STATUTORY CONSTRUCTION

I. General Principles

A. Definition of Statute
B. Statutory Construction, Definition and Concept
C. Statutory Construction is essentially judicial
1. Endencia vs. David, 93 SCRA 696
2. NAPOCOR vs. Province of Lanao del Sur, 264 SCRA 271

II. Judicial Authority and Duty

A. Court’s primary duty to apply the law.

1. Silva vs. Cabrera, 88 Phil, 381
2. People vs. Mapa, 20 SCRA 1164
3. Cebu Portland Cement vs. Municipality of Naga, 24 SCRA 708
4. United Christian Missionary vs. SSC, 30 SCRA 982
5. Quijano vs. Development Bank, 35 SCRA 270

B. Courts have no power to change the law

1. Enrile vs. Salazar, 186 SCRA 217
2. Floresca vs. Philex Mining 136 SCRA 141

C. Courts must not distinguish where the law does not distinguish
1. Phil. British Association vs. IAC, 150 SCRA 520
2. Banco de Oro vs. Equitable Banking Corporation 157 SCRA 188
3. Salenillas vs. CA, 169 SCRA 829

D. Duty of Courts to effectuate policy or purpose of the law

1. Vda. De Macabenta vs. Davao Stevedore Terminal Co., 32 SCRA
382
2. De Castro vs. JBC, G.R. No. 191002, Mar. 17, 2010

E. Legislative findings of fact bind the Courts

1. People vs. Ferrer, 48 SCRA 382

III. Parts of the Statute

A. The Title
1. Del Rosario vs. Carbonell, G.R. No. L-32476, October 20, 1970
2. Lidasan vs. Commission on Elections, G.R. No. L-28089, October 25,
1967
B. The Preamble
1. People vs. Echavez, 95 SCRA 663 [1980]

C. The Enacting Clause

D. The Body
E. Exceptions and Provisos
F. Interpretative, repealing, separability and saving clauses
G. Date of Effectivity

IV. Rules of Construction

A. In General
1. Purpose of construction to discover the intentions of the statute.

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 2. Definitions and interpretations clauses in statutes being construed
3. Presumption to aid construction

(a) In general
(1) That the act expresses the intention of the legislature;
that the legislature acted with full knowledge as to
existing conditions; and that it did not intend unjust or
unreasonable consequences.
(2) That the legislature intended to enact an effective law
and the legislature is not presumed to have done a vain
thing in the enactment of a statute.
- Paras vs. COMELEC, 261 SCRA 49

(b) As to words, phrases, and provisions

(1) Espino vs. Cleofe, 52 SCRA 92

B. Intention of Legislature
1. In general
(a) People vs. Conception, 44 Phil. 126
(b) Alonzo vs. IAC, 150 SCRA 259
2. Ascertainment of Intention
(a) Intent Ascertained from the language used.
1. Unambiguous language
- Tañada vs. Yulo, 61 Phil. 515
- Commissioner of Customs vs. Phil. Acetylene, 39
SCRA 70
- Davao Light vs. Commissioner 44 SCRA 122
- Ramos vs. CA, 108 SCRA 728
- Globe Mackay vs. LRC 206 SCRA 70
- Re: request of Judge Tito G. Gustilo that the 2 nd 25%
Grant of the Special Allowance for Judges be Included in the
Computation of his Retirement Benefits, 436 SCRA 377
[2004]

2. Ambiguities
- People vs. Nazario, 165 SCRA 186
- Commissioner vs. TMX, 205 SCRA 184
- Del Mar vs. PAGCOR, 346 SCRA 485 [2000]

(b) Intent ascertained from the whole statute

1. Manila Lodge No. 761 vs. CA, 73 SCRA 162
2. Aisporna vs. CA, 113 SCRA 459

(c) Intent ascertained from the whole statute

1. Director of Lands vs. Abaya 63 Phil. 559
2. Smart vs. City of Davao, G.R. No. 155491, Sep. 16,
2008

3. Construction to effect legislative purpose

(a) Araneta vs. Dinglasan, 84 Phil. 368
(b) Litex employees vs. Edwala, 79 SCRA 89
(c) Ursua vs. CA, 256 SCRA 147

4. Spirit or letter
(a) Casela vs. ca, 35 SCRA 279

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(b) Matabuena vs. Cervantes, 38 SCRA 284
(c) Melchor vs. Commission on audit, 200 SCRA 704

5. Effect and consequences

a) Commissioner vs. Esso Standard, 1728 SCRA 364

6. Implication and inferences

a) Chua vs. CSC, 206 SCRA
(b) Pepsi-Cola vs. Secretary of Labor, 312 SCRA 104 [1999]

C. Meaning of Language
1. In general
a) General Considerations
(b) Natural and commonly understood meaning
(1) Alfon vs. Republic, 97 SCRA 858
(2) Capati vs. Ocampo, 113 SCRA 794
(3) Rura vs. Lopnea, 137 SCRA 121
(4) Baranda vs. Gustilo, 165 SCRA 757
(5) Jumawan vs. Eviota, 234 SCRA 524 [1994]
(6) Baybay Water District vs. Commission on Audit, 374
SCRA 482 [2002]
(7) Board of Medicine vs. Ota, G.R. No. 166097, July 14, 2008

(c) Right to vary meaning of words

(1) Diokno vs. RFC, 91 Phil. 608

(d) Reasonable and effectiveness formation

(1) Morales vs. Pineda, 55 Phil, 565

2. Technical Terms
(a) Manila Herald vs. Ramos, 88 Phil 94
(b) Javellana vs. Kintanar, 115 SCRA 627
(c) Heirs of Delgado vs. Gonzalez, G.R. No. 184337, Aug. 7, 2009
(d) Orceo vs. Comelec, G.R. No. 190779, Mar. 26, 2010
(concurring opinion of J. Brion)

3. Associated words (Noscitur a sociis)

(a) Caltex (Phils.) vs. Palomar, 18 SCRA 247
(b) San Miguel Corporation vs. NLRC, 161 SCRA 719
(c) Magtajas vs. Pryce Properties Corp. 234 SCRA 255

4. General and specific words

(a) Doctrine of Ejusdem Generis
(1) When applicable
-Mutuc vs. COMELEC, 36 SCRA 228
- Vera vs. Cuevas, 90 SCRA 379
- Del Mar vs. PAGCOR, 346 SCRA 485 [2000]
- Emin vs. De Leon, 378 SCRA 143 [2002]
- BSU vs. COA, G.R. No. 169637, 08 June 2007

(2) At what time not applicable

- US vs. Santo Niño, 13 Phil. 141
- Roman Catholic Archbishop vs. SSC, 1 SCRA 10
- Cagayan Valley Ent. Vs. CA, 179 SCRA 218

5. Express mention and implied exclusion (expressio unius est

exclusio alterius)

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 (a) Vera vs. Fernandez, 89 SCRA 199
(b) Empire Insurance vs. Rufino 90 SCRA 437
(c) Centeno vs. Villalon-Pornillos 236 SCRA 197
(d) Finman vs. CA, G.R. No. 100970, 02 September 1992)
(e) GR No. 157870, Social Justice Society v. Dangerous Drugs
Board and Philippine Drug Enforcement Agency (PDEA), November 3, 2008

A. Limitations of Rule
(a) Manabat vs. De Aquino, 92 Phil. 1025
(b) People vs. Manantan, 5 SCRA 684

6. Relative and qualifying terms and relation to antecedents

(a) Roldan vs. Villaroman, 69 Phil 12

7. Conjunctive and disjunctive words

(a) Centeno vs. Villalon-Pornillos 236 SCRA 197
(b) Herrera vs. NAPOCOR, G.R. No. 166570, Dec. 18, 2009

8. Negatives and Affirmatives

9. Singular and Plural words
10. Particular words and Phrases
11. Different Languages and translations
(a) Employees Club, Inc. vs. China Banking Corp. 60 Phil 233
(b) Roldan vs. Villaroman, 69 Phil 12
12. Rules of Grammar
13. Punctuation
14. Verbal or Clerical errors
15. Surplusage and unnecessary matter
16. Words Omitted
(a) People vs. Manantan, 5 SCRA 684

D. Statute as a whole and intrinsic aid to construction

1. Giving effect to entire statute
(a) People vs. Garcia, 85 Phil. 651
(b) People vs. Palawan, 86 Phil 350

2. Conflicting Provisions
(a) General and special provisions
(1) Manila Railroad Co. vs. Collector, 52 Phil 950

3. Context and related clauses

(a) Paras vs. COMELEC, 264 SCRA 49

4. Preamble and Recitals

(a) People VS. Purisima, 86 SCRA 542
(b) People vs. Echaves, 95 SCRA 663

5. Title, headings, and marginal notes

(a) People vs. Yabut, 58 Phil 499
(b) Tolentino vs. Secretary of Finance, 235 SCRA 630

E. Extrinsic aides to construction

1. In general
(a) People vs. Muñoz, 170 SCRA 107

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 (b) League of Cities vs. COMELEC, G.R. No. 176951, Dec. 21,
2009

2. Existing general or public policy of the state

3. Contemporaneous circumstances
(a) Philippine Sugar Centrals Agency vs. Collector, 51 Phil 131
(b) Manila Jockey Club vs. GAB, 107 Phil

4. Motives and Opinions of Legislature or its members or of third

persons
(a)Song Kiat Chocolate Factory vs. Central Bank 102 Phil 477
(b) Mayon Motors vs. Acting Commissioner

5. History and passage of Act

(a) Oliva vs. Lamadrid, 21 SCRA 737
(b) Commissioner vs. Esso Standard 66 SCRA 113

6. Legislative debates and reports of committees or commissions

(a) Manila Jockey Club vs. GAB 107 Phil 151
(b) China Banking Corporation vs. Ortega, 49 SCRA 355
(c) Astorga vs. Villegas, 56 SCRA 714

7. Contemporaneous Construction
(a) Bengzon vs. Secretary of Justice 62 Phil 912
(b) Araneta vs. Dinglasan 84 Phil 368
(c) UP vs. CA, 37 SCRA 64

8. Practical construction or usage generally

9. Executive Construction
(a) In general
(b) Qualification of Rules
(c) Application of Rules
(1) Philippine Sugar Centrals Agency vs. Collector, 51
Phil131
(2) Phil. Assn. of Free Labor Unions vs. BLR, 27 SCRA
396
(3) IBAA Employees Union vs. Inciong, 132 SCRA 663
(4) Melendres, Jr. vs. COMELEC, G.R. No. 129958. 
November 25, 1999

10.Legislative Construction

11. Evidence to aid construction

F. Construction with reference to other laws.

1. Construction with reference to civil law
(a) People vs. Del Rosario, 97 Phil 67
(b) People vs. Reyes, 175 SCRA 597

2. Construction with reference to other statutes

(a) Escosura vs. San Miguel Brewery, Inc. 4 SCRA 727

3. Statutes relating to same subject matter in general (in pari material)

(a) Generals
(b)Limitations of rule of pari material

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 (c) Cases
- City of Naga vs. Agna, 71 SCRA 176
- Tan vs. Commissioner on Elections, 142 SCRA 727
(d) Particular statutes

4. Conflicting statutes
(a) Gordon vs. Veridiano, 167 SCRA 51
(b) David vs. COMELEC, 271 SCRA 90
(c) Roque vs. COMELEC, G.R. No. 188456, Se. 10, 2009

5. General and Special Statutes

(a) Sitchon vs. Aquino, 98 Phil 458
(b) Butuan Sawmill vs. City of Butuan, 16 SCRA 755
(c)Lagman vs. City of Manila, 17 SCRA 580
(d) City of Manila vs. Teotico, 22 SCRA 267

6. Municipal Ordinance inferior to statute

(a)Primicias vs. Municipality of Urdaneta, 93 SCRA 462

7. Statute Prevails over administrative regulations

(a) Hijo Plantations vs. Centtral Bank, 164 SCRA 192
(b) China Banking Corp. vs. CA 265 SCRA 327

8. Reenactment of, or reference to former statutes

(a) Adoption of Provisions previously construed
(1) Previous construction by courts
(2) Previous executive or legislative construction

9. Construction of Statutes adopted from other jurisdictions

(a) US vs. de Guzman, 30 Phil 416
(b) Zamora vs. Collector, 8 SCRA 163
(c) People vs. Pagpaguitan, 315 SCRA 226 [1999]

10. Statutes Construed by other courts

(a) Phil. Education Co. vs. Soriano, 39 SCRA 587
(b) Carolina Industries vs. CMS stock Brokerage, 97 SCRA 734

11. Limitations or Qualifications of Rule

(a) In general
(1) Ortigas & Co. vs. FEATI bank, 94 SCRA 533

(b)Construction by courts of original state after adoption

G. Construction as mandatory or directory

1. Determination of characters of provisions
(a) General rules
(1) Chartered Bank vs. National Government Auditing
Office, 149 SCRA 58

(b) Negative, Prohibitory, or Exclusive words

(1) McGee vs. Republic, 94 Phil 820
(2) Fule vs. CA, 162, 162 SCRA 446

(c) Time of performance of duties

(1) Portfolio vs. Arteche, 57 Phil 227
(2) Romualdez-Marcos vs. COMELEC, 248 SCRA 300

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 (d) Construction of Particular word
(1) “May,” “must, and “shall”
- Bersabal vs. Salvador, 84 SCRA 176
- Republic Planters Bank vs. Agana, Sr., 269 SCRA 1

H. Provisos, exceptions, and saving clauses

1. Proviso
(a) To what provision proviso applicable
(1) ALU-TUCP vs. NLRC, 234 SCRA 678
(b) Restriction or enlargement of enactment
(c) Conflict between proviso and enacting clause
(1) Arenas vs. City of San Carlos, 82 SCRA 318

2. Exceptions
(a) Arabay, Inc. vs. CFI, 66 SCRA 617
(b) Implied exceptions
(c) Construction and effect
(1) Samson vs. CA, 145 SCRA 654

3. Saving Clauses
(a) Ocampo vs. Buenaventura, 55 SCRA 267

I. Amendments, revisions, codes and repealing acts

1. Amendatory and amended acts
(a) Operation and effect of amendment
(1) Presumption of intent to change law
- Amandy vs. People, 161 SCRA 436

2. Revisions and Codes

(a) Conflicting provisions
(b) Legislative and judicial construction
(c) Notes, comments, or reports

3. Repealing Acts
(a) Legislative intent to change the law
(1) People vs. Almuete, 69 SCRA 410
(2) David vs. Comelec, 271 SCRA 90 [1997]
(b) Special law no repealed by general law by implication
(1) Phil. Railway Co. vs. Collector, 91 Phil 35
(2) LLDA vs. CA, 251 SCRA 42

(c) Implied repeals

(1) When implied repeals operate
- Ramirez vs. CA, 71 SCRA 231

(2) Implied Repeals not favored

- Almeda vs. Florentino 15 SCRA 514
- Villegas vs. Enrile, 50 SCRA 10
- Maddumba vs. GSIS, 182 SCRA 281
- Mecano vs. COA, 21 SCRA 500
-Tiangco vs. Uniwide, G.R. No. 168697, Dec. 14, 2009

(d) When implied repeal cannot be given retroactive effect

(1) Tac-an vs. CA, 179 SCRA 319

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 (e) When reason of the law ceases, the law itself ceases.
(1) Comendador vs. de Villa, 200 SCRA 80

V. Construction of the Constitution and particular Classes of Statutes

A. Constitutional Construction
1. Intent of the framers of the organic law and of the people adopting it
given effect.
(a) Nitafan vs. Commissioner, 152 SCRA 284
(b) Civil Liberties Union vs. Executive secretary, 194 SCRA 317
(c) CO vs. HRET, 199 SCRA 692

2. Language of the Constitution construed in the ordinary meaning

(a) Ordillo vs. COMELEC, 192 SCRA 100
(b) Manila Prince Hotel vs. 267 SCRA 408

B. Construction of Statute to harmonize with constitution

1. Rules of Construction in relation to issue of constitutionality
(a) Victoriano vs. Elizalde Rope worker’s Union, 59 SCRA 54
(b) Manila Trading vs. Reyes, 62 Phil 461

2. Construction of statute to harmonize it with the Constitution

(a) Yee Cong Eng vs. Trinidad, 47 Phil 385
(b) Herras Teehankee vs. Director of Prisons 76 Phil 756
(c) Garcia vs. COMELEC, 237 SCRA 279

3. The constitution is superior to a statute

(a) Aquino vs. COMELEC, 248 SCRA 400

C. Construction of Particular Statutes

1. Liberal or Strict construction as affected by nature of Act in general
2. Remedial Statutes
(a) Del Rosario vs. Hamoy, 151 SCRA 719
(b) International Corporate Bank vs. IAC, 163 SCRA 296
(c) Perla Compania vs. Concepcion, 104 SCRA 786

3. Penal Statutes
(a) Construction
(1) In general
(2) Application of general rules of construction
- People vs. Manantas
-People vs. Purisima
- People vs. Terrado
-Malinias vs. Commission on Election, 390 SCRA 480
[2002]
-Angeles vs. Gaite, G.R. No. 165276, Nov. 25, 2009

4. Statutes both penal and remedial

5. Statutes in derogation of sovereignty
6. Statutes in derogation of fundamental rights
(a) Provincial Chapter of Laguna, NP vs. COMELEC, 122 SCRA
423
(b) Genero V. Reyes Construction vs. CA, 234 SCRA 116

7. Legislative Grants
(a) Manila Lodge No. 761 vs. CA, 73 SCRA 162

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 8. Statute imposing liabilities
9. Revenue Laws
(a) Application of general rules
(b) Construction in favor of taxpayer in general
(c) Strict of liberal construction in general
(d) Particular tax statutes or provisions
(e) Cases
- Republic Flour Mills vs. Commissioner, 31 SCRA 520
- Serfino vs. CA, 154 SCRA 19
- People vs. Castañeda, Jr. 165 SCRA 327
- Commisioner vs. CA, 301 SCRA 152. [1999]
10. Private Acts
11. Labor Laws
(a) Villavert vs. ECC, 110 SCRA 233
(b) Abella vs. NLRC, 152 SCRA 140
12. Social Security Laws
(a) Vicente vs. ECC, 193 SCRA 190
13. Corporation Laws
(a) Home Insurance Co. vs. Eastern Shipping Lines, 123 SCRA
424
14. Insurance Laws
(a) Del Rosario vs. Equitable Insurance, 8 SCRA 343
(b) Fielmens Insurance vs. Vda de Songco, 25 SCRA 70
15. Administrative Laws
(a) Solid Homes Inc. vs. Payawal, 177 SCRA 72
16. Retirement and pension Laws
(a) Re: application for retirement – Britanico, 173 SCRA 421
(b) Board of Administrators, PVA vs. Bautista, 12 SCRA 59
(c) Tantuico Jr. vs. Domingo, 230 SCRA 391
17. Naturalization Laws
(a) Velasco vs. Republic 108 Phil 234
(b) Co. vs. Republic 108 Phil 265
18. Special or Local Laws
(a) Llanto vs. Domingo, 16 SCRA 601
19. Statutes Offering Rewards
(a) Penid vs. Virata, 121 SCRA 166
20. Habeas Corpus rules
(a) Enrile vs. Salazar, 186 SCRA 217
21. Statutes prescribing formalities in wills
(a) In re: Testate Estate of Tampoy 107 SCRA 100
22. Probation Laws
(a) Santos To. Vs. Paño, 120 SCRA 8
23. Election Laws
(a) Pahilan vs. Tabalba, 230 SCRA 205
(b) Loong vs. COMELEC, 305 SCRA 832, [1999]

III. Effectivity and Prospectivity or Retroactively of Statutes

A. Effectivity of statutes

B. General Prospective construction

1. Espiritu vs. Cipriano, 55 SCRA 533

2. Nilo vs. CA, 205 SCRA 419
3. Balatbat vs. CA, 205 SCRA 419
4. Co. vs. CA, 227 SCRA 444

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 C. Retroactive Operation

1. Presumption
2. Remedial Statutes
- Palomo Building Tenants Association, Inc. vs. Intermediate
Appellate Court, 133 SCRA 168
3. Statutes relating to offenses and prosecutions
- Laceste vs. Santos, 56 Phil 472
4. Application to Pending Actions and Proceedings
- MRCA, Inc. vs. Court of Appeals
5. Curative Statutes
- Municipality of San Isidro

Cases for Stat con

Endencia vs. David, 93 SCRA 696

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 Republic of the Philippines
SUPREME COURT
Manila

EN BANC

G.R. No. L-6355-56             August 31, 1953

PASTOR M. ENDENCIA and FERNANDO JUGO, plaintiffs-appellees,

vs.
SATURNINO DAVID, as Collector of Internal Revenue, defendant-appellant.

Office of the Solicitor General Juan R. Liwag and Solicitor Jose P. Alejandro for appellant.
Manuel O. Chan for appellees.

MONTEMAYOR, J.:

This is a joint appeal from the decision of the Court of First Instance of Manila declaring
section 13 of Republic Act No. 590 unconstitutional, and ordering the appellant Saturnino
David as Collector of Internal Revenue to re-fund to Justice Pastor M. Endencia the sum of
P1,744.45, representing the income tax collected on his salary as Associate Justice of the
Court of Appeals in 1951, and to Justice Fernando Jugo the amount of P2,345.46,
representing the income tax collected on his salary from January 1,1950 to October 19, 1950,
as Presiding Justice of the Court of Appeals, and from October 20, 1950 to December
31,1950, as Associate Justice of the Supreme Court, without special pronouncement as to
costs.

Because of the similarity of the two cases, involving as they do the same question of law,
they were jointly submitted for determination in the lower court. Judge Higinio B. Macadaeg
presiding, in a rather exhaustive and well considered decision found and held that under the
doctrine laid down by this Court in the case of Perfecto vs. Meer, 85 Phil., 552, the collection
of income taxes from the salaries of Justice Jugo and Justice Endencia was a diminution of
their compensation and therefore was in violation of the Constitution of the Philippines, and
so ordered the refund of said taxes.

We see no profit and necessity in again discussing and considering the proposition and the
arguments pro and cons involved in the case of Perfecto vs. Meer, supra, which are raised,
brought up and presented here. In that case, we have held despite the ruling enunciated by the
United States Federal Supreme Court in the case of O 'Malley vs. Woodrought 307 U. S.,
277, that taxing the salary of a judicial officer in the Philippines is a diminution of such salary
and so violates the Constitution. We shall now confine our-selves to a discussion and
determination of the remaining question of whether or not Republic Act No. 590, particularly
section 13, can justify and legalize the collection of income tax on the salary of judicial
officers.

According to the brief of the Solicitor General on behalf of appellant Collector of Internal
Revenue, our decision in the case of Perfecto vs. Meer, supra, was not received favorably by
Congress, because immediately after its promulgation, Congress enacted Republic Act No.
590. To bring home his point, the Solicitor General reproduced what he considers the
pertinent discussion in the Lower House of House Bill No. 1127 which became Republic Act
No. 590.

For purposes of reference, we are reproducing section 9, Article VIII of our Constitution:.

SEC. 9. The members of the Supreme Court and all judges of inferior courts shall
hold office during good behavior, until they reach the age of seventy years, or become
incapacitated to discharge the duties of their office. They shall receive such

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 compensation as may be fixed by law, which shall not be diminished during their
continuance in office. Until the Congress shall provide otherwise, the Chief Justice of
the Supreme Court shall receive an annual compensation of sixteen thousand pesos,
and each Associate Justice, fifteen thousand pesos.

As already stated construing and applying the above constitutional provision, we held in the
Perfecto case that judicial officers are exempt from the payment of income tax on their
salaries, because the collection thereof by the Government was a decrease or diminution of
their salaries during their continuance in office, a thing which is expressly prohibited by the
Constitution. Thereafter, according to the Solicitor General, because Congress did not
favorably receive the decision in the Perfecto case, Congress promulgated Republic Act No.
590, if not to counteract the ruling in that decision, at least now to authorize and legalize the
collection of income tax on the salaries of judicial officers. We quote section 13 of Republic
Act No. 590:

SEC 13. No salary wherever received by any public officer of the Republic of the
Philippines shall be considered as exempt from the income tax, payment of which is
hereby declared not to be dimunition of his compensation fixed by the Constitution or
by law.

So we have this situation. The Supreme Court in a decision interpreting the Constitution,
particularly section 9, Article VIII, has held that judicial officers are exempt from payment of
income tax on their salaries, because the collection thereof was a diminution of such salaries,
specifically prohibited by the Constitution. Now comes the Legislature and in section 13,
Republic Act No. 590, says that "no salary wherever received by any public officer of the
Republic (naturally including a judicial officer) shall be considered as exempt from the
income tax," and proceeds to declare that payment of said income tax is not a diminution of
his compensation. Can the Legislature validly do this? May the Legislature lawfully declare
the collection of income tax on the salary of a public official, specially a judicial officer, not a
decrease of his salary, after the Supreme Court has found and decided otherwise? To
determine this question, we shall have to go back to the fundamental principles regarding
separation of powers.

Under our system of constitutional government, the Legislative department is assigned the
power to make and enact laws. The Executive department is charged with the execution of
carrying out of the provisions of said laws. But the interpretation and application of said laws
belong exclusively to the Judicial department. And this authority to interpret and apply the
laws extends to the Constitution. Before the courts can determine whether a law is
constitutional or not, it will have to interpret and ascertain the meaning not only of said law,
but also of the pertinent portion of the Constitution in order to decide whether there is a
conflict between the two, because if there is, then the law will have to give way and has to be
declared invalid and unconstitutional.

Defining and interpreting the law is a judicial function and the legislative branch may
not limit or restrict the power granted to the courts by the Constitution. (Bandy vs.
Mickelson et al., 44N. W., 2nd 341, 342.)

When it is clear that a statute transgresses the authority vested in the legislature by the
Constitution, it is the duty of the courts to declare the act unconstitutional because
they cannot shrink from it without violating their oaths of office. This duty of the
courts to maintain the Constitution as the fundamental law of the state is imperative
and unceasing; and, as Chief Justice Marshall said, whenever a statute is in violation
of the fundamental law, the courts must so adjudge and thereby give effect to the
Constitution. Any other course would lead to the destruction of the Constitution.
Since the question as to the constitutionality of a statute is a judicial matter, the courts
will not decline the exercise of jurisdiction upon the suggestion that action might be

12
 taken by political agencies in disregard of the judgment of the judicial tribunals. (11
Am. Jur., 714-715.)

Under the American system of constitutional government, among the most important
functions in trusted to the judiciary are the interpreting of Constitutions and, as a
closely connected power, the determination of whether laws and acts of the legislature
are or are not contrary to the provisions of the Federal and State Constitutions. (11
Am. Jur., 905.).

By legislative fiat as enunciated in section 13, Republic Act NO. 590, Congress says that
taxing the salary of a judicial officer is not a decrease of compensation. This is a clear
example of interpretation or ascertainment of the meaning of the phrase "which shall not be
diminished during their continuance in office," found in section 9, Article VIII of the
Constitution, referring to the salaries of judicial officers. This act of interpreting the
Constitution or any part thereof by the Legislature is an invasion of the well-defined and
established province and jurisdiction of the Judiciary.

The rule is recognized elsewhere that the legislature cannot pass any declaratory act,
or act declaratory of what the law was before its passage, so as to give it any binding
weight with the courts. A legislative definition of a word as used in a statute is not
conclusive of its meaning as used elsewhere; otherwise, the legislature would be
usurping a judicial function in defining a term. (11 Am. Jur., 914, emphasis supplied)

The legislature cannot, upon passing a law which violates a constitutional provision,
validate it so as to prevent an attack thereon in the courts, by a declaration that it
shall be so construed as not to violate the constitutional inhibition. (11 Am. Jur., 919,
emphasis supplied)

We have already said that the Legislature under our form of government is assigned the task
and the power to make and enact laws, but not to interpret them. This is more true with regard
to the interpretation of the basic law, the Constitution, which is not within the sphere of the
Legislative department. If the Legislature may declare what a law means, or what a specific
portion of the Constitution means, especially after the courts have in actual case ascertain its
meaning by interpretation and applied it in a decision, this would surely cause confusion and
instability in judicial processes and court decisions. Under such a system, a final court
determination of a case based on a judicial interpretation of the law of the Constitution may
be undermined or even annulled by a subsequent and different interpretation of the law or of
the Constitution by the Legislative department. That would be neither wise nor desirable,
besides being clearly violative of the fundamental, principles of our constitutional system of
government, particularly those governing the separation of powers.

So much for the constitutional aspect of the case. Considering the practical side thereof, we
believe that the collection of income tax on a salary is an actual and evident diminution
thereof. Under the old system where the in-come tax was paid at the end of the year or
sometime thereafter, the decrease may not be so apparent and clear. All that the official who
had previously received his full salary was called upon to do, was to fulfill his obligation and
to exercise his privilege of paying his income tax on his salary. His salary fixed by law was
received by him in the amount of said tax comes from his other sources of income, he may
not fully realize the fact that his salary had been decreased in the amount of said income tax.
But under the present system of withholding the income tax at the source, where the full
amount of the income tax corresponding to his salary is computed in advance and divided
into equal portions corresponding to the number of pay-days during the year and actually
deducted from his salary corresponding to each payday, said official actually does not receive
his salary in full, because the income tax is deducted therefrom every payday, that is to say,
twice a month. Let us take the case of Justice Endencia. As Associate Justice of the Court of
Appeals, his salary is fixed at p12,000 a year, that is to say, he should receive P1,000 a month
or P500 every payday, — fifteenth and end of month. In the present case, the amount

13
collected by the Collector of Internal Revenue on said salary is P1,744.45 for one year.
Divided by twelve (months) we shall have P145.37 a month. And further dividing it by two
paydays will bring it down to P72.685, which is the income tax deducted form the collected
on his salary each half month. So, if Justice Endencia's salary as a judicial officer were not
exempt from payment of the income tax, instead of receiving P500 every payday, he would
be actually receiving P427.31 only, and instead of receiving P12,000 a year, he would be
receiving but P10,255.55. Is it not therefor clear that every payday, his salary is actually
decreased by P72.685 and every year is decreased by P1,744.45?

Reading the discussion in the lower House in connection with House Bill No. 1127, which
became Republic Act No. 590, it would seem that one of the main reasons behind the
enactment of the law was the feeling among certain legislators that members of the Supreme
Court should not enjoy any exemption and that as citizens, out of patriotism and love for their
country, they should pay income tax on their salaries. It might be stated in this connection
that the exemption is not enjoyed by the members of the Supreme Court alone but also by all
judicial officers including Justices of the Court of Appeals and judges of inferior courts. The
exemption also extends to other constitutional officers, like the President of the Republic, the
Auditor General, the members of the Commission on Elections, and possibly members of the
Board of Tax Appeals, commissioners of the Public Service Commission, and judges of the
Court of Industrial Relations. Compares to the number of all these officials, that of the
Supreme Court Justices is relatively insignificant. There are more than 990 other judicial
officers enjoying the exemption, including 15 Justices of the Court of Appeals, about 107
Judges of First Instance, 38 Municipal Judges and about 830 Justices of the Peace. The
reason behind the exemption in the Constitution, as interpreted by the United States Federal
Supreme Court and this Court, is to preserve the independence of the Judiciary, not only of
this High Tribunal but of the other courts, whose present membership number more than 990
judicial officials.

The exemption was not primarily intended to benefit judicial officers, but was grounded on
public policy. As said by Justice Van Devanter of the United States Supreme Court in the
case of Evans vs. Gore (253 U. S., 245):

The primary purpose of the prohibition against diminution was not to benefit the
judges, but, like the clause in respect of tenure, to attract good and competent men to
the bench and to promote that independence of action and judgment which is essential
to the maintenance of the guaranties, limitations and pervading principles of the
Constitution and to the administration of justice without respect to person and with
equal concern for the poor and the rich. Such being its purpose, it is to be construed,
not as a private grant, but as a limitation imposed in the public interest; in other
words, not restrictively, but in accord with its spirit and the principle on which it
proceeds.

Having in mind the limited number of judicial officers in the Philippines enjoying this
exemption, especially when the great bulk thereof are justices of the peace, many of them
receiving as low as P200 a month, and considering further the other exemptions allowed by
the income tax law, such as P3,000 for a married person and P600 for each dependent, the
amount of national revenue to be derived from income tax on the salaries of judicial officers,
were if not for the constitutional exemption, could not be large or substantial. But even if it
were otherwise, it should not affect, much less outweigh the purpose and the considerations
that prompted the establishment of the constitutional exemption. In the same case of Evans
vs. Gore, supra, the Federal Supreme Court declared "that they (fathers of the Constitution)
regarded the independence of the judges as far as greater importance than any revenue that
could come from taxing their salaries.

When a judicial officer assumed office, he does not exactly ask for exemption from payment
of income tax on his salary, as a privilege . It is already attached to his office, provided and
secured by the fundamental law, not primarily for his benefit, but based on public interest, to

14
secure and preserve his independence of judicial thought and action. When we come to the
members of the Supreme Court, this excemption to them is relatively of short duration.
Because of the limited membership in this High Tribunal, eleven, and due to the high
standards of experience, practice and training required, one generally enters its portals and
comes to join its membership quite late in life, on the aver-age, around his sixtieth year, and
being required to retire at seventy, assuming that he does not die or become incapacitated
earlier, naturally he is not in a position to receive the benefit of exemption for long. It is
rather to the justices of the peace that the exemption can give more benefit. They are
relatively more numerous, and because of the meager salary they receive, they can less afford
to pay the income tax on it and its diminution by the amount of the income tax if paid would
be real, substantial and onerous.

Considering exemption in the abstract, there is nothing unusual or abhorrent in it, as long as it
is based on public policy or public interest. While all other citizens are subject to arrest when
charged with the commission of a crime, members of the Senate and House of
Representatives except in cases of treason, felony and breach of the peace are exempt from
arrest, during their attendance in the session of the Legislature; and while all other citizens
are generally liable for any speech, remark or statement, oral or written, tending to cause the
dishonor, discredit or contempt of a natural or juridical person or to blacken the memory of
one who is dead, Senators and Congressmen in making such statements during their sessions
are extended immunity and exemption.

And as to tax exemption, there are not a few citizens who enjoy this exemption. Persons,
natural and juridical, are exempt from taxes on their lands, buildings and improvements
thereon when used exclusively for educational purposes, even if they derive income
therefrom. (Art. VI, Sec. 22 [3].) Holders of government bonds are exempted from the
payment of taxes on the income or interest they receive therefrom (sec. 29 (b) [4], National
Internal Revenue Code as amended by Republic Act No. 566). Payments or income received
by any person residing in the Philippines under the laws of the United States administered by
the United States Veterans Administration are exempt from taxation. (Republic Act No. 360).
Funds received by officers and enlisted men of the Philippine Army who served in the Armed
Forces of the United States, allowances earned by virtue of such services corresponding to
the taxable years 1942 to 1945, inclusive, are exempted from income tax. (Republic Act No.
210). The payment of wages and allowances of officers and enlisted men of the Army Forces
of the Philippines sent to Korea are also exempted from taxation. (Republic Act No. 35). In
other words, for reasons of public policy and public interest, a citizen may justifiably by
constitutional provision or statute be exempted from his ordinary obligation of paying taxes
on his income. Under the same public policy and perhaps for the same it not higher
considerations, the framers of the Constitution deemed it wise and necessary to exempt
judicial officers from paying taxes on their salaries so as not to decrease their compensation,
thereby insuring the independence of the Judiciary.

In conclusion we reiterate the doctrine laid down in the case of Perfecto vs. Meer, supra, to
the effect that the collection of income tax on the salary of a judicial officer is a diminution
thereof and so violates the Constitution. We further hold that the interpretation and
application of the Constitution and of statutes is within the exclusive province and
jurisdiction of the Judicial department, and that in enacting a law, the Legislature may not
legally provide therein that it be interpreted in such a way that it may not violate a
Constitutional prohibition, thereby tying the hands of the courts in their task of later
interpreting said statute, specially when the interpretation sought and provided in said statute
runs counter to a previous interpretation already given in a case by the highest court of the
land.

In the views of the foregoing considerations, the decision appealed from is hereby affirmed,
with no pronouncement as to costs.

Pablo, Bengzon, Padilla, Tuason, Reyes, and Labrador, JJ., concur.

15
Separate Opinions

BAUTISTA ANGELO, J., concurring:

Without expressing any opinion on the doctrine laid down by this Court in the case of
Perfecto vs. Meer, G. R. No. L-2314, in view of the part I had in that case as former Solicitor
General, I wish however to state that I concur in the opinion of the majority to the effect that
section 13, Republic Act No. 590, in so far as it provides that taxing of the salary of a judicial
officer shall be considered "not to be a diminution of his compensation fixed by the
Constitution or by law", constitutes an invasion of the province and jurisdiction of the
judiciary. In this sense, I am of the opinion that said section is null and void, it being a
transgression of the fundamental principle underlying the separation of powers.

PARAS, C.J., concurring and dissenting:

I dissent for the same reasons stated in the dissenting opinion of Mr. Justice Ozaeta in
Perfecto vs. Meer, 85 Phil., 552, in which I concurred. But I disagree with the majority in
ruling that no legislation may provide that it be held valid although against a provision of the
Constitution.

The Lawphil Project - Arellano Law Foundation

G.R. No. 96700 November 19, 1996

NATIONAL POWER CORPORATION, petitioner,

vs.
PROVINCE OF LANAO DEL SUR, LANAO DEL SUR GOVERNOR SAIDAMEN B.
PANGARUNGAN and LANAO DEL SUR PROVINCIAL TREASURER HADJI
MACMOD L. DALIDIG, respondents.

PANGANIBAN, J.:

Is petitioner National Power Corporation liable for real property taxes for the period
June 14, 1984 to December 31, 1989 amounting to more than P154 million? To
compel payment of petitioner's alleged delinquency in its realty taxes, did
respondents act correctly in selling at publication petitioner's real properties on which
is situated its hydroelectric power plant complex?

Petitioner filed the instant special civil action for prohibition to (1) perpetually prohibit
and enjoin respondents from disposing and selling, (2) annul the auction sale of, and
(3) cancel the registration of the certificate of sale involving the aforesaid real
properties of the petitioner.

The Facts

16
Petitioner National Power Corporation is the owner of certain real properties situated
in Saguiaran, Lanao del Sur, more particularly described in Tax Declarations Nos. D-
802-A, D-803-A, D-804-A, D-805-A, D-806 and D-807 issued by the Office of the
Provincial Assessor of Lanao del Sur. Said properties comprise petitioner's Agus II
Hydroelectric Power Plant Complex. Petitioner was assessed real estate taxes on
said properties in the amount of one hundred fifty four million one hundred fourteen
thousand eight hundred fifty four pesos and eighty two centavos (P154,114,854.82)
covering the period from June 14, 1984 to December 31, 1989, 1 allegedly because
petitioner's exemption from realty taxes had been withdrawn.

On August 7, 1990, a demand letter was sent by respondent provincial treasurer to

the petitioner for the payment of real property taxes due on the abovementioned
properties. On August 21, 1990, a second demand letter 2 from respondent provincial
treasurer was sent to petitioner with a warning that unless the obligation was settled,
legal remedies would be resorted to by the respondent province. On December 14,
1990, a Notice of Auction (Sale) covering the subject properties was served on
petitioner. 3 A copy of said notice was posted for one month from December 17, 1990
to January 17, 1991 at the main entrance of the provincial capitol building in Marawi
City and at the plant site in Saguiaran, Lanao del Sur. It was also published in the
December 17 and 24, 1990 and January 5, 1991 4 issues of the Philippine Daily
Inquirer and the December 17 and 24, 1990 issues of the Lake Lanao Times. The
auction sale was scheduled to be held at 10:00 A.M. of January 22, 1991 at the
Office of the Provincial Treasurer in Marawi City.

On January 18, 1991, petitioner filed directly with this Court the instant petition for
prohibition with prayer for a writ of preliminary injunction and/or temporary restraining
order. On January 21, 1991, this Court issued a temporary restraining order 5
enjoining respondents from proceeding with and conducting the auction sale of the
subject properties.

The auction sale was however held as scheduled with the Province of Lanao del Sur
as the sole bidder. A certificate of sale was immediately issued and registered with
the Register of Deeds of the province at 1:30 p.m. of the same
day. 6

At 2:30 and 3:00 p.m. of the same day, respondents provincial governor and
provincial treasurer respectively 7 received telegraphic notices of this Court's
restraining order.

Respondents submitted their comment on February 14, 1991 to which petitioner filed
its reply on April 29, 1991. Rejoinder was submitted on October 25, 1993.
Thereafter, this Court gave due course to the petition and the parties thus filed their
respective memoranda.

Anent the tax exempt status of petitioner for the period up to December 31, 1989, the
following are the relevant laws and resolutions:

(1) Commonwealth Act No. 120, which became effective on November 3, 1936,
created the petitioner as a non-profit public corporation wholly owned by the
government of the Republic of the Philippines tacked to undertake the development
of hydraulic power and the production of power from other sources. 8 Section 13
thereof exempted it from the payment of all forms of taxes, duties, fees, imposts as
well as costs and service fees including filing fees, appeal bonds, supersedeas
bonds, in any court or administrative proceedings "to enable the Corporation to pay
its indebtedness and obligations."

17
(2) Section 2 of Republic Act No. 358, which took effect on June 4, 1949, exempted
petitioner "from all taxes, duties, fees, imposts, charges and restrictions of the
Republic of the Philippines, its provinces, cities and municipalities" in order to
facilitate payment of its indebtedness.

(3) Republic Act No. 6395, which took effect on September 10, 1971, revised the
charter of the petitioner. To quote the Solicitor General:

Congress declared as a national policy the total electrification of the Philippines

through the development of power from all sources to meet the needs of industrial
development and rural electrification. The corporate existence of NAPOCOR was
extended to carry out this policy, specifically to undertake the development of
hydroelectric generation of power and the production of electricity from nuclear,
geothermal and other sources, as well as the transmission of electric power on a
nationwide basis. And having been declared by legislative fiat as a non-profit public
corporation with a responsibility of devoting all its returns from its capital investment
as well as excess revenues from its operation for expansion, petitioner was granted
exemption from the payment of all forms of taxes, duties, fees, imposts and other
charges by the government and its instrumentalities. Thus, Section 13 of RA 6395
provides in detail such exemptions, to wit:

Sec. 13. Non-profit Character of the Corporation; Exemption from All

Taxes, Duties, Fees, Imposts and Other Charges by Government
and Governmental Instrumentalities. — The Corporation shall be
non-profit and shall devote all its returns from its capital investments,
as well as excess revenues from its operation, for expansion. To
enable the Corporation to pay its indebtedness and obligations and in
furtherance and effective implementation of the policy enunciated in
Section One of this Act, the Corporation is hereby declared exempt:

(a) From the payment of all taxes, duties, fees, imposts, charges,
costs and service fees in any court or administrative proceedings in
which it may be a party, restrictions and duties to the Republic of the
Philippines, its provinces, cities, municipalities and other government
agencies and instrumentalities;

(b) From all income taxes, franchise taxes and realty taxes to be paid
to the National Government, its provinces, cities, municipalities and
other government agencies and instrumentalities;

(c) From all import duties, compensating taxes and advanced sales
tax, and wharfage fees on import of foreign goods required for its
operations' and projects; and

(d) From all taxes, duties, fees, imposts, and all other charges
imposed by the Republic of the Philippines, its provinces, cities,
municipalities and other government agencies and instrumentalities
on all petroleum products used by the Corporation in the generation,
transmission, utilization, and sale of electric power. (emphasis
supplied).

(4) On January 22, 1974, Presidential Decree No. 380 amended Section 13,
paragraphs (a) and (d), of RA 6395 by specifying, among others, the exemption of
petitioner from taxes, duties, fees, imposts and other charges imposed, "directly or
indirectly", on all petroleum products used by petitioner in its operations.

(5) On June 1, 1974, Presidential Decree No. 464, also known as the Real Property
Tax Code, was enacted into law. Section 40(a) thereof provides:

Sec. 40. Exemptions from Real Property Tax. — The exemption shall be as follows:

(a) Real property owned by the Republic of the Philippines or any of its political
subdivisions and any government-owned corporation so exempt by its charter; . . .

18
(6) On August 24, 1975, Presidential Decree No. 776 was promulgated, creating the
Fiscal Incentives Review Board (FIRB). Among other things, the Board was tasked
as follows:

Sec. 2. A Fiscal Incentives Review Board is hereby created for the purpose of
determining what subsidies and tax exemptions should be modified, withdrawn,
revoked or suspended, which shall be composed of the following officials:

Chairman — Secretary of Finance

Members — Secretary of Industry
— Director General of the National
Economic and Development Authority
— Commissioner of Internal Revenue
— Commissioner of Customs

The Board may recommend to the President of the Philippines and for reasons of
compatibility with the declared economic policy, the withdrawal, modification,
revocation or suspension of the enforceability of any of the above-cited statutory
subsidies or tax exemption grants, except those granted by the Constitution. To attain
its objectives, the Board may require the assistance of any appropriate government
agency or entity. The Board shall meet once a month, or oftener at the call of the
Secretary of Finance.

(7) Section 10 of Presidential Decree No. 938, dated May 27, 1976, further amended
the aforestated provisions of Section 13 of RA 6395 by integrating the various tax
exemptions therein into a general exemption from "all forms of taxes, duties," etc.
under one paragraph, making said on Section 13 read as follows:

Sec. 13. Non-profit Character of the Corporation; Exemption from All Taxes, Duties,
Fees, Imposts and Other Charges by the Government and Government
Instrumentalities. — The Corporation shall be non-profit and shall devote all its
returns from its capital investment as well as excess revenues from its operation for
expansion. To enable the Corporation to pay its indebtedness and obligations and in
furtherance and effective implementation of the policy enunciated in Section One of
this Act, the Corporation, including its subsidiaries, is hereby declared exempt from
the payment of all forms of taxes, duties, fees, imposts as well as costs and service
fees including filing fees, appeal bonds, supersedeas bonds, in any court or
administrative proceedings. (Emphasis supplied).

8 On June 11, 1984, Presidential Decree No. 1931, in its Section 2 withdrew all tax
exemption privileges granted to government-owned or controlled corporations.
However, Section 2 thereof provided:

The President of the Philippines and/or the Minister of Finance, upon the
recommendation of the Fiscal Incentives Review Board (FIRB) . . . is hereby
empowered to restore, partially or totally, the exemptions withdrawn by Section 1 . . .

(9) Pursuant to Sec. 2 of PD 1931, on February 7, 1985, the FIRB issued Resolution
No. 10-85 9 restoring petitioner's tax and duty exemption privileges enjoyed by it
under CA 120 as amended, effective from June 11, 1984 up to June 30, 1985. And,
subsequently, FIRB Resolution No. 1-86 10 extended the said tax and duty exemption
privileges of petitioner from July 1, 1985 onwards indefinitely.

(10) On December 17, 1986, President Corazon Aquino promulgated Executive

Order No. 93 effective March 10, 1987, once again withdrawing all tax and duty
incentives of government and private entities. But Section 2 thereof gave FIRB the
authority to "restore tax and/or duty exemptions withdrawn hereunder."

(11) On June 24, 1987, the FIRB issued Resolution No. 17-87 11 once again restoring
petitioner's tax and duty exemption privileges, effective as of March 10, 1987 (the
effectivity date of E.O. 93).

19
(12) Finally, in a Memorandum dated October 5, 1987 addressed to the Chairman,
FIRB, then Acting Executive Secretary Catalino Macaraig, Jr. confirmed and
approved, by authority of the President, FIRB Resolution No. 17-87.

The Issues

The main issue in this petition is whether or not respondent province and provincial
officials can validly and lawfully assess real property taxes for the period June 14,
1984 to December 31, 1989 against, and thereafter sell at public auction, the subject
properties of petitioner to effect collection of alleged deficiencies in the payment of
such taxes.

The preliminary but pivotal issue however is whether or not petitioner has ceased to
enjoy its tax and duty exemption privileges, including its exemption from payment of
real property taxes.

Petitioner's position, simply put, is that it has never been effectively deprived of its
tax and duty exemption privileges granted under CA 120, as amended, and RA
6395, as amended, and which, although temporarily withdrawn, were just as quickly
restored, such that at no time did it lose its tax-exempt status. Hence, never did it
become liable for realty taxes, and therefore, the subject properties were wrongfully
levied upon and sold at auction.

On the other hand, respondents' position is that the petitioner's exemption from
payment of realty taxes had been withdrawn or revoked by virtue of PD 1931, and
had never been validly restored by the FIRB Resolutions aforementioned, nor by the
memorandum of Exec. Sec. Macaraig, Jr., thereby rendering petitioner liable for
realty taxes for the period June 14, 1984 up to December 31, 1989. Relying on
National Power Corporation vs. Province of Albay, 12 which they claim is based on
analogous facts, respondents contend that, under Sec. 2 of PD 776 (promulgated
August 24, 1975) which created the FIRB, and in line with Sec. 2 of PD 1931, the
FIRB is given or granted only a recommendatory power, and is devoid of authority to
impose taxes or revoke existing ones, which under the Constitution, only the
legislature may do. Neither could it validly prescribe exemptions nor restore taxability
by itself. Respondents argue that FIRB Resolutions No. 10-85 and 1-86 were issued
in excess of authority, and constitute an undue delegation of taxing power. Thus,
they are constitutionally defective and therefore null and void; and given the same
rationale EO 93, insofar as it authorizes, in its Section 2, the FIRB to inter alia
restore tax and/or duty exemptions withdrawn under Section 1 thereof, is similarly
void and of no force and effect. Respondents also assail the said FIRB resolutions
as invalid and ineffective; firstly, because in each case, there was only one signatory
thereof (viz., then Acting Minister of Finance Alfredo Pio de Roda, Jr. and then
Minister of Finance Cesar E.A. Virata, respectively), emphasizing that the FIRB is
not a one-man body; and secondly, because two separate and distinct acts were
required — a recommendation and an approval — which could not be combined and
performed by a single person acting both as head of the FIRB and as minister of
finance.

The Court's Ruling

Preliminary Issue: Valid Restoration of Tax Exemptions

Although Section 1 of PD 1931 withdrew all tax exemptions presumably including

those of petitioner, Section 2 thereof authorized and empowered the President
and/or the Minister of Finance to restore the same to deserving entities. In order to
reinstate the petitioner's tax exemptions, Hon. De Roda, Jr., in his concurrent
capacities as Acting Minister of Finance and as Acting Chairman of FIRB, signed

20
FIRB Resolution No. 10-85 which was made effective as of June 11, 1984, the
promulgation date of PD 1931, until June 30, 1985. On the other hand, by virtue of
FIRB Resolution No. 1-86, Hon. Virata fully restored the tax exemption as of July 1,
1985, to continue for an indefinite period. He also signed the same in his dual
capacities as Minister of Finance and as Chairman of the FIRB. The resolution
specifically provided that:

2. The NPC as a government corporation is exempt from the real property tax on land
and improvements owned by it . . . pursuant to the provisions of Section 40 (a) of the
Real Property Tax Code, as amended.

