of August 23, 1994 being elevates as sole issue for resolution the first issue it had raised before the Court of Appeals,
assailed here, the Court of Appeals affirmed the Resolution of the HIGC Appeals Board. i.e., whether or not the LGVHAIs failure to file its by-laws within the period prescribed by
In resolving the first issue, the Court of Appeals held that under the Corporation Code, a Section 46 of the Corporation Code had the effect of automatically dissolving the said
private corporation commences to have corporate existence and juridical personality from the corporation.
date the Securities and Exchange Commission (SEC) issues a certificate of incorporation Petitioner contends that, since Section 46 uses the word must with respect to the filing
under its official seal. The requirement for the filing of by-laws under Section 46 of the of by-laws, noncompliance therewith would result in self-extinction either due to non-
Corporation Code within one month from official notice of the issuance of the certificate of occurrence of a suspensive condition or the occurrence of a resolutory condition under the
incorporation presupposes that it is already incorporated, although it may file its by-laws with hypothesis that (by) the issuance of the certificate of registration alone the corporate
its articles of incorporation. Elucidating on the effect of a delayed filing of by-laws, the Court personality is deemed already formed. It asserts that the Corporation Code provides for a
of Appeals said: gradation of violations of requirements. Hence, Section 22 mandates that the corporation
We also find nothing in the provisions cited by the petitioner, i.e., Sections 46 and 22, must be formally organized and should commence transactions within two years from date of
Corporation Code, or in any other provision of the Code and other laws which provide or at incorporation. Otherwise, the corporation would be deemed dissolved. On the other hand, if
least imply that failure to file the by-laws results in an automatic dissolution of the the corporation commences operations but becomes continuously inoperative for five years,
corporation. While Section 46, in prescribing that by-laws must be adopted within the period then it may be suspended or its corporate franchise revoked.
prescribed therein, may be interpreted as a mandatory provision, particularly because of the Petitioner concedes that Section 46 and the other provisions of the Corporation Code do
use of the word must, its meaning cannot be stretched to support the argument that not provide for sanctions for non-filing of the by-laws. However, it insists that no sanction
automatic dissolution results from non-compliance. need be provided because the mandatory nature of the provision is so clear that there can be
We realize that Section 46 or other provisions of the Corporation Code are silent on the result no doubt about its being an essential attribute of corporate birth. To petitioner, its
of the failure to adopt and file the by-laws within the required period. Thus, Section 46 and submission is buttressed by the facts that the period for compliance is spelled out distinctly;
other related provisions of the Corporation Code are to be construed with Section 6 (1) of that the certification of the SEC/HIGC must show that the by-laws are not inconsistent with
P.D. 902-A. This section empowers the SEC to suspend or revoke certificates of registration the Code, and that a copy of the by-laws has to be attached to the articles of incorporation.
on the grounds listed therein. Among the grounds stated is the failure to file by-laws (see Moreover, no sanction is provided for because in the first place, no corporate identity has
also II Campos: The Corporation Code, 1990 ed., pp. 124-125). Such suspension or been completed. Petitioner asserts that non-provision for remedy or sanction is itself the tacit
revocation, the same section provides, should be made upon proper notice and proclamation that non-compliance is fatal and no corporate existence had yet evolved, and
hearing. Although P.D. 902-A refers to the SEC, the same principles and procedures apply to therefore, there was no need to proclaim its demise.[6] In a bid to convince the Court of its
the public respondent HIGC as it exercises its power to revoke or suspend the certificates of arguments, petitioner stresses that:
registration or homeowners associations. (Section 2 [a], E.O. 535, series 1979, transferred x x x the word MUST is used in Sec. 46 in its universal literal meaning and corollary human
the powers and authorities of the SEC over homeowners associations to the HIGC.) implication its compulsion is integrated in its very essence MUST is always enforceable by
We also do not agree with the petitioners interpretation that Section 46, Corporation Code the inevitable consequence that is, OR ELSE. The use of the word MUST in Sec. 46 is no
prevails over Section 6, P.D. 902-A and that the latter is invalid because it contravenes the exception it means file the by-laws within one month after notice of issuance of certificate of
former. There is no basis for such interpretation considering that these two provisions are not registration OR ELSE. The OR ELSE, though not specified, is inextricably a part of
inconsistent with each other. They are, in fact, complementary to each other so that one MUST. Do this or if you do not you are Kaput. The importance of the by-laws to corporate
cannot be considered as invalidating the other. existence compels such meaning for as decreed the by-laws is `the government of the
The Court of Appeals added that, as there was no showing that the registration of corporation. Indeed, how can the corporation do any lawful act as such without by-laws.
LGVHAI had been validly revoked, it continued to be the duly registered homeowners Surely, no law is intended to create chaos.[7]
association in the Loyola Grand Villas. More importantly, the South Association did not Petitioner asserts that P.D. No. 902-A cannot exceed the scope and power of
dispute the fact that LGVHAI had been organized and that, thereafter, it transacted business the Corporation Code which itself does not provide sanctions for non-filing of by-laws. For the
within the period prescribed by law. petitioner, it is not proper to assess the true meaning of Sec. 46 x x x on an unauthorized
provision on such matter contained in the said decree.
In their comment on the petition, private respondents counter that the requirement of company, insurance company, public utility, educational institution or other special
adoption of by-laws is not mandatory. They point to P.D. No. 902-A as having resolved the corporations governed by special laws, unless accompanied by a certificate of the appropriate
issue of whether said requirement is mandatory or merely directory. Citing Chung Ka Bio v. government agency to the effect that such by-laws or amendments are in accordance with
Intermediate Appellate Court,[8] private respondents contend that Section 6(I) of that decree law.
provides that non-filing of by-laws is only a ground for suspension or revocation of the As correctly postulated by the petitioner, interpretation of this provision of law begins
certificate of registration of corporations and, therefore, it may not result in automatic with the determination of the meaning and import of the word must in this
dissolution of the corporation.Moreover, the adoption and filing of by-laws is a condition section. Ordinarily, the word must connotes an imperative act or operates to impose a duty
subsequent which does not affect the corporate personality of a corporation like the which may be enforced.[9] It is synonymous with ought which connotes compulsion or
LGVHAI. This is so because Section 9 of the Corporation Code provides that the corporate mandatoriness.[10] However, the word must in a statute, like shall, is not always imperative.
