1. ARIS Inc vs NLRC et. al.

The antecedent facts and proceedings which gave rise to this petition are not
Petitioner assails the constitutionality of the amendment introduced by disputed:
Section 12 of Republic Act No. 6715 to Article 223 of the Labor Code of the On 11 April 1988, private respondents, who were employees of petitioner,
Philippines (PD No. 442, as amended) allowing execution pending appeal of aggrieved by management's failure to attend to their complaints concerning
the reinstatement aspect of a decision of a labor arbiter reinstating a their working surroundings which had become detrimental and hazardous,
dismissed or separated employee and of Section 2 of the NLRC Interim Rules requested for a grievance conference. As none was arranged, and believing
on Appeals under R.A. No. 6715 implementing the same. It also questions the that their appeal would be fruitless, they grouped together after the end of
validity of the Transitory Provision (Section 17) of the said Interim Rules. their work that day with other employees and marched directly to the
The challenged portion of Section 12 of Republic Act No. 6715, which took management's office to protest its long silence and inaction on their
effect on 21 March 1989, reads as follows: complaints.
SEC 12. Article 223 of the same code is amended to read as follows: On 12 April 1988, the management issued a memorandum to each of the
ART. 223. Appeal. private respondents, who were identified by the petitioner's supervisors as
xxx xxx xxx the most active participants in the rally requiring them to explain why they
In any event, the decision of the Labor Arbiter reinstating a dismissed or should not be terminated from the service for their conduct. Despite their
separated employee, in so far as the reinstatement aspect is concerned, shall explanation, private respondents were dismissed for violation of company
immediately be executory, even pending appeal. The employee shall either rules and regulations, more specifically of the provisions on security and
be admitted back to work under the same terms and conditions prevailing public order and on inciting or participating in illegal strikes or concerted
prior to his dismissal or separation or, at the option of the employer, merely actions.
reinstated in the payroll. The posting of a bond by the employer shall not stay Private respondents lost no time in filing a complaint for illegal dismissal
the execution for reinstatement provided therein. against petitioner and Mr. Gavino Bayan with the regional office of the NLRC
This is a new paragraph ingrafted into the Article. at the National Capital Region, Manila, which was docketed therein as NLRC-
Sections 2 and 17 of the "NLRC Interim Rules On Appeals Under R.A. No. 6715, NCR-00-0401630-88.
Amending the Labor Code", which the National Labor Relations Commission After due trial, Labor Arbiter Felipe Garduque III handed down on 22 June
(NLRC) promulgated on 8 August 1989, provide as follows: 1989 a decision' the dispositive portion of which reads:
Section 2. Order of Reinstatement and Effect of Bond. — In so far as the ACCORDINGLY, respondent Aris (Phils.), Inc. is hereby ordered to reinstate
reinstatement aspect is concerned, the decision of the Labor Arbiter within ten (10) days from receipt hereof, herein complainants Leodegario de
reinstating a dismissed or separated employee shall immediately be Guzman, Rufino de Castro, Lilia M. Perez, Marieta Magalad, Flordeliza Rayos
executory even pending appeal. The employee shall either be admitted back del Sol, Reynaldo Toriado, Roberto Besmonte, Apolinario Gagahina, Aidam
to work under the same terms and conditions prevailing prior to his dismissal (sic) Opena, Steve C. Sancho Ester Cairo, and Mary B. Nadala to their former
or separation, or, at the option of the employer, merely be reinstated in the respective positions or any substantial equivalent positions if already filled
payroll. up, without loss of seniority right and privileges but with limited backwages
The posting of a bond by the employer shall not stay the execution for of six (6) months except complainant Leodegario de Guzman.
reinstatement. All other claims and prayers are hereby denied for lack of merit.
xxx xxx xxx SO ORDERED.
Section 17. Transitory provision. — Appeals filed on or after March 21, 1989, On 19 July 1989, complainants (herein private respondents) filed a Motion
but prior to the effectivity of these Interim Rules must conform to the For Issuance of a Writ of Execution2 pursuant to the above-quoted Section 12
requirements as herein set forth or as may be directed by the Commission. of R.A. No. 6715.
On 21 July 1989, petitioner filed its Appeal.3
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On 26 July 1989, the complainants, except Flor Rayos del Sol, filed a Partial CONSTITUTIONAL GUARANTY OF DUE PROCESS IT BEING OPPRESSIVE AND
Appeal.4 UNREASONABLE.
On 10 August 1989, complainant Flor Rayos del Sol filed a Partial Appeal.5 B. GRANTING ARGUENDO THAT THE PROVISION IN(SIC) REINSTATEMENT
On 29 August 1989, petitioner filed an Opposition6 to the motion for PENDING APPEAL IS VALID, NONETHELESS, THE LABOR ARBITER A QUO AND
execution alleging that Section 12 of R.A. No. 6715 on execution pending THE NLRC STILL ACTED IN EXCESS AND WITHOUT JURISDICTION IN
appeal cannot be applied retroactively to cases pending at the time of its RETROACTIVELY APPLYING SAID PROVISION TO PENDING LABOR CASES.
effectivity because it does not expressly provide that it shall be given In Our resolution of 7 March 1989, We required the respondents to comment
retroactive effect7 and to give retroactive effect to Section 12 thereof to on the petition.
pending cases would not only result in the imposition of an additional Respondent NLRC, through the Office of the Solicitor General, filed its
obligation on petitioner but would also dilute its right to appeal since it would Comment on 20 November 1989.13 Meeting squarely the issues raised by
be burdened with the consequences of reinstatement without the benefit of petitioner, it submits that the provision concerning the mandatory and
a final judgment. In their Reply8 filed on 1 September 1989, complainants automatic reinstatement of an employee whose dismissal is found unjustified
argued that R.A. No. 6715 is not sought to be given retroactive effect in this by the labor arbiter is a valid exercise of the police power of the state and the
case since the decision to be executed pursuant to it was rendered after the contested provision "is then a police legislation."
effectivity of the Act. The said law took effect on 21 March 1989, while the As regards the retroactive application thereof, it maintains that being merely
decision was rendered on 22 June 1989. procedural in nature, it can apply to cases pending at the time of its effectivity
Petitioner submitted a Rejoinder to the Reply on 5 September 1989.9 on the theory that no one can claim a vested right in a rule of procedure.
On 5 October 1989, the Labor Arbiter issued an Order granting the motion for Moreover, such a law is compatible with the constitutional provision on
execution and the issuance of a partial writ of execution10 as far as protection to labor.
reinstatement of herein complainants is concerned in consonance with the On 11 December 1989, private respondents filed a Manifestation14 informing
provision of Section 2 of the rules particularly the last sentence thereof. the Court that they are adopting the Comment filed by the Solicitor General
In this Order, the Labor Arbiter also made reference to Section 17 of the NLRC and stressing that petitioner failed to comply with the requisites for a valid
Interim Rules in this wise: petition for certiorari under Rule 65 of the Rules of Court.
Since Section 17 of the said rules made mention of appeals filed on or after On 20 December 1989, petitioner filed a Rejoinder15 to the Comment of the
March 21, 1989, but prior to the effectivity of these interim rules which must Solicitor General.
conform with the requirements as therein set forth (Section 9) or as may be In the resolution of 11 January 1990,16 We considered the Comments as
directed by the Commission, it obviously treats of decisions of Labor Arbiters respondents' Answers, gave due course to the petition, and directed that the
before March 21,1989. With more reason these interim rules be made to case be calendared for deliberation.
apply to the instant case since the decision hereof (sic) was rendered In urging Us to declare as unconstitutional that portion of Section 223 of the
thereafter.11 Labor Code introduced by Section 12 of R.A. No. 6715, as well as the
Unable to accept the above Order, petitioner filed the instant petition on 26 implementing provision covered by Section 2 of the NLRC Interim Rules,
October 198912 raising the issues adverted to in the introductory portion of allowing immediate execution, even pending appeal, of the reinstatement
this decision under the following assignment of errors: aspect of a decision of a labor arbiter reinstating a dismissed or separated
A. THE LABOR ARBITER A QUO AND THE NLRC, IN ORDERING THE employee, petitioner submits that said portion violates the due process
REINSTATEMENT OF THE PRIVATE RESPONDENTS PENDING APPEAL AND IN clause of the Constitution in that it is oppressive and unreasonable. It argues
PROVIDING FOR SECTION 2 OF THE INTERIM RULES, RESPECTIVELY, ACTED that a reinstatement pending appeal negates the right of the employer to
WITHOUT AND IN EXCESS OF JURISDICTION SINCE THE BASIS FOR SAID ORDER self-protection for it has been ruled that an employer cannot be compelled
AND INTERIM RULE, i.e., SECTION 12 OF R.A. 6715 IS VIOLATIVE OF THE to continue in employment an employee guilty of acts inimical to the interest
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of the employer; the right of an employer to dismiss is consistent with the These provisions are the quintessence of the aspirations of the workingman
legal truism that the law, in protecting the rights of the laborer, authorizes for recognition of his role in the social and economic life of the nation, for the
neither the oppression nor the destruction of the employer. For, social justice protection of his rights, and the promotion of his welfare. Thus, in the Article
should be implemented not through mistaken sympathy for or misplaced on Social Justice and Human Rights of the Constitution,20 which principally
antipathy against any group, but even-handedly and fairly.17 directs Congress to give highest priority to the enactment of measures that
To clinch its case, petitioner tries to demonstrate the oppressiveness of protect and enhance the right of all people to human dignity, reduce social,
reinstatement pending appeal by portraying the following consequences: (a) economic, and political inequalities, and remove cultural inequities by
the employer would be compelled to hire additional employees or adjust the equitably diffusing wealth and political power for the common good, the
duties of other employees simply to have someone watch over the reinstated State is mandated to afford full protection to labor, local and overseas,
employee to prevent the commission of further acts prejudicial to the organized and unorganized, and promote full employment and equality of
employer, (b) reinstatement of an undeserving, if not undesirable, employee employment opportunities for all; to guarantee the rights of all workers to
may demoralize the rank and file, and (c) it may encourage and embolden not self-organization, collective bargaining and negotiations, and peaceful
only the reinstated employees but also other employees to commit similar, if concerted activities, including the right to strike in accordance with law,
not graver infractions. security of tenure, human conditions of work, and a living wage, to participate
These rationalizations and portrayals are misplaced and are purely in policy and decision-making processes affecting their rights and benefits as
conjectural which, unfortunately, proceed from a misunderstanding of the may be provided by law; and to promote the principle of shared responsibility
nature and scope of the relief of execution pending appeal. between workers and employers and the preferential use of voluntary modes
Execution pending appeal is interlinked with the right to appeal. One cannot in settling disputes. Incidentally, a study of the Constitutions of various
be divorced from the other. The latter may be availed of by the losing party nations readily reveals that it is only our Constitution which devotes a
or a party who is not satisfied with a judgment, while the former may be separate article on Social Justice and Human Rights. Thus, by no less than its
applied for by the prevailing party during the pendency of the appeal. The fundamental law, the Philippines has laid down the strong foundations of a
right to appeal, however, is not a constitutional, natural or inherent right. It truly just and humane society. This Article addresses itself to specified areas
is a statutory privilege of statutory origin18 and, therefore, available only if of concern labor, agrarian and natural resources reform, urban land reform
granted or provided by statute. The law may then validly provide limitations and housing, health, working women, and people's organizations and reaches
or qualifications thereto or relief to the prevailing party in the event an appeal out to the underprivileged sector of society, for which reason the President
is interposed by the losing party. Execution pending appeal is one such relief of the Constitutional Commission of 1986, former Associate Justice of this
long recognized in this jurisdiction. The Revised Rules of Court allows Court Cecilia Muñoz-Palma, aptly describes this Article as the "heart of the
execution pending appeal and the grant thereof is left to the discretion of the new Charter."21
court upon good reasons to be stated in a special order.19 These duties and responsibilities of the State are imposed not so much to
Before its amendment by Section 12 of R.A. No. 6715, Article 223 of the Labor express sympathy for the workingman as to forcefully and meaningfully
Code already allowed execution of decisions of the NLRC pending their appeal underscore labor as a primary social and economic force, which the
to the Secretary of Labor and Employment. Constitution also expressly affirms With equal intensity.22 Labor is an
In authorizing execution pending appeal of the reinstatement aspect of a indispensable partner for the nation's progress and stability.
decision of the Labor Arbiter reinstating a dismissed or separated employee, If in ordinary civil actions execution of judgment pending appeal is authorized
the law itself has laid down a compassionate policy which, once more, vivifies for reasons the determination of which is merely left to the discretion of the
and enhances the provisions of the 1987 Constitution on labor and the judge, We find no plausible reason to withhold it in cases of decisions
working-man. reinstating dismissed or separated employees. In such cases, the poor
employees had been deprived of their only source of livelihood, their only
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means of support for their family their very lifeblood. To Us, this special ... can be traced to the doctrine of separation of powers which enjoins on
circumstance is far better than any other which a judge, in his sound each department a proper respect for the acts of the other departments. ...
discretion, may determine. In short, with respect to decisions reinstating The theory is that, as the joint act of the legislative and executive authorities,
employees, the law itself has determined a sufficiently overwhelming reason a law is supposed to have been carefully studied and determined to be
for its execution pending appeal. constitution before it was finally enacted. Hence, as long as there is some
The validity of the questioned law is not only supported and sustained by the other basis that can be used by the courts for its decision, the
foregoing considerations. As contended by the Solicitor General, it is a valid constitutionality of the challenged law will not be touched upon and the case
exercise of the police power of the State. Certainly, if the right of an employer will be decided on other available grounds.28
to freely discharge his employees is subject to regulation by the State, The issue concerning Section 17 of the NLRC Interim Rules does not deserve
basically in the exercise of its permanent police power on the theory that the a measure of attention. The reference to it in the Order of the Labor Arbiter
preservation of the lives of the citizens is a basic duty of the State, that is of 5 October 1989 was unnecessary since the procedure of the appeal proper
more vital than the preservation of corporate profits.23 Then, by and pursuant is not involved in this case. Moreover, the questioned interim rules of the
to the same power, the State may authorize an immediate implementation, NLRC, promulgated on 8 August 1989, can validly be given retroactive effect.
pending appeal, of a decision reinstating a dismissed or separated employee They are procedural or remedial in character, promulgated pursuant to the
since that saving act is designed to stop, although temporarily since the authority vested upon it under Article 218(a) of the Labor Code of the
appeal may be decided in favor of the appellant, a continuing threat or danger Philippines, as amended. Settled is the rule that procedural laws may be given
to the survival or even the life of the dismissed or separated employee and retroactive effect.29 There are no vested rights in rules of procedure.30 A
its family. remedial statute may be made applicable to cases pending at the time of its
The charge then that the challenged law as well as the implementing rule are enactment.31
unconstitutional is absolutely baseless.1âwphi1 Laws are presumed WHEREFORE, the petition is hereby DISMISSED for lack of merit. Costs against
constitutional.24 To justify nullification of a law, there must be a clear and petitioner.
unequivocal breach of the Constitution, not a doubtful and argumentative SO ORDERED.
implication; a law shall not be declared invalid unless the conflict with the
constitution is clear beyond reasonable doubt.25 In Parades, et al. vs.
Executive Secretary26 We stated:
2. For one thing, it is in accordance with the settled doctrine that between
two possible constructions, one avoiding a finding of unconstitutionality and
the other yielding such a result, the former is to be preferred. That which will
save, not that which will destroy, commends itself for acceptance. After all,
the basic presumption all these years is one of validity. The onerous task of
proving otherwise is on the party seeking to nullify a statute. It must be
proved by clear and convincing evidence that there is an infringement of a
constitutional provision, save in those cases where the challenged act is void
on its face. Absent such a showing, there can be no finding of
unconstitutionality. A doubt, even if well-founded, does not suffice. Justice
Malcolm's aphorism is apropos: To doubt is to sustain.27
The reason for this:

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2. Hon. Alfredo Lim vs Hon. Felipe G. Paquing and Associated Development Development Corporation to operate the jai-alai in the City of Manila, until
Corp. the following legal questions are properly resolved:
Teofisto Guingona, Jr. And Dominador R. Cepeda Vs. Hon. Vetino Reyes And
Associated Development Corporation 1. Whether P.D. 771 which revoked all existing Jai-Alai franchisers issued by
These two (2) cases which are inter-related actually involve simple issues. if local governments as of 20 August 1975 is unconstitutional.
these issues have apparently become complicated, it is not by reason of their
nature because of the events and dramatis personae involved. 2. Assuming that the City of Manila had the power on 7 September 1971 to
issue a Jai-Alai franchise to Associated Development Corporation, whether
The petition in G.R. No. 115044 was dismissed by the First Division of this the franchise granted is valied considering that the franchise has no duration,
Court on 01 September 1994 based on a finding that there was "no abuse of and appears to be granted in perpetuity.
discretion, much less lack of or excess of jurisdiction, on the part of
respondent judge [Pacquing]", in issuing the questioned orders. Judge 3. Whether the City of Manila had the power to issue a Jai-Alai franchise to
Pacquing had earlier issued in Civil Case No. 88-45660, RTC of Manila, Branch Associated Development Corporation on 7 September 1971 in view of
40, the following orders which were assailed by the Mayor of the City of executive Order No. 392 dated 1 January 1951 which transferred from local
Manila, Hon. Alfredo S. Lim, in said G.R. No. 115044: governments to the Games and Amusements Board the power to regulate
Jai-Alai.1
a. order dated 28 March 1994 directing Manila mayor Alfredo S. Lim to issue
the permit/license to operate the jai-alai in favor of Associated Development On 15 September 1994, respondent Associated Development Corporation
Corporation (ADC). (ADC) filed a petition for prohibition, mandamus, injunction and damages
with prayer for temporary restraining order and/or writ of preliminary
b. order dated 11 April 1994 directing mayor Lim to explain why he should injunction in the Regional Trial Court of Manila against petitioner Guingona
not be cited for contempt for non-compliance with the order dated 28 March and then GAB chairman Sumulong, docketed as Civil Case No. 94-71656,
1994. seeking to prevent GAB from withdrawing the provisional authority that had
earlier been granted to ADC. On the same day, the RTC of Manila, Branch 4,
c. order dated 20 April 1994 reiterating the previous order directing Mayor through presiding Judge Vetino Reyes, issued a temporary restraining order
Lim to immediately issue the permit/license to Associated Development enjoining the GAB from withdrawing ADC's provisional authority. This
Corporation (ADC). temporary restraining order was converted into a writ of preliminary
injunction upon ADC's posting of a bond in the amount of P2,000,000.00.2
The order dated 28 march 1994 was in turn issued upon motion by ADC for
execution of a final judgment rendered on 9 September 1988 which ordered Subsequently, also in G.R. No. 115044, the Republic of the Philippines,
the Manila Mayor to immediately issue to ADC the permit/license to operate through the Games and Amusements Board, filed a "Motion for Intervention;
the jai-alai in Manila, under Manila Ordinance No. 7065. for Leave to File a Motion for reconsideration in Intervention; and to Refer
the case to the Court En Banc" and later a "Motion for Leave to File
On 13 September 1994, petitioner Guingona (as executive secretary) issued a Supplemental Motion for Reconsideration-in-Intervention and to Admit
directive to then chairman of the Games and Amusements Board (GAB) Attached Supplemental Motion for Reconsideration-in-Intervention".
Francisco R. Sumulong, jr. to hold in abeyance the grant of authority, or if any
had been issued, to withdraw such grant of authority, to Associated

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In an En Banc Resolution dated 20 September 1994, this Court referred G.R.
No. 115044 to the Court En Banc and required the respondents therein to On the issue of the propriety of the intervention by the Republic of the
comment on the aforementioned motions. Philippines, a question was raised during the hearing on 10 November 1994
as to whether intervention in G.R. No. 115044 was the proper remedy for the
Meanwhile, Judge Reyes on 19 October 1994 issued another order, this time, national government to take in questioning the existence of a valid ADC
granting ADC a writ of preliminary mandatory injunction against Guingona franchise to operate the jai-alai or whether a separate action for quo
and GAB to compel them to issue in favor of ADC the authority to operate jai- warranto under Section 2, Rule 66 of the Rules of Court was the proper
alai. remedy.