While EO 93 again withdrew the tax exemption of petitioner, through its Section 1, as
follows:

Sec. 1. The provisions of any general or special law to the contrary notwithstanding,
all tax and duty incentives granted to government and private entities are hereby
withdrawn, except:

xxx xxx xxx

f) those approved by the President upon the recommendation of the Fiscal Incentives
Review Board.

nevertheless, it also stated:

Sec. 2. The Fiscal Incentives Review Board created under PD 776, as amended, is
hereby authorized to:

(a) restore tax and/or duty exemptions withdrawn hereunder in whole or in part;

(b) revise the scope and coverage of tax and/or duty exemption that may be restored;

(c) impose conditions for the restoration of tax and/or duty exemption;

(d) prescribe the date or period of effectivity of the restoration of tax and/or duty
exemption;

(e) formulate and submit to the President for approval, a complete system for the
grant of subsidies to deserving beneficiaries, in lieu of or in combination with the
restoration of tax and duty exemptions or preferential treatment in taxation, indicating
the source of funding therefor, eligible beneficiaries and the terms and conditions for
the grant thereof, taking into consideration the international commitments of the
Philippines and the necessary precautions such that the grant of subsidies does not
become the basis for countervailing action. (emphasis supplied)

Pursuant thereto, FIRB Resolution No. 17-87 restored the tax exemption privileges
of the petitioner effective March 10, 1987. Again, the resolution was signed by De
Roda, Jr. in his dual capacities as Acting Secretary of Finance and as Chairman,
FIRB. This resolution was confirmed and approved by then Acting Executive
Secretary Macaraig, by the authority of the President.

Considering the entire chain of events, it is clear that petitioner's tax exemptions for
the period in question (1984-1989) had effectively been preserved intact by virtue of
their restoration through FIRB resolutions.

Respondents however vigorously argue that the FIRB, through the above-mentioned
resolutions, arrogated unto itself the power to restore tax exemptions which it never
possessed under PD 776 and EO 93. Respondents insist that FIRB effectively
exercised not merely the power to recommend exemptions but the very authority to
grant the same, which was lodged in the Minister of Finance and the President. As

21
proof of this, it did not secure any recommendation from any other body or office.
Instead, one and the same individual recommended — in his capacity as FIRB
chairman — and then approved — in his capacity as Minister of Finance — the grant
of the exemption. For this reason, FIRB Resolution Nos. 10-85 and 1-86 were held
by this Court in the Albay case to be null and void:

. . . , the FIRB, under its charter, Presidential Decree No. 776, had been empowered
merely to "recommend" tax exemptions. By itself, it could not have validly prescribed
exemptions or restore taxability. Hence, as of June 11, 1984 (promulgation of
Presidential Decree No. 1931), NAPOCOR had ceased to enjoy tax exemption
privileges. 13

Such arguments are no longer tenable. Albay has since been modified and
superseded by Maceda vs. Macaraig, Jr., 14 where this Court En Banc expressly
ruled that FIRB Resolution Nos. 10-85 and 1-86 are valid:

. . . FIRB Resolution Nos. 10-85 and 1-86 . . . were issued in compliance with the
requirement of Section 2, P.D. No. 1931, whereby the FIRB should make the
recommendation subject to the approval of "the President of the Philippines and/or
the Minister of Finance." While said Resolutions do not appear to have been
approved by the President, they were nevertheless approved by the Minister of
Finance who is also duly authorized to approve the same. In fact it was the Minister of
Finance who signed and promulgated said resolutions.

The observation of Mr. Justice Sarmiento in the dissenting opinion that FIRB
Resolution Nos. 10-85 and 1-86 which were promulgated by then Acting Minister of
Finance Alfredo de Roda, Jr. and Minister of Finance Cesar E. A. Virata, as Chairman
of FIRB, respectively, should be separately approved by said Minister of Finance as
required by P.D. 1931 is, a superfluity. An examination of the said resolutions . . .
show that the said officials signed said resolutions in the dual capacity of Chairman of
FIRB and Minister of Finance.

Mr. Justice Sarmiento also makes reference to the case National Power Corporation
vs. Province of Albay, wherein the Court observed that under P.D. No. 776 the power
of the FIRB was only recommendatory and requires the approval of the President to
be valid. Thus, in said case the Court held that FIRB Resolutions Nos. 10-85 and 1-
86 not having been approved by the President were not valid and effective while the
validity of FIRB (Resolution No.) 17-87 was upheld as it was duly approved by the
Office of the President on October 5, 1987.

However, under Section 2 of P.D. No. 1931 of June 11, 1984, hereinabove
reproduced, which amended P.D. No. 776, it is clearly provided for that such FIRB
resolution, may be approved by the "President of the Philippines and/or the Minister
of Finance." To repeat, as FIRB Resolutions Nos. 10-85 and 1-86 were duly
approved by the Minister of Finance, hence they are valid and effective. To this
extent, this decision modifies or supersedes the Court's earlier decision in Albay
afore-referred to. (emphasis supplied)

There can thus be no question that petitioner's tax exemptions withdrawn by PD

1931 were validly restored by FIRB Resolutions Nos. 10-85 and 1-86. Again
withdrawn by EO 93, they were once more restored by FIRB Resolution No. 17-87,
effective as of March 10, 1987. Moreover, this Court, in the same case of Maceda
vs. Macaraig, Jr., reaffirmed the determination in Albay that EO 93 along with PDs
776 and were 1931 were all valid, and that FIRB Resolution No. 17-87 and the tax
exemptions restored thereunder were "valid and effective." 15 The Court in Maceda
also held —

True it is that the then Secretary of Justice in Opinion No. 77, dated August 6, 1977
was of the view that the powers conferred upon the FIRB by Sections 2(a), (b), (c)
and (d) of Executive Order No. 93 constitute undue delegation of legislative power
and is therefore unconstitutional. However, he was overruled by the respondent
Executive Secretary in a letter to the Secretary of Finance dated March 30, 1989. The

22
 Executive Secretary, by authority of the President, has the power to modify, alter or
reverse the construction of a statute given by a department secretary.

and laid emphasis on the fact that EO 93 constituted a valid delegation of

legislative power to the FIRB, thus: 16

The latest in our jurisprudence indicates that delegation of legislative power has
become the rule and its non-delegation the exception. The reason is the increasing
complexity of modern life and many technical fields of governmental functions as in
matters pertaining to tax exemptions. This is coupled by the growing inability of the
legislature to cope directly with the many problems demanding its attention. The
growth of society has ramified its activities and created peculiar and sophisticated
problems that the legislature cannot be expected reasonably to comprehend.
Specialization even in legislation has become necessary. To many of the problems
attendant upon present day undertakings, the legislature may not have the
competence, let alone the interest and the time, to provide the required direct and
efficacious, not to say specific solutions.

The inescapable conclusion is that the tax exemption privileges of petitioner had
been validly restored and preserved by said FIRB resolutions.

In passing, since we have delved into Maceda (which happens to involve indirect
taxes), we also make mention of the fact that one of the key issues raised in the
dissenting opinions (in Maceda) was the fact that the ultimate beneficiaries of that
ponencia's affirmance of the tax-exempt status of the National Power Corporation
would have been the oil companies, to which the NPC would assign whatever tax
refund or credit it became entitled to as a result of such ponencia, and not the NPC
itself, nor the government or the public. In fact, it was even anticipated by Mr. Justice
Sarmiento in his dissent that the majority ruling in Maceda would set a precedent not
only for the oil companies but also for the NPC's other suppliers, importers and
contractors. In contrast, the instant case involves direct — taxes — real property
taxes — and any tax exemption with respect thereto will obviously not be
transmissible nor beneficial to any other entity but only to petitioner NPC and,
rightfully, the electricity-consuming public.

Respondents further contend that PD 1177, which was issued for the formulation
and implementation of a national budget, repealed the tax exemption privilege
granted the petitioner under RA 6395, by virtue of the PD's general repealing clause,
worded as follows: 17

(A)ll laws, decrees, executive orders, rules and regulations or parts thereof which are
inconsistent with the provisions of the Decree are hereby repealed and/or modified
accordingly.

This argument is likewise bereft of merit. It will be noted from the foregoing
chronological presentation that Section 10 of PD 938 amended Section 13 of RA
6395, the petitioner's charter, by converting the various tax exemptions therein into a
general exemption from all forms of taxes, direct and indirect. This state of
exemption from taxes subsisted even with the enactment of PD 1931 in 1984. It
cannot then be successfully argued that petitioner's tax-exempt status was revoked
in 1977 by PD 1177. Besides, this Court has consistently held that "(r)epeals by
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 deliberation and
with full knowledge of all existing ones on the subject, it is but reasonable to
conclude that in passing a statute it was not intended to interfere with or abrogate
any former law relating to same matter, unless the repugnancy between the two is
not only irreconcilable, but also clear and convincing, and flowing necessarily from
the language used, unless the later act fully embraces the subject matter of the
earlier, or unless the reason for the earlier act is beyond peradventure removed.

23
Hence, every effort must be used to make all acts stand and if, by any reasonable
construction, they can be reconciled, the later act will not operate as a repeal of the
earlier." 18

Main Issue: Subject Properties

Exempt From Realty Taxes

Aside from the FIRB Resolutions above discussed, there is yet another cogent
reason why the properties in question are not subject to realty tax. Section 40 (a) of
the Real Property Tax Code, PD 464, as amended, expressly exempts them from
such tax. Said section provides:

Exemptions from Real Property Tax. — The exemption shall be as follows:

(a) Real property owned by the Republic of the Philippines or any of its political
subdivisions and any government-owned corporation so exempt by its charter.
Provided, however, that this exemption shall not apply to real property of the
abovenamed entities the beneficial use of which has been granted, for consideration
or otherwise, to a taxable person.

xxx xxx xxx

The exemption is not only legally defensible, but also logically unassailable. The
properties in question comprise the site of the entire Agus II Hydroelectric Power
Plant Complex, which generates and supplies relatively cheap electricity to the island
of Mindanao. These are government properties, wholly owned by petitioner and
devoted directly and solely for public service and utilized in the implementation of the
state policy of bringing about the total electrification of the country at the least cost to
the public, through the development of power from all sources to meet the needs of
industrial development and rural electrification. It can be noted, from RA 6395, PD
380 and PD 938, that petitioner's non-profit character has been maintained
throughout its existence, and that petitioner is mandated to devote all its returns from
capital investment and excess revenues from operations to its expansion. 19 On
account thereof, and to enable petitioner to pay its indebtedness and obligations and
in furtherance of the state policy on electrification and power generation, petitioner
has always been exempted from taxes.

Consequently, the assessment and levy on (as well as the sale of) the properties of
petitioner by respondents were null and void for having been in made in violation of
Section 10 of P.D. 938 and Section 40 (a) of the Real Property Tax Code.

At this juncture, we hasten to point out that the foregoing ruling is solely with respect
to the purported realty tax liabilities of petitioner for the period from June 14, 1984 to
December 31, 1989. We shall not, in this Decision, rule upon the effect (if any) of
Republic Act No. 7160, otherwise) known as the Local Government Code of 1991,
upon petitioner's tax-exempt status; we merely make mention of the fact that the
exemption claimed by petitioner is partly based on PD 464 which, though repealed
by the Local Government Code in its paragraph (c), Section 534, Title Four of Book
IV, 20 was still good law during the period the exemption was being claimed in the
instant case. 21

Nullity of the Auction Sale

of Petitioner's Properties

Inasmuch as the realty tax assessment levied against and auction sale of petitioner's
properties had been premised on respondents' erroneous belief that FIRB
Resolutions Nos. 10-85, 1-86 and 17-87 are void, the judicial declaration of the
validity of said resolutions ipso jure renders such assessment and sale void.

24
The assessment of realty tax being void, petitioner never became delinquent in the
payment of said taxes to respondent province, and the latter never acquired any right
to sell nor to purchase the said properties at auction. In short, there were never any
taxes, delinquent or otherwise, to satisfy. This is borne out by Section 65 of the Real
Property Tax Code, by virtue of which respondent Provincial Treasurer was
authorized to sell real property at auction:

Sec. 65. Notice of delinquency in the payment of the real property tax. — Upon the
real property tax or any installment thereof becoming delinquent, the provincial or city
treasurer shall immediately cause notice of the fact to be posted . . .

Such notice shall specify the date upon which the tax became delinquent, and shall
state . . . that unless the tax and penalties be paid before the expiration of the year for
which the tax is due, or the tax shall have been judicially set aside, the entire
delinquent real property will be sold at public auction, and that thereafter the full title
to the property will be and remain with the purchaser, subject only to the right of the
delinquent taxpayer or any other person in his behalf to redeem the sold property
within one year from the date of sale.

As clearly spelled out above, the power to sell at public auction is premised on
the real property tax or any portion thereof first becoming delinquent. The
properties in this case being exempt from payment of realty taxes, no such
delinquency was possible to begin with.

Further, Section 73 of the Real Property Tax Code, as amended, excludes properties
of the petitioner from advertisement of real properties to be sold at public auction.
Section 73 provides in part:

Sec. 73. Advertisement of sale of real property at public auction. — After the
expiration of the year for which the tax is due, the province or city treasurer shall
advertise the sale at public auction of the entire delinquent real property, except real
property mentioned in subsection (a) of Section forty hereof , to satisfy all the taxes
and penalties due and the costs of sale. . . .

The fact that the telegraphic temporary restraining order issued by this Court was
received by the respondent governor of Lanao del Sur at 2:30 p.m. and by
respondent provincial treasurer at 3:00 p.m. 22 of January 22, 1991, or an hour and
an hour and a half, respectively, after the registration of the sale with the Register of
Deeds of the province, and several hours after the close of the auction sale, is of no
moment. Ordinarily, this Court would have been overjoyed to hear about said
Register of Deeds (or any government functionary for that matter) moving with
blinding speed, except that in this case, it is more than patent that such precipitate
action was prompted not in the least by respondents' anticipation that this Court was
about to act on petitioner's application for a writ of preliminary injunction and/or
temporary restraining order. The respondents' all-too-obvious attempt at rendering
nugatory and inutile any injunctive relief this Court may grant is useless and brings
them only rebuke and condemnation. Clearly, legally and equitably rooted in and
proceeding from the foregoing discussion is the ineludible conclusion that the auction
sale and registration of subject properties are totally bereft of any legal basis and
therefore null and void, and cannot vest title over the said real properties nor the
hydroelectric power plant complex built upon them, in favor of respondent province.

Re: Mr. Justice Davide's Dissent

Mr. Justice Hilario G. Davide, Jr. is suggesting in his Dissenting Opinion that we
reexamine Maceda vs. Macaraig 23 and revert back to the old doctrine in National
Power Corp. vs. Albay. 24 Basically, he is reiterating Mr. Justice Sarmiento's own
dissent in Maceda that Resolutions 10-85 and 1-86 were not valid acts of the FIRB
and thus could not confer any tax exemption on NPC. As these arguments were

25
extensively passed upon by this Court and sufficiently rebutted by Mr. Justice Emilio
A. Gancayco in his ponencia therein, we shall no longer answer them point by point
here. 25

In any event, Mr. Justice Gancayco's 7-5-2 ponencia was strengthened

two years later by what could be termed as "Maceda — Part II." This was the
Resolution 26 penned by Mr. Justice Rodolfo A. Nocon and concurred in by Chief
Justice Narvasa and Justices Feliciano, Bidin, Regalado, Romero, Bellosillo and
Melo. Promulgated on June 8, 1993, it denied the Motion for Reconsideration of
petitioner Maceda for lack of merit, and effectively affirmed the earlier Decision
promulgated on May 31, 1991. Among the most significant holdings in the said
Resolution are the following:

1. A chronological review of the relevant NPC laws, particularly those affecting its tax
exemption privileges, will demonstrate that it has been the lawmaker's intention all
throughout that the NPC be made completely tax exempt from all forms of taxes —
direct and indirect. Such exemption was deemed necessary to enable it to pay its
indebtedness, an indebtedness which mushroomed to P12 billion in total domestic
indebtedness and US$4 billion in total foreign loans as of the time of the issuance of
PD 938.

2. It is clear that NPC had been granted tax exemption privileges for both direct and
indirect taxes under PD 938.

3. While the NPC lost its duty and tax exemptions as a result of the enactment of PD
1177 on July 30, 1977, the same were effectively restored by the Minister of Finance
upon recommendation of the FIRB (via Resolutions Nos. 10-85 and 1- 86) pursuant
to Sec. 2 of PD 1931 issued on June 11, 1984. FIRB Resolutions Nos. 10-85 and 1-
86 were both legally and validly issued by the FIRB pursuant to PD 1931. The FIRB
did not create NPC's tax exemption status but merely restored it.

4. Under Amendment No. 6, former President Marcos could issue decrees not only
when, for any reason, the Interim Batasang Pambansa failed or was unable to act
adequately on any matter which required immediate action, but also when there
existed a grave emergency or a threat thereof, such as the economic crisis triggered
by the loss of confidence in the Philippine government as a result of the Aquino
assassination, which led to the moratorium on and rescheduling of foreign debt
payments. NPC, for one, had US$2.1 billion in foreign debt as a result of the
construction of the Bataan Nuclear Power Plant. In the context of the serious debt-
rescheduling emergency, Marcos was compelled to issue PD 1931 using his
Amendment 6 powers. Clearly then, there was no violation of the rule under the 1973
Constitution that "no law granting a tax exemption shall be passed without the
concurrence of a majority of all the members of the Batasang Pambansa", inasmuch
as PD 1931 was not passed by the said legislative body but by then President
Marcos under his Amendment 6 powers. In brief, then, PD 1931 was validly and
properly issued.

5. There is no problem of "violation of due process" when FIRB Resolutions Nos. 10-
85 and 1-86 were approved by the Minister of Finance after the same were
recommended by him in his capacity as Chairman of FIRB. This was so since NPC
was not asking to be granted tax exemption privileges for the first time, but merely to
have its previous tax exemptions restored. Thus the same person acting in a dual
capacity recommending and approving said tax exemption restorations cannot be
deemed to violate procedural due process.

6. When EO 93 (series of 1986) was issued by President Aquino, she was exercising
both executive and legislative powers. Thus, there was no power delegated to her;
rather, it was she delegating her power to the FIRB, which for purposes of EO 93 is a
delegate of the legislature. Indubitably, there was no problem of former President
Aquino sub-delegating her power. Moreover, EO 93 as a delegating law was
complete in itself and met the standards set in Pelaez vs. Auditor General (15 SCRA
569 [1965]).

26
 7. After all has been said and done, it is clear that the NPC had its tax exemption
privileges restored from June 11, 1984 up to the present.

"Maceda Part II", as mentioned earlier, was passed by a majority of eight justices.
Two justices (JJ. Padilla and Quiason) took no part, while J. Cruz maintained his
original dissent, and JJ. Griño-Aquino and Davide, Jr. joined J. Sarmiento in his
original dissent. That makes eight in favor, four against, with two abstaining. This is
certainly stronger than the seven-five-two vote in the original Maceda decision.
Undoubtedly, the said Decision, as affirmed by the aforementioned Resolution, can
no longer be considered to "carry no persuasive weight".

Epilogue

Quite apart from resolving the legal merits of this case, this Court to wishes to
emphasize — as a matter of judicial policy — the necessity of upholding the
authoritativeness and stability of its pronouncements. While in Albay, we ruled the
subject FIRB Resolutions to be null and void, we reversed ourselves in Maceda I and
fortified such reversal through Maceda II. While we are not necessarily averse to
arguments against, or even criticisms of, our pronouncements, we deem it more
important to stress that the decisions of this Court are reached after due deliberation
upon and consideration of all relevant issues. Thus it would be apropos to quote Mr.
Justice Douglas of the United States Supreme Court:

But beyond that is the problem of stare decisis. The construction given Section 20 (of
the Criminal Code) in the Classic Case (supra note 128, No. 11) formulated a rule of
law which has become the basis of federal enforcement in this important field. The
rule adopted in that case was formulated after mature consideration. It should be
good for more than one day only. We do not have a situation here comparable to
Mahnich vs. Southern S. S. Co., 321 U.S., 96; 88 Law. ed., 561; 64 Sup. Ct., 455
(1944) (supra note 123, No. 19) where we overuled a decision demonstrated to be a
sport in the law and inconsistent with what preceded and what followed. The Classic
case was not the product of hasty action or inadvertence. We add only to the
instability and uncertainty of the law if we revise the meaning of Section 20 to meet
the exigencies of each case coming before us. (Screws vs. United States, 325 U.S.,
112.) 27

Consistent with the above, we frowned upon needless flipflops in Cabagnot vs.
Comelec, 28 where we chided the public respondent, thus:

. . . We take this occasion to remind the Commission to be more judicious in its

actions and decisions and avoid imprudent volte face moves that the undermine the
public's faith and confidence in it.

A denial of the tax-exempt status of NPC, as sought by respondents, would not only
be legally untenable and subversive of doctrinal stability but would also lead to
disastrous practical consequences. It should be noted that in this case, respondent
province has already auctioned off, purchased and caused to be registered in its
name the subject real properties of petitioner on which the Agus II Hydroelectric
Power Plant Complex is built. Thus, should the FIRB resolutions be deemed void,
then the ownership of the auctioned properties including the hydro-electric plant
would be legally vested in respondent province. Additionally, other local government
entities might even be induced to covet and grab other properties of the NPC in the
guise of collecting local taxes. The far-reaching consequence of such eventuality
would not be difficult to imagine. Definitely, it would seriously impair the capacity of
the National Power Corporation to fulfill its statutory mandate to carry out the "total
electrification of the Philippines through the development of power from all sources
to meet the needs of industrial development and rural electrification."

In the end, the Supreme Court has the constitutional duty not only of interpreting and
applying the law in accordance with prior doctrines but also of protecting society from

27
the improvidence and wantonness wrought by needless upheavals in such
interpretations and applications. Interest rei publicae ut finis sit litium. 29

WHEREFORE, the petition is hereby GRANTED. Judgment is hereby rendered:

a) ENJOINING respondents and their agents from selling and disposing of the
subject properties of petitioner;

b) DECLARING the auction sale conducted on January 22, 1991 and the registration
of the same as NULL AND VOID;

c) ORDERING the Register of Deeds of Lanao del Sur to CANCEL the registration of
the auction sale in favor of respondent province; and

d) HOLDING that said properties including the hydroelectric power plant complex
thereat remain in petitioner's ownership and control as if the assessment and auction
sale never took place.

SO ORDERED.

Narvasa, C.J., Romero, Bellosillo, Melo, Puno, Kapunan, Francisco, Hermosisima,

Jr. and Torres, Jr., JJ., concur.

Regalado and Mendoza, JJ., concur in the result.

Separate Opinions
 

DAVIDE, JR., J., dissenting:

I regret I cannot join in the majority opinion. The lapse of more than five (5) years
since Maceda vs. Macaraig (197 SCRA 771 [1991]), where I unqualifiedly joined Mr.
Justice Abraham Sarmiento in his dissent, has not a convinced me that FIRB
Resolutions Nos. 10-85 and No. 1-86 validly restored be withdrawn tax exemption
privileges of the National Power Corporation (NPC). I also submit that FIRB
Resolution No. 17-87 did not validly restore the tax exemption privileges of the NPC
which were withdrawn by Executive Order No. 93.

A reexamination of Maceda vs. Macaraig is hereby respectfully suggested. It may be

stated that the decision in National Power Corp. vs. Albay (186 SCRA 198 [1990])
declaring void FIRB Resolutions Nos. 10-85 and 1-86 was by an overwhelming vote
of eleven, (Sarmiento, J., ponente, with the concurrence of Fernan, C.J., Narvasa
(now C.J.) Melencio-Herrera, Gutierrez, Cruz, Paras, Padilla, Bidin, Cortes,
Medialdea, and Feliciano, JJ., with the latter only in the result) without any dissent
(although Gancayco and Griño-Aquino, JJ., were on leave, and Regalado, J., took
no part). Upon the other hand, the Court was sharply divided in Maceda vs.
Macaraig. Seven (Gancayco, J., ponente, with Narvasa (now C.J.), Melencio-
Herrera, Feliciano, Bidin, Medialdea, and Regalado, JJ., concurring) voted to sustain
the validity of the resolutions. Five (Gutierrez, Cruz, Paras, Sarmiento, and Davide,

28
Jr., JJ.) dissented. Two of those who concurred with Justice Sarmiento in National
Power Corporation vs. Albay (Fernan, C.J., and Padilla, J.) took no part for the
reasons stated therein. Thus, the latter case carries no persuasive weight.

In his dissent in Maceda, Mr. Justice Sarmiento held the view that FIRB Resolutions
Nos. 10-85 and 1086 are null and void because they were not valid acts of the FIRB,
considering that the former was signed only by Alfredo Pio de Roda, Jr., in his
concurrent capacities as Acting Minister (Secretary) of Finance and Acting Chairman
of the FIRB, while the latter was signed only by Cesar E.A. Virata in his concurrent
capacities as Minister (Secretary) of Finance and Chairman of the FIRB. An
amplification thereon is in order.

Section 2 of P.D. No. 776 provides for the creation, composition, and functions of the
FIRB, thus:

Sec. 2. A Fiscal Incentives Review Board is hereby created for the purpose of
determining what subsidies and tax exemptions should be modified, withdrawn,
revoked or suspended, which shall be composed of the following officials:

Chairman — Secretary of Finance

Members — Secretary of Industry
Director of the National Economic
and Development Authority
Commissioner of Internal Revenue
Commissioner of Customs

The Board may recommend to the President of the Philippines and for reasons of
compatibility with the declared economic policy, the withdrawal, modification,
revocation or suspension of the enforceability of any of the abovecited statutory
subsidies or tax exemption grants, except those granted by the Constitution. To attain
its objectives, the Board may require the assistance of any appropriate government
agency or entity. The Board shall meet once a month, or oftener at the call of the
Secretary of Finance.

Section 1 thereof grants the FIRB the power to modify any and all tax exemption
benefits and privileges except those enumerated therein. It reads:

Sec. 1. Any and all tax exemption benefits and privileges validly acquired, exercised
and granted to individuals, associations, corporations and entities, and all laws,
decrees, orders or ordinances giving rise thereto, may now be modified by the Fiscal
Incentives Review Board except those embraced and expressly provided hereunder,
to wit:

1. Constitutional provisions

2. International comity or treaty

3. National Internal Revenue Code as of its amendment by PD 34

4. Tariff and Customs Code as of its amendment by PD 426

5. Local Tax Code as of its amendment by PD 426

6. Statutory prescriptions bearing on —

a. Export Processing Zone Authority

b. BOI Registered industries

c. Multi-national corporations

29
 d. Service contracts on oil explorations

From these provisions, it is obvious that the FIRB must act as a board in the exercise
of its powers or in the performance of its functions. The board, which is composed of
five members, with the Secretary of Finance as the Chairman, can validly transact
business only at a meeting attended by the required quorum (which is presumed to
be the majority of the members, i.e., three), and a vote of the majority of those
constituting the quorum would be necessary for the validity of any and all board acts
or resolutions. Also, since the chairmanship of the FIRB is vested in a specific
person — the Secretary of Finance — and the decree provides for no alternate for
him, i.e., any one acting as such, then no one else other than the duly appointed
Secretary of Finance can sit and act as Chairman of the FIRB. Clearly, Resolution
No. 10-85 is null and void for having been signed only by Alfredo Pio de Roda, Jr., in
his concurrent capacities as merely Acting Minister (Secretary) of Finance and
Acting Chairman of the FIRB, and not by the board itself . Resolution No. 1-86
attained no better status, considering that it is not a board resolution, although
signed by the duly appointed Minister (Secretary) of Finance. Neither Mr. De Roda
nor Mr. Virata could pretend, even if seriously, to be the FIRB.

Resolutions Nos. 10-85 and 1-86 were presumably enacted pursuant to FIRB's
authority under Section 2 of P.D. No. 1931, which provides:

Sec. 2. The President of the Philippines and/or the Minister of Finance, upon
recommendation of the Fiscal Incentives Review Board created under Presidential
Decree No. 776, is hereby empowered to restore, partially or totally, the exemptions
withdrawn by Section 1 above, or otherwise revise the scope of coverage of any
applicable tax and duty . . . .

Any restoration of the tax exemption privilege would, in effect, be a new grant of the
privilege, since the earlier withdrawal thereof was by virtue of a complete law of
withdrawal and not merely by one suspending the effects of the prior exemption.

The authority granted to the President in Section 2 of P.D. No. 1931 to restore the
tax exemption privilege is unnecessary or a surplusage. At the time P.D. No. 1931
was enacted, then President Marcos could exercise legislative power under the
unlamented Amendment No. 6 of the 1973 Constitution. Paragraph 4 of Section 17,
Article VIII of said Constitution provided as follows:

(4) No law granting any tax exemption shall be passed without the concurrence of a
majority of all the Members of the Batasang Pambansa.

Because then President Marcos exercised legislative power, he could, as he

did several times, act as the Batasang Pambansa and grant anew tax
exemptions.

However, the grant to the Minister (Secretary) of Finance of the authority or power to
restore tax exemption under the same Section 2 of P.D. 1931 is an invalid delegation
of a legislative power. I agree, in this connection, with the thesis of Mr. Justice Cruz
in his dissent in Maceda vs. Macaraig.

The aforequoted paragraph 4 of Section 17, Article VIII of the 1973 Constitution,
reproduced in paragraph 4 of Section 28 of Article VI of the present Constitution,
leaves no room for doubt that it is mandatory in character. It requires an absolute
majority of ALL the Members of the Batasang Pambansa to grant tax exemption. The
power to grant tax exemption, being merely corollary to the legislature's inherent
power to tax, cannot be delegated except to those to whom the power to tax has
been granted or delegated. It is said:

30
 The power to exempt may be delegated by the legislature to the same extent it may
itself exercise the power to exempt. Thus, the legislature, where the Constitution does
not forbid, has authority to delegate to municipalities the power to exempt property
from taxation to the same extent the legislature has power to exempt (COOLEY, The
Law on Taxation, vol. II [1924], Section 669, p. 1398).

Under Section 5, Article XI of the 1973 Constitution, only local government

units were granted the power to create their own sources of revenue and to
levy taxes, but subject to such limitations as may be provided by law. Section
5, Article X of the present Constitution strengthens further the power of local
government units to tax by mandating that the guidelines and limitations which
Congress may impose must be consistent with the basic policy of local
autonomy and that the taxes, fees, and charges levied by the local
government units shall accrue exclusively to them. Section 192 of the Local
Government Code of 1991 specifically empowers local government units to
grant, through ordinances duly approved, tax exemptions, incentives, or
reliefs under such terms and conditions as they may deem necessary. It has
thus been said that.

The power of taxation is inherent in the State. Primarily vested in the national
legislature, it may now also be exercised by the local legislative bodies, no longer by
virtue of a valid delegation as before but pursuant to a direct authority conferred by
Article X, Section 5, of the Constitution. . . (CRUZ, Isagani, A., Constitutional Law
[1991], 84).

No one dares argue that the Minister (Secretary) of Finance was ever constituted as
a local government unit or given the powers, prestige, and ascendancy of a local
government unit to be able to exercise the power to tax or the corollary power to
grant tax exemptions.

II

I shall now turn to FIRB No. 17-87, which purports to restore the tax exemption
privileges of NPC that were withdrawn by Executive Order No. 93 of President
Corazon C. Aquino dated 17 December 1986. The said withdrawal took effect on 10
March 1987. FIRB Resolution No. 17-87 was issued on 24 June 1987 under FIRB's
authority conferred by Section 2 of EO No. 93, which pertinently provides as follows:

Sec. 2. The Fiscal Incentives Review Board created under Presidential Decree No.
776, as amended, is hereby authorized to:

(a) Restore tax and/or duty exemptions withdrawn hereunder in whole or in part;

xxx xxx xxx

Then Secretary Macaraig approved on 5 October 1987 FIRB Resolution No.

17-87.

Under EO No. 93 the FIRB cannot, by itself, restore tax exemptions. Section 2
thereof should be read together with the preceding Section 1(f), which reads:

Sec. 1. The provisions of any general or special law to the contrary notwithstanding,
all tax and duty incentives granted to government and private entities are hereby
withdrawn, except:

xxx xxx xxx

(f) those approved by the President upon the recommendation of the Fiscal
Incentives Review Board.

31
 The last paragraph of Section 2 of P.D. No. 776 earlier quoted should also be
considered. Taken together, the FIRB can only recommend. It was precisely
for this reason that FIRB Res. No. 17-87 was confirmed and approved by the
President through Acting Executive Secretary Macaraig. Without the approval,
FIRB Res. No. 17-87 would be absolutely ineffective. It is the Presidential
approval which could give life then to the Resolution as a restoration of tax
exemption privilege or, more correctly, as a new grant of tax exemptions.

But, was the Presidential approval valid?

I respectfully submit that it was not. At the time FIRB Res. No. 17-87 was approved,
the first Congress under the 1987 Constitution was already convened and in session.
It was convened on the fourth Monday of July 1987 Sec. 15, Article VI, Constitution)
following the first election under the constitution of the Members of Congress (Sec.
1, Article XVIII). Only Congress then could have validly restored tax exemption
privileges pursuant to Section 28 (4), Article VI of the Constitution. It would have
been entirely different if the Presidential approval of FIRB Res. No. 17-87 was made
before the convening of the first Congress, because, by then, President Aquino could
still exercise legislative powers pursuant to Section 6 Article XVIII of the Constitution,
which provides:

Sec. 6. The incumbent President shall continue to exercise legislative powers until
the first Congress convened.

III

Resort to Section 40(a) of Real Property Tax Code (P.D. No. 464), another ground
relied upon in the ponencia why the properties in question are not subject to real
property tax, provides no relief to petitioner. The tax exemption privilege granted by
the said Code was among those withdrawn by P.D. No. 1931. Section 1 of the latter
expressly provides:

The provisions of special or general law to the contrary notwithstanding, all

exemptions from the payment of duties, taxes, fees, imposts and other charges
heretofore granted in favor of government-owned or controlled corporations including
their subsidiaries, are hereby withdrawn.

Its repealing clause, paragraph 5, provides as follows:

The provisions of President Decree No. 1177 as well as all other laws, decrees,
executive orders, administrative orders, rules, regulations or parts thereof which are
inconsistent with this Decree are hereby repealed, amended or modified accordingly.

I vote then to DENY the instant petition.

Padilla and Vitug, JJ., concur.

G.R. No. L-12446             May 20, 1960

ELISEO SILVA, petitioner,

vs.
BELEN CABRERA, respondent.

32
Rodolfo M. Medina for petitioner.
Arsenio M. Cabrera for respondent.

CONCEPCION, J.:

Petitioner Eliseo Silva seeks the review of a decision of the Public Service Commission,
dated September 20, 1956, as amended on June 5, 1957, granting respondent Belen Cabrera a
certificate of public convenience to install and operate a 5-ton ice plant in the City of Lipa,
and to sell her ice in said City, and in the municipalities of Cuenca, Alitagtag and Ibaan,
province of Batangas, for a period of fifteen (15) years from January 7, 1950.

Cabrera's application, filed on June 1, 1949, was a for a 15-ton ice plant and covered the
municipalities of Sto. Tomas, Tanuaan, Cuenca, Rosario, Alitagtag, San Juan de Bolbok and
Ibaan, province of Batangas. Oppositions were filed by: (1) Eliseo Silva, who operates a 5-
ton ice plant in the City of Lipa, with authority to sell his ice therein and in the municipalities
of Malvar, Tanauan, Talisay and Sto. Tomas, Batangas; (2) Antonio Zaragosa, who operates
a 10-ton ice plant in San Juan de Bolbok, Batangas, with authority to sell his ice therein and
in the municipalities of Rosario, province of Batangas, and Candelaria, province of Quezon;
and (3) Leoncio S. Opulencia and Leonor Lat, who are, likewise, authorized to operate a 5-
ton ice plant in Tanauan, Batangas.

On July 14, 1949, Cabrera excluded the municipalities of San Juan de Bolbok and Rosario
from her application, whereupon Antonio Zaragosa withdrew his aforementioned opposition.
Subsequently, Cabrera and the remaining oppositors presented their evidence before the
Chief, Legal Division, Public Service Commission, Atty. Antonio Aspillera, who had been
delegated therefor by Public Service Commissioner Feliciano Ocampo, and thereafter, or on
January 7, 1950, a decision was rendered authorizing Cabrera to operate a 10-ton ice plant in
Lipa City. On appeal taken by Silva, this decision was, on March 19, 1951, annulled by the
Supreme Court (in G.R. No. L-3629),1 which ordered a rehearing before either the
Commission en banc or one of the Public Service Commissioners delegated therefor by the
Commission, upon the ground that, under the Public Service Act then in force, such function
could not be otherwise delegated.

Meanwhile, or during the pendency of the appeal, Cabrera had installed her 10-ton ice plant
and started operation on March 15, 1950. After the rendition of said decision of the Supreme
court, or on April 11, 1951, Cabrera applied for a provisional permit to continue operating her
ice plant, to which Silva objected. On May 31, 1951, at the hearing of this incident and
rehearing of the case, Commissioner Ocampo allowed Cabrera, over the objection of Silva, to
re-submit the evidence formerly introduced before Atty. Aspillera. On July 26, 1951,
Commissioner Ocampo granted Cabrera's petition for a provisional permit, subject to
cancellation or revocation at any time and without prejudice to such decision as may
eventually be rendered on the merits of the case. A reconsideration of this order having been
denied, on October 17, 1951, Silva applied from the Supreme Court (G.R. No. L-5162)2 for a
writ of certiorari for the purpose of having another rehearing and of annulling said order of
July 26, 1951, as well as of securing a writ of preliminary injunction to restrain Cabrera from
operating her ice plant, upon the ground that the admission of the evidence already
introduced before Atty. Aspillera violated the decision of said Court in case G.R. No. L-3629,
and was, therefore, null and void. By a decision, dated January 31, 1952, we denied said
petition for certiorari and ordered a trial de novo, in line with our decision in case G.R. No.
L-3629, for the reason that the Commission had not adhered thereto in admitting said
evidence for the determination on the merits of the case, but had not infringed any law in
considering said evidence for the resolution of the petition for a provisional permit. Thus, the
order of July 26, 1951 granting the same was, in effect, affirmed.

Subsequently a trial de novo, at which both parties introduced their respective evidence, was
held. In the meantime, Cabrera had further excluded from her application the municipalities
of Tanauan and Sto. Tomas, Batangas, to which the opposition of Leoncio S. Opulencia and

33
Leonor Lat referred. On September 20, 1956, the Commission rendered a decision granting
Cabrera a certificate of public convenience to install and operate a 10-ton ice plant in the City
of Lipa and to sell her ice in that city and in the municipalities of Cuenca, Alitagtag and
Ibaan, province of Batangas, for a period of fifteen (15) years from January 7, 1950. On
motion for reconsideration and new trial filed by Silva on or about October 26, 1956, the
Commission, by an order of June 5, 1957, denied the new trial prayed for, but modified its
decision of September 20, 1956 "in the sense that applicant Belen Cabrera shall produce in
her ice plant in Lipa City not more than 5 tons of ice daily instead of the 10 tons there
authorized". The case is now before us for the third time on appeal taken by Silva, who
maintains that:

The Public Service Commission erred in granting the certificate of public

convenience to the respondent since there is no evidence to reasonably support the
decision and the order of June 5, 1957. In fact, the meager evidence adduced by the
respondent as against the overwhelming evidence of the petitioner showing the lack of
necessity for the installation of an additional plant of any capacity in Lipa City in
addition to the newly discovered evidence of the petitioner which the Public Service
Commission ignored, when construed by the Public Service Commission as justifying
the grant of a certificate of Public Convenience to the respondent, constitutes an abuse
of discretion to the prejudice and detriment of petitioner's business, which is entitled
to reasonable protection against ruinous competition. (Petitioner's brief, pp. 5-6.)

The issue thus raised by Silva is one of fact, which hinges on the credibility and weight of the
evidence introduced at the trial de novo. In this connection, the decision appealed from says:

Applicant's evidence is to the effect that Lipa is a growing and well populated city
with new commercial establishments which every day a considerable supply of ice
have to be consumed; that the ice plant of the oppositor which has produced only five
tons since it was installed is inadequate for the requirements of the public; that the
people of Lipa have to get their ice from ice dealers and the latter have to go to other
towns to buy their ice and this results not only in a higher price paid by Lipa people
for the ice which they need but also in an irregular and undependable service; that not
only the people of Lipa but also those of the towns which are proposed to be served
have a great demand for ice because these towns are close to Lipa and ice service
from Lipa is easy if there were enough supply of ice in the City of Lipa; that daily but
more particularly on special occasions when there is an extraordinary demand for ice,
there is no way of obtaining this very necessary commodity; that many people
likewise go to Lipa every day for business, or personal reasons and they too add to the
number of people who must be provided with ice; that there is no ice plant either in
Sto. Tomas, Cuenca or Alitagtag notwithstanding the big demand for ice in these
towns; that applicant has operated her plant continuously and the production of her
plant has been availed of totally except on occasions when the plant due too
breakdown was not able to operate; that the demand for ice in Lipa and the other
towns can easily reach up to 20 or 25 tons so that the present production of 5 tons is
grossly inadequate; that applicant has continued to invest large amounts in the repair
and improvement of her ice plant in order to be able to operate the same to provide
the public with the ice that it needs and that her actual investment on the plant is over
P100,000, and that public interests and convenience will be promoted by the grant of
a regular certificate to her to operate the ice plant in Lipa.

The evidence of the oppositor, on the other hand, is to the effect that there is no such
demand for ice in Lipa and the other towns as testified to by applicant's witnesses but
even before the war and up to the present time oppositor has never been able to sell
the total output of his 5-ton plant; that there are really no businesses in Lipa which
require the use of ice; that applicant's plant itself frequently stops operation due to the
fact that there is no demand for ice is so little that there is no need for authorizing a
new plant in Lipa to supply the requirements of these other towns; that in Tanauan

34
 now there is a 10-ton plant operated by Opulencia and Lat and this plant together with
that of the oppositor provides all the ice that the public of Lipa and the other towns so
that there is no necessity for the operation of applicant's plant.

It appears from the evidence that Lipa City and the towns of Tanauan, Cuenca,
Alitagtag and Ibaan have a total population of over 125,000 people. Lipa alone has a
population of over 50,000. Oppositor Silva has a 5-ton plant and is authorized to sell
in Lipa, Malvar, Tanauan, Sto. Tomas and Talisay. Oppositor's authorized territory
would concur with that proposed by the applicant in the towns of Lipa, Sto. Tomas
and Tanauan. Our records show that there is now a 10-ton plant in Tanauan operated
by Opulencia and Lat and this operator is authorized, among other towns, to sell in
Tanauan, Sto. Tomas and Lipa. We have gone over the evidence presented by both
parties at the rehearing very carefully and are of the opinion that the preponderance
thereof establishes the need for permitting the applicant to operate a 10-ton plant in
Lipa. We are convinced that a 5-ton production in Lipa can not be sufficient for the
ice needs of the public considering the population of over 50,000 people of the City.
There is also the population of over 60,000 people in the other towns of Alitagtag,
Ibaan and Cuenca, without counting the population of Tanauan which is now served
by an ice plant in that town. We are convinced that the operation of applicant's 10-ton
plant in Lipa will undoubtedly result in promoting public interests and convenience
because thereby the ice requirements of the public which can not be met by the
present plant will be adequately served. While it is true that ice is brought to Lipa by
ice dealers, we are inclined to believe the evidence of the applicant that the service of
ice dealers results in higher price paid by the consumers and at the same time is not
reliable and regular because these dealers do not have the obligation of bringing ice
regularly. Undoubtedly an additional plant in Lipa to serve the proven needs of the
public will be more beneficial and convenient to the people of Lipa than to make them
rely on service of ice dealers. We believe, however, that applicant should only be
authorized a 10-ton plant and that the town of Tanauan should not be included in her
territory inasmuch as there is already in Tanauan a 10-ton ice plant, and we do not
believe that with a 10-ton ice plant, in Tanauan, it would be necessary for the
applicant to send her ice to that town.

Without denying the existence of evidence on the facts thus found by the Commission, it is
urged that the proof to the contrary introduced by appellant Silva is more weighty than that of
appellee Cabrera. It is well settled, however, that the findings of fact made by the
Commission are conclusive upon this Court, as long as there is evidence reasonably
supporting such findings (Javellana vs. La Paz Ice Plant & Cold Storage Co., 37 Off. Gaz.
3110; Phil. Ship-owners' Association vs. Public Utility Commissioner, 43 Phil., 328;
Ynchausti Steamship Co vs. Public Utility Commissioner, 44 Phil., 362; San Miguel Brewery
vs. Lapi, 53 Phil. 539; Ice and Cold Storage Industries of the Phil. vs. Valero, et al., 85 Phil.,
7; Halili et al. vs. Isip, L-2458 and L-2476, January 28, 1950; Lopez vs. Batangas Trans. Co.,
et al., 105 Phil., 649., 56 Off. Gaz. [20]3646) A.L. Ammen Trans. Co. vs. Soriano, L-12350,
May 26, 1959; Bachrach Motor Co. vs. Guico, 106 Phil., 118; 57 Off. Gaz. [24] 4433; and the
evidence on record, to our mind, are sufficient to bear out the conclusions of fact made in the
decision appealed from.

Indeed, the issue in this appeal boils down to whether the needs of the public in the area
covered by the decision appealed from are sufficiently met by the ice plant operators therein.
Apart from the facts adverted in the appealed decision, it appears that in April, 1947, Silva
had applied for authority to increase the capacity of his ice plant, from five (5) tons to ten
(10) tons daily, upon the allegation that an increased production was demanded by the "rapid
rehabilitation and advancement of the fishing industry in and around Taal Lake; plus the
increased volume of agricultural products harvested in the province of Batangas and ...
brought to Lipa City" as the "province's commercial center," as well as by "the big increase of
population in said municipality and in the municipalities of Malvar, Tanauan, Sto. Tomas and
Talisay." This application (Case No. 24971) was dismissed on October 24, 1947, on account

35
of Silva's failure to appear on the date set for the hearing thereof. However, soon after
Cabrera had docketed her application, which is the subject matter of his appeal, or on June
13, 1949, Silva filed another application (Case No. 50513) for authority to increase the
capacity of his ice plant from five (5) to fifteen (15) tons, on grounds substantially identical
to those set forth in his application in Case No. 24971. In short, therefore, the very appellant
had urged the Public Service Commission to believe that the ice plant operators in the City of
Lipa and in the municipalities mentioned in the decision appealed from can not sufficiently
supply the needs of the public therein.

It may not be amiss to note, also, that, in view of the number of years this case had been
pending and of the incidents decided in relation thereto, the Commission had more than the
average opportunity and time to ascertain and elucidate the facts pertinent thereto. That it
actually gave due consideration to the opposition filed by appellant Silva and the evidence
introduce by him is attested by the circumstance that in the light of the new evidence he
discovered, after the rendition of the decision of September 20, 1956, and disclosed in his
motion for reconsideration and new trial, the Commission modified said decision by reducing
to one-half (1/2) the amount of ice therein authorized to be produced by appellee Belen
Cabrera.

Wherefore, the decision appealed from is hereby affirmed, with costs against petitioner,
Eliseo Silva. It so ordered.

Paras, C. J., Bengzon, Padilla, Montemayor, Bautista Angelo, Labrador, Barrera, and
Gutierrez David, JJ., concur.

G.R. No. L-22301             August 30, 1967

THE PEOPLE OF THE PHILIPPINES, plaintiff-appellee,

vs.
MARIO MAPA Y MAPULONG, defendant-appellant.

Francisco P. Cabigao for defendant-appellant.

Office of the Solicitor General Arturo A. Alafriz, Assistant Solicitor General F. R. Rosete and
Solicitor O. C. Hernandez for plaintiff-appellee.

FERNANDO, J.:

The sole question in this appeal from a judgment of conviction by the lower court is whether
or not the appointment to and holding of the position of a secret agent to the provincial
governor would constitute a sufficient defense to a prosecution for the crime of illegal
possession of firearm and ammunition. We hold that it does not.

The accused in this case was indicted for the above offense in an information dated August
14, 1962 reading as follows: "The undersized accuses MARIO MAPA Y MAPULONG of a
violation of Section 878 in connection with Section 2692 of the Revised Administrative
Code, as amended by Commonwealth Act No. 56 and as further amended by Republic Act
No. 4, committed as follows: That on or about the 13th day of August, 1962, in the City of
Manila, Philippines, the said accused did then and there wilfully and unlawfully have in his
possession and under his custody and control one home-made revolver (Paltik), Cal. 22,
without serial number, with six (6) rounds of ammunition, without first having secured the
necessary license or permit therefor from the corresponding authorities. Contrary to law."

36
When the case was called for hearing on September 3, 1963, the lower court at the outset
asked the counsel for the accused: "May counsel stipulate that the accused was found in
possession of the gun involved in this case, that he has neither a permit or license to possess
the same and that we can submit the same on a question of law whether or not an agent of the
governor can hold a firearm without a permit issued by the Philippine Constabulary." After
counsel sought from the fiscal an assurance that he would not question the authenticity of his
exhibits, the understanding being that only a question of law would be submitted for decision,
he explicitly specified such question to be "whether or not a secret agent is not required to get
a license for his firearm."

Upon the lower court stating that the fiscal should examine the document so that he could
pass on their authenticity, the fiscal asked the following question: "Does the accused admit
that this pistol cal. 22 revolver with six rounds of ammunition mentioned in the information
was found in his possession on August 13, 1962, in the City of Manila without first having
secured the necessary license or permit thereof from the corresponding authority?" The
accused, now the appellant, answered categorically: "Yes, Your Honor." Upon which, the
lower court made a statement: "The accused admits, Yes, and his counsel Atty. Cabigao also
affirms that the accused admits."

Forthwith, the fiscal announced that he was "willing to submit the same for decision."
Counsel for the accused on his part presented four (4) exhibits consisting of his appointment
"as secret agent of the Hon. Feliciano Leviste," then Governor of Batangas, dated June 2,
1962;1 another document likewise issued by Gov. Leviste also addressed to the accused
directing him to proceed to Manila, Pasay and Quezon City on a confidential mission;2 the
oath of office of the accused as such secret agent,3 a certificate dated March 11, 1963, to the
effect that the accused "is a secret agent" of Gov. Leviste.4 Counsel for the accused then
stated that with the presentation of the above exhibits he was "willing to submit the case on
the question of whether or not a secret agent duly appointed and qualified as such of the
provincial governor is exempt from the requirement of having a license of firearm." The
exhibits were admitted and the parties were given time to file their respective
memoranda.1äwphï1.ñët

Thereafter on November 27, 1963, the lower court rendered a decision convicting the accused
"of the crime of illegal possession of firearms and sentenced to an indeterminate penalty of
from one year and one day to two years and to pay the costs. The firearm and ammunition
confiscated from him are forfeited in favor of the Government."

The only question being one of law, the appeal was taken to this Court. The decision must be
affirmed.

The law is explicit that except as thereafter specifically allowed, "it shall be unlawful for any
person to . . . possess any firearm, detached parts of firearms or ammunition therefor, or any
instrument or implement used or intended to be used in the manufacture of firearms, parts of
firearms, or ammunition."5 The next section provides that "firearms and ammunition
regularly and lawfully issued to officers, soldiers, sailors, or marines [of the Armed Forces of
the Philippines], the Philippine Constabulary, guards in the employment of the Bureau of
Prisons, municipal police, provincial governors, lieutenant governors, provincial treasurers,
municipal treasurers, municipal mayors, and guards of provincial prisoners and jails," are not
covered "when such firearms are in possession of such officials and public servants for use in
the performance of their official duties."6

The law cannot be any clearer. No provision is made for a secret agent. As such he is not
exempt. Our task is equally clear. The first and fundamental duty of courts is to apply the
law. "Construction and interpretation come only after it has been demonstrated that
application is impossible or inadequate without them."7 The conviction of the accused must
stand. It cannot be set aside.