existence and juridical personality of a corporation begins from the date the SEC issues a It may be consistent with an exercise of discretion. In this jurisdiction, the tendency has been
certificate of incorporation under its official seal. Consequently, even if the by-laws have not to interpret shall as the context or a reasonable construction of the statute in which it is used
yet been filed, a corporation may be considered a de facto corporation. To emphasize the demands or requires.[11] This is equally true as regards the word must. Thus, if the language
fact the LGVHAI was registered as the sole homeowners association in the Loyola Grand of a statute considered as a whole and with due regard to its nature and object reveals that
Villas, private respondents point out that membership in the LGVHAI was an unconditional the legislature intended to use the words shall and must to be directory, they should be
restriction in the deeds of sale signed by lot buyers. given that meaning.[12]
In its reply to private respondents comment on the petition, petitioner reiterates its In this respect, the following portions of the deliberations of the Batasang Pambansa
argument that the word must in Section 46 of the Corporation Code is mandatory. It adds No. 68 are illuminating:
that, before the ruling in Chung Ka Bio v. Intermediate Appellate Court could be applied MR. FUENTEBELLA. Thank you, Mr. Speaker.
to this case, this Court must first resolve the issue of whether or not the provisions of P.D. On page 34, referring to the adoption of by-laws, are we made to understand
No. 902-A prescribing the rules and regulations to implement the Corporation Code can rise here, Mr. Speaker, that by-laws must immediately be filed within one month after the
issuance? In other words, would this be mandatory or directory in character?
above and change the substantive provisions of the Code.
MR. MENDOZA. This is mandatory.
The pertinent provision of the Corporation Code that is the focal point of controversy in
MR. FUENTEBELLA. It being mandatory, Mr. Speaker, what would be the effect of
this case states: the failure of the corporation to file these by-laws within one month?
Sec. 46. Adoption of by-laws. Every corporation formed under this Code, must within one MR. MENDOZA. There is a provision in the latter part of the Code which identifies
(1) month after receipt of official notice of the issuance of its certificate of incorporation by and describes the consequences of violations of any provision of this Code. One such
the Securities and Exchange Commission, adopt a code of by-laws for its government not consequence is the dissolution of the corporation for its inability, or perhaps, incurring
inconsistent with this Code. For the adoption of by-laws by the corporation, the affirmative certain penalties.
vote of the stockholders representing at least a majority of the outstanding capital stock, or MR. FUENTEBELLA. But it will not automatically amount to a dissolution of the
of at least a majority of the members, in the case of non-stock corporations, shall be corporation by merely failing to file the by-laws within one month. Supposing the
corporation was late, say, five days, what would be the mandatory penalty?
necessary. The by-laws shall be signed by the stockholders or members voting for them and
MR. MENDOZA. I do not think it will necessarily result in the automatic or ipso
shall be kept in the principal office of the corporation, subject to the stockholders or
facto dissolution of the corporation. Perhaps, as in the case, as you suggested, in the
members voting for them and shall be kept in the principal office of the corporation, subject case of El Hogar Filipino where a quo warranto action is brought, one takes into
to inspection of the stockholders or members during office hours; and a copy thereof, shall account the gravity of the violation committed. If the by-laws were late the filing of the
be filed with the Securities and Exchange Commission which shall be attached to the original by-laws were late by, perhaps, a day or two, I would suppose that might be a tolerable
articles of incorporation. delay, but if they are delayed over a period of months as is happening now because of
Notwithstanding the provisions of the preceding paragraph, by-laws may be adopted and the absence of a clear requirement that by-laws must be completed within a specified
filed prior to incorporation; in such case, such by-laws shall be approved and signed by all period of time, the corporation must suffer certain consequences.[13]
the incorporators and submitted to the Securities and Exchange Commission, together with This exchange of views demonstrates clearly that automatic corporate dissolution for
the articles of incorporation. failure to file the by-laws on time was never the intention of the legislature. Moreover, even
In all cases, by-laws shall be effective only upon the issuance by the Securities and Exchange without resorting to the records of deliberations of the Batasang Pambansa, the law itself
Commission of a certification that the by-laws are not inconsistent with this Code. provides the answer to the issue propounded by petitioner.
The Securities and Exchange Commission shall not accept for filing the by-laws or any
amendment thereto of any bank, banking institution, building and loan association, trust
Taken as a whole and under the principle that the best interpreter of a statute is the 5. Failure to file by-laws within the required period;
statute itself (optima statuli interpretatix est ipsum statutum),[14] Section 46 xxx xxx xxx xxx
aforequoted reveals the legislative intent to attach a directory, and not mandatory, meaning In the exercise of the foregoing authority and jurisdiction of the Commissions or by a
for the word must in the first sentence thereof. Note should be taken of the second Commissioner or by such other bodies, boards, committees and/or any officer as may be
paragraph of the law which allows the filing of the by-laws even prior to incorporation. This created or designated by the Commission for the purpose. The decision, ruling or order of
provision in the same section of the Code rules out mandatory compliance with the any such Commissioner, bodies, boards, committees and/or officer may be appealed to the
requirement of filing the by-laws within one (1) month after receipt of official notice of the Commission sitting en banc within thirty (30) days after receipt by the appellant of notice of
issuance of its certificate of incorporation by the Securities and Exchange Commission. It such decision, ruling or order. The Commission shall promulgate rules of procedures to
necessarily follows that failure to file the by-laws within that period does not imply the govern the proceedings, hearings and appeals of cases falling within its jurisdiction.
demise of the corporation. By-laws may be necessary for the government of the corporation The aggrieved party may appeal the order, decision or ruling of the Commission sitting en
but these are subordinate to the articles of incorporation as well as to the Corporation Code banc to the Supreme Court by petition for review in accordance with the pertinent provisions
and related statutes.[15] There are in fact cases where by-laws are unnecessary to corporate of the Rules of Court.
existence or to the valid exercise of corporate powers, thus: Even under the foregoing express grant of power and authority, there can be
In the absence of charter or statutory provisions to the contrary, by-laws are not necessary no automatic corporate dissolution simply because the incorporators failed to abide by the
either to the existence of a corporation or to the valid exercise of the powers conferred upon required filing of by-laws embodied in Section 46 of the Corporation Code. There is no
it, certainly in all cases where the charter sufficiently provides for the government of the outright demise of corporate existence. Proper notice and hearing are cardinal components of
body; and even where the governing statute in express terms confers upon the corporation due process in any democratic institution, agency or society. In other words, the
the power to adopt by-laws, the failure to exercise the power will be ascribed to incorporators must be given the chance to explain their neglect or omission and remedy the
mere nonaction which will not render void any acts of the corporation which same.