Guingona, as executive secretary, and Dominador Cepeda, Jr. as the new GAB We need not belabor this issue since counsel for respondent ADC agreed to
chairman, then filed the petition in G.R. No. 117263 assailing the the suggestion that this Court once and for all settle all substantive issues
abovementioned orders of respondent Judge Vetino Reyes. raised by the parties in these cases. Moreover, this Court can consider the
petition filed in G.R. No. 117263 as one for quo warranto which is within the
On 25 October 1994, in G.R. No. 117263, this Court granted petitioner's original jurisdiction of the Court under section 5(1), Article VIII of the
motion for leave to file supplemental petition and to admit attached Constitution. 3
supplemental petition with urgent prayer for restraining order. The Court
further required respondents to file their comment on the petition and On the propriety of intervention by the Republic, however, it will be recalled
supplemental petition with urgent prayer for restraining order. The Court that this Court in Director of Lands v. Court of Appeals (93 SCRA 238) allowed
likewise set the case and all incidents thereof for hearing on 10 November intervention even beyond the period prescribed in Section 2 Rule 12 of the
1994. Rules of Court. The Court ruled in said case that a denial of the motions for
intervention would "lead the Court to commit an act of injustice to the
At the hearing on 10 November 1994, the issues to be resolved were movants, to their successor-in-interest and to all purchasers for value and in
formulated by the Court as follows: good faith and thereby open the door to fraud, falsehood and
misrepresentation, should intervenors' claim be proven to be true."
1. whether or not intervention by the Republic of the Philippines at this stage
of the proceedings is proper; In the present case, the resulting injustice and injury, should the national
government's allegations be proven correct, are manifest, since the latter has
2. assuming such intervention is proper, whether or not the Associated squarely questioned the very existence of a valid franchise to maintain and
Development Corporation has a valid and subsisting franchise to maintain operate the jai-alai (which is a gambling operation) in favor of ADC. As will be
and operate the jai-alai; more extensively discussed later, the national government contends that
Manila Ordinance No. 7065 which purported to grant to ADC a franchise to
3. whether or not there was grave abuse of discretion committed by conduct jai-alai operations is void and ultra vires since Republic Act No. 954,
respondent Judge Reyes in issuing the aforementioned temporary restraining approved on 20 June 1953, or very much earlier than said Ordinance No.
order (later writ of preliminary injunction); and 7065, the latter approved 7 September 1971, in Section 4 thereof, requires a
legislative franchise, not a municipal franchise, for the operation of jai-alai.
4. whether or not there was grave abuse of discretion committed by Additionally, the national government argues that even assuming, arguendo,
respondent Judge Reyes in issuing the aforementioned writ of preliminary that the abovementioned ordinance is valid, ADC's franchise was nonetheless
mandatory injunction. effectively revoked by Presidential decree No. 771, issued on 20 August 1975,
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Sec. 3 of which expressly revoked all existing franchises and permits to And on the question of whether or not the government is estopped from
operate all forms of gambling facilities (including the jai-alai) issued by local contesting ADC's possession of a valid franchise, the well-settled rule is that
governments. the State cannot be put in estoppel by the mistakes or errors, if any, of its
officials or agents (Republic v. Intermediate Appellate Court, 209 SCRA 90)
On the other hand, ADC's position is that Ordinance No. 7065 was validly
enacted by the City of Manila pursuant to its delegated powers under it Consequently, in the light of the foregoing expostulation, we conclude that
charter, Republic Act No. 409. ADC also squarely assails the constitutionality the republic (in contra distinction to the City of Manila) may be allowed to
of PD No. 771 as violative of the equal protection and non-impairment clauses intervene in G.R. No. 115044. The Republic is intervening in G.R. No. 115044
of the Constitution. In this connection, counsel for ADC contends that this in the exercise, not of its business or proprietary functions, but in the exercise
Court should really rule on the validity of PD No. 771 to be able to determine of its governmental functions to protect public morals and promote the
whether ADC continues to possess a valid franchise. general welfare.

It will undoubtedly be a grave injustice to both parties in this case if this Court II
were to shirk from ruling on the issue of constitutionality of PD No. 771. Such
issue has, in our view, become the very lis mota in resolving the present Anent the question of whether ADC has a valid franchise to operate the Jai-
controversy, in view of ADC's insistence that it was granted a valid and legal Alai de Manila, a statement of the pertinent laws is in order.
franchise by Ordinance No. 7065 to operate the jai-alai.
1. The Charter of the City of Manila was enacted by Congress on 18 June 1949.
The time-honored doctrine is that all laws (PD No. 771 included) are Section 18 thereof provides:
presumed valid and constitutional until or unless otherwise ruled by this
Court. Not only this; Article XVIII Section 3 of the Constitution states: Sec. 18. Legislative Powers. — The Municipal Board shall have the following
legislative powers:
Sec. 3. All existing laws, decrees, executive orders, proclamations, letters of
instructions and other executive issuances not inconsistent with this xxx xxx xxx
Constitution shall remain operative until amended, repealed or revoked.
(jj) To tax, license, permit and regulate wagers or betting by the public on
There is nothing on record to show or even suggest that PD No. 771 has been boxing, sipa, bowling, billiards, pools, horse and dog races, cockpits, jai-alai,
repealed, altered or amended by any subsequent law or presidential issuance roller or ice-skating on any sporting or athletic contests, as well as grant
(when the executive still exercised legislative powers). exclusive rights to establishments for this purpose, notwithstanding any
existing law to the contrary.
Neither can it be tenably stated that the issue of the continued existence of
ADC's franchise by reason of the unconstitutionality of PD No. 771 was settled 2. On 1 January 1951, Executive Order No. 392 was issued transferring the
in G.R. No. 115044, for the decision of the Court's First Division in said case, authority to regulate jai-alais from local government to the Games and
aside from not being final, cannot have the effect of nullifying PD No. 771 as Amusements Board (GAB).
unconstitutional, since only the Court En Banc has that power under Article
VIII, Section 4(2) of the Constitution.4 3. On 20 June 1953, Congress enacted Republic Act No. 954, entitled "An Act
to Prohibit With Horse Races and Basque Pelota Games (Jai-Alai), And To

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Prescribe Penalties For Its Violation". The provisions of Republic Act No. 954 repealing PD 810 and revoking and cancelling the franchise granted to the
relating to jai-alai are as follows: Philippine Jai-Alai and Amusement Corporation.

Sec. 4. No person, or group of persons other than the operator or maintainer Petitioners in G.R. No. 117263 argue that Republic Act No. 954 effectively
of a fronton with legislative franchise to conduct basque pelota games (Jai- removed the power of the Municipal Board of Manila to grant franchises for
alai), shall offer, to take or arrange bets on any basque pelota game or event, gambling operations. It is argued that the term "legislative franchise" in Rep.
or maintain or use a totalizator or other device, method or system to bet or Act No. 954 is used to refer to franchises issued by Congress.
gamble on any basque pelota game or event. (emphasis supplied).
On the other hand, ADC contends that Republic Act N. 409 (Manila Chapter)
Sec. 5. No person, operator or maintainer of a fronton with legislative gives legislative powers to the Municipal Board to grant franchises, and since
franchise to conduct basque pelota games shall offer, take, or arrange bets Republic Act No. 954 does not specifically qualify the word "legislative" as
on any basque pelota game or event, or maintain or use a totalizator or other referring exclusively to Congress, then Rep. Act No. 954 did not remove the
device, method or system to bet or gamble on any basque pelota game or power of the Municipal Board under Section 18(jj) of Republic Act No. 409
event outside the place, enclosure, or fronton where the basque pelota game and consequently it was within the power of the City of Manila to allow ADC
is held. (emphasis supplied). to operate the jai-alai in the City of Manila.

4. On 07 September 1971, however, the Municipal Board of Manila On this point, the government counter-argues that the term "legislative
nonetheless passed Ordinance No. 7065 entitled "An Ordinance Authorizing powers" is used in Rep. Act No. 409 merely to distinguish the powers under
the Mayor To Allow And Permit The Associated Development Corporation To Section 18 of the law from the other powers of the Municipal Board, but that
Establish, Maintain And Operate A Jai-Alai In The City Of Manila, Under the term "legislative franchise" in Rep. Act No. 954 refers to a franchise
Certain Terms And Conditions And For Other Purposes." granted solely by Congress.

5. On 20 August 1975, Presidential Decree No. 771 was issued by then Further, the government argues that Executive Order No. 392 dated 01
President Marcos. The decree, entitled "Revoking All Powers and Authority of January 1951 transferred even the power to regulate Jai-Alai from the local
Local Government(s) To Grant Franchise, License or Permit And Regulate governments to the Games and Amusements Board (GAB), a national
Wagers Or Betting By The Public On Horse And Dog Races, Jai-Alai Or Basque government agency.
Pelota, And Other Forms Of Gambling", in Section 3 thereof, expressly
revoked all existing franchises and permits issued by local governments. It is worthy of note that neither of the authorities relied upon by ADC to
support its alleged possession of a valid franchise, namely the Charter of the
6. On 16 October 1975, Presidential Decree No. 810, entitled "An Act granting City of Manila (Rep. Act No. 409) and Manila Ordinance No. 7065 uses the
The Philippine Jai-Alai And Amusement Corporation A Franchise To Operate, word "franchise". Rep. Act No. 409 empowers the Municipal Board of Manila
Construct And Maintain A Fronton For Basque Pelota And Similar Games of to "tax, license, permit and regulate wagers or betting" and to "grant
Skill In THE Greater Manila Area," was promulgated. exclusive rights to establishments", while Ordinance No. 7065 authorized the
Manila City Mayor to "allow and permit" ADC to operate jai-alai facilities in
7 On 08 May 1987, then President Aquino, by virtue of Article XVIII, Section the City of Manila.
6, of the Constitution, which allowed the incumbent legislative powers until
the first Congress was convened, issued Executive Order No. 169 expressly It is clear from the foregoing that Congress did not delegate to the City of
Manila the power "to franchise" wagers or betting, including the jai-alai, but
StatCon Chapter 5 Cases 8 | P a g e
retained for itself such power "to franchise". What Congress delegated to the not only in the plain words of the enumerations under Section 28 but also in
City of Manila in Rep. Act No. 409, with respect to wagers or betting, was the this Court's ruling in People v. Vera (65 Phil. 56).
power to "license, permit, or regulate" which therefore means that a license
or permit issued by the City of Manila to operate a wager or betting activity, In Vera, this Court declared that a law which gives the Provincial Board the
such as the jai-alai where bets are accepted, would not amount to something discretion to determine whether or not a law of general application (such as,
meaningful UNLESS the holder of the permit or license was also FRANCHISED the Probation law-Act No. 4221) would or would not be operative within the
by the national government to so operate. Moreover, even this power to province, is unconstitutional for being an undue delegation of legislative
license, permit, or regulate wagers or betting on jai-alai was removed from power.
local governments, including the City of Manila, and transferred to the GAB
on 1 January 1951 by Executive Order No. 392. The net result is that the From the ruling in Vera, it would be logical to conclude that, if ADC's
authority to grant franchises for the operation of jai-alai frontons is in arguments were to prevail, this Court would likewise declare Section 18(jj) of
Congress, while the regulatory function is vested in the GAB. the Revised Charter of Manila unconstitutional for the power it would
delegate to the Municipal Board of Manila would give the latter the absolute
In relation, therefore, to the facts of this case, since ADC has no franchise and unlimited discretion to render the penal code provisions on gambling
from Congress to operate the jai-alai, it may not so operate even if its has a inapplicable or inoperative to persons or entities issued permits to operate
license or permit from the City Mayor to operate the jai-alai in the City of gambling establishments in the City of Manila.
Manila.
We need not go to this extent, however, since the rule is that laws must be
It cannot be overlooked, in this connection, that the Revised Penal Code presumed valid, constitutional and in harmony with other laws. Thus, the
punishes gambling and betting under Articles 195 to 199 thereof. Gambling relevant provisions of Rep. Acts Nos. 409 and 954 and Ordinance No. 7065
is thus generally prohibited by law, unless another law is enacted by Congress should be taken together and it should then be clear that the legislative
expressly exempting or excluding certain forms of gambling from the reach powers of the Municipal Board should be understood to be regulatory in
of criminal law. Among these form the reach of criminal law. Among these nature and that Republic Act No. 954 should be understood to refer to
forms of gambling allowed by special law are the horse races authorized by congressional franchises, as a necessity for the operation of jai-alai.
Republic Acts Nos. 309 and 983 and gambling casinos authorized under
Presidential Decree No. 1869. We need not, however, again belabor this issue further since the task at hand
which will ultimately, and with finality, decide the issues in this case is to
While jai-alai as a sport is not illegal per se, the accepting of bets or wagers determine whether PD No. 771 validly revoked ADC's franchise to operate the
on the results of jai-alai games is undoubtedly gambling and, therefore, a jai-alai, assuming (without conceding) that it indeed possessed such franchise
criminal offense punishable under Articles 195-199 of the Revised Penal under Ordinance No. 7065.
Code, unless it is shown that a later or special law had been passed allowing
it. ADC has not shown any such special law. ADC argues that PD No. 771 is unconstitutional for being violative of the equal
protection and non-impairment provisions of the Constitution. On the other
Republic Act No. 409 (the Revised Charter of the City of Manila) which was hand, the government contends that PD No. 771 is a valid exercise of the
enacted by Congress on 18 June 1949 gave the Municipal Board certain inherent police power of the State.
delegated legislative powers under Section 18. A perusal of the powers
enumerated under Section 18 shows that these powers are basically The police power has been described as the least limitable of the inherent
regulatory in nature.5 The regulatory nature of these powers finds support powers of the State. It is based on the ancient doctrine — salus populi est
StatCon Chapter 5 Cases 9 | P a g e
suprema lex (the welfare of the people is the supreme law.) In the early case
of Rubi v. Provincial Board of Mindoro (39 Phil. 660), this Court through Mr. In the exercise of its own discretion, the legislative power may prohibit
Justice George A. Malcolm stated thus: gambling altogether or allow it without limitation or it may prohibit some
forms of gambling and allow others for whatever reasons it may consider
The police power of the State . . . is a power co-extensive with self-protection, sufficient. Thus, it has prohibited jueteng and monte but permits lotteries,
and is not inaptly termed the "law of overruling necessity." It may be said to cockfighting and horse-racing. In making such choices, Congress has
be that inherent and plenary power in the State which enables it to prohibit consulted its own wisdom, which this Court has no authority to review, much
all things hurtful to the comfort, safety and welfare of society. Carried onward less reverse. Well has it been said that courts do not sit to resolve the merits
by the current of legislation, the judiciary rarely attempts to dam the of conflicting theories. That is the prerogative of the political departments. It
onrushing power of legislative discretion, provided the purposes of the law is settled that questions regarding wisdom, morality and practicability of
do not go beyond the great principles that mean security for the public statutes are not addressed to the judiciary but may be resolved only by the
welfare or do not arbitrarily interfere with the right of the individual. executive and legislative departments, to which the function belongs in our
scheme of government. (Emphasis supplied)
In the matter of PD No. 771, the purpose of the law is clearly stated in the
"whereas clause" as follows: Talks regarding the supposed vanishing line between right and privilege in
American constitutional law has no relevance in the context of these cases
WHEREAS, it has been reported that in spite of the current drive of our law since the reference there is to economic regulations. On the other hand, jai-
enforcement agencies against vices and illegal gambling, these social ills are alai is not a mere economic activity which the law seeks to regulate. It is
still prevalent in many areas of the country; essentially gambling and whether it should be permitted and, if so, under
what conditions are questions primarily for the lawmaking authority to
WHEREAS, there is need to consolidate all the efforts of the government to determine, talking into account national and local interests. Here, it is the
eradicate and minimize vices and other forms of social ills in pursuance of the police power of the State that is paramount.
social and economic development program under the new society;
ADC questions the motive for the issuance of PD Nos. 771. Clearly, however,
WHEREAS, in order to effectively control and regulate wagers or betting by this Court cannot look into allegations that PD No. 771 was enacted to benefit
the public on horse and dog races, jai-alai and other forms of gambling there a select group which was later given authority to operate the jai-alai under
is a necessity to transfer the issuance of permit and/or franchise from local PD No. 810. The examination of legislative motivation is generally prohibited.
government to the National Government. (Palmer v. Thompson, 403 U.S. 217, 29 L. Ed. 2d 438 [1971] per Black, J.) There
is, the first place, absolute lack of evidence to support ADC's allegation of
It cannot be argued that the control and regulation of gambling do not improper motivation in the issuance of PD No. 771. In the second place, as
promote public morals and welfare. Gambling is essentially antagonistic and already averred, this Court cannot go behind the expressed and proclaimed
self-reliance. It breeds indolence and erodes the value of good, honest and purposes of PD No. 771, which are reasonable and even laudable.
hard work. It is, as very aptly stated by PD No. 771, a vice and a social ill which
government must minimize (if not eradicate) in pursuit of social and It should also be remembered that PD No. 771 provides that the national
economic development. government can subsequently grant franchises "upon proper application and
verification of the qualifications of the applicant." ADC has not alleged that it
In Magtajas v. Pryce Properties Corporation (20 July 1994, G.R. No. 111097), filed an application for a franchise with the national government subsequent
this Court stated thru Mr. Justice Isagani A. Cruz: to the enactment of PD No. 771; thus, the allegations abovementioned (of
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preference to a select group) are based on conjectures, speculations and power to grant gambling franchises. Thus, all franchises then existing were
imagined biases which do not warrant the consideration of this Court. revoked but were made subject to reissuance by the national government
upon compliance by the applicant with government-set qualifications and
On the other hand, it is noteworthy that while then president Aquino issued requirements.
Executive Order No. 169 revoking PD No. 810 (which granted a franchise to a
Marcos-crony to operate the jai-alai), she did not scrap or repeal PD No. 771 There was no violation by PD No. 771 of the equal protection clause since the
which had revoked all franchises to operate jai-alais issued by local decree revoked all franchises issued by local governments without
governments, thereby re-affirming the government policy that franchises to qualification or exception. ADC cannot allege violation of the equal protection
operate jai-alais are for the national government (not local governments) to clause simply because it was the only one affected by the decree, for as
consider and approve. correctly pointed out by the government, ADC was not singled out when all
jai-alai franchises were revoked. Besides, it is too late in the day for ADC to
On the alleged violation of the non-impairment and equal protection clauses seek redress for alleged violation of its constitutional rights for it could have
of the Constitution, it should be remembered that a franchise is not in the raised these issues as early as 1975, almost twenty 920) years ago.
strict sense a simple contract but rather it is more importantly, a mere
privilege specially in matters which are within the government's power to Finally, we do not agree that Section 3 of PD No. 771 and the requirement of
regulate and even prohibit through the exercise of the police power. Thus, a a legislative franchise in Republic Act No. 954 are "riders" to the two 92) laws
gambling franchise is always subject to the exercise of police power for the and are violative of the rule that laws should embrace one subject which shall
public welfare. be expressed in the title, as argued by ADC. In Cordero v. Cabatuando (6 SCRA
418), this Court ruled that the requirement under the constitution that all
In RCPI v. NTC (150 SCRA 450), we held that: laws should embrace only one subject which shall be expressed in the title is
sufficiently met if the title is comprehensive enough reasonably to include the
A franchise started out as a "royal privilege or (a) branch of the King's general object which the statute seeks to effect, without expressing each and
prerogative, subsisting in the hands of a subject." This definition was given by every end and means necessary or convenient for the accomplishing of the
Finch, adopted by Blackstone, and accepted by every authority since . . . objective.
Today, a franchise being merely a privilege emanating from the sovereign
power of the state and owing its existence to a grant, is subject to regulation III
by the state itself by virtue of its police power through its administrative
agencies. On the issue of whether or not there was grave abuse of discretion committed
by respondent Judge Reyes in issuing the temporary restraining order (later
There is a stronger reason for holding ADC's permit to be a mere privilege converted to a writ of preliminary injunction) and the writ of preliminary
because jai-alai, when played for bets, is pure and simple gambling. To mandatory injunction, we hold and rule there was.
analogize a gambling franchise for the operation of a public utility, such as
public transportation company, is to trivialize the great historic origin of this Section 3, Rule 58 of the rules of Court provides for the grounds for the
branch of royal privilege. issuance of a preliminary injunction. While ADC could allege these grounds,
respondent judge should have taken judicial notice of Republic Act No. 954
As earlier noted, ADC has not alleged ever applying for a franchise under the and PD 771, under Section 1 rule 129 of the Rules of court. These laws negate
provisions of PD No. 771. and yet, the purpose of PD No. 771 is quite clear the existence of any legal right on the part of ADC to the reliefs it sought so
from its provisions, i.e., to give to the national government the exclusive as to justify the issuance of a writ of preliminary injunction. since PD No. 771
StatCon Chapter 5 Cases 11 | P a g e
and Republic Act No. 954 are presumed valid and constitutional until ruled
otherwise by the Supreme Court after due hearing, ADC was not entitled to
the writs issued and consequently there was grave abuse of discretion in
issuing them.

WHEREFORE, for the foregoing reasons, judgment is hereby rendered:

1. allowing the Republic of the Philippines to intervene in G.R. No. 115044.

2. declaring Presidential Decree No. 771 valid and constitutional.

3. declaring that respondent Associated Development corporation (ADC)

does not possess the required congressional franchise to operate and
conduct the jai-alai under Republic Act No. 954 and Presidential Decree No.
771.

4. setting aside the writs of preliminary injunction and preliminary mandatory

injunction issued by respondent Judge Vetino Reyes in civil Case No. 94-
71656.

SO ORDERED.