37
Accused however would rely on People v. Macarandang,8 where a secret agent was acquitted
on appeal on the assumption that the appointment "of the accused as a secret agent to assist in
the maintenance of peace and order campaigns and detection of crimes, sufficiently put him
within the category of a "peace officer" equivalent even to a member of the municipal police
expressly covered by section 879." Such reliance is misplaced. It is not within the power of
this Court to set aside the clear and explicit mandate of a statutory provision. To the extent
therefore that this decision conflicts with what was held in People v. Macarandang, it no
longer speaks with authority.

Wherefore, the judgment appealed from is affirmed.

G.R. Nos. 24116-17           August 22, 1968

CEBU PORTLAND CEMENT COMPANY, Plaintiff-Appellant, vs. MUNICIPALITY

OF NAGA, CEBU, ET AL., Defendants-Appellees.

FERNANDO, J.: chanrobles virtual law library

In two separate actions, plaintiff-appellant Cebu Portland Cement Company sought to test the
validity of the distraint and thereafter the sale at public auction by the principal defendant-
appellee, Municipality of Naga, Cebu, of 100,000 bags of cement for the purpose of
satisfying its alleged deficiency in the payment of the municipal license tax for 1960,
municipal license tax for 1961 as well as the penalty, all in the total sum of P204,300.00. The
lower court rendered a joint decision sustaining the validity of the action taken by defendant-
appellee Municipality of Naga. The case is now before us on appeal. We
affirm.chanroblesvirtuallawlibrary
chanrobles virtual law library

According to the appealed decision: "From all the evidence, mostly documentary, adduced
during the hearing the following facts have been established. The efforts of the defendant
Treasurer to collect from the plaintiff the municipal license tax imposed by Amended
Ordinance No. 21. Series of 1959 on cement factories located within the Municipality of
Naga, Cebu, have met with rebuff time and again. The demands made on the taxpayer ... have
not been entirely successful. Finally, the defendant Treasurer decided on June 26, 1961 to
avail of the Civil remedies provided for under Section 2304 of the Revised Administrative
Code and gave the plaintiff a period of ten days from receipt thereof within which to settle
the account, computed as follows ...: Deficiency Municipal License Tax for 1960 -
P80,250.00; Municipal License Tax for 1961 - P90,000.00; and 20% Penalty - P34,050.00,
stating in exasperation, "This is our last recourse as we had exhausted all efforts for an
amicable solution of our problem." "1 chanrobles virtual law library

It was further shown: "On July 6, 1961, at 11:00 A.M., the defendant Treasurer notified the
Plant Manager of the plaintiff that he was "distraining 100,000 bags of Apo cement in
satisfaction of your delinquency in municipal license taxes in the total amount of
P204,300.00" ... This notice was received by the acting officer in charge of the plaintiff's
plant, Vicente T. Garaygay, according to his own admission. At first, he was not in accord

38
with the said letter, asking the defendant Treasurer for time to study the same, but in the
afternoon he [acknowledged the] distraint ..." 2 chanrobles virtual law library

As was noted in the decision, the defendant Treasurer in turn "signed the receipt for goods,
articles or effects seized under authority of Section 2304 of the Revised Administrative Code,
certifying that he has constructively distrained on July 6, 1961 from the Cebu Portland
Cement Company at its plant at Tina-an, Naga, Cebu, 100,000 bags of Apo cement in tanks,
and that "the said articles or goods will be sold at public auction to the highest bidder on July
27, 1961, and the proceeds thereof will be utilized in part satisfaction of the account of the
said company in municipal licenses and penalties in the total amount of P204,300.00 due the
Municipality of Naga Province of Cebu" ..."3 chanrobles virtual law library

The lower court likewise found as a fact that on the same day, July 6, 1961, the municipal
treasurer posted the notice of sale to the effect that pursuant to the provisions of Section 2305
of the Revised Administrative Code, he would sell at public auction for cash to the highest
bidder at the main entrance of the municipal building of the Municipality of Naga, Province
of Cebu, Philippines on the 27th day of July, 1961, at 9 o'clock in the morning, the property
seized and distrained or levied upon from the Cebu Portland Cement Company in satisfaction
of the municipal license taxes and penalties in the amount of P204,300.00, specifying that
what was to be sold was 100,000 bags of Apo cement.4 No sale, as thus announced, was held
on July 27, 1961. It was likewise stated in the appealed decision that there was stipulation by
the parties to this effect: "1. The auction sale took place on January 30, 1962, ..."5 chanrobles virtual law library

In this appeal from the above joint decision, plaintiff-appellant Cebu Portland Cement
Company upholds the view that the distraint of the 100,000 bags of cement as well as the sale
at public auction thereafter made ran counter to the law. As earlier noted, we do not see it that
way.chanroblesvirtuallawlibrary
chanrobles virtual law library

1. On the validity of the distraint - In the first two errors assigned, plaintiff-appellant submits
as illegal the distraint of 100,000 bags of cement made on July 6, 1961. Its contention is
premised on the fact that in the letter of defendant-appellee dated June 26, 1961, requiring
plaintiff-appellant to settle its account of P204,300.00, it was given a period of 10 days from
receipt within which it could pay, failure to do so being the occasion for the distraint of its
property. It is now alleged that the 10-day period of grace was not allowed to lapse, the
distraint having taken place on July 6, 1961.chanroblesvirtuallawlibrary chanrobles virtual law library

It suffices to answer such a contention by referring to the explicit language of the law.
According to the Revised Administrative Code: "The remedy by distraint shall proceed as
follows: Upon the failure of the person owing any municipal tax or revenue to pay the same,
at the time required, the municipal treasurer may seize and distrain any personal property
belonging to such person or any property subject to the tax lien, in sufficient quantity to
satisfy the tax or charge in question, together with any increment thereto incident to
delinquency, and the expenses of the distraint."6 chanrobles virtual law library

The clear and explicit language of the law leaves no room for doubt. The municipal treasurer
"may seize and distrain any personal property" of the individual or entity subject to the tax
upon failure "to pay the same, at the time required ..." There was such a failure on the part of
plaintiff-appellant to pay the municipal tax at the time required. The power of the municipal
treasurer in accordance with the above provision therefore came into play.chanroblesvirtuallawlibrary chanrobles virtual law library

Whatever might have been set forth in the letter of the municipal treasurer could not change
or amend the law it has to be enforced as written. That was what the lower court did. What
was done then cannot be rightfully looked upon as a failure to abide by what the statutory
provision requires. Time and time again, it has been repeatedly declared by this Court that
where the law speaks in clear and categorical language, there is no room for interpretation.
There is only room for application. That was what occurred in this case.7 chanrobles virtual law library

39
2. On the validity of the auction sale - The validity of the auction sale held on January 30,
1962 is challenged in the next two errors assigned as allegedly committed by the lower court.
Plaintiff-appellant's argument is predicated on the fact that it was not until January 16, 1962
that it was notified that the public auction sale was to take place on January 29, 1962. It is its
view that under the Revised Administrative Code8 the sale of the distrained property cannot
take place "less than twenty days after notice to the owner or possessor of the property
[distrained] ... and the publication or posting of such notice." chanrobles virtual law library

Why such a contention could not prosper is explained clearly by the lower court in the
appealed decision. Thus: "With respect to the claim that the auction sale held on January 30,
1962 pursuant to the distraint was null and void for being contrary to law because not more
than twenty days have elapsed from the date of notice, it is believed that the defendant
Municipality of Naga and Municipal Treasurer of Naga have substantially complied with the
requirements provided for by Section 2305 of the Revised Administrative Code. From the
time that the plaintiff was first notified of the distraint on July 6, 1961 up to the date of the
sale on January 30, 1962, certainly, more than twenty days have elapsed. If the sale did not
take place, as advertised, on July 27, 1961, but only on January 30, 1962, it was due to the
requests for deferment made by the plaintiff which unduly delayed the proceedings for
collection of the tax, and the said taxpayer should not be allowed now to complain that the
required period has not yet elapsed when the intention of the tax collector was already well-
publicized for many months."9 The reasonableness of the above observation of the lower
court cannot be disputed. Under the circumstances, the allegation that there was no
observance of the twenty-day period hardly carries conviction.chanroblesvirtuallawlibrary chanrobles virtual law library

The point is further made that the auction sale took place not on January 29, 1962, as stated in
the notice of sale, but on the next day, January 30, 1962. According to plaintiff-appellant:
"On this score alone, the sale ..., was illegal as it was not made on the time stated in the
notice." 10
chanrobles virtual law library

There is no basis to sustain such a plea as the finding of the lower court is otherwise. Thus:
"On January 16, 1962, the defendant Treasurer informed Garaygay that he would cause the
readvertisement for sale at public auction of the 100,000 bags of Apo cement which were
under constructive distraint ... On January 19, 1962, the said defendant issued the
corresponding notice of sale, which fixed January 30, 1962, at 10:00 A.M., as the date of
sale, posting the said notice in public places and delivering copies thereof to the interested
parties in the previous notice, ... Ultimately, the bidding was conducted on that day, January
30, 1962, with the representatives of the Provincial Auditor and Provincial Treasurer present.
Only two bidders submitted sealed bids. After the bidding, the defendant-treasurer informed
the plaintiff that an award was given to the winning bidder, ..." 11 chanrobles virtual law library

This being a direct appeal to us, plaintiff-appellant must be deemed to have accepted as
conclusive what the lower court found as established by the evidence, only questions of law
being brought to us for review. It is the established rule that when a party appeals directly to
this Court, he is deemed to have waived the right to dispute any finding of fact made by the
court below. 12 chanrobles virtual law library

WHEREFORE, the decision of the lower court dated 23, 1964, is affirmed in toto. With costs
against plaintiff-appellant.

G.R. No. L-26712-16      December 27, 1969

40
UNITED CHRISTIAN MISSIONARY SOCIETY, UNITED CHURCH BOARD FOR
WORLD MINISTERS, BOARD OF FOREIGN MISSION OF THE REFORMED
CHURCH IN AMERICA, BOARD OF MISSION OF THE EVANGELICAL UNITED
PRESBYTERIAN CHURCH, COMMISSION OF ECUMENICAL MISSION ON
RELATIONS OF THE UNITED PRESBYTERIAN CHURCH, petitioners,
vs.
SOCIAL SECURITY COMMISSION and SOCIAL SECURITY SYSTEM, respondents.

Sedfrey A. Ordoñez for petitioners.

Office of the Solicitor General Antonio P. Barredo, Assistant Solicitor General Felicisimo R.
Rosete and Solicitor Buenaventura J. Guerrero for respondents.

TEEHANKEE, J.:

In this appeal from an order of the Social Security Commission, we uphold the Commission's
Order dismissing the petition before it, on the ground that in the absence of an express
provision in the Social Security Act1 vesting in the Commission the power to condone
penalties, it has no legal authority to condone, waive or relinquish the penalty for late
premium remittances mandatorily imposed under the Social Security Act.

The five petitioners originally filed on November 20, 1964 separate petitions with respondent
Commission, contesting the social security coverage of American missionaries who perform
religious missionary work in the Philippines under specific employment contracts with
petitioners. After several hearings, however, petitioners commendably desisted from further
contesting said coverage, manifesting that they had adopted a policy of cooperation with the
Philippine authorities in its program of social amelioration, with which they are in complete
accord. They instead filed their consolidated amended petition dated May 7, 1966, praying
for condonation of assessed penalties against them for delayed social security premium
remittances in the aggregate amount of P69,446.42 for the period from September, 1958 to
September, 1963.

In support of their request for condonation, petitioners alleged that they had labored under the
impression that as international organizations, they were not subject to coverage under the
Philippine Social Security System, but upon advice by certain Social Security System
officials, they paid to the System in October, 1963, the total amount of P81,341.80,
representing their back premiums for the period from September, 1958 to September, 1963.
They further claimed that the penalties assessed against them appear to be inequitable, citing
several resolutions of respondent Commission which in the past allegedly permitted
condonation of such penalties.

On May 25, 1966, respondent System filed a Motion to Dismiss on the ground that "the
Social Security Commission has no power or authority to condone penalties for late premium
remittance, to which petitioners filed their opposition of June 15, 1966, and in turn,
respondent filed its reply thereto of June 22, 1966.

Respondent Commission set the Motion to Dismiss for hearing and oral argument on July 20,
1966. At the hearing, petitioners' counsel made no appearance but submitted their
Memorandum in lieu of oral argument. Upon petition of the System's Counsel, the
Commission gave the parties a further period of fifteen days to submit their Memorandum
consolidating their arguments, after which the motion would be deemed submitted for
decision. Petitioners stood on their original memorandum, and respondent System filed its
memorandum on August 4, 1966.

On September 22, 1966, respondent Commission issued its Order dismissing the petition, as
follows:

41
 Considering all of the foregoing, this Commission finds, and so holds, that in the
absence of an express provision in the Social Security Act vesting in the Commission
the power to condone penalties, it cannot legally do so. The policy enunciated in
Commission Resolution No. 536, series of 1964, cited by the parties, in their
respective pleadings, has been reiterated in Commission Resolution No. 878, dated
August 18, 1966, wherein the Commission adopting the recommendation of the
Committee on Legal Matters and Legislation of the Social Security Commission ruled
that it "has no power to condone, waive or relinquish the penalties for late premium
remittances which may be imposed under the Social Security Act."

WHEREFORE, the petition is hereby dismissed and petitioners are directed to pay the
respondent System, within thirty (30) days from receipt of this Order, the amount of
P69,446.42 representing the penalties payable by them, broken down as follows:

United Christian Missionary Society P5,253.53

Board of Mission of the Evangelical United Brothers 7,891.74

Church

United Church Board for World Ministers 12,353.75

Commission on Ecumenical Mission & Relations 33,019.36

Board of Foreign Mission of the Reformed Church in 10,928.04

America

TOTAL P
69,446.42

Upon failure of the petitioners to comply with this Order within the period specified
herein, a warrant shall be issued to the Sheriff of the Province of Rizal to levy and sell
so much of the property of the petitioners as may be necessary to satisfy the
aforestated liability of the petitioners to the System.

This Court is thus confronted on appeal with this question of first impression as to whether or
not respondent Commission erred in ruling that it has no authority under the Social Security
Act to condone the penalty prescribed by law for late premium remittances.

We find no error in the Commission's action.

1. The plain text and intent of the pertinent provisions of the Social Security Act clearly rule
out petitioners' posture that the respondent Commission should assume, as against the
mandatory imposition of the 3% penalty per month for late payment of premium remittances,
the discretionary authority of condoning, waiving or relinquishing such penalty.

The pertinent portion of Section 22 (a) of the Social Security Act peremptorily provides that:

SEC 22. Remittance of premiums. — (a) The contributions imposed in the preceding
sections shall be remitted to the System within the first seven days of each calendar
month following the month for which they are applicable or within such time as the
Commission may prescribe. "Every employer required to deduct and to remit such
contribution shall be liable for their payment and if any contribution is not paid to the
system, as herein prescribed, he shall pay besides the contribution a penalty thereon
of three per centum per month from the date the contribution falls due until paid . . .2

No discretion or alternative is granted respondent Commission in the enforcement of the

law's mandate that the employer who fails to comply with his legal obligation to remit the

42
premiums to the System within the prescribed period shall pay a penalty of three 3% per
month. The prescribed penalty is evidently of a punitive character, provided by the legislature
to assure that employers do not take lightly the State's exercise of the police power in the
implementation of the Republic's declared policy "to develop, establish gradually and perfect
a social security system which shall be suitable to the needs of the people throughout the
Philippines and (to) provide protection to employers against the hazards of disability,
sickness, old age and death."3 In this concept, good faith or bad faith is rendered irrelevant,
since the law makes no distinction between an employer who professes good reasons for
delaying the remittance of premiums and another who deliberately disregards the legal duty
imposed upon him to make such remittance. From the moment the remittance of premiums
due is delayed, the penalty immediately attaches to the delayed premium payments by force
of law.

2. Petitioners contend that in the exercise of the respondent Commission's power of direction
and control over the system, as provided in Section 3 of the Act, it does have the authority to
condone the penalty for late payment under Section 4 (1), whereby it is empowered to
"perform such other acts as it may deem appropriate for the proper enforcement of this Act."
The law does not bear out this contention. Section 4 of the Social Security Act precisely
enumerates the powers of the Commission. Nowhere from said powers of the Commission
may it be shown that the Commission is granted expressly or by implication the authority to
condone penalties imposed by the Act.

3. Moreover, the funds contributed to the System by compulsion of law have already been
held by us to be "funds belonging to the members which are merely held in trust by the
Government."4 Being a mere trustee of the funds of the System which actually belong to the
members, respondent Commission cannot legally perform any acts affecting the same,
including condonation of penalties, that would diminish the property rights of the owners and
beneficiaries of such funds without an express or specific authority therefor.

4. Where the language of the law is clear and the intent of the legislature is equally plain,
there is no room for interpretation and construction of the statute. The Court is therefore
bound to uphold respondent Commission's refusal to arrogate unto itself the authority to
condone penalties for late payment of social security premiums, for otherwise we would be
sanctioning the Commission's reading into the law discretionary powers that are not actually
provided therein, and hindering and defeating the plain purpose and intent of the legislature.

5. Petitioners cite fourteen instances in the past wherein respondent Commission had granted
condonation of penalties on delayed premium payments. They charge the Commission with
grave abuse of discretion in not having uniformly applied to their cases its former policy of
granting condonation of penalties. They invoke more compelling considerations of equity in
their cases, in that they are non-profit religious organizations who minister to the spiritual
needs of the Filipino people, and that their delay in the payment of their premiums was not of
a contumacious or deliberate defiance of the law but was prompted by a well-founded belief
that the Social Security Act did not apply to their missionaries.

The past instances of alleged condonation granted by the Commission are not, however,
before the Court, and the unilateral conclusion asserted by petitioners that the Commission
had granted such condonations would be of no avail, without a review of the pertinent records
of said cases. Nevertheless, assuming such conclusion to be correct, the Commission, in its
appealed Order of September 22, 1966 makes of record that since its Resolution No. 536,
series of 1964, which it reiterated in another resolution dated August 18, 1966, it had
definitely taken the legal stand, pursuant to the recommendation of its Committee on Legal
Matters and Legislation, that in the absence of an express provision in the Social Security Act
vesting in the Commission the power to condone penalties, it "has no power to condone,
waive or relinquish the penalties for late premium remittances which may be imposed under
the Social Security Act."

43
6. The Commission cannot be faulted for this correct legal position. Granting that it had erred
in the past in granting condonation of penalties without legal authority, the Court has held
time and again that "it is a well-known rule that erroneous application and enforcement of the
law by public officers do not block subsequent correct application of the statute and that the
Government is never estopped by mistake or error on the part of its agents."5 Petitioners' lack
of intent to deliberately violate the law may be conceded, and was borne out by their later
withdrawal in May, 1966 of their original petitions in November, 1964 contesting their social
security coverage. The point, however, is that they followed the wrong procedure in
questioning the applicability of the Social Security Act to them, in that they failed for five
years to pay the premiums prescribed by law and thus incurred the 3% penalty thereon per
month mandatorily imposed by law for late payment. The proper procedure would have been
to pay the premiums and then contest their liability therefor, thereby preventing the penalty
from attaching. This would have been the prudent course, considering that the Act provides in
Section 22 (b) thereof that the premiums which the employer refuses or neglects to pay may
be collected by the System in the same manner as taxes under the National Internal Revenue
Code, and that at the time they instituted their petitions in 1964 contesting their coverage, the
Court had already ruled in effect against their contest three years earlier, when it held in
Roman Catholic Archbishop vs. Social Security Commission6 that the legislature had clearly
intended to include charitable and religious institutions and other non-profit institutions, such
as petitioners, within the scope and coverage of the Social Security Act.

7. No grave abuse of discretion was committed, therefore, by the Commission in issuing its
Order dismissing the petition for condonation of penalties for late payment of premiums, as
claimed by petitioners in their second and last error assigned. Petitioners were duly heard by
the Commission and were given due opportunity to adduce all their arguments, as in fact they
filed their Memorandum in lieu of oral argument and waived the presentation of an additional
memorandum. The mere fact that there was a pending appeal in the Court of Appeals from an
identical ruling of the Commission in an earlier case as to its lack of authority to condone
penalties does not mean, as petitioners contend, that the Commission was thereby shorn of its
authority and discretion to dismiss their petition on the same legal ground.7 The
Commission's action has thus paved the way for a final ruling of the Court on the matter.

ACCORDINGLY, the order appealed from is hereby affirmed, without pronouncement as to

costs.

Concepcion, C.J., Reyes, J.B.L., Makalintal, Zaldivar Sanchez, Castro and Fernando, JJ.,
concur.

Dizon and Barredo, JJ., took no part.

G.R. No. L-26419 October 16, 1970

GEDEON G. QUIJANO and EUGENIA T. QUIJANO, petitioners-appellants,

vs.
THE DEVELOPMENT BANK OF THE PHILIPPINES and THE EX-OFICIO
SHERIFF OF MISAMIS OCCIDENTAL, respondents-appellees.

J. Alaric P. Acosta for petitioners-appellant.

Esperanza Valenzoga for respondents-appellees.

BARREDO, J.:.

Appeal from the decision of the Court of First Instance of Misamis Occidental in its Special
Civil Case No. 2519, dismissing the petition for mandamus with prayer for a writ of

44
preliminary injunction filed therein by the herein petitioners-appellants Gedeon G. Quijano
and Eugenio T. Quijano to compel the herein respondent-appellee Development Bank of the
Philippines to accept said petitioners-appellants' back pay certificate payment of their loan
from the said appellee Bank, and to restrain the herein respondent-appellee ex-oficio sheriff
of the province of Misamis Occidental from proceeding with the scheduled foreclosure sale
of the real properties the above-named appellant spouses had mortgaged with the
Development Bank of the Philippines to secure the loan aforementioned.

The said appealed decision was based on the following:

STIPULATION OF FACTS.

The undersigned parties, thru counsels, hereby submit the foregoing stipulation of
facts, to wit:

I. That the petitioners filed an application for an urban estate loan with the
Rehabilitation Finance Corporation (RFC), predecessor-in-interest of the herein
respondent-bank, in the amount of P19,500.00;

II. That the petitioners' urban real estate loan was approved per RFC Board
Resolution No. 2533 on April 30, 1953;

III. That the mortgage contract was executed by the petitioners in favor of the
respondent-bank on March 23, 1954;

IV. That the said loan of P19,500.00 was to be received by the petitioners in several
releases, subject among others, to the following conditions:.

"(1) That the amount of P4,200.00 shall be released only after:.

"(a) the execution and registration of the mortgage

contract;

"(b) the presentation of a duly approved building

permit;

"(c) the construction has been started and the value

of the work done amounted to P6,500.00;.

"(d) the submission of the certificate of title covering

Psu-136173, free form any encumbrance and

"(e) the submission of evidence showing full payment

of current estate taxes;

(2) That the subsequent releases shall not be more than 100% of the
value of the construction completed in excess of P6,500.00; that all
releases shall be made against the payroll of workers engaged in the
project, receipts of all materials used and that there are no unpaid
labor or unpaid materials;

(3) That a sufficient amount may be withheld until the building is

completed and painted and found in accordance with the plans and
specifications submitted;

(4) That the amount of insurance of the building, when completed,

shall not be less than P18,000.00, which shall be secured by the
mortgagee, in accordance with its Board Resolution No. 3395, series
of 1947;

(5) That the construction and painting of the building shall be

completed within 120 days from the date of the mortgage contract;

45
 (6) That the release of this loan is subject to the availability of funds;

(7) That the lien appearing on the face of the title shall be cancelled,
otherwise, Luciana Jimenez shall sign as co-mortgagor; that this
mortgage contract was registered on March 23, 1954 with the
Register of Deeds of Misamis Occidental at Oroquieta;

"V. That the first release of P4,200 was made on April 29, 1954, and the other
releases were made subsequent thereafter;

"VI. That as of July 31, 1965, the outstanding obligation of the petitioners with the
respondent-bank, including interests, was P13,983.59;

"VII. That on July 27, 1965, petitioner Gedeon Quijano, as holder of Acknowledgment
No. 10181, wrote the respondent-bank in Manila offering to pay in the amount of
P14,000.00 for his outstanding obligation with the respondent-bank, out of the
proceeds of his back pay pursuant to Republic Act No. 897;

"VIII. That the respondent-bank, thru its Ozamis Branch advised the petitioners of the
non-acceptance of his offer on the ground that the loan was not incurred before or
subsisting on June 20, 1953 when Republic Act 897 was approved;

"IX. That the respondent-bank, thru its Ozamis City Branch, filed on October 14,
1965, an application for the foreclosure of real estate mortgage executed by the
petitioners, and that acting on the application of the respondent-bank, the Provincial
Sheriff, thru his deputies, scheduled the public auction sale for January 18, 1966,
after advising petitioner Gedeon Quijano of the application for foreclosure filed by the
respondent-bank;

"X. That the parties herein agree to transfer the auction sale scheduled for January
16, 1966 to February 18, 1966, without the necessity of republication of the notice of
sale."

Upon these facts and the submission of the parties that the only issue is whether or
not the obligation of the petitioners was subsisting at the time of the approval of
Republic Act No. 897, the Amendatory Act of Julie 20, 1953 to Republic Act 304, the
original back pay law, the trial court dismissed the petition, as already stated, and
directed respondent sheriff to proceed and continue with the public auction sale of
the property mortgaged in accordance with the foreclosure application of respondent
Development Bank of the Philippines after due notice to petitioners. In their appeal,
petitioners' sole assignment of error is that: "The trial court erred in declaring that the
loan of the petitioners-appellants was not subsisting when Republic Act No. 897 was
enacted on June 20, 1953."

The appeal has no merit.

The pertinent portions of the controlling provisions of the aforementioned Back Pay
Law, as amended by Republic Act No. 897 on June 20, 1953, 1 read as follows:.

SEC. 2. The Treasurer of the Philippines shall, upon application of all persons
specified in section one hereof and within one year from the approval of this
Amendatory Act, and under such rules and regulations as may be promulgated by the
Secretary of Finance, acknowledge and file requests for the recognition of the right to
the Salaries and wages as provided in section one hereof and notice of such
acknowledgment shall be issued to the applicant which shall state the total amount of
such salaries or wages due the applicant, and certify that it shall be redeemed by the
Government of the Philippines within ten years from the date of their issuance without
interests: Provided, That upon application and subject to such rules and regulations
as may be approved by the Secretary of Finance a certificate of indebtedness may be
issued by the Treasurer of the Philippines covering the whole or a part of the total
salaries and wages the right to which has been duly acknowledged and recognized,
provided that the face value of such certificate of indebtedness shall not exceed the
amount that the applicant may need for the payment of (1) obligations subsisting at

46
 the time of the approval of this Amendatory Act for which the applicant may directly
be liable to the government or to any of its branches or instrumentalities, or the
corporations owned or controlled by the Government, or to any citizen of the
Philippines, or to any association or corporation organized under the laws of the
Philippines, who may be willing to accept the same for such settlement; ...

It is indeed settled that under the above provisions, the Government or any of its
agencies does not have any discretion in the acceptance of back pay certificates, 2
when they are used by the applicants or original holders themselves for the
settlement of any of the obligations or liabilities specifically enumerated in the law. 3 It
is equally clear, however, that the same provisions expressly require that the
obligations — for which certificates of indebtedness may be accepted as payments
of — must be subsisting at the time of the approval of Republic Act No. 897; hence
when, as in the instant case, such back pay certificates are offered in payment to a
government-owned corporation of an obligation thereto which was not subsisting at
the time of the enactment of said amendatory Act on June 20, 1953, which
corporation may not, legally be compelled to accept the certificates.

It is true that appellants' application for an urban real estate loan was approved by
appellee bank on April 80, 1953. It appears, however, that appellants did not avail of
it until much later, as in fact, they executed the mortgage contract only on March 23,
1954, and furthermore, that the release of the amount of the said loan of P19,500.00
was to be made in installments and subject to compliance with certain conditions by
said appellants. Under these circumstances, Our ruling in the case of Rodriguez vs.
Development Bank of the Philippines 4 is controlling.

In that case, Rodriguez obtained a loan from the said Development Bank of the
Philippines to be received by him in several releases and to be paid later in
installments, under the terms and conditions specified in the loan agreement.
Pursuant to said agreement, Rodriguez received the first release in the sum of
P5,000.00 on May 27, 1953, while the subsequent releases covering the P9,000.00
— balance of the loan were all availed of and received by him later than June, 1953.
Later, Rodriguez paid the installments as they fell due. When a balance of about
P10,000.00 remained unpaid, Rodriguez offered to pay the said outstanding balance
of the loan with his back pay certificate. The Bank refused at first to accept the said
tender of payment in certificate, and when it accepted the same later, it limited its
acceptance only to the amount of P5,000.00 representing the portion of the loan
released before the passage of Republic Act No. 897, although the amount of the
back pay certificate offered by Rodriguez was more than sufficient to cover the total
unpaid balance of the loan. So, Rodriguez instituted an action for mandamus in the
Court of First Instance of Davao to compel the Bank to accept his back pay
certificate in payment of his whole outstanding obligation or, in other words, even for
the portions of the loan corresponding to the releases made after June 20, 1953.
This action was dismissed by the trial court and upon appeal to this Court, the
dismissal was affirmed upon the following rationale:.

It can not be said that appellant became indebted to the Bank for the total amount of
P14,000.00 from the date of the agreement. The releases of the balance of the
agreed loan were made dependent on certain conditions (see additional conditions
mentioned in paragraph 4 of the stipulation of facts, supra) among which is the
availability of funds. Non-compliance with any of these conditions will not entitle the
appellant to the release of the balance of the agreed loan and conversely, will not
entitle the bank to hold the appellant liable for the unreleased amounts.
Consequently, we hold, as did the trial court, that:.

"... the amounts released in July, 1953 and thereafter cannot be

considered as obligations subsisting in June, 1953. The defendant
may be compelled to accept a back pay certificate in payment of
obligations subsisting when the Amendatory Act was approved (Sec.
2, Republic Act 897).têñ.£îhqw⣠Republic Act 897 was approved on

47
 June 20, 1953. The defendant may not be compelled to accept
plaintiff's back pay certificate in payment of the amounts released
after June 20, 1953."

The case of Sabelino v. RFC (G.R. No. L-11790, Sept. 30, 1958) relied upon by
appellant is irrelevant, as the mortgage indebtedness sought to be paid with
appellee's back pay certificate therein, appears to have subsisted prior to the
approval of Republic Act No. 897. ...

Herein appellants' situation is even worse than that of Rodriguez. Here appellants
actually availed of their approved loan only about nine (9) months after the
enactment of Republic Act 897 and the corresponding releases thereof were
received by appellants only after the execution of the mortgage contract on March
23, 1954. Undoubtedly, notwithstanding the approval by the appellee Development
Bank of the Philippines (RFC) of appellants' loan application on April 30, 1953,
appellants did not thereby incur any obligation to pay the same; only after the
corresponding amounts were released to appellants after March 23, 1954 did such
obligation attach; and it cannot, therefore, be said that the said loan was an
obligation subsisting at the time of the approval of Republic Act No. 897 on June 20,
1953.

It may be truly said, as contended by appellants, that when their application for the
loan was approved by the appellee Bank on April 30, 1953, an agreement was
perfected between them and said Bank, but it should be noted that under such
agreement the only enforceable obligation that was created was that of the Bank to
grant the loan applied for, whereas the obligation of appellants to pay the same
could not have arisen until after the amount of the loan has been actually released to
them; and said release was even subject to their compliance with certain conditions
specified in the mortgage contract executed after the approval already of Republic
Act 897. Appellants' appeal that a more liberal construction of the law would enable
"many crippled or disabled veterans, or their wives and orphans, or those who had in
one way or another unselfishly sacrificed or contributed to the cause of the last war"
to take advantage of their back pay certificates, does deserve sympathy, for indeed,
among the avowed purposes of the said law are: "First, to serve as a source of
financial aid to needy veterans, like crippled or disabled veterans, and to their wives
and orphans. Secondly, to give recognition to the sacrifices of those who joined the
last war, and particularly to those who have given their all for the cause of the last
war." (Congressional Record No. 61, 2nd Congress, 4th Regular Session, May 6,
1953, page 74, as quoted in Florentino, et al. vs. PNB, 98 Phil. 959, 961-963).têñ.
£îhqw⣠On the other hand, however, We cannot see any room for interpretation or
construction in the clear and unambiguous language of the above-quoted provision
of law. This Court has steadfastly adhered to the doctrine that its first and
fundamental duty is the application of the law according to its express terms,
interpretation being called for only when such literal application is impossible. 5 No
process of interpretation or construction need be resorted to here a provision of law
peremptorily calls for application. Where a requirement or condition is made in
explicit and unambiguous terms, no discretion is left to the judiciary. It must see to it
that its mandate is obeyed.6 Thus, even before the amendment of the Back Pay Law,
when said law limited the applicability of back pay certificates to "obligations
subsisting at the time of the approval of this Act," this Court has ruled that obligations
contracted after its enactment on June 18, 1948 cannot come within its purview.

Since the debt of appellants was contracted on November 24, 1948, they could not
validly seek to discharge it by application of their back pay certificate under Republic
Act 304, on June 18, 1948, because that Act, in terms, limited any such application to
"obligations subsisting at the time of the approval of this Act". (Sec. 2) 7

WHEREFORE, the judgment of the trial court is affirmed. No costs.

48
Reyes, J.B.L., Act. C.J., Dizon, Makalintal, Zaldivar, Castro, Fernando, Teehankee,
Villamor and Makasiar, JJ., concur.

G.R. No. 92163 June 5, 1990

IN THE MATTER OF THE PETITION FOR HABEAS CORPUS. JUAN PONCE

ENRILE, petitioner
vs.
JUDGE JAIME SALAZAR (Presiding Judge of the Regional Trial Court of
Quezon City [Br. 103], SENIOR STATE PROSECUTOR AURELIO TRAMPE,
PROSECUTOR FERDINAND R. ABESAMIS, AND CITY ASSISTANT CITY
PROSECUTOR EULOGIO MANANQUIL, NATIONAL BUREAU OF
INVESTIGATION DIRECTOR ALFREDO LIM, BRIG. GEN. EDGAR DULA
TORRES (Superintendent of the Northern Police District) AND/ OR ANY AND
ALL PERSONS WHO MAY HAVE ACTUAL CUSTODY OVER THE PERSON OF
JUAN PONCE ENRILE, respondents.

G.R. No. 92164 June 5, 1990

SPS. REBECCO E. PANLILIO AND ERLINDA E. PANLILIO, petitioners,

vs.
PROSECUTORS FERNANDO DE LEON, AURELIO C. TRAMPE, FFRDINAND R.
ABESAMIS, AND EULOGIO C. MANANQUIL, and HON. JAIME W. SALAZAR,
JR., in his capacity as Presiding Judge, Regional Trial Court, Quezon City,
Branch 103, respondents.

NARVASA, J.:

Thirty-four years after it wrote history into our criminal jurisprudence, People vs.
Hernandez 1 once more takes center stage as the focus of a confrontation at law that
would re-examine, if not the validity of its doctrine, the limits of its applicability. To be
sure, the intervening period saw a number of similar cases 2 that took issue with the
ruling-all with a marked lack of success-but none, it would Beem, where season and
circumstance had more effectively conspired to attract wide public attention and
excite impassioned debate, even among laymen; none, certainly, which has seen
quite the kind and range of arguments that are now brought to bear on the same
question.

The facts are not in dispute. In the afternoon of February 27, 1990, Senate Minority
Floor Leader Juan Ponce Enrile was arrested by law enforcement officers led by
Director Alfredo Lim of the National Bureau of Investigation on the strength of a
warrant issued by Hon. Jaime Salazar of the Regional Trial Court of Quezon City
Branch 103, in Criminal Case No. 9010941. The warrant had issued on an
information signed and earlier that day filed by a panel of prosecutors composed of
Senior State Prosecutor Aurelio C. Trampe, State Prosecutor Ferdinand R.
Abesamis and Assistant City Prosecutor Eulogio Mananquil, Jr., charging Senator
Enrile, the spouses Rebecco and Erlinda Panlilio, and Gregorio Honasan with the
crime of rebellion with murder and multiple frustrated murder allegedly committed
during the period of the failed coup attempt from November 29 to December 10,
1990. Senator Enrile was taken to and held overnight at the NBI headquarters on
Taft Avenue, Manila, without bail, none having been recommended in the information
and none fixed in the arrest warrant. The following morning, February 28, 1990, he
was brought to Camp Tomas Karingal in Quezon City where he was given over to

49
the custody of the Superintendent of the Northern Police District, Brig. Gen. Edgardo
Dula Torres. 3

On the same date of February 28, 1990, Senator Enrile, through counsel, filed the
petition for habeas corpus herein (which was followed by a supplemental petition
filed on March 2, 1990), alleging that he was deprived of his constitutional rights in
being, or having been:

(a) held to answer for criminal offense which does not exist in the statute books;

(b) charged with a criminal offense in an information for which no complaint was
initially filed or preliminary investigation was conducted, hence was denied due
process;

(c) denied his right to bail; and

(d) arrested and detained on the strength of a warrant issued without the judge who
issued it first having personally determined the existence of probable cause. 4

The Court issued the writ prayed for, returnable March 5, 1990 and set the plea for
hearing on March 6, 1990. 5 On March 5, 1990, the Solicitor General filed a
consolidated return 6 for the respondents in this case and in G.R. No. 92164 7 Which
had been contemporaneously but separately filed by two of Senator Enrile's co-
accused, the spouses Rebecco and Erlinda Panlilio, and raised similar questions.
Said return urged that the petitioners' case does not fall within the Hernandez ruling
because-and this is putting it very simply-the information in Hernandez charged
murders and other common crimes committed as a necessary means for the
commission of rebellion, whereas the information against Sen. Enrile et al. charged
murder and frustrated murder committed on the occasion, but not in furtherance, of
rebellion. Stated otherwise, the Solicitor General would distinguish between the
complex crime ("delito complejo") arising from an offense being a necessary means
for committing another, which is referred to in the second clause of Article 48,
Revised Penal Code, and is the subject of the Hernandez ruling, and the compound
crime ("delito compuesto") arising from a single act constituting two or more grave or
less grave offenses referred to in the first clause of the same paragraph, with which
Hernandez was not concerned and to which, therefore, it should not apply.

The parties were heard in oral argument, as scheduled, on March 6, 1990, after
which the Court issued its Resolution of the same date 8 granting Senator Enrile and
the Panlilio spouses provisional liberty conditioned upon their filing, within 24 hours
from notice, cash or surety bonds of P100,000.00 (for Senator Enrile) and
P200,000.00 (for the Panlilios), respectively. The Resolution stated that it was issued
without prejudice to a more extended resolution on the matter of the provisional
liberty of the petitioners and stressed that it was not passing upon the legal issues
raised in both cases. Four Members of the Court 9 voted against granting bail to
Senator Enrile, and two 10 against granting bail to the Panlilios.

The Court now addresses those issues insofar as they are raised and litigated in
Senator Enrile's petition, G.R. No. 92163.

The parties' oral and written pleas presented the Court with the following options:

(a) abandon Hernandez and adopt the minority view expressed in the main dissent of
Justice Montemayor in said case that rebellion cannot absorb more serious crimes,
and that under Article 48 of the Revised Penal Code rebellion may properly be
complexed with common offenses, so-called; this option was suggested by the
Solicitor General in oral argument although it is not offered in his written pleadings;

50
 (b) hold Hernandez applicable only to offenses committed in furtherance, or as a
necessary means for the commission, of rebellion, but not to acts committed in the
course of a rebellion which also constitute "common" crimes of grave or less grave
character;

(c) maintain Hernandez as applying to make rebellion absorb all other offenses
committed in its course, whether or not necessary to its commission or in furtherance
thereof.

On the first option, eleven (11) Members of the Court voted against abandoning
Hernandez. Two (2) Members felt that the doctrine should be re-examined. 10-A In the
view of the majority, the ruling remains good law, its substantive and logical bases
have withstood all subsequent challenges and no new ones are presented here
persuasive enough to warrant a complete reversal. This view is reinforced by the fact
that not too long ago, the incumbent President, exercising her powers under the
1986 Freedom Constitution, saw fit to repeal, among others, Presidential Decree No.
942 of the former regime which precisely sought to nullify or neutralize Hernandez by
enacting a new provision (Art. 142-A) into the Revised Penal Code to the effect that
"(w)hen by reason, or on the occasion, of any of the crimes penalized in this Chapter
(Chapter I of Title 3, which includes rebellion), acts which constitute offenses upon
which graver penalties are imposed by law are committed, the penalty for the most
serious offense in its maximum period shall be imposed upon the offender."' 11 In
thus acting, the President in effect by legislative flat reinstated Hernandez as binding
doctrine with the effect of law. The Court can do no less than accord it the same
recognition, absent any sufficiently powerful reason against so doing.

On the second option, the Court unanimously voted to reject the theory that
Hernandez is, or should be, limited in its application to offenses committed as a
necessary means for the commission of rebellion and that the ruling should not be
interpreted as prohibiting the complexing of rebellion with other common crimes
committed on the occasion, but not in furtherance, thereof. While four Members of
the Court felt that the proponents' arguments were not entirely devoid of merit, the
consensus was that they were not sufficient to overcome what appears to be the real
thrust of Hernandez to rule out the complexing of rebellion with any other offense
committed in its course under either of the aforecited clauses of Article 48, as is
made clear by the following excerpt from the majority opinion in that case:

There is one other reason-and a fundamental one at that-why Article 48 of our Penal
Code cannot be applied in the case at bar. If murder were not complexed with
rebellion, and the two crimes were punished separately (assuming that this could be
done), the following penalties would be imposable upon the movant, namely: (1) for
the crime of rebellion, a fine not exceeding P20,000 and prision mayor, in the
corresponding period, depending upon the modifying circumstances present, but
never exceeding 12 years of prision mayor, and (2) for the crime of murder, reclusion
temporal in its maximum period to death, depending upon the modifying
circumstances present. in other words, in the absence of aggravating circumstances,
the extreme penalty could not be imposed upon him. However, under Article 48 said
penalty would have to be meted out to him, even in the absence of a single
aggravating circumstance. Thus, said provision, if construed in conformity with the
theory of the prosecution, would be unfavorable to the movant.

Upon the other hand, said Article 48 was enacted for the purpose of favoring the
culprit, not of sentencing him to a penalty more severe than that which would be
proper if the several acts performed by him were punished separately. In the words of
Rodriguez Navarro:

La unificacion de penas en los casos de concurso de delitos a que

hace referencia este articulo (75 del Codigo de 1932), esta basado
francamente en el principio pro reo.' (II Doctrina Penal del Tribunal
Supremo de Espana, p. 2168.)

51
 We are aware of the fact that this observation refers to Article 71 (later 75) of the
Spanish Penal Code (the counterpart of our Article 48), as amended in 1908 and then
in 1932, reading:

Las disposiciones del articulo anterior no son aplicables en el caso

de que un solo hecho constituya dos o mas delitos, o cuando el uno
de ellos sea medio necesario para cometer el otro.

En estos casos solo se impondra la pena correspondiente al delito

mas grave en su grado maximo, hasta el limite que represents la
suma de las que pudieran imponerse, penando separadamente los
delitos.

Cuando la pena asi computada exceda de este limite, se

sancionaran los delitos por separado. (Rodriguez Navarro, Doctrina
Penal del Tribunal Supremo, Vol. II, p. 2163)

and that our Article 48 does not contain the qualification inserted in said amendment,
restricting the imposition of the penalty for the graver offense in its maximum period
to the case when it does not exceed the sum total of the penalties imposable if the
acts charged were dealt with separately. The absence of said limitation in our Penal
Code does not, to our mind, affect substantially the spirit of said Article 48. Indeed, if
one act constitutes two or more offenses, there can be no reason to inflict a
punishment graver than that prescribed for each one of said offenses put together. In
directing that the penalty for the graver offense be, in such case, imposed in its
maximum period, Article 48 could have had no other purpose than to prescribe a
penalty lower than the aggregate of the penalties for each offense, if imposed
separately. The reason for this benevolent spirit of article 48 is readily discernible.
When two or more crimes are the result of a single act, the offender is deemed less
perverse than when he commits said crimes thru separate and distinct acts. Instead
of sentencing him for each crime independently from the other, he must suffer the
maximum of the penalty for the more serious one, on the assumption that it is less
grave than the sum total of the separate penalties for each offense. 12

The rejection of both options shapes and determines the primary ruling of the Court,
which is that Hernandez remains binding doctrine operating to prohibit the
complexing of rebellion with any other offense committed on the occasion thereof,
either as a means necessary to its commission or as an unintended effect of an
activity that constitutes rebellion.

This, however, does not write finis to the case. Petitioner's guilt or innocence is not
here inquired into, much less adjudged. That is for the trial court to do at the proper
time. The Court's ruling merely provides a take-off point for the disposition of other
questions relevant to the petitioner's complaints about the denial of his rights and to
the propriety of the recourse he has taken.

The Court rules further (by a vote of 11 to 3) that the information filed against the
petitioner does in fact charge an offense. Disregarding the objectionable phrasing
that would complex rebellion with murder and multiple frustrated murder, that
indictment is to be read as charging simple rebellion. Thus, in Hernandez, the Court
said:

In conclusion, we hold that, under the allegations of the amended information against
defendant-appellant Amado V. Hernandez, the murders, arsons and robberies
described therein are mere ingredients of the crime of rebellion allegedly committed
by said defendants, as means "necessary" (4) for the perpetration of said offense of
rebellion; that the crime charged in the aforementioned amended information is,
therefore, simple rebellion, not the complex crime of rebellion with multiple murder,
arsons and robberies; that the maximum penalty imposable under such charge
cannot exceed twelve (12) years of prision mayor and a fine of P2H,HHH; and that, in
conformity with the policy of this court in dealing with accused persons amenable to a
similar punishment, said defendant may be allowed bail. 13

52
The plaint of petitioner's counsel that he is charged with a crime that does not exist in
the statute books, while technically correct so far as the Court has ruled that
rebellion may not be complexed with other offenses committed on the occasion
thereof, must therefore be dismissed as a mere flight of rhetoric. Read in the context
of Hernandez, the information does indeed charge the petitioner with a crime defined
and punished by the Revised Penal Code: simple rebellion.

Was the petitioner charged without a complaint having been initially filed and/or
preliminary investigation conducted? The record shows otherwise, that a complaint
against petitioner for simple rebellion was filed by the Director of the National Bureau
of Investigation, and that on the strength of said complaint a preliminary investigation
was conducted by the respondent prosecutors, culminating in the filing of the
questioned information. 14 There is nothing inherently irregular or contrary to law in
filing against a respondent an indictment for an offense different from what is
charged in the initiatory complaint, if warranted by the evidence developed during the
preliminary investigation.

It is also contended that the respondent Judge issued the warrant for petitioner's
arrest without first personally determining the existence of probable cause by
examining under oath or affirmation the complainant and his witnesses, in violation
of Art. III, sec. 2, of the Constitution. 15 This Court has already ruled, however, that it
is not the unavoidable duty of the judge to make such a personal examination, it
being sufficient that he follows established procedure by personally evaluating the
report and the supporting documents submitted by the prosecutor. 16 Petitioner claims
that the warrant of arrest issued barely one hour and twenty minutes after the case
was raffled off to the respondent Judge, which hardly gave the latter sufficient time to
personally go over the voluminous records of the preliminary investigation. 17 Merely
because said respondent had what some might consider only a relatively brief period
within which to comply with that duty, gives no reason to assume that he had not, or
could not have, so complied; nor does that single circumstance suffice to overcome
the legal presumption that official duty has been regularly performed.

Petitioner finally claims that he was denied the right to bail. In the light of the Court's
reaffirmation of Hernandez as applicable to petitioner's case, and of the logical and
necessary corollary that the information against him should be considered as
charging only the crime of simple rebellion, which is bailable before conviction, that
must now be accepted as a correct proposition. But the question remains: Given the
facts from which this case arose, was a petition for habeas corpus in this Court the
appropriate vehicle for asserting a right to bail or vindicating its denial?

The criminal case before the respondent Judge was the normal venue for invoking
the petitioner's right to have provisional liberty pending trial and judgment. The
original jurisdiction to grant or deny bail rested with said respondent. The correct
course was for petitioner to invoke that jurisdiction by filing a petition to be admitted
to bail, claiming a right to bail per se by reason of the weakness of the evidence
against him. Only after that remedy was denied by the trial court should the review
jurisdiction of this Court have been invoked, and even then, not without first applying
to the Court of Appeals if appropriate relief was also available there.

Even acceptance of petitioner's premise that going by the Hernandez ruling, the
information charges a non-existent crime or, contrarily, theorizing on the same basis
that it charges more than one offense, would not excuse or justify his improper
choice of remedies. Under either hypothesis, the obvious recourse would have been
a motion to quash brought in the criminal action before the respondent Judge. 18

There thus seems to be no question that All the grounds upon which petitioner has
founded the present petition, whether these went into the substance of what is

53
charged in the information or imputed error or omission on the part of the
prosecuting panel or of the respondent Judge in dealing with the charges against
him, were originally justiciable in the criminal case before said Judge and should
have been brought up there instead of directly to this Court.

There was and is no reason to assume that the resolution of any of these questions
was beyond the ability or competence of the respondent Judge-indeed such an
assumption would be demeaning and less than fair to our trial courts; none whatever
to hold them to be of such complexity or transcendental importance as to disqualify
every court, except this Court, from deciding them; none, in short that would justify
by passing established judicial processes designed to orderly move litigation through
the hierarchy of our courts. Parenthentically, this is the reason behind the vote of
four Members of the Court against the grant of bail to petitioner: the view that the trial
court should not thus be precipitately ousted of its original jurisdiction to grant or
deny bail, and if it erred in that matter, denied an opportunity to correct its error. It
makes no difference that the respondent Judge here issued a warrant of arrest fixing
no bail. Immemorial practice sanctions simply following the prosecutor's
recommendation regarding bail, though it may be perceived as the better course for
the judge motu proprio to set a bail hearing where a capital offense is charged. 19 It is,
in any event, incumbent on the accused as to whom no bail has been recommended
or fixed to claim the right to a bail hearing and thereby put to proof the strength or
weakness of the evidence against him.

It is apropos to point out that the present petition has triggered a rush to this Court of
other parties in a similar situation, all apparently taking their cue from it, distrustful or
contemptuous of the efficacy of seeking recourse in the regular manner just outlined.
The proliferation of such pleas has only contributed to the delay that the petitioner
may have hoped to avoid by coming directly to this Court.

Not only because popular interest seems focused on the outcome of the present
petition, but also because to wash the Court's hand off it on jurisdictional grounds
would only compound the delay that it has already gone through, the Court now
decides the same on the merits. But in so doing, the Court cannot express too
strongly the view that said petition interdicted the ordered and orderly progression of
proceedings that should have started with the trial court and reached this Court only
if the relief appealed for was denied by the former and, in a proper case, by the
Court of Appeals on review.

Let it be made very clear that hereafter the Court will no longer countenance, but will
give short shrift to, pleas like the present, that clearly short-circuit the judicial process
and burden it with the resolution of issues properly within the original competence of
the lower courts. What has thus far been stated is equally applicable to and decisive
of the petition of the Panlilio spouses (G.R. No. 92164) which is virtually Identical to
that of petitioner Enrile in factual milieu and is therefore determinable on the same
principles already set forth. Said spouses have uncontestedly pleaded 20 that
warrants of arrest issued against them as co-accused of petitioner Enrile in Criminal
Case No. 90-10941, that when they appeared before NBI Director Alfredo Lim in the
afternoon of March 1, 1990, they were taken into custody and detained without bail
on the strength of said warrants in violation-they claim-of their constitutional rights.