would otherwise be valid.[16] (Italics supplied.) That the failure to file by-laws is not provided for by the Corporation Code but in
another law is of no moment. P.D. No. 902-A, which took effect immediately after its
As Fletcher aptly puts it: promulgation on March 11, 1976, is very much apposite to the Code. Accordingly, the
It has been said that the by-laws of a corporation are the rule of its life, and that until by-laws have
provisions abovequoted supply the law governing the situation in the case at bar, inasmuch
been adopted the corporation may not be able to act for the purposes of its creation, and that the first
and most important duty of the members is to adopt them. This would seem to follow as a matter of as the Corporation Code and P.D. No. 902-A are statutes in pari materia. Interpretare et
principle from the office and functions of by-laws. Viewed in this light, the adoption of by-laws is a concordare legibus est optimus interpretandi. Every statute must be so construed and
matter of practical, if not one of legal, necessity. Moreover, the peculiar circumstances attending the harmonized with other statutes as to form a uniform system of jurisprudence. [18]
formation of a corporation may impose the obligation to adopt certain by-laws, as in the case of a close As the rules and regulations or private laws enacted by the corporation to regulate,
corporation organized for specific purposes. And the statute or general laws from which the corporation govern and control its own actions, affairs and concerns and its stockholders or members and
derives its corporate existence may expressly require it to make and adopt by-laws and specify to some directors and officers with relation thereto and among themselves in their relation to
extent what they shall contain and the manner of their adoption. The mere fact, however, of the it,[19] by-laws are indispensable to corporations in this jurisdiction. These may not be
existence of power in the corporation to adopt by-laws does not ordinarily and of necessity essential to corporate birth but certainly, these are required by law for an orderly governance
make the exercise of such power essential to its corporate life, or to the validity of any of
and management of corporations. Nonetheless, failure to file them within the period required
its acts.[17]
Although the Corporation Code requires the filing of by-laws, it does not expressly by law by no means tolls the automatic dissolution of a corporation.
provide for the consequences of the non-filing of the same within the period provided for in In this regard, private respondents are correct in relying on the pronouncements of this
Section 46. However, such omission has been rectified by Presidential Decree No. 902-A, the Court in Chung Ka Bio v. Intermediate Appellate Court,[20] as follows:
pertinent provisions on the jurisdiction of the SEC of which state: x x x. Moreover, failure to file the by-laws does not automatically operate to dissolve a
SEC. 6. In order to effectively exercise such jurisdiction, the Commission shall possess the corporation but is now considered only a ground for such dissolution.
following powers: Section 19 of the Corporation Law, part of which is now Section 22 of the Corporation Code,
xxx xxx xxx xxx provided that the powers of the corporation would cease if it did not formally organize and
(l) To suspend, or revoke, after proper notice and hearing, the franchise or certificate of commence the transaction of its business or the continuation of its works within two years
registration of corporations, partnerships or associations, upon any of the grounds provided by law, from date of its incorporation. Section 20, which has been reproduced with some
including the following: modifications in Section 46 of the Corporation Code, expressly declared that every
xxx xxx xxx xxx corporation formed under this Act, must within one month after the filing of the articles of
incorporation with the Securities and Exchange Commission, adopt a code of by- SECOND DIVISION
laws. Whether this provision should be given mandatory or only directory effect remained a G.R. No. 172409
controversial question until it became academic with the adoption of PD 902-A. Under this ROOS INDUSTRIAL CONSTRUCTION, INC. and OSCAR TOCMO,
decree, it is now clear that the failure to file by-laws within the required period is only a Petitioners,
ground for suspension or revocation of the certificate of registration of corporations. - versus -
Non-filing of the by-laws will not result in automatic dissolution of the corporation. Under NATIONAL LABOR RELATIONS COMMISSION and JOSE MARTILLOS,
Section 6(I) of PD 902-A, the SEC is empowered to suspend or revoke, after proper notice Respondents. Promulgated:
and hearing, the franchise or certificate of registration of a corporation on the ground inter February 4, 2008
alia of failure to file by-laws within the required period. It is clear from this provision that QUISUMBING, J.,
there must first of all be a hearing to determine the existence of the ground, and secondly, x----------------------------------------------------------------------------x
assuming such finding, the penalty is not necessarily revocation but may be only suspension DECISION
of the charter. In fact, under the rules and regulations of the SEC, failure to file the by-laws
on time may be penalized merely with the imposition of an administrative fine without TINGA, J.:
affecting the corporate existence of the erring firm. In this Petition for Review on Certiorari[1] under Rule 45 of the 1997 Rules of Civil Procedure,
It should be stressed in this connection that substantial compliance with conditions petitioners Roos Industrial Construction, Inc. and Oscar Tocmo assail the Court of
subsequent will suffice to perfect corporate personality. Organization and commencement of Appeals[2] Decision dated 12 January 2006 in C.A. G.R. SP No. 87572 and its
transaction of corporate business are but conditions subsequent and not prerequisites for Resolution[3] dated 10 April 2006 denying their Motion for Reconsideration.[4]
acquisition of corporate personality. The adoption and filing of by-laws is also a condition
The following are the antecedents.
subsequent. Under Section 19 of the Corporation Code, a corporation commences its
corporate existence and juridical personality and is deemed incorporated from the date the
On 9 April 2002, private respondent Jose Martillos (respondent) filed a complaint against
Securities and Exchange Commission issues certificate of incorporation under its official
petitioners for illegal dismissal and money claims such as the payment of separation pay in
seal. This may be done even before the filing of the by-laws, which under Section 46 of the
lieu of reinstatement plus full backwages, service incentive leave, 13 th month pay, litigation
Corporation Code, must be adopted within one month after receipt of official notice of the
expenses, underpayment of holiday pay and other equitable reliefs before the National
issuance of its certificate of incorporation.[21]
Capital Arbitration Branch of the National Labor Relations Commission (NLRC), docketed as
That the corporation involved herein is under the supervision of the HIGC does not alter
NLRC NCR South Sector Case No. 30-04-01856-02.