StatCon Chapter 5 Cases 12 | P a g e

3. Jovencio Lim and Teresita Lim vs People No Bail Recommended.
The constitutionality of PD 818, a decree which amended Article 315 of the
Revised Penal Code by increasing the penalties for estafa committed by SO ORDERED. 1
means of bouncing checks, is being challenged in this petition for certiorari,
for being violative of the due process clause, the right to bail and the provision On July 18, 2001, petitioners filed an "Urgent Motion to Quash Information
against cruel, degrading or inhuman punishment enshrined under the and Warrant of Arrest" which was denied by the trial court. Likewise,
Constitution.chanrob1es virtua1 1aw 1ibrary petitioners’ motion for bail filed on July 24, 2001 was denied by the trial court
on the same day. Petitioner Jovencio Lim was arrested by virtue of the
The antecedents of this case, as gathered from the parties’ pleadings and warrant of arrest issued by the trial court and was detained at the Quezon
documentary proofs, follow. City Jail. However, petitioner Teresita Lim remained at large.

In December 1991, petitioner spouses issued to private respondent two On August 22, 2001, petitioners filed the instant petition for certiorari
postdated checks, namely, Metrobank check no. 464728 dated January 15, imputing grave abuse of discretion on the part of the lower court and the
1992 in the amount of P365,750 and Metrobank check no. 464743 dated Office of the City Prosecutor of Quezon City, arguing that PD 818 violates the
January 22, 1992 in the amount of P429,000. Check no. 464728 was constitutional provisions on due process, bail and imposition of cruel,
dishonored upon presentment for having been drawn against insufficient degrading or inhuman punishment.
funds while check no. 464743 was not presented for payment upon request
of petitioners who promised to replace the dishonored check. In a resolution dated February 26, 2002, this Court granted the petition of
Jovencio Lim to post bail pursuant to Department of Justice Circular No. 74
When petitioners reneged on their promise to cover the amount of check no. dated November 6, 2001 which amended the 2000 Bail Bond Guide involving
464728, the private respondent filed a complaint-affidavit before the Office estafa under Article 315, par. 2 (d), and qualified theft. Said Circular
of the City Prosecutor of Quezon City charging petitioner spouses with the specifically provides as follows:chanrob1es virtual 1aw library
crime of estafa under Article 315, par. 2 (d) of the Revised Penal Code, as
amended by PD 818. x x x

On February 16, 2001, the City Prosecutor issued a resolution finding

probable cause against petitioners and recommending the filing of an 3) Where the amount of fraud is P32,000.00 or over in which the imposable
information for estafa with no bail recommended. On the same day, an penalty is reclusion temporal to reclusion perpetua, bail shall be based on
information for the crime of estafa was filed with Branch 217 of the Regional reclusion temporal maximum, pursuant to Par. 2 (a) of the 2000 Bail Bond
Trial Court of Quezon City against petitioners. The case was docketed as Guide, multiplied by P2,000.00, plus an additional of P2,000.00 for every
Criminal Case No. Q-01-101574. Thereafter, the trial court issued a warrant P10,000.00 in excess of P22,000.00; Provided, however, that the total
for the arrest of herein petitioners, thus:chanrob1es virtual 1aw library amount of bail shall not exceed P60,000.00.

It appearing on the face of the information and from supporting affidavit of In view of the aforementioned resolution, the matter concerning bail shall no
the complaining witness and its annexes that probable cause exists, that the longer be discussed. Thus, this decision will focus on whether or not PD 818
crime charged was committed and accused is probably guilty thereof, let a violates Sections 1 and 19 of Article III of the Constitution, which respectively
warrant for the arrest of the accused be issued. provide:chanrob1es virtual 1aw library

StatCon Chapter 5 Cases 13 | P a g e

Section 1. No person shall be deprived of life, liberty or property without due Petitioners contend that, inasmuch as the amount of the subject check is
process of law, nor shall any person be denied the equal protection of the P365,750, they can be penalized with reclusion perpetua or 30 years of
laws. imprisonment. This penalty, according to petitioners, is too severe and
disproportionate to the crime they committed and infringes on the express
x x x mandate of Article III, Section 19 of the Constitution which prohibits the
infliction of cruel, degrading and inhuman punishment.

Section 19 (1) Excessive fines shall not be imposed, nor cruel, degrading or Settled is the rule that a punishment authorized by statute is not cruel,
inhuman punishment inflicted. . . . degrading or disproportionate to the nature of the offense unless it is
flagrantly and plainly oppressive and wholly disproportionate to the nature
We shall deal first with the issue of whether PD 818 was enacted in of the offense as to shock the moral sense of the community. It takes more
contravention of Section 19 of Article III of the Constitution. In this regard, than merely being harsh, excessive, out of proportion or severe for a penalty
the impugned provision of PD 818 reads as follows:chanrob1es virtual 1aw to be obnoxious to the Constitution. 2 Based on this principle, the Court has
library consistently overruled contentions of the defense that the penalty of fine or
imprisonment authorized by the statute involved is cruel and degrading.
SECTION 1. Any person who shall defraud another by means of false
pretenses or fraudulent acts as defined in paragraph 2(d) of Article 315 of the In People v. Tongko, 3 this Court held that the prohibition against cruel and
Revised Penal Code, as amended by Republic Act No. 4885, shall punished unusual punishment is generally aimed at the form or character of the
by:chanrob1es virtual 1aw library punishment rather than its severity in respect of its duration or amount, and
applies to punishments which never existed in America or which public
1st. The penalty of reclusion temporal if the amount of the fraud is over sentiment regards as cruel or obsolete. This refers, for instance, to those
12,000 pesos but does not exceed 22,000 pesos, and if such amount exceeds inflicted at the whipping post or in the pillory, to burning at the stake,
the later sum, the penalty provided in this paragraph shall be imposed in its breaking on the wheel, disemboweling and the like. The fact that the penalty
maximum period, adding one year for each additional 10,000 pesos but the is severe provides insufficient basis to declare a law unconstitutional and does
total penalty which may be imposed shall in no case exceed thirty years. In not, by that circumstance alone, make it cruel and inhuman.
such cases, and in connection with the accessory penalties which may be
imposed under the Revised Penal Code, the penalty shall be termed reclusion Petitioners also argue that while PD 818 increased the imposable penalties
perpetua; for estafa committed under Article 315, par. 2 (d) of the Revised Penal Code,
it did not increase the amounts corresponding to the said new penalties.
2nd. The penalty of prision mayor in its maximum period, if the amount of Thus, the original amounts provided for in the Revised Penal Code have
the fraud is over 6,000 pesos but does not exceed 12,000 pesos. remained the same notwithstanding that they have become negligible and
insignificant compared to the present value of the peso.
3rd. The penalty of prision mayor in its medium period, if such amount is over
200 pesos but does not exceed 6,000 pesos; and This argument is without merit. The primary purpose of PD 818 is
emphatically and categorically stated in the following:chanrob1es virtual 1aw
4th. By prision mayor in its minimum period, if such amount does not exceed library
200 pesos.

StatCon Chapter 5 Cases 14 | P a g e

WHEREAS, reports received of late indicate an upsurge of estafa (swindling) With the foregoing considerations in mind, this Court upholds the
cases committed by means of bouncing checks; constitutionality of PD 818.chanrob1es virtua1 1aw 1ibrary

WHEREAS, if not checked at once, these criminal acts would erode the WHEREFORE, the petition is hereby DISMISSED.
people’s confidence in the use of negotiable instruments as a medium of
commercial transaction and consequently result in the retardation of trade SO ORDERED.
and commerce and the undermining of the banking system of the country;

WHEREAS, it is vitally necessary to arrest and curb the rise in this kind of
estafa cases by increasing the existing penalties provided therefor.

Clearly, the increase in the penalty, far from being cruel and degrading, was
motivated by a laudable purpose, namely, to effectuate the repression of an
evil that undermines the country’s commercial and economic growth, and to
serve as a necessary precaution to deter people from issuing bouncing
checks. The fact that PD 818 did not increase the amounts corresponding to
the new penalties only proves that the amount is immaterial and
inconsequential. What the law sought to avert was the proliferation of estafa
cases committed by means of bouncing checks. Taking into account the
salutary purpose for which said law was decreed, we conclude that PD 818
does not violate Section 19 of Article III of the Constitution.

Moreover, when a law is questioned before the Court, the presumption is in

favor of its constitutionality. To justify its nullification, there must be a clear
and unmistakable breach of the Constitution, not a doubtful and
argumentative one. 4 The burden of proving the invalidity of a law rests on
those who challenge it. In this case, petitioners failed to present clear and
convincing proof to defeat the presumption of constitutionality of PD 818.

With respect to the issue of whether PD 818 infringes on Section 1 of Article

III of the Constitution, petitioners claim that PD 818 is violative of the due
process clause of the Constitution as it was not published in the Official
Gazette. This claim is incorrect and must be rejected. Publication, being an
indispensable part of due process, is imperative to the validity of laws,
presidential decrees and executive orders. 5 PD 818 was published in the
Official Gazette on December 1, 1975. 6

StatCon Chapter 5 Cases 15 | P a g e

4. Karen E. Salvacion vs Central Bank On February 4, 1989, Greg Bartelli y Northcott, an American tourist, coaxed
In our predisposition to discover the "original intent" of a statute, courts and lured petitioner Karen Salvacion, then 12 years old to go with him to his
become the unfeeling pillars of the status quo. Ligle do we realize that apartment. Therein, Greg Bartelli detained Karen Salvacion for four days, or
statutes or even constitutions are bundles of compromises thrown our way up to February 7, 1989 and was able to rape the child once on February 4,
by their framers. Unless we exercise vigilance, the statute may already be out and three times each day on February 5, 6, and 7, 1989. On February 7, 1989,
of tune and irrelevant to our day. after policemen and people living nearby, rescued Karen, Greg Bartelli was
arrested and detained at the Makati Municipal Jail. The policemen recovered
The petition is for declaratory relief. It prays for the following reliefs: from Bartelli the following items: 1.) Dollar Check No. 368, Control No.
021000678-1166111303, US 3,903.20; 2.) COCOBANK Bank Book No. 104-
a.) Immediately upon the filing of this petition, an Order be issued restraining 108758-8 (Peso Acct.); 3.) Dollar Account — China Banking Corp.,
the respondents from applying and enforcing Section 113 of Central Bank US$/A#54105028-2; 4.) ID-122-30-8877; 5.) Philippine Money (P234.00) cash;
Circular No. 960; 6.) Door Keys 6 pieces; 7.) Stuffed Doll (Teddy Bear) used in seducing the
complainant.
b.) After hearing, judgment be rendered:
On February 16, 1989, Makati Investigating Fiscal Edwin G. Condaya filed
1.) Declaring the respective rights and duties of petitioners and respondents; against Greg Bartelli, Criminal Case No. 801 for Serious Illegal Detention and
Criminal Cases Nos. 802, 803, 804, and 805 for four (4) counts of Rape. On the
2.) Adjudging Section 113 of Central Bank Circular No. 960 as contrary to the same day, petitioners filed with the Regional Trial Court of Makati Civil Case
provisions of the Constitution, hence void; because its provision that "Foreign No. 89-3214 for damages with preliminary attachment against Greg Bartelli.
currency deposits shall be exempt from attachment, garnishment, or any On February 24, 1989, the day there was a scheduled hearing for Bartelli's
other order or process of any court, legislative body, government agency or petition for bail the latter escaped from jail.
any administrative body whatsoever
On February 28, 1989, the court granted the fiscal's Urgent Ex-Parte Motion
i.) has taken away the right of petitioners to have the bank deposit of for the Issuance of Warrant of Arrest and Hold Departure Order. Pending the
defendant Greg Bartelli y Northcott garnished to satisfy the judgment arrest of the accused Greg Bartelli y Northcott, the criminal cases were
rendered in petitioners' favor in violation of substantive due process archived in an Order dated February 28, 1989.
guaranteed by the Constitution;
Meanwhile, in Civil Case No. 89-3214, the Judge issued an Order dated
ii.) has given foreign currency depositors an undue favor or a class privilege February 22, 1989 granting the application of herein petitioners, for the
in violation of the equal protection clause of the Constitution; issuance of the writ of preliminary attachment. After petitioners gave Bond
No. JCL (4) 1981 by FGU Insurance Corporation in the amount of P100,000.00,
iii.) has provided a safe haven for criminals like the herein respondent Greg a Writ of Preliminary Attachment was issued by the trial court on February
Bartelli y Northcott since criminals could escape civil liability for their 28, 1989.
wrongful acts by merely converting their money to a foreign currency and
depositing it in a foreign currency deposit account with an authorized bank. On March 1, 1989, the Deputy Sheriff of Makati served a Notice of
Garnishment on China Banking Corporation. In a letter dated March 13, 1989
The antecedent facts: to the Deputy Sheriff of Makati, China Banking Corporation invoked Republic
Act No. 1405 as its answer to the notice of garnishment served on it. On
StatCon Chapter 5 Cases 16 | P a g e
March 15, 1989, Deputy Sheriff of Makati Armando de Guzman sent his reply in your subject letter. The law may be harsh as some perceive it, but it is still
to China Banking Corporation saying that the garnishment did not violate the the law. Compliance is, therefore, enjoined.
secrecy of bank deposits since the disclosure is merely incidental to a
garnishment properly and legally made by virtue of a court order which has Very truly yours,
placed the subject deposits in custodia legis. In answer to this letter of the
Deputy Sheriff of Makati, China Banking Corporation, in a letter dated March (SGD) AGAPITO S. FAJARDO
20, 1989, invoked Section 113 of Central Bank Circular No. 960 to the effect Director1
that the dollar deposits or defendant Greg Bartelli are exempt from
attachment, garnishment, or any other order or process of any court, Meanwhile, on April 10, 1989, the trial court granted petitioners' motion for
legislative body, government agency or any administrative body, whatsoever. leave to serve summons by publication in the Civil Case No. 89-3214 entitled
"Karen Salvacion, et al. vs. Greg Bartelli y Northcott." Summons with the
This prompted the counsel for petitioners to make an inquiry with the Central complaint was a published in the Manila Times once a week for three
Bank in a letter dated April 25, 1989 on whether Section 113 of CB Circular consecutive weeks. Greg Bartelli failed to file his answer to the complaint and
No. 960 has any exception or whether said section has been repealed or was declared in default on August 7, 1989. After hearing the case ex-parte,
amended since said section has rendered nugatory the substantive right of the court rendered judgment in favor of petitioners on March 29, 1990, the
the plaintiff to have the claim sought to be enforced by the civil action dispositive portion of which reads:
secured by way of the writ of preliminary attachment as granted to the
plaintiff under Rule 57 of the Revised Rules of Court. The Central Bank WHEREFORE, judgment is hereby rendered in favor of plaintiffs and against
responded as follows: defendant, ordering the latter:

May 26, 1989 1. To pay plaintiff Karen E. Salvacion the amount of P500,000.00 as moral
damages;
Ms. Erlinda S. Carolino
12 Pres. Osmena Avenue 2. To pay her parents, plaintiffs spouses Federico N. Salvacion, Jr., and Evelina
South Admiral Village E. Salvacion the amount of P150,000.00 each or a total of P300,000.00 for
Paranaque, Metro Manila both of them;

Dear Ms. Carolino: 3. To pay plaintiffs exemplary damages of P100,000.00; and

This is in reply to your letter dated April 25, 1989 regarding your inquiry on 4. To pay attorney's fees in an amount equivalent to 25% of the total amount
Section 113, CB Circular No. 960 (1983). of damages herein awarded;

The cited provision is absolute in application. It does not admit of any 5. To pay litigation expenses of P10,000.00; plus
exception, nor has the same been repealed nor amended.
6. Costs of the suit.
The purpose of the law is to encourage dollar accounts within the country's
banking system which would help in the development of the economy. There SO ORDERED.
is no intention to render futile the basic rights of a person as was suggested
StatCon Chapter 5 Cases 17 | P a g e
The heinous acts of respondent Greg Bartelli which gave rise to the award The American asked Karen what was her favorite subject and she told him it's
were related in graphic detail by the trial court in its decision as follows: Pilipino. He then invited her to go with him to his house where she could
teach Pilipino to his niece. He even gave her a stuffed toy to persuade her to
The defendant in this case was originally detained in the municipal jail of teach his niece. (Id., pp. 5-6)
Makati but was able to escape therefrom on February 24, 1989 as per report
of the Jail Warden of Makati to the Presiding Judge, Honorable Manuel M. They walked from Plaza Fair along Pasong Tamo, turning right to reach the
Cosico of the Regional Trial Court of Makati, Branch 136, where he was defendant's house along Kalayaan Avenue. (Id., p. 6)
charged with four counts of Rape and Serious Illegal Detention (Crim. Cases
Nos. 802 to 805). Accordingly, upon motion of plaintiffs, through counsel, When they reached the apartment house, Karen noticed that defendant's
summons was served upon defendant by publication in the Manila Times, a alleged niece was not outside the house but defendant told her maybe his
newspaper of general circulation as attested by the Advertising Manager of niece was inside. When Karen did not see the alleged niece inside the house,
the Metro Media Times, Inc., the publisher of the said newspaper. Defendant, defendant told her maybe his niece was upstairs, and invited Karen to go
however, failed to file his answer to the complaint despite the lapse of the upstairs. (Id., p. 7)
period of sixty (60) days from the last publication; hence, upon motion of the
plaintiffs, through counsel, defendant was declared in default and plaintiffs Upon entering the bedroom defendant suddenly locked the door. Karen
were authorized to present their evidence ex parte. became nervous because his niece was not there. Defendant got a piece of
cotton cord and tied Karen's hands with it, and then he undressed her. Karen
In support of the complaint, plaintiffs presented as witnesses the minor Karen cried for help but defendant strangled her. He took a packing tape and he
E. Salvacion, her father, Federico N. Salvacion, Jr., a certain Joseph Aguilar covered her mouth with it and he circled it around her head. (Id., p. 7)
and a certain Liberato Madulio, who gave the following testimony:
Then, defendant suddenly pushed Karen towards the bed which was just near
Karen took her first year high school in St. Mary's Academy in Pasay City but the door. He tied her feet and hands spread apart to the bed posts. He knelt
has recently transferred to Arellano University for her second year. in front of her and inserted his finger in her sex organ. She felt severe pain.
She tried to shout but no sound could come out because there were tapes on
In the afternoon of February 4, 1989, Karen was at the Plaza Fair Makati her mouth. When defendant withdrew his finger it was full of blood and Karen
Cinema Square, with her friend Edna Tangile whiling away her free time. At felt more pain after the withdrawal of the finger. (Id., p. 8)
about 3:30 p.m. while she was finishing her snack on a concrete bench in front
of Plaza Fair, an American approached her. She was then alone because Edna He then got a Johnson's Baby Oil and he applied it to his sex organ as well as
Tangile had already left, and she was about to go home. (TSN, Aug. 15, 1989, to her sex organ. After that he forced his sex organ into her but he was not
pp. 2 to 5) able to do so. While he was doing it, Karen found it difficult to breathe and
she perspired a lot while feeling severe pain. She merely presumed that he
The American asked her name and introduced himself as Greg Bartelli. He sat was able to insert his sex organ a little, because she could not see. Karen could
beside her when he talked to her. He said he was a Math teacher and told her not recall how long the defendant was in that position. (Id. pp. 8-9)
that he has a sister who is a nurse in New York. His sister allegedly has a
daughter who is about Karen's age and who was with him in his house along After that, he stood up and went to the bathroom to wash. He also told Karen
Kalayaan Avenue. (TSN, Aug. 15, 1989, pp. 4-5) to take a shower and he untied her hands. Karen could only hear the sound
of the water while the defendant, she presumed, was in the bathroom
washing his sex organ. When she took a shower more blood came out from
StatCon Chapter 5 Cases 18 | P a g e
her. In the meantime, defendant changed the mattress because it was full of stepped on the bowl and she cried for help through the hole. She cried:
blood. After the shower, Karen was allowed by defendant to sleep. She fell "Maawa no po kayo so akin. Tulungan n'yo akong makalabas dito. Kinidnap
asleep because she got tired crying. The incident happened at about 4:00 p.m. ako!" Somebody heard her. It was a woman, probably a neighbor, but she got
Karen had no way of determining the exact time because defendant removed angry and said she was "istorbo". Karen pleaded for help and the woman told
her watch. Defendant did not care to give her food before she went to sleep. her to sleep and she will call the police. She finally fell asleep but no
Karen woke up at about 8:00 o'clock the following morning. (Id., pp. 9-10) policeman came. (TSN, Aug. 15, 1989, pp. 15-16)