It may be that in the light of contemporary events, the act of rebellion has lost that
quitessentiany quixotic quality that justifies the relative leniency with which it is
regarded and punished by law, that present-day rebels are less impelled by love of
country than by lust for power and have become no better than mere terrorists to
whom nothing, not even the sanctity of human life, is allowed to stand in the way of
their ambitions. Nothing so underscores this aberration as the rash of seemingly
senseless killings, bombings, kidnappings and assorted mayhem so much in the

54
news these days, as often perpetrated against innocent civilians as against the
military, but by and large attributable to, or even claimed by so-called rebels to be
part of, an ongoing rebellion.

It is enough to give anyone pause-and the Court is no exception-that not even the
crowded streets of our capital City seem safe from such unsettling violence that is
disruptive of the public peace and stymies every effort at national economic
recovery. There is an apparent need to restructure the law on rebellion, either to
raise the penalty therefor or to clearly define and delimit the other offenses to be
considered as absorbed thereby, so that it cannot be conveniently utilized as the
umbrella for every sort of illegal activity undertaken in its name. The Court has no
power to effect such change, for it can only interpret the law as it stands at any given
time, and what is needed lies beyond interpretation. Hopefully, Congress will
perceive the need for promptly seizing the initiative in this matter, which is properly
within its province.

WHEREFORE, the Court reiterates that based on the doctrine enunciated in People
vs. Hernandez, the questioned information filed against petitioners Juan Ponce
Enrile and the spouses Rebecco and Erlinda Panlilio must be read as charging
simple rebellion only, hence said petitioners are entitled to bail, before final
conviction, as a matter of right. The Court's earlier grant of bail to petitioners being
merely provisional in character, the proceedings in both cases are ordered
REMANDED to the respondent Judge to fix the amount of bail to be posted by the
petitioners. Once bail is fixed by said respondent for any of the petitioners, the
corresponding bail bond flied with this Court shall become functus oficio. No
pronouncement as to costs.

SO ORDERED.

Cruz, Gancayco and Regalado, JJ., concur.

Medialdea, J., concurs in G.R. No. 92164 but took no part in G.R. No. 92163.

Cortes and Griño-Aquino, JJ., are on leave.

Separate Opinions
 

MELENCIO-HERRERA, J., concurring:

I join my colleagues in holding that the Hernandez doctrine, which has been with us
for the past three decades, remains good law and, thus, should remain undisturbed,
despite periodic challenges to it that, ironically, have only served to strengthen its
pronouncements.

I take exception to the view, however, that habeas corpus was not the proper
remedy.

Had the Information filed below charged merely the simple crime of Rebellion, that
proposition could have been plausible. But that Information charged Rebellion
complexed with Murder and Multiple Frustrated Murder, a crime which does not exist

55
in our statute books. The charge was obviously intended to make the penalty for the
most serious offense in its maximum period imposable upon the offender pursuant to
Article 48 of the Revised Penal Code. Thus, no bail was recommended in the
Information nor was any prescribed in the Warrant of Arrest issued by the Trial
Court.

Under the attendant circumstances, therefore, to have filed a Motion to Quash before
the lower Court would not have brought about the speedy relief from unlawful
restraint that petitioner was seeking. During the pendency of said Motion before the
lower Court, petitioner could have continued to languish in detention. Besides, the
Writ of Habeas Corpus may still issue even if another remedy, which is less effective,
may be availed of (Chavez vs. Court of Appeals, 24 SCRA 663).

It is true that habeas corpus would ordinarily not he when a person is under custody
by virtue of a process issued by a Court.

The Court, however, must have jurisdiction to issue the process. In this case, the
Court below must be deemed to have been ousted of jurisdiction when it illegally
curtailed petitioner's liberty. Habeas corpus is thus available.

The writ of habeas corpus is available to relieve persons from unlawful restraint. But
where the detention or confinement is the result of a process issued by the court or
judge or by virtue of a judgment or sentence, the writ ordinarily cannot be availed of.
It may still be invoked though if the process, judgment or sentence proceeded from a
court or tribunal the jurisdiction of which may be assailed. Even if it had authority to
act at the outset, it is now the prevailing doctrine that a deprivation of constitutional
right, if shown to exist, would oust it of jurisdiction. In such a case, habeas corpus
could be relied upon to regain one's liberty (Celeste vs. People, 31 SCRA 391)
[Emphasis emphasis].

The Petition for habeas corpus was precisely premised on the violation of petitioner's
constitutional right to bail inasmuch as rebellion, under the present state of the law,
is a bailable offense and the crime for which petitioner stands accused of and for
which he was denied bail is non-existent in law.

While litigants should, as a rule, ascend the steps of the judicial ladder, nothing
should stop this Court from taking cognizance of petitions brought before it raising
urgent constitutional issues, any procedural flaw notwithstanding.

The rules on habeas corpus are to be liberally construed (Ganaway v. Quilen, 42 Phil.
805), the writ of habeas corpus being the fundamental instrument for safeguarding
individual freedom against arbitrary and lawless state action. The scope and flexibility
of the writ-its capacity to reach all manner of illegal detention-its ability to cut through
barriers of form and procedural mazes-have always been emphasized and jealously
guarded by courts and lawmakers (Gumabon v. Director of Bureau of Prisons, 37
SCRA 420) [emphasis supplied].

The proliferation of cases in this Court, which followed in the wake of this Petition,
was brought about by the insistence of the prosecution to charge the crime of
Rebellion complexed with other common offenses notwithstanding the fact that this
Court had not yet ruled on the validity of that charge and had granted provisional
liberty to petitioner.

If, indeed, it is desired to make the crime of Rebellion a capital offense (now
punishable by reclusion perpetua), the remedy lies in legislation. But Article 142-A 1
of the Revised Penal Code, along with P.D. No. 942, were repealed, for being
"repressive," by EO No. 187 on 5 June 1987. EO 187 further explicitly provided that
Article 134 (and others enumerated) of the Revised Penal Code was "restored to its
full force and effect as it existed before said amendatory decrees." Having been so

56
repealed, this Court is bereft of power to legislate into existence, under the guise of
re-examining a settled doctrine, a "creature unknown in law"- the complex crime of
Rebellion with Murder. The remand of the case to the lower Court for further
proceedings is in order. The Writ of Habeas Corpus has served its purpose.

GUTIERREZ, JR., J., concurring:

I join the Court's decision to grant the petition. In reiterating the rule that under
existing law rebellion may not be complexed with murder, the Court emphasizes that
it cannot legislate a new-crime into existence nor prescribe a penalty for its
commission. That function is exclusively for Congress.

I write this separate opinion to make clear how I view certain issues arising from
these cases, especially on how the defective informations filed by the prosecutors
should have been treated.

I agree with the ponente that a petition for habeas corpus is ordinarily not the proper
procedure to assert the right to bail. Under the special circumstances of this case,
however, the petitioners had no other recourse. They had to come to us.

First, the trial court was certainly aware of the decision in People v. Hernandez, 99
Phil. 515 (1956) that there is no such crime in our statute books as rebellion
complexed with murder, that murder committed in connection with a rebellion is
absorbed by the crime of rebellion, and that a resort to arms resulting in the
destruction of life or property constitutes neither two or more offenses nor a complex
crime but one crime-rebellion pure and simple.

Second, Hernandez has been the law for 34 years. It has been reiterated in equally
sensational cases. All lawyers and even law students are aware of the doctrine.
Attempts to have the doctrine re-examined have been consistently rejected by this
Court.

Third, President Marcos through the use of his then legislative powers, issued Pres.
Decree 942, thereby installing the new crime of rebellion complexed with offenses
like murder where graver penalties are imposed by law. However, President Aquino
using her then legislative powers expressly repealed PD 942 by issuing Exec. Order
187. She thereby erased the crime of rebellion complexed with murder and made it
clear that the Hernandez doctrine remains the controlling rule. The prosecution has
not explained why it insists on resurrecting an offense expressly wiped out by the
President. The prosecution, in effect, questions the action of the President in
repealing a repressive decree, a decree which, according to the repeal order, is
violative of human rights.

Fourth, any re-examination of the Hernandez doctrine brings the ex post facto
principle into the picture. Decisions of this Court form part of our legal system. Even
if we declare that rebellion may be complexed with murder, our declaration can not
be made retroactive where the effect is to imprison a person for a crime which did
not exist until the Supreme Court reversed itself.

And fifth, the attempts to distinguish this case from the Hernandez case by stressing
that the killings charged in the information were committed "on the occasion of, but
not a necessary means for, the commission of rebellion" result in outlandish
consequences and ignore the basic nature of rebellion. Thus, under the prosecution
theory a bomb dropped on PTV-4 which kills government troopers results in simple
rebellion because the act is a necessary means to make the rebellion succeed.

57
However, if the same bomb also kills some civilians in the neighborhood, the
dropping of the bomb becomes rebellion complexed with murder because the killing
of civilians is not necessary for the success of a rebellion and, therefore, the killings
are only "on the occasion of but not a 'necessary means for' the commission of
rebellion.

This argument is puerile.

The crime of rebellion consists of many acts. The dropping of one bomb cannot be
isolated as a separate crime of rebellion. Neither should the dropping of one hundred
bombs or the firing of thousands of machine gun bullets be broken up into a hundred
or thousands of separate offenses, if each bomb or each bullet happens to result in
the destruction of life and property. The same act cannot be punishable by separate
penalties depending on what strikes the fancy of prosecutors-punishment for the
killing of soldiers or retribution for the deaths of civilians. The prosecution also loses
sight of the regrettable fact that in total war and in rebellion the killing of civilians, the
laying waste of civilian economies, the massacre of innocent people, the blowing up
of passenger airplanes, and other acts of terrorism are all used by those engaged in
rebellion. We cannot and should not try to ascertain the intent of rebels for each
single act unless the act is plainly not connected to the rebellion. We cannot use
Article 48 of the Revised Penal Code in lieu of still-to- be-enacted legislation. The
killing of civilians during a rebel attack on military facilities furthers the rebellion and
is part of the rebellion.

The trial court was certainly aware of all the above considerations. I cannot
understand why the trial Judge issued the warrant of arrest which categorically
states therein that the accused was not entitled to bail. The petitioner was compelled
to come to us so he would not be arrested without bail for a nonexistent crime. The
trial court forgot to apply an established doctrine of the Supreme Court. Worse, it
issued a warrant which reversed 34 years of established procedure based on a well-
known Supreme Court ruling.

All courts should remember that they form part of an independent judicial system;
they do not belong to the prosecution service. A court should never play into the
hands of the prosecution and blindly comply with its erroneous manifestations.
Faced with an information charging a manifestly non-existent crime, the duty of a
trial court is to throw it out. Or, at the very least and where possible, make it conform
to the law.

A lower court cannot re-examine and reverse a decision of the Supreme Court
especially a decision consistently followed for 34 years. Where a Judge disagrees
with a Supreme Court ruling, he is free to express his reservations in the body of his
decision, order, or resolution. However, any judgment he renders, any order he
prescribes, and any processes he issues must follow the Supreme Court precedent.
A trial court has no jurisdiction to reverse or ignore precedents of the Supreme
Court. In this particular case, it should have been the Solicitor General coming to this
Court to question the lower court's rejection of the application for a warrant of arrest
without bail. It should have been the Solicitor-General provoking the issue of re-
examination instead of the petitioners asking to be freed from their arrest for a non-
existent crime.

The principle bears repeating:

Respondent Court of Appeals really was devoid of any choice at all. It could not have
ruled in any other way on the legal question raised. This Tribunal having spoken, its
duty was to obey. It is as simple as that. There is relevance to this excerpt from
Barrera v. Barrera. (L-31589, July 31, 1970, 34 SCRA 98) 'The delicate task of
ascertaining the significance that attaches to a constitutional or statutory provision, an

58
 executive order, a procedural norm or a municipal ordinance is committed to the
judiciary. It thus discharges a role no less crucial than that appertaining to the other
two departments in the maintenance of the rule of law. To assure stability in legal
relations and avoid confusion, it has to speak with one voice. It does so with finality,
logically and rightly, through the highest judicial organ, this Court. What it says then
should be definitive and authoritative, binding on those occupying the lower ranks in
the judicial hierarchy. They have to defer and to submit.' (Ibid, 107. The opinion of
Justice Laurel in People v. Vera, 65 Phil. 56 [1937] was cited). The ensuing
paragraph of the opinion in Barrera further emphasizes the point: Such a thought was
reiterated in an opinion of Justice J.B.L. Reyes and further emphasized in these
words: 'Judge Gaudencio Cloribel need not be reminded that the Supreme Court, by
tradition and in our system of judicial administration, has the last word on what the
law is; it is the final arbiter of any justifiable controversy. There is only one Supreme
Court from whose decisions all other courts should take their bearings. (Ibid. Justice
J.B.L. Reyes spoke thus in Albert v. Court of First Instance of Manila (Br. VI), L-
26364, May 29, 1968, 23 SCRA 948, 961. (Tugade v. Court of Appeals, 85 SCRA
226 [1978]. See also Albert v. Court of First Instance, 23 SCRA 948 [1968] and Vir-
Jen Shipping and Marine Services, Inc. v. NLRC, 125 SCRA 577 [1983])

I find the situation in Spouses Panlilio v. Prosecutors Fernando de Leon, et al. even
more inexplicable. In the case of the Panlilios, any probable cause to commit the
non- existent crime of rebellion complexed with murder exists only in the minds of
the prosecutors, not in the records of the case.

I have gone over the records and pleadings furnished to the members of the
Supreme Court. I listened intently to the oral arguments during the hearing and it
was quite apparent that the constitutional requirement of probable cause was not
satisfied. In fact, in answer to my query for any other proofs to support the issuance
of a warrant of arrest, the answer was that the evidence would be submitted in due
time to the trial court.

The spouses Panlilio and one parent have been in the restaurant business for
decades. Under the records of these petitions, any restaurant owner or hotel
manager who serves food to rebels is a co-conspirator in the rebellion. The absurdity
of this proposition is apparent if we bear in mind that rebels ride in buses and
jeepneys, eat meals in rural houses when mealtime finds them in the vicinity, join
weddings, fiestas, and other parties, play basketball with barrio youths, attend
masses and church services and otherwise mix with people in various gatherings.
Even if the hosts recognize them to be rebels and fail to shoo them away, it does not
necessarily follow that the former are co-conspirators in a rebellion.

The only basis for probable cause shown by the records of the Panlilio case is the
alleged fact that the petitioners served food to rebels at the Enrile household and a
hotel supervisor asked two or three of their waiters, without reason, to go on a
vacation. Clearly, a much, much stronger showing of probable cause must be
shown.

In Salonga v. Cruz Paño, 134 SCRA 438 (1985), then Senator Salonga was charged
as a conspirator in the heinous bombing of innocent civilians because the man who
planted the bomb had, sometime earlier, appeared in a group photograph taken
during a birthday party in the United States with the Senator and other guests. It was
a case of conspiracy proved through a group picture. Here, it is a case of conspiracy
sought to proved through the catering of food.

The Court in Salonga stressed:

The purpose of a preliminary investigation is to secure the innocent against hasty,

malicious and oppressive prosecution, and to protect him from an open and public
accusation of crime, from the trouble, expense and anxiety of a public trial, and also
to protect the state from useless and expensive trials. (Trocio v. Manta, 118 SCRA
241; citing Hashimn v. Boncan, 71 Phil. 216). The right to a preliminary investigation

59
 is a statutory grant, and to withhold it would be to transgress constitutional due
process. (See People v. Oandasa, 25 SCRA 277) However, in order to satisfy the
due process clause it is not enough that the preliminary investigation is conducted in
the sense of making sure that a transgressor shall not escape with impunity. A
preliminary investigation serves not only the purposes of the State. More important, it
is a part of the guarantees of freedom and fair play which are birthrights of all who live
in our country. It is, therefore, imperative upon the fiscal or the judge as the case may
be, to relieve the accused from the pain of going through a trial once it is ascertained
that the evidence is insufficient to sustain a prima facie case or that no probable
cause exists to form a sufficient belief as to the guilt of the accused. Although there is
no general formula or fixed rule for the determination of probable cause since the
same must be decided in the light of the conditions obtaining in given situations and
its existence depends to a large degree upon the finding or opinion of the judge
conducting the examination, such a finding should not disregard the facts before the
judge nor run counter to the clear dictates of reason (See La Chemise Lacoste, S.A.
v. Fernandez, 129 SCRA 391). The judge or fiscal, therefore, should not go on with
the prosecution in the hope that some credible evidence might later turn up during
trial for this would be a flagrant violation of a basic right which the courts are created
to uphold. It bears repeating that the judiciary lives up to its mission by vitalizing and
not denigrating constitutional rights. So it has been before. It should continue to be
so. (id., pp. 461- 462)

Because of the foregoing, I take exception to that part of the ponencia which will
read the informations as charging simple rebellion. This case did not arise from
innocent error. If an information charges murder but its contents show only the
ingredients of homicide, the Judge may rightly read it as charging homicide. In these
cases, however, there is a deliberate attempt to charge the petitioners for an offense
which this Court has ruled as non-existent. The prosecution wanted Hernandez to be
reversed. Since the prosecution has filed informations for a crime which, under our
rulings, does not exist, those informations should be treated as null and void. New
informations charging the correct offense should be filed. And in G.R. No. 92164, an
extra effort should be made to see whether or not the Principle in Salonga v. Cruz
Patio, et al. (supra) has been violated.

The Court is not, in any way, preventing the Government from using more effective
weapons to suppress rebellion. If the Government feels that the current situation
calls for the imposition of more severe penalties like death or the creation of new
crimes like rebellion complexed with murder, the remedy is with Congress, not the
courts.

I, therefore, vote to GRANT the petitions and to ORDER the respondent court to
DISMISS the void informations for a non-existent crime.

FELICIANO, J., concurring:

I concur in the result reached by the majority of the Court.

I believe that there are certain aspects of the Hernandez doctrine that, as an abstract
question of law, could stand reexamination or clarification. I have in mind in particular
matters such as the correct or appropriate relationship between Article 134 and
Article 135 of the Revised Penal Code. This is a matter which relates to the legal
concept of rebellion in our legal system. If one examines the actual terms of Article
134 (entitled: "Rebellion or Insurrection-How Committed"), it would appear that this
Article specifies both the overt acts and the criminal purpose which, when put
together, would constitute the offense of rebellion. Thus, Article 134 states that "the
crime of rebellion is committed by rising publicly and taking arms against the
Government "(i.e., the overt acts comprising rebellion), "for the purpose of (i.e., the
specific criminal intent or political objective) removing from the allegiance to said

60
government or its laws the territory of the Republic of the Philippines or any part
thereof, or any body of land, naval or other armed forces, or depriving the Chief
Executive or the Legislature, wholly or partially, of their powers or prerogatives." At
the same time, Article 135 (entitled: "Penalty for Rebellion or Insurrection.") sets out
a listing of acts or particular measures which appear to fall under the rubric of
rebellion or insurrection: "engaging in war against the forces of the Government,
destroying property or committing serious violence, exacting contributions or
diverting public funds from the lawful purpose for which they have been
appropriated." Are these modalities of rebellion generally? Or are they particular
modes by which those "who promote [ ], maintain [ ] or head [ ] a rebellion or
insurrection" commit rebellion, or particular modes of participation in a rebellion by
public officers or employees? Clearly, the scope of the legal concept of rebellion
relates to the distinction between, on the one hand, the indispensable acts or
ingredients of the crime of rebellion under the Revised Penal Code and, on the other
hand, differing optional modes of seeking to carry out the political or social objective
of the rebellion or insurrection.

The difficulty that is at once raised by any effort to examine once more even the
above threshold questions is that the results of such re-examination may well be that
acts which under the Hernandez doctrine are absorbed into rebellion, may be
characterized as separate or discrete offenses which, as a matter of law, can either
be prosecuted separately from rebellion or prosecuted under the provisions of Article
48 of the Revised Penal Code, which (both Clause 1 and Clause 2 thereof) clearly
envisage the existence of at least two (2) distinct offenses. To reach such a
conclusion in the case at bar, would, as far as I can see, result in colliding with the
fundamental non-retroactivity principle (Article 4, Civil Code; Article 22, Revised
Penal Code; both in relation to Article 8, Civil Code).

The non-retroactivity rule applies to statutes principally. But, statutes do not exist in
the abstract but rather bear upon the lives of people with the specific form given
them by judicial decisions interpreting their norms. Judicial decisions construing
statutory norms give specific shape and content to such norms. In time, the statutory
norms become encrusted with the glosses placed upon them by the courts and the
glosses become integral with the norms (Cf Caltex v. Palomar, 18 SCRA 247
[1966]). Thus, while in legal theory, judicial interpretation of a statute becomes part
of the law as of the date that the law was originally enacted, I believe this theory is
not to be applied rigorously where a new judicial doctrine is announced, in particular
one overruling a previous existing doctrine of long standing (here, 36 years) and
most specially not where the statute construed is criminal in nature and the new
doctrine is more onerous for the accused than the pre-existing one (People v.
Jabinal, 55 SCRA 607 [1974]; People v. Licera, 65 SCRA 270 [1975]; Gumabon v.
Director of Prisons, 37 SCRA 420 [1971]). Moreover, the non-retroactivity rule
whether in respect of legislative acts or judicial decisions has constitutional
implications. The prevailing rule in the United States is that a judicial decision that
retroactively renders an act criminal or enhances the severity of the penalty
prescribed for an offense, is vulnerable to constitutional challenge based upon the
rule against ex post facto laws and the due process clause (Bouie v. City of
Columbia, 378 US 347,12 L. Ed. 2d 894 [1964]; Marks v. U.S., 43 US 188, 51 L. Ed.
2d 260 [1977]; Devine v. New Mexico Department of Corrections, 866 F. 2d 339
[1989]).

It is urged by the Solicitor General that the non-retroactivity principle does not
present any real problem for the reason that the Hernandez doctrine was based
upon Article 48, second clause, of the Revised Penal Code and not upon the first
clause thereof, while it is precisely the first clause of Article 48 that the Government
here invokes. It is, however, open to serious doubt whether Hernandez can
reasonably be so simply and sharply characterized. And assuming the Hernandez

61
could be so characterized, subsequent cases refer to the Hernandez doctrine in
terms which do not distinguish clearly between the first clause and the second
clause of Article 48 (e.g., People v. Geronimo, 100 Phil. 90 [1956]; People v.
Rodriguez, 107 Phil. 659 [1960]). Thus, it appears to me that the critical question
would be whether a man of ordinary intelligence would have necessarily read or
understood the Hernandez doctrine as referring exclusively to Article 48, second
clause. Put in slightly different terms, the important question would be whether the
new doctrine here proposed by the Government could fairly have been derived by a
man of average intelligence (or counsel of average competence in the law) from an
examination of Articles 134 and 135 of the Revised Penal Code as interpreted by the
Court in the Hernandez and subsequent cases. To formulate the question ill these
terms would almost be to compel a negative answer, especially in view of the
conclusions reached by the Court and its several Members today.

Finally, there appears to be no question that the new doctrine that the Government
would have us discover for the first time since the promulgation of the Revised Penal
Code in 1932, would be more onerous for the respondent accused than the simple
application of the Hernandez doctrine that murders which have been committed on
the occasion of and in furtherance of the crime of rebellion must be deemed
absorbed in the offense of simple rebellion.

I agree therefore that the information in this case must be viewed as charging only
the crime of simple rebellion.

FERNAN, C.J., concurring and dissenting:

I am constrained to write this separate opinion on what seems to be a rigid

adherence to the 1956 ruling of the Court. The numerous challenges to the doctrine
enunciated in the case of People vs. Hernandez, 99 Phil. 515 (1956) should at once
demonstrate the need to redefine the applicability of said doctrine so as to make it
conformable with accepted and well-settled principles of criminal law and
jurisprudence.

To my mind, the Hernandez doctrine should not be interpreted as an all-embracing

authority for the rule that all common crimes committed on the occasion, or in
furtherance of, or in connection with, rebellion are absorbed by the latter. To that
extent, I cannot go along with the view of the majority in the instant case that
'Hernandez remains binding doctrine operating to prohibit the complexing of rebellion
with any other offense committed on the occasion thereof, either as a means
necessary to its commission or as an unintended effect of an activity that constitutes
rebellion" (p. 9, Decision).

The Hernandez doctrine has served the purpose for which it was appealed by the
Court in 1956 during the communist-inspired rebellion of the Huks. The changes in
our society in the span of 34 years since then have far-reaching effects on the all-
embracing applicability of the doctrine considering the emergence of alternative
modes of seizing the powers of the duly constituted Government not contemplated in
Articles 134 and 135 of the Revised Penal Code and their consequent effects on the
lives of our people. The doctrine was good law then, but I believe that there is a
certain aspect of the Hernandez doctrine that needs clarification.

With all due respect to the views of my brethren in the Court, I believe that the Court,
in the instant case, should have further considered that distinction between acts or
offenses which are indispensable in the commission of rebellion, on the one hand,
and those acts or offenses that are merely necessary but not indispensable in the

62
commission of rebellion, on the other. The majority of the Court is correct in
adopting, albeit impliedly, the view in Hernandez case that when an offense
perpetrated as a necessary means of committing another, which is an element of the
latter, the resulting interlocking crimes should be considered as only one simple
offense and must be deemed outside the operation of the complex crime provision
(Article 48) of the Revised Penal Code. As in the case of Hernandez, the Court,
however, failed in the instant case to distinguish what is indispensable from what is
merely necessary in the commission of an offense, resulting thus in the rule that
common crimes like murder, arson, robbery, etc. committed in the course or on the
occasion of rebellion are absorbed or included in the latter as elements thereof.

The relevance of the distinction is significant, more particularly, if applied to

contemporaneous events happening in our country today. Theoretically, a crime
which is indispensable in the commission of another must necessarily be an element
of the latter; but a crime that is merely necessary but not indispensable in the
commission of another is not an element of the latter, and if and when actually
committed, brings the interlocking crime within the operation of the complex crime
provision (Art. 48) of the Revised Penal Code. With that distinction, common crimes
committed against Government forces and property in the course of rebellion are
properly considered indispensable overt acts of rebellion and are logically absorbed
in it as virtual ingredients or elements thereof, but common crimes committed against
the civilian population in the course or on the occasion of rebellion and in furtherance
thereof, may be necessary but not indispensable in committing the latter, and may,
therefore, not be considered as elements of the said crime of rebellion. To illustrate,
the deaths occurring during armed confrontation or clashes between government
forces and the rebels are absorbed in the rebellion, and would be those resulting
from the bombing of military camps and installations, as these acts are indispensable
in carrying out the rebellion. But deliberately shooting down an unarmed innocent
civilian to instill fear or create chaos among the people, although done in the
furtherance of the rebellion, should not be absorbed in the crime of rebellion as the
felonious act is merely necessary, but not indispensable. In the latter case, Article 48
of the Revised Penal Code should apply.

The occurrence of a coup d' etat in our country as a mode of seizing the powers of
the duly-constituted government by staging surprise attacks or occupying centers of
powers, of which this Court should take judicial notice, has introduced a new
dimension to the interpretation of the provisions on rebellion and insurrection in the
Revised Penal Code. Generally, as a mode of seizing the powers of the duly
constituted government, it falls within the contemplation of rebellion under the
Revised Penal Code, but, strictly construed, a coup d'etat per se is a class by itself.
The manner of its execution and the extent and magnitude of its effects on the lives
of the people distinguish a coup d'etat from the traditional definition and modes of
commission attached by the Revised Penal Code to the crime of rebellion as applied
by the Court to the communist-inspired rebellion of the 1950's. A coup d'etat may be
executed successfully without its perpetrators resorting to the commission of other
serious crimes such as murder, arson, kidnapping, robbery, etc. because of the
element of surprise and the precise timing of its execution. In extreme cases where
murder, arson, robbery, and other common crimes are committed on the occasion of
a coup d' etat, the distinction referred to above on what is necessary and what is
indispensable in the commission of the coup d'etat should be painstakingly
considered as the Court should have done in the case of herein petitioners.

I concur in the result insofar as the other issues are resolved by the Court but I take
exception to the vote of the majority on the broad application of the Hernandez
doctrine.

BIDIN, J., concurring and dissenting:

63
I concur with the majority opinion except as regards the dispositive portion thereof
which orders the remand of the case to the respondent judge for further proceedings
to fix the amount of bail to be posted by the petitioner.

I submit that the proceedings need not be remanded to the respondent judge for the
purpose of fixing bail since we have construed the indictment herein as charging
simple rebellion, an offense which is bailable. Consequently, habeas corpus is the
proper remedy available to petitioner as an accused who had been charged with
simple rebellion, a bailable offense but who had been denied his right to bail by the
respondent judge in violation of petitioner's constitutional right to bail. In view thereof,
the responsibility of fixing the amount of bail and approval thereof when filed,
devolves upon us, if complete relief is to be accorded to petitioner in the instant
proceedings.

It is indubitable that before conviction, admission to bail is a matter of right to the

defendant, accused before the Regional Trial Court of an offense less than capital
(Section 13 Article III, Constitution and Section 3, Rule 114). Petitioner is, before Us,
on a petition for habeas corpus praying, among others, for his provisional release on
bail. Since the offense charged (construed as simple rebellion) admits of bail, it is
incumbent upon us m the exercise of our jurisdiction over the petition for habeas
corpus (Section 5 (1), Article VIII, Constitution; Section 2, Rule 102), to grant
petitioner his right to bail and having admitted him to bail, to fix the amount thereof in
such sums as the court deems reasonable. Thereafter, the rules require that "the
proceedings together with the bond" shall forthwith be certified to the respondent trial
court (Section 14, Rule 102).

Accordingly, the cash bond in the amount of P 100,000.00 posted by petitioner for
his provisional release pursuant to our resolution dated March 6, 1990 should now
be deemed and admitted as his bail bond for his provisional release in the case
(simple rebellion) pending before the respondent judge, without necessity of a
remand for further proceedings, conditioned for his (petitioner's) appearance before
the trial court to abide its order or judgment in the said case.

SARMIENTO, J., concurring and dissenting:

I agree that People v. Hernandez 1 should abide. More than three decades after
which it was penned, it has firmly settled in the tomes of our jurisprudence as correct
doctrine.

As Hernandez put it, rebellion means "engaging m war against the forces of the
government," 2 which implies "resort to arms, requisition of property and services,
collection of taxes and contributions, restraint of liberty, damage to property, physical
injuries and loss of life, and the hunger, illness and unhappiness that war leaves in
its wake. ..." 3 whether committed in furtherance, of as a necessary means for the
commission, or in the course, of rebellion. To say that rebellion may be complexed
with any other offense, in this case murder, is to play into a contradiction in terms
because exactly, rebellion includes murder, among other possible crimes.

I also agree that the information may stand as an accusation for simple rebellion.
Since the acts complained of as constituting rebellion have been embodied in the
information, mention therein of murder as a complexing offense is a surplusage,
because in any case, the crime of rebellion is left fully described. 4

At any rate, the government need only amend the information by a clerical
correction, since an amendment will not alter its substance.

64
I dissent, however, insofar as the majority orders the remand of the matter of bail to
the lower court. I take it that when we, in our Resolution of March 6, 1990, granted
the petitioner "provisional liberty" upon the filing of a bond of P100,000.00, we
granted him bail. The fact that we gave him "provisional liberty" is in my view, of no
moment, because bail means provisional liberty. It will serve no useful purpose to
have the trial court hear the incident again when we ourselves have been satisfied
that the petitioner is entitled to temporary freedom.

PADILLA, J., dissenting:

I concur in the majority opinion insofar as it holds that the ruling in People vs.
Hernandez, 99 Phil. 515 "remains binding doctrine operating to prohibit the
complexing of rebellion with any other offense committed on the occasion thereof,
either as a means necessary to its commission or as an unintended effect of an
activity that constitutes rebellion."

I dissent, however, from the majority opinion insofar as it holds that the information in
question, while charging the complex crime of rebellion with murder and multiple
frustrated murder, "is to be read as charging simple rebellion."

The present cases are to be distinguished from the Hernandez case in at least one
(1) material respect. In the Hernandez case, this Court was confronted with an
appealed case, i.e., Hernandez had been convicted by the trial court of the complex
crime of rebellion with murder, arson and robbery, and his plea to be released on bail
before the Supreme Court, pending appeal, gave birth to the now celebrated
Hernandez doctrine that the crime of rebellion complexed with murder, arson and
robbery does not exist. In the present cases, on the other hand, the Court is
confronted with an original case, i.e., where an information has been recently filed in
the trial court and the petitioners have not even pleaded thereto.

Furthermore, the Supreme Court, in the Hernandez case, was "ground-breaking" on

the issue of whether rebellion can be complexed with murder, arson, robbery, etc. In
the present cases, on the other hand, the prosecution and the lower court, not only
had the Hernandez doctrine (as case law), but Executive Order No. 187 of President
Corazon C. Aquino dated 5 June 1987 (as statutory law) to bind them to the legal
proposition that the crime of rebellion complexed with murder, and multiple frustrated
murder does not exist.

And yet, notwithstanding these unmistakable and controlling beacon lights-absent

when this Court laid down the Hernandez doctrine-the prosecution has insisted in
filing, and the lower court has persisted in hearing, an information charging the
petitioners with rebellion complexed with murder an multiple frustrated murder. That
information is clearly a nullity and plainly void ab initio. Its head should not be
allowed to surface. As a nullity in substantive law, it charges nothing; it has given rise
to nothing. The warrants of arrest issued pursuant thereto are as null and void as the
information on which they are anchored. And, since the entire question of the
information's validity is before the Court in these habeas corpus cases, I venture to
say that the information is fatally defective, even under procedural law, because it
charges more than one (1) offense (Sec. 13, Rule 110, Rules of Court).

I submit then that it is not for this Court to energize a dead and, at best, fatally
decrepit information by labelling or "baptizing" it differently from what it announces
itself to be. The prosecution must file an entirely new and proper information, for this
entire exercise to merit the serious consideration of the courts.

65
ACCORDINGLY, I vote to GRANT the petitions, QUASH the warrants of arrest, and
ORDER the information for rebellion complexed with murder and multiple frustrated
murder in Criminal Case Nos. 90-10941, RTC of Quezon City, DISMISSED.

Consequently, the petitioners should be ordered permanently released and their

bails cancelled.

Paras, J., concurs.

Separate Opinions

MELENCIO-HERRERA, J., concurring:

I join my colleagues in holding that the Hernandez doctrine, which has been with us
for the past three decades, remains good law and, thus, should remain undisturbed,
despite periodic challenges to it that, ironically, have only served to strengthen its
pronouncements.

I take exception to the view, however, that habeas corpus was not the proper
remedy.

Had the Information filed below charged merely the simple crime of Rebellion, that
proposition could have been plausible. But that Information charged Rebellion
complexed with Murder and Multiple Frustrated Murder, a crime which does not exist
in our statute books. The charge was obviously intended to make the penalty for the
most serious offense in its maximum period imposable upon the offender pursuant to
Article 48 of the Revised Penal Code. Thus, no bail was recommended in the
Information nor was any prescribed in the Warrant of Arrest issued by the Trial
Court.

Under the attendant circumstances, therefore, to have filed a Motion to Quash before
the lower Court would not have brought about the speedy relief from unlawful
restraint that petitioner was seeking. During the pendency of said Motion before the
lower Court, petitioner could have continued to languish in detention. Besides, the
Writ of Habeas Corpus may still issue even if another remedy, which is less effective,
may be availed of (Chavez vs. Court of Appeals, 24 SCRA 663).

It is true that habeas corpus would ordinarily not he when a person is under custody
by virtue of a process issued by a Court.

The Court, however, must have jurisdiction to issue the process. In this case, the
Court below must be deemed to have been ousted of jurisdiction when it illegally
curtailed petitioner's liberty. Habeas corpus is thus available.

The writ of habeas corpus is available to relieve persons from unlawful restraint. But
where the detention or confinement is the result of a process issued by the court or
judge or by virtue of a judgment or sentence, the writ ordinarily cannot be availed of.
It may still be invoked though if the process, judgment or sentence proceeded from a
court or tribunal the jurisdiction of which may be assailed. Even if it had authority to
act at the outset, it is now the prevailing doctrine that a deprivation of constitutional
right, if shown to exist, would oust it of jurisdiction. In such a case, habeas corpus
could be relied upon to regain one's liberty (Celeste vs. People, 31 SCRA 391)
[Emphasis emphasis].

66
The Petition for habeas corpus was precisely premised on the violation of petitioner's
constitutional right to bail inasmuch as rebellion, under the present state of the law,
is a bailable offense and the crime for which petitioner stands accused of and for
which he was denied bail is non-existent in law.

While litigants should, as a rule, ascend the steps of the judicial ladder, nothing
should stop this Court from taking cognizance of petitions brought before it raising
urgent constitutional issues, any procedural flaw notwithstanding.

The rules on habeas corpus are to be liberally construed (Ganaway v. Quilen, 42 Phil.
805), the writ of habeas corpus being the fundamental instrument for safeguarding
individual freedom against arbitrary and lawless state action. The scope and flexibility
of the writ-its capacity to reach all manner of illegal detention-its ability to cut through
barriers of form and procedural mazes-have always been emphasized and jealously
guarded by courts and lawmakers (Gumabon v. Director of Bureau of Prisons, 37
SCRA 420) [emphasis supplied].

The proliferation of cases in this Court, which followed in the wake of this Petition,
was brought about by the insistence of the prosecution to charge the crime of
Rebellion complexed with other common offenses notwithstanding the fact that this
Court had not yet ruled on the validity of that charge and had granted provisional
liberty to petitioner.

If, indeed, it is desired to make the crime of Rebellion a capital offense (now
punishable by reclusion perpetua), the remedy lies in legislation. But Article 142-A 1
of the Revised Penal Code, along with P.D. No. 942, were repealed, for being
"repressive," by EO No. 187 on 5 June 1987. EO 187 further explicitly provided that
Article 134 (and others enumerated) of the Revised Penal Code was "restored to its
full force and effect as it existed before said amendatory decrees." Having been so
repealed, this Court is bereft of power to legislate into existence, under the guise of
re-examining a settled doctrine, a "creature unknown in law"- the complex crime of
Rebellion with Murder. The remand of the case to the lower Court for further
proceedings is in order. The Writ of Habeas Corpus has served its purpose.

GUTIERREZ, JR., J., concurring:

I join the Court's decision to grant the petition. In reiterating the rule that under
existing law rebellion may not be complexed with murder, the Court emphasizes that
it cannot legislate a new-crime into existence nor prescribe a penalty for its
commission. That function is exclusively for Congress.

I write this separate opinion to make clear how I view certain issues arising from
these cases, especially on how the defective informations filed by the prosecutors
should have been treated.

I agree with the ponente that a petition for habeas corpus is ordinarily not the proper
procedure to assert the right to bail. Under the special circumstances of this case,
however, the petitioners had no other recourse. They had to come to us.

First, the trial court was certainly aware of the decision in People v. Hernandez, 99
Phil. 515 (1956) that there is no such crime in our statute books as rebellion
complexed with murder, that murder committed in connection with a rebellion is
absorbed by the crime of rebellion, and that a resort to arms resulting in the
destruction of life or property constitutes neither two or more offenses nor a complex
crime but one crime-rebellion pure and simple.

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Second, Hernandez has been the law for 34 years. It has been reiterated in equally
sensational cases. All lawyers and even law students are aware of the doctrine.
Attempts to have the doctrine re-examined have been consistently rejected by this
Court.

Third, President Marcos through the use of his then legislative powers, issued Pres.
Decree 942, thereby installing the new crime of rebellion complexed with offenses
like murder where graver penalties are imposed by law. However, President Aquino
using her then legislative powers expressly repealed PD 942 by issuing Exec. Order
187. She thereby erased the crime of rebellion complexed with murder and made it
clear that the Hernandez doctrine remains the controlling rule. The prosecution has
not explained why it insists on resurrecting an offense expressly wiped out by the
President. The prosecution, in effect, questions the action of the President in
repealing a repressive decree, a decree which, according to the repeal order, is
violative of human rights.

Fourth, any re-examination of the Hernandez doctrine brings the ex post facto
principle into the picture. Decisions of this Court form part of our legal system. Even
if we declare that rebellion may be complexed with murder, our declaration can not
be made retroactive where the effect is to imprison a person for a crime which did
not exist until the Supreme Court reversed itself.

And fifth, the attempts to distinguish this case from the Hernandez case by stressing
that the killings charged in the information were committed "on the occasion of, but
not a necessary means for, the commission of rebellion" result in outlandish
consequences and ignore the basic nature of rebellion. Thus, under the prosecution
theory a bomb dropped on PTV-4 which kills government troopers results in simple
rebellion because the act is a necessary means to make the rebellion succeed.
However, if the same bomb also kills some civilians in the neighborhood, the
dropping of the bomb becomes rebellion complexed with murder because the killing
of civilians is not necessary for the success of a rebellion and, therefore, the killings
are only "on the occasion of but not a 'necessary means for' the commission of
rebellion.

This argument is puerile.

The crime of rebellion consists of many acts. The dropping of one bomb cannot be
isolated as a separate crime of rebellion. Neither should the dropping of one hundred
bombs or the firing of thousands of machine gun bullets be broken up into a hundred
or thousands of separate offenses, if each bomb or each bullet happens to result in
the destruction of life and property. The same act cannot be punishable by separate
penalties depending on what strikes the fancy of prosecutors-punishment for the
killing of soldiers or retribution for the deaths of civilians. The prosecution also loses
sight of the regrettable fact that in total war and in rebellion the killing of civilians, the
laying waste of civilian economies, the massacre of innocent people, the blowing up
of passenger airplanes, and other acts of terrorism are all used by those engaged in
rebellion. We cannot and should not try to ascertain the intent of rebels for each
single act unless the act is plainly not connected to the rebellion. We cannot use
Article 48 of the Revised Penal Code in lieu of still-to- be-enacted legislation. The
killing of civilians during a rebel attack on military facilities furthers the rebellion and
is part of the rebellion.

The trial court was certainly aware of all the above considerations. I cannot
understand why the trial Judge issued the warrant of arrest which categorically
states therein that the accused was not entitled to bail. The petitioner was compelled
to come to us so he would not be arrested without bail for a nonexistent crime. The
trial court forgot to apply an established doctrine of the Supreme Court. Worse, it

68
issued a warrant which reversed 34 years of established procedure based on a well-
known Supreme Court ruling.

All courts should remember that they form part of an independent judicial system;
they do not belong to the prosecution service. A court should never play into the
hands of the prosecution and blindly comply with its erroneous manifestations.
Faced with an information charging a manifestly non-existent crime, the duty of a
trial court is to throw it out. Or, at the very least and where possible, make it conform
to the law.

A lower court cannot re-examine and reverse a decision of the Supreme Court
especially a decision consistently followed for 34 years. Where a Judge disagrees
with a Supreme Court ruling, he is free to express his reservations in the body of his
decision, order, or resolution. However, any judgment he renders, any order he
prescribes, and any processes he issues must follow the Supreme Court precedent.
A trial court has no jurisdiction to reverse or ignore precedents of the Supreme
Court. In this particular case, it should have been the Solicitor General coming to this
Court to question the lower court's rejection of the application for a warrant of arrest
without bail. It should have been the Solicitor-General provoking the issue of re-
examination instead of the petitioners asking to be freed from their arrest for a non-
existent crime.

The principle bears repeating:

Respondent Court of Appeals really was devoid of any choice at all. It could not have
ruled in any other way on the legal question raised. This Tribunal having spoken, its
duty was to obey. It is as simple as that. There is relevance to this excerpt from
Barrera v. Barrera. (L-31589, July 31, 1970, 34 SCRA 98) 'The delicate task of
ascertaining the significance that attaches to a constitutional or statutory provision, an
executive order, a procedural norm or a municipal ordinance is committed to the
judiciary. It thus discharges a role no less crucial than that appertaining to the other
two departments in the maintenance of the rule of law. To assure stability in legal
relations and avoid confusion, it has to speak with one voice. It does so with finality,
logically and rightly, through the highest judicial organ, this Court. What it says then
should be definitive and authoritative, binding on those occupying the lower ranks in
the judicial hierarchy. They have to defer and to submit.' (Ibid, 107. The opinion of
Justice Laurel in People v. Vera, 65 Phil. 56 [1937] was cited). The ensuing
paragraph of the opinion in Barrera further emphasizes the point: Such a thought was
reiterated in an opinion of Justice J.B.L. Reyes and further emphasized in these
words: 'Judge Gaudencio Cloribel need not be reminded that the Supreme Court, by
tradition and in our system of judicial administration, has the last word on what the
law is; it is the final arbiter of any justifiable controversy. There is only one Supreme
Court from whose decisions all other courts should take their bearings. (Ibid. Justice
J.B.L. Reyes spoke thus in Albert v. Court of First Instance of Manila (Br. VI), L-
26364, May 29, 1968, 23 SCRA 948, 961. (Tugade v. Court of Appeals, 85 SCRA
226 [1978]. See also Albert v. Court of First Instance, 23 SCRA 948 [1968] and Vir-
Jen Shipping and Marine Services, Inc. v. NLRC, 125 SCRA 577 [1983])

I find the situation in Spouses Panlilio v. Prosecutors Fernando de Leon, et al. even
more inexplicable. In the case of the Panlilios, any probable cause to commit the
non- existent crime of rebellion complexed with murder exists only in the minds of
the prosecutors, not in the records of the case.

I have gone over the records and pleadings furnished to the members of the
Supreme Court. I listened intently to the oral arguments during the hearing and it
was quite apparent that the constitutional requirement of probable cause was not
satisfied. In fact, in answer to my query for any other proofs to support the issuance
of a warrant of arrest, the answer was that the evidence would be submitted in due
time to the trial court.

69
The spouses Panlilio and one parent have been in the restaurant business for
decades. Under the records of these petitions, any restaurant owner or hotel
manager who serves food to rebels is a co-conspirator in the rebellion. The absurdity
of this proposition is apparent if we bear in mind that rebels ride in buses and
jeepneys, eat meals in rural houses when mealtime finds them in the vicinity, join
weddings, fiestas, and other parties, play basketball with barrio youths, attend
masses and church services and otherwise mix with people in various gatherings.
Even if the hosts recognize them to be rebels and fail to shoo them away, it does not
necessarily follow that the former are co-conspirators in a rebellion.

The only basis for probable cause shown by the records of the Panlilio case is the
alleged fact that the petitioners served food to rebels at the Enrile household and a
hotel supervisor asked two or three of their waiters, without reason, to go on a
vacation. Clearly, a much, much stronger showing of probable cause must be
shown.

In Salonga v. Cruz Paño, 134 SCRA 438 (1985), then Senator Salonga was charged
as a conspirator in the heinous bombing of innocent civilians because the man who
planted the bomb had, sometime earlier, appeared in a group photograph taken
during a birthday party in the United States with the Senator and other guests. It was
a case of conspiracy proved through a group picture. Here, it is a case of conspiracy
sought to proved through the catering of food.

The Court in Salonga stressed:

The purpose of a preliminary investigation is to secure the innocent against hasty,

malicious and oppressive prosecution, and to protect him from an open and public
accusation of crime, from the trouble, expense and anxiety of a public trial, and also
to protect the state from useless and expensive trials. (Trocio v. Manta, 118 SCRA
241; citing Hashimn v. Boncan, 71 Phil. 216). The right to a preliminary investigation
is a statutory grant, and to withhold it would be to transgress constitutional due
process. (See People v. Oandasa, 25 SCRA 277) However, in order to satisfy the
due process clause it is not enough that the preliminary investigation is conducted in
the sense of making sure that a transgressor shall not escape with impunity. A
preliminary investigation serves not only the purposes of the State. More important, it
is a part of the guarantees of freedom and fair play which are birthrights of all who live
in our country. It is, therefore, imperative upon the fiscal or the judge as the case may
be, to relieve the accused from the pain of going through a trial once it is ascertained
that the evidence is insufficient to sustain a prima facie case or that no probable
cause exists to form a sufficient belief as to the guilt of the accused. Although there is
no general formula or fixed rule for the determination of probable cause since the
same must be decided in the light of the conditions obtaining in given situations and
its existence depends to a large degree upon the finding or opinion of the judge
conducting the examination, such a finding should not disregard the facts before the
judge nor run counter to the clear dictates of reason (See La Chemise Lacoste, S.A.
v. Fernandez, 129 SCRA 391). The judge or fiscal, therefore, should not go on with
the prosecution in the hope that some credible evidence might later turn up during
trial for this would be a flagrant violation of a basic right which the courts are created
to uphold. It bears repeating that the judiciary lives up to its mission by vitalizing and
not denigrating constitutional rights. So it has been before. It should continue to be
so. (id., pp. 461- 462)

Because of the foregoing, I take exception to that part of the ponencia which will
read the informations as charging simple rebellion. This case did not arise from
innocent error. If an information charges murder but its contents show only the
ingredients of homicide, the Judge may rightly read it as charging homicide. In these
cases, however, there is a deliberate attempt to charge the petitioners for an offense
which this Court has ruled as non-existent. The prosecution wanted Hernandez to be
reversed. Since the prosecution has filed informations for a crime which, under our
rulings, does not exist, those informations should be treated as null and void. New
informations charging the correct offense should be filed. And in G.R. No. 92164, an

70
extra effort should be made to see whether or not the Principle in Salonga v. Cruz
Patio, et al. (supra) has been violated.

The Court is not, in any way, preventing the Government from using more effective
weapons to suppress rebellion. If the Government feels that the current situation
calls for the imposition of more severe penalties like death or the creation of new
crimes like rebellion complexed with murder, the remedy is with Congress, not the
courts.

I, therefore, vote to GRANT the petitions and to ORDER the respondent court to
DISMISS the void informations for a non-existent crime.

FELICIANO, J., concurring:

I concur in the result reached by the majority of the Court.

I believe that there are certain aspects of the Hernandez doctrine that, as an abstract
question of law, could stand reexamination or clarification. I have in mind in particular
matters such as the correct or appropriate relationship between Article 134 and
Article 135 of the Revised Penal Code. This is a matter which relates to the legal
concept of rebellion in our legal system. If one examines the actual terms of Article
134 (entitled: "Rebellion or Insurrection-How Committed"), it would appear that this
Article specifies both the overt acts and the criminal purpose which, when put
together, would constitute the offense of rebellion. Thus, Article 134 states that "the
crime of rebellion is committed by rising publicly and taking arms against the
Government "(i.e., the overt acts comprising rebellion), "for the purpose of (i.e., the
specific criminal intent or political objective) removing from the allegiance to said
government or its laws the territory of the Republic of the Philippines or any part
thereof, or any body of land, naval or other armed forces, or depriving the Chief
Executive or the Legislature, wholly or partially, of their powers or prerogatives." At
the same time, Article 135 (entitled: "Penalty for Rebellion or Insurrection.") sets out
a listing of acts or particular measures which appear to fall under the rubric of
rebellion or insurrection: "engaging in war against the forces of the Government,
destroying property or committing serious violence, exacting contributions or
diverting public funds from the lawful purpose for which they have been
appropriated." Are these modalities of rebellion generally? Or are they particular
modes by which those "who promote [ ], maintain [ ] or head [ ] a rebellion or
insurrection" commit rebellion, or particular modes of participation in a rebellion by
public officers or employees? Clearly, the scope of the legal concept of rebellion
relates to the distinction between, on the one hand, the indispensable acts or
ingredients of the crime of rebellion under the Revised Penal Code and, on the other
hand, differing optional modes of seeking to carry out the political or social objective
of the rebellion or insurrection.