the result of this case. The HIGC has taken over the specialized functions of the former
Home Financing Corporation by virtue of Executive Order No. 90 dated December 17, Respondent alleged that he had been hired as a driver-mechanic sometime in 1988 but was
1986.[22] With respect to homeowners associations, the HIGC shall exercise all the powers, not made to sign any employment contract by petitioners. As driver mechanic, respondent
authorities and responsibilities that are vested on the Securities and Exchange Commission x was assigned to work at Carmona, Cavite and he worked daily from 7:00 a.m. to 10:00
x x, the provision of Act 1459, as amended by P.D. 902-A, to the contrary p.m. at the rate of P200.00 a day. He was also required to work during legal holidays but
notwithstanding.[23] was only paid an additional 30% holiday pay. He likewise claimed that he had not been paid
WHEREFORE, the instant petition for review on certiorari is hereby DENIED and the service incentive leave and 13th month pay during the entire course of his employment.
questioned Decision of the Court of Appeals AFFIRMED. This Decision is immediately On 16 March 2002, his employment was allegedly terminated without due process. [5]
executory.Costs against petitioner. Petitioners denied respondents allegations. They contended that respondent had been hired
SO ORDERED. on several occasions as a project employee and that his employment was coterminous with
Regalado, (Chairman), Puno, and Mendoza, JJ., concur. the duration of the projects. They also maintained that respondent was fully aware of this
Torres, Jr., J., on leave. arrangement. Considering that respondents employment had been validly terminated after
the completion of the projects, petitioners concluded that he is not entitled to separation pay
and other monetary claims, even attorneys fees.[6]
The Labor Arbiter ruled that respondent had been illegally dismissed after finding that he had
acquired the status of a regular employee as he was hired as a driver with little interruption
from one project to another, a task which is necessary to the usual trade of his In addition, the NLRC restated that its Rules of Procedure proscribes the filing of any motion
employer.[7] The Labor Arbiter pertinently stated as follows: for extension of the period within which to perfect an appeal. The NLRC summed up that
x x x If it were true that complainant was hired as project employee, then there considering that petitioners appeal had not been perfected, it had no jurisdiction to act on
should have been project employment contracts specifying the project for which said appeal and the assailed decision, as a consequence, has become final and
complainants services were hired, as well as the duration of the project as required in executory.[14] The NLRC likewise denied petitioners Motion for Reconsideration[15] for lack of
Art. 280 of the Labor Code. As there were four (4) projects where complainant was
merit in another Resolution.[16] On 11 November 2004, the NLRC issued an entry of judgment
allegedly assigned, there should have been the equal number of project employment
declaring its resolution final and executory as of 9 October 2004. On respondents motion, the
contracts executed by the complainant. Further, for every project termination, there
should have been the equal number of termination report submitted to the Labor Arbiter ordered that the writ of execution be issued to enforce the award. On 26
Department of Labor and Employment. However, the record shows that there is only January 2005, a writ of execution was issued.[17]
one termination [report] submitted to DOLE pertaining to the last project assignment
of complainant in Carmona, Cavite. Petitioners elevated the dismissal of their appeal to the Court of Appeals by way of a
In the absence of said project employment contracts and the corresponding special civil action of certiorari. They argued that the filing of the appeal bond evinced their
Termination Report to DOLE at every project termination, the inevitable conclusion is willingness to comply and was in fact substantial compliance with the Rules. They likewise
that the complainant was a regular employee of the respondents. maintained that the NLRC gravely abused its discretion in failing to consider the meritorious
grounds for their motion for extension of time to file the appeal bond. Lastly, petitioners
In the case of Maraguinot, Jr. v. NLRC, 284 SCRA 539, 556 [1998], citing capital
Industrial Construction Group v. NLRC, 221 SCRA 469, 473-474 [1993], it was ruled contended that the NLRC gravely erred in issuing an entry of judgment as the assailed
therein that a project employee may acquire the status of a regular employee when resolution is still open for review.[18] On 12 January 2006, the Court of Appeals affirmed the
the following concurs: (1) there is a continuous rehiring of project employees even challenged resolution of the NLRC. Hence, the instant petition.
after the cessation of a project; and (2) the tasks performed by the alleged project Before this Court, petitioners reiterate their previous assertions. They insist on the application
employee are vital, necessary and indispensable to the usual business or trade of the of Star Angel Handicraft v. National Labor Relations Commission, et al. [19] where it was
employer. Both factors are present in the instant case. Thus, even granting that held that a motion for reduction of bond may be filed in lieu of the bond during the period for
complainant was hired as a project employee, he eventually became a regular appeal. They aver that Borja Estate v. Ballad,[20] which underscored the importance of the
employee as there was a continuous rehiring of this services.
filing of a cash or surety bond in the perfection of appeals in labor cases, had not been
xxx
promulgated yet in 2003 when they filed their appeal. As such, the doctrine in Borja could
In the instant case, apart from the fact that complainant was not made to sign any
project employment contract x x x he was successively transferred from one project not be given retroactive effect for to do so would prejudice and impair petitioners right to
after another, and he was made to perform the same kind of work as driver.[8] appeal. Moreover, they point out that judicial decisions have no retroactive effect. [21]
The Labor Arbiter ordered petitioners to pay respondent the aggregate sum of P224,647.17 The Court denies the petition.
representing backwages, separation pay, salary differential, holiday pay, service incentive The Court reiterates the settled rule that an appeal from the decision of the Labor Arbiter
leave pay and 13th month pay.[9] involving a monetary award is only deemed perfected upon the posting of a cash or surety
Petitioners received a copy of the Labor Arbiters decision on 17 December 2003. On 29 bond within ten (10) days from such decision.[22] Article 223 of the Labor Code states:
December 2003, the last day of the reglementary period for perfecting an appeal, petitioners ART. 223. Appeal.Decisions, awards or orders of the Labor Arbiter are
filed a Memorandum of Appeal[10] before the NLRC and paid the appeal fee. However, instead final and executory unless appealed to the Commission by any or both parties
of posting the required cash or surety bond within the reglementary period, petitioners filed a within ten (10) calendar days from receipt of such decisions, awards, or orders.
