G.R. No.

L-19650

September 29, 1966

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

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

having in view sections 1954(a), 1982 and 1983 of the Revised Administrative Code, the pertinent provisions of which read as follows: SECTION 1954. Absolutely non-mailable matter. No matter belonging to any of the following classes, whether sealed as first-class matter or not, shall be imported into the Philippines through the mails, or to be deposited in or carried by the mails of the Philippines, or be delivered to its addressee by any officer or employee of the Bureau of Posts: Written or printed matter in any form advertising, describing, or in any manner pertaining to, or conveying or purporting to convey any information concerning any lottery, gift enterprise, or similar scheme depending in whole or in part upon lot or chance, or any scheme, device, or enterprise for obtaining any money or property of any kind by means of false or fraudulent pretenses, representations, or promises. "SECTION 1982. Fraud orders.Upon satisfactory evidence that any person or company is engaged in conducting any lottery, gift enterprise, or scheme for the distribution of money, or of any real or personal property by lot, chance, or drawing of any kind, or that any person or company is conducting any scheme, device, or enterprise for obtaining money or property of any kind through the mails by means of false or fraudulent pretenses, representations, or promises, the Director of Posts may instruct any postmaster or other officer or employee of the Bureau to return to the person, depositing the same in the mails, with the word "fraudulent" plainly written or stamped upon the outside cover thereof, any mail matter of whatever class mailed by or addressed to such person or company or the representative or agent of such person or company. SECTION 1983. Deprivation of use of money order system and telegraphic transfer service.The Director of Posts may, upon evidence satisfactory to him that any person or company is engaged in conducting any lottery, gift enterprise or scheme for the distribution of money, or of any real or personal property by lot, chance, or drawing of any kind, or that any person or company is conducting any scheme, device, or enterprise for obtaining money or property of any kind through the mails by means of false or fraudulent pretenses, representations, or promise, forbid the issue or payment by any postmaster of any postal money order or telegraphic transfer to said person or company or to the agent of any such person or company, whether such agent is acting as an individual or as a firm, bank, corporation, or association of any kind, and may provide by regulation for the return to the remitters of the sums named in money orders or telegraphic transfers drawn in favor of such person or company or its agent. The overtures were later formalized in a letter to the Postmaster General, dated October 31, 1960, in which the Caltex, thru counsel, enclosed a copy of the contest rules and endeavored to justify its position that the contest does not violate the anti-lottery provisions of the Postal Law. Unimpressed, the then Acting Postmaster General opined that the scheme falls within the purview of the provisions aforesaid and declined to grant the requested clearance. In its counsel's letter of December 7, 1960, Caltex sought a reconsideration of the foregoing stand, stressing that there being involved no consideration in the part of any contestant, the contest was not, under

controlling authorities, condemnable as a lottery. Relying, however, on an opinion rendered by the Secretary of Justice on an unrelated case seven years before (Opinion 217, Series of 1953), the Postmaster General maintained his view that the contest involves consideration, or that, if it does not, it is nevertheless a "gift enterprise" which is equally banned by the Postal Law, and in his letter of December 10, 1960 not only denied the use of the mails for purposes of the proposed contest but as well threatened that if the contest was conducted, "a fraud order will have to be issued against it (Caltex) and all its representatives". Caltex thereupon invoked judicial intervention by filing the present petition for declaratory relief against Postmaster General Enrico Palomar, praying "that judgment be rendered declaring its 'Caltex Hooded Pump Contest' not to be violative of the Postal Law, and ordering respondent to allow petitioner the use of the mails to bring the contest to the attention of the public". After issues were joined and upon the respective memoranda of the parties, the trial court rendered judgment as follows: In view of the foregoing considerations, the Court holds that the proposed 'Caltex Hooded Pump Contest' announced to be conducted by the petitioner under the rules marked as Annex B of the petitioner does not violate the Postal Law and the respondent has no right to bar the public distribution of said rules by the mails. The respondent appealed. The parties are now before us, arrayed against each other upon two basic issues: first, whether the petition states a sufficient cause of action for declaratory relief; and second, whether the proposed "Caltex Hooded Pump Contest" violates the Postal Law. We shall take these up in seriatim. 1. By express mandate of section 1 of Rule 66 of the old Rules of Court, which was the applicable legal basis for the remedy at the time it was invoked, declaratory relief is available to any person "whose rights are affected by a statute . . . to determine any question of construction or validity arising under the . . . statute and for a declaration of his rights thereunder" (now section 1, Rule 64, Revised Rules of Court). In amplification, this Court, conformably to established jurisprudence on the matter, laid down certain conditions sine qua non therefor, to wit: (1) there must be a justiciable controversy; (2) the controversy must be between persons whose interests are adverse; (3) the party seeking declaratory relief must have a legal interest in the controversy; and (4) the issue involved must be ripe for judicial determination (Tolentino vs. The Board of Accountancy, et al., G.R. No. L-3062, September 28, 1951; Delumen, et al. vs. Republic of the Philippines, 50 O.G., No. 2, pp. 576, 578-579; Edades vs. Edades, et al., G.R. No. L-8964, July 31, 1956). The gravamen of the appellant's stand being that the petition herein states no sufficient cause of action for declaratory relief, our duty is to assay the factual bases thereof upon the foregoing crucible. As we look in retrospect at the incidents that generated the present controversy, a number of significant points stand out in bold relief. The appellee (Caltex), as a business enterprise of some consequence, concededly has the unquestioned right to exploit every legitimate means, and to avail of all appropriate media to advertise and stimulate increased patronage for its products.

In contrast, the appellant, as the authority charged with the enforcement of the Postal Law, admittedly has the power and the duty to suppress transgressions thereof particularly thru the issuance of fraud orders, under Sections 1982 and 1983 of the Revised Administrative Code, against legally non-mailable schemes. Obviously pursuing its right aforesaid, the appellee laid out plans for the sales promotion scheme hereinbefore detailed. To forestall possible difficulties in the dissemination of information thereon thru the mails, amongst other media, it was found expedient to request the appellant for an advance clearance therefor. However, likewise by virtue of his jurisdiction in the premises and construing the pertinent provisions of the Postal Law, the appellant saw a violation thereof in the proposed scheme and accordingly declined the request. A point of difference as to the correct construction to be given to the applicable statute was thus reached. Communications in which the parties expounded on their respective theories were