The difficulty that is at once raised by any effort to examine once more even the
above threshold questions is that the results of such re-examination may well be that
acts which under the Hernandez doctrine are absorbed into rebellion, may be
characterized as separate or discrete offenses which, as a matter of law, can either
be prosecuted separately from rebellion or prosecuted under the provisions of Article
48 of the Revised Penal Code, which (both Clause 1 and Clause 2 thereof) clearly
envisage the existence of at least two (2) distinct offenses. To reach such a
conclusion in the case at bar, would, as far as I can see, result in colliding with the
fundamental non-retroactivity principle (Article 4, Civil Code; Article 22, Revised
Penal Code; both in relation to Article 8, Civil Code).

71
The non-retroactivity rule applies to statutes principally. But, statutes do not exist in
the abstract but rather bear upon the lives of people with the specific form given
them by judicial decisions interpreting their norms. Judicial decisions construing
statutory norms give specific shape and content to such norms. In time, the statutory
norms become encrusted with the glosses placed upon them by the courts and the
glosses become integral with the norms (Cf Caltex v. Palomar, 18 SCRA 247
[1966]). Thus, while in legal theory, judicial interpretation of a statute becomes part
of the law as of the date that the law was originally enacted, I believe this theory is
not to be applied rigorously where a new judicial doctrine is announced, in particular
one overruling a previous existing doctrine of long standing (here, 36 years) and
most specially not where the statute construed is criminal in nature and the new
doctrine is more onerous for the accused than the pre-existing one (People v.
Jabinal, 55 SCRA 607 [1974]; People v. Licera, 65 SCRA 270 [1975]; Gumabon v.
Director of Prisons, 37 SCRA 420 [1971]). Moreover, the non-retroactivity rule
whether in respect of legislative acts or judicial decisions has constitutional
implications. The prevailing rule in the United States is that a judicial decision that
retroactively renders an act criminal or enhances the severity of the penalty
prescribed for an offense, is vulnerable to constitutional challenge based upon the
rule against ex post facto laws and the due process clause (Bouie v. City of
Columbia, 378 US 347,12 L. Ed. 2d 894 [1964]; Marks v. U.S., 43 US 188, 51 L. Ed.
2d 260 [1977]; Devine v. New Mexico Department of Corrections, 866 F. 2d 339
[1989]).

It is urged by the Solicitor General that the non-retroactivity principle does not
present any real problem for the reason that the Hernandez doctrine was based
upon Article 48, second clause, of the Revised Penal Code and not upon the first
clause thereof, while it is precisely the first clause of Article 48 that the Government
here invokes. It is, however, open to serious doubt whether Hernandez can
reasonably be so simply and sharply characterized. And assuming the Hernandez
could be so characterized, subsequent cases refer to the Hernandez doctrine in
terms which do not distinguish clearly between the first clause and the second
clause of Article 48 (e.g., People v. Geronimo, 100 Phil. 90 [1956]; People v.
Rodriguez, 107 Phil. 659 [1960]). Thus, it appears to me that the critical question
would be whether a man of ordinary intelligence would have necessarily read or
understood the Hernandez doctrine as referring exclusively to Article 48, second
clause. Put in slightly different terms, the important question would be whether the
new doctrine here proposed by the Government could fairly have been derived by a
man of average intelligence (or counsel of average competence in the law) from an
examination of Articles 134 and 135 of the Revised Penal Code as interpreted by the
Court in the Hernandez and subsequent cases. To formulate the question ill these
terms would almost be to compel a negative answer, especially in view of the
conclusions reached by the Court and its several Members today.

Finally, there appears to be no question that the new doctrine that the Government
would have us discover for the first time since the promulgation of the Revised Penal
Code in 1932, would be more onerous for the respondent accused than the simple
application of the Hernandez doctrine that murders which have been committed on
the occasion of and in furtherance of the crime of rebellion must be deemed
absorbed in the offense of simple rebellion.

I agree therefore that the information in this case must be viewed as charging only
the crime of simple rebellion.

FERNAN, C.J., concurring and dissenting:

72
I am constrained to write this separate opinion on what seems to be a rigid
adherence to the 1956 ruling of the Court. The numerous challenges to the doctrine
enunciated in the case of People vs. Hernandez, 99 Phil. 515 (1956) should at once
demonstrate the need to redefine the applicability of said doctrine so as to make it
conformable with accepted and well-settled principles of criminal law and
jurisprudence.

To my mind, the Hernandez doctrine should not be interpreted as an all-embracing

authority for the rule that all common crimes committed on the occasion, or in
furtherance of, or in connection with, rebellion are absorbed by the latter. To that
extent, I cannot go along with the view of the majority in the instant case that
'Hernandez remains binding doctrine operating to prohibit the complexing of rebellion
with any other offense committed on the occasion thereof, either as a means
necessary to its commission or as an unintended effect of an activity that constitutes
rebellion" (p. 9, Decision).

The Hernandez doctrine has served the purpose for which it was appealed by the
Court in 1956 during the communist-inspired rebellion of the Huks. The changes in
our society in the span of 34 years since then have far-reaching effects on the all-
embracing applicability of the doctrine considering the emergence of alternative
modes of seizing the powers of the duly constituted Government not contemplated in
Articles 134 and 135 of the Revised Penal Code and their consequent effects on the
lives of our people. The doctrine was good law then, but I believe that there is a
certain aspect of the Hernandez doctrine that needs clarification.

With all due respect to the views of my brethren in the Court, I believe that the Court,
in the instant case, should have further considered that distinction between acts or
offenses which are indispensable in the commission of rebellion, on the one hand,
and those acts or offenses that are merely necessary but not indispensable in the
commission of rebellion, on the other. The majority of the Court is correct in
adopting, albeit impliedly, the view in Hernandez case that when an offense
perpetrated as a necessary means of committing another, which is an element of the
latter, the resulting interlocking crimes should be considered as only one simple
offense and must be deemed outside the operation of the complex crime provision
(Article 48) of the Revised Penal Code. As in the case of Hernandez, the Court,
however, failed in the instant case to distinguish what is indispensable from what is
merely necessary in the commission of an offense, resulting thus in the rule that
common crimes like murder, arson, robbery, etc. committed in the course or on the
occasion of rebellion are absorbed or included in the latter as elements thereof.

The relevance of the distinction is significant, more particularly, if applied to

contemporaneous events happening in our country today. Theoretically, a crime
which is indispensable in the commission of another must necessarily be an element
of the latter; but a crime that is merely necessary but not indispensable in the
commission of another is not an element of the latter, and if and when actually
committed, brings the interlocking crime within the operation of the complex crime
provision (Art. 48) of the Revised Penal Code. With that distinction, common crimes
committed against Government forces and property in the course of rebellion are
properly considered indispensable overt acts of rebellion and are logically absorbed
in it as virtual ingredients or elements thereof, but common crimes committed against
the civilian population in the course or on the occasion of rebellion and in furtherance
thereof, may be necessary but not indispensable in committing the latter, and may,
therefore, not be considered as elements of the said crime of rebellion. To illustrate,
the deaths occurring during armed confrontation or clashes between government
forces and the rebels are absorbed in the rebellion, and would be those resulting
from the bombing of military camps and installations, as these acts are indispensable
in carrying out the rebellion. But deliberately shooting down an unarmed innocent

73
civilian to instill fear or create chaos among the people, although done in the
furtherance of the rebellion, should not be absorbed in the crime of rebellion as the
felonious act is merely necessary, but not indispensable. In the latter case, Article 48
of the Revised Penal Code should apply.

The occurrence of a coup d' etat in our country as a mode of seizing the powers of
the duly-constituted government by staging surprise attacks or occupying centers of
powers, of which this Court should take judicial notice, has introduced a new
dimension to the interpretation of the provisions on rebellion and insurrection in the
Revised Penal Code. Generally, as a mode of seizing the powers of the duly
constituted government, it falls within the contemplation of rebellion under the
Revised Penal Code, but, strictly construed, a coup d'etat per se is a class by itself.
The manner of its execution and the extent and magnitude of its effects on the lives
of the people distinguish a coup d'etat from the traditional definition and modes of
commission attached by the Revised Penal Code to the crime of rebellion as applied
by the Court to the communist-inspired rebellion of the 1950's. A coup d'etat may be
executed successfully without its perpetrators resorting to the commission of other
serious crimes such as murder, arson, kidnapping, robbery, etc. because of the
element of surprise and the precise timing of its execution. In extreme cases where
murder, arson, robbery, and other common crimes are committed on the occasion of
a coup d' etat, the distinction referred to above on what is necessary and what is
indispensable in the commission of the coup d'etat should be painstakingly
considered as the Court should have done in the case of herein petitioners.

I concur in the result insofar as the other issues are resolved by the Court but I take
exception to the vote of the majority on the broad application of the Hernandez
doctrine.

BIDIN, J., concurring and dissenting:

I concur with the majority opinion except as regards the dispositive portion thereof
which orders the remand of the case to the respondent judge for further proceedings
to fix the amount of bail to be posted by the petitioner.

I submit that the proceedings need not be remanded to the respondent judge for the
purpose of fixing bail since we have construed the indictment herein as charging
simple rebellion, an offense which is bailable. Consequently, habeas corpus is the
proper remedy available to petitioner as an accused who had been charged with
simple rebellion, a bailable offense but who had been denied his right to bail by the
respondent judge in violation of petitioner's constitutional right to bail. In view thereof,
the responsibility of fixing the amount of bail and approval thereof when filed,
devolves upon us, if complete relief is to be accorded to petitioner in the instant
proceedings.

It is indubitable that before conviction, admission to bail is a matter of right to the

defendant, accused before the Regional Trial Court of an offense less than capital
(Section 13 Article III, Constitution and Section 3, Rule 114). Petitioner is, before Us,
on a petition for habeas corpus praying, among others, for his provisional release on
bail. Since the offense charged (construed as simple rebellion) admits of bail, it is
incumbent upon us m the exercise of our jurisdiction over the petition for habeas
corpus (Section 5 (1), Article VIII, Constitution; Section 2, Rule 102), to grant
petitioner his right to bail and having admitted him to bail, to fix the amount thereof in
such sums as the court deems reasonable. Thereafter, the rules require that "the
proceedings together with the bond" shall forthwith be certified to the respondent trial
court (Section 14, Rule 102).

74
Accordingly, the cash bond in the amount of P 100,000.00 posted by petitioner for
his provisional release pursuant to our resolution dated March 6, 1990 should now
be deemed and admitted as his bail bond for his provisional release in the case
(simple rebellion) pending before the respondent judge, without necessity of a
remand for further proceedings, conditioned for his (petitioner's) appearance before
the trial court to abide its order or judgment in the said case.

SARMIENTO, J., concurring and dissenting:

I agree that People v. Hernandez 1 should abide. More than three decades after
which it was penned, it has firmly settled in the tomes of our jurisprudence as correct
doctrine.

As Hernandez put it, rebellion means "engaging m war against the forces of the
government," 2 which implies "resort to arms, requisition of property and services,
collection of taxes and contributions, restraint of liberty, damage to property, physical
injuries and loss of life, and the hunger, illness and unhappiness that war leaves in
its wake. ..." 3 whether committed in furtherance, of as a necessary means for the
commission, or in the course, of rebellion. To say that rebellion may be complexed
with any other offense, in this case murder, is to play into a contradiction in terms
because exactly, rebellion includes murder, among other possible crimes.

I also agree that the information may stand as an accusation for simple rebellion.
Since the acts complained of as constituting rebellion have been embodied in the
information, mention therein of murder as a complexing offense is a surplusage,
because in any case, the crime of rebellion is left fully described. 4

At any rate, the government need only amend the information by a clerical
correction, since an amendment will not alter its substance.

I dissent, however, insofar as the majority orders the remand of the matter of bail to
the lower court. I take it that when we, in our Resolution of March 6, 1990, granted
the petitioner "provisional liberty" upon the filing of a bond of P100,000.00, we
granted him bail. The fact that we gave him "provisional liberty" is in my view, of no
moment, because bail means provisional liberty. It will serve no useful purpose to
have the trial court hear the incident again when we ourselves have been satisfied
that the petitioner is entitled to temporary freedom.

PADILLA, J., dissenting:

I concur in the majority opinion insofar as it holds that the ruling in People vs.
Hernandez, 99 Phil. 515 "remains binding doctrine operating to prohibit the
complexing of rebellion with any other offense committed on the occasion thereof,
either as a means necessary to its commission or as an unintended effect of an
activity that constitutes rebellion."

I dissent, however, from the majority opinion insofar as it holds that the information in
question, while charging the complex crime of rebellion with murder and multiple
frustrated murder, "is to be read as charging simple rebellion."

The present cases are to be distinguished from the Hernandez case in at least one
(1) material respect. In the Hernandez case, this Court was confronted with an
appealed case, i.e., Hernandez had been convicted by the trial court of the complex

75
crime of rebellion with murder, arson and robbery, and his plea to be released on bail
before the Supreme Court, pending appeal, gave birth to the now celebrated
Hernandez doctrine that the crime of rebellion complexed with murder, arson and
robbery does not exist. In the present cases, on the other hand, the Court is
confronted with an original case, i.e., where an information has been recently filed in
the trial court and the petitioners have not even pleaded thereto.

Furthermore, the Supreme Court, in the Hernandez case, was "ground-breaking" on

the issue of whether rebellion can be complexed with murder, arson, robbery, etc. In
the present cases, on the other hand, the prosecution and the lower court, not only
had the Hernandez doctrine (as case law), but Executive Order No. 187 of President
Corazon C. Aquino dated 5 June 1987 (as statutory law) to bind them to the legal
proposition that the crime of rebellion complexed with murder, and multiple frustrated
murder does not exist.

And yet, notwithstanding these unmistakable and controlling beacon lights-absent

when this Court laid down the Hernandez doctrine-the prosecution has insisted in
filing, and the lower court has persisted in hearing, an information charging the
petitioners with rebellion complexed with murder an multiple frustrated murder. That
information is clearly a nullity and plainly void ab initio. Its head should not be
allowed to surface. As a nullity in substantive law, it charges nothing; it has given rise
to nothing. The warrants of arrest issued pursuant thereto are as null and void as the
information on which they are anchored. And, since the entire question of the
information's validity is before the Court in these habeas corpus cases, I venture to
say that the information is fatally defective, even under procedural law, because it
charges more than one (1) offense (Sec. 13, Rule 110, Rules of Court).

I submit then that it is not for this Court to energize a dead and, at best, fatally
decrepit information by labelling or "baptizing" it differently from what it announces
itself to be. The prosecution must file an entirely new and proper information, for this
entire exercise to merit the serious consideration of the courts.

ACCORDINGLY, I vote to GRANT the petitions, QUASH the warrants of arrest, and
ORDER the information for rebellion complexed with murder and multiple frustrated
murder in Criminal Case Nos. 90-10941, RTC of Quezon City, DISMISSED.

Consequently, the petitioners should be ordered permanently released and their

bails cancelled.

Paras, J., concurs.

G.R. No. L-30642 April 30, 1985

PERFECTO S. FLORESCA, in his own behalf and on behalf of the minors

ROMULO and NESTOR S. FLORESCA; and ERLINDA FLORESCA-GABUYO,
PEDRO S. FLORESCA, JR., CELSO S. FLORESCA, MELBA S. FLORESCA,
JUDITH S. FLORESCA and CARMEN S. FLORESCA;

LYDIA CARAMAT VDA. DE MARTINEZ in her own behalf and on behalf of her
minor children LINDA, ROMEO, ANTONIO JEAN and ELY, all surnamed
Martinez; and DANIEL MARTINEZ and TOMAS MARTINEZ;

SALUSTIANA ASPIRAS VDA. DE OBRA, in her own behalf and on behalf of her
minor children JOSE, ESTELA, JULITA SALUD and DANILO, all surnamed
OBRA;

76
LYDIA CULBENGAN VDA. DE VILLAR, in her own behalf and on behalf of her
minor children EDNA, GEORGE and LARRY III, all surnamed VILLAR;

DOLORES LOLITA ADER VDA. DE LANUZA, in her own behalf and on behalf of
her minor children EDITHA, ELIZABETH, DIVINA, RAYMUNDO, NESTOR and
AURELIO, JR. all surnamed LANUZA;

EMERENCIANA JOSE VDA. DE ISLA, in her own behalf and on behalf of her
minor children JOSE, LORENZO, JR., MARIA, VENUS and FELIX, all surnamed
ISLA, petitioners,
vs.
PHILEX MINING CORPORATION and HON. JESUS P. MORFE, Presiding Judge
of Branch XIII, Court of First Instance of Manila, respondents.

Rodolfo C. Pacampara for petitioners.

Tito M. Villaluna for respondents.

MAKASIAR, J.:

This is a petition to review the order of the former Court of First Instance of Manila,
Branch XIII, dated December 16, 1968 dismissing petitioners' complaint for damages
on the ground of lack of jurisdiction.

Petitioners are the heirs of the deceased employees of Philex Mining Corporation
(hereinafter referred to as Philex), who, while working at its copper mines
underground operations at Tuba, Benguet on June 28, 1967, died as a result of the
cave-in that buried them in the tunnels of the mine. Specifically, the complaint
alleges that Philex, in violation of government rules and regulations, negligently and
deliberately failed to take the required precautions for the protection of the lives of its
men working underground. Portion of the complaint reads:

xxx xxx xxx

9. That for sometime prior and up to June 28,1967, the defendant PHILEX, with gross
and reckless negligence and imprudence and deliberate failure to take the required
precautions for the due protection of the lives of its men working underground at the
time, and in utter violation of the laws and the rules and regulations duly promulgated
by the Government pursuant thereto, allowed great amount of water and mud to
accumulate in an open pit area at the mine above Block 43-S-1 which seeped
through and saturated the 600 ft. column of broken ore and rock below it, thereby
exerting tremendous pressure on the working spaces at its 4300 level, with the result
that, on the said date, at about 4 o'clock in the afternoon, with the collapse of all
underground supports due to such enormous pressure, approximately 500,000 cubic
feet of broken ores rocks, mud and water, accompanied by surface boulders, blasted
through the tunnels and flowed out and filled in, in a matter of approximately five (5)
minutes, the underground workings, ripped timber supports and carried off materials,
machines and equipment which blocked all avenues of exit, thereby trapping within its
tunnels of all its men above referred to, including those named in the next preceding
paragraph, represented by the plaintiffs herein;

10. That out of the 48 mine workers who were then working at defendant PHILEX's
mine on the said date, five (5) were able to escape from the terrifying holocaust; 22
were rescued within the next 7 days; and the rest, 21 in number, including those
referred to in paragraph 7 hereinabove, were left mercilessly to their fate,
notwithstanding the fact that up to then, a great many of them were still alive,
entombed in the tunnels of the mine, but were not rescued due to defendant
PHILEX's decision to abandon rescue operations, in utter disregard of its bounden
legal and moral duties in the premises;

77
 xxx xxx xxx

13. That defendant PHILEX not only violated the law and the rules and regulations
duly promulgated by the duly constituted authorities as set out by the Special
Committee above referred to, in their Report of investigation, pages 7-13, Annex 'B'
hereof, but also failed completely to provide its men working underground the
necessary security for the protection of their lives notwithstanding the fact that it had
vast financial resources, it having made, during the year 1966 alone, a total operating
income of P 38,220,254.00, or net earnings, after taxes of P19,117,394.00, as per its
llth Annual Report for the year ended December 31, 1966, and with aggregate assets
totalling P 45,794,103.00 as of December 31, 1966;

xxx xxx xxx

(pp. 42-44, rec.)

A motion to dismiss dated May 14, 1968 was filed by Philex alleging that the causes
of action of petitioners based on an industrial accident are covered by the provisions
of the Workmen's Compensation Act (Act 3428, as amended by RA 772) and that
the former Court of First Instance has no jurisdiction over the case. Petitioners filed
an opposition dated May 27, 1968 to the said motion to dismiss claiming that the
causes of action are not based on the provisions of the Workmen's Compensation
Act but on the provisions of the Civil Code allowing the award of actual, moral and
exemplary damages, particularly:

Art. 2176. Whoever by act or omission causes damage to another, there being fault
or negligence, is obliged to pay for the damage done. Such fault or negligence, if
there is no pre- existing contractual relation between the parties, is called a quasi-
delict and is governed by the provisions of this Chapter.

Art. 2178. The provisions of articles 1172 to 1174 are also applicable to a quasi-
delict.

(b) Art. 1173—The fault or negligence of the obligor consists in the omission of that
diligence which is required by the nature of the obligation and corresponds with the
circumstances of the persons, of the time and of the place. When negligence shows
bad faith, the provisions of Articles 1171 and 2201, paragraph 2 shall apply.

Art. 2201. x x x x x x x x x

In case of fraud, bad faith, malice or wanton attitude, the obligor shall be responsible
for all damages which may be reasonably attributed to the non-performance of the
obligation.

Art. 2231. In quasi-delicts, exemplary damages may be granted if the defendant

acted with gross negligence.

After a reply and a rejoinder thereto were filed, respondent Judge issued an order
dated June 27, 1968 dismissing the case on the ground that it falls within the
exclusive jurisdiction of the Workmen's Compensation Commission. On petitioners'
motion for reconsideration of the said order, respondent Judge, on September 23,
1968, reconsidered and set aside his order of June 27, 1968 and allowed Philex to
file an answer to the complaint. Philex moved to reconsider the aforesaid order
which was opposed by petitioners.

On December 16, 1968, respondent Judge dismissed the case for lack of jurisdiction
and ruled that in accordance with the established jurisprudence, the Workmen's
Compensation Commission has exclusive original jurisdiction over damage or
compensation claims for work-connected deaths or injuries of workmen or
employees, irrespective of whether or not the employer was negligent, adding that if
the employer's negligence results in work-connected deaths or injuries, the employer

78
shall, pursuant to Section 4-A of the Workmen's Compensation Act, pay additional
compensation equal to 50% of the compensation fixed in the Act.

Petitioners thus filed the present petition.

In their brief, petitioners raised the following assignment of errors:

THE LOWER COURT ERRED IN DISMISSING THE PLAINTIFFS- PETITIONERS'

COMPLAINT FOR LACK OF JURISDICTION.

II

THE LOWER COURT ERRED IN FAILING TO CONSIDER THE CLEAR

DISTINCTION BETWEEN CLAIMS FOR DAMAGES UNDER THE CIVIL CODE AND
CLAIMS FOR COMPENSATION UNDER THE WORKMEN'S COMPENSATION
ACT.

In the first assignment of error, petitioners argue that the lower court has jurisdiction
over the cause of action since the complaint is based on the provisions of the Civil
Code on damages, particularly Articles 2176, 2178, 1173, 2201 and 2231, and not
on the provisions of the Workmen's Compensation Act. They point out that the
complaint alleges gross and brazen negligence on the part of Philex in failing to take
the necessary security for the protection of the lives of its employees working
underground. They also assert that since Philex opted to file a motion to dismiss in
the court a quo, the allegations in their complaint including those contained in the
annexes are deemed admitted.

In the second assignment of error, petitioners asseverate that respondent Judge

failed to see the distinction between the claims for compensation under the
Workmen's Compensation Act and the claims for damages based on gross
negligence of Philex under the Civil Code. They point out that workmen's
compensation refers to liability for compensation for loss resulting from injury,
disability or death of the working man through industrial accident or disease, without
regard to the fault or negligence of the employer, while the claim for damages under
the Civil Code which petitioners pursued in the regular court, refers to the employer's
liability for reckless and wanton negligence resulting in the death of the employees
and for which the regular court has jurisdiction to adjudicate the same.

On the other hand, Philex asserts that work-connected injuries are compensable
exclusively under the provisions of Sections 5 and 46 of the Workmen's
Compensation Act, which read:

SEC. 5. Exclusive right to compensation.—The rights and remedies granted by this

Act to an employee by reason of a personal injury entitling him to compensation shall
exclude all other rights and remedies accruing to the employee, his personal
representatives, dependents or nearest of kin against the employer under the Civil
Code and other laws because of said injury ...

SEC. 46. Jurisdiction.— The Workmen's Compensation Commissioner shall have

exclusive jurisdiction to hear and decide claims for compensation under the
Workmen's Compensation Act, subject to appeal to the Supreme Court, ...

Philex cites the case of Manalo vs. Foster Wheeler (98 Phil. 855 [1956]) where it was
held that "all claims of workmen against their employer for damages due to accident

79
suffered in the course of employment shall be investigated and adjudicated by the
Workmen's Compensation Commission," subject to appeal to the Supreme Court.

Philex maintains that the fact that an employer was negligent, does not remove the
case from the exclusive character of recoveries under the Workmen's Compensation
Act; because Section 4-A of the Act provides an additional compensation in case the
employer fails to comply with the requirements of safety as imposed by law to
prevent accidents. In fact, it points out that Philex voluntarily paid the compensation
due the petitioners and all the payments have been accepted in behalf of the
deceased miners, except the heirs of Nazarito Floresca who insisted that they are
entitled to a greater amount of damages under the Civil Code.

In the hearing of this case, then Undersecretary of Labor Israel Bocobo, then Atty.
Edgardo Angara, now President of the University of the Philippines, Justice Manuel
Lazaro, as corporate counsel and Assistant General Manager of the GSIS Legal
Affairs Department, and Commissioner on Elections, formerly UP Law Center
Director Froilan Bacungan, appeared as amici curiae and thereafter, submitted their
respective memoranda.

The issue to be resolved as WE stated in the resolution of November 26, 1976, is:

Whether the action of an injured employee or worker or that of his heirs in case of his
death under the Workmen's Compensation Act is exclusive, selective or cumulative,
that is to say, whether his or his heirs' action is exclusively restricted to seeking the
limited compensation provided under the Workmen's Compensation Act or whether
they have a right of selection or choice of action between availing of the worker's right
under the Workmen's Compensation Act and suing in the regular courts under the
Civil Code for higher damages (actual, moral and/or exemplary) from the employer by
virtue of negligence (or fault) of the employer or of his other employees or whether
they may avail cumulatively of both actions, i.e., collect the limited compensation
under the Workmen's Compensation Act and sue in addition for damages in the
regular courts.

There are divergent opinions in this case. Justice Lazaro is of the opinion that an
injured employee or worker, or the heirs in case of his death, may initiate a complaint
to recover damages (not compensation under the Workmen's Compensation Act)
with the regular court on the basis of negligence of an employer pursuant to the Civil
Code provisions. Atty. Angara believes otherwise. He submits that the remedy of an
injured employee for work-connected injury or accident is exclusive in accordance
with Section 5 of the Workmen's Compensation Act, while Atty. Bacungan's position
is that the action is selective. He opines that the heirs of the employee in case of his
death have a right of choice to avail themselves of the benefits provided under the
Workmen's Compensation Act or to sue in the regular court under the Civil Code for
higher damages from the employer by virtue of negligence of the latter. Atty.
Bocobo's stand is the same as that of Atty. Bacungan and adds that once the heirs
elect the remedy provided for under the Act, they are no longer entitled to avail
themselves of the remedy provided for under the Civil Code by filing an action for
higher damages in the regular court, and vice versa.

On August 3, 1978, petitioners-heirs of deceased employee Nazarito Floresca filed a

motion to dismiss on the ground that they have amicably settled their claim with
respondent Philex. In the resolution of September 7, 1978, WE dismissed the
petition only insofar as the aforesaid petitioners are connected, it appearing that
there are other petitioners in this case.

WE hold that the former Court of First Instance has jurisdiction to try the case,

It should be underscored that petitioners' complaint is not for compensation based on

the Workmen's Compensation Act but a complaint for damages (actual, exemplary

80
and moral) in the total amount of eight hundred twenty-five thousand (P825,000.00)
pesos. Petitioners did not invoke the provisions of the Workmen's Compensation Act
to entitle them to compensation thereunder. In fact, no allegation appeared in the
complaint that the employees died from accident arising out of and in the course of
their employments. The complaint instead alleges gross and reckless negligence
and deliberate failure on the part of Philex to protect the lives of its workers as a
consequence of which a cave-in occurred resulting in the death of the employees
working underground. Settled is the rule that in ascertaining whether or not the
cause of action is in the nature of workmen's compensation claim or a claim for
damages pursuant to the provisions of the Civil Code, the test is the averments or
allegations in the complaint (Belandres vs. Lopez Sugar Mill, Co., Inc., 97 Phil. 100).

In the present case, there exists between Philex and the deceased employees a
contractual relationship. The alleged gross and reckless negligence and deliberate
failure that amount to bad faith on the part of Philex, constitute a breach of contract
for which it may be held liable for damages. The provisions of the Civil Code on
cases of breach of contract when there is fraud or bad faith, read:

Art. 2232. In contracts and quasi-contracts, the court may award exemplary damages
if the defendant acted in a wanton, fraudulent, reckless, oppressive or malevolent
manner.

Art. 2201. In contracts and quasi-contracts, the damages for which the obligor who
acted in good faith is able shall be those that are the natural and probable
consequences of the breach of the obligation, and which the parties have foreseen or
could have reasonably foreseen at the time the obligation was constituted.

In cases of fraud, bad faith, malice or wanton attitude, the obligor shall be responsible
for all damages which may be reasonably attributed to the non-performance of the
obligation.

Furthermore, Articles 2216 et seq., Civil Code, allow the payment of all kinds of
damages, as assessed by the court.

The rationale in awarding compensation under the Workmen's Compensation Act

differs from that in giving damages under the Civil Code. The compensation acts are
based on a theory of compensation distinct from the existing theories of damages,
payments under the acts being made as compensation and not as damages (99
C.J.S. 53). Compensation is given to mitigate the harshness and insecurity of
industrial life for the workman and his family. Hence, an employer is liable whether
negligence exists or not since liability is created by law. Recovery under the Act is
not based on any theory of actionable wrong on the part of the employer (99 C.J.S.
36).

In other words, under the compensation acts, the employer is liable to pay
compensation benefits for loss of income, as long as the death, sickness or injury is
work-connected or work-aggravated, even if the death or injury is not due to the fault
of the employer (Murillo vs. Mendoza, 66 Phil. 689). On the other hand, damages are
awarded to one as a vindication of the wrongful invasion of his rights. It is the
indemnity recoverable by a person who has sustained injury either in his person,
property or relative rights, through the act or default of another (25 C.J.S. 452).

The claimant for damages under the Civil Code has the burden of proving the causal
relation between the defendant's negligence and the resulting injury as well as the
damages suffered. While under the Workmen's Compensation Act, there is a
presumption in favor of the deceased or injured employee that the death or injury is
work-connected or work-aggravated; and the employer has the burden to prove

81
otherwise (De los Angeles vs. GSIS, 94 SCRA 308; Carino vs. WCC, 93 SCRA 551;
Maria Cristina Fertilizer Corp. vs. WCC, 60 SCRA 228).

The claim of petitioners that the case is not cognizable by the Workmen's
Compensation Commission then, now Employees Compensation Commission, is
strengthened by the fact that unlike in the Civil Code, the Workmen's Compensation
Act did not contain any provision for an award of actual, moral and exemplary
damages. What the Act provided was merely the right of the heirs to claim limited
compensation for the death in the amount of six thousand (P6,000.00) pesos plus
burial expenses of two hundred (P200.00) pesos, and medical expenses when
incurred (Sections 8, 12 and 13, Workmen's Compensation Act), and an additional
compensation of only 50% if the complaint alleges failure on the part of the employer
to "install and maintain safety appliances or to take other precautions for the
prevention of accident or occupational disease" (Section 4-A, Ibid.). In the case at
bar, the amount sought to be recovered is over and above that which was provided
under the Workmen's Compensation Act and which cannot be granted by the
Commission.

Moreover, under the Workmen's Compensation Act, compensation benefits should

be paid to an employee who suffered an accident not due to the facilities or lack of
facilities in the industry of his employer but caused by factors outside the industrial
plant of his employer. Under the Civil Code, the liability of the employer, depends on
breach of contract or tort. The Workmen's Compensation Act was specifically
enacted to afford protection to the employees or workmen. It is a social legislation
designed to give relief to the workman who has been the victim of an accident
causing his death or ailment or injury in the pursuit of his employment (Abong vs.
WCC, 54 SCRA 379).

WE now come to the query as to whether or not the injured employee or his heirs in
case of death have a right of selection or choice of action between availing
themselves of the worker's right under the Workmen's Compensation Act and suing
in the regular courts under the Civil Code for higher damages (actual, moral and
exemplary) from the employers by virtue of that negligence or fault of the employers
or whether they may avail themselves cumulatively of both actions, i.e., collect the
limited compensation under the Workmen's Compensation Act and sue in addition
for damages in the regular courts.

In disposing of a similar issue, this Court in Pacana vs. Cebu Autobus Company, 32
SCRA 442, ruled that an injured worker has a choice of either to recover from the
employer the fixed amounts set by the Workmen's Compensation Act or to prosecute
an ordinary civil action against the tortfeasor for higher damages but he cannot
pursue both courses of action simultaneously.

In Pacaña WE said:

In the analogous case of Esguerra vs. Munoz Palma, involving the application of
Section 6 of the Workmen's Compensation Act on the injured workers' right to sue
third- party tortfeasors in the regular courts, Mr. Justice J.B.L. Reyes, again speaking
for the Court, pointed out that the injured worker has the choice of remedies but
cannot pursue both courses of action simultaneously and thus balanced the relative
advantage of recourse under the Workmen's Compensation Act as against an
ordinary action.

As applied to this case, petitioner Esguerra cannot maintain his action for damages
against the respondents (defendants below), because he has elected to seek
compensation under the Workmen's Compensation Law, and his claim (case No.
44549 of the Compensation Commission) was being processed at the time he filed
this action in the Court of First Instance. It is argued for petitioner that as the
damages recoverable under the Civil Code are much more extensive than the

82
 amounts that may be awarded under the Workmen's Compensation Act, they should
not be deemed incompatible. As already indicated, the injured laborer was initially
free to choose either to recover from the employer the fixed amounts set by the
Compensation Law or else, to prosecute an ordinary civil action against the tortfeasor
for higher damages. While perhaps not as profitable, the smaller indemnity obtainable
by the first course is balanced by the claimant's being relieved of the burden of
proving the causal connection between the defendant's negligence and the resulting
injury, and of having to establish the extent of the damage suffered; issues that are
apt to be troublesome to establish satisfactorily. Having staked his fortunes on a
particular remedy, petitioner is precluded from pursuing the alternate course, at least
until the prior claim is rejected by the Compensation Commission. Anyway, under the
proviso of Section 6 aforequoted, if the employer Franklin Baker Company recovers,
by derivative action against the alleged tortfeasors, a sum greater than the
compensation he may have paid the herein petitioner, the excess accrues to the
latter.

Although the doctrine in the case of Esguerra vs. Munoz Palma (104 Phil. 582),
applies to third-party tortfeasor, said rule should likewise apply to the employer-
tortfeasor.

Insofar as the heirs of Nazarito Floresca are concerned, as already stated, the
petition has been dismissed in the resolution of September 7, 1978 in view of the
amicable settlement reached by Philex and the said heirs.

With regard to the other petitioners, it was alleged by Philex in its motion to dismiss
dated May 14, 1968 before the court a quo, that the heirs of the deceased
employees, namely Emerito Obra, Larry Villar, Jr., Aurelio Lanuza, Lorenzo Isla and
Saturnino Martinez submitted notices and claims for compensation to the Regional
Office No. 1 of the then Department of Labor and all of them have been paid in full
as of August 25, 1967, except Saturnino Martinez whose heirs decided that they be
paid in installments (pp. 106-107, rec.). Such allegation was admitted by herein
petitioners in their opposition to the motion to dismiss dated May 27, 1968 (pp. 121-
122, rec.) in the lower court, but they set up the defense that the claims were filed
under the Workmen's Compensation Act before they learned of the official report of
the committee created to investigate the accident which established the criminal
negligence and violation of law by Philex, and which report was forwarded by the
Director of Mines to the then Executive Secretary Rafael Salas in a letter dated
October 19, 1967 only (p. 76, rec.).

WE hold that although the other petitioners had received the benefits under the
Workmen's Compensation Act, such may not preclude them from bringing an action
before the regular court because they became cognizant of the fact that Philex has
been remiss in its contractual obligations with the deceased miners only after
receiving compensation under the Act. Had petitioners been aware of said violation
of government rules and regulations by Philex, and of its negligence, they would not
have sought redress under the Workmen's Compensation Commission which
awarded a lesser amount for compensation. The choice of the first remedy was
based on ignorance or a mistake of fact, which nullifies the choice as it was not an
intelligent choice. The case should therefore be remanded to the lower court for
further proceedings. However, should the petitioners be successful in their bid before
the lower court, the payments made under the Workmen's Compensation Act should
be deducted from the damages that may be decreed in their favor.

Contrary to the perception of the dissenting opinion, the Court does not legislate in
the instant case. The Court merely applies and gives effect to the constitutional
guarantees of social justice then secured by Section 5 of Article 11 and Section 6 of
Article XIV of the 1935 Constitution, and now by Sections 6, 7, and 9 of Article 11 of

83
the DECLARATION OF PRINCIPLES AND STATE POLICIES of the 1973
Constitution, as amended, and as implemented by Articles 2176, 2177, 2178, 1173,
2201, 2216, 2231 and 2232 of the New Civil Code of 1950.

To emphasize, the 1935 Constitution declares that:

Sec. 5. The promotion of social justice to insure the well-being and economic security
of all the people should be the concern of the State (Art. II).

Sec. 6. The State shall afford protection to labor, especially to working women, and
minors, and shall regulate the relations between landowner and tenant, and between
labor and capital in industry and in agriculture. The State may provide for compulsory
arbitration (Art. XIV).

The 1973 Constitution likewise commands the State to "promote social justice to
insure the dignity, welfare, and security of all the people "... regulate the use ... and
disposition of private property and equitably diffuse property ownership and profits
"establish, maintain and ensure adequate social services in, the field of education,
health, housing, employment, welfare and social security to guarantee the
enjoyment by the people of a decent standard of living" (Sections 6 and 7, Art. II,
1973 Constitution); "... afford protection to labor, ... and regulate the relations
between workers and employers ..., and assure the rights of workers to ... just and
humane conditions of work" (Sec. 9, Art. II, 1973 Constitution, emphasis supplied).

The foregoing constitutional guarantees in favor of labor institutionalized in Section 9

of Article 11 of the 1973 Constitution and re-stated as a declaration of basic policy in
Article 3 of the New Labor Code, thus:

Art. 3. Declaration of basic policy.—The State shall afford protection to labor,

promote full employment, ensure equal work opportunities regardless of sex, race or
creed, and regulate the relations between workers and employers. The State shall
assure the rights of workers to self-organization, collective bargaining, security of
tenure, and just and humane conditions of work. (emphasis supplied).

The aforestated constitutional principles as implemented by the aforementioned

articles of the New Civil Code cannot be impliedly repealed by the restrictive
provisions of Article 173 of the New Labor Code. Section 5 of the Workmen's
Compensation Act (before it was amended by R.A. No. 772 on June 20, 1952),
predecessor of Article 173 of the New Labor Code, has been superseded by the
aforestated provisions of the New Civil Code, a subsequent law, which took effect on
August 30, 1950, which obey the constitutional mandates of social justice enhancing
as they do the rights of the workers as against their employers. Article 173 of the
New Labor Code seems to diminish the rights of the workers and therefore collides
with the social justice guarantee of the Constitution and the liberal provisions of the
New Civil Code.

The guarantees of social justice embodied in Sections 6, 7 and 9 of Article II of the

1973 Constitution are statements of legal principles to be applied and enforced by
the courts. Mr. Justice Robert Jackson in the case of West Virginia State Board of
Education vs. Barnette, with characteristic eloquence, enunciated:

The very purpose of a Bill of Rights was to withdraw certain subjects from the
vicissitudes of political controversy, to place them beyond the reach of majorities and
officials and to establish them as legal principles to be applied by the courts. One's
right to life, liberty, and property, to free speech, a free press, freedom of worship and
assembly, and other fundamental rights may not be submitted to vote; they depend
on the outcome of no elections (319 U.S. 625, 638, 87 L.ed. 1638, emphasis
supplied).

84
In case of any doubt which may be engendered by Article 173 of the New Labor
Code, both the New Labor Code and the Civil Code direct that the doubts should be
resolved in favor of the workers and employees.

Thus, Article 4 of the New Labor Code, otherwise known as Presidential Decree No.
442, as amended, promulgated on May 1, 1974, but which took effect six months
thereafter, provides that "all doubts in the implementation and interpretation of the
provisions of this Code, including its implementing rules and regulations, shall be
resolved in favor of labor" (Art. 2, Labor Code).

Article 10 of the New Civil Code states: "In case of doubt in the interpretation or
application of laws, it is presumed that the law-making body intended right and
justice to prevail. "

More specifically, Article 1702 of the New Civil Code likewise directs that. "In case of
doubt, all labor legislation and all labor contracts shall be construed in favor of the
safety and decent living of the laborer."

Before it was amended by Commonwealth Act No. 772 on June 20, 1952, Section 5
of the Workmen's Compensation Act provided:

Sec. 5. Exclusive right to compensation.- The rights and remedies granted by this Act
to an employee by reason of a personal injury entitling him to compensation shall
exclude all other rights and remedies accruing to the employee, his personal
representatives, dependents or nearest of kin against the employer under the Civil
Code and other laws, because of said injury (emphasis supplied).

Employers contracting laborecsrs in the Philippine Islands for work outside the same
may stipulate with such laborers that the remedies prescribed by this Act shall apply
exclusively to injuries received outside the Islands through accidents happening in
and during the performance of the duties of the employment; and all service contracts
made in the manner prescribed in this section shall be presumed to include such
agreement.

Only the second paragraph of Section 5 of the Workmen's Compensation Act No.
3428, was amended by Commonwealth Act No. 772 on June 20, 1952, thus:

Sec. 5. Exclusive right to compensation.- The rights and remedies granted by this Act
to an employee by reason of a personal injury entitling him to compensation shall
exclude all other rights and remedies accruing to the employee, his personal
representatives, dependents or nearest of kin against the employer under the Civil
Code and other laws, because of said injury.

Employers contracting laborers in the Philippine Islands for work outside the same
shall stipulate with such laborers that the remedies prescribed by this Act shall apply
to injuries received outside the Island through accidents happening in and during the
performance of the duties of the employment. Such stipulation shall not prejudice the
right of the laborers to the benefits of the Workmen's Compensation Law of the place
where the accident occurs, should such law be more favorable to them (As amended
by section 5 of Republic Act No. 772).

Article 173 of the New Labor Code does not repeal expressly nor impliedly the
applicable provisions of the New Civil Code, because said Article 173 provides:

Art. 173. Exclusiveness of liability.- Unless otherwise provided, the liability of the
State Insurance Fund under this Title shall be exclusive and in place of all other
liabilities of the employer to the employee, his dependents or anyone otherwise
entitled to receive damages on behalf of the employee or his dependents. The
payment of compensation under this Title shall bar the recovery of benefits as
provided for in Section 699 of the Revised Administrative Code, Republic Act
Numbered Eleven hundred sixty-one, as amended, Commonwealth Act Numbered
One hundred eighty- six, as amended, Commonwealth Act Numbered Six hundred

85
 ten, as amended, Republic Act Numbered Forty-eight hundred Sixty-four, as
amended, and other laws whose benefits are administered by the System during the
period of such payment for the same disability or death, and conversely (emphasis
supplied).

As above-quoted, Article 173 of the New Labor Code expressly repealed only
Section 699 of the Revised Administrative Code, R.A. No. 1161, as amended, C.A.
No. 186, as amended, R.A. No. 610, as amended, R.A. No. 4864, as amended, and
all other laws whose benefits are administered by the System (referring to the GSIS
or SSS).

Unlike Section 5 of the Workmen's Compensation Act as aforequoted, Article 173 of

the New Labor Code does not even remotely, much less expressly, repeal the New
Civil Code provisions heretofore quoted.

It is patent, therefore, that recovery under the New Civil Code for damages arising
from negligence, is not barred by Article 173 of the New Labor Code. And the
damages recoverable under the New Civil Code are not administered by the System
provided for by the New Labor Code, which defines the "System" as referring to the
Government Service Insurance System or the Social Security System (Art. 167 [c],
[d] and [e] of the New Labor Code).

Furthermore, under Article 8 of the New Civil Code, decisions of the Supreme Court
form part of the law of the land.

Article 8 of the New Civil Code provides:

Art. 8. Judicial decisions applying or interpreting the laws or the Constitution shall
form a part of the legal system of the Philippines.

The Court, through the late Chief Justice Fred Ruiz Castro, in People vs. Licera
ruled:

Article 8 of the Civil Code of the Philippines decrees that judicial decisions applying or
interpreting the laws or the Constitution form part of this jurisdiction's legal system.
These decisions, although in themselves not laws, constitute evidence of what the
laws mean. The application or interpretation placed by the Court upon a law is part of
the law as of the date of the enactment of the said law since the Court's application or
interpretation merely establishes the contemporaneous legislative intent that the
construed law purports to carry into effect" (65 SCRA 270, 272-273 [1975]).

WE ruled that judicial decisions of the Supreme Court assume the same authority as
the statute itself (Caltex vs. Palomer, 18 SCRA 247; 124 Phil. 763).

The aforequoted provisions of Section 5 of the Workmen's Compensation Act, before

and after it was amended by Commonwealth Act No. 772 on June 20, 1952, limited
the right of recovery in favor of the deceased, ailing or injured employee to the
compensation provided for therein. Said Section 5 was not accorded controlling
application by the Supreme Court in the 1970 case of Pacana vs. Cebu Autobus
Company (32 SCRA 442) when WE ruled that an injured worker has a choice of
either to recover from the employer the fixed amount set by the Workmen's
Compensation Act or to prosecute an ordinary civil action against the tortfeasor for
greater damages; but he cannot pursue both courses of action simultaneously. Said
Pacana case penned by Mr. Justice Teehankee, applied Article 1711 of the Civil
Code as against the Workmen's Compensation Act, reiterating the 1969 ruling in the
case of Valencia vs. Manila Yacht Club (28 SCRA 724, June 30,1969) and the 1958
case of Esguerra vs. Munoz Palma (104 Phil. 582), both penned by Justice J.B.L.
Reyes. Said Pacana case was concurred in by Justices J.B.L. Reyes, Dizon,
Makalintal, Zaldivar, Castro, Fernando and Villamor.

86
Since the first sentence of Article 173 of the New Labor Code is merely a re-
statement of the first paragraph of Section 5 of the Workmen's Compensation Act, as
amended, and does not even refer, neither expressly nor impliedly, to the Civil Code
as Section 5 of the Workmen's Compensation Act did, with greater reason said
Article 173 must be subject to the same interpretation adopted in the cases of
Pacana, Valencia and Esguerra aforementioned as the doctrine in the aforesaid
three (3) cases is faithful to and advances the social justice guarantees enshrined in
both the 1935 and 1973 Constitutions.

It should be stressed likewise that there is no similar provision on social justice in the
American Federal Constitution, nor in the various state constitutions of the American
Union. Consequently, the restrictive nature of the American decisions on the
Workmen's Compensation Act cannot limit the range and compass of OUR
interpretation of our own laws, especially Article 1711 of the New Civil Code, vis-a-
vis Article 173 of the New Labor Code, in relation to Section 5 of Article II and
Section 6 of Article XIV of the 1935 Constitution then, and now Sections 6, 7 and 9 of
the Declaration of Principles and State Policies of Article II of the 1973 Constitution.

The dissent seems to subordinate the life of the laborer to the property rights of the
employer. The right to life is guaranteed specifically by the due process clause of the
Constitution. To relieve the employer from liability for the death of his workers arising
from his gross or wanton fault or failure to provide safety devices for the protection of
his employees or workers against the dangers which are inherent in underground
mining, is to deprive the deceased worker and his heirs of the right to recover
indemnity for the loss of the life of the worker and the consequent loss to his family
without due process of law. The dissent in effect condones and therefore
encourages such gross or wanton neglect on the part of the employer to comply with
his legal obligation to provide safety measures for the protection of the life, limb and
health of his worker. Even from the moral viewpoint alone, such attitude is un-
Christian.

It is therefore patent that giving effect to the social justice guarantees of the
Constitution, as implemented by the provisions of the New Civil Code, is not an
exercise of the power of law-making, but is rendering obedience to the mandates of
the fundamental law and the implementing legislation aforementioned.

The Court, to repeat, is not legislating in the instant case.

It is axiomatic that no ordinary statute can override a constitutional provision.

The words of Section 5 of the Workmen's Compensation Act and of Article 173 of the
New Labor Code subvert the rights of the petitioners as surviving heirs of the
deceased mining employees. Section 5 of the Workmen's Compensation Act and
Article 173 of the New Labor Code are retrogressive; because they are a throwback
to the obsolete laissez-faire doctrine of Adam Smith enunciated in 1776 in his
treatise Wealth of Nations (Collier's Encyclopedia, Vol. 21, p. 93, 1964), which has
been discarded soon after the close of the 18th century due to the Industrial
Revolution that generated the machines and other mechanical devices (beginning
with Eli Whitney's cotton gin of 1793 and Robert Fulton's steamboat of 1807) for
production and transportation which are dangerous to life, limb and health. The old
socio-political-economic philosophy of live-and-let-live is now superdesed by the
benign Christian shibboleth of live-and-help others to live. Those who profess to be
Christians should not adhere to Cain's selfish affirmation that he is not his brother's
keeper. In this our civilization, each one of us is our brother's keeper. No man is an
island. To assert otherwise is to be as atavistic and ante-deluvian as the 1837 case
of Prisley vs. Fowler (3 MN 1,150 reprint 1030) invoked by the dissent, The Prisley
case was decided in 1837 during the era of economic royalists and robber barons of

87
America. Only ruthless, unfeeling capitalistics and egoistic reactionaries continue to
pay obeisance to such un-Christian doctrine. The Prisley rule humiliates man and
debases him; because the decision derisively refers to the lowly worker as "servant"
and utilizes with aristocratic arrogance "master" for "employer." It robs man of his
inherent dignity and dehumanizes him. To stress this affront to human dignity, WE
only have to restate the quotation from Prisley, thus: "The mere relation of the
master and the servant never can imply an obligation on the part of the master to
take more care of the servant than he may reasonably be expected to do himself."
This is the very selfish doctrine that provoked the American Civil War which
generated so much hatred and drew so much precious blood on American plains
and valleys from 1861 to 1864.

"Idolatrous reverence" for the letter of the law sacrifices the human being. The spirit
of the law insures man's survival and ennobles him. In the words of Shakespeare,
"the letter of the law killeth; its spirit giveth life."

It is curious that the dissenting opinion clings to the myth that the courts cannot
legislate.

That myth had been exploded by Article 9 of the New Civil Code, which provides that
"No judge or court shall decline to render judgment by reason of the silence,
obscurity or insufficiency of the laws. "

Hence, even the legislator himself, through Article 9 of the New Civil Code,
recognizes that in certain instances, the court, in the language of Justice Holmes,
"do and must legislate" to fill in the gaps in the law; because the mind of the
legislator, like all human beings, is finite and therefore cannot envisage all possible
cases to which the law may apply Nor has the human mind the infinite capacity to
anticipate all situations.

But about two centuries before Article 9 of the New Civil Code, the founding fathers
of the American Constitution foresaw and recognized the eventuality that the courts
may have to legislate to supply the omissions or to clarify the ambiguities in the
American Constitution and the statutes.