Motion for Extension of Time to Submit/Post Surety Bond. [11] Petitioners stated that they In case of a judgment involving a monetary award, an appeal by the
could not post and submit the required surety bond as the signatories to the bond were on employer may be perfected only upon the posting of a cash or surety bond
leave during the holiday season, and made a commitment to post and submit the surety issued by a reputable bonding company duly accredited by the Commission in
the amount equivalent to the monetary award in the judgment appealed from.
bond on or before 6 January 2004. The NLRC did not act on the motion. Thereafter, on 6
January 2004, petitioners filed a surety bond equivalent to the award of the Labor Arbiter. [12] xxx
In a Resolution[13] dated July 29, 2004, the Second Division of the NLRC dismissed petitioners Contrary to petitioners assertion, the appeal bond is not merely procedural but jurisdictional.
appeal for lack of jurisdiction. The NLRC stressed that the bond is an indispensable requisite Without said bond, the NLRC does not acquire jurisdiction over the appeal. [23]Indeed, non-
for the perfection of an appeal by the employer and that the perfection of an appeal within compliance with such legal requirements is fatal and has the effect of rendering the
the reglementary period and in the manner prescribed by law is mandatory and jurisdictional.
judgment final and executory.[24] It must be stressed that there is no inherent right to an appeal was not material to the resolution of Star Angel, and thus could properly be
appeal in a labor case, as it arises solely from the grant of statute.[25] considered as obiter dictum.[32]
Evidently, the NLRC did not acquire jurisdiction over petitioners appeal within the ten (10)- Lastly, the Court does not agree that the Borja doctrine should only be applied
day reglementary period to perfect the appeal as the appeal bond was filed eight (8) days prospectively. In the first place, Borja is not a ground-breaking precedent as it is a
after the last day thereof. Thus, the Court cannot ascribe grave abuse of discretion to the reiteration, emphatic though, of long standing jurisprudence.[33] It is well to recall too
NLRC or error to the Court of Appeals in refusing to take cognizance of petitioners belated our pronouncement in Senarillos v. Hermosisima, et al.[34] that the judicial
appeal. interpretation of a statute constitutes part of the law as of the date it was originally
While indeed the Court has relaxed the application of this requirement in cases where the passed, since the Courts construction merely establishes the contemporaneous
failure to comply with the requirement was justified or where there was substantial legislative intent that the interpreted law carried into effect. Such judicial doctrine
compliance with the rules,[26] the overpowering legislative intent of Article 223 remains to be does not amount to the passage of a new law but consists merely of a construction
for a strict application of the appeal bond requirement as a requisite for the perfection of an or interpretation of a pre-existing one, as is the situation in this case.[35]
appeal and as a burden imposed on the employer.[27] As the Court held in the case of Borja At all events, the decision of the Labor Arbiter appears to be well-founded and petitioners ill-
Estate v. Ballad:[28] starred appeal untenable.
The intention of the lawmakers to make the bond an indispensable requisite for the WHEREFORE, the Petition is DENIED. Costs against petitioners.
perfection of an appeal by the employer is underscored by the provision that an
SO ORDERED.
appeal may be perfected only upon the posting of a cash or surety bond. The word
only makes it perfectly clear that the LAWMAKERS intended the posting of a cash or
surety bond by the employer to be
the exclusive means by which an employers appeal may be considered completed. G.R. No. L-26001 October 29, 1968
The law however does not require its outright payment, but only the posting of a PHILIPPINE NATIONAL BANK, petitioner,
bond to ensure that the award will be eventually paid should the appeal fail. What vs.
petitioners have to pay is a moderate and reasonable sum for the premium of such THE COURT OF APPEALS and PHILIPPINE COMMERCIAL AND INDUSTRIAL
bond.[29]
BANK, respondents.
Moreover, no exceptional circumstances obtain in the case at bar which would warrant a Tomas Besa, Jose B. Galang and Juan C. Jimenez for petitioner.
relaxation of the bond requirement as a condition for perfecting the appeal. It is only in San Juan, Africa & Benedicto for respondents.
highly meritorious cases that this Court opts not to strictly apply the rules and thus prevent a
CONCEPCION, C.J.:
grave injustice from being done[30] and this is not one of those cases.
In addition, petitioners cannot take refuge behind the Courts ruling in Star Angel. Pertinently, The Philippine National Bank — hereinafter referred to as the PNB — seeks the review
the Court stated in Computer Innovations Center v. National Labor Relations Commission :[31] by certiorari of a decision of the Court of Appeals, which affirmed that of the Court of First
Moreover, the reference in Star Angel to the distinction between the period to file the Instance of Manila, dismissing plaintiff's complaint against the Philippine Commercial and
appeal and to perfect the appeal has been pointedly made only once by this Court Industrial Bank — hereinafter referred to as the PCIB — for the recovery of P57,415.00.
in Gensoli v. NLRC thus, it has not acquired the sheen of venerability reserved for A partial stipulation of facts entered into by the parties and the decision of the Court of
repeatedly-cited cases. The distinction, if any, is not particularly evident or material Appeals show that, on about January 15, 1962, one Augusto Lim deposited in his current
in the Labor Code; hence, the reluctance of the Court to adopt such doctrine.
account with the PCIB branch at Padre Faura, Manila, GSIS Check No. 645915- B, in the sum
Moreover, the present provision in the NLRC Rules of Procedure, that the filing of a
motion to reduce bond shall not stop the running of the period to perfect appeal flatly of P57,415.00, drawn against the PNB; that, following an established banking practice in the
contradicts the notion expressed in Star Angel that there is a distinction between Philippines, the check was, on the same date, forwarded, for clearing, through the Central
filing an appeal and perfecting an appeal. Bank, to the PNB, which did not return said check the next day, or at any other time, but
Ultimately, the disposition of Star Angel was premised on the ruling that a motion for retained it and paid its amount to the PCIB, as well as debited it against the account of the
reduction of the appeal bond necessarily stays the period for perfecting the appeal, GSIS in the PNB; that, subsequently, or on January 31, 1962, upon demand from the GSIS,
and that the employer cannot be expected to perfect the appeal by posting the said sum of P57,415.00 was re-credited to the latter's account, for the reason that the
proper bond until such time the said motion for reduction is resolved. The unduly signatures of its officers on the check were forged; and that, thereupon, or on February 2,
stretched-out distinction between the period to file an appeal and to perfect an 1962, the PNB demanded from the PCIB the refund of said sum, which the PCIB refused to
do. Hence, the present action against the PCIB, which was dismissed by the Court of First Referring to the fourth and fifth assignments of error, we must bear in mind that, in general,
Instance of Manila, whose decision was, in turn, affirmed by the Court of Appeals. "acceptance", in the sense in which this term is used in the Negotiable Instruments Law 9 is
It is not disputed that the signatures of the General Manager and the Auditor of the GSIS on not required for checks, for the same are payable on demand.10 Indeed, "acceptance" and
the check, as drawer thereof, are forged; that the person named in the check as its payee "payment" are, within the purview of said Law, essentially different things, for the former is
was one Mariano D. Pulido, who purportedly indorsed it to one Manuel Go; that the check "a promise to perform an act," whereas the latter is the "actual performance" thereof.11 In
purports to have been indorsed by Manuel Go to Augusto Lim, who, in turn, deposited it with the words of the Law,12 "the acceptance of a bill is the signification by the drawee of
the PCIB, on January 15, 1962; that, thereupon, the PCIB stamped the following on the back his assent to the order of the drawer," which, in the case of checks, is the payment, on
of the check: "All prior indorsements and/or Lack of Endorsement Guaranteed, Philippine demand, of a given sum of money. Upon the other hand, actual payment of the amount of a
Commercial and Industrial Bank," Padre Faura Branch, Manila; that, on the same date, the check implies not only an assent to said order of the drawer and a recognition of the
PCIB sent the check to the PNB, for clearance, through the Central Bank; and that, over two drawer's obligation to pay the aforementioned sum, but, also, a compliance with such
(2) months before, or on November 13, 1961, the GSIS had notified the PNB, which obligation.