The following day, February 5, 1989, a Sunday, after a breakfast of biscuit and She woke up at 6:00 o'clock the following morning, and she saw defendant in
coke at about 8:30 to 9:00 a.m. defendant raped Karen while she was still bed, this time sleeping. She waited for him to wake up. When he woke up, he
bleeding. For lunch, they also took biscuit and coke. She was raped for the again got some food but he always kept the door locked. As usual, she was
second time at about 12:00 to 2:00 p.m. In the evening, they had rice for merely fed with biscuit and coke. On that day, February 7, 1989, she was again
dinner which defendant had stored downstairs; it was he who cooked the rice raped three times. The first at about 6:30 to 7:00 a.m., the second at about
that is why it looks like "lugaw". For the third time, Karen was raped again 8:30 — 9:00, and the third was after lunch at 12:00 noon. After he had raped
during the night. During those three times defendant succeeded in inserting her for the second time he left but only for a short while. Upon his return, he
his sex organ but she could not say whether the organ was inserted wholly. caught her shouting for help but he did not understand what she was
shouting about. After she was raped the third time, he left the house. (TSN,
Karen did not see any firearm or any bladed weapon. The defendant did not Aug. 15, 1989, pp. 16-17) She again went to the bathroom and shouted for
tie her hands and feet nor put a tape on her mouth anymore but she did not help. After shouting for about five minutes, she heard many voices. The voices
cry for help for fear that she might be killed; besides, all the windows and were asking for her name and she gave her name as Karen Salvacion. After a
doors were closed. And even if she shouted for help, nobody would hear her. while, she heard a voice of a woman saying they will just call the police. They
She was so afraid that if somebody would hear her and would be able to call were also telling her to change her clothes. She went from the bathroom to
the police, it was still possible that as she was still inside the house, defendant the room but she did not change her clothes being afraid that should the
might kill her. Besides, the defendant did not leave that Sunday, ruling out neighbors call for the police and the defendant see her in different clothes,
her chance to call for help. At nighttime he slept with her again. (TSN, Aug. he might kill her. At that time she was wearing a T-shirt of the American
15, 1989, pp. 12-14) because the latter washed her dress. (Id., p. 16)

On February 6, 1989, Monday, Karen was raped three times, once in the Afterwards, defendant arrived and he opened the door. He asked her if she
morning for thirty minutes after a breakfast of biscuits; again in the had asked for help because there were many policemen outside and she
afternoon; and again in the evening. At first, Karen did not know that there denied it. He told her to change her clothes, and she did change to the one
was a window because everything was covered by a carpet, until defendant she was wearing on Saturday. He instructed her to tell the police that she left
opened the window for around fifteen minutes or less to let some air in, and home and willingly; then he went downstairs but he locked the door. She
she found that the window was covered by styrofoam and plywood. After could hear people conversing but she could not understand what they were
that, he again closed the window with a hammer and he put the styrofoam, saying. (Id., p. 19)
plywood, and carpet back. (Id., pp. 14-15)
When she heard the voices of many people who were conversing downstairs,
That Monday evening, Karen had a chance to call for help, although she knocked repeatedly at the door as hard as she could. She heard
defendant left but kept the door closed. She went to the bathroom and saw somebody going upstairs and when the door was opened, she saw a
a small window covered by styrofoam and she also spotted a small hole. She policeman. The policeman asked her name and the reason why she was there.
StatCon Chapter 5 Cases 19 | P a g e
She told him she was kidnapped. Downstairs, he saw about five policemen in if she could ever recover from this experience. (TSN, Sept. 24, 1989, pp. 10-
uniform and the defendant was talking to them. "Nakikipag-areglo po sa mga 11)
pulis," Karen added. "The policeman told him to just explain at the precinct.
(Id., p. 20) Pursuant to an Order granting leave to publish notice of decision, said notice
was published in the Manila Bulletin once a week for three consecutive
They went out of the house and she saw some of her neighbors in front of weeks. After the lapse of fifteen (15) days from the date of the last publication
the house. They rode the car of a certain person she called Kuya Boy together of the notice of judgment and the decision of the trial court had become final,
with defendant, the policeman, and two of her neighbors whom she called petitioners tried to execute on Bartelli's dollar deposit with China Banking
Kuya Bong Lacson and one Ate Nita. They were brought to Sub-Station I and Corporation. Likewise, the bank invoked Section 113 of Central Bank Circular
there she was investigated by a policeman. At about 2:00 a.m., her father No. 960.
arrived, followed by her mother together with some of their neighbors. Then
they were brought to the second floor of the police headquarters. (Id., p. 21) Thus, petitioners decided to seek relief from this Court.

At the headquarters, she was asked several questions by the investigator. The The issues raised and the arguments articulated by the parties boil down to
written statement she gave to the police was marked as Exhibit A. Then they two:
proceeded to the National Bureau of Investigation together with the
investigator and her parents. At the NBI, a doctor, a medico-legal officer, May this Court entertain the instant petition despite the fact that original
examined her private parts. It was already 3:00 in the early morning of the jurisdiction in petitions for declaratory relief rests with the lower court?
following day when they reached the NBI. (TSN, Aug. 15, 1989, p. 22) The Should Section 113 of Central Bank Circular No. 960 and Section 8 of R.A.
findings of the medico-legal officer has been marked as Exhibit B. 6426, as amended by P.D. 1246, otherwise known as the Foreign Currency
Deposit Act be made applicable to a foreign transient?
She was studying at the St. Mary's Academy in Pasay City at the time of the
incident but she subsequently transferred to Apolinario Mabini, Arellano Petitioners aver as heretofore stated that Section 113 of Central Bank Circular
University, situated along Taft Avenue, because she was ashamed to be the No. 960 providing that "Foreign currency deposits shall be exempt from
subject of conversation in the school. She first applied for transfer to Jose attachment, garnishment, or any other order or process of any court,
Abad Santos, Arellano University along Taft Avenue near the Light Rail Transit legislative body, government agency or any administrative body
Station but she was denied admission after she told the school the true whatsoever." should be adjudged as unconstitutional on the grounds that: 1.)
reason for her transfer. The reason for their denial was that they might be it has taken away the right of petitioners to have the bank deposit of
implicated in the case. (TSN, Aug. 15, 1989, p. 46) defendant Greg Bartelli y Northcott garnished to satisfy the judgment
rendered in petitioners' favor in violation of substantive due process
xxx xxx xxx guaranteed by the Constitution; 2.) it has given foreign currency depositors
an undue favor or a class privilege in violation of the equal protection clause
After the incident, Karen has changed a lot. She does not play with her of the Constitution; 3.) it has provided a safe haven for criminals like the
brother and sister anymore, and she is always in a state of shock; she has herein respondent Greg Bartelli y Northcott since criminals could escape civil
been absent-minded and is ashamed even to go out of the house. (TSN, Sept. liability for their wrongful acts by merely converting their money to a foreign
12, 1989, p. 10) She appears to be restless or sad, (Id., p. 11) The father prays currency and depositing it in a foreign currency deposit account with an
for P500,000.00 moral damages for Karen for this shocking experience which authorized bank; and 4.) The Monetary Board, in issuing Section 113 of
probably, she would always recall until she reaches old age, and he is not sure Central Bank Circular No. 960 has exceeded its delegated quasi-legislative
StatCon Chapter 5 Cases 20 | P a g e
power when it took away: a.) the plaintiffs substantive right to have the claim welfare or public interest. Respondent Central Bank also alleges that Rule 39
sought to be enforced by the civil action secured by way of the writ of and Rule 57 of the Revised Rules of Court provide that some properties are
preliminary attachment as granted by Rule 57 of the Revised Rules of Court; exempted from execution/attachment especially provided by law and R.A.
b.) the plaintiffs substantive right to have the judgment credit satisfied by way No. 6426 as amended is such a law, in that it specifically provides, among
of the writ of execution out of the bank deposit of the judgment debtor as others, that foreign currency deposits shall be exempted from attachment,
granted to the judgment creditor by Rule 39 of the Revised Rules of Court, garnishment, or any other order or process of any court, legislative body,
which is beyond its power to do so. government agency or any administrative body whatsoever.

On the other hand, respondent Central Bank, in its Comment alleges that the For its part, respondent China Banking Corporation, aside from giving reasons
Monetary Board in issuing Section 113 of CB Circular No. 960 did not exceed similar to that of respondent Central Bank, also stated that respondent China
its power or authority because the subject Section is copied verbatim from a Bank is not unmindful of the inhuman sufferings experienced by the minor
portion of R.A. No. 6426 as amended by P.D. 1246. Hence, it was not the Karen E. Salvacion from the beastly hands of Greg Bartelli; that it is only too
Monetary Board that grants exemption from attachment or garnishment to willing to release the dollar deposit of Bartelli which may perhaps partly
foreign currency deposits, but the law (R.A. 6426 as amended) itself; that it mitigate the sufferings petitioner has undergone; but it is restrained from
does not violate the substantive due process guaranteed by the Constitution doing so in view of R.A. No. 6426 and Section 113 of Central Bank Circular No.
because a.) it was based on a law; b.) the law seems to be reasonable; c.) it is 960; and that despite the harsh effect of these laws on petitioners, CBC has
enforced according to regular methods of procedure; and d.) it applies to all no other alternative but to follow the same.
members of a class.
This Court finds the petition to be partly meritorious.
Expanding, the Central Bank said; that one reason for exempting the foreign
currency deposits from attachment, garnishment or any other order or Petitioner deserves to receive the damages awarded to her by the court. But
process of any court, is to assure the development and speedy growth of the this petition for declaratory relief can only be entertained and treated as a
Foreign Currency Deposit System and the Offshore Banking System in the petition for mandamus to require respondents to honor and comply with the
Philippines; that another reason is to encourage the inflow of foreign writ of execution in Civil Case No. 89-3214.
currency deposits into the banking institutions thereby placing such
institutions more in a position to properly channel the same to loans and This Court has no original and exclusive jurisdiction over a petition for
investments in the Philippines, thus directly contributing to the economic declaratory relief.2 However, exceptions to this rule have been recognized.
development of the country; that the subject section is being enforced Thus, where the petition has far-reaching implications and raises questions
according to the regular methods of procedure; and that it applies to all that should be resolved, it may be treated as one for mandamus.3
foreign currency deposits made by any person and therefore does not violate
the equal protection clause of the Constitution. Here is a child, a 12-year old girl, who in her belief that all Americans are good
and in her gesture of kindness by teaching his alleged niece the Filipino
Respondent Central Bank further avers that the questioned provision is language as requested by the American, trustingly went with said stranger to
needed to promote the public interest and the general welfare; that the State his apartment, and there she was raped by said American tourist Greg
cannot just stand idly by while a considerable segment of the society suffers Bartelli. Not once, but ten times. She was detained therein for four (4) days.
from economic distress; that the State had to take some measures to This American tourist was able to escape from the jail and avoid punishment.
encourage economic development; and that in so doing persons and property On the other hand, the child, having received a favorable judgment in the Civil
may be subjected to some kinds of restraints or burdens to secure the general Case for damages in the amount of more than P1,000,000.00, which amount
StatCon Chapter 5 Cases 21 | P a g e
could alleviate the humiliation, anxiety, and besmirched reputation she had enacted. But the realities of the present times show that the country has
suffered and may continue to suffer for a long, long time; and knowing that recovered economically; and even if not, the questioned law still denies those
this person who had wronged her has the money, could not, however get the entitled to due process of law for being unreasonable and oppressive. The
award of damages because of this unreasonable law. This questioned law, intention of the questioned law may be good when enacted. The law failed
therefore makes futile the favorable judgment and award of damages that to anticipate the iniquitous effects producing outright injustice and inequality
she and her parents fully deserve. As stated by the trial court in its decision, such as the case before us.

Indeed, after hearing the testimony of Karen, the Court believes that it was It has thus been said that —
undoubtedly a shocking and traumatic experience she had undergone which
could haunt her mind for a long, long time, the mere recall of which could But I also know,5 that laws and institutions must go hand in hand with the
make her feel so humiliated, as in fact she had been actually humiliated once progress of the human mind. As that becomes more developed, more
when she was refused admission at the Abad Santos High School, Arellano enlightened, as new discoveries are made, new truths are disclosed and
University, where she sought to transfer from another school, simply because manners and opinions change with the change of circumstances, institutions
the school authorities of the said High School learned about what happened must advance also, and keep pace with the times. . . We might as well require
to her and allegedly feared that they might be implicated in the case. a man to wear still the coat which fitted him when a boy, as civilized society
to remain ever under the regimen of their barbarous ancestors.
xxx xxx xxx
In his Comment, the Solicitor General correctly opined, thus:
The reason for imposing exemplary or corrective damages is due to the
wanton and bestial manner defendant had committed the acts of rape during The present petition has far-reaching implications on the right of a national
a period of serious illegal detention of his hapless victim, the minor Karen to obtain redress for a wrong committed by an alien who takes refuge under
Salvacion whose only fault was in her being so naive and credulous to believe a law and regulation promulgated for a purpose which does not contemplate
easily that defendant, an American national, could not have such a bestial the application thereof envisaged by the alien. More specifically, the petition
desire on her nor capable of committing such a heinous crime. Being only 12 raises the question whether the protection against attachment, garnishment
years old when that unfortunate incident happened, she has never heard of or other court process accorded to foreign currency deposits by PD No. 1246
an old Filipino adage that in every forest there is a and CB Circular No. 960 applies when the deposit does not come from a
snake, . . . .4 lender or investor but from a mere transient or tourist who is not expected
to maintain the deposit in the bank for long.
If Karen's sad fate had happened to anybody's own kin, it would be difficult
for him to fathom how the incentive for foreign currency deposit could be The resolution of this question is important for the protection of nationals
more important than his child's rights to said award of damages; in this case, who are victimized in the forum by foreigners who are merely passing
the victim's claim for damages from this alien who had the gall to wrong a through.
child of tender years of a country where he is a mere visitor. This further
illustrates the flaw in the questioned provisions. xxx xxx xxx

It is worth mentioning that R.A. No. 6426 was enacted in 1983 or at a time . . . Respondents China Banking Corporation and Central Bank of the
when the country's economy was in a shambles; when foreign investments Philippines refused to honor the writ of execution issued in Civil Case No. 89-
were minimal and presumably, this was the reason why said statute was
StatCon Chapter 5 Cases 22 | P a g e
3214 on the strength of the following provision of Central Bank Circular No.
960: WHEREAS, under Republic Act No. 6426, as amended by Presidential Decree
No. 1035, certain Philippine banking institutions and branches of foreign
Sec. 113. Exemption from attachment. — Foreign currency deposits shall be banks are authorized to accept deposits in foreign currency;
exempt from attachment, garnishment, or any other order or process of any
court, legislative body, government agency or any administrative body WHEREAS, under the provisions of Presidential Decree No. 1034 authorizing
whatsoever. the establishment of an offshore banking system in the Philippines, offshore
banking units are also authorized to receive foreign currency deposits in
Central Bank Circular No. 960 was issued pursuant to Section 7 of Republic certain cases;
Act No. 6426:
WHEREAS, in order to assure the development and speedy growth of the
Sec. 7. Rules and Regulations. The Monetary Board of the Central Bank shall Foreign Currency Deposit System and the Offshore Banking System in the
promulgate such rules and regulations as may be necessary to carry out the Philippines, certain incentives were provided for under the two Systems such
provisions of this Act which shall take effect after the publication of such rules as confidentiality of deposits subject to certain exceptions and tax
and regulations in the Official Gazette and in a newspaper of national exemptions on the interest income of depositors who are nonresidents and
circulation for at least once a week for three consecutive weeks. In case the are not engaged in trade or business in the Philippines;
Central Bank promulgates new rules and regulations decreasing the rights of
depositors, the rules and regulations at the time the deposit was made shall WHEREAS, making absolute the protective cloak of confidentiality over such
govern. foreign currency deposits, exempting such deposits from tax, and
guaranteeing the vested rights of depositors would better encourage the
The aforecited Section 113 was copied from Section 8 of Republic Act NO. inflow of foreign currency deposits into the banking institutions authorized
6426, as amended by P.D. 1246, thus: to accept such deposits in the Philippines thereby placing such institutions
more in a position to properly channel the same to loans and investments in
Sec. 8. Secrecy of Foreign Currency Deposits. — All foreign currency deposits the Philippines, thus directly contributing to the economic development of
authorized under this Act, as amended by Presidential Decree No. 1035, as the country;
well as foreign currency deposits authorized under Presidential Decree No.
1034, are hereby declared as and considered of an absolutely confidential Thus, one of the principal purposes of the protection accorded to foreign
nature and, except upon the written permission of the depositor, in no currency deposits is "to assure the development and speedy growth of the
instance shall such foreign currency deposits be examined, inquired or looked Foreign Currency Deposit system and the Offshore Banking in the Philippines"
into by any person, government official, bureau or office whether judicial or (3rd Whereas).
administrative or legislative or any other entity whether public or private:
Provided, however, that said foreign currency deposits shall be exempt from The Offshore Banking System was established by PD No. 1034. In turn, the
attachment, garnishment, or any other order or process of any court, purposes of PD No. 1034 are as follows:
legislative body, government agency or any administrative body whatsoever.
WHEREAS, conditions conducive to the establishment of an offshore banking
The purpose of PD 1246 in according protection against attachment, system, such as political stability, a growing economy and adequate
garnishment and other court process to foreign currency deposits is stated in communication facilities, among others, exist in the Philippines;
its whereases, viz.:
StatCon Chapter 5 Cases 23 | P a g e
WHEREAS, it is in the interest of developing countries to have as wide access incentives and protection by said laws because such depositor stays only for
as possible to the sources of capital funds for economic development; a few days in the country and, therefore, will maintain his deposit in the bank
only for a short time.
WHEREAS, an offshore banking system based in the Philippines will be
advantageous and beneficial to the country by increasing our links with Respondent Greg Bartelli, as stated, is just a tourist or a transient. He
foreign lenders, facilitating the flow of desired investments into the deposited his dollars with respondent China Banking Corporation only for
Philippines, creating employment opportunities and expertise in safekeeping during his temporary stay in the Philippines.
international finance, and contributing to the national development effort.
For the reasons stated above, the Solicitor General thus submits that the
WHEREAS, the geographical location, physical and human resources, and dollar deposit of respondent Greg Bartelli is not entitled to the protection of
other positive factors provide the Philippines with the clear potential to Section 113 of Central Bank Circular No. 960 and PD No. 1246 against
develop as another financial center in Asia; attachment, garnishment or other court processes.6

On the other hand, the Foreign Currency Deposit system was created by PD. In fine, the application of the law depends on the extent of its justice.
No. 1035. Its purposes are as follows: Eventually, if we rule that the questioned Section 113 of Central Bank Circular
No. 960 which exempts from attachment, garnishment, or any other order or
WHEREAS, the establishment of an offshore banking system in the Philippines process of any court, legislative body, government agency or any
has been authorized under a separate decree; administrative body whatsoever, is applicable to a foreign transient, injustice
would result especially to a citizen aggrieved by a foreign guest like accused
WHEREAS, a number of local commercial banks, as depository bank under the Greg Bartelli. This would negate Article 10 of the New Civil Code which
Foreign Currency Deposit Act (RA No. 6426), have the resources and provides that "in case of doubt in the interpretation or application of laws, it
managerial competence to more actively engage in foreign exchange is presumed that the lawmaking body intended right and justice to prevail.
transactions and participate in the grant of foreign currency loans to resident "Ninguno non deue enriquecerse tortizeramente con dano de otro." Simply
corporations and firms; stated, when the statute is silent or ambiguous, this is one of those
fundamental solutions that would respond to the vehement urge of
WHEREAS, it is timely to expand the foreign currency lending authority of the conscience. (Padilla vs. Padilla, 74 Phil. 377).
said depository banks under RA 6426 and apply to their transactions the same
taxes as would be applicable to transaction of the proposed offshore banking It would be unthinkable, that the questioned Section 113 of Central Bank No.
units; 960 would be used as a device by accused Greg Bartelli for wrongdoing, and
in so doing, acquitting the guilty at the expense of the innocent.
It is evident from the above [Whereas clauses] that the Offshore Banking
System and the Foreign Currency Deposit System were designed to draw Call it what it may — but is there no conflict of legal policy here? Dollar against
deposits from foreign lenders and investors (Vide second Whereas of PD No. Peso? Upholding the final and executory judgment of the lower court against
1034; third Whereas of PD No. 1035). It is these deposits that are induced by the Central Bank Circular protecting the foreign depositor? Shielding or
the two laws and given protection and incentives by them. protecting the dollar deposit of a transient alien depositor against injustice to
a national and victim of a crime? This situation calls for fairness against legal
Obviously, the foreign currency deposit made by a transient or a tourist is not tyranny.
the kind of deposit encouraged by PD Nos. 1034 and 1035 and given
StatCon Chapter 5 Cases 24 | P a g e
We definitely cannot have both ways and rest in the belief that we have
served the ends of justice.

IN VIEW WHEREOF, the provisions of Section 113 of CB Circular No. 960 and
PD No. 1246, insofar as it amends Section 8 of R.A. No. 6426 are hereby held
to be INAPPLICABLE to this case because of its peculiar circumstances.
Respondents are hereby REQUIRED to COMPLY with the writ of execution
issued in Civil Case No. 89-3214, "Karen Salvacion, et al. vs. Greg Bartelli y
Northcott, by Branch CXLIV, RTC Makati and to RELEASE to petitioners the
dollar deposit of respondent Greg Bartelli y Northcott in such amount as
would satisfy the judgment.

SO ORDERED.