'Thus, Alexander Hamilton pragmatically admits that judicial legislation may be

justified but denies that the power of the Judiciary to nullify statutes may give rise to
Judicial tyranny (The Federalist, Modern Library, pp. 503-511, 1937 ed.). Thomas
Jefferson went farther to concede that the court is even independent of the Nation
itself (A.F.L. vs. American Sash Company, 1949 335 US 538).

Many of the great expounders of the American Constitution likewise share the same
view. Chief Justice Marshall pronounced: "It is emphatically the province and duty of
the Judicial department to say what the law is (Marbury vs. Madison I Cranch 127
1803), which was re-stated by Chief Justice Hughes when he said that "the
Constitution is what the judge says it is (Address on May 3, 1907, quoted by
President Franklin Delano Roosevelt on March 9, 1937). This was reiterated by
Justice Cardozo who pronounced that "No doubt the limits for the judge are
narrower. He legislates only between gaps. He fills the open spaces in the law. "
(The Nature of the Judicial Process, p. 113). In the language of Chief Justice Harlan
F. Stone, "The only limit to the judicial legislation is the restraint of the judge" (U.S.
vs. Butler 297 U.S. 1 Dissenting Opinion, p. 79), which view is also entertained by
Justice Frankfurter and Justice Robert Jackson. In the rhetoric of Justice Frankfurter,
"the courts breathe life, feeble or strong, into the inert pages of the Constitution and
all statute books."

88
It should be stressed that the liability of the employer under Section 5 of the
Workmen's Compensation Act or Article 173 of the New Labor Code is limited to
death, ailment or injury caused by the nature of the work, without any fault on the
part of the employers. It is correctly termed no fault liability. Section 5 of the
Workmen's Compensation Act, as amended, or Article 173 of the New Labor Code,
does not cover the tortious liability of the employer occasioned by his fault or
culpable negligence in failing to provide the safety devices required by the law for the
protection of the life, limb and health of the workers. Under either Section 5 or Article
173, the employer remains liable to pay compensation benefits to the employee
whose death, ailment or injury is work-connected, even if the employer has faithfully
and diligently furnished all the safety measures and contrivances decreed by the law
to protect the employee.

The written word is no longer the "sovereign talisman." In the epigrammatic language
of Mr. Justice Cardozo, "the law has outgrown its primitive stage of formalism when
the precise word was the sovereign talisman, and every slip was fatal" (Wood vs.
Duff Gordon 222 NW 88; Cardozo, The Nature of the Judicial Process 100). Justice
Cardozo warned that: "Sometimes the conservatism of judges has threatened for an
interval to rob the legislation of its efficacy. ... Precedents established in those items
exert an unhappy influence even now" (citing Pound, Common Law and Legislation
21 Harvard Law Review 383, 387).

Finally, Justice Holmes delivered the coup de grace when he pragmatically admitted,
although with a cautionary undertone: "that judges do and must legislate, but they
can do so only interstitially they are confined from molar to molecular motions"
(Southern Pacific Company vs. Jensen, 244 US 204 1917). And in the subsequent
case of Springer vs. Government (277 US 188, 210-212, 72 L.ed. 845, 852- 853),
Justice Holmes pronounced:

The great ordinances of the Constitution do not establish and divide fields of black
and white. Even the more specific of them are found to terminate in a penumbra
shading gradually from one extreme to the other. x x x. When we come to the
fundamental distinctions it is still more obvious that they must be received with a
certain latitude or our government could not go on.

To make a rule of conduct applicable to an individual who but for such action would
be free from it is to legislate yet it is what the judges do whenever they determine
which of two competing principles of policy shall prevail.

xxx xxx xxx

It does not seem to need argument to show that however we may disguise it by
veiling words we do not and cannot carry out the distinction between legislative and
executive action with mathematical precision and divide the branches into waterlight
compartments, were it ever so desirable to do so, which I am far from believing that it
is, or that the Constitution requires.

True, there are jurists and legal writers who affirm that judges should not legislate,
but grudgingly concede that in certain cases judges do legislate. They criticize the
assumption by the courts of such law-making power as dangerous for it may
degenerate into Judicial tyranny. They include Blackstone, Jeremy Bentham, Justice
Black, Justice Harlan, Justice Roberts, Justice David Brewer, Ronald Dworkin, Rolf
Sartorious, Macklin Fleming and Beryl Harold Levy. But said Justices, jurists or legal
commentators, who either deny the power of the courts to legislate in-between gaps
of the law, or decry the exercise of such power, have not pointed to examples of the
exercise by the courts of such law-making authority in the interpretation and
application of the laws in specific cases that gave rise to judicial tyranny or
oppression or that such judicial legislation has not protected public interest or
individual welfare, particularly the lowly workers or the underprivileged.

89
On the other hand, there are numerous decisions interpreting the Bill of Rights and
statutory enactments expanding the scope of such provisions to protect human
rights. Foremost among them is the doctrine in the cases of Miranda vs. Arizona
(384 US 436 1964), Gideon vs. Wainright (372 US 335), Escubedo vs. Illinois (378
US 478), which guaranteed the accused under custodial investigation his rights to
remain silent and to counsel and to be informed of such rights as even as it protects
him against the use of force or intimidation to extort confession from him. These
rights are not found in the American Bill of Rights. These rights are now
institutionalized in Section 20, Article IV of the 1973 Constitution. Only the peace-
and-order adherents were critical of the activism of the American Supreme Court led
by Chief Justice Earl Warren.

Even the definition of Identical offenses for purposes of the double jeopardy
provision was developed by American judicial decisions, not by amendment to the
Bill of Rights on double jeopardy (see Justice Laurel in People vs. Tarok, 73 Phil.
260, 261-268). And these judicial decisions have been re-stated in Section 7 of Rule
117 of the 1985 Rules on Criminal Procedure, as well as in Section 9 of Rule 117 of
the 1964 Revised Rules of Court. In both provisions, the second offense is the same
as the first offense if the second offense is an attempt to commit the first or
frustration thereof or necessarily includes or is necessarily included in the first
offense.

The requisites of double jeopardy are not spelled out in the Bill of Rights. They were
also developed by judicial decisions in the United States and in the Philippines even
before people vs. Ylagan (58 Phil. 851-853).

Again, the equal protection clause was interpreted in the case of Plessy vs.
Ferguson (163 US 537) as securing to the Negroes equal but separate facilities,
which doctrine was revoked in the case of Brown vs. Maryland Board of Education
(349 US 294), holding that the equal protection clause means that the Negroes are
entitled to attend the same schools attended by the whites-equal facilities in the
same school-which was extended to public parks and public buses.

De-segregation, not segregation, is now the governing principle.

Among other examples, the due process clause was interpreted in the case of
People vs. Pomar (46 Phil. 440) by a conservative, capitalistic court to invalidate a
law granting maternity leave to working women-according primacy to property rights
over human rights. The case of People vs. Pomar is no longer the rule.

As early as 1904, in the case of Lochner vs. New York (198 US 45, 76, 49 L. ed.
937, 949), Justice Holmes had been railing against the conservatism of Judges
perverting the guarantee of due process to protect property rights as against human
rights or social justice for the working man. The law fixing maximum hours of labor
was invalidated. Justice Holmes was vindicated finally in 1936 in the case of West
Coast Hotel vs. Parish (300 US 377-79; 81 L. ed. 703) where the American Supreme
Court upheld the rights of workers to social justice in the form of guaranteed
minimum wage for women and minors, working hours not exceeding eight (8) daily,
and maternity leave for women employees.

The power of judicial review and the principle of separation of powers as well as the
rule on political questions have been evolved and grafted into the American
Constitution by judicial decisions (Marbury vs. Madison, supra Coleman vs. Miller,
307 US 433, 83 L. ed. 1385; Springer vs. Government, 277 US 210-212, 72 L. ed.
852, 853).

90
It is noteworthy that Justice Black, who seems to be against judicial legislation,
penned a separate concurring opinion in the case of Coleman vs. Miller, supra,
affirming the doctrine of political question as beyond the ambit of judicial review.
There is nothing in both the American and Philippine Constitutions expressly
providing that the power of the courts is limited by the principle of separation of
powers and the doctrine on political questions. There are numerous cases in
Philippine jurisprudence applying the doctrines of separation of powers and political
questions and invoking American precedents.

Unlike the American Constitution, both the 1935 and 1973 Philippine Constitutions
expressly vest in the Supreme Court the power to review the validity or
constitutionality of any legislative enactment or executive act.

WHEREFORE, THE TRIAL COURT'S ORDER OF DISMISSAL IS HEREBY

REVERSED AND SET ASIDE AND THE CASE IS REMANDED TO IT FOR
FURTHER PROCEEDINGS. SHOULD A GREATER AMOUNT OF DAMAGES BE
DECREED IN FAVOR OF HEREIN PETITIONERS, THE PAYMENTS ALREADY
MADE TO THEM PURSUANT TO THE WORKMEN'S COMPENSATION ACT
SHALL BE DEDUCTED. NO COSTS.

SO ORDERED.

Fernando, C.J., Teehankee, Plana, Escolin, De la Fuente, Cuevas and Alampay JJ.,
concur.

Concepcion, Jr., J., is on leave.

Abad Santos and Relova, JJ., took no part.

.R. No. 74917 January 20, 1988

BANCO DE ORO SAVINGS AND MORTGAGE BANK, Petitioner, vs. EQUITABLE

BANKING CORPORATION, PHILIPPINE CLEARING HOUSE CORPORATION,
AND REGIONAL TRIAL COURT OF QUEZON CITY, BRANCH XCII (92),
Respondents.

GANCAYCO, J.:

This is a petition for review on certiorari of a decision of the Regional Trial Court of Quezon
City promulgated on March 24, 1986 in Civil Case No. Q-46517 entitled Banco de Oro
Savings and Mortgage Bank versus Equitable Banking Corporation and the Philippine
Clearing House Corporation after a review of the Decision of the Board of Directors of the
Philippine Clearing House Corporation (PCHC) in the case of Equitable Banking Corporation
(EBC) vs. Banco de Oro Savings and Mortgage (BCO), ARBICOM Case No.
84033.chanroblesvirtuallawlibrary
chanrobles virtual law library

The undisputed facts are as follows:

It appears that some time in March, April, May and August 1983, plaintiff
through its Visa Card Department, drew six crossed Manager's check (Exhibits
"A" to "F", and herein referred to as Checks) having an aggregate amount of

91
 Forty Five Thousand Nine Hundred and Eighty Two & 23/100 (P45,982.23)
Pesos and payable to certain member establishments of Visa Card.
Subsequently, the Checks were deposited with the defendant to the credit of its
depositor, a certain Aida Trencio.chanroblesvirtuallawlibrary chanrobles virtual law library

Following normal procedures, and after stamping at the back of the Checks the
usual endorsements. All prior and/or lack of endorsement guaranteed the
defendant sent the checks for clearing through the Philippine Clearing House
Corporation (PCHC). Accordingly, plaintiff paid the Checks; its clearing
account was debited for the value of the Checks and defendant's clearing
account was credited for the same amount, chanrobles virtual law library

Thereafter, plaintiff discovered that the endorsements appearing at the back of

the Checks and purporting to be that of the payees were forged and/or
unauthorized or otherwise belong to persons other than the
payees.chanroblesvirtuallawlibrary chanrobles virtual law library

Pursuant to the PCHC Clearing Rules and Regulations, plaintiff presented the
Checks directly to the defendant for the purpose of claiming reimbursement
from the latter. However, defendant refused to accept such direct presentation
and to reimburse the plaintiff for the value of the Checks; hence, this
case.chanroblesvirtuallawlibrary chanrobles virtual law library

In its Complaint, plaintiff prays for judgment to require the defendant to pay
the plaintiff the sum of P45,982.23 with interest at the rate of 12% per annum
from the date of the complaint plus attorney's fees in the amount of
P10,000.00 as well as the cost of the suit.chanroblesvirtuallawlibrary chanrobles virtual law library

In accordance with Section 38 of the Clearing House Rules and Regulations,

the dispute was presented for Arbitration; and Atty. Ceasar Querubin was
designated as the Arbitrator.chanroblesvirtuallawlibrary chanrobles virtual law library

After an exhaustive investigation and hearing the Arbiter rendered a decision

in favor of the plaintiff and against the defendant ordering the PCHC to debit
the clearing account of the defendant, and to credit the clearing account of the
plaintiff of the amount of P45,982.23 with interest at the rate of 12% per
annum from date of the complaint and Attorney's fee in the amount of
P5,000.00. No pronouncement as to cost was made. 1

In a motion for reconsideration filed by the petitioner, the Board of Directors of the PCHC
affirmed the decision of the said Arbiter in this wise:

In view of all the foregoing, the decision of the Arbiter is confirmed; and the
Philippine Clearing House Corporation is hereby ordered to debit the clearing
account of the defendant and credit the clearing account of plaintiff the
amount of Forty Five Thousand Nine Hundred Eighty Two & 23/100
(P45,982.23) Pesos with interest at the rate of 12% per annum from date of the
complaint, and the Attorney's fee in the amount of Five Thousand (P5,000.00)
Pesos.

Thus, a petition for review was filed with the Regional Trial Court of Quezon City, Branch
XCII, wherein in due course a decision was rendered affirming in toto the decision of the
PCHC.chanroblesvirtuallawlibrarychanrobles virtual law library

Hence this petition.chanroblesvirtuallawlibrary chanrobles virtual law library

The petition is focused on the following issues: chanrobles virtual law library

92
1. Did the PCHC have any jurisdiction to give due course to and adjudicate Arbicom Case
No. 84033? chanrobles virtual law library

2. Were the subject checks non-negotiable and if not, does it fall under the ambit of the power
of the PCHC? chanrobles virtual law library

3. Is the Negotiable Instrument Law, Act No. 2031 applicable in deciding controversies of
this nature by the PCHC? chanrobles virtual law library

4. What law should govern in resolving controversies of this nature? chanrobles virtual law library

5. Was the petitioner bank negligent and thus responsible for any undue payment? chanrobles virtual law library

Petitioner maintains that the PCHC is not clothed with jurisdiction because the Clearing
House Rules and Regulations of PCHC cover and apply only to checks that are genuinely
negotiable. Emphasis is laid on the primary purpose of the PCHC in the Articles of
Incorporation, which states:

To provide, maintain and render an effective, convenient, efficient,

economical and relevant exchange and facilitate service limited to check
processing and sorting by way of assisting member banks, entities in clearing
checks and other clearing items as defined in existing and in future Central
Bank of the Philippines circulars, memoranda, circular letters, rules and
regulations and policies in pursuance to the provisions of Section 107 of R.A.
265. ...

and Section 107 of R.A. 265 which provides:

xxx xxx xxx chanrobles virtual law library

The deposit reserves maintained by the banks in the Central Bank, in

accordance with the provisions of Section 1000 shall serve as a basis for the
clearing of checks, and the settlement of interbank balances ...

Petitioner argues that by law and common sense, the term check should be interpreted as one
that fits the articles of incorporation of the PCHC, the Central Bank and the Clearing House
Rules stating that it is a negotiable instrument citing the definition of a "check" as basically a
"bill of exchange" under Section 185 of the NIL and that it should be payable to "order" or to
"bearer" under Section 126 of game law. Petitioner alleges that with the cancellation of the
printed words "or bearer from the face of the check, it becomes non-negotiable so the PCHC
has no jurisdiction over the case.chanroblesvirtuallawlibrary chanrobles virtual law library

The Regional Trial Court took exception to this stand and conclusion put forth by the herein
petitioner as it held:

Petitioner's theory cannot be maintained. As will be noted, the PCHC makes

no distinction as to the character or nature of the checks subject of its
jurisdiction. The pertinent provisions quoted in petitioners memorandum
simply refer to check(s). Where the law does not distinguish, we shall not
distinguish.chanroblesvirtuallawlibrary chanrobles virtual law library

In the case of Reyes vs. Chuanico (CA-G.R. No. 20813 R, Feb. 5, 1962) the
Appellate Court categorically stated that there are four kinds of checks in this
jurisdiction; the regular check; the cashier's check; the traveller's check; and
the crossed check. The Court, further elucidated, that while the Negotiable
Instruments Law does not contain any provision on crossed checks, it is coon
practice in commercial and banking operations to issue checks of this

93
 character, obviously in accordance with Article 541 of the Code of Commerce.
Attention is likewise called to Section 185 of the Negotiable Instruments Law:

Sec. 185. Check defined. - A check is a bill of exchange drawn

on a bank payable on demand. Except as herein otherwise
provided, the provisions of this act applicable to a bill of
exchange payable on demand apply to a check

and the provisions of Section 61 (supra) that the drawer may insert in the
instrument an express stipulation negating or limiting his own liability to the
holder. Consequently, it appears that the use of the term "check" in the
Articles of Incorporation of PCHC is to be perceived as not limited to
negotiable checks only, but to checks as is generally known in use in
commercial or business transactions.chanroblesvirtuallawlibrary chanrobles virtual law library

Anent Petitioner's liability on said instruments, this court is in full accord with
the ruling of the PCHC Board of Directors that:

In presenting the Checks for clearing and for payment, the

defendant made an express guarantee on the validity of "all
prior endorsements." Thus, stamped at the back of the checks
are the defendant's clear warranty; ALL PRIOR
ENDORSEMENTS AND/OR LACK OF ENDORSEMENTS
GUARANTEED. With. out such warranty, plaintiff would not
have paid on the checks.chanroblesvirtuallawlibrary chanrobles virtual law library

No amount of legal jargon can reverse the clear meaning of

defendant's warranty. As the warranty has proven to be false
and inaccurate, the defendant is liable for any damage arising
out of the falsity of its representation.chanroblesvirtuallawlibrary chanrobles virtual law library

The principle of estoppel, effectively prevents the defendant

from denying liability for any damage sustained by the plaintiff
which, relying upon an action or declaration of the defendant,
paid on the Checks. The same principle of estoppel effectively
prevents the defendant from denying the existence of the
Checks. (Pp. 1011 Decision; pp. 4344, Rollo)

We agree.chanroblesvirtuallawlibrary chanrobles virtual law library

As provided in the aforecited articles of incorporation of PCHC its operation extend to

"clearing checks and other clearing items." No doubt transactions on non-negotiable checks
are within the ambit of its jurisdiction.chanroblesvirtuallawlibrary chanrobles virtual law library

In a previous case, this Court had occasion to rule: "Ubi lex non distinguish nec nos
distinguere debemos." 2 It was enunciated in Loc Cham v. Ocampo, 77 Phil. 636 (1946):

The rule, founded on logic is a corollary of the principle that general words
and phrases in a statute should ordinarily be accorded their natural and general
significance. In other words, there should be no distinction in the application
of a statute where none is indicated.

There should be no distinction in the application of a statute where none is indicated for
courts are not authorized to distinguish where the law makes no distinction. They should
instead administer the law not as they think it ought to be but as they find it and without
regard to consequences. 3 chanrobles virtual law library

94
The term check as used in the said Articles of Incorporation of PCHC can only connote
checks in general use in commercial and business activities. It cannot be conceived to be
limited to negotiable checks only.chanroblesvirtuallawlibrary chanrobles virtual law library

Checks are used between banks and bankers and their customers, and are designed to
facilitate banking operations. It is of the essence to be payable on demand, because the
contract between the banker and the customer is that the money is needed on demand. 4 chanrobles virtual law library

The participation of the two banks, petitioner and private respondent, in the clearing
operations of PCHC is a manifestation of their submission to its jurisdiction. Sec. 3 and 36.6
of the PCHC-CHRR clearing rules and regulations provide:

SEC. 3. AGREEMENT TO THESE RULES. - It is the general agreement and

understanding that any participant in the Philippine Clearing House
Corporation, MICR clearing operations by the mere fact of their participation,
thereby manifests its agreement to these Rules and Regulations and its
subsequent amendments." chanrobles virtual law library

Sec 36.6. (ARBITRATION) - The fact that a bank participates in the clearing
operations of the PCHC shall be deemed its written and subscribed consent to
the binding effect of this arbitration agreement as if it had done so in
accordance with section 4 of the Republic Act No. 876, otherwise known as
the Arbitration Law.

Further Section 2 of the Arbitration Law mandates:

Two or more persons or parties may submit to the arbitration of one or more
arbitrators any controversy existing between them at the time of the
submission and which may be the subject of an action, or the parties of any
contract may in such contract agree to settle by arbitration a controversy
thereafter arising between them. Such submission or contract shall be valid
and irrevocable, save upon grounds as exist at law for the revocation of any
contract.chanroblesvirtuallawlibrary
chanrobles virtual law library

Such submission or contract may include question arising out of valuations,

appraisals or other controversies which may be collateral, incidental,
precedent or subsequent to any issue between the parties. ...

Sec. 21 of the same rules, says:

Items which have been the subject of material alteration or items bearing
forged endorsement when such endorsement is necessary for negotiation shall
be returned by direct presentation or demand to the Presenting Bank and not
through the regular clearing house facilities within the period prescribed by
law for the filing of a legal action by the returning bank/branch, institution or
entity sending the same. (Emphasis supplied)

Viewing these provisions the conclusion is clear that the PCHC Rules and Regulations should
not be interpreted to be applicable only to checks which are negotiable instruments but also to
non-negotiable instruments and that the PCHC has jurisdiction over this case even as the
checks subject of this litigation are admittedly non-negotiable.chanroblesvirtuallawlibrary chanrobles virtual law library

Moreover, petitioner is estopped from raising the defense of non-negotiability of the checks
in question. It stamped its guarantee on the back of the checks and subsequently presented
these checks for clearing and it was on the basis of these endorsements by the petitioner that
the proceeds were credited in its clearing account.chanroblesvirtuallawlibrary chanrobles virtual law library

95
The petitioner by its own acts and representation can not now deny liability because it
assumed the liabilities of an endorser by stamping its guarantee at the back of the
checks.chanroblesvirtuallawlibrary chanrobles virtual law library

The petitioner having stamped its guarantee of "all prior endorsements and/or lack of
endorsements" (Exh. A-2 to F-2) is now estopped from claiming that the checks under
consideration are not negotiable instruments. The checks were accepted for deposit by the
petitioner stamping thereon its guarantee, in order that it can clear the said checks with the
respondent bank. By such deliberate and positive attitude of the petitioner it has for all legal
intents and purposes treated the said cheeks as negotiable instruments and accordingly
assumed the warranty of the endorser when it stamped its guarantee of prior endorsements at
the back of the checks. It led the said respondent to believe that it was acting as endorser of
the checks and on the strength of this guarantee said respondent cleared the checks in
question and credited the account of the petitioner. Petitioner is now barred from taking an
opposite posture by claiming that the disputed checks are not negotiable
instrument.chanroblesvirtuallawlibrary chanrobles virtual law library

This Court enunciated in Philippine National Bank vs. Court of Appeals 5 a point relevant to
the issue when it stated the doctrine of estoppel is based upon the grounds of public policy,
fair dealing, good faith and justice and its purpose is to forbid one to speak against his own
act, representations or commitments to the injury of one to whom they were directed and who
reasonably relied thereon.chanroblesvirtuallawlibrary chanrobles virtual law library

A commercial bank cannot escape the liability of an endorser of a check and which may turn
out to be a forged endorsement. Whenever any bank treats the signature at the back of the
checks as endorsements and thus logically guarantees the same as such there can be no doubt
said bank has considered the checks as negotiable.chanroblesvirtuallawlibrary chanrobles virtual law library

Apropos the matter of forgery in endorsements, this Court has succinctly emphasized that the
collecting bank or last endorser generally suffers the loss because it has the duty to ascertain
the genuineness of all prior endorsements considering that the act of presenting the check for
payment to the drawee is an assertion that the party making the presentment has done its duty
to ascertain the genuineness of the endorsements. This is laid down in the case of PNB vs.
National City Bank. 6 In another case, this court held that if the drawee-bank discovers that
the signature of the payee was forged after it has paid the amount of the check to the holder
thereof, it can recover the amount paid from the collecting bank. 7 chanrobles virtual law library

A truism stated by this Court is that - "The doctrine of estoppel precludes a party from
repudiating an obligation voluntarily assumed after having accepted benefits therefrom. To
countenance such repudiation would be contrary to equity and put premium on fraud or
misrepresentation". 8 chanrobles virtual law library

We made clear in Our decision in Philippine National Bank vs. The National City Bank of
NY & Motor Service Co. that:

Where a check is accepted or certified by the bank on which it is drawn, the

bank is estopped to deny the genuineness of the drawers signature and his
capacity to issue the instrument.chanroblesvirtuallawlibrary chanrobles virtual law library

If a drawee bank pays a forged check which was previously accepted or

certified by the said bank, it can not recover from a holder who did not
participate in the forgery and did not have actual notice
thereof.chanroblesvirtuallawlibrary chanrobles virtual law library

The payment of a check does not include or imply its acceptance in the sense
that this word is used in Section 62 of the Negotiable Instruments Act. 9 chanrobles virtual law library

96
The point that comes uppermost is whether the drawee bank was negligent in failing to
discover the alteration or the forgery. Very akin to the case at bar is one which involves a suit
filed by the drawer of checks against the collecting bank and this came about in Farmers State
Bank 10 where it was held:

A cause of action against the (collecting bank) in favor of the appellee (the
drawer) accrued as a result of the bank breaching its implied warranty of the
genuineness of the indorsements of the name of the payee by bringing about
the presentation of the checks (to the drawee bank) and collecting the amounts
thereof, the right to enforce that cause of action was not destroyed by the
circumstance that another cause of action for the recovery of the amounts paid
on the checks would have accrued in favor of the appellee against another or
to others than the bank if when the checks were paid they have been indorsed
by the payee. (United States vs. National Exchange Bank, 214 US, 302, 29 S
CT665, 53 L. Ed 1006, 16 Am. Cas. 11 84; Onondaga County Savings Bank
vs. United States (E.C.A.) 64 F 703)

Section 66 of the Negotiable Instruments ordains that:

Every indorser who indorsee without qualification, warrants to all subsequent

holders in due course' (a) that the instrument is genuine and in all respects
what it purports to be; (b) that he has good title to it; (c) that all prior parties
have capacity to contract; and (d) that the instrument is at the time of his
indorsement valid and subsisting. 11 chanrobles virtual law library

It has been enunciated in an American case particularly in American Exchange National

Bank vs. Yorkville Bank 12 that: "the drawer owes no duty of diligence to the collecting bank
(one who had accepted an altered check and had paid over the proceeds to the depositor)
except of seasonably discovering the alteration by a comparison of its returned checks and
check stubs or other equivalent record, and to inform the drawee thereof." In this case it was
further held that:

The real and underlying reasons why negligence of the drawer constitutes no
defense to the collecting bank are that there is no privity between the drawer
and the collecting bank (Corn Exchange Bank vs. Nassau Bank, 204 N.Y.S.
80) and the drawer owe to that bank no duty of vigilance (New York Produce
Exchange Bank vs. Twelfth Ward Bank, 204 N.Y.S. 54) and no act of the
collecting bank is induced by any act or representation or admission of the
drawer (Seaboard National Bank vs. Bank of America (supra) and it follows
that negligence on the part of the drawer cannot create any liability from it to
the collecting bank, and the drawer thus is neither a necessary nor a proper
party to an action by the drawee bank against such bank. It is quite true that
depositors in banks are under the obligation of examining their passbooks and
returned vouchers as a protection against the payment by the depository bank
against forged checks, and negligence in the performance of that obligation
may relieve that bank of liability for the repayment of amounts paid out on
forged checks, which but for such negligence it would be bound to repay. A
leading case on that subject is Morgan vs. United States Mortgage and Trust
Col. 208 N.Y. 218, 101 N.E. 871 Amn. Cas. 1914D, 462, L.R.A. 1915D, 74.

Thus We hold that while the drawer generally owes no duty of diligence to the collecting
bank, the law imposes a duty of diligence on the collecting bank to scrutinize checks
deposited with it for the purpose of determining their genuineness and regularity. The
collecting bank being primarily engaged in banking holds itself out to the public as the expert
and the law holds it to a high standard of conduct.chanroblesvirtuallawlibrary chanrobles virtual law library

97
And although the subject checks are non-negotiable the responsibility of petitioner as
indorser thereof remains.chanroblesvirtuallawlibrary chanrobles virtual law library

To countenance a repudiation by the petitioner of its obligation would be contrary to equity

and would deal a negative blow to the whole banking system of this
country.chanroblesvirtuallawlibrary
chanrobles virtual law library

The court reproduces with approval the following disquisition of the PCHC in its decision -

II. Payments To Persons Other

Than The Payees Are Not Valid chanrobles virtual law library

And Give Rise To An Obligation chanrobles virtual law library

To Return Amounts Received

Nothing is more clear than that neither the defendant's depositor nor the
defendant is entitled to receive payment payable for the Checks. As the checks
are not payable to defendant's depositor, payments to persons other than
payees named therein, their successor-in-interest or any person authorized to
receive payment are not valid. Article 1240, New Civil Code of the
Philippines unequivocably provides that:

"Art. 1240. Payment shall be made to the person in whose favor

the obligation has been constituted, or his successo-in-interest,
or any person authorized to receive it. "

Considering that neither the defendant's depositor nor the defendant is entitled
to receive payments for the Checks, payments to any of them give rise to an
obligation to return the amounts received. Section 2154 of the New Civil Code
mandates that:

Article 2154. If something is received when there is no right to

demand it, and it was unduly delivered through mistake, the
obligation to return it arises.

It is contended that plaintiff should be held responsible for issuing the Checks
notwithstanding that the underlying transactions were fictitious This
contention has no basis in our jurisprudence.chanroblesvirtuallawlibrary chanrobles virtual law library

The nullity of the underlying transactions does not diminish, but in fact
strengthens, plaintiffs right to recover from the defendant. Such nullity clearly
emphasizes the obligation of the payees to return the proceeds of the Checks.
If a failure of consideration is sufficient to warrant a finding that a payee is not
entitled to payment or must return payment already made, with more reason
the defendant, who is neither the payee nor the person authorized by the
payee, should be compelled to surrender the proceeds of the Checks received
by it. Defendant does not have any title to the Checks; neither can it claim any
derivative title to them.chanroblesvirtuallawlibrary chanrobles virtual law library

III. Having Violated Its Warranty

On Validity Of All Endorsements, chanrobles virtual law library

Collecting Bank Cannot Deny chanrobles virtual law library

98
 liability To Those Who Relied chanrobles virtual law library

On Its Warranty

In presenting the Checks for clearing and for payment, the defendant made an
express guarantee on the validity of "all prior endorsements." Thus, stamped at
the bank of the checks are the defendant's clear warranty: ALL PRIOR
ENDORSEMENTS AND/OR LACK OF ENDORSEMENTS
GUARANTEED. Without such warranty, plaintiff would not have paid on the
checks.chanroblesvirtuallawlibrary
chanrobles virtual law library

No amount of legal jargon can reverse the clear meaning of defendant's

warranty. As the warranty has proven to be false and inaccurate, the defendant
is liable for any damage arising out of the falsity of its
representation.chanroblesvirtuallawlibrary chanrobles virtual law library

The principle of estoppel effectively prevents the defendant from denying

liability for any damages sustained by the plaintiff which, relying upon an
action or declaration of the defendant, paid on the Checks. The same principle
of estoppel effectively prevents the defendant from denying the existence of
the Checks.chanroblesvirtuallawlibrary chanrobles virtual law library

Whether the Checks have been issued for valuable considerations or not is of
no serious moment to this case. These Checks have been made the subject of
contracts of endorsement wherein the defendant made expressed warranties to
induce payment by the drawer of the Checks; and the defendant cannot now
refuse liability for breach of warranty as a consequence of such forged
endorsements. The defendant has falsely warranted in favor of plaintiff the
validity of all endorsements and the genuineness of the cheeks in all respects
what they purport to be.chanroblesvirtuallawlibrary chanrobles virtual law library

The damage that will result if judgment is not rendered for the plaintiff is
irreparable. The collecting bank has privity with the depositor who is the
principal culprit in this case. The defendant knows the depositor; her address
and her history, Depositor is defendant's client. It has taken a risk on its
depositor when it allowed her to collect on the crossed-
checks.chanroblesvirtuallawlibrary
chanrobles virtual law library

Having accepted the crossed checks from persons other than the payees, the
defendant is guilty of negligence; the risk of wrongful payment has to be
assumed by the defendant.chanroblesvirtuallawlibrary chanrobles virtual law library

On the matter of the award of the interest and attorney's fees, the Board of
Directors finds no reason to reverse the decision of the Arbiter. The
defendant's failure to reimburse the plaintiff has constrained the plaintiff to
regular the services of counsel in order to protect its interest notwithstanding
that plaintiffs claim is plainly valid just and demandable. In addition,
defendant's clear obligation is to reimburse plaintiff upon direct presentation
of the checks; and it is undenied that up to this time the defendant has failed to
make such reimbursement.

WHEREFORE, the petition is DISMISSED for lack of merit without pronouncement as to

costs. The decision of the respondent court of 24 March 1986 and its order of 3 June 1986 are
hereby declared to be immediately executory.

SO ORDERED.

99
Teehankee, C.J., Narvasa, Cruz and Paras, JJ., concur.

G.R. No. 191002               April 20, 2010

ARTURO M. DE CASTRO, Petitioner,

vs.
JUDICIAL AND BAR COUNCIL (JBC) and PRESIDENT GLORIA MACAPAGAL -
ARROYO, Respondents.

x - - - - - - - - - - - - - - - - - - - - - - -x

G.R. No. 191032

JAIME N. SORIANO, Petitioner,

vs.
JUDICIAL AND BAR COUNCIL (JBC), Respondent.

x - - - - - - - - - - - - - - - - - - - - - - -x

G.R. No. 191057

PHILIPPINE CONSTITUTION ASSOCIATION (PHILCONSA), Petitioner,

vs.
JUDICIAL AND BAR COUNCIL (JBC), Respondent.

x - - - - - - - - - - - - - - - - - - - - - - -x

A.M. No. 10-2-5-SC

IN RE APPLICABILITY OF SECTION 15, ARTICLE VII OF THE CONSTITUTION

TO APPOINTMENTS TO THE JUDICIARY, ESTELITO P. MENDOZA, Petitioner,

x - - - - - - - - - - - - - - - - - - - - - - -x

G.R. No. 191149

JOHN G. PERALTA, Petitioner,

vs.
JUDICIAL AND BAR COUNCIL (JBC). Respondent.
PETER IRVING CORVERA; CHRISTIAN ROBERT S. LIM; ALFONSO V. TAN,
JR.; NATIONAL UNION OF PEOPLE’S LAWYERS; MARLOU B. UBANO;
INTEGRATED BAR OF THE PHILIPPINES-DAVAO DEL SUR CHAPTER,
represented by its Immediate Past President, ATTY. ISRAELITO P. TORREON, and
the latter in his own personal capacity as a MEMBER of the PHILIPPINE BAR;
MITCHELL JOHN L. BOISER; BAGONG ALYANSANG BAYAN (BAYAN)
CHAIRMAN DR. CAROLINA P. ARAULLO; BAYAN SECRETARY GENERAL
RENATO M. REYES, JR.; CONFEDERATION FOR UNITY, RECOGNITION AND
ADVANCE-MENT OF GOVERNMENT EMPLOYEES (COURAGE) CHAIRMAN
FERDINAND GAITE; KALIPUNAN NG DAMAYANG MAHIHIRAP (KADAMAY)
SECRETARY GENERAL GLORIA ARELLANO; ALYANSA NG NAGKAKAISANG
KABATAAN NG SAMBAYANAN PARA SA KAUNLARAN (ANAKBAYAN)
CHAIRMAN KEN LEONARD RAMOS; TAYO ANG PAG-ASA CONVENOR ALVIN
PETERS; LEAGUE OF FILIPINO STUDENTS (LFS) CHAIRMAN JAMES MARK
TERRY LACUANAN RIDON; NATIONAL UNION OF STUDENTS OF THE
PHILIPPINES (NUSP) CHAIRMAN EINSTEIN RECEDES; COLLEGE EDITORS

100
GUILD OF THE PHILIPPINES (CEGP) CHAIRMAN VIJAE ALQUISOLA; and
STUDENT CHRISTIAN MOVEMENT OF THE PHILIPPINES (SCMP) CHAIRMAN
MA. CRISTINA ANGELA GUEVARRA; WALDEN F. BELLO and LORETTA ANN
P. ROSALES; WOMEN TRIAL LAWYERS ORGANIZATION OF THE
PHILIPPINES, represented by YOLANDA QUISUMBING-JAVELLANA; BELLEZA
ALOJADO DEMAISIP; TERESITA GANDIONCO-OLEDAN; MA. VERENA
KASILAG-VILLANUEVA; MARILYN STA. ROMANA; LEONILA DE JESUS; and
GUINEVERE DE LEON; AQUILINO Q. PIMENTEL, JR.; Intervenors.

x - - - - - - - - - - - - - - - - - - - - - - -x

G.R. No. 191342

ATTY. AMADOR Z. TOLENTINO, JR., (IBP Governor-Southern Luzon), and ATTY.

ROLAND B. INTING (IBP Governor-Eastern Visayas), Petitioners,
vs.
JUDICIAL AND BAR COUNCIL (JBC), Respondent.

x - - - - - - - - - - - - - - - - - - - - - - -x

G.R. No. 191420

PHILIPPINE BAR ASSOCIATION, INC., Petitioner,

vs.
JUDICIAL AND BAR COUNCIL and HER EXCELLENCY GLORIA MACAPAGAL-
ARROYO, Respondents.

RESOLUTION

BERSAMIN, J.:

On March 17, 2010, the Court promulgated its decision, holding:

WHEREFORE, the Court:

1. Dismisses the petitions for certiorari and mandamus in G.R. No. 191002 and G.R.
No. 191149, and the petition for mandamus in G.R. No. 191057 for being premature;

2. Dismisses the petitions for prohibition in G.R. No. 191032 and G.R. No. 191342
for lack of merit; and

3. Grants the petition in A.M. No. 10-2-5-SC and, accordingly, directs the Judicial
and Bar Council:

(a) To resume its proceedings for the nomination of candidates to fill the
vacancy to be created by the compulsory retirement of Chief Justice Reynato
S. Puno by May 17, 2010;

(b) To prepare the short list of nominees for the position of Chief Justice;

(c) To submit to the incumbent President the short list of nominees for the
position of Chief Justice on or before May 17, 2010; and

(d) To continue its proceedings for the nomination of candidates to fill other
vacancies in the Judiciary and submit to the President the short list of
nominees corresponding thereto in accordance with this decision.

101
SO ORDERED.

Motions for Reconsideration

Petitioners Jaime N. Soriano (G.R. No. 191032), Amador Z. Tolentino and Roland B. Inting
(G.R. No. 191342), and Philippine Bar Association (G.R. No. 191420), as well as intervenors
Integrated Bar of the Philippines-Davao del Sur (IBP-Davao del Sur, et al.); Christian Robert
S. Lim; Peter Irving Corvera; Bagong Alyansang Bayan and others (BAYAN, et al.); Alfonso
V. Tan, Jr.; the Women Trial Lawyers Organization of the Philippines (WTLOP); Marlou B.
Ubano; Mitchell John L. Boiser; and Walden F. Bello and Loretta Ann P. Rosales (Bello, et
al.), filed their respective motions for reconsideration. Also filing a motion for
reconsideration was Senator Aquilino Q. Pimentel, Jr., whose belated intervention was
allowed.

We summarize the arguments and submissions of the various motions for reconsideration, in
the aforegiven order:

Soriano

1. The Court has not squarely ruled upon or addressed the issue of whether or not the
power to designate the Chief Justice belonged to the Supreme Court en banc.

2. The Mendoza petition should have been dismissed, because it sought a mere
declaratory judgment and did not involve a justiciable controversy.

3. All Justices of the Court should participate in the next deliberations. The mere fact
that the Chief Justice sits as ex officio head of the JBC should not prevail over the
more compelling state interest for him to participate as a Member of the Court.

Tolentino and Inting

1. A plain reading of Section 15, Article VII does not lead to an interpretation that
exempts judicial appointments from the express ban on midnight appointments.

2. In excluding the Judiciary from the ban, the Court has made distinctions and has
created exemptions when none exists.

3. The ban on midnight appointments is placed in Article VII, not in Article VIII,
because it limits an executive, not a judicial, power.

4. Resort to the deliberations of the Constitutional Commission is superfluous, and is

powerless to vary the terms of the clear prohibition.

5. The Court has given too much credit to the position taken by Justice Regalado.
Thereby, the Court has raised the Constitution to the level of a venerated text whose
intent can only be divined by its framers as to be outside the realm of understanding
by the sovereign people that ratified it.

6. Valenzuela should not be reversed.

7. The petitioners, as taxpayers and lawyers, have the clear legal standing to question
the illegal composition of the JBC.

Philippine Bar Association

102
1. The Court’s strained interpretation of the Constitution violates the basic principle
that the Court should not formulate a rule of constitutional law broader than what is
required by the precise facts of the case.

2. Considering that Section 15, Article VII is clear and straightforward, the only duty
of the Court is to apply it. The provision expressly and clearly provides a general
limitation on the appointing power of the President in prohibiting the appointment of
any person to any position in the Government without any qualification and
distinction.

3. The Court gravely erred in unilaterally ignoring the constitutional safeguard against
midnight appointments.

4. The Constitution has installed two constitutional safeguards:- the prohibition

against midnight appointments, and the creation of the JBC. It is not within the
authority of the Court to prefer one over the other, for the Court’s duty is to apply the
safeguards as they are, not as the Court likes them to be.

5. The Court has erred in failing to apply the basic principles of statutory construction
in interpreting the Constitution.

6. The Court has erred in relying heavily on the title, chapter or section headings,
despite precedents on statutory construction holding that such headings carried very
little weight.

7. The Constitution has provided a general rule on midnight appointments, and the
only exception is that on temporary appointments to executive positions.

8. The Court has erred in directing the JBC to resume the proceedings for the
nomination of the candidates to fill the vacancy to be created by the compulsory
retirement of Chief Justice Puno with a view to submitting the list of nominees for
Chief Justice to President Arroyo on or before May 17, 2010. The Constitution grants
the Court only the power of supervision over the JBC; hence, the Court cannot tell the
JBC what to do, how to do it, or when to do it, especially in the absence of a real and
justiciable case assailing any specific action or inaction of the JBC.

9. The Court has engaged in rendering an advisory opinion and has indulged in
speculations.

10. The constitutional ban on appointments being already in effect, the Court’s
directing the JBC to comply with the decision constitutes a culpable violation of the
Constitution and the commission of an election offense.

11. The Court cannot reverse on the basis of a secondary authority a doctrine
unanimously formulated by the Court en banc.

12. The practice has been for the most senior Justice to act as Chief Justice whenever
the incumbent is indisposed. Thus, the appointment of the successor Chief Justice is
not urgently necessary.

13. The principal purpose for the ban on midnight appointments is to arrest any
attempt to prolong the outgoing President’s powers by means of proxies. The attempt
of the incumbent President to appoint the next Chief Justice is undeniably intended to
perpetuate her power beyond her term of office.

IBP-Davao del Sur, et al.

103
1. Its language being unambiguous, Section 15, Article VII of the Constitution applies
to appointments to the Judiciary. Hence, no cogent reason exists to warrant the
reversal of the Valenzuela pronouncement.

2. Section 16, Article VII of the Constitution provides for presidential appointments to
the Constitutional Commissions and the JBC with the consent of the Commission on
Appointments. Its phrase "other officers whose appointments are vested in him in this
Constitution" is enough proof that the limitation on the appointing power of the
President extends to appointments to the Judiciary. Thus, Section 14, Section 15, and
Section 16 of Article VII apply to all presidential appointments in the Executive and
Judicial Branches of the Government.

3. There is no evidence that the framers of the Constitution abhorred the idea of an
Acting Chief Justice in all cases.

Lim

1. There is no justiciable controversy that warrants the Court’s exercise of judicial

review.

2. The election ban under Section 15, Article VII applies to appointments to fill a
vacancy in the Court and to other appointments to the Judiciary.

3. The creation of the JBC does not justify the removal of the safeguard under Section
15 of Article VII against midnight appointments in the Judiciary.

Corvera

1. The Court’s exclusion of appointments to the Judiciary from the Constitutional ban
on midnight appointments is based on an interpretation beyond the plain and
unequivocal language of the Constitution.

2. The intent of the ban on midnight appointments is to cover appointments in both

the Executive and Judicial Departments. The application of the principle of verba
legis (ordinary meaning) would have obviated dwelling on the organization and
arrangement of the provisions of the Constitution. If there is any ambiguity in Section
15, Article VII, the intent behind the provision, which is to prevent political
partisanship in all branches of the Government, should have controlled.

3. A plain reading is preferred to a contorted and strained interpretation based on

compartmentalization and physical arrangement, especially considering that the
Constitution must be interpreted as a whole.

4. Resort to the deliberations or to the personal interpretation of the framers of the

Constitution should yield to the plain and unequivocal language of the Constitution.

5. There is no sufficient reason for reversing Valenzuela, a ruling that is reasonable

and in accord with the Constitution.

BAYAN, et al.

1. The Court erred in granting the petition in A.M. No. 10-2-5-SC, because the
petition did not present a justiciable controversy. The issues it raised were not yet ripe
for adjudication, considering that the office of the Chief Justice was not yet vacant
and that the JBC itself has yet to decide whether or not to submit a list of nominees to
the President.

104
2. The collective wisdom of Valenzuela Court is more important and compelling than
the opinion of Justice Regalado.

3. In ruling that Section 15, Article VII is in conflict with Section 4(1), Article VIII,
the Court has violated the principle of ut magis valeat quam pereat (which mandates
that the Constitution should be interpreted as a whole, such that any conflicting
provisions are to be harmonized as to fully give effect to all). There is no conflict
between the provisions; they complement each other.

4. The form and structure of the Constitution’s titles, chapters, sections, and
draftsmanship carry little weight in statutory construction. The clear and plain
language of Section 15, Article VII precludes interpretation.

Tan, Jr.

1. The factual antecedents do not present an actual case or controversy. The clash of
legal rights and interests in the present case are merely anticipated. Even if it is
anticipated with certainty, no actual vacancy in the position of the Chief Justice has
yet occurred.

2. The ruling that Section 15, Article VII does not apply to a vacancy in the Court and
the Judiciary runs in conflict with long standing principles and doctrines of statutory
construction. The provision admits only one exception, temporary appointments in the
Executive Department. Thus, the Court should not distinguish, because the law itself
makes no distinction.

3. Valenzuela was erroneously reversed. The framers of the Constitution clearly

intended the ban on midnight appointments to cover the members of the Judiciary.
Hence, giving more weight to the opinion of Justice Regalado to reverse the en banc
decision in Valenzuela was unwarranted.

4. Section 15, Article VII is not incompatible with Section 4(1), Article VIII. The 90-
day mandate to fill any vacancy lasts until August 15, 2010, or a month and a half
after the end of the ban. The next President has roughly the same time of 45 days as
the incumbent President (i.e., 44 days) within which to scrutinize and study the
qualifications of the next Chief Justice. Thus, the JBC has more than enough
opportunity to examine the nominees without haste and political uncertainty.1avvphi1

5. When the constitutional ban is in place, the 90-day period under Section 4(1),
Article VIII is suspended.

6. There is no basis to direct the JBC to submit the list of nominees on or before May
17, 2010. The directive to the JBC sanctions a culpable violation of the Constitution
and constitutes an election offense.

7. There is no pressing necessity for the appointment of a Chief Justice, because the
Court sits en banc, even when it acts as the sole judge of all contests relative to the
election, returns and qualifications of the President and Vice-President. Fourteen other
Members of the Court can validly comprise the Presidential Electoral Tribunal.

WTLOP

1. The Court exceeded its jurisdiction in ordering the JBC to submit the list of
nominees for Chief Justice to the President on or before May 17, 2010, and to
continue its proceedings for the nomination of the candidates, because it granted a
relief not prayed for; imposed on the JBC a deadline not provided by law or the

105
Constitution; exercised control instead of mere supervision over the JBC; and lacked
sufficient votes to reverse Valenzuela.

2. In interpreting Section 15, Article VII, the Court has ignored the basic principle of
statutory construction to the effect that the literal meaning of the law must be applied
when it is clear and unambiguous; and that we should not distinguish where the law
does not distinguish.

3. There is no urgency to appoint the next Chief Justice, considering that the Judiciary
Act of 1948 already provides that the power and duties of the office devolve on the
most senior Associate Justice in case of a vacancy in the office of the Chief Justice.

Ubano

1. The language of Section 15, Article VII, being clear and unequivocal, needs no
interpretation

2. The Constitution must be construed in its entirety, not by resort to the organization
and arrangement of its provisions.

3. The opinion of Justice Regalado is irrelevant, because Section 15, Article VII and
the pertinent records of the Constitutional Commission are clear and unambiguous.

4. The Court has erred in ordering the JBC to submit the list of nominees to the
President by May 17, 2010 at the latest, because no specific law requires the JBC to
submit the list of nominees even before the vacancy has occurred.

Boiser

1. Under Section 15, Article VII, the only exemption from the ban on midnight
appointments is the temporary appointment to an executive position. The limitation is
in keeping with the clear intent of the framers of the Constitution to place a restriction
on the power of the outgoing Chief Executive to make appointments.

2. To exempt the appointment of the next Chief Justice from the ban on midnight
appointments makes the appointee beholden to the outgoing Chief Executive, and
compromises the independence of the Chief Justice by having the outgoing President
be continually influential.

3. The Court’s reversal of Valenzuela without stating the sufficient reason violates the
principle of stare decisis.

Bello, et al.

1. Section 15, Article VII does not distinguish as to the type of appointments an
outgoing President is prohibited from making within the prescribed period. Plain
textual reading and the records of the Constitutional Commission support the view
that the ban on midnight appointments extends to judicial appointments.

2. Supervision of the JBC by the Court involves oversight. The subordinate subject to
oversight must first act not in accord with prescribed rules before the act can be
redone to conform to the prescribed rules.

3. The Court erred in granting the petition in A.M. No. 10-2-5-SC, because the
petition did not present a justiciable controversy.

Pimentel

106
 1. Any constitutional interpretative changes must be reasonable, rational, and
conformable to the general intent of the Constitution as a limitation to the powers of
Government and as a bastion for the protection of the rights of the people. Thus, in
harmonizing seemingly conflicting provisions of the Constitution, the interpretation
should always be one that protects the citizenry from an ever expanding grant of
authority to its representatives.

2. The decision expands the constitutional powers of the President in a manner totally
repugnant to republican constitutional democracy, and is tantamount to a judicial
amendment of the Constitution without proper authority.

Comments

The Office of the Solicitor General (OSG) and the JBC separately represent in their
respective comments, thus:

OSG

1. The JBC may be compelled to submit to the President a short list of its nominees
for the position of Chief Justice.

2. The incumbent President has the power to appoint the next Chief Justice.

3. Section 15, Article VII does not apply to the Judiciary.

4. The principles of constitutional construction favor the exemption of the Judiciary

from the ban on midnight appointments.1awph!1

5. The Court has the duty to consider and resolve all issues raised by the parties as
well as other related matters.

JBC

1. The consolidated petitions should have been dismissed for prematurity, because the
JBC has not yet decided at the time the petitions were filed whether the incumbent
President has the power to appoint the new Chief Justice, and because the JBC,
having yet to interview the candidates, has not submitted a short list to the President.

2. The statement in the decision that there is a doubt on whether a JBC short list is
necessary for the President to appoint a Chief Justice should be struck down as bereft
of constitutional and legal basis. The statement undermines the independence of the
JBC.