acknowledged receipt of the notice, that said check had been lost, and, accordingly,
Let us now consider the first and the last assignments of error. The PNB maintains that the
requested that its payment be stopped.
lower court erred in not finding that the PCIB had been guilty of negligence in not
In its brief, the PNB maintains that the lower court erred: (1) in not finding the PCIB guilty of discovering that the check was forged. Assuming that there had been such negligence on the
negligence; (2) in not finding that the indorsements at the back of the check are forged; (3) part of the PCIB, it is undeniable, however, that the PNB has, also, been negligent, with the
in not finding the PCIB liable to the PNB by virtue of the former's warranty on the back of the particularity that the PNB had been guilty of a greater degree of negligence, because it had a
check; (4) in not holding that "clearing" is not "acceptance", in contemplation of the previous and formal notice from the GSIS that the check had been lost, with the request that
Negotiable Instruments law; (5) in not finding that, since the check had not been accepted payment thereof be stopped. Just as important, if not more important and decisive, is the
by the PNB, the latter is entitled to reimbursement therefor; and (6) in denying the PNB's fact that the PNB's negligence was the main or proximate cause for the corresponding loss.
right to recover from the PCIB. In this connection, it will be recalled that the PCIB did not cash the check upon its
The first assignment of error will be discussed later, together with the last,with which it is presentation by Augusto Lim; that the latter had merely deposited it in his current account
interrelated. with the PCIB; that, on the same day, the PCIB sent it, through the Central Bank, to the PNB,
for clearing; that the PNB did not return the check to the PCIB the next day or at any other
As regards the second assignment of error, the PNB argues that, since the signatures of the
time; that said failure to return the check to the PCIB implied, under the current banking
drawer are forged, so must the signatures of the supposed indorsers be; but this conclusion
practice, that the PNB considered the check good and would honor it; that, in fact, the PNB
does not necessarily follow from said premise. Besides, there is absolutely no evidence, and
honored the check and paid its amount to the PCIB; and that only then did the PCIB allow
the PNB has not even tried to prove that the aforementioned indorsements are spurious.
Augusto Lim to draw said amount from his aforementioned current account.
Again, the PNB refunded the amount of the check to the GSIS, on account of the forgery in
Thus, by not returning the check to the PCIB, by thereby indicating that the PNB had found
the signatures, not of the indorsers or supposed indorsers, but of the officers of the GSIS as
nothing wrong with the check and would honor the same, and by actually paying its amount
drawer of the instrument. In other words, the question whether or not the indorsements
to the PCIB, the PNB induced the latter, not only to believe that the check was genuine and
have been falsified is immaterial to the PNB's liability as a drawee, or to its right to recover
good in every respect, but, also, to pay its amount to Augusto Lim. In other words, the PNB
from the PCIB,1 for, as against the drawee, the indorsement of an intermediate bank does
was the primary or proximate cause of the loss, and, hence, may not recover from the
not guarantee the signature of the drawer,2 since the forgery of the indorsement is notthe
PCIB.13
cause of the loss.3
It is a well-settled maxim of law and equity that when one of two (2) innocent persons must
With respect to the warranty on the back of the check, to which the third assignment of error
suffer by the wrongful act of a third person, the loss must be borne by the one whose
refers, it should be noted that the PCIB thereby guaranteed "all prior indorsements," not the
negligence was the proximate cause of the loss or who put it into the power of the third
authenticity of the signatures of the officers of the GSIS who signed on its behalf, because
person to perpetrate the wrong.14
the GSIS is not an indorser of the check, but its drawer.4 Said warranty is irrelevant,
Then, again, it has, likewise, been held that, where the collecting (PCIB) and the drawee
therefore, to the PNB's alleged right to recover from the PCIB. It could have been availed of
(PNB) banks are equally at fault, the court will leave the parties where it finds them. 15
by a subsequent indorsee5 or a holder in due course6 subsequent to the PCIB, but, the PNB is
Lastly, Section 62 of Act No. 2031 provides:
neither.7 Indeed, upon payment by the PNB, as drawee, the check ceased to be a negotiable
The acceptor by accepting the instrument engages that he will pay it according to the tenor of
instrument, and became a mere voucher or proof of payment. 8 his acceptance; and admits:
(a) The existence of the drawer, the genuineness of his signature, and his capacity and 9. Russell Gacus 1-30-85 Engineer 1 6-30-92
authority to draw the instrument; and 10. Jose Garguena 3-02-81 Warehouseman to present
(b) The existence of the payee and his then capacity to indorse. 11. Eusebio Mejos 11-17-82 Survey Aide 8-31-91
12. Bonifacio Mejos 11-17-82 Surv. Party Head 1992
The prevailing view is that the same rule applies in the case of a drawee who pays a bill 13. Romeo Sarona 2-26-83 Machine Operator 8-31-912
without having previously accepted it.16
WHEREFORE, the decision appealed from is hereby affirmed, with costs against the Philippine On 5 July 1990, petitioners filed separate complaints for unfair labor practice, regularization
National Bank. It is so ordered. and monetary benefits with the NLRC, Sub-Regional Arbitration Branch XII, Iligan City.