StatCon Chapter 5 Cases 25 | P a g e

5. Carlos Alonzo and Casimira Alonzo vs Intermediate Appellate Court and In truth, such actual notice as acquired by the co-heirs cannot be plausibly
Tecla Padua denied. The other co-heirs, including Tecla Padua, lived on the same lot,
The question is sometimes asked, in serious inquiry or in curious conjecture, which consisted of only 604 square meters, including the portions sold to the
whether we are a court of law or a court of justice. Do we apply the law even petitioners . 8 Eustaquia herself, who had sold her portion, was staying in the
if it is unjust or do we administer justice even against the law? Thus queried, same house with her sister Tecla, who later claimed redemption petition. 9
we do not equivocate. The answer is that we do neither because we are a Moreover, the petitioners and the private respondents were close friends
court both of law and of justice. We apply the law with justice for that is our and neighbors whose children went to school together. 10
mission and purpose in the scheme of our Republic. This case is an illustration.
It is highly improbable that the other co-heirs were unaware of the sales and
Five brothers and sisters inherited in equal pro indiviso shares a parcel of land that they thought, as they alleged, that the area occupied by the petitioners
registered in 'the name of their deceased parents under OCT No. 10977 of had merely been mortgaged by Celestino and Eustaquia. In the circumstances
the Registry of Deeds of Tarlac. 1 just narrated, it was impossible for Tecla not to know that the area occupied
by the petitioners had been purchased by them from the other. co-heirs.
On March 15, 1963, one of them, Celestino Padua, transferred his undivided Especially significant was the erection thereon of the permanent semi-
share of the herein petitioners for the sum of P550.00 by way of absolute concrete structure by the petitioners' son, which was done without objection
sale. 2 One year later, on April 22, 1964, Eustaquia Padua, his sister, sold her on her part or of any of the other co-heirs.
own share to the same vendees, in an instrument denominated "Con Pacto
de Retro Sale," for the sum of P 440.00. 3 The only real question in this case, therefore, is the correct interpretation and
application of the pertinent law as invoked, interestingly enough, by both the
By virtue of such agreements, the petitioners occupied, after the said sales, petitioners and the private respondents. This is Article 1088 of the Civil Code,
an area corresponding to two-fifths of the said lot, representing the portions providing as follows:
sold to them. The vendees subsequently enclosed the same with a fence. In
1975, with their consent, their son Eduardo Alonzo and his wife built a semi- Art. 1088. Should any of the heirs sell his hereditary rights to a stranger before
concrete house on a part of the enclosed area.4 the partition, any or all of the co-heirs may be subrogated to the rights of the
purchaser by reimbursing him for the price of the sale, provided they do so
On February 25, 1976, Mariano Padua, one of the five coheirs, sought to within the period of one month from the time they were notified in writing
redeem the area sold to the spouses Alonzo, but his complaint was dismissed of the sale by the vendor.
when it appeared that he was an American citizen .5 On May 27, 1977,
however, Tecla Padua, another co-heir, filed her own complaint invoking the In reversing the trial court, the respondent court ** declared that the notice
same right of redemption claimed by her brother. 6 required by the said article was written notice and that actual notice would
not suffice as a substitute. Citing the same case of De Conejero v. Court of
The trial court * also dismiss this complaint, now on the ground that the right Appeals 11 applied by the trial court, the respondent court held that that
had lapsed, not having been exercised within thirty days from notice of the decision, interpreting a like rule in Article 1623, stressed the need for written
sales in 1963 and 1964. Although there was no written notice, it was held that notice although no particular form was required.
actual knowledge of the sales by the co-heirs satisfied the requirement of the
law. 7 Thus, according to Justice J.B.L. Reyes, who was the ponente of the Court,
furnishing the co-heirs with a copy of the deed of sale of the property subject
to redemption would satisfy the requirement for written notice. "So long,
StatCon Chapter 5 Cases 26 | P a g e
therefore, as the latter (i.e., the redemptioner) is informed in writing of the Thus, we interpret and apply the law not independently of but in consonance
sale and the particulars thereof," he declared, "the thirty days for redemption with justice. Law and justice are inseparable, and we must keep them so. To
start running. " be sure, there are some laws that, while generally valid, may seem arbitrary
when applied in a particular case because of its peculiar circumstances. In
In the earlier decision of Butte v. UY, 12 " the Court, speaking through the such a situation, we are not bound, because only of our nature and functions,
same learned jurist, emphasized that the written notice should be given by to apply them just the same, in slavish obedience to their language. What we
the vendor and not the vendees, conformably to a similar requirement under do instead is find a balance between the word and the will, that justice may
Article 1623, reading as follows: be done even as the law is obeyed.

Art. 1623. The right of legal pre-emption or redemption shall not be exercised As judges, we are not automatons. We do not and must not unfeelingly apply
except within thirty days from the notice in writing by the prospective vendor, the law as it is worded, yielding like robots to the literal command without
or by the vendors, as the case may be. The deed of sale shall not be recorded regard to its cause and consequence. "Courts are apt to err by sticking too
in the Registry of Property, unless accompanied by an affidavit of the vendor closely to the words of a law," so we are warned, by Justice Holmes again,
that he has given written notice thereof to all possible redemptioners. "where these words import a policy that goes beyond them." 13 While we
admittedly may not legislate, we nevertheless have the power to interpret
The right of redemption of co-owners excludes that of the adjoining owners. the law in such a way as to reflect the will of the legislature. While we may
not read into the law a purpose that is not there, we nevertheless have the
As "it is thus apparent that the Philippine legislature in Article 1623 right to read out of it the reason for its enactment. In doing so, we defer not
deliberately selected a particular method of giving notice, and that notice to "the letter that killeth" but to "the spirit that vivifieth," to give effect to the
must be deemed exclusive," the Court held that notice given by the vendees law maker's will.
and not the vendor would not toll the running of the 30-day period.
The spirit, rather than the letter of a statute determines its construction,
The petition before us appears to be an illustration of the Holmes dictum that hence, a statute must be read according to its spirit or intent. For what is
"hard cases make bad laws" as the petitioners obviously cannot argue against within the spirit is within the letter but although it is not within the letter
the fact that there was really no written notice given by the vendors to their thereof, and that which is within the letter but not within the spirit is not
co-heirs. Strictly applied and interpreted, Article 1088 can lead to only one within the statute. Stated differently, a thing which is within the intent of the
conclusion, to wit, that in view of such deficiency, the 30 day period for lawmaker is as much within the statute as if within the letter; and a thing
redemption had not begun to run, much less expired in 1977. which is within the letter of the statute is not within the statute unless within
the intent of the lawmakers. 14
But as has also been aptly observed, we test a law by its results; and likewise,
we may add, by its purposes. It is a cardinal rule that, in seeking the meaning In requiring written notice, Article 1088 seeks to ensure that the
of the law, the first concern of the judge should be to discover in its provisions redemptioner is properly notified of the sale and to indicate the date of such
the in tent of the lawmaker. Unquestionably, the law should never be notice as the starting time of the 30-day period of redemption. Considering
interpreted in such a way as to cause injustice as this is never within the the shortness of the period, it is really necessary, as a general rule, to pinpoint
legislative intent. An indispensable part of that intent, in fact, for we presume the precise date it is supposed to begin, to obviate any problem of alleged
the good motives of the legislature, is to render justice. delays, sometimes consisting of only a day or two.

StatCon Chapter 5 Cases 27 | P a g e

The instant case presents no such problem because the right of redemption While the general rule is, that to charge a party with laches in the assertion
was invoked not days but years after the sales were made in 1963 and 1964. of an alleged right it is essential that he should have knowledge of the facts
The complaint was filed by Tecla Padua in 1977, thirteen years after the first upon which he bases his claim, yet if the circumstances were such as should
sale and fourteen years after the second sale. The delay invoked by the have induced inquiry, and the means of ascertaining the truth were readily
petitioners extends to more than a decade, assuming of course that there was available upon inquiry, but the party neglects to make it, he will be chargeable
a valid notice that tolled the running of the period of redemption. with laches, the same as if he had known the facts. 15

Was there a valid notice? Granting that the law requires the notice to be It was the perfectly natural thing for the co-heirs to wonder why the spouses
written, would such notice be necessary in this case? Assuming there was a Alonzo, who were not among them, should enclose a portion of the inherited
valid notice although it was not in writing. would there be any question that lot and build thereon a house of strong materials. This definitely was not the
the 30-day period for redemption had expired long before the complaint was act of a temporary possessor or a mere mortgagee. This certainly looked like
filed in 1977? an act of ownership. Yet, given this unseemly situation, none of the co-heirs
saw fit to object or at least inquire, to ascertain the facts, which were readily
In the face of the established facts, we cannot accept the private available. It took all of thirteen years before one of them chose to claim the
respondents' pretense that they were unaware of the sales made by their right of redemption, but then it was already too late.
brother and sister in 1963 and 1964. By requiring written proof of such notice,
we would be closing our eyes to the obvious truth in favor of their palpably We realize that in arriving at our conclusion today, we are deviating from the
false claim of ignorance, thus exalting the letter of the law over its purpose. strict letter of the law, which the respondent court understandably applied
The purpose is clear enough: to make sure that the redemptioners are duly pursuant to existing jurisprudence. The said court acted properly as it had no
notified. We are satisfied that in this case the other brothers and sisters were competence to reverse the doctrines laid down by this Court in the above-
actually informed, although not in writing, of the sales made in 1963 and cited cases. In fact, and this should be clearly stressed, we ourselves are not
1964, and that such notice was sufficient. abandoning the De Conejero and Buttle doctrines. What we are doing simply
is adopting an exception to the general rule, in view of the peculiar
Now, when did the 30-day period of redemption begin? circumstances of this case.

While we do not here declare that this period started from the dates of such The co-heirs in this case were undeniably informed of the sales although no
sales in 1963 and 1964, we do say that sometime between those years and notice in writing was given them. And there is no doubt either that the 30-
1976, when the first complaint for redemption was filed, the other co-heirs day period began and ended during the 14 years between the sales in
were actually informed of the sale and that thereafter the 30-day period question and the filing of the complaint for redemption in 1977, without the
started running and ultimately expired. This could have happened any time co-heirs exercising their right of redemption. These are the justifications for
during the interval of thirteen years, when none of the co-heirs made a move this exception.
to redeem the properties sold. By 1977, in other words, when Tecla Padua
filed her complaint, the right of redemption had already been extinguished More than twenty centuries ago, Justinian defined justice "as the constant
because the period for its exercise had already expired. and perpetual wish to render every one his due." 16 That wish continues to
motivate this Court when it assesses the facts and the law in every case
The following doctrine is also worth noting: brought to it for decision. Justice is always an essential ingredient of its
decisions. Thus when the facts warrants, we interpret the law in a way that
will render justice, presuming that it was the intention of the lawmaker, to
StatCon Chapter 5 Cases 28 | P a g e
begin with, that the law be dispensed with justice. So we have done in this
case.

WHEREFORE, the petition is granted. The decision of the respondent court is

REVERSED and that of the trial court is reinstated, without any
pronouncement as to costs. It is so ordered.

StatCon Chapter 5 Cases 29 | P a g e

6. Aleli C. Almadovar, General Manager ISAWAD, Isabela City, Basilan vs Payment of Representation and Transportation Allowances (RATA) to the
Chairperson Ma. Gracia M. Pulido-Tan, COA GM, ISAWAD over and above the authorized rate of the Department of
This is a petition for certiorari under Rule 64 of the Revised Rules of Court Budget and Management (DBM) under Corporate Budget Circular (CBC) No.
seeking to reverse and set aside the December 29, 2011 Decision1 of the 18 and National Budget Circular (NBC) No. 498
Commission on Audit (COA) and the April 4, 2014 Resolution2 of the COA En P6,000.00
Bane which affirmed the October 28, 2010 Decision3 of the COA Regional cralawlawlibrary
Office No. IX (COA Regional Office) regarding Notices of Disallowances (NDs).
On April 26, 2007, petitioner filed an appeal with the Regional Cluster
Isabela Water District (ISAWAD) is a government owned and controlled Director, Cluster Ill-Public Utilities, Corporation Government Sector, which
corporation (GOCC) created pursuant to the provisions of Presidential Decree was indorsed to the COA Regional Office. Petitioner insisted that the increase
(P.D.) No. 198, or the "Provincial Water Utilities Act of 1973" (PWUA), as in her salary and her RATA was in accordance with R.A. No. 9286, or the law
amended by Republic Act (R.A.) No. 9286.4 Aleli G. Almadovar (petitioner) is which amended the PWUA.11
the General Manager (GM) of ISAWAD.5
Petitioner further claimed that the engagement of a private counsel, Atty.
On January 25, 2007, Catalino S. Genel (Genel), Audit Team Leader for Quirino Esguerra Jr. (Atty. Esguerra), and the designation of OGCC lawyer,
ISAWAD, Isabela City, issued the following NDs for ISAWAD's various Atty. Fortunato G. Operario Jr. (Atty. Operario), were in accordance with the
payments:6chanroblesvirtuallawlibrary procedure set forth by law. Consequently, the payments made to them were
appropriate.12

ND No. The COA Regional Office Ruling

Particulars
Amount On October 28, 2010, the COA Regional Office rendered a decision affirming
2006-001 with modification the assailed NDs. It explained that the compensation of the
(2005)7 GMs of local water districts (LWDs) was still subject to the provisions of R.A.
Payment of salary increase for the GM, ISAWAD, from P20,823.00 to P35,574- No. 6758, or the Salary Standardization Law (SSL). Thus, it found that the
00 per month, from August to December, 2005, without legal basis. increase in petitioner's salary was improper as it ran afoul with the provisions
P73,755.00 of R.A. No. 6758. It also agreed that the disallowance of petitioner's RATA was
2006-002(2005)8 correct because it exceeded the allowable RATA for her position pursuant to
Payment of legal retainer's fee at P4,000.00 per month for the period from of CBC No. 18,13 dated April 1, 2005, and NBC No. 498,14 dated November 14,
January to December 2005 without proper authority from the Office of the 2000.
Government Corporate Counsel (OGCC) and the written concurrence of the
COA. The COA Regional Office also agreed that the payment of honoraria to Atty.
P48,000.00 Operario had no basis because it constituted an unnecessary and excessive
2006-003(2005)9 expenditure. The disallowed amount in ND No. 2006-002(2005), was reduced
Payment of honorarium to OGCC Lawyer without express authority from the from P48,000.00 to P40,000.00 because Atty. Esguerra's services from
OGCC, and proof of service rendered to the ISAWAD November to December 2005 were covered by a retainership contract duly
P24,000.00 approved by the OGCC and with the written concurrence of the COA.
2006-004(2005)10
StatCon Chapter 5 Cases 30 | P a g e
The case was automatically elevated for review to the COA pursuant to Petitioner also claims that the payments to Atty. Esguerra from January to
Section 7, Rule V of the 2009 Revised Rules of Procedures of the COA. October 2005 were valid because the OGCC concurred with the retainership
contract for one year effective from November 1, 2004. She faults the COA
The COA Ruling for belatedly acting upon the request for conformity. Likewise, petitioner
posits that the written concurrence of the COA only applies to the
On December 29, 2011, the COA rendered the assailed decision affirming the engagement or hiring of a private lawyer and not the renewal of the
ruling of the COA Regional Office. It stressed that before a private lawyer may retainership. She argues that the retainership of Atty. Esguerra had been
be hired by the GOCC, the written conformity of the OGCC and the written effected on a yearly basis starting November 1, 2003, which necessarily
concurrence of the COA must first be secured -which also applied in cases of follows that subsequent renewal should be in November of the succeeding
contract renewal. The COA ruled that the payments to Atty. Esguerra from year.16
January to October 2005 were improper because his services were retained
without the necessary conformity and concurrence of both the OGCC and the Petitioner also faults the OGCC for the delay in issuing the necessary authority
COA. Only the retainership contract for a period of one year effective on for Atty. Operario, baring that as early as 2004 the board of directors of
November 1, 2005 was with the conformity and concurrence of both the ISAWAD already requested from the OGCC the necessary authority, but it was
OGCC and the COA. given only on July 11, 2006. She avers that denying the lawyers the
remuneration for their services will be tantamount to unjust enrichment.17
Aggrieved, petitioner moved for reconsideration of the decision but her
motion was denied by the COA En Banc in its assailed resolution, dated April Citing Mendoza v. COA18 (Mendoza), petitioner claims that she acted in good
4, 2014. faith in making all the disbursements and, therefore, she should not be made
to refund them because they were given under an honest belief that the
Hence, this present petition. payees were entitled to the said remunerations and these were in
consideration for their services rendered. Petitioner likewise prays for the
ISSUES issuance of a Writ of Preliminary Injunction and/or TRO because she stands
to suffer grave injustice and great irreparable injury.
1] Whether or not the disbursements under the NDs were improper.
In its Comment,19 dated July 28, 2014, the COA countered that LWDs were
2] In the event the disbursements were improper, whether or not petitioner covered by R.A. No. 6758 or the SSL. R.A. No. 9286 did not expressly repeal it,
liable to refund the same. and an implied repeal, as claimed by petitioner, was disfavored by law.