3. The JBC will abide by the final decision of the Court, but in accord with its
constitutional mandate and its implementing rules and regulations.

For his part, petitioner Estelito P. Mendoza (A.M. No. 10-2-5-SC) submits his comment even
if the OSG and the JBC were the only ones the Court has required to do so. He states that the
motions for reconsideration were directed at the administrative matter he initiated and which
the Court resolved. His comment asserts:

1. The grounds of the motions for reconsideration were already resolved by the
decision and the separate opinion.

2. The administrative matter he brought invoked the Court’s power of supervision

over the JBC as provided by Section 8(1), Article VIII of the Constitution, as
distinguished from the Court’s adjudicatory power under Section 1, Article VIII. In

107
 the former, the requisites for judicial review are not required, which was why
Valenzuela was docketed as an administrative matter. Considering that the JBC itself
has yet to take a position on when to submit the short list to the proper appointing
authority, it has effectively solicited the exercise by the Court of its power of
supervision over the JBC.

3. To apply Section 15, Article VII to Section 4(1) and Section 9, Article VIII is to
amend the Constitution.

4. The portions of the deliberations of the Constitutional Commission quoted in the

dissent of Justice Carpio Morales, as well as in some of the motions for
reconsideration do not refer to either Section 15, Article VII or Section 4(1), Article
VIII, but to Section 13, Article VII (on nepotism).

Ruling

We deny the motions for reconsideration for lack of merit, for all the matters being thereby
raised and argued, not being new, have all been resolved by the decision of March 17, 2010.

Nonetheless, the Court opts to dwell on some matters only for the purpose of clarification and
emphasis.

First: Most of the movants contend that the principle of stare decisis is controlling, and
accordingly insist that the Court has erred in disobeying or abandoning Valenzuela.1

The contention has no basis.

Stare decisis derives its name from the Latin maxim stare decisis et non quieta movere, i.e., to
adhere to precedent and not to unsettle things that are settled. It simply means that a principle
underlying the decision in one case is deemed of imperative authority, controlling the
decisions of like cases in the same court and in lower courts within the same jurisdiction,
unless and until the decision in question is reversed or overruled by a court of competent
authority. The decisions relied upon as precedents are commonly those of appellate courts,
because the decisions of the trial courts may be appealed to higher courts and for that reason
are probably not the best evidence of the rules of law laid down. 2

Judicial decisions assume the same authority as a statute itself and, until authoritatively
abandoned, necessarily become, to the extent that they are applicable, the criteria that must
control the actuations, not only of those called upon to abide by them, but also of those duty-
bound to enforce obedience to them.3 In a hierarchical judicial system like ours, the decisions
of the higher courts bind the lower courts, but the courts of co-ordinate authority do not bind
each other. The one highest court does not bind itself, being invested with the innate authority
to rule according to its best lights.4

The Court, as the highest court of the land, may be guided but is not controlled by precedent.
Thus, the Court, especially with a new membership, is not obliged to follow blindly a
particular decision that it determines, after re-examination, to call for a rectification.5 The
adherence to precedents is strict and rigid in a common-law setting like the United Kingdom,
where judges make law as binding as an Act of Parliament.6 But ours is not a common-law
system; hence, judicial precedents are not always strictly and rigidly followed. A judicial
pronouncement in an earlier decision may be followed as a precedent in a subsequent case
only when its reasoning and justification are relevant, and the court in the latter case accepts
such reasoning and justification to be applicable to the case. The application of the precedent
is for the sake of convenience and stability.

For the intervenors to insist that Valenzuela ought not to be disobeyed, or abandoned, or
reversed, and that its wisdom should guide, if not control, the Court in this case is, therefore,

108
devoid of rationality and foundation. They seem to conveniently forget that the Constitution
itself recognizes the innate authority of the Court en banc to modify or reverse a doctrine or
principle of law laid down in any decision rendered en banc or in division.7

Second: Some intervenors are grossly misleading the public by their insistence that the
Constitutional Commission extended to the Judiciary the ban on presidential appointments
during the period stated in Section 15, Article VII.

The deliberations that the dissent of Justice Carpio Morales quoted from the records of the
Constitutional Commission did not concern either Section 15, Article VII or Section 4(1),
Article VIII, but only Section 13, Article VII, a provision on nepotism. The records of the
Constitutional Commission show that Commissioner Hilario G. Davide, Jr. had proposed to
include judges and justices related to the President within the fourth civil degree of
consanguinity or affinity among the persons whom the President might not appoint during his
or her tenure. In the end, however, Commissioner Davide, Jr. withdrew the proposal to
include the Judiciary in Section 13, Article VII "(t)o avoid any further complication,"8 such
that the final version of the second paragraph of Section 13, Article VII even completely
omits any reference to the Judiciary, to wit:

Section 13. xxx

The spouse and relatives by consanguinity or affinity within the fourth civil degree of the
President shall not during his tenure be appointed as Members of the Constitutional
Commissions, or the Office of the Ombudsman, or as Secretaries, Undersecretaries, chairmen
or heads of bureaus or offices, including government-owned or controlled corporations and
their subsidiaries.

Last: The movants take the majority to task for holding that Section 15, Article VII does not
apply to appointments in the Judiciary. They aver that the Court either ignored or refused to
apply many principles of statutory construction.

The movants gravely err in their posture, and are themselves apparently contravening their
avowed reliance on the principles of statutory construction.

For one, the movants, disregarding the absence from Section 15, Article VII of the express
extension of the ban on appointments to the Judiciary, insist that the ban applied to the
Judiciary under the principle of verba legis. That is self-contradiction at its worst.

Another instance is the movants’ unhesitating willingness to read into Section 4(1) and
Section 9, both of Article VIII, the express applicability of the ban under Section 15, Article
VII during the period provided therein, despite the silence of said provisions thereon. Yet,
construction cannot supply the omission, for doing so would generally constitute an
encroachment upon the field of the Constitutional Commission. Rather, Section 4(1) and
Section 9 should be left as they are, given that their meaning is clear and explicit, and no
words can be interpolated in them.9 Interpolation of words is unnecessary, because the law is
more than likely to fail to express the legislative intent with the interpolation. In other words,
the addition of new words may alter the thought intended to be conveyed. And, even where
the meaning of the law is clear and sensible, either with or without the omitted word or
words, interpolation is improper, because the primary source of the legislative intent is in the
language of the law itself.10

Thus, the decision of March 17, 2010 has fittingly observed:

Had the framers intended to extend the prohibition contained in Section 15, Article VII to the
appointment of Members of the Supreme Court, they could have explicitly done so. They
could not have ignored the meticulous ordering of the provisions. They would have easily
and surely written the prohibition made explicit in Section 15, Article VII as being equally

109
applicable to the appointment of Members of the Supreme Court in Article VIII itself, most
likely in Section 4 (1), Article VIII. That such specification was not done only reveals that the
prohibition against the President or Acting President making appointments within two
months before the next presidential elections and up to the end of the President’s or Acting
President’s term does not refer to the Members of the Supreme Court.

We cannot permit the meaning of the Constitution to be stretched to any unintended point in
order to suit the purposes of any quarter.

Final Word

It has been insinuated as part of the polemics attendant to the controversy we are resolving
that because all the Members of the present Court were appointed by the incumbent
President, a majority of them are now granting to her the authority to appoint the successor of
the retiring Chief Justice.

The insinuation is misguided and utterly unfair.

The Members of the Court vote on the sole basis of their conscience and the merits of the
issues. Any claim to the contrary proceeds from malice and condescension. Neither the
outgoing President nor the present Members of the Court had arranged the current situation to
happen and to evolve as it has. None of the Members of the Court could have prevented the
Members composing the Court when she assumed the Presidency about a decade ago from
retiring during her prolonged term and tenure, for their retirements were mandatory. Yet, she
is now left with an imperative duty under the Constitution to fill up the vacancies created by
such inexorable retirements within 90 days from their occurrence. Her official duty she must
comply with. So must we ours who are tasked by the Constitution to settle the controversy.

ACCORDINGLY, the motions for reconsideration are denied with finality.

SO ORDERED.

G.R. No. Nos. L-32613-14 December 27, 1972

PEOPLE OF THE PHILIPPINES, Petitioner, vs. HON. SIMEON. FERRER (in his
capacity as Judge of the Court of First Instance of Tarlac, Branch I), FELICIANO CO
alias LEONCIO CO alias "Bob," and NILO S. TAYAG alias Romy Reyes alias "Taba,"
Respondents.

CASTRO, J.: chanrobles virtual law library

I. Statement of the Case

Posed in issue in these two cases is the constitutionality of the Anti-Subversion

Act, 1 which outlaws the Communist Party of the Philippines and other "subversive
associations," and punishes any person who "knowingly, willfully and by overt acts affiliates
himself with, becomes or remains a member" of the Party or of any other similar "subversive"
organization.chanroblesvirtuallawlibrary
chanrobles virtual law library

On March 5, 1970 a criminal complaint for violation of section 4 of the Anti-Subversion Act
was filed against the respondent Feliciano Co in the Court of First Instance of Tarlac. On
March 10 Judge Jose C. de Guzman conducted a preliminary investigation and, finding a
prima facie case against Co, directed the Government prosecutors to file the corresponding
information. The twice-amended information, docketed as Criminal Case No. 27, recites:

That on or about May 1969 to December 5, 1969, in the Municipality of

Capas, Province of Tarlac, Philippines, and within the jurisdiction of this

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 Honorable Court, the abovenamed accused, feloniously became an officer
and/or ranking leader of the Communist Party of the Philippines, an outlawed
and illegal organization aimed to overthrow the Government of the Philippines
by means of force, violence, deceit, subversion, or any other illegal means for
the purpose of establishing in the Philippines a totalitarian regime and placing
the government under the control and domination of an alien power, by being
an instructor in the Mao Tse Tung University, the training school of recruits of
the New People's Army, the military arm of the said Communist Party of the
Philippines.chanroblesvirtuallawlibrary chanrobles virtual law library

That in the commission of the above offense, the following aggravating

circumstances are present, to wit: chanrobles virtual law library

(a) That the crime has been committed in contempt of or with insult to public
authorities; chanrobles virtual law library

(b) That the crime was committed by a band; and afford

impunity.chanroblesvirtuallawlibrary chanrobles virtual law library

(c) With the aid of armed men or persons who insure or afford impunity.

Co moved to quash on the ground that the Anti-Subversion Act is a bill of

attainder.chanroblesvirtuallawlibrary chanrobles virtual law library

Meanwhile, on May 25, 1970, another criminal complaint was filed with the same court,
sharing the respondent Nilo Tayag and five others with subversion. After preliminary
investigation was had, an information was filed, which, as amended, reads:

The undersigned provincial Fiscal of Tarlac and State Prosecutors duly

designated by the Secretary of Justice to collaborate with the Provincial Fiscal
of Tarlac, pursuant to the Order dated June 5, above entitled case, hereby
accuse Nilo S. Tayag, alias Romy Reyes alias TABA, ARTHUR GARCIA,
RENATO (REY) CASIPE, ABELARDO GARCIA, MANUEL ALAVADO,
BENJAMIN BIE alias COMMANDER MELODY and several JOHN DOES,
whose identities are still unknown, for violation of REPUBLIC ACT No.
1700, otherwise known as the Anti-Subversion Law, committed as follows: chanrobles virtual law library

That in or about March 1969 and for sometime prior thereto and thereafter, in
the Province of Tarlac, within the jurisdiction of this Honorable Court, and
elsewhere in the Philippines, the above-named accused knowingly, willfully
and by overt acts organized, joined and/or remained as offices and/or ranking
leaders, of the KABATAANG MAKABAYAN, a subversive organization as
defined in Republic Act No. 1700; that BENJAMIN BIE and COMMANDER
MELODY, in addition thereto, knowingly, willfully and by over acts joined
and/or remained as a member and became an officer and/or ranking leader not
only of the Communist Party of the Philippines but also of the New People's
Army, the military arm of the Communist Party of the Philippines; and that all
the above-named accused, as such officers and/or ranking leaders of the
aforestated subversive organizations, conspiring, confederating and mutually
helping one another, did then and there knowingly, willfully and feloniously
commit subversive and/or seditious acts, by inciting, instigating and stirring
the people to unite and rise publicly and tumultuously and take up arms
against the government, and/or engage in rebellious conspiracies and riots to
overthrow the government of the Republic of the Philippines by force,
violence, deceit, subversion and/or other illegal means among which are the
following: chanrobles virtual law library

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 1. On several occasions within the province of Tarlac, the accused conducted
meetings and/or seminars wherein the said accused delivered speeches
instigating and inciting the people to unite, rise in arms and overthrow the
Government of the Republic of the Philippines, by force, violence, deceit,
subversion and/or other illegal means; and toward this end, the said accused
organized, among others a chapter of the KABATAANG MAKABAYAN in
barrio Motrico, La Paz, Tarlac for the avowed purpose of undertaking or
promoting an armed revolution, subversive and/or seditious propaganda,
conspiracies, and/or riots and/or other illegal means to discredit and overthrow
the Government of the Republic of the Philippines and to established in the
Philippines a Communist regime.chanroblesvirtuallawlibrary chanrobles virtual law library

2. The accused NILO TAYAG alias ROMY REYES alias TABA, together
with FRANCISCO PORTEM alias KIKO Gonzales and others, pursued the
above subversive and/or seditious activities in San Pablo City by recruiting
members for the New People's Army, and/or by instigating and inciting the
people to organize and unite for the purpose of overthrowing the Government
of the Republic of the Philippines through armed revolution, deceit,
subversion and/or other illegal means, and establishing in the Philippines a
Communist Government.chanroblesvirtuallawlibrary chanrobles virtual law library

That the following aggravating circumstances attended the commission of the

offense: (a) aid of armed men or persons to insure or afford impunity; and (b)
craft, fraud, or disguise was employed.

On July 21, 1970 Tayag moved to quash, impugning the validity of the statute on the grounds
that (1) it is a bill of attainder; (2) it is vague; (3) it embraces more than one subject not
expressed in the title thereof; and (4) it denied him the equal protection of the
laws.chanroblesvirtuallawlibrary
chanrobles virtual law library

Resolving the constitutional issues raised, the trial court, in its resolution of September 15,
1970, declared the statute void on the grounds that it is a bill of attainder and that it is vague
and overboard, and dismissed the informations against the two accused. The Government
appealed. We resolved to treat its appeal as a special civil action for certiorari.

II. Is the Act a Bill of Attainder?

Article III, section 1 (11) of the Constitution states that "No bill of attainder or ex port facto
law shall be enacted." 2 A bill of attainder is a legislative act which inflicts punishment
without trial. 3 Its essence is the substitution of a legislative for a judicial determination of
guilt. 4 The constitutional ban against bills of attainder serves to implement the principle of
separation of powers 5 by confining legislatures to
rule-making 6 and thereby forestalling legislative usurpation of the judicial function. 7 History
in perspective, bills of attainder were employed to suppress unpopular causes and political
minorities, 8 and it is against this evil that the constitutional prohibition is directed. The
singling out of a definite class, the imposition of a burden on it, and a legislative intent,
suffice to stigmatizea statute as a bill of attainder. 9 chanrobles virtual law library

In the case at bar, the Anti-Subversion Act was condemned by the court a quo as a bill of
attainder because it "tars and feathers" the Communist Party of the Philippines as a
"continuing menace to the freedom and security of the country; its existence, a 'clear, present
and grave danger to the security of the Philippines.'" By means of the Act, the trial court said,
Congress usurped "the powers of the judge," and assumed "judicial magistracy by
pronouncing the guilt of the CCP without any of the forms or safeguards of judicial trial."
Finally, according to the trial court, "if the only issue [to be determined] is whether or not the
accused is a knowing and voluntary member, the law is still a bill of attainder because it has

112
expressly created a presumption of organizational guilt which the accused can never hope to
overthrow." chanrobles virtual law library

1. When the Act is viewed in its actual operation, it will be seen that it does not specify the
Communist Party of the Philippines or the members thereof for the purpose of punishment.
What it does is simply to declare the Party to be an organized conspiracy for the overthrow of
the Government for the purposes of the prohibition, stated in section 4, against membership
in the outlawed organization. The term "Communist Party of the Philippines" issued solely
for definitional purposes. In fact the Act applies not only to the Communist Party of the
Philippines but also to "any other organization having the same purpose and their
successors." Its focus is not on individuals but on conduct. 10 chanrobles virtual law library

This feature of the Act distinguishes it from section 504 of the U.S. Federal Labor-
Management Reporting and Disclosure Act of 1959 11 which, in U.S. vs. Brown, 12 was held
to be a bill of attainder and therefore unconstitutional. Section 504 provided in its pertinent
parts as follows:

(a) No person who is or has been a member of the Communist

Party ... shall serve -
chanrobles virtual law library

(1) as an officer, director, trustee, member of any executive board or similar

governing body, business agent, manager, organizer, or other employee (other
than as an employee performing exclusively clerical or custodial duties) of any
labor organization.chanroblesvirtuallawlibrary chanrobles virtual law library

during or for five years after the termination of his membership in the
Communist Party....chanroblesvirtuallawlibrary chanrobles virtual law library

(b) Any person who willfully violates this section shall be fined not more than
$10,000 or imprisoned for not more than one year, or both.

This statute specified the Communist Party, and imposes disability and penalties on its
members. Membership in the Party, without more, ipso facto disqualifies a person from
becoming an officer or a member of the governing body of any labor organization. As the
Supreme Court of the United States pointed out:

Under the line of cases just outlined, sec. 504 of the Labor Management
Reporting and Disclosure Act plainly constitutes a bill of attainder. Congress
undoubtedly possesses power under the Commerce Clause to enact legislation
designed to keep from positions affecting interstate commerce persons who
may use of such positions to bring about political strikes. In section 504,
however, Congress has exceeded the authority granted it by the Constitution.
The statute does not set forth a generally applicable rule decreeing that any
person who commits certain acts or possesses certain characteristics (acts and
characteristics which, in Congress' view, make them likely to initiate political
strikes) shall not hold union office, and leaves to courts and juries the job of
deciding what persons have committed the specified acts or possessed the
specified characteristics. Instead, it designates in no uncertain terms the
persons who possess the feared characteristics and therefore cannot hold
union office without incurring criminal liability - members of the Communist
Party.chanroblesvirtuallawlibrary chanrobles virtual law library

Communist Party v. Subversive Activities Control Board, 367 US 1, 6 L ed 2d

625, 81 S CT 1357, lend a support to our conclusion. That case involved an
appeal from an order by the Control Board ordering the Communist Party to
register as a "Communist-action organization," under the Subversive
Activities Control Act of 1950, 64 Stat 987, 50 USC sec. 781 et seq. (1958

113
 ed). The definition of "Communist-action organization" which the Board is to
apply is set forth in sec. 3 of the Act: chanrobles virtual law library

[A]ny organization in the United States ... which (i)is substantially directed,
dominated, or controlled by the foreign government or foreign organization
controlling the world Communist movement referred to in section 2 of this
title, and(ii) operates primarily to advance the objectives of such world
Communist movement... 64 Stat 989, 50 USC sec. 782 (1958 ed.) chanrobles virtual law library

A majority of the Court rejected the argument that the Act was a bill of
attainder, reasoning that sec. 3 does not specify the persons or groups upon
which the deprivations setforth in the Act are to be imposed, but instead sets
forth a general definition. Although the Board has determined in 1953 that the
Communist Party was a "Communist-action organization," the Court found the
statutory definition not to be so narrow as to insure that the Party would
always come within it: chanrobles virtual law library

In this proceeding the Board had found, and the Court of Appeals has
sustained its conclusion, that the Communist Party, by virtud of the activities
in which it now engages, comes within the terms of the Act. If the Party
should at anytime choose to abandon these activities, after it is once registered
pursuant to sec. 7, the Act provides adequate means of relief. (367 US, at 87, 6
L ed 2d at 683)

Indeed, were the Anti-Subversion Act a bill of attainder, it would be totally unnecessary to
charge Communists in court, as the law alone, without more, would suffice to secure their
punishment. But the undeniable fact is that their guilt still has to be judicially established.
The Government has yet to prove at the trial that the accused joined the Party knowingly,
willfully and by overt acts, and that they joined the Party, knowing its subversive character
and with specific intent to further its basic objective, i.e., to overthrow the existing
Government by force deceit, and other illegal means and place the country under the control
and domination of a foreign power.chanroblesvirtuallawlibrary chanrobles virtual law library

As to the claim that under the statute organizationl guilt is nonetheless imputed despite the
requirement of proof of knowing membership in the Party, suffice it to say that is precisely
the nature of conspiracy, which has been referred to as a "dragneet device" whereby all who
participate in the criminal covenant are liable. The contention would be correct if the statute
were construed as punishing mere membership devoid of any specific intent to further the
unlawful goals of the Party. 13 But the statute specifically required that membership must be
knowing or active, with specific intent to further the illegal objectives of the Party. That is
what section 4 means when it requires that membership, to be unlawful, must be shown to
have been acquired "knowingly, willfully and by overt acts." 14 The ingredient of specific
intent to pursue the unlawful goals of the Party must be shown by "overt acts." 15 This
constitutes an element of "membership" distinct from the ingredient of guilty knowledge. The
former requires proof of direct participation in the organization's unlawful activities, while
the latter requires proof of mere adherence to the organization's illegal
objectives.chanroblesvirtuallawlibrary
chanrobles virtual law library

2. Even assuming, however, that the Act specifies individuals and not activities, this feature is
not enough to render it a bill of attainder. A statute prohibiting partners or employees of
securities underwriting firms from serving as officers or employees of national banks on the
basis of a legislative finding that the persons mentioned would be subject to the temptation to
commit acts deemed inimical to the national economy, has been declared not to be a bill of
attainder. 16 Similarly, a statute requiring every secret, oath-bound society having a
membership of at least twenty to register, and punishing any person who becomes a member
of such society which fails to register or remains a member thereof, was declared valid even
if in its operation it was shown to apply only to the members of the Ku Klux Klan. 17 chanrobles virtual law library

114
In the Philippines the validity of section 23 (b) of the Industrial Peace Act, 18 requiring labor
unions to file with the Department of Labor affidavits of union officers "to the effect that they
are not members of the Communist Party and that they are not members of any organization
which teaches the overthrow of the Government by force or by any illegal or unconstitutional
method," was upheld by this Court. 19 chanrobles virtual law library

Indeed, it is only when a statute applies either to named individuals or to easily ascertainable
members of a group in such a way as to inflict punishment on them without a judicial trial
does it become a bill of attainder. 20 It is upon this ground that statutes which disqualified
those who had taken part in the rebellion against the Government of the United States during
the Civil War from holding office, 21 or from exercising their profession, 22 or which
prohibited the payment of further compensation to individuals named in the Act on the basis
of a finding that they had engages in subversive activities, 23 or which made it a crime for a
member of the Communist Party to serve as an officer or employee of a labor union, 24 have
been invalidated as bills of attainder.chanroblesvirtuallawlibrary chanrobles virtual law library

But when the judgment expressed in legislation is so universally acknowledged to be certain

as to be "judicially noticeable," the legislature may apply its own rules, and judicial hearing is
not needed fairly to make such determination. 25 chanrobles virtual law library

In New York ex rel. Bryant vs. Zimmerman, 26 the New York legislature passed a law
requiring every secret, oath-bound society with a membership of at least twenty to register,
and punishing any person who joined or remained a member of such a society failing to
register. While the statute did not specify the Ku Klux Klan, in its operation the law applied
to the KKK exclusively. In sustaining the statute against the claim that it discriminated
against the Ku Klux Klan while exempting other secret, oath-bound organizations like
masonic societies and the Knights of Columbus, the United States Supreme Court relied on
common knowledge of the nature and activities of the Ku Klux Klan. The Court said:

The courts below recognized the principle shown in the cases just cited and
reached the conclusion that the classification was justified by a difference
between the two classes of associations shown by experience, and that the
difference consisted (a) in a manifest tendency on the part of one class to make
the secrecy surrounding its purpose and membership a cloak for acts and
conduct inimical to personal rights and public welfare, and (b) in the absence
of such a tendency on the part of the other class. In pointing out this difference
one of the courts said of the Ku Klux Klan, the principal association in the
included class: "It is a matter of common knowledge that this organization
functions largely at night, its members disguised by hoods and gowns and
doing things calculated to strike terror into the minds of the people;" and later
said of the other class: "These organizations and their purposes are well
known, many of them having been in existence for many years. Many of them
are oath-bound and secret. But we hear no complaint against them regarding
violation of the peace or interfering with the rights of others." Another of the
courts said: "It is a matter of common knowledge that the association or
organization of which the relator is concededly a member exercises activities
tending to the prejudice and intimidation of sundry classes of our citizens. But
the legislation is not confined to this society;" and later said of the other class:
"Labor unions have a recognized lawful purpose. The benevolent orders
mentioned in the Benevolent Orders Law have already received legislative
scrutiny and have been granted special privileges so that the legislature may
well consider them beneficial rather than harmful agencies." The third court,
after recognizing "the potentialities of evil in secret societies," and observing
that "the danger of certain organizations has been judicially demonstrated," -
meaning in that state, - said: "Benevolent orders, labor unions and college
fraternities have existed for many years, and, while not immune from hostile
criticism, have on the whole justified their existence." chanrobles virtual law library

115
 We assume that the legislature had before it such information as was readily
available including the published report of a hearing, before a committee of
the House of Representatives of the 57th Congress relating to the formation,
purposes and activities of the Klu Klux Klan. If so it was advised - putting
aside controverted evidence - that the order was a revival of the Ku Klux Klan
of an earlier time with additional features borrowed from the Know Nothing
and the A. P. A. orders of other periods; that its memberships was limited to
native-born, gentile, protestant whites; that in part of its constitution and
printed creed it proclaimed the widest freedom for all and full adherence to the
Constitution of the United States; in another exacted of its member an oath to
shield and preserve "white supremacy;" and in still another declared any
person actively opposing its principles to be "a dangerous ingredient in the
body politic of our country and an enemy to the weal of our national
commonwealth;" that it was conducting a crusade against Catholics, Jews, and
Negroes, and stimulating hurtful religious and race prejudices; that it was
striving for political power and assuming a sort of guardianship over the
administration of local, state and national affairs; and that at times it was
taking into its own hands the punishment of what some of its members
conceived to be crimes. 27 chanrobles virtual law library

In the Philippines the character of the Communist Party has been the object of continuing
scrutiny by this Court. In 1932 we found the Communist Party of the Philippines to be an
illegal association. 28 In 1969 we again found that the objective of the Party was the
"overthrow of the Philippine Government by armed struggle and to establish in the
Philippines a communist form of government similar to that of Soviet Russia and Red
China." 29 More recently, in Lansang vs. Garcia, 30 we noted the growth of the Communist
Party of the Philippines and the organization of Communist fronts among youth organizations
such as the Kabataang Makabayan (KM) and the emergence of the New People's Army. After
meticulously reviewing the evidence, we said: "We entertain, therefore, no doubts about the
existence of a sizeable group of men who have publicly risen in arms to overthrow the
government and have thus been and still are engaged in rebellion against the Government of
the Philippines.chanroblesvirtuallawlibrary
chanrobles virtual law library

3. Nor is it enough that the statute specify persons or groups in order that it may fall within
the ambit of the prohibition against bills of attainder. It is also necessary that it must apply
retroactively and reach past conduct. This requirement follows from the nature of a bill of
attainder as a legislative adjudication of guilt. As Justice Frankfurter observed, "frequently a
bill of attainder was ... doubly objectionable because of its ex post facto features. This is the
historic explanation for uniting the two mischiefs in one
clause - 'No Bill of Attainder or ex post facto law shall be passed.' ... Therefore, if [a statute]
is a bill of attainder it is also an ex post facto law. But if it is not an ex post facto law, the
reasons that establish that it is not are persuasive that it cannot be a bill of attainder." 31 chanrobles virtual law library

Thus in Gardner vs. Board of Public Works, 32 the U.S. Supreme Court upheld the validity of
the Charter of the City of Los Angeles which provided:

... [N]o person shall hold or retain or be eligible for any public office or
employment in the service of the City of Los Angeles, in any office or
department thereof, either elective or appointive, who has within five (5) years
prior to the effective date of this section advised, advocated, or taught, or who
may, after this section becomes effective, become a member of or affiliated
with any group, society, association, organization or party which advises,
advocates or teaches or has within said period of five (5) years advised,
advocated, or taught the overthrow by force or violence of the Government of
the United States of America or of the State of California.

116
In upholding the statute, the Court stressed the prospective application of the Act to the
petitioner therein, thus:

... Immaterial here is any opinion we might have as to the charter provision
insofar as it purported to apply restrospectively for a five-year period to its
effective date. We assume that under the Federal Constitution the Charter
Amendment is valid to the extent that it bars from the city's public service
persons who, subsequently to its adoption in 1941, advise, advocate, or reach
the violent overthrow of the Government or who are or become affiliated with
any group doing so. The provisions operating thus prospectively were a
reasonable regulation to protect the municipal service by establishing an
employment qualification of loyalty to the State and the United
States.chanroblesvirtuallawlibrary
chanrobles virtual law library

... Unlike the provisions of the charter and ordinance under which petitioners
were removed, the statute in the Lovett case did not declare general and
prospectively operative standards of qualification and eligibility for public
employment. Rather, by its terms it prohibited any further payment of
compensationto named individuals or employees. Under these circumstances,
viewed against the legislative background, the statutewas held to have
imposed penalties without judicial trial.

Indeed, if one objection to the bill of attainder is thatCongress thereby assumed judicial
magistracy, them it mustbe demonstrated that the statute claimed to be a bill of
attainderreaches past conduct and that the penalties it imposesare inescapable. As the U.S.
Supreme Court observedwith respect to the U.S. Federal Subversive Activities ControlAct of
1950:

Nor is the statute made an act of "outlawry" or of attainderby the fact that the
conduct which it regulates is describedwith such particularity that, in
probability, few organizationswill come within the statutory terms.
Legislatures may act tocurb behaviour which they regard as harmful to the
public welfare,whether that conduct is found to be engaged in by manypersons
or by one. So long as the incidence of legislation issuch that the persons who
engage in the regulated conduct, bethey many or few, can escape regulation
merely by altering thecourse of their own present activities, there can be no
complaintof an attainder. 33 chanrobles virtual law library

This statement, mutatis mutandis, may be said of theAnti-Subversion Act. Section 4 thereof
expressly statesthat the prohibition therein applies only to acts committed"After the approval
of this Act." Only those who "knowingly,willfully and by overt acts affiliate themselves
with,become or remain members of the Communist Party of thePhilippines and/or its
successors or of any subversive association"after June 20, 1957, are punished. Those
whowere members of the Party or of any other subversive associationat the time of the
enactment of the law, weregiven the opportunity of purging themselves of liability
byrenouncing in writing and under oath their membershipin the Party. The law expressly
provides that such renunciationshall operate to exempt such persons from penalliability. 34
The penalties prescribed by the Act are thereforenot inescapable.

III. The Act and the Requirements of Due Process

1. As already stated, the legislative declaration in section 2 of the Act that the Communist
Party of the Philippinesis an organized conspiracy for the overthrow of theGovernment is
inteded not to provide the basis for a legislativefinding of guilt of the members of the Party
butrather to justify the proscription spelled out in section 4. Freedom of expression and
freedom of association are sofundamental that they are thought by some to occupy
a"preferred position" in the hierarchy of constitutional values. 35 Accordingly, any limitation

117
on their exercise mustbe justified by the existence of a substantive evil. This isthe reason why
before enacting the statute in question Congressconducted careful investigations and then
stated itsfindings in the preamble, thus:

... [T]he Communist Party of the Philippines althoughpurportedly a political

party, is in fact an organized conspiracyto overthrow the Government of the
Republic of the Philippinesnot only by force and violence but also by deceit,
subversionand other illegal means, for the purpose of establishing in
thePhilippines a totalitarian regime subject to alien dominationand control; chanrobles virtual law library

... [T]he continued existence and activities of the CommunistParty of the

Philippines constitutes a clear, present andgrave danger to the security of the
Philippines; chanrobles virtual law library

... [I]n the face of the organized, systematice and persistentsubversion,

national in scope but international in direction,posed by the Communist Party
of the Philippines and its activities,there is urgent need for special legislation
to cope withthis continuing menace to the freedom and security of the country.

In truth, the constitutionality of the Act would be opento question if, instead of making these
findings in enactingthe statute, Congress omitted to do so.chanroblesvirtuallawlibrary chanrobles virtual law library

In saying that by means of the Act Congress has assumed judicial magistracy, the trial courd
failed to takeproper account of the distinction between legislative fact and adjudicative fact.
Professor Paul Freund elucidatesthe crucial distinction, thus:

... A law forbidding the sale of beverages containingmore than 3.2 per cent of
alcohol would raise a question of legislativefact, i.e., whether this standard has
a reasonable relationto public health, morals, and the enforcement problem.
Alaw forbidding the sale of intoxicating beverages (assuming itis not so vague
as to require supplementation by rule-making)would raise a question of
adjudicative fact, i.e., whether thisor that beverage is intoxicating within the
meaning of the statuteand the limits on governmental action imposed by the
Constitution. Of course what we mean by fact in each case is itselfan ultimate
conclusion founded on underlying facts and oncriteria of judgment for
weighing them.chanroblesvirtuallawlibrary chanrobles virtual law library

A conventional formulation is that legislative facts - those facts which are

relevant to the legislative judgment - will not be canvassed save to determine
whether there is a rationalbasis for believing that they exist, while
adjudicativefacts - those which tie the legislative enactment to the litigant - are
to be demonstrated and found according to the ordinarystandards prevailing
for judicial trials. 36 chanrobles virtual law library

The test formulated in Nebbia vs. new York, 37 andadopted by this Court in Lansang vs.
Garcia, 38 is that 'if laws are seen to have a reasonable relation to a proper legislative purpose,
and are neither arbitrary nor discriminatory, the requirements of due process are satisfied, and
judicial determination to that effect renders a court functus officio." The recital of legislative
findings implements this test.chanroblesvirtuallawlibrary chanrobles virtual law library

With respect to a similar statement of legislative findingsin the U.S. Federal Subversive
Activities Control Actof 1950 (that "Communist-action organizations" are controlledby the
foreign government controlling the worldCommunist movement and that they operate
primarily to"advance the objectives of such world Communist movement"),the U.S. Supreme
Court said:

118
 It is not for the courts to reexamine the validity of theselegislative findings and
reject them....They are the productof extensive investigation by Committes of
Congress over morethan a decade and a half. Cf. Nebbia v. New York, 291
U.S.502, 516, 530. We certainly cannot dismiss them as unfoundedirrational
imaginings. ... And if we accept them, as we mustas a not unentertainable
appraisal by Congress of the threatwhich Communist organizations pose not
only to existing governmentin the United States, but to the United States as
asovereign, independent Nation. ...we must recognize that thepower of
Congress to regulate Communist organizations of thisnature is
extensive. 39chanrobles virtual law library

This statement, mutatis mutandis, may be said of thelegislative findings articulated in the
Anti-Subversion Act.chanroblesvirtuallawlibrary chanrobles virtual law library

That the Government has a right to protect itself againstsubversion is a proposition too plain
to require elaboration.Self-preservation is the "ultimate value" of society. It surpasses and
transcendes every other value, "forif a society cannot protect its very structure from
armedinternal attack, ...no subordinate value can be protected" 40 As Chief Justice Vinson so
aptly said in Dennis vs. United States: 41

Whatever theoretical merit there may be to the argumentthat there is a 'right' to

rebellion against dictatorial governmentsis without force where the existing
structure of government provides for peaceful and orderly change. We
rejectany principle of governmental helplessness in the face of preparationfor
revolution, which principle, carried to its logical conclusion,must lead to
anarchy. No one could conceive that it isnot within the power of Congress to
prohibit acts intended tooverthrow the government by force and violence.

2. By carefully delimiting the reach of the Act to conduct (as explicitly described in sectin 4
thereof), Congressreaffirmed its respect for the rule that "even throughthe governmental
purpose be legitimate and substantial,that purpose cannot be pursued by means that broadly
stiflefundamental personal liberties when the end can be more narrowly achieved." 42 The
requirement of knowing membership,as distinguished from nominal membership, hasbeen
held as a sufficient basis for penalizing membershipin a subversive organization. 43 For, as
has been stated:

Membership in an organization renders aid and encouragement to the

organization; and when membership is acceptedor retained with knowledge
that the organization is engaged inan unlawful purpose, the one accepting or
retaining membershipwith such knowledge makes himself a party to the
unlawfulenterprise in which it is engaged. 44 chanrobles virtual law library

3. The argument that the Act is unconstitutionallyoverbroad because section 2 merely speaks
of "overthrow"of the Government and overthrow may be achieved by peaceful means,
misconceives the function of the phrase"knowingly, willfully and by overt acts" in section 4.
Section 2 is merely a legislative declaration; the definitionsof and the penalties prescribed for
the different acts prescribedare stated in section 4 which requires that membershipin the
Communist Party of the Philippines, to be unlawful, must be acquired "knowingly, willfully
and by overt acts." Indeed, the first "whereas" clause makes clear thatthe overthrow
contemplated is "overthrow not only by forceand violence but also be deceit, subversion and
other illegalmeans." The absence of this qualificatio in section 2 appearsto be due more to an
oversight rather than to deliberateomission.chanroblesvirtuallawlibrary chanrobles virtual law library

Moreover, the word "overthrow' sufficiently connotesthe use of violent and other illegal
means. Only in a metaphoricalsense may one speak of peaceful overthrow ofgovernments,
and certainly the law does not speak in metaphors.In the case of the Anti-Subversion Act, the
use ofthe word "overthrow" in a metaphorical sense is hardlyconsistent with the clearly

119
delineated objective of the "overthrow,"namely, "establishing in the Philippines a
totalitarianregime and place [sic] the Government under thecontrol and domination of an
alien power." What thisCourt once said in a prosecution for sedition is appropos: "The
language used by the appellant clearly imported anoverthrow of the Government by violence,
and it should beinterpreted in the plain and obvious sense in which it wasevidently intended
to be understood. The word 'overthrow'could not have been intended as referring to an
ordinarychange by the exercise of the elective franchise. The useof the whip [which the
accused exhorted his audience to useagainst the Constabulary], an instrument designed
toleave marks on the sides of adversaries, is inconsistentwith the mild interpretation which
the appellant wouldhave us impute to the language." 45

IV. The Act and the Guaranty of Free Expression

As already pointed out, the Act is aimed against conspiracies to overthrow the Government
by force, violence orother illegal means. Whatever interest in freedom of speechand freedom
of association is infringed by the prohibitionagainst knowing membership in the Communist
Party ofthe Philippines, is so indirect and so insubstantial as to beclearly and heavily
outweighed by the overriding considerationsof national security and the preservartion of
democraticinstitutions in his country.chanroblesvirtuallawlibrary chanrobles virtual law library

The membership clause of the U.S. Federal Smith Actis similar in many respects to the
membership provision ofthe Anti-Subversion Act. The former provides:

Whoever organizes or helps or attempts to organize anysociety, group, or

assembly of persons who teach, advocate, orencourage the overthrow or
destruction of any such governmentby force or violence; or becomes or is a
member of, or affiliatedwith, any such society, group or assembly of persons,
knowingthe purpose thereof - chanrobles virtual law library

Shall be fined not more than $20,000 or imprisoned notmore than twenty
years, or both, and shall be ineligible for emplymentby the United States or
any department or agencythereof, for the five years next following his
conviction.... 46
chanrobles virtual law library

In sustaining the validity of this provision, the "Court said in Scales vs. United States: 47

It was settled in Dennis that advocacy with which we arehere concerned is not
constitutionally protected speech, and itwas further established that a
combination to promote suchadvocacy, albeit under the aegis of what purports
to be a politicalparty, is not such association as is protected by the
firstAmendment. We can discern no reason why membership, whenit
constitutes a purposeful form of complicity in a group engagingin this same
forbidden advocacy, should receive anygreater degree of protection from the
guarantees of that Amendment.

Moreover, as was held in another case, where the problemsof accommodating the exigencies
of self-preservationand the values of liberty are as complex and intricate as inthe situation
described in the legislative findings stated inthe U.S. Federal Subversive Activities Control
Act of 1950,the legislative judgment as to how that threat may best bemet consistently with
the safeguards of personal freedomsis not to be set aside merely because the judgment of
judgeswould, in the first instance, have chosen other methods. 48 For in truth, legislation,
"whether it restrains freedom tohire or freedom to speak, is itself an effort at
compromisebetween the claims of the social order and individual freedom,and when the
legislative compromise in either case isbrought to the judicial test the court stands one step
removedfrom the conflict and its resolution through law." 49

V. The Act and its Title

120
The respondent Tayag invokes the constitutional commandthat "no bill which may be enacted
into law shall embrace more than one subject which shall be expressed in the title of the bill."
50
chanrobles virtual law library

What is assailed as not germane to or embraced in thetitle of the Act is the last proviso of
section 4 which reads:

And provided, finally, That one who conspires with anyother person to
overthrow the Government of the Republic ofthe Philippines, or the
government of any of its political subdivisionsby force, violence, deceit,
subversion or illegal means,for the purpose of placing such Government or
political subdivisionunder the control and domination of any lien power,
shallbe punished by prision correccional to prision mayor with allthe
accessory penalties provided therefor in the same code.

It is argued that the said proviso, in reality, punishes notonly membership in the Communist
Party of the Philippinesor similar associations, but as well "any conspiracyby two persons to
overthrow the national or any local governmentby illegal means, even if their intent is not to
establisha totalitarian regime, burt a democratic regime, evenif their purpose is not to place
the nation under an aliencommunist power, but under an alien democratic power likethe
United States or England or Malaysia or even an anti-communistpower like Spain, Japan,
Thailand or Taiwanor Indonesia." chanrobles virtual law library

The Act, in addition to its main title ("An Act to Outlawthe Communist Party of the
Philippines and SimilarAssociations, Penalizing Membership Therein, and forOther
Purposes"), has a short title. Section 1 providesthat "This Act shall be known as the
Anti-Subversion Act."Together with the main title, the short title of the statuteunequivocally
indicates that the subject matter is subversionin general which has for its fundamental
purpose the substitutionof a foreign totalitarian regime in place of theexisting Government
and not merely subversion by Communistconspiracies..chanroblesvirtuallawlibrary chanrobles virtual law library

The title of a bill need not be a catalogue or an indexof its contents, and need not recite the
details of the Act. 51 It is a valid title if it indicates in broad but clear termsthe nature, scope,
and consequences of the proposed lawand its operation. 52 A narrow or technical construction
isto be avoided, and the statute will be read fairly and reasonablyin order not to thwart the
legislative intent. We holdthat the Anti-Subversion Act fully satisfies these requirements.

VI. Conclusion and Guidelines

In conclusion, even as we uphold the validity of theAnti-Subversion Act, we cannot

overemphasize the needfor prudence and circumspection in its enforcement, operatingas it
does in the sensitive area of freedom of expressionand belief. Accordingly, we set the
following basic guidelines to be observed in any prosecution under the Act.The Government,
in addition to proving such circumstancesas may affect liability, must establish the following
elementsof the crime of joining the Communist Party of the Philippinesor any other
subversive association: chanrobles virtual law library

(1) In the case of subversive organizations other thanthe Communist Party of the Philippines,
(a) that thepurpose of the organization is to overthrow the presentGovernment of the
Philippines and to establish in thiscountry a totalitarian regime under the domination of
aforeign power; (b) that the accused joined such organization;and (c) that he did so
knowingly, willfully and byovert acts; and chanrobles virtual law library

(2) In the case of the Communist Party of the Philippines,(a) that the CPP continues to pursue
the objectiveswhich led Congress in 1957 to declare it to be an organizedconspiracy for the
overthrow of the Government by illegalmeans for the purpose of placing the country under

121
thecontrol of a foreign power; (b) that the accused joined theCPP; and (c) that he did so
willfully, knowingly and byovert acts.chanroblesvirtuallawlibrary chanrobles virtual law library

We refrain from making any pronouncement as to thecrime or remaining a member of the

Communist Party ofthe Philippines or of any other subversive association: weleave this
matter to future determination.chanroblesvirtuallawlibrary chanrobles virtual law library

ACCORDINGLY, the questioned resolution of September15, 1970 is set aside, and these two
cases are herebyremanded to the court a quo for trial on the merits. Costs de oficio.

Makalintal, Zaldivar, Teehankee, Barredo and Esguerra, JJ., concur.chanroblesvirtuallawlibrary chanrobles virtual law library

Concepcion, C.J., concurs in the result.chanroblesvirtuallawlibrary chanrobles virtual law library

Makasiar and Antonio, JJ., took no part.

  chanrobles virtual law library

  chanrobles virtual law library

G.R. No. L-28089            October 25, 1967

BARA LIDASAN, petitioner,

vs.
COMMISSION ON ELECTIONS, respondent.

Suntay for petitioner.

Barrios and Fule for respondent.

SANCHEZ, J.:

The question initially presented to the Commission on Elections,1 is this: Is Republic Act
4790, which is entitled "An Act Creating the Municipality of Dianaton in the Province of
Lanao del Sur", but which includes barrios located in another province — Cotabato — to be
spared from attack planted upon the constitutional mandate that "No bill which may be
enacted into law shall embrace more than one subject which shall be expressed in the title of
the bill"? Comelec's answer is in the affirmative. Offshoot is the present original petition for
certiorari and prohibition.

On June 18, 1966, the Chief Executive signed into law House Bill 1247, known as Republic
Act 4790, now in dispute. The body of the statute, reproduced in haec verba, reads:

Sec. 1. Barrios Togaig, Madalum, Bayanga, Langkong, Sarakan, Kat-bo, Digakapan,

Magabo, Tabangao, Tiongko, Colodan, Kabamakawan, Kapatagan, Bongabong,
Aipang, Dagowan, Bakikis, Bungabung, Losain, Matimos and Magolatung, in the
Municipalities of Butig and Balabagan, Province of Lanao del Sur, are separated from
said municipalities and constituted into a distinct and independent municipality of the
same province to be known as the Municipality of Dianaton, Province of Lanao del
Sur. The seat of government of the municipality shall be in Togaig.

Sec. 2. The first mayor, vice-mayor and councilors of the new municipality shall be
elected in the nineteen hundred sixty-seven general elections for local officials.

Sec. 3. This Act shall take effect upon its approval.

It came to light later that barrios Togaig and Madalum just mentioned are within the
municipality of Buldon, Province of Cotabato, and that Bayanga, Langkong, Sarakan, Kat-

122
bo, Digakapan, Magabo, Tabangao, Tiongko, Colodan and Kabamakawan are parts and
parcel of another municipality, the municipality of Parang, also in the Province of Cotabato
and not of Lanao del Sur.

Prompted by the coming elections, Comelec adopted its resolution of August 15, 1967, the
pertinent portions of which are:

For purposes of establishment of precincts, registration of voters and for other

election purposes, the Commission RESOLVED that pursuant to RA 4790, the new
municipality of Dianaton, Lanao del Sur shall comprise the barrios of Kapatagan,
Bongabong, Aipang, Dagowan, Bakikis, Bungabung, Losain, Matimos, and
Magolatung situated in the municipality of Balabagan, Lanao del Sur, the barrios of
Togaig and Madalum situated in the municipality of Buldon, Cotabato, the barrios of
Bayanga, Langkong, Sarakan, Kat-bo, Digakapan, Magabo, Tabangao, Tiongko,
Colodan and Kabamakawan situated in the municipality of Parang, also of Cotabato.

Doubtless, as the statute stands, twelve barrios — in two municipalities in the province of
Cotabato — are transferred to the province of Lanao del Sur. This brought about a change in
the boundaries of the two provinces.

Apprised of this development, on September 7, 1967, the Office of the President, through the
Assistant Executive Secretary, recommended to Comelec that the operation of the statute be
suspended until "clarified by correcting legislation."

Comelec, by resolution of September 20, 1967, stood by its own interpretation, declared that
the statute "should be implemented unless declared unconstitutional by the Supreme Court."

This triggered the present original action for certiorari and prohibition by Bara Lidasan, a
resident and taxpayer of the detached portion of Parang, Cotabato, and a qualified voter for
the 1967 elections. He prays that Republic Act 4790 be declared unconstitutional; and that
Comelec's resolutions of August 15, 1967 and September 20, 1967 implementing the same
for electoral purposes, be nullified.

1. Petitioner relies upon the constitutional requirement aforestated, that "[n]o bill which may
be enacted into law shall embrace more than one subject which shall be expressed in the title
of the bill."2

It may be well to state, right at the outset, that the constitutional provision contains dual
limitations upon legislative power. First. Congress is to refrain from conglomeration, under
one statute, of heterogeneous subjects. Second. The title of the bill is to be couched in a
language sufficient to notify the legislators and the public and those concerned of the import
of the single subject thereof.

Of relevance here is the second directive. The subject of the statute must be "expressed in the
title" of the bill. This constitutional requirement "breathes the spirit of command."3
Compliance is imperative, given the fact that the Constitution does not exact of Congress the
obligation to read during its deliberations the entire text of the bill. In fact, in the case of
House Bill 1247, which became Republic Act 4790, only its title was read from its
introduction to its final approval in the House of Representatives4 where the bill, being of
local application, originated.5

Of course, the Constitution does not require Congress to employ in the title of an enactment,
language of such precision as to mirror, fully index or catalogue all the contents and the
minute details therein. It suffices if the title should serve the purpose of the constitutional
demand that it inform the legislators, the persons interested in the subject of the bill, and the
public, of the nature, scope and consequences of the proposed law and its operation. And this,

123
to lead them to inquire into the body of the bill, study and discuss the same, take appropriate
action thereon, and, thus, prevent surprise or fraud upon the legislators.6

In our task of ascertaining whether or not the title of a statute conforms with the
constitutional requirement, the following, we believe, may be taken as guidelines:

The test of the sufficiency of a title is whether or not it is misleading; and, which
technical accuracy is not essential, and the subject need not be stated in express terms
where it is clearly inferable from the details set forth, a title which is so uncertain that
the average person reading it would not be informed of the purpose of the enactment
or put on inquiry as to its contents, or which is misleading, either in referring to or
indicating one subject where another or different one is really embraced in the act, or
in omitting any expression or indication of the real subject or scope of the act, is bad.

xxx           xxx           xxx

In determining sufficiency of particular title its substance rather than its form should
be considered, and the purpose of the constitutional requirement, of giving notice to
all persons interested, should be kept in mind by the court.7

With the foregoing principles at hand, we take a hard look at the disputed statute. The title —
"An Act Creating the Municipality of Dianaton, in the Province of Lanao del Sur"8 —
projects the impression that solely the province of Lanao del Sur is affected by the creation of
Dianaton. Not the slightest intimation is there that communities in the adjacent province of
Cotabato are incorporated in this new Lanao del Sur town. The phrase "in the Province of
Lanao del Sur," read without subtlety or contortion, makes the title misleading, deceptive.
For, the known fact is that the legislation has a two-pronged purpose combined in one statute:
(1) it creates the municipality of Dianaton purportedly from twenty-one barrios in the towns
of Butig and Balabagan, both in the province of Lanao del Sur; and (2) it also dismembers
two municipalities in Cotabato, a province different from Lanao del Sur.

The baneful effect of the defective title here presented is not so difficult to perceive. Such
title did not inform the members of Congress as to the full impact of the law; it did not
apprise the people in the towns of Buldon and Parang in Cotabato and in the province of
Cotabato itself that part of their territory is being taken away from their towns and province
and added to the adjacent Province of Lanao del Sur; it kept the public in the dark as to what
towns and provinces were actually affected by the bill. These are the pressures which heavily
weigh against the constitutionality of Republic Act 4790.