Reyes, J.B.L., Dizon, Makalintal, Sanchez, Castro, Angeles, Fernando and Capistrano, The complaints were consolidated and after hearing, the Labor Arbiter in a Decision dated 7
JJ., concur. June 1991, declared petitioners "regular project employees who shall continue their
Zaldivar, J., took no part. employment as such for as long as such [project] activity exists," but entitled to the salary of
a regular employee pursuant to the provisions in the collective bargaining agreement. It also
ordered payment of salary differentials. 3
Both parties appealed to the NLRC from that decision. Petitioners argued that they were
regular, not project, employees. Private respondent, on the other hand, claimed that
G.R. No. 109902 August 2, 1994
petitioners are project employees as they were employed to undertake a specific project —
ALU-TUCP, Representing Members: ALAN BARINQUE, with 13 others, namely:
NSC's Five Year Expansion Program (FAYEP I & II).
ENGR. ALAN G. BARINQUE, ENGR. DARRELL LEE ELTAGONDE, EDUARD H.
FOOKSON, JR., ROMEO R. SARONA, RUSSELL GACUS, JERRY BONTILAO, EUSEBIO The NLRC in its questioned resolutions modified the Labor Arbiter's decision. It affirmed the
MARIN, JR., LEONIDO ECHAVEZ, BONIFACIO MEJOS, EDGAR S. BONTUYAN, JOSE Labor Arbiter's holding that petitioners were project employees since they were hired to
G. GARGUENA, JR., OSIAS B. DANDASAN, and GERRY I. FETALVERO, petitioners, perform work in a specific undertaking — the Five Years Expansion Program, the completion
vs. of which had been determined at the time of their engagement and which operation was not
NATIONAL LABOR RELATIONS COMMISSION and NATIONAL STEEL directly related to the business of steel manufacturing. The NLRC, however, set aside the
CORPORATION (NSC), respondents. award to petitioners of the same benefits enjoyed by regular employees for lack of legal and
Leonard U. Sawal for petitioners. factual basis. Deliberating on the present Petition for Certiorari, the Court considers that
Saturnino Mejorada for private respondent. petitioners have failed to show any grave abuse of discretion or any act without or in excess
of jurisdiction on the part of the NLRC in rendering its questioned resolutions of 8 January
FELICIANO, J.: 1993 and 15 February 1993.
In this Petition for Certiorari, petitioners assail the Resolution of the National Labor Relations The law on the matter is Article 280 of the Labor Code which reads in full:
Commission ("NLRC") dated 8 January 1993 which declared petitioners to be project Art. 280. Regular and Casual Employment — The provisions of the written agreement
employees of private respondent National Steel Corporation ("NSC"), and the NLRC's to the contrary notwithstanding and regardless of the oral agreement of the parties,
subsequent Resolution of 15 February 1993, denying petitioners' motion for reconsideration. and employment shall be deemed to be regular where the employee has been
Petitioners plead that they had been employed by respondent NSC in connection with its Five engaged to perform activities which are usually necessary or desirable in the usual
business or trade of the employer, except where the employment has been fixed for
Year Expansion Program (FAYEP I & II) 1 for varying lengths of time when they were
a specific project or undertaking the completion or termination of which has been
separated from NSC's service: determined at the time of the engagement of the employee or where the work or
Employee Date Nature of Separated services to be performed is seasonal in nature and the employment is for the duration
Employed Employment of the season.
1. Alan Barinque 5-14-82 Engineer 1 8-31-91 An employment shall be deemed to be casual if it is not covered by the preceding
2. Jerry Bontilao 8-05-85 Engineer 2 6-30-92 paragraph: Provided, That, any employee who has rendered at least one year service,
3. Edgar Bontuyan 11-03-82 Chairman to present whether such service is continuous or broken, shall be considered a regular employee
4. Osias Dandasan 9-21-82 Utilityman 1991 with respect to the activity in which he is employed and his employment shall
5. Leonido Echavez 6-16-82 Eng. Assistant 6-30-92 continue while such actually exists. (Emphasis supplied)
6. Darrell Eltagonde 5-20-85 Engineer 1 8-31-91
Petitioners argue that they are "regular" employees of NSC because: (i) their jobs are
7. Gerry Fetalvero 4-08-85 Mat. Expediter regularized
8. Eduard Fookson 9-20-84 Eng. Assistant 8-31-91
"necessary, desirable and work-related to private respondent's main business, steel-making"; The term "project" could also refer to, secondly, a particular job or undertaking that
and (ii) they have rendered service for six (6) or more years to private respondent NSC. 4 is not within the regular business of the corporation. Such a job or undertaking must also be
The basic issue is thus whether or not petitioners are properly characterized as "project identifiably separate and distinct from the ordinary or regular business operations of the
employees" rather than "regular employees" of NSC. This issue relates, of course, to an employer. The job or undertaking also begins and ends at determined or determinable times.
important consequence: the services of project employees are co-terminous with the project The case at bar presents what appears to our mind as a typical example of this kind of
and may be terminated upon the end or completion of the project for which they were "project."
hired. 5 Regular employees, in contract, are legally entitled to remain in the service of their
NSC undertook the ambitious Five Year Expansion Program I and II with the ultimate end in
employer until that service is terminated by one or another of the recognized modes of
view of expanding the volume and increasing the kinds of products that it may offer for sale
termination of service under the Labor Code. 6
to the public. The Five Year Expansion Program had a number of component projects: e.g.,
It is evidently important to become clear about the meaning and scope of the term "project" (a) the setting up of a "Cold Rolling Mill Expansion Project"; (b) the establishment of a "Billet
in the present context. The "project" for the carrying out of which "project employees" are Steel-Making Plant" (BSP); (c) the acquisition and installation of a "Five Stand TDM"; and (d)
hired would ordinarily have some relationship to the usual business of the employer. the "Cold Mill Peripherals Project." 8 Instead of contracting out to an outside or independent
Exceptionally, the "project" undertaking might not have an ordinary or normal relationship to contractor the tasks of constructing the buildings with related civil and electrical works that
the usual business of the employer. In this latter case, the determination of the scope and would house the new machinery and equipment, the installation of the newly acquired mill or
parameeters of the "project" becomes fairly easy. It is unusual (but still conceivable) for a plant machinery and equipment and the commissioning of such machinery and equipment,
company to undertake a project which has absolutely no relationship to the usual business of NSC opted to execute and carry out its Five Yeear Expansion Projects "in house," as it were,
the company; thus, for instance, it would be an unusual steel-making company which would by administration. The carrying out of the Five Year Expansion Program (or more precisely,
undertake the breeding and production of fish or the cultivation of vegetables. From the each of its component projects) constitutes a distinct undertaking identifiable from the
viewpoint, however, of the legal characterization problem here presented to the Court, there ordinary business and activity of NSC. Each component project, of course, begins and ends at
should be no difficulty in designating the employees who are retained or hired for the specified times, which had already been determined by the time petitioners were engaged.