Petitioner insists that her salary increase was proper because LWDs were The COA also contended that the renewal of retainership contracts required
exempt from the coverage of the SSL as Section 23 of R.A. No. 9286, a later the written concurrence of the COA. It is also insisted that the payments of
law, empowered the board of directors of LWDs to fix the salary of its GM, honorarium made to Atty. Operario were improper because at the time he
thereby impliedly repealing R.A. No. 6758; that her salary was within the scale rendered his services, the OGCC had yet to issue any authority. It noted that
provided by the Office of the Philippine Association of Water Districts, Inc.; the OGCC approval and the COA concurrence were required to ensure that
and that she need not refund the alleged overpaid RATA because she acted there was basis for the engagement of a private lawyer.
in good faith as she stopped claiming the same after the NDs were issued.15
The COA argued that petitioner could not claim good faith because the case
cited by her, allowing the defense of good faith, was premised on the fact
StatCon Chapter 5 Cases 31 | P a g e
that there was no prior case or rule that settled the applicability of R.A. No.
6758 to LWDs. Finally, the COA opined that petitioner failed to state factual Congress could have amended Section 23 of Presidential Decree No. 198 to
allegations to support the issuance of a writ of Preliminary Injunction and/or expressly provide that the compensation of a general manager is exempted
TRO. from the Salary Standardization Law. However, Congress did not. Section 23
was amended to emphasize that the general manager "shall not be removed
In her Reply,20 dated March 13, 2015, petitioner merely reiterated her from office, except for cause and after due process."
previous arguments.
This does not mean that water utilities cannot fix the compensation of their
The Court's Ruling respective general managers. Section 23 of Presidential Decree No. 198
clearly provides that a water utility's board of directors has the power to
R.A. No. 6758 covers local water districts define the duties and fix the compensation of a general manager. However,
the compensation fixed must be in accordance with the position classification
The increase in the salary of the petitioner was correctly disallowed because system under the Salary Standardization Law. xxx22
it contravened the provisions of the SSL. In Mendoza,21 the Court ruled that
the salaries of GMs of LWDs were subject to the provision of the SSL, to [Emphases Supplied]cralawlawlibrary
wit:chanRoblesvirtualLawlibrary
Petitioner claims that R.A. No. 9286, being a later law, repealed the SSL. The
The Salary Standardization Law applies to all government positions, including Court, however, notes that R.A. No. 9286 did not expressly repeal the SSL.
those in government-owned or controlled corporations, without Neither did R.A. No. 9286 impliedly repeal the SSL because repeal by
qualification. The exception to this rule is when the government-owned or implication is not favored by law and is only resorted to in case of
controlled corporation's charter specifically exempts the corporation from irreconcilable inconsistency and repugnancy between the new law and the
the coverage of the Salary Standardization Law. xxx old law.23 As clearly pointed out in Mendoza, there is no irreconcilable
inconsistency between R.A. No. 9286 and the SSL. It is conceded though that
We are not convinced that Section 23 of Presidential Decree No. 198, as the board of directors has full discretion in fixing the salary of the GM, but it
amended, or any of its provisions, exempts water utilities from the coverage is always subject to the limits under the SSL, unless the charter of the LWD
of the Salary Standardization Law. In statutes subsequent to Republic Act No. exempts it from the coverage of the said law.
6758, Congress consistently provided not only for the power to fix
compensation but also the agency's or corporation's exemption from the Engagements ofAtty. Esguerra
Salary Standardization Law. If Congress had intended to exempt water and Atty. Operario were unauthorized
utilities from the coverage of the Salary Standardization Law and other laws
on compensation and position classification, it could have expressly provided COA Circular No. 95-011, dated December 4, 1995, provides that in the event
in Presidential Decree No. 198 an exemption clause similar to those provided that the need for the legal services of a private lawyer cannot be avoided or
in the respective charters of the Philippine Postal Corporation, Trade is justified under extraordinary or exceptional circumstances, the written
Investment and Development Corporation, Land Bank of the Philippines, conformity and acquiescence of the OGCC and the written concurrence of the
Social Security System, Small Business Guarantee and Finance Corporation, COA shall first be secured. The failure to secure the written concurrence
Government Service Insurance System, Development Bank of the Philippines, makes the engagement of the private lawyer or law firm unauthorized.24
Home Guaranty Corporation, and the Philippine Deposit Insurance
Corporation.
StatCon Chapter 5 Cases 32 | P a g e
In the case at bench, petitioner does not deny that there was no written
concurrence from the COA when Atty. Esguerra, a private lawyer, rendered Petitioner admits that it was only on July 11, 2006 that the authority of Atty.
legal services from January to October 2005. She, instead, argues that it is not Operaria to render services for ISAWAD was issued. Obviously, he had no
mandatory to secure the written concurrence of COA because it only applies authority to provide legal services to ISAWAD prior to the approval of the
to the hiring or employment of a lawyer and not the renewal of a retainership OGCC. Consequently, Atty. Operario was not entitled to the honorarium given
contract. Further, petitioner blames the COA because it belatedly acted on for the alleged services he had rendered.
the request of ISAWAD for a written concurrence.
Petitioner cannot argue that disallowing the payments made to Atty.
The arguments of petitioner fail to persuade. Esguerra and Atty. Operario is tantamount to unjust enrichment. In The Law
Firm of Laguesma Magsalin Consulta and Gastardo v. COA,29 the Court,
ISAWAD first engaged Atty. Esguerra under a retainership contract25 for a notwithstanding the fact that actual services had been rendered, upheld the
period of one year effective November 1, 2003, with the written concurrence disallowance of payment made to a law firm, which was unauthorized to act
of the OGCC and the COA. The following year, another retainership in behalf of a GOCC, for failure to secure the COA's concurrence. In the case
contract26 was executed, effective one year from November 1, 2004, with at bench, there is no unjust enrichment because the NDs directed the
the concurrence of the OGCC but not the COA. Again, in the following year, a responsible officers of ISAWAD, who made the disbursements (including
retainership contract27 was executed for another one year effective on petitioner), and not the lawyers engaged, to make the refund.
November 1, 2005, with the written concurrence of both the OGCC and the
COA. Refund not necessary if the
disbursements were made
ISAWAD engaged Atty. Esguerra under a general retainer for a specific length in good faith
of time, which was regularly renewed after its termination. Each renewal
constituted the hiring of Atty. Esguerra because after the lapse of one year, In Mendoza, the Court excused the erring officials therein from refunding the
the engagement was terminated; and each renewal for another one-year amounts subject of the ND, to wit:chanRoblesvirtualLawlibrary
term required the written conformity of the COA.
The salaries petitioner Mendoza received were fixed by the Talisay Water
Petitioner likewise faults the COA for failing to act on time on the request for District's board of directors pursuant to Section 23 of the Presidential Decree
concurrence. This, however, is a bare assertion as petitioner failed to provide No. 198. Petitioner Mendoza had no hand in fixing the amount of
any document showing that a request for the COA's written concurrence was compensation he received. Moreover, at the time petitioner Mendoza
even made. Petitioner only presented the OGCC's written approval,28 dated received the disputed amount in 2005 and 2006, there was no jurisprudence
September 5, 2005, of the retainership contract effective November 1, 2004. yet ruling that water utilities are not exempted from the Salary
The letter significantly reminded ISAWAD to seek the conformity of the COA Standardization Law.
- which it failed to do.
Pursuant to de Jesus v. Commission on Audit, petitioner Mendoza received
With regard to Atty. Operario, Executive Order (E.O.) No. 878, series of 1983, the disallowed salaries in good faith. He need not refund the disallowed
allows any member of the OGCC's legal staff to be designated in a concurrent amount.cralawlawlibrary
capacity to act as a corporate officer of the GOCC being serviced by the OGCC
when the exigency of the service so requires, provided that the Government In this case, the Court is of the view that the payment of the erroneous
Corporate Counsel approves the designation. increase in petitioner's salary was nonetheless made in good faith. The
StatCon Chapter 5 Cases 33 | P a g e
increase was computed in accordance with the scale provided by the Office WHEREFORE, the December 29, 2011 Decision of the Commission on Audit is
of the Philippine Association of Water Districts, Inc., which also made an AFFIRMED with MODIFICATION in that petitioner be absolved from refunding
erroneous opinion that R.A. No. 9286 repealed the SSL. Further, at the time the amount paid in the increase of her salary.
the disbursement was made, no categorical pronouncement, similar to
Mendoza, that the LWDs are subject to the provisions of the SSL, had been SO ORDERED
issued.

Good faith, however, cannot be appreciated in petitioner's other

disbursements. Petitioner knowingly approved the payments to Atty.
Esguerra and Atty. Operaria in spite of the lack of the necessary approval by
the government offices concerned. Further, petitioner's failure to claim her
excessive RATA after the NDs were issued does not evince good faith because,
at that time, CBC No. 18 and NBC No. 498 already provided for the allowable
RATA to be given to GMs of LWDs.

No basis for the issuance of a writ of injunction

In Calawag v. University of the Philippines Visayas,30 the Court ruled that the
right sought to be protected must not be doubtful in order for an injunctive
relief to be issued, to wit:chanRoblesvirtualLawlibrary

To be entitled to a writ of preliminary injunction, xxx the petitioners must

establish the following requisites: (a) the invasion of the right sought to be
protected is material and substantial; (b) the right of the complainant is clear
and unmistakable; and (c) there is an urgent and permanent necessity for the
writ to prevent serious damage, xxx When the complainant's right is thus
doubtful or disputed, he does not have a clear legal right and, therefore, the
issuance of injunctive relief is improper.

[Emphasis supplied]
cralawlawlibrary

Here, petitioner failed to show sufficient reasons to justify the issuance of the
injunctive relief. It has been thoroughly discussed that the disbursements
were without legal basis as they either were in excess of the limits provided
for by law or were issued without authority.

StatCon Chapter 5 Cases 34 | P a g e

7. Antonia A. Mecano vs COA This is only possible if this revised statute or code was intended to cover the
1. STATUTORY CONSTRUCTION; STATUTES; KINDS OF REPEALS. — The whole subject to be a complete and perfect system in itself. It is the rule that
question of whether a particular law has been repealed or not by a a subsequent statute is deemed to repeal a prior law if the former revises the
subsequent law is a matter of legislative intent. The lawmakers may expressly whole subject matter of the former statute. When both intent and scope
repeal a law by incorporating therein a repealing provision which expressly clearly evince the idea of a repeal, then all parts and provisions of the prior
and specifically cites the particular law or laws, and portions thereof, that are act that are omitted from the revised act are deemed repealed. Furthermore,
intended to be repealed. A declaration in a statute, usually in its repealing before there can be an implied repeal under this category, it must be the clear
clause, that a particular and specific law, identified by its number or title, is intent of the legislature that the later act be the substitute to the prior act.
repealed is an express repeal; all others are implied repeals.
4. ID.; ID.; ID.; ID.; NOT IMPLIED REPEAL OF SECTION 699 OF THE REVISED
2. ID.; ID.; REPEALS BY IMPLICATION; NECESSITY OF A CLEAR INDICATION OF ADMINISTRATIVE CODE BY ADMINISTRATIVE CODE OF 1987; CASE AT BAR. —
LEGISLATIVE PURPOSE TO REPEAL. — The fact that a later enactment may Comparing the two Codes, it is apparent that the new Code does not cover
relate to the same subject matter as that of an earlier statute is not of itself nor attempt to cover the entire subject matter of the old Code. There are
sufficient to cause an implied repeal of the prior act, since the new statute several matters treated in the old Code which are not found in the new Code,
may merely be cumulative or a continuation of the old one. What is necessary such as the provisions on notaries public, the leave law, the public bonding
is a manifest indication of legislative purpose to repeal. Repeal by implication law, military reservations, claims for sickness benefits under Section 699, and
proceeds on the premise that where a statute of later date clearly reveals an still others. Moreover, the COA failed to demonstrate that the provisions of
intention on the part of the legislature to abrogate a prior act on the subject, the two Codes on the matter of the subject claim are in an irreconcilable
that intention must be given effect. Hence, before there can be a repeal, conflict. In fact, there can be no such conflict because the provision on
there must be a clear showing on the part of the lawmaker that the intent in sickness benefits of the nature being claimed by petitioner has not been
enacting the new law was to abrogate the old one. The intention to repeal restated in the Administrative Code of 1987.
must be clear and manifest; otherwise, at least, as a general rule, the later act
is to be construed as a continuation of, and not a substitute for, the first act 5. ADMINISTRATIVE LAW; ADMINISTRATIVE CONSTRUCTION AND
and will continue so far as the two acts are the same from the time of the first INTERPRETATION OF LAWS; WEIGHT OF OPINIONS OF THE SECRETARY OF
enactment. JUSTICE ON STATUTES IN PARI MATERIAL; CASE AT BAR. — According to
Opinion No. 73, S. 1991 of the Secretary of Justice, what appears clear is the
3. ID.; ID.; ID.; CATEGORIES THEREOF. — There are two categories of repeal intent to cover only those aspects of government that pertain to
by implication. The first is where provisions in the two acts on the same administration, organization and procedure, understandably because of the
subject matter are in an irreconcilable conflict, The later act to the extent of many changes that transpired in the government structure since the
the conflict constitutes an implied repeal of the earlier one. The second is if enactment of the RAC decades of years ago. The COA challenges the weight
the later act covers the whole subject of the earlier one and is clearly that this opinion carries in the determination of this controversy inasmuch as
intended as a substitute, it will operate to repeal the earlier law. Implied the body which had been entrusted with the implementation of this
repeal by irreconcilable inconsistency takes place when the two statutes particular provision has already rendered its decision. The COA relied on the
cover the same subject matter; they are so clearly inconsistent and rule in administrative law enunciated in the case of Sison v. Pangramuyen that
incompatible with each other that they cannot be reconciled or harmonized; in the absence of palpable error or grave abuse of discretion, the Court would
and both cannot be given effect, that is, that one law cannot he enforced be loathe to substitute its own judgment for that of the administrative agency
without nullifying the other. The second category of repeal — the enactment entrusted with the enforcement and implementation of the law. This will not
of a statute revising or codifying the former laws on the whole subject matter. hold water. This principle is subject to limitations. Administrative decisions
StatCon Chapter 5 Cases 35 | P a g e
may be reviewed by the courts upon a showing that the decision is vitiated DECISION
by fraud, imposition or mistake. It has been held that Opinions of the
Secretary and Undersecretary of Justice are material in the construction of
statutes in pari materia. CAMPOS, JR., J.:

6. STATUTORY CONSTRUCTION; REPEALS BY IMPLICATION NOT FAVORED. —

Lastly, it is a well-settled rule of statutory construction that repeals of statutes Antonio A. Mecano, through a petition for certiorari, seeks to nullify the
by implication are not favored. The presumption is against inconsistency and decision of the Commission on Audit (COA, for brevity) embodied in its 7th
repugnancy for the legislature is presumed to know the existing laws on the Indorsement, dated January 16, 1992, denying his claim for reimbursement
subject and not to have enacted inconsistent or conflicting statutes. This under Section 699 of the Revised Administrative Code (RAC), as amended, in
Court, in a case, explains the principle in detail as follows: "Repeals by the total amount of P40,831.00.
implication are not favored, and will not be decreed unless it is manifest that
the legislature so intended. As laws are presumed to be passed with Petitioner is a Director II of the National Bureau of Investigation (NBI). He was
deliberation with full knowledge of all existing ones on the subject, it is but hospitalized for cholecystitis from March 26, 1990 to April 7, 1990, on account
reasonable to conclude that in passing a statute it was not intended to of which he incurred medical and hospitalization expenses, the total amount
interfere with or abrogate any former law relating to some matter, unless the of which he is claiming from the COA.
repugnancy between the two is not only irreconcilable, but also clear and
convincing, and flowing necessarily from the language used, unless the later On May 11, 1990, in a memorandum to the NBI Director, Alfredo S. Lim
act fully embraces the subject matter of the earlier, or unless the reason for (Director Lim, for brevity), he requested reimbursement for his expenses on
the earlier act is beyond peradventure renewed. Hence, every effort must be the ground that he is entitled to the benefits under Section 699 1 of the RAC,
used to make all acts stand and if, by any reasonable construction, they can the pertinent provisions of which read:jgc:chanrobles.com.ph
be reconciled, the later act will not operate as a repeal of the earlier."cralaw
virtua1aw library "SECTION 699. Allowances in case of injury, death, or sickness incurred in
performance of duty. — When a person in the service of the national
7. LABOR CODE; ARTICLE 173 THEREOF; EMPLOYEES COMPENSATION; government or in the service of the government of a province, city,
PAYMENT OF COMPENSATION THEREUNDER NOT A BAR TO RECOVERY OF municipality or municipal district is so injured in the performance of duty as
BENEFITS UNDER SEC. 699 OF THE REVISED ADMINISTRATIVE CODE. — thereby to receive some actual physical hurt or wound, the proper Head of
Regarding respondent’s contention that recovery under this subject section Department may direct that absence during any period of disability thereby
shall bar the recovery of benefits under the Employees’ Compensation occasioned shall be on full pay, though not more than six months, and in such
Program, the same cannot be upheld. The second sentence of Article 173, case he may in his discretion also authorize the payment of the medical
Chapter II, Title II (dealing on Employees’ Compensation and State Insurance attendance, necessary transportation, subsistence and hospital fees of the
Fund), Book IV of the Labor Code, as amended by P.D. 1921, expressly injured person. Absence in the case contemplated shall be charged first
provides that "the payment of compensation under this Title shall not bar the against vacation leave, if any there be.
recovery of benefits as provided for in Section 669 of the Revised
Administrative Code . . . whose benefits are administered by the system x x x
(meaning SSS or GSIS) or by other agencies of the government."

StatCon Chapter 5 Cases 36 | P a g e

"In case of sickness caused by or connected directly with the performance of Eventually, petitioner’s claim was returned by Undersecretary of Justice
some act in the line of duty, the Department head may in his discretion Eduardo Montenegro to Director Lim under a 9th Indorsement dated
authorize the payment of the necessary hospital fees." chanrobles February 7, 1992, with the advice that petitioner "elevate the matter to the
virtualawlibrary chanrobles.com:chanrobles.com.ph Supreme Court if he so desires."cralaw virtua1aw library

Director Lim then forwarded petitioner’s claim, in a 1st Indorsement dated On the sole issue of whether or not the Administrative Code of 1987 repealed
June 22, 1990, to the Secretary of Justice, along with the comment, bearing or abrogated Section 699 of the RAC, this petition was brought for the
the same date, of Gerarda Galang, Chief, LED of the NBI, "recommending consideration of this Court.chanrobles virtual lawlibrary
favorable action thereof." Finding petitioner’s illness to be service -
connected, the Committee on Physical Examination of the Department of Petitioner anchors his claim on Section 699 of the RAC, as amended, and on
Justice favorably recommended the payment of petitioner’s claim. the aforementioned Opinion No. 73, S. 1991 of Secretary Drilon. He further
maintains that in the event that a claim is filed with the Employees’
However, then Undersecretary of Justice Silvestre H. Bello III, in a 4th Compensation Commission, as suggested by respondent, he would still not
Indorsement dated November 21, 1990, returned petitioner’s claim to be barred from filing a claim under the subject section. Thus, the resolution
Director Lim, having considered the statements of the Chairman of the COA of whether or not there was a repeal of the Revised Administrative Code of
in its 5th Indorsement dated 19 September 1990, to the effect that the RAC 1917 would decide the fate of petitioner’s claim for reimbursement.
being relied upon was repealed by the Administrative Code of 1987.
The COA, on the other hand, strongly maintains that the enactment of the
Petitioner then re-submitted his claim to Director Lim, with a copy of Opinion Administrative Code of 1987 (Exec. Order No. 292) operated to revoke or
No. 73, S. 1991 2 dated April 26, 1991 of then Secretary of Justice Franklin M. supplant in its entirety the Revised Administrative Code of 1917. The COA
Drilon (Secretary Drilon, for brevity) stating that "the issuance of the claims that from the "whereas" clauses of the new Administrative Code, it can
Administrative Code did not operate to repeal or abrogate in its entirety the be gleaned that it was the intent of the legislature to repeal the old Code.
Revised Administrative Code, including the particular Section 699 of the Moreover, the COA questions the applicability of the aforesaid opinion of the
latter."cralaw virtua1aw library Secretary of Justice in deciding the matter. Lastly, the COA contends that
employment-related sickness, injury or death is adequately covered by the
On May 10, 1991, Director Lim, under a 5th Indorsement transmitted anew Employees’ Compensation Program under P.D. 626, such that to allow
Mecano’s claim to then Undersecretary Bello for favorable consideration. simultaneous recovery of benefits under both laws on account of the same
Under a 6th Indorsement, dated July 2, 1991, Secretary Drilon forwarded contingency would be unfair and unjust to the government.
petitioner’s claim to the COA Chairman, recommending payment of the same.
COA Chairman Eufemio C. Domingo, in his 7th Indorsement of January 16, The question of whether a particular law has been repealed or not by a
1992, however denied petitioner’s claim on the ground that Section 699 of subsequent law is a matter of legislative intent. The lawmakers may expressly
the RAC has been repealed by the Administrative Code of 1987, solely for the repeal a law by incorporating therein a repealing provision which expressly
reason that the same section was not restated nor re-enacted in the and specifically cites the particular law or laws, and portions thereof, that are
Administrative Code of 1987. He commented, however, that the claim may intended to be repealed. 3 A declaration in a statute, usually in its repealing
be filed with the Employees’ Compensation Commission, considering that the clause, that a particular and specific law, identified by its number or title, is
illness of Director Mecano occurred after the effectivity of the Administrative repealed is an express repeal; all others are implied repeals. 4
Code of 1987.

StatCon Chapter 5 Cases 37 | P a g e

In the case of the two Administrative Codes in question, the ascertainment of Implied repeal by irreconcilable inconsistency takes place when the two
whether or not it was the intent of the legislature to supplant the old Code statutes cover the same subject matter; they are so clearly inconsistent and
with the new Code partly depends on the scrutiny of the repealing clause of incompatible with each other that they cannot be reconciled or harmonized;
the new Code. This provision is found in Section 27, Book VII (Final Provisions) and both cannot be given effect, that is, that one law cannot he enforced
of the Administrative Code of 1987 which reads:jgc:chanrobles.com.ph without nullifying the other. 11cralawnad