Respondent's stance is that the change in boundaries of the two provinces resulting in "the
substantial diminution of territorial limits" of Cotabato province is "merely the incidental
legal results of the definition of the boundary" of the municipality of Dianaton and that,
therefore, reference to the fact that portions in Cotabato are taken away "need not be
expressed in the title of the law." This posture — we must say — but emphasizes the error of
constitutional dimensions in writing down the title of the bill. Transfer of a sizeable portion
of territory from one province to another of necessity involves reduction of area, population
and income of the first and the corresponding increase of those of the other. This is as
important as the creation of a municipality. And yet, the title did not reflect this fact.

Respondent asks us to read Felwa vs. Salas, L-16511, October 29, 1966, as controlling here.
The Felwa case is not in focus. For there, the title of the Act (Republic Act 4695) reads: "An
Act Creating the Provinces of Benguet, Mountain Province, Ifugao, and Kalinga-Apayao."
That title was assailed as unconstitutional upon the averment that the provisions of the law
(Section, 8 thereof) in reference to the elective officials of the provinces thus created, were
not set forth in the title of the bill. We there ruled that this pretense is devoid of merit "for,
surely, an Act creating said provinces must be expected to provide for the officers who shall
run the affairs thereof" — which is "manifestly germane to the subject" of the legislation, as

124
set forth in its title. The statute now before us stands altogether on a different footing. The
lumping together of barrios in adjacent but separate provinces under one statute is neither a
natural nor logical consequence of the creation of the new municipality of Dianaton. A
change of boundaries of the two provinces may be made without necessarily creating a new
municipality and vice versa.

As we canvass the authorities on this point, our attention is drawn to Hume vs. Village of
Fruitport, 219 NW 648, 649. There, the statute in controversy bears the title "An Act to
Incorporate the Village of Fruitport, in the County of Muskegon." The statute, however, in its
section 1 reads: "The people of the state of Michigan enact, that the following described
territory in the counties of Muskegon and Ottawa Michigan, to wit: . . . be, and the same is
hereby constituted a village corporate, by the name of the Village of Fruitport." This statute
was challenged as void by plaintiff, a resident of Ottawa county, in an action to restraint the
Village from exercising jurisdiction and control, including taxing his lands. Plaintiff based his
claim on Section 20, Article IV of the Michigan State Constitution, which reads: "No law
shall embrace more than one object, which shall be expressed in its title." The Circuit Court
decree voided the statute and defendant appealed. The Supreme Court of Michigan voted to
uphold the decree of nullity. The following, said in Hume, may well apply to this case:

It may be that words, "An act to incorporate the village of Fruitport," would have
been a sufficient title, and that the words, "in the county of Muskegon" were
unnecessary; but we do not agree with appellant that the words last quoted may, for
that reason, be disregarded as surplusage.

. . . Under the guise of discarding surplusage, a court cannot reject a part of the title of
an act for the purpose of saving the act. Schmalz vs. Woody, 56 N.J. Eq. 649, 39 A.
539.

A purpose of the provision of the Constitution is to "challenge the attention of those

affected by the act to its provisions." Savings Bank vs. State of Michigan, 228 Mich.
316, 200 NW 262.

The title here is restrictive. It restricts the operation of the act of Muskegon county.
The act goes beyond the restriction. As was said in Schmalz vs. Wooly, supra: "The
title is erroneous in the worst degree, for it is misleading."9

Similar statutes aimed at changing boundaries of political subdivisions, which legislative

purpose is not expressed in the title, were likewise declared unconstitutional."10

We rule that Republic Act 4790 is null and void.

2. Suggestion was made that Republic Act 4790 may still be salvaged with reference to the
nine barrios in the municipalities of Butig and Balabagan in Lanao del Sur, with the mere
nullification of the portion thereof which took away the twelve barrios in the municipalities
of Buldon and Parang in the other province of Cotabato. The reasoning advocated is that the
limited title of the Act still covers those barrios actually in the province of Lanao del Sur.

We are not unmindful of the rule, buttressed on reason and of long standing, that where a
portion of a statute is rendered unconstitutional and the remainder valid, the parts will be
separated, and the constitutional portion upheld. Black, however, gives the exception to this
rule, thus:

. . . But when the parts of the statute are so mutually dependent and connected, as
conditions, considerations, inducements, or compensations for each other, as to
warrant a belief that the legislature intended them as a whole, and that if all could not
be carried into effect, the legislature would not pass the residue independently, then, if

125
 some parts are unconstitutional, all the provisions which are thus dependent,
conditional, or connected, must fall with them,11

In substantially similar language, the same exception is recognized in the jurisprudence of

this Court, thus:

The general rule is that where part of a statute is void, as repugnant to the Organic
Law, while another part is valid, the valid portion if separable from the invalid, may
stand and be enforced. But in order to do this, the valid portion must be so far
independent of the invalid portion that it is fair to presume that the Legislature would
have enacted it by itself if they had supposed that they could not constitutionally enact
the other. . . Enough must remain to make a complete, intelligible, and valid statute,
which carries out the legislative intent. . . . The language used in the invalid part of
the statute can have no legal force or efficacy for any purpose whatever, and what
remains must express the legislative will independently of the void part, since the
court has no power to legislate, . . . .12

Could we indulge in the assumption that Congress still intended, by the Act, to create the
restricted area of nine barrios in the towns of Butig and Balabagan in Lanao del Sur into the
town of Dianaton, if the twelve barrios in the towns of Buldon and Parang, Cotabato were to
be excluded therefrom? The answer must be in the negative.

Municipal corporations perform twin functions. Firstly. They serve as an instrumentality of

the State in carrying out the functions of government. Secondly. They act as an agency of the
community in the administration of local affairs. It is in the latter character that they are a
separate entity acting for their own purposes and not a subdivision of the State.13

Consequently, several factors come to the fore in the consideration of whether a group of
barrios is capable of maintaining itself as an independent municipality. Amongst these are
population, territory, and income. It was apparently these same factors which induced the
writing out of House Bill 1247 creating the town of Dianaton. Speaking of the original
twenty-one barrios which comprise the new municipality, the explanatory note to House Bill
1247, now Republic Act 4790, reads:

The territory is now a progressive community; the aggregate population is large; and
the collective income is sufficient to maintain an independent municipality.

This bill, if enacted into law, will enable the inhabitants concerned to govern
themselves and enjoy the blessings of municipal autonomy.

When the foregoing bill was presented in Congress, unquestionably, the totality of the
twenty-one barrios — not nine barrios — was in the mind of the proponent thereof. That this
is so, is plainly evident by the fact that the bill itself, thereafter enacted into law, states that
the seat of the government is in Togaig, which is a barrio in the municipality of Buldon in
Cotabato. And then the reduced area poses a number of questions, thus: Could the
observations as to progressive community, large aggregate population, collective income
sufficient to maintain an independent municipality, still apply to a motley group of only nine
barrios out of the twenty-one? Is it fair to assume that the inhabitants of the said remaining
barrios would have agreed that they be formed into a municipality, what with the consequent
duties and liabilities of an independent municipal corporation? Could they stand on their own
feet with the income to be derived in their community? How about the peace and order,
sanitation, and other corporate obligations? This Court may not supply the answer to any of
these disturbing questions. And yet, to remain deaf to these problems, or to answer them in
the negative and still cling to the rule on separability, we are afraid, is to impute to Congress
an undeclared will. With the known premise that Dianaton was created upon the basic
considerations of progressive community, large aggregate population and sufficient income,
we may not now say that Congress intended to create Dianaton with only nine — of the

126
original twenty-one — barrios, with a seat of government still left to be conjectured. For, this
unduly stretches judicial interpretation of congressional intent beyond credibility point. To do
so, indeed, is to pass the line which circumscribes the judiciary and tread on legislative
premises. Paying due respect to the traditional separation of powers, we may not now melt
and recast Republic Act 4790 to read a Dianaton town of nine instead of the originally
intended twenty-one barrios. Really, if these nine barrios are to constitute a town at all, it is
the function of Congress, not of this Court, to spell out that congressional will.

Republic Act 4790 is thus indivisible, and it is accordingly null and void in its totality.14

3. There remains for consideration the issue raised by respondent, namely, that petitioner has
no substantial legal interest adversely affected by the implementation of Republic Act 4790.
Stated differently, respondent's pose is that petitioner is not the real party in interest.

Here the validity of a statute is challenged on the ground that it violates the constitutional
requirement that the subject of the bill be expressed in its title. Capacity to sue, therefore,
hinges on whether petitioner's substantial rights or interests are impaired by lack of
notification in the title that the barrio in Parang, Cotabato, where he is residing has been
transferred to a different provincial hegemony.

The right of every citizen, taxpayer and voter of a community affected by legislation creating
a town to ascertain that the law so created is not dismembering his place of residence "in
accordance with the Constitution" is recognized in this jurisdiction.15

Petitioner is a qualified voter. He expects to vote in the 1967 elections. His right to vote in his
own barrio before it was annexed to a new town is affected. He may not want, as is the case
here, to vote in a town different from his actual residence. He may not desire to be considered
a part of hitherto different communities which are fanned into the new town; he may prefer to
remain in the place where he is and as it was constituted, and continue to enjoy the rights and
benefits he acquired therein. He may not even know the candidates of the new town; he may
express a lack of desire to vote for anyone of them; he may feel that his vote should be cast
for the officials in the town before dismemberment. Since by constitutional direction the
purpose of a bill must be shown in its title for the benefit, amongst others, of the community
affected thereby,16 it stands to reason to say that when the constitutional right to vote on the
part of any citizen of that community is affected, he may become a suitor to challenge the
constitutionality of the Act as passed by Congress.

For the reasons given, we vote to declare Republic Act 4790 null and void, and to prohibit
respondent Commission from implementing the same for electoral purposes.

No costs allowed. So ordered.

Concepcion, C.J., Reyes, J.B.L., Dizon, Makalintal, Bengzon, J.P., Zaldivar, Castro and
Angeles, JJ., concur.

Separate Opinions

FERNANDO, J., dissenting:

With regret and with due recognition of the merit of the opinion of the Court, I find myself
unable to give my assent. Hence these few words to express my stand.

Republic Act No. 4790 deals with one subject matter, the creation of the municipality of
Dianaton in the province of Lanao del Sur. The title makes evident what is the subject matter
of such an enactment. The mere fact that in the body of such statute barrios found in two

127
other municipalities of another province were included does not of itself suffice for a finding
of nullity by virtue of the constitutional provision invoked. At the most, the statute to be free
from the insubstantial doubts about its validity must be construed as not including the barrios,
located not in the municipalities of Butig and Balabagan, Lanao del Sur, but in Parang and
Baldon, Cotabato.

The constitutional requirement is that no bill which may be enacted into law shall embrace
more than one subject which shall be expressed in the title of the bill.1 This provision is
similar to those found in the Constitution of many American States. It is aimed against the
evils, of the so-called omnibus bills, and log-rolling legislation, and against surreptitious or
unconsidered enactments.2 Where the subject of a bill is limited to a particular matter, the
members of the legislature as well as the people should be informed of the subject of
proposed legislative measures. This constitutional provision thus precludes the insertion of
riders in legislation, a rider being a provision not germane to the subject matter of the bill.

It is not to be narrowly construed though as to cripple or impede proper legislation. The

construction must be reasonable and not technical. It is sufficient if the title be
comprehensive enough reasonably to include the general object which the statute seeks to
effect without expressing each and every end and means necessary for the accomplishment of
that object. Mere details need not be set forth. The legislature is not required to make the title
of the act a complete index of its contents. The constitutional provision is satisfied if all parts
of an act which relates to its subject find expression in its title.3

The first decision of this Court, after the establishment of the Commonwealth of the
Philippines, in 1938, construing a provision of this nature, Government v. Hongkong &
Shanghai Bank,4 held that the inclusion of Section 11 of Act No. 4007, the Reorganization
Law, providing for the mode in which the total annual expenses of the Bureau of Banking
may be reimbursed through assessment levied upon all banking institutions subject to
inspection by the Bank Commissioner was not violative of such a requirement in the Jones
Law, the previous organic act. Justice Laurel, however, vigorously dissented, his view being
that while the main subject of the act was reorganization, the provision assailed did not deal
with reorganization but with taxation. While the case of Government vs. Hongkong &
Shanghai Bank was decided by a bare majority of four justices against three, the present trend
seems to be that the constitutional requirement is to be given the liberal test as indicated in
the majority opinion penned by Justice Abad Santos, and not the strict test as desired by the
majority headed by Justice Laurel.

Such a trend has been reflected in subsequent decisions beginning with Sumulong v.
Commission on Elections,5 up to and including Felwa vs. Salas, a 1966 decision,6 the opinion
coming from Justice Concepcion.

It is true of course that in Philconsa v. Gimenez,7 one of the grounds on which the invalidity
of Republic Act No. 3836 was predicated was the violation of the above constitutional
provision. This Retirement Act for senators and representatives was entitled "AN ACT
AMENDING SUB-SECTION (c), SECTION TWELVE OF COMMONWEALTH ACT
NUMBERED ONE HUNDRED EIGHTY-SIX, AS AMENDED BY REPUBLIC ACT
NUMBERED THIRTY HUNDRED NINETY-SIX." As we noted, the paragraph in Republic
Act No. 3836 deemed objectionable "refers to members of Congress and to elective officers
thereof who are not members of the Government Service Insurance System. To provide
retirement benefits, therefore, for these officials, would relate to a subject matter which is not
germane to Commonwealth Act No. 186. In other words, this portion of the amendment ( re
retirement benefits for Members of Congress and appointive officers, such as the Secretary
and Sergeants-at-arms for each house) is not related in any manner to the subject of
Commonwealth Act No. 186 establishing the Government Service Insurance System and
which provides for both retirement and insurance benefits to its members." Nonetheless our
opinion was careful to note that there was no abandonment of the principle of liberality.
Thus: "we are not unmindful of the fact that there has been a general disposition in all courts

128
to construe the constitutional provision with reference to the subject and title of the Act,
liberally."

It would follow therefore that the challenged legislation Republic Act No. 4790 is not
susceptible to the indictment that the constitutional requirement as to legislation having only
one subject which should be expressed in his title was not met. The subject was the creation
of the municipality of Dianaton. That was embodied in the title.

It is in the light of the aforementioned judicial decisions of this Court, some of the opinions
coming from jurists illustrious for their mastery of constitutional law and their acknowledged
erudition, that, with all due respect, I find the citation from Corpus Juris Secundum,
unnecessary and far from persuasive. The State decisions cited, I do not deem controlling, as
the freedom of this Court to accept or reject doctrines therein announced cannot be doubted.

Wherein does the weakness of the statute lie then? To repeat, several barrios of two
municipalities outside Lanao del Sur were included in the municipality of Dianaton of that
province. That itself would not have given rise to a constitutional question considering the
broad, well-high plenary powers possessed by Congress to alter provincial and municipal
boundaries. What justified resort to this Court was the congressional failure to make explicit
that such barrios in two municipalities located in Cotabato would thereafter form part of the
newly created municipality of Dianaton, Lanao del Sur.

To avoid any doubt as to the validity of such statute, it must be construed as to exclude from
Dianaton all of such barrios mentioned in Republic Act No. 4790 found in municipalities
outside Lanao del Sur. As thus interpreted, the statute can meet the test of the most rigid
scrutiny. Nor is this to do violence to the legislative intent. What was created was a new
municipality from barrios named as found in Lanao del Sur. This construction assures
precisely that.

This mode of interpreting Republic Act No. 4790 finds support in basic principles underlying
precedents, which if not precisely controlling, have a persuasive ring. In Radiowealth v.
Agregado,8 certain provisions of the Administrative Code were interpreted and given a
"construction which would be more in harmony with the tenets of the fundamental law." In
Sanchez v. Lyon Construction,9 this Court had a similar ruling: "Article 302 of the Code of
Commerce must be applied in consonance with [the relevant] provisions of our Constitution."
The above principle gained acceptance at a much earlier period in our constitutional history.
Thus in a 1913 decision, In re Guariña:10 "In construing a statute enacted by the Philippine
Commission we deem it our duty not to give it a construction which would be repugnant to
an Act of Congress, if the language of the statute is fairly susceptible of another construction
not in conflict with the higher law. In doing so, we think we should not hesitate to disregard
contentions touching the apparent intention of the legislator which would lead to the
conclusion that the Commission intended to enact a law in violation of the Act of Congress.
However specious the argument may be in favor of one of two possible constructions, it must
be disregarded if on examination it is found to rest on the contention that the legislator
designed an attempt to transcend the rightful limits of his authority, and that his apparent
intention was to enact an invalid law."

American Supreme Court decisions are equally explicit. The then Justice, later Chief Justice,
Stone, construed statutes "with an eye to possible constitutional limitations so as to avoid
doubts as to [their] validity."11 From the pen of the articulate jurist, Frankfurter:12
"Accordingly, the phrase "lobbying activities" in the resolution must be given the meaning
that may fairly be attributed to it, having special regard for the principle of constitutional
adjudication which makes it decisive in the choice of fair alternatives that one construction
may raise serious constitutional questions avoided by another." His opinion in the Rumely
case continues with the above pronouncement of Stone and two other former Chief Justices:
"In the words of Mr. Chief Justice Taft, '(i)t is our duty in the interpretation of federal statutes
to reach conclusion which will avoid serious doubt of their constitutionality', Richmond

129
Screw Anchor Co. v. United States, 275 US 331, 346, 48 S. Ct. 194, 198, 72 L. ed. 303. . . .
As phrased by Mr. Chief Justice Hughes, "if a serious doubt of constitutionality is raised, it is
a cardinal principle that this Court will first ascertain whether a construction of the statute is
fairly possible by which the question may be avoided.' Crowell v. Benson, 285, 296, 76 L. ed.
598, and cases cited." The prevailing doctrine then as set forth by Justice Clark in a 1963
decision,13 is that courts "have consistently sought an interpretation which supports the
constitutionality of legislation." Phrased differently by Justice Douglas, the judiciary favors
"that interpretation of legislation which gives it the greater change of surviving the test of
constitutionality."14

It would follow then that both Philippine and American decisions unite in the view that a
legislative measure, in the language of Van Devanter "should not be given a construction
which will imperil its validity where it is reasonably open to construction free from such
peril."15 Republic Act No. 4790 as above construed incurs no such risk and is free from the
peril of nullity.

So I would view the matter, with all due acknowledgment of the practical considerations
clearly brought to light in the opinion of the Court.

Footnotes
1
Hereinafter referred to as Comelec.
2
Article VI, Sec. 21(1), Philippine Constitution.
3
Stiglitz vs. Schiardien, 40 SW 2d 315, 317, 320.
4
Congressional Record, Vol. I, No. 40, p. 8; Vol. I, No. 50, pp. 40-41.
5
Section 18, Article VI of the Constitution, provides:

"Sec. 18. All appropriation, revenue or tariff bills, bills authorizing increase of
the public debt, bills of local application, and private bills, shall originate
exclusively in the House of Representatives, but the Senate may propose or
concur with amendments."
6
Vidal de Roces vs. Posadas, 58 Phil. 108, 111-112; Ichong vs. Hernandez, 101 Phil.
1155, 1188-1190.
7
82 C.J.S. pp. 365, 370; emphasis supplied.
8
Emphasis ours.
9
Emphasis supplied.
10
Examples: Wilcox vs. Paddock, 31 NW 609, where the statute entitled "An act
making an appropriation of state swamp lands to aid the county of Gratiot in
improving the channel of Maple river . . ." but the body of the act affected another
county other than Gratiot.

State vs. Burr, 238 P 585, the statute entitled "An act to amend Secs. 4318 and
4327 of the Codes of Montana relating to changing the boundaries of Fergus
and Judith Basin countries" was rendered void because the body of the act
included the boundaries of Petroleum county.

130
 Atchison vs. Kearney County, 48 P 583, where the title of the act purported to
attach Kearney county to Finney county the body of the act attached it to
Hamilton county.

State vs. Nelson, 98 So. 715, the title of the act purporting to alter or rearrange
the boundaries of Decatur city and the body of the act which actually
diminished the boundary lines of the city were considered by the court as
dealing with incongruous matters. The reading of the former would give no
clear suggestion that the latter would follow and be made the subject of the
act. Jackson, Clerk vs. Sherrod, 92 So. 481; City of Ensley vs. Simpson, 52
So. 61, cited.

Fairview vs. City of Detroit, 113 NW 368, where the title gave notice that the
entire village of Fairview is annexed to Detroit when the body affected only a
portion.
11
Black, Interpretation of Laws, 2d. ed., p. 116.
12
Barrameda vs. Moir, 25 Phil. 44, 47-48, quoted in Government vs. Springer (50
Phil. 259, 292; emphasis supplied).
13
McQuillin, Municipal Corporations, 3d ed., pp. 456-464.
14
In the case of Fuqua vs. City of Mobile, 121 So. 696, it was asserted that the portion
of the statute excluding a territory from Mobile which was not express in the title "An
act to alter and rearrange the boundary lines of the city of Mobile in the state of
Alabama" should be the only portion invalidated. The court, using the test whether or
not after the objectionable feature is stricken off there would still remain an act
complete in itself, sensible, capable of being executed, ruled that there can be no
segregation of that portion dealing with the excluded territory from that dealing with
additional territory because these two matters are all embraced and intermingled in
one section dealing with the corporate limits of the city.

In the case of Engle vs. Bonnie, 204 SW 2d 963, the statute involved was
entitled "An Act relating to cities". Section 4 thereof "requires the creation of a
municipality on petition of a majority of voters or 500 voters." But some of the
provisions were germane to the title of the law. This statute was declared void
in toto. The Court of Appeals of Kentucky ruled as follows:

"The judgment declared only Section 4 [relative to the creation of a

municipality on petition of the voters] to be void and the remainder valid.
While some of the provisions of the act are germane to the title, since they
deal with the classification of cities to be created, they seem merely to
harmonize other sections of the statute which they amend with a new creation
of cities other than sixth class towns. To remove only Section 4 would be like
taking the motor of an automobile which leaves the machine of no use. We are
quite sure that these provisions would not have been enacted without Section
4; hence, they too must fall."
15
Macias vs. The Commission on Elections, L-18684, September 14, 1961.
16
Brooks vs. Hydorn, 42 NW 1122, 1123-1124; Fairview vs. City of Detroit, 113 NW
368, 370.

FERNANDO, J., dissenting:

131
 1
Art. VI, Sec. 21, par. 1, Constitution.
2
Government v. Hongkong & Shanghai Bank (1938), 66 Phil. 483.
3
People vs. Carlos (1947), 78 Phil. 535.
4
66 Phil. 483.
5
73 Phil. (1942) 228.
6
L-26511, October 29, 1960. The other cases that may be cited follows People v.
Carlos (1947), 78 Phil. 535; Nuval v. de la Fuente (1953), 92 Phil. 1074; Ichong v.
Hernandez (1951), 101 Phil. 1155; Cordero v. Cabatuando, L-14542, Oct. 31, 1962;
Municipality of Jose Panganiban v. Shell Company, L-18349, July 30, 1966.
7
L-23326, December 18, 1965.
8
86 Phil. 429 (1950).
9
87 Phil. 309 (1950), Cf . City of Manila v. Arellano Law Colleges, Inc. (1950), 85
Phil. 663.
10
24 Phil. 37. Justice Carson who penned the opinion cited Black on Interpretation of
Laws to this effect: "Hence it follows that the courts will not so construe the law as to
make it conflict with the constitution, but will rather put such an interpretation upon it
as will avoid conflict with the constitution and give it full force and effect, if this can
be done without extravagance. If there is doubt, or uncertainty as to the meaning of
the legislature, if the words or provisions of the statute are obscure, or if the
enactment is fairly susceptible of two or more constructions, that interpretation will be
adopted which will avoid the effect of unconstitutionality, even though it may be
necessary, for this purpose, to disregard the more usual or apparent impact of the
language employed."
11
Lucas v. Alexander (1928). 279 US 573, 577-578, citing United States ex rel. Atty.
Gen. v. Delaware & H. Co. 213 US 366, 407, 408, 53 L. ed. 836, 848, 849, 29 Sup.
Ct. Rep. 527: United States v. Standard Brewery, 251 US 210, 220, 64 L. ed. 229,
235, 40 Sup. Ct. Rep. 139; Texas v. Eastern Texas R. Co. 258 US 204, 217, 66 L. ed.
566, 572, 42 Sup. Ct. Rep. 281; Bratton v. Chandler, 260 US 110, 114, 67 L. ed. 157,
161, 43 Sup. Ct. Rep. 43; Panama R. Co. v. Johnson, 264 US 375, 390, 68 L. ed. 748,
754, 44 Sup. Ct. Rep. 391.
12
United States v. Rumely (1953), 345 US 41, 45.
13
United States v. National Dairy Product Corp. 373 US 29, 32.
14
Ex parte Endo (1944), 323 US 283, 299-300.
15
Chippewa Indians v. United States (1937), 301 US 358, 376.

THIRD DIVISION

[G.R. No. 155491, September 16, 2008]

SMART COMMUNICATIONS, INC., PETITIONER, VS. THE CITY OF

DAVAO, REPRESENTED HEREIN BY ITS MAYOR HON. RODRIGO

132
R. DUTERTE, AND THE SANGGUNIANG PANLUNGSOD OF DAVAO
CITY, RESPONDENTS.

DECISION

NACHURA, J.:

This is a petition for review on certiorari under Rule 45 of the Rules of Court
filed by Smart Communications, Inc. (Smart) against the City of Davao,
represented by its Mayor, Hon. Rodrigo R. Duterte, and the Sangguniang
Panlungsod of Davao City, to annul the Decision[1] dated July 19, 2002 of the
Regional Trial Court (RTC) and its Order[2] dated September 26, 2002 in Sp.
Civil Case No. 28,976-2002.

The Facts

On February 18, 2002, Smart filed a special civil action for declaratory relief[3]
under Rule 63 of the Rules of Court, for the ascertainment of its rights and
obligations under the Tax Code of the City of Davao,[4] particularly Section 1,
Article 10 thereof, the pertinent portion of which reads:
Notwithstanding any exemption granted by any law or other special law, there
is hereby imposed a tax on businesses enjoying a franchise, at a rate of seventy-
five percent (75%) of one percent (1%) of the gross annual receipts for the
preceding calendar year based on the income or receipts realized within the
territorial jurisdiction of Davao City.
Smart contends that its telecenter in Davao City is exempt from payment of
franchise tax to the City, on the following grounds: (a) the issuance of its
franchise under Republic Act (R.A.) No. 7294[5] subsequent to R.A. No. 7160
shows the clear legislative intent to exempt it from the provisions of R.A. 7160;
[6]
(b) Section 137 of R.A. No. 7160 can only apply to exemptions already
existing at the time of its effectivity and not to future exemptions; (c) the power
of the City of Davao to impose a franchise tax is subject to statutory limitations
such as the "in lieu of all taxes" clause found in Section 9 of R.A. No. 7294; and
(d) the imposition of franchise tax by the City of Davao would amount to a
violation of the constitutional provision against impairment of contracts.[7]

On March 2, 2002, respondents filed their Answer[8] in which they contested the
tax exemption claimed by Smart. They invoked the power granted by the
Constitution to local government units to create their own sources of revenue.[9]

On May 17, 2002, a pre-trial conference was held. Inasmuch as only legal issues
were involved in the case, the RTC issued an order requiring the parties to
submit their respective memoranda and, thereafter, the case would be deemed
submitted for resolution.[10]

On July 19, 2002, the RTC rendered its Decision[11] denying the petition. The
trial court noted that the ambiguity of the "in lieu of all taxes" provision in R.A.
No. 7294, on whether it covers both national and local taxes, must be resolved
against the taxpayer.[12] The RTC ratiocinated that tax exemptions are construed

133
in strictissimi juris against the taxpayer and liberally in favor of the taxing
authority and, thus, those who assert a tax exemption must justify it with words
too plain to be mistaken and too categorical not to be misinterpreted.[13] On the
issue of violation of the non-impairment clause of the Constitution, the trial
court cited Mactan Cebu International Airport Authority v. Marcos,[14] and
declared that the city's power to tax is based not merely on a valid delegation of
legislative power but on the direct authority granted to it by the fundamental
law. It added that while such power may be subject to restrictions or conditions
imposed by Congress, any such legislated limitation must be consistent with the
basic policy of local autonomy.[15]

Smart filed a motion for reconsideration which was denied by the trial court in
an Order[16] dated September 26, 2002.

Thus, the instant case.

Smart assigns the following errors:

[a.] THE LOWER COURT ERRED IN NOT HOLDING THAT UNDER
PETITIONER'S FRANCHISE (REPUBLIC ACT NO. 7294), WHICH
CONTAINS THE "IN LIEU OF ALL TAXES" CLAUSE, AND WHICH IS A
SPECIAL LAW ENACTED SUBSEQUENT TO THE LOCAL
GOVERNMENT CODE, NO FRANCHISE TAX MAY BE IMPOSED ON
PETITIONER BY RESPONDENT CITY.

[b.] THE LOWER COURT ERRED IN HOLDING THAT PETITIONER'S

FRANCHISE IS A GENERAL LAW AND DID NOT REPEAL RELEVANT
PROVISIONS REGARDING FRANCHISE TAX OF THE LOCAL
GOVERNMENT CODE, WHICH ACCORDING TO THE COURT IS A
SPECIAL LAW.

[c.] THE LOWER COURT ERRED IN NOT HOLDING THAT SECTION 137
OF THE LOCAL GOVERNMENT CODE, WHICH, IN RELATION TO
SECTION 151 THEREOF, ALLOWS RESPONDENT CITY TO IMPOSE
THE FRANCHISE TAX, AND SECTION 193 OF THE CODE, WHICH
PROVIDES FOR WITHDRAWAL OF TAX EXEMPTION PRIVILEGES,
ARE NOT APPLICABLE TO THIS CASE.

[d.] THE LOWER COURT ERRED IN NOT HOLDING THAT SECTIONS

137 AND 193 OF THE LOCAL GOVERNMENT CODE REFER ONLY TO
EXEMPTIONS ALREADY EXISTING AT THE TIME OF ITS
ENACTMENT BUT NOT TO FUTURE EXEMPTIONS.

[e.] THE LOWER COURT ERRED IN APPLYING THE RULE OF

STATUTORY CONSTRUCTION THAT TAX EXEMPTIONS ARE
CONSTRUED STRICTLY AGAINST THE TAXPAYER.

[f.] THE LOWER COURT ERRED IN NOT HOLDING THAT

PETITIONER'S FRANCHISE (REPUBLIC ACT NO. 7294) HAS BEEN
AMENDED AND EXPANDED BY SECTION 23 OF REPUBLIC ACT NO.

134
7925, "THE PUBLIC TELECOMMUNICATIONS POLICY ACT," TAKING
INTO ACCOUNT THE FRANCHISE OF GLOBE TELECOM, INC.
(GLOBE) (REPUBLIC ACT NO. 7229), WHICH ARE SPECIAL
PROVISIONS AND WERE ENACTED SUBSEQUENT TO THE LOCAL
GOVERNMENT CODE, THEREBY PROVIDING AN ADDITIONAL
GROUND WHY NO FRANCHISE TAX MAY BE IMPOSED ON
PETITIONER BY RESPONDENT CITY.

[g.] THE LOWER COURT ERRED IN DISREGARDING THE RULING OF

THE DEPARTMENT OF FINANCE, THROUGH ITS BUREAU OF LOCAL
GOVERNMENT FINANCE, THAT PETITIONER IS EXEMPT FROM THE
PAYMENT OF THE FRANCHISE TAX IMPOSABLE BY LOCAL
GOVERNMENT UNITS UNDER THE LOCAL GOVERNMENT CODE.

[h.] THE LOWER COURT ERRED IN NOT HOLDING THAT THE

IMPOSITION OF THE LOCAL FRANCHISE TAX ON PETITIONER
WOULD VIOLATE THE CONSTITUTIONAL PROHIBITION AGAINST
IMPAIRMENT OF CONTRACTS.

[i.] THE LOWER COURT ERRED IN DENYING THE PETITION BELOW.

[17]

The Issue

In sum, the pivotal issue in this case is whether Smart is liable to pay the
franchise tax imposed by the City of Davao.

The Ruling of the Court

We rule in the affirmative.

I. Prospective Effect of R.A. No. 7160

On March 27, 1992, Smart's legislative franchise (R.A. No. 7294) took effect.
Section 9 thereof, quoted hereunder, is at the heart of the present controversy:
Section 9. Tax provisions. -- The grantee, its successors or assigns shall be
liable to pay the same taxes on their real estate buildings and personal property,
exclusive of' this franchise, as other persons or corporations which are now or
hereafter may be required by law to pay. In addition thereto, the grantee, its
successors or assigns shall pay a franchise tax equivalent to three percent
(3%) of all gross receipts of the business transacted under this franchise by
the grantee, its successors or assigns and the said percentage shall be in lieu
of all taxes on this franchise or earnings thereof: Provided, That the grantee,
its successors or assigns shall continue to be liable for income taxes payable
under Title II of the National Internal Revenue Code pursuant to Section 2 of
Executive Order No. 72 unless the latter enactment is amended or repealed, in
which case the amendment or repeal shall be applicable thereto.

The grantee shall file the return with and pay the tax due thereon to the
Commissioner of Internal Revenue or his duly authorized representative in

135
accordance with the National Internal Revenue Code and the return shall be
subject to audit by the Bureau of Internal Revenue. (Emphasis supplied.)
Smart alleges that the "in lieu of all taxes" clause in Section 9 of its franchise
exempts it from all taxes, both local and national, except the national franchise
tax (now VAT), income tax, and real property tax.[18]

On January 1, 1992, two months ahead of Smart's franchise, the Local

Government Code (R.A. No. 7160) took effect. Section 137, in relation to
Section 151 of R.A. No. 7160, allowed the imposition of franchise tax by the
local government units; while Section 193 thereof provided for the withdrawal
of tax exemption privileges granted prior to the issuance of R.A. No. 7160
except for those expressly mentioned therein, viz.:
Section 137. Franchise Tax. -- Notwithstanding any exemption granted by
any law or other special law, the province may impose a tax on businesses
enjoying a franchise, at the rate not exceeding fifty percent (50%) of one
percent (1%) of the gross annual receipts for the preceding calendar year
based on the incoming receipt, or realized, within its territorial
jurisdiction.

In the case of a newly started business, the tax shall not exceed one-twentieth
(1/20) of one percent (1%) of the capital investment. In the succeeding calendar
year, regardless of when the business started to operate, the tax shall be based
on the gross receipts for the preceding calendar year, or any fraction thereon, as
provided herein.

Section 151. Scope of Taxing Powers. -- Except as otherwise provided in this

Code, the city may levy the taxes, fees, and charges which the province or
municipality may impose: Provided, however, That the taxes, fees and charges
levied and collected by highly urbanized and independent component cities
shall accrue to them and distributed in accordance with the provisions of this
Code.

The rates of taxes that the city may levy may exceed the maximum rates
allowed for the province or municipality by not more than fifty percent
(50%) except the rates of professional and amusement taxes.

Section 193. Withdrawal of Tax Exemption Privileges. -- Unless otherwise

provided in this Code, tax exemptions or incentives granted to, or presently
enjoyed by all persons, whether natural or juridical, including government-
owned or controlled corporations, except local water districts, cooperatives duly
registered under RA No. 6938, non-stock and non-profit hospitals and
educational institutions, are hereby withdrawn upon the effectivity of this Code.
(Emphasis supplied.)
Smart argues that it is not covered by Section 137, in relation to Section 151 of
R.A. No. 7160, because its franchise was granted after the effectivity of the said
law. We agree with Smart's contention on this matter. The withdrawal of tax
exemptions or incentives provided in R.A. No. 7160 can only affect those
franchises granted prior to the effectivity of the law. The intention of the
legislature to remove all tax exemptions or incentives granted prior to the said

136
law is evident in the language of Section 193 of R.A. No. 7160. No
interpretation is necessary.

II. The "in lieu of all taxes" Clause in R.A. No. 7294

The "in lieu of all taxes" clause in Smart's franchise is put in issue before the
Court. In order to ascertain its meaning, consistent with fundamentals of
statutory construction, all the words in the statute must be considered. The grant
of tax exemption by R.A. No. 7294 is not to be interpreted from a consideration
of a single portion or of isolated words or clauses, but from a general view of
the act as a whole. Every part of the statute must be construed with reference to
the context.[19]

Smart is of the view that the only taxes it may be made to bear under its
franchise are the national franchise tax (now VAT), income tax, and real
property tax.[20] It claims exemption from the local franchise tax because the "in
lieu of taxes" clause in its franchise does not distinguish between national and
local taxes.[21]

We pay heed that R.A. No. 7294 is not definite in granting exemption to Smart
from local taxation. Section 9 of R.A. No. 7294 imposes on Smart a franchise
tax equivalent to three percent (3%) of all gross receipts of the business
transacted under the franchise and the said percentage shall be in lieu of all
taxes on the franchise or earnings thereof. R.A. No 7294 does not expressly
provide what kind of taxes Smart is exempted from. It is not clear whether the
"in lieu of all taxes" provision in the franchise of Smart would include
exemption from local or national taxation. What is clear is that Smart shall pay
franchise tax equivalent to three percent (3%) of all gross receipts of the
business transacted under its franchise. But whether the franchise tax exemption
would include exemption from exactions by both the local and the national
government is not unequivocal.

The uncertainty in the "in lieu of all taxes" clause in R.A. No. 7294 on whether
Smart is exempted from both local and national franchise tax must be construed
strictly against Smart which claims the exemption. Smart has the burden of
proving that, aside from the imposed 3% franchise tax, Congress intended it to
be exempt from all kinds of franchise taxes - whether local or national.
However, Smart failed in this regard.

Tax exemptions are never presumed and are strictly construed against the
taxpayer and liberally in favor of the taxing authority.[22] They can only be given
force when the grant is clear and categorical.[23] The surrender of the power to
tax, when claimed, must be clearly shown by a language that will admit of no
reasonable construction consistent with the reservation of the power. If the
intention of the legislature is open to doubt, then the intention of the legislature
must be resolved in favor of the State.[24]

In this case, the doubt must be resolved in favor of the City of Davao. The "in
lieu of all taxes" clause applies only to national internal revenue taxes and not to

137
local taxes. As appropriately pointed out in the separate opinion of Justice
Antonio T. Carpio in a similar case[25] involving a demand for exemption from
local franchise taxes:
[T]he "in lieu of all taxes" clause in Smart's franchise refers only to taxes, other
than income tax, imposed under the National Internal Revenue Code. The "in
lieu of all taxes" clause does not apply to local taxes. The proviso in the first
paragraph of Section 9 of Smart's franchise states that the grantee shall
"continue to be liable for income taxes payable under Title II of the National
Internal Revenue Code." Also, the second paragraph of Section 9 speaks of tax
returns filed and taxes paid to the "Commissioner of Internal Revenue or his
duly authorized representative in accordance with the National Internal Revenue
Code." Moreover, the same paragraph declares that the tax returns "shall be
subject to audit by the Bureau of Internal Revenue." Nothing is mentioned in
Section 9 about local taxes. The clear intent is for the "in lieu of all taxes"
clause to apply only to taxes under the National Internal Revenue Code and not
to local taxes. Even with respect to national internal revenue taxes, the "in lieu
of all taxes" clause does not apply to income tax.

If Congress intended the "in lieu of all taxes" clause in Smart's franchise to also
apply to local taxes, Congress would have expressly mentioned the exemption
from municipal and provincial taxes. Congress could have used the language in
Section 9(b) of Clavecilla's old franchise, as follows:
x x x in lieu of any and all taxes of any kind, nature or description levied,
established or collected by any authority whatsoever, omunicipal, provincial or
national, from which the grantee is hereby expressly exempted, x x x.
(Emphasis supplied).
However, Congress did not expressly exempt Smart from local taxes. Congress
used the "in lieu of all taxes" clause only in reference to national internal
revenue taxes. The only interpretation, under the rule on strict construction of
tax exemptions, is that the "in lieu of all taxes" clause in Smart's franchise refers
only to national and not to local taxes.
It should be noted that the "in lieu of all taxes" clause in R.A. No. 7294 has
become functus officio with the abolition of the franchise tax on
telecommunications companies.[26] As admitted by Smart in its pleadings, it is
no longer paying the 3% franchise tax mandated in its franchise. Currently,
Smart along with other telecommunications companies pays the uniform 10%
value-added tax.[27]

The VAT on sale of services of telephone franchise grantees is equivalent to

10% of gross receipts derived from the sale or exchange of services.[28] R.A. No.
7716, as amended by the Expanded Value Added Tax Law (R.A. No. 8241), the
pertinent portion of which is hereunder quoted, amended Section 9 of R.A. No.
7294:
SEC. 102. Value-added tax on sale of services and use or lease of
properties. -- (a) Rate and base of tax. -- There shall be levied assessed and
collected, a value-added tax equivalent to ten percent (10%) of gross
receipts derived from the sale or exchange of services, including the use or
lease of properties.

138
The phrase "sale or exchange of services" means the performance of all
kinds of services in the Philippines for others for a fee, remuneration or
consideration, including those performed or rendered by construction and
service contractors; stock, real estate, commercial, customs and immigration
brokers; lessors of property, whether personal or real; warehousing services;
lessors or distributors of cinematographic films; persons engaged in milling,
processing, manufacturing or repacking goods for others; proprietors, operators
or keepers of hotels, motels, rest houses, pension houses, inns, resorts;
proprietors or operators of restaurants, refreshment parlors, cafes and other
eating places, including clubs and caterers; dealers in securities; lending
investors; transportation contractors on their transport of goods or cargoes,
including persons who transport goods or cargoes for hire and other domestic
common carriers by land, air, and water relative to their transport of goods or
cargoes; services of franchise grantees of telephone and telegraph, radio
and television broadcasting and all other franchise grantees except those
under Section 117 of this Code; services of banks, non-bank financial
intermediaries and finance companies; and non-life insurance companies
(except their crop insurances) including surety, fidelity, indemnity and bonding
companies; and similar services regardless of whether or not the performance
thereof calls for the exercise or use of the physical or mental faculties. x x x.[29]
R.A. No. 7716, specifically Section 20 thereof, expressly repealed the
provisions of all special laws relative to the rate of franchise taxes. It also
repealed, amended, or modified all other laws, orders, issuances, rules and
regulations, or parts thereof which are inconsistent with it.[30] In effect, the "in
lieu of all taxes" clause in R.A. No. 7294 was rendered ineffective by the advent
of the VAT Law.[31]

However, the franchise tax that the City of Davao may impose must comply
with Sections 137 and 151 of R.A. No. 7160. Thus, the local franchise tax that
may be imposed by the City must not exceed 50% of 1% of the gross annual
receipts for the preceding calendar year based on the income on receipts
realized within the territorial jurisdiction of Davao.

III. Opinion of the Bureau of Local Government Finance (BLGF)

In support of its argument that the "in lieu of all taxes" clause is to be construed
as an exemption from local franchise taxes, Smart submits the opinion of the
Department of Finance, through the BLGF, dated August 13, 1998 and February
24, 1998, regarding the franchises of Smart and Globe, respectively.[32] Smart
presents the same arguments as the Philippine Long Distance Telephone
Company in the previous cases already decided by this Court.[33] As previously
held by the Court, the findings of the BLGF are not conclusive on the courts:
[T]he BLGF opined that §23 of R.A. No. 7925 amended the franchise of
petitioner and in effect restored its exemptions from local taxes. Petitioner
contends that courts should not set aside conclusions reached by the BLGF
because its function is precisely the study of local tax problems and it has
necessarily developed an expertise on the subject.

To be sure, the BLGF is not an administrative agency whose findings on

139
questions of fact are given weight and deference in the courts. The authorities
cited by petitioner pertain to the Court of Tax Appeals, a highly specialized
court which performs judicial functions as it was created for the review of tax
cases. In contrast, the BLGF was created merely to provide consultative
services and technical assistance to local governments and the general public on
local taxation, real property assessment, and other related matters, among
others. The question raised by petitioner is a legal question, to wit, the
interpretation of §23 of R.A. No. 7925. There is, therefore, no basis for
claiming expertise for the BLGF that administrative agencies are said to possess
in their respective fields.

Petitioner likewise argues that the BLGF enjoys the presumption of regularity in
the performance of its duty. It does enjoy this presumption, but this has nothing
to do with the question in this case. This case does not concern the regularity of
performance of the BLGF in the exercise of its duties, but the correctness of its
interpretation of a provision of law.[34]
IV. Tax Exclusion/Tax Exemption

Smart gives another perspective of the "in lieu of all taxes" clause in Section 9
of R.A. No. 7294 in order to avoid the payment of local franchise tax. It says
that, viewed from another angle, the "in lieu of all taxes" clause partakes of the
nature of a tax exclusion and not a tax exemption. A tax exemption means that
the taxpayer does not pay any tax at all. Smart pays VAT, income tax, and real
property tax. Thus, what it enjoys is more accurately a tax exclusion.[35]

However, as previously held by the Court, both in their nature and effect, there
is no essential difference between a tax exemption and a tax exclusion. An
exemption is an immunity or a privilege; it is the freedom from a charge or
burden to which others are subjected. An exclusion, on the other hand, is the
removal of otherwise taxable items from the reach of taxation, e.g., exclusions
from gross income and allowable deductions. An exclusion is, thus, also an
immunity or privilege which frees a taxpayer from a charge to which others are
subjected. Consequently, the rule that a tax exemption should be applied in
strictissimi juris against the taxpayer and liberally in favor of the government
applies equally to tax exclusions.[36]

V. Section 23 of R.A. No. 7925

To further its claim, Smart invokes Section 23 of the Public

Telecommunications Policy Act (R.A. No. 7925):
SECTION 23. Equality of Treatment in the Telecommunications Industry. --
Any advantage, favor, privilege, exemption, or immunity granted under
existing franchises, or may hereafter be granted, shall ipso facto become
part of previously granted telecommunications franchise and shall be
accorded immediately and unconditionally to the grantees of such
franchises: Provided, however, That the foregoing shall neither apply to nor
affect provisions of telecommunications franchises concerning territory covered
by the franchise, the life span of the franchise, or the type of service authorized
by the franchise. (Emphasis supplied.)

140
In sum, Smart wants us to interpret anew Section 23 of R.A. No. 7925, in
connection with the franchise of Globe (R.A. No. 7227),[37] which was enacted
on March 19, 1992.

Allegedly, by virtue of Section 23 of R.A. No. 7925, otherwise known as the

"most favored treatment clause" or the "equality clause," the provision in the
franchise of Globe exempting it from local taxes is automatically incorporated
in the franchise of Smart.[38] Smart posits that, since the franchise of Globe
contains a provision exempting it from municipal or local franchise tax, this
provision should also benefit Smart by virtue of Section 23 of R.A. No. 7925.
The provision in Globe's franchise invoked by Smart reads:
(b) The grantee shall further pay to the Treasurer of the Philippines each year
after the audit and approval of the accounts as prescribed in this Act, one and
one-half per centum of all gross receipts from business transacted under this
franchise by the said grantee in the Philippines, in lieu of any and all taxes of
any kind, nature or description levied, established or collected by any
authority whatsoever, municipal, provincial or national, from which the
grantee is hereby expressly exempted, effective from the date of the approval
of Republic Act Numbered Sixteen hundred eighteen.[39]
We find no reason to disturb the previous pronouncements of this Court
regarding the interpretation of Section 23 of R.A. No. 7925. As aptly explained
in the en banc decision of this Court in Philippine Long Distance Telephone
Company, Inc. v. City of Davao,[40] and recently in Digital Telecommunications
Philippines, Inc. (Digitel) v. Province of Pangasinan ,[41] Congress, in approving
Section 23 of R.A. No. 7925, did not intend it to operate as a blanket tax
exemption to all telecommunications entities.[42] The language of Section 23 of
R.A. No. 7925 and the proceedings of both Houses of Congress are bereft of
anything that would signify the grant of tax exemptions to all
telecommunications entities, including those whose exemptions had been
withdrawn by R.A. No. 7160.[43] The term "exemption" in Section 23 of R.A.
No. 7925 does not mean tax exemption. The term refers to exemption from
certain regulations and requirements imposed by the National
Telecommunications Commission.[44]

Furthermore, in the franchise of Globe (R.A. No. 7229), the legislature

incontrovertibly stated that it will be liable for one and one-half per centum of
all gross receipts from business transacted under the franchise, in lieu of any
and all taxes of any kind, nature, or description levied, established, or collected
by any authority whatsoever, municipal, provincial, or national, from which the
grantee is hereby expressly exempted.[45] The grant of exemption from
municipal, provincial, or national is clear and categorical - that aside from the
franchise tax collected by virtue of R.A. No. 7229, no other franchise tax may
be collected from Globe regardless of who the taxing power is. No such
provision is found in the franchise of Smart; the kind of tax from which it is
exempted is not clearly specified.

As previously explained by the Court, the stance of Smart would lead to absurd
consequences.

141
The acceptance of petitioner's theory would result in absurd consequences. To
illustrate: In its franchise, Globe is required to pay a franchise tax of only one
and one-half percentum (1½%) of all gross receipts from its transactions while
Smart is required to pay a tax of three percent (3%) on all gross receipts from
business transacted. Petitioner's theory would require that, to level the playing
field, any "advantage, favor, privilege, exemption, or immunity" granted to
Globe must be extended to all telecommunications companies, including Smart.
If, later, Congress again grants a franchise to another telecommunications
company imposing, say, one percent (1%) franchise tax, then all other
telecommunications franchises will have to be adjusted to "level the playing
field" so to speak. This could not have been the intent of Congress in enacting
§23 of Rep. Act 7925. Petitioner's theory will leave the Government with the
burden of having to keep track of all granted telecommunications franchises,
lest some companies be treated unequally. It is different if Congress enacts a
law specifically granting uniform advantages, favor, privilege, exemption, or
immunity to all telecommunications entities.[46]
VI. Non-impairment Clause of the Constitution

Another argument of Smart is that the imposition of the local franchise tax by
the City of Davao would violate the constitutional prohibition against
impairment of contracts. The franchise, according to petitioner, is in the nature
of a contract between the government and Smart.[47]

However, we find that there is no violation of Article III, Section 10 of the 1987
Philippine Constitution. As previously discussed, the franchise of Smart does
not expressly provide for exemption from local taxes. Absent the express
provision on such exemption under the franchise, we are constrained to rule
against it. The "in lieu of all taxes" clause in Section 9 of R.A. No. 7294 leaves
much room for interpretation. Due to this ambiguity in the law, the doubt must
be resolved against the grant of tax exemption.

Moreover, Smart's franchise was granted with the express condition that it is
subject to amendment, alteration, or repeal.[48] As held in Tolentino v. Secretary
of Finance: [49]
It is enough to say that the parties to a contract cannot, through the exercise of
prophetic discernment, fetter the exercise of the taxing power of the State. For
not only are existing laws read into contracts in order to fix obligations as
between parties, but the reservation of essential attributes of sovereign power is
also read into contracts as a basic postulate of the legal order. The policy of
protecting contracts against impairment presupposes the maintenance of a
government which retains adequate authority to secure the peace and good order
of society.

In truth, the Contract Clause has never been thought as a limitation on the
exercise of the State's power of taxation save only where a tax exemption has
been granted for a valid consideration. x x x.
WHEREFORE, the instant petition is DENIED for lack of merit. Costs against
petitioner.

142
SO ORDERED.

143