purpose of undertaking fish culture or the production of vegetables as "project employees," We also note that NSC did the work here involved — the construction of buildings and civil
as distinguished from ordinary or "regular employees," so long as the duration and scope of and electrical works, installation of machinery and equipment and the commissioning of such
the project were determined or specified at the time of engagement of the "project machinery — only for itself. Private respondent NSC was not in the business of constructing
employees." 7 For, as is evident from the provisions of Article 280 of the Labor Code, quoted buildings and installing plant machinery for the general business community, i.e., for
earlier, the principal test for determining whether particular employees are properly unrelated, third party, corporations. NSC did not hold itself out to the public as a construction
characterized as "project employees" as distinguished from "regular employees," is whether company or as an engineering corporation.
or not the "project employees" were assigned to carry out a "specific project or undertaking,"
Which ever type of project employment is found in a particular case, a common basic
the duration (and scope) of which were specified at the time the employees were engaged
requisite is that the designation of named employees as "project employees" and their
for that project.
assignment to a specific project, are effected and implemented in good faith, and not merely
In the realm of business and industry, we note that "project" could refer to one or the other as a means of evading otherwise applicable requirements of labor laws.
of at least two (2) distinguishable types of activities. Firstly, a project could refer to a Thus, the particular component projects embraced in the Five Year Expansion Program, to
particular job or undertaking that is within the regular or usual business of the employer which petitioners were assigned, were distinguishable from the regular or ordinary business
company, but which is distinct and separate, and identifiable as such, from the other of NSC which, of course, is the production or making and marketing of steel products. During
undertakings of the company. Such job or undertaking begins and ends at determined or the time petitioners rendered services to NSC, their work was limited to one or another of the
determinable times. The typical example of this first type of project is a particular specific component projects which made up the FAYEP I and II. There is nothing in the
construction job or project of a construction company. A construction company ordinarily record to show that petitioners were hired for, or in fact assigned to, other purposes, e.g.,
carries out two or more discrete identifiable construction projects: e.g., a twenty-five- storey for operating or maintaining the old, or previously installed and commissioned, steel-making
hotel in Makati; a residential condominium building in Baguio City; and a domestic air machinery and equipment, or for selling the finished steel products.
terminal in Iloilo City. Employees who are hired for the carrying out of one of these separate We, therefore, agree with the basic finding of the NLRC (and the Labor Arbiter) that the
projects, the scope and duration of which has been determined and made known to the petitioners were indeed "project employees:"
employees at the time of employment, are properly treated as "project employees," and their It is well established by the facts and evidence on record that herein 13 complainants
services may be lawfully terminated at completion of the project. were hired and engaged for specific activities or undertaking the period of which has
been determined at time of hiring or engagement. It is of public knowledge and

which this Commission can safely take judicial notice that the expansion program
(FAYEP) of respondent NSC consist of various phases [of] project components which
are being executed or implemented independently or simultaneously from each other
...
In other words, the employment of each "project worker" is dependent and co-
terminous with the completion or termination of the specific activity or undertaking
[for which] he was hired which has been pre-determined at the time of engagement.
Since, there is no showing that they (13 complainants) were engaged to perform
work-related activities to the business of respondent which is steel-making, there is
no logical and legal sense of applying to them the proviso under the second
paragraph of Article 280 of the Labor Code, as amended.
xxx xxx xxx
The present case therefore strictly falls under the definition of "project employees" on
paragraph one of Article 280 of the Labor Code, as amended. Moreover, it has been
held that the length of service of a project employee is not the controlling test of
employment tenure but whether or not "the employment has been fixed for a specific
project or undertaking the completion or termination of which has been determined
at the time of the engagement of the employee". (See Hilario Rada v. NLRC, G.R. No.
96078, January 9, 1992; and Sandoval Shipping, Inc. v. NLRC, 136 SCRA 674
(1985). 9
Petitioners next claim that their service to NSC of more than six (6) years should qualify them
as regular employees. We believe this claim is without legal basis. The simple fact that the
employment of petitioners as project employees had gone beyond one (1) year, does not
detract from, or legally dissolve, their status as project employees. 10 The second paragraph
of Article 280 of the Labor Code, quoted above, providing that an employee who has served
for at least one (1) year, shall be considered a regular employee, relates to casual
employees, not to project employees.
In the case of Mercado, Sr. vs. National Labor Relations Commission, 11 this Court ruled that
the proviso in the second paragraph of Article 280 relates only to casual employees and is
not applicable to those who fall within the definition of said Article's first paragraph,
i.e., project employees. The familiar grammatical rule is that a proviso is to be construed with
reference to the immediately preceding part of the provision to which it is attached, and not
to other sections thereof, unless the clear legislative intent is to restrict or qualify not only
the phrase immediately preceding the proviso but also earlier provisions of the statute or
even the statute itself as a whole. No such intent is observable in Article 280 of the Labor
Code, which has been quoted earlier.
ACCORDINGLY, in view of the foregoing, the Petition for Certiorari is hereby DISMISSED for
lack of merit. The Resolutions of the NLRC dated 8 January 1993 and 15 February 1993 are
hereby AFFIRMED. No pronouncement as to costs.
SO ORDERED.
Narvasa, C.J., Cruz, Padilla, Bidin, Regalado, Davide, Jr., Romero, Melo, Quiason,
Puno, Vitug, Kapunan and Mendoza, JJ., concur.
Bellosillo, J., is on leave.

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Statutory Construction September 4 Page |1

xxx b) treated as a grievance/request for assistance which may be referred to the

been determined at time of hiring or engagement. It is of public knowledge and

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