"SECTION 27. Repealing Clause. — All laws, decrees, orders, rules and Comparing the two Codes, it is apparent that the new Code does not cover
regulations, or portions thereof, inconsistent with this Code are hereby nor attempt to cover the entire subject matter of the old Code. There are
repealed or modified accordingly."cralaw virtua1aw library several matters treated in the old Code which are not found in the new Code,
such as the provisions on notaries public, the leave law, the public bonding
The question that should be asked is: What is the nature of this repealing law, military reservations, claims for sickness benefits under Section 699, and
clause? It is certainly not an express repealing clause because it fails to still others.
identify or designate the act or acts that are intended to be repealed. 5
Rather, it is an example of a general repealing provision, as stated in Opinion Moreover, the COA failed to demonstrate that the provisions of the two
No. 73, S. 1991. It is a clause which predicates the intended repeal under the Codes on the matter of the subject claim are in an irreconcilable conflict. In
condition that a substantial conflict must be found in existing and prior acts. fact, there can be no such conflict because the provision on sickness benefits
The failure to add a specific repealing clause indicates that the intent was not of the nature being claimed by petitioner has not been restated in the
to repeal any existing law, unless an irreconcilable inconsistency and Administrative Code of 1987. However, the COA would have Us consider that
repugnancy exist in the terms of the new and old laws. 6 This latter situation the fact that Section 699 was not restated in the Administrative Code of 1987
falls under the category of an implied repeal. meant that the same section had been repealed. It further maintained that
to allow the particular provisions not restated in the new Code to continue in
Repeal by implication proceeds on the premise that where a statute of later force argues against the Code itself. The COA anchored this argument on the
date clearly reveals an intention on the part of the legislature to abrogate a whereas clause of the 1987 Code, which states:jgc:chanrobles.com.ph
prior act on the subject, that intention must be given effect. 7 Hence, before
there can be a repeal, there must be a clear showing on the part of the "WHEREAS, the effectiveness of the Government will be enhanced by a new
lawmaker that the intent in enacting the new law was to abrogate the old Administrative Code which incorporates in a unified document the major
one. The intention to repeal must be clear and manifest; 8 otherwise, at least, structural, functional and procedural principles and rules of governance; and
as a general rule, the later act is to be construed as a continuation of, and not
a substitute for, the first act and will continue so far as the two acts are the x x x"
same from the time of the first enactment. 9
It argues, in effect, that what is contemplated is only one Code — the
There are two categories of repeal by implication. The first is where Administrative Code of 1987. This contention is untenable.
provisions in the two acts on the same subject matter are in an irreconcilable
conflict, The later act to the extent of the conflict constitutes an implied The fact that a later enactment may relate to the same subject matter as that
repeal of the earlier one. The second is if the later act covers the whole of an earlier statute is not of itself sufficient to cause an implied repeal of the
subject of the earlier one and is clearly intended as a substitute, it will operate prior act, since the new statute may merely be cumulative or a continuation
to repeal the earlier law. 10 of the old one. 12 What is necessary is a manifest indication of legislative
purpose to repeal. 13
StatCon Chapter 5 Cases 38 | P a g e
 the legislature so intended. As laws are presumed to be passed with
We come now to the second category of repeal — the enactment of a statute deliberation with full knowledge of all existing ones on the subject, it is but
revising or codifying the former laws on the whole subject matter. This is only reasonable to conclude that in passing a statute it was not intended to
possible if this revised statute or code was intended to cover the whole interfere with or abrogate any former law relating to some matter, unless the
subject to be a complete and perfect system in itself. It is the rule that a repugnancy between the two is not only irreconcilable, but also clear and
subsequent statute is deemed to repeal a prior law if the former revises the convincing, and flowing necessarily from the language used, unless the later
whole subject matter of the former statute. 14 When both intent and scope act fully embraces the subject matter of the earlier, or unless the reason for
clearly evince the idea of a repeal, then all parts and provisions of the prior the earlier act is beyond peradventure renewed. Hence, every effort must be
act that are omitted from the revised act are deemed repealed. 15 used to make all acts stand and if, by any reasonable construction, they can
Furthermore, before there can be an implied repeal under this category, it be reconciled, the later act will not operate as a repeal of the earlier. 22
must be the clear intent of the legislature that the later act be the substitute
to the prior act. 16 Regarding respondent’s contention that recovery under this subject section
shall bar the recovery of benefits under the Employees’ Compensation
According to Opinion No. 73, S. 1991 of the Secretary of Justice, what appears Program, the same cannot be upheld. The second sentence of Article 173,
clear is the intent to cover only those aspects of government that pertain to Chapter II, Title II (dealing on Employees’ Compensation and State Insurance
administration, organization and procedure, understandably because of the Fund), Book IV of the Labor Code, as amended by P.D. 1921, expressly
many changes that transpired in the government structure since the provides that "the payment of compensation under this Title shall not bar the
enactment of the RAC decades of years ago. The COA challenges the weight recovery of benefits as provided for in Section 669 of the Revised
that this opinion carries in the determination of this controversy inasmuch as Administrative Code xxx whose benefits are administered by the system
the body which had been entrusted with the implementation of this (meaning SSS or GSIS) or by other agencies of the government."cralaw
particular provision has already rendered its decision. The COA relied on the virtua1aw library
rule in administrative law enunciated in the case of Sison v. Pangramuyen 17
that in the absence of palpable error or grave abuse of discretion, the Court WHEREFORE, premises considered, the Court resolves to GRANT the petition;
would be loathe to substitute its own judgment for that of the administrative respondent is, hereby ordered to give due course to petitioner’s claim for
agency entrusted with the enforcement and implementation of the law. This benefits. No costs.
will not hold water. This principle is subject to limitations. Administrative
decisions may be reviewed by the courts upon a showing that the decision is SO ORDERED.
vitiated by fraud, imposition or mistake. 18 It has been held that Opinions of
the Secretary and Undersecretary of Justice are material in the construction
of statutes in pari materia. 19

Lastly, it is a well-settled rule of statutory construction that repeals of statutes

by implication are not favored. 20 The presumption is against inconsistency
and repugnancy for the legislature is presumed to know the existing laws on
the subject and not to have enacted inconsistent or conflicting statutes. 21

This Court, in a case, explains the principle in detail as follows: "Repeals by

implication are not favored, and will not be decreed unless it is manifest that
StatCon Chapter 5 Cases 39 | P a g e
8. Danilo E. Paras vs COMELEC Union v. Letrondo-Montejo, 237 SCRA 621, where the Court considered the
Petitioner Danilo E. Paras is the incumbent Punong Barangay of Pula, SK election as a regular local election. Petitioner maintains that as the SK
Cabanatuan City who won during the last regular barangay election in 1994. election is a regular local election, hence no recall election can be had for
A petition for his recall as Punong Barangay was filed by the registered voters barely four months separate the SK election from the recall election. We do
of the barangay. Acting on the petition for recall, public respondent not agree.
Commission on Elections (COMELEC) resolved to approve the petition,
scheduled the petition signing on October 14, 1995, and set the recall election The subject provision of the Local Government Code provides:
on November 13,
1995.1 At least 29.30% of the registered voters signed the petition, well Sec. 74. Limitations on Recall. — (a) Any elective local official may be the
above the 25% requirement provided by law. The COMELEC, however, subject of a recall election only once during his term of office for loss of
deferred the recall election in view of petitioner's opposition. On December confidence.
6, 1995, the COMELEC set anew the recall election, this time on December
16, 1995. To prevent the holding of the recall election, petitioner filed before (b) No recall shall take place within one (1) year from the date of the official's
the Regional Trial Court of Cabanatuan City a petition for injunction, docketed assumption to office or one (1) year immediately preceding a regular local
as SP Civil Action No. 2254-AF, with the trial court issuing a temporary election.
restraining order. After conducting a summary hearing, the trial court lifted
the restraining order, dismissed the petition and required petitioner and his [Emphasis added]
counsel to explain why they should not be cited for contempt for
misrepresenting that the barangay recall election was without COMELEC It is a rule in statutory construction that every part of the statute must be
approval.2 interpreted with reference to the context, i.e., that every part of the statute
must be considered together with the other parts, and kept subservient to
In a resolution dated January 5, 1996, the COMELEC, for the third time, re- the general intent of the whole enactment.4 The evident intent of Section 74
scheduled the recall election an January 13, 1996; hence, the instant petition is to subject an elective local official to recall election once during his term of
for certiorari with urgent prayer for injunction. On January 12, 1996, the office. Paragraph (b) construed together with paragraph (a) merely
Court issued a temporary restraining order and required the Office of the designates the period when such elective local official may be subject of a
Solicitor General, in behalf of public respondent, to comment on the petition. recall election, that is, during the second year of his term of office. Thus,
In view of the Office of the Solicitor General's manifestation maintaining an subscribing to petitioner's interpretation of the phrase regular local election
opinion adverse to that of the COMELEC, the latter through its law to include the SK election will unduly circumscribe the novel provision of the
department filed the required comment. Petitioner thereafter filed a reply.3 Local Government Code on recall, a mode of removal of public officers by
initiation of the people before the end of his term. And if the SK election
Petitioner's argument is simple and to the point. Citing Section 74 (b) of which is set by R.A No. 7808 to be held every three years from May 1996 were
Republic Act No. 7160, otherwise known as the Local Government Code, to be deemed within the purview of the phrase "regular local election", as
which states that "no recall shall take place within one (1) year from the date erroneously insisted by petitioner, then no recall election can be conducted
of the official's assumption to office or one (1) year immediately preceding a rendering inutile the recall provision of the Local Government Code.
regular local election", petitioner insists that the scheduled January 13, 1996
recall election is now barred as the Sangguniang Kabataan (SK) election was In the interpretation of a statute, the Court should start with the assumption
set by Republic Act No. 7808 on the first Monday of May 1996, and every that the legislature intended to enact an effective law, and the legislature is
three years thereafter. In support thereof, petitioner cites Associated Labor not presumed to have done a vain thing in the enactment of a statute.5 An
StatCon Chapter 5 Cases 40 | P a g e
interpretation should, if possible, be avoided under which a statute or Nevertheless, recall at this time is no longer possible because of the limitation
provision being construed is defeated, or as otherwise expressed, nullified, stated under Section 74 (b) of the Code considering that the next regular
destroyed, emasculated, repealed, explained away, or rendered insignificant, election involving the barangay office concerned is barely seven (7) months
meaningless, inoperative or nugatory.6 away, the same having been scheduled on May 1997. 9

It is likewise a basic precept in statutory construction that a statute should be ACCORDINGLY, the petition is hereby dismissed for having become moot and
interpreted in harmony with the Constitution.7 Thus, the interpretation of academic. The temporary restraining order issued by the Court on January
Section 74 of the Local Government Code, specifically paragraph (b) thereof, 12, 1996, enjoining the recall election should be as it is hereby made
should not be in conflict with the Constitutional mandate of Section 3 of permanent.
Article X of the Constitution to "enact a local government code which shall
provide for a more responsive and accountable local government structure SO ORDERED.
instituted through a system of decentralization with effective mechanism of
recall, initiative, and referendum . . . ." Narvasa, C.J., Padilla, Regalado, Romero, Bellosillo, Melo, Puno, Vitug,
Kapunan, Mendoza, Hermosisima, Jr., Panganiban and Torres, Jr., JJ., concur.
Moreover, petitioner's too literal interpretation of the law leads to absurdity
which we cannot countenance. Thus, in a case, the Court made the following
admonition:

We admonish against a too-literal reading of the law as this is apt to constrict

rather than fulfill its purpose and defeat the intention of its authors. That
intention is usually found not in "the letter that killeth but in the spirit that
vivifieth". . .8 Separate Opinions

The spirit, rather than the letter of a law determines its construction; hence,
a statute, as in this case, must be read according to its spirit and intent.
DAVIDE, JR., J., concurring:
Finally, recall election is potentially disruptive of the normal working of the
local government unit necessitating additional expenses, hence the I concur with Mr. Justice Ricardo J. Francisco in his ponencia.
prohibition against the conduct of recall election one year immediately
preceding the regular local election. The proscription is due to the proximity However, I wish to add another reason as to why the SK election cannot be
of the next regular election for the office of the local elective official considered a "regular local election" for purposes of recall under Section 74
concerned. The electorate could choose the official's replacement in the said of the Local Government Code of 1991.
election who certainly has a longer tenure in office than a successor elected
through a recall election. It would, therefore, be more in keeping with the The term "regular local election" must be confined to the regular election of
intent of the recall provision of the Code to construe regular local election as elective local officials, as distinguished from the regular election of national
one referring to an election where the office held by the local elective official officials. The elective national officials are the President, Vice-President,
sought to be recalled will be contested and be filled by the electorate. Senators and Congressmen. The elective local officials are Provincial
Governors, Vice-Governors of provinces, Mayors and Vice-Mayors of cities
StatCon Chapter 5 Cases 41 | P a g e
and municipalities, Members of the Sanggunians of provinces, cities and provides who comprise the elective officials of the sangguniang barangay,
municipalities, punong barangays and members of the sangguniang viz., the punong barangay and the seven (7) regular sangguniang barangay
barangays, and the elective regional officials of the Autonomous Region of members elected at large by those qualified to exercise the right of suffrage
Muslim Mindanao. These are the only local elective officials deemed under Article V of the Constitution, who are likewise registered voters of the
recognized by Section 2(2) of Article IX-C of the Constitution, which provides: barangay. This shows further that the SK election is not a regular local election
for purposes of recall under Section 74 of the Local Government Code.
Sec. 2. The Commission on Elections shall exercise the following powers and
functions:

xxx xxx xxx Separate Opinions

(2) Exercise exclusive original jurisdiction over all contests relating to the DAVIDE, JR., J., concurring:
elections, returns, and qualifications of all elective regional, provincial, and
city officials, and appellate jurisdiction over all contests involving elective I concur with Mr. Justice Ricardo J. Francisco in his ponencia.
municipal officials decided by trial courts of general jurisdiction, or involving
elective barangay officials decided by trial courts of limited jurisdiction. However, I wish to add another reason as to why the SK election cannot be
considered a "regular local election" for purposes of recall under Section 74
A regular election, whether national or local, can only refer to an election of the Local Government Code of 1991.
participated in by those who possess the right of suffrage, are not otherwise
disqualified by law, and who are registered voters. One of the requirements The term "regular local election" must be confined to the regular election of
for the exercise of suffrage under Section 1, Article V of the Constitution is elective local officials, as distinguished from the regular election of national
that the person must be at least 18 years of age, and one requisite before he officials. The elective national officials are the President, Vice-President,
can vote is that he be a registered voter pursuant to the rules on registration Senators and Congressmen. The elective local officials are Provincial
prescribed in the Omnibus Election Code (Section 113-118). Governors, Vice-Governors of provinces, Mayors and Vice-Mayors of cities
and municipalities, Members of the Sanggunians of provinces, cities and
Under the law, the SK includes the youth with ages ranging from 15 to 21 (Sec. municipalities, punong barangays and members of the sangguniang
424, Local Government Code of 1991). Accordingly, they include many who barangays, and the elective regional officials of the Autonomous Region of
are not qualified to vote in a regular election, viz., those from ages 15 to less Muslim Mindanao. These are the only local elective officials deemed
than 18. In no manner then may SK elections be considered a regular election recognized by Section 2(2) of Article IX-C of the Constitution, which provides:
(whether national or local).
Sec. 2. The Commission on Elections shall exercise the following powers and
Indeed the Sangguniang Kabataan is nothing more than a youth organization, functions:
and although fully recognized in the Local Government Code and vested with
certain powers and functions, its elective officials have not attained the status xxx xxx xxx
of local elective officials. So, in Mercado vs. Board of Election Supervisors (243
SCRA 422 [1995]), this Court ruled that although the SK Chairman is an ex- (2) Exercise exclusive original jurisdiction over all contests relating to the
officio member of the sangguniang barangay — an elective body — that fact elections, returns, and qualifications of all elective regional, provincial, and
does not make him "an elective barangay official," since the law specifically city officials, and appellate jurisdiction over all contests involving elective
StatCon Chapter 5 Cases 42 | P a g e
municipal officials decided by trial courts of general jurisdiction, or involving
elective barangay officials decided by trial courts of limited jurisdiction.

A regular election, whether national or local, can only refer to an election

participated in by those who possess the right of suffrage, are not otherwise
disqualified by law, and who are registered voters. One of the requirements
for the exercise of suffrage under Section 1, Article V of the Constitution is
that the person must be at least 18 years of age, and one requisite before he
can vote is that he be a registered voter pursuant to the rules on registration
prescribed in the Omnibus Election Code (Section 113-118).

Under the law, the SK includes the youth with ages ranging from 15 to 21 (Sec.
424, Local Government Code of 1991). Accordingly, they include many who
are not qualified to vote in a regular election, viz., those from ages 15 to less
than 18. In no manner then may SK elections be considered a regular election
(whether national or local).

Indeed the Sangguniang Kabataan is nothing more than a youth organization,

and although fully recognized in the Local Government Code and vested with
certain powers and functions, its elective officials have not attained the status
of local elective officials. So, in Mercado vs. Board of Election Supervisors (243
SCRA 422 [1995]), this Court ruled that although the SK Chairman is an ex-
officio member of the sangguniang barangay — an elective body — that fact
does not make him "an elective barangay official," since the law specifically
provides who comprise the elective officials of the sangguniang barangay,
viz., the punong barangay and the seven (7) regular sangguniang barangay
members elected at large by those qualified to exercise the right of suffrage
under Article V of the Constitution, who are likewise registered voters of the
barangay. This shows further that the SK election is not a regular local election
for purposes of recall under Section 74 of the Local Government Code.

StatCon Chapter 5 Cases 43 | P a g e

9. Commissioner of Internal Revenue vs ESSO Standard Eastern, Inc. and the payment to ESSO of its "refund-claim x x in the amount of P39,787.94 as
Court of Tax Appeals overpaid interest. Hence, this appeal by the Commissioner. The CTA justified
In two (2) cases appealed to it 1 by the private respondent, hereafter simply its award of the refund as follows:
referred to as ESSO, the Court of Tax Appeals rendered judgment 2 sustaining
the decisions of the Commissioner of Internal Revenue excepted to, save "the ... In the letter of August 5, 1964, .. (the Commissioner) admitted that .. ESSO
refund-claim .. in the amount of P39,787.94 as overpaid interest which it had overpaid its 1959 income tax by P221,033.00. Accordingly .. (the
ordered refunded to ESSO Commissioner) granted to .. ESSO a tax credit of P221,033.00. In short, the
said sum of P221,033.00 of ESSO's money was in the Government's hands at
Reversal of this decision is sought by the Commissioner by a petition for the latest on July 15, 1960 when it ESSO paid in full its second installment of
review on certiorari filed with this Court. He ascribes to the Tax Court one income tax for 1959. On July 10, 1964 .. (the Commissioner) claimed that for
sole error: "of applying the tax credit for overpayment of the 1959 income 1960, .. ESSO underpaid its income tax by P367,994.00. However, instead of
tax of .. ESSO, granted by the petitioner (Commissioner), to .. (ESSO's) basic deducting from P367,994.00 the tax credit of P221,033.00 which .. (the
1960 deficiency income tax liability x x and imposing the 1-1/2% monthly Commissioner) had already admitted was due .. ESSO .. (the Commissioner)
interests 3 only on the remaining balance thereof in the sum of P146,961.00" still insists in collecting the interest on the full amount of P367,994.00 for the
4 (instead of the full amount of the 1960 deficiency liability in the amount of period April 18, 1961 to April 18,1964 when the Government had already in
P367,994.00). Reversal of the same judgment of the Court of Tax Appeals is its hands the sum of P221,033.00 of .. ESSOs money even before the latter's
also sought by ESSO in its own appeal (docketed as G.R. Nos. L28508-09); but income tax for 1960 was due and payable. If the imposition of interest does
in the brief filed by it in this case, it indicates that it will not press its appeal not amount to a penalty but merely a just compensation to the State for the
in the event that "the instant petition for review be denied and that judgment delay in paying the tax, and for the concomitant use by the taxpayer of funds
be rendered affirming the decision of the Court of Tax Appeals." that rightfully should be in the Government's hand (Castro v. Collector, G.R.
No. L-1274, Dec. 28, 1962), the collection of the interest on the full amount
The facts are simple enough and are quite quickly recounted. ESSO overpaid of P367,994.00 without deducting first the tax credit of P221,033.00, which
its 1959 income tax by P221,033.00. It was accordingly granted a tax credit in has long been in the hands of the Government, becomes erroneous, illegal
this amount by the Comissioner on August 5,1964. However, ESSOs payment and arbitrary.
of its income tax for 1960 was found to be short by P367,994.00. So, on July
10, 1964, the Commissioner wrote to ESSO demanding payment of the .. (ESSO) could hardly be charged of delinquency in paying P221,033.00 out
deficiency tax, together with interest thereon for the period from April of the deficiency income tax of P367,994.00, for which the State should be
18,1961 to April 18,1964. On August 10, 1964, ESSO paid under protest the compensated by the payment of interest, because the said amount of
amount alleged to be due, including the interest as reckoned by the P221,033.00 was already in the coffers of the Government. Neither could ..
Commissioner. It protested the computation of interest, contending it was ESSO be charged for the concomitant use of funds that rightfully belong to
more than that properly due. It claimed that it should not have been required the Government because as early as July 15, 1960, it was the Government
to pay interest on the total amount of the deficiency tax, P367,994.00, but that was using .. ESSOs funds of P221,033.00. In the circumstances, we find it
only on the amount of P146,961.00—representing the difference between unfair and unjust for .. (the Commissioner) to exact the interest on the said
said deficiency, P367,994.00, and ESSOs earlier overpayment of P221,033.00 sum of P221,033.00 which, after all, was paid to and received by the
(for which it had been granted a tax credit). ESSO thus asked for a refund. Government even before the incidence of the deficiency income tax of
P367,994.00. (Itogon-Suyoc Mines, Inc. v. Commissioner, C.T.A. Case No.
The Internal Revenue Commissioner denied the claim for refund. ESSO 1327, Sept. 30,1965). On the contrary, the Government should be the first to
appealed to the Court of Tax Appeals. As aforestated. that Court ordered
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blaze the trail and set the example of fairness and honest dealing in the (d) Interest on deficiency. — Interest upon the amount determined as
administration of tax laws. deficiency shall be assessed at the same time as the deficiency and shall be
paid upon notice and demand from the Commissioner of Internal Revenue;
Accordingly, we hold that the tax credit of P221,033.00 for 1959 should first and shall be collected as a part of the tax, at the rate of six per centum per
be deducted from the basic deficiency tax of P367,994.00 for 1960 and the annum from the date prescribed for the payment of the tax (or, if the tax is
resulting difference of P146,961.00 would be subject to the 18% interest paid in installments, from the date prescribed for the payment of the first
prescribed by Section 51 (d) of the Revenue Code. According to the prayer of installment) to the date the deficiency is assessed; Provided, That the amount
..(ESSO) .. (the Commissioner) is hereby ordered to refund to .. (ESSO) the that may be collected as interest on deficiency shall in no case exceed the
amount of P39,787.94 as overpaid interest in the settlement of its 1960 amount corresponding to a period of three years, the present provision
income tax liability. However, as the collection of the tax was not attended regarding prescription to the contrary notwithstanding.
with arbitrariness because .. (ESSO) itself followed x x (the Commissioner's)
manner of computing the tax in paying the sum of P213,189.93 on August 10, The fact is that, as respondent Court of Tax Appeals has stressed, as early as
1964, the prayer of .. (ESSO) that it be granted the legal rate of interest on its July 15, 1960, the Government already had in its hands the sum of
overpayment of P39,787.94 from August 10, 1964 to the time it is actually P221,033.00 representing excess payment. Having been paid and received by
refunded is denied. (See Collector of Internal Revenue v. Binalbagan Estate, mistake, as petitioner Commissioner subsequently acknowledged, that sum
Inc., G.R. No. 1,12752, Jan. 30, 1965). unquestionably belonged to ESSO, and the Government had the obligation to
return it to ESSO That acknowledgment of the erroneous payment came
The Commissioner's position is that income taxes are determined and paid some four (4) years afterwards in nowise negates or detracts from its
on an annual basis, and that such determination and payment of annual taxes actuality. The obligation to return money mistakenly paid arises from the
are separate and independent transactions; and that a tax credit could not be moment that payment is made, and not from the time that the payee admits
so considered until it has been finally approved and the taxpayer duly notified the obligation to reimburse. The obligation of the payee to reimburse an
thereof. Since in this case, he argues, the tax credit of P221,033.00 was amount paid to him results from the mistake, not from the payee's confession
approved only on August 5, 1964, it could not be availed of in reduction of of the mistake or recognition of the obligation to reimburse. In other words,
ESSOs earlier tax deficiency for the year 1960; as of that year, 1960, there was since the amount of P221,033.00 belonging to ESSO was already in the hands
as yet no tax credit to speak of, which would reduce the deficiency tax liability of the Government as of July, 1960, although the latter had no right whatever
for 1960. In support of his position, the Commissioner invokes the provisions to the amount and indeed was bound to return it to ESSO, it was neither
of Section 51 of the Tax Code pertinently reading as follows: legally nor logically possible for ESSO thereafter to be considered a debtor of
the Government in that amount of P221,033.00; and whatever other
(c) Definition of deficiency. As used in this Chapter in respect of tax imposed obligation ESSO might subsequently incur in favor of the Government would
by this Title, the term 'deficiency' means: have to be reduced by that sum, in respect of which no interest could be
charged. To interpret the words of the statute in such a manner as to subvert
(1) The amount by which the tax imposed by this Title exceeds the amount these truisms simply can not and should not be countenanced. "Nothing is
shown as the tax by the taxpayer upon his return; but the amount so shown better settled than that courts are not to give words a meaning which would
on the return shall first be increased by the amounts previously assessed (or lead to absurd or unreasonable consequences. That is a principle that goes
collected without assessment) as a deficiency, and decreased by the amount back to In re Allen (2 Phil. 630) decided on October 29, 1903, where it was
previously abated credited, returned, or otherwise in respect of such tax; .. held that a literal interpretation is to be rejected if it would be unjust or lead
to absurd results." 6 "Statutes should receive a sensible construction, such as

StatCon Chapter 5 Cases 45 | P a g e

will give effect to the legislative intention and so as to avoid an unjust or
absurd conclusion." 7

WHEREFORE, the petition for review is DENIED, and the Decision of the Court
of Tax Appeals dated October 28, 1967 subject of the petition is AFFIRMED,
without pronouncement as to costs.

StatCon Chapter 5 Cases 46 | P a g e

10. Cesario Ursua vs CA
1. STATUTORY CONSTRUCTION; STATUTES; CONSTRUED WITH REFERENCE TO 4. ID.; ID.; USE OF FICTITIOUS NAME IN A SINGLE TRANSACTION WITHOUT
THE INTENDED SCOPE AND PURPOSE. — Time and again we have decreed INTENDING TO BE KNOWN BY THIS NAME IN ADDITION TO HIS REAL NAME,
that statutes are to be construed in the light of the purposes to be achieved NOT A VIOLATION THEREOF. — The use of a fictitious name or a different
and the evils sought to be remedied. Thus in construing a statute the reason name belonging to another person in a single instance without any sign or
for its enactment should be kept in mind and the statute should be construed indication that the user intends to be known by this name in addition to his
with reference to the intended scope and purpose. The court may consider real name from that day forth does not fall within the prohibition contained
the spirit and reason of the statute, where a literal meaning would lead to in C.A. No. 142 as amended.
absurdity, contradiction, injustice, or would defeat the clear purpose of the
lawmakers. 5. ID.; ID.; ID.; CASE AT BAR. — This is so in the case at bench. It is not disputed
that petitioner introduced himself in the Office of the Ombudsman as "Oscar
2. ID.; COMMONWEALTH ACT 142, AS AMENDED (AN ACT TO REGULATE THE Perez," which was the name of the messenger of his lawyer who should have
USE OF ALIASES) PURPOSE IS TO REGULATE THE USE OF ALIASES IN BUSINESS brought the letter to that office in the first place instead of petitioner. He did
TRANSACTION. — The objective and purpose of C.A. No. 142 have their origin so while merely serving the request of his lawyer to obtain a copy of the
and basis in Act No. 3883, An Act to Regulate the Use in Business Transactions complaint in which petitioner was a Respondent. There is no question then
of Names other than True Names, Prescribing the Duties of the Director of that "Oscar Perez" is not an alias name of petitioner. There is no evidence
the Bureau of Commerce and Industry in its Enforcement, Providing Penalties showing that he had used or was intending to use that name as his second
for Violations thereof, and other purposes, which was approved on 14 name in addition to his real name. The use of the name "Oscar Perez" was
November 1931 and amended by Act No. 4147, approved on 28 November made by petitioner in an isolated transaction where he was not even legally
1934. The enactment of C.A. No. 142 as amended was made primarily to curb required to expose his real identity. For, even if he had identified himself
the common practice among the Chinese of adopting scores of different properly at the Office of the Ombudsman, petitioner would still be able to get
names and aliases which created tremendous confusion in the field of trade. a copy of the complaint as a matter of right, and the Office of the Ombudsman
Such a practice almost bordered on the crime of using fictitious names which could not refuse him because the complaint was part of public records hence
for obvious reasons could not be successfully maintained against the Chinese open to inspection and examination by anyone under the proper
who, rightly or wrongly, claimed they possessed a thousand and one names. circumstances. While the act of petitioner may be covered by other
C.A. No. 142 thus penalized the act of using an alias name, unless such alias provisions of law, such does not constitute an offense within the concept of
was duly authorized by proper judicial proceedings and reocrded in the civil C.A. No. 142 as amended under which he is prosecuted. The confusion and
register. fraud in business transactions which the anti-alias law and its related statutes
seek to prevent are not present here as the circumstances are peculiar and
3. CRIMINAL LAW; COMMONWEALTH ACT 142, AS AMENDED (AN ACT TO distinct from those contemplated by the legislature in enacting C.A. No. 142
REGULATE THE USE OF ALIASES); ALIAS, DEFINED. — An alias is a names or as amended. There exists a valid presumption that undesirable consequences
names used by a person or intended to be used by him publicly and habitually were never intended by a legislative measure and that a construction of
usually in business transactions in addition to his real name by which he is which the statute is fairly susceptible is favored, which will avoid all
registered at birth or baptized the first time or substitute name authorized by objectionable, mischievous, indefensible, wrongful, evil and injurious
a competent authority. A man’s name is simply the sound or sounds by which consequences. Indeed, our mind cannot rest easy on the proposition that
he is commonly designated by his fellows and by which they distinguish him petitioner should be convicted on a law that does not clearly penalize the act
but sometimes a man is known by several different names and these are done by him. Wherefore, the questioned decision of the Court of Appeals
known as aliases.
StatCon Chapter 5 Cases 47 | P a g e
affirming that of the Regional Trial Court of Davao City is REVERSED and SET law firm’s messenger, Oscar Perez, had to attend to some personal matters.
ASIDE and petitioner CESARIO URSUA is ACQUITTED of the crime charged. Before proceeding to the Office of the Ombudsman petitioner talked to Oscar
Perez and told him that he was reluctant to personally ask for the document
6. STATUTORY CONSTRUCTION; A PENAL STATUTE LIKE COMMONWEALTH since he was one of the respondents before the Ombudsman. However, Perez
ACT 142, AS AMENDED, CONSTRUED STRICTLY AGAINST THE STATE AND IN advised him not to worry as he could just sign his (Perez) name if ever he
FAVOR OF THE ACCUSED. — As C.A. No. 142 is a penal statute, it should be would be required to acknowledge receipt of the complaint. 3
construed strictly against the State and in favor of the accused. The reason
for this principle is the tenderness of the law for the rights of individuals and When petitioner arrived at the Office of the Ombudsman in Davao City he
the object is to establish a certain rule by conformity to which mankind would was instructed by the security officer to register in the visitors’ logbook.
be safe, and the discretion of the court limited. Instead of writing down his name petitioner wrote the name "Oscar Perez"
after which he was told to proceed to the Administrative Division for the copy
of the complaint he needed. He handed the letter of Atty. Palmones to the
DECISION Chief of the Administrative Division, Ms. Loida Kahulugan, who then gave him
a copy of the complaint, receipt of which he acknowledged by writing the
name "Oscar Perez." 4
BELLOSILLO, J.:
Before petitioner could leave the premises he was greeted by an
acquaintance, Josefa Amparo, who also worked in the same office. They
This is a petition of a review of the decision of the Court of Appeals which conversed for a while then he left. When Loida learned that the person who
affirmed the conviction of petitioner by the Regional Trial Court of Davao City introduced himself as "Oscar Perez" was actually petitioner Cesario Ursua, a
for violation of Sec. 1 of C. A No. 142, as amended by R.A. No 6085, otherwise customer of Josefa Amparo in her gasoline station, Loida reported the matter
known as "An Act to Regulate the Use of Alliases." 1 to the Deputy Ombudsman who recommended that petitioner be accordingly
charged.
Petitioner Cesario Ursua was a Community Environment and Natural
Resources Officer assigned in Kidapawan, Cotabato. On 9 May 1989 the On 18 December 1990, after the prosecution had completed the presentation
Provincial Governor of Cotabato requested the Office of the Ombudsman in of its evidence, petitioner without leave of court filed a demurrer to evidence
Manila to conduct an Investigation on a complainant for bribery, dishonesty, alleging that the failure of the prosecution to prove that his supposed alias
abuse of authority and giving of unwarranted benefits by petitioner and other was different from his registered name in the local civil registry was fatal to
officials of the Department of Environment and Natural Resources. The its cause. Petitioner argued that no document from the local civil registry was
complaint was initiated by the Sangguniang Panlalawigan of Cotabato presented to show the registered name of accused which according to him
through a resolution advising the Governor to report the involvement of was a condition sine qua non for the validity of his conviction.chanrobles
petitioner and others in the illegal cutting of mahogany trees and hauling of lawlibrary : rednad
illegally-cut logs in the area. 2
The trial court rejected his contentions and found him guilty of violating Sec.
On 1 August 1989 Atty. Francis Palmones, counsel for petitioner, wrote the 1 of C.A. No. 142 as amended by R. A. No. 6085. He was sentenced to suffer
Office of the Ombudsman in Davao City requesting that he be furnished copy a prison term of one (1) year and one (1) day of prison correccional minimum
of the complaint against petitioner. Atty. Palmones then asked his client as minimum, to four (4) years of prison correccional medium as maximum,
Ursua to take his letter-request to the Office of the Ombudsman because his
StatCon Chapter 5 Cases 48 | P a g e
with all the accessory penalties provided for by law, and to pay a fine of P4,
000.00 plus costs. Section 1. Except as a pseudonym for literary purposes, no person shall use
any name different from the one with which he was christened or by which
Petitioner appealed to the Court of Appeals. he has been known since his childhood, or such substitute name as may have
been authorized by a competent court. The name shall comprise the
On 31 May 1993 the Court of Appeals affirmed the conviction of petitioner patronymic name and one or two surnames.
but modified the penalty by imposing an indeterminate term of one (1) year
as minimum to three (3) years as maximum and a fine of P5,000.00. Section 2. Any person desiring to use an alias or aliases shall apply for
authority therefor in proceedings like those legally provided to obtain judicial
Petitioner now comes to us for review of his conviction as he reasserts his authority for a change of name. Separate proceedings shall be had for each
innocence. He contends that he has not violated C.A. No. 142 as amended by alias, and each new petition shall set forth the original name and the alias or
R. A. No. 6085 as he never used any alias name; neither is "Oscar Perez" his aliases for its use of which judicial authority has been obtained, specifying the
alias. An alias, according to him, is a term which connotes the habitual use of proceedings and the date on which such authority was granted. Judicial
another name by which a person is also known. He claims that he has never authorities for the use of aliases shall be recorded in the proper civil register.
been known as "Oscar Perez" and that he only used such name on one ..
occasion and it was with the express consent of Oscar Perez himself. It is his
position that an essential requirement for a conviction under C.A. No. 142 as The above law was subsequently amended by R. A. No. 6085, approved on 4
amended by R. A. No. 6085 has not been complied with when the prosecution August 1969. As amended, C.A. No. 142 nor reads:chanrob1es virtual 1aw
failed to prove that his supposed alias was different from his registered name library
in the Registry of Births. He further argues that the Court of Appeals erred in
not considering the defense theory that he was charged under the wrong law. Section 1. Except as a pseudonym solely for literary, cinema, television, radio
5 or other entertainment purposes and in athletic events where the use of
pseudonym is a normally accepted practice, on person shall use any name
Time and again we have decreed that statutes are to be construed in the light different from the one with which he was registered at birth in the office of
of the purposes to be achieved and the evils sought to be remedied. Thus in the local civil registry or with which he was baptized for the first time, or in
construing a statute the reason for its enactment should be kept in mind and case of an alien, with which he was registered in the bureau of immigration
the statute should be construed with reference to the intended scope and upon entry; or such substitute name as may have been authorized by a
purpose. 6 The court may consider the spirit and reason of the statute, where competent court: Provided, That persons whose births have not been
a literal meaning would lead to absurdity, contradiction, injustice, or would registered in any local civil registry and who have not been baptized, have
defeat the clear purpose of the lawmakers. 7 one year from the approval of this act within which to register their names in
the civil registry of their residence. The name shall comprise the patronymic
For a clear understanding of the purpose of C.A. No. 142 as amended, which name or two surnames.
was allegedly violated by petitioner, and the surrounding circumstances
under which the law was enacted, the pertinent provisions thereof, its Sec. 2. Any person desiring to use an alias shall apply for authority therefor in
amendments and related statutes are herein cited. C.A. No. 142, which was proceeding like those legally provided to obtain judicial authority for a change
approved on 7 November 1936, and before its amendment by R. A. No. 6085, of name and no person shall be allowed to secure such judicial authority for
is entitled An Act to Regulate the Use of Aliases. It provides as more than one alias. The petition for an alias shall set forth the person’s
follows:chanrob1es virtual 1aw library baptismal and family name and the name recorded in the civil registry, if
StatCon Chapter 5 Cases 49 | P a g e
different, his immigrant’s name if an alien, and his pseudonym, if he has such In Yu Kheng Chiau v. Republic 10 the Court had occasion to explain the
names other than his original or real name, specifying the reason or reasons meaning, concept and ill effects of the use of an alias within the purview of
for the desired alias. The judicial authority for the use of alias, the Christian C.A. No. 142 when we ruled —
name and the alien immigrant’s name shall be recorded in the proper local
civil registry, and no person shall use any name or names other than his There can hardly be any doubt that petitioner’s use of alias ‘Kheng Chiau
original or real name unless the same is or are duly recorded in the proper Young’ in addition to his real name Yu Cheng Chiau’ would add to more
local civil registry. confusion. That he is known in his business, as manager of the Robert Reid,
Inc., by the former name, is not sufficient reason to allow him its use. After
The objective and purpose of C A. No. 142 have their origin and basis in act all, petitioner admitted that he is known to his associates by both names. In
No. 3883, An Act to Regulate the Use in Business Transactions of Names other fact, the Anselmo Trinidad, Inc., of which he is a customer, known him by his
than True Names, Prescribing the Duties of the Director of the Bureau of real name. Neither would the fact that he had encountered certain difficulties
Commerce And Industry in its enforcement, Providing Penalties for Violations in his transactions with government offices which required him to explain
therefor, and for other purposes, which was approved on 14 November 1931 why he bore two names, justify the grant of his petition, for petitioner could
and amended by Act No. 4147, approved on 28 November 1934. 8 The easily avoid said difficulties by simply using and sticking only to his real name
pertinent provisions of Act No. 3883 as amended follow — ‘Yu Cheng Chiau.’

Section 1. It shall be unlawful for any person to use or sign, on any written or The fact that petitioner intends to reside permanently in the Philippines, as
printed receipt including receipt for tax or business or any written or printed shown by his having filed a petition for naturalization in Branch V of the
contract not verified by a notary public or on any written or printed evidence above-mentioned court, argues the more against the grant of his petition,
of any agreement or business transactions, any name used in connection with because if naturalized as a Filipino citizen, there would then be no necessity
his business other than his true name, or keep conspicuously exhibited in pain for his further using said alias, as it would be contrary to the usual Filipino
view in or at the place where his business is conducted, if he is engaged in a way and practice of using only one name in ordinary as well as business
business, any sign announcing a firm name or business name or style without transactions. And, as the lower court correctly observed, if he believes (after
first registering such other name, or such firm name, or business name or he is naturalized) that it would be better for him to write his name following
style in the Bureau of Commerce together with his true name and that of any the Occidental method, ‘he can easily file a petition for change of name, so
other person having a joint or common interest with him in such contract that in lieu of the name ‘Yu Kheng Chian,’ he can, abandoning the same, ask
agreement, business transaction, or business. . . for authority to adopt the name Kheng Chiau Young.’

For a bit of history, the enactment of C.A. No. 142 as amended was made All things considered, we are of the opinion and so hold, that petitioner has
primarily to curb the common practice among the Chinese of adopting scores not shown satisfactory proper and reasonable grounds under the
of different names and aliases which created tremendous confusion in the aforequoted provisions of Commonwealth Act No. 142 and the Rules of
field of trade. Such a practice almost bordered on the crime of using fictitious Court, to warrant the grant of his petition for the use of an alias name.
names which for obvious reasons could not be successfully maintained
against the Chinese who, rightly or wrongly, claimed they possessed a Clearly therefore an alias is a name or names used by a person or intended to
thousand and one names. C.A. No. 142 thus penalized the act of using an alias be used by him publicly and habitually usually in business transactions in
name, unless such alias was duly authorized by proper judicial proceeding and addition to his real name by which he is registered at birth or baptized the
recorded in the civil register. 9 first time or substitute name authorized by a competent authority. A man’s
name is simply the sound or sounds by which he is commonly designated by
StatCon Chapter 5 Cases 50 | P a g e
his fellows and by which they distinguish him but sometimes a man is known court limited. 14 Indeed, our mind cannot rest easy on the proposition that
by several different names and these are known as aliases. 11 Hence, the use petitioner should be convicted on a law that does not clearly penalize the act
of a fictitious name or a different name belonging to another person in a done by him.
single instance without any sign or indication that the user intends to be
known by this name in addition to his real name from that day forth does not WHEREFORE, the questioned decision of the Court of Appeals affirming that
fall within the prohibition contained in C.A. No. 142 as amended. This is so in of the Regional Trial Court of Davao City is REVERSED and SET ASIDE and
the case at bench. petitioner CESARIO URSUA is ACQUITTED of the crime charged.

It is not disputed that petitioner introduced himself in the Office of the SO ORDERED.
Ombudsman as "Oscar Perez," which was the name of the messenger of his
lawyer who should have brought the letter to that office in the first place
instead of petitioner. He did so while merely serving the request of his lawyer
to obtain the copy of the complaint in which petitioner was a Respondent.
There is no question then that "Oscar Perez" is not an alias name of
petitioner. There is no evidence showing that he had used or was intending
to use that name as his second name in addition to his real name. The use of
the name "Oscar Perez" was made by petitioner in an isolated transaction
where he was not even legally required to expose his real identity. For, even
if he had identified himself properly at the Office of the Ombudsman,
petitioner would still be able to get a copy of the complaint as a matter of
right, and the Office of the Ombudsman could not refuse him because the
complaint was part of public records hence open to inspection and
examination by anyone under the proper circumstances.

While the act of petitioner may be covered by other provisions of law, such
does not constitute an offense within the concept of C.A. No. 142 as amended
under which he is prosecuted. The confusion and fraud in business
transactions which the anti-alias law and is related statutes seek to prevent
are not present here as the circumstances are peculiar and distinct from those
contemplated by the legislature in enacting C.A. No. 142 as amended. There
exists a valid presumption that undesirable consequences were never
intended by a legislative measure and that a construction of which the statute
is fairly susceptible is favored, which will avoid all objectionable, mischievous,
indefensible, wrongful, evil and injurious consequences. 12 Moreover, as C.A.
No. 142 is a penal statute, it should be construed strictly against the State and
in favor of the accused. 13 The reason for this principle is the tenderness of
the law for the rights of individuals and the object is to establish a certain rule
by conformity to which mankind would be safe, and the discretion of the
StatCon Chapter 5 Cases 51 | P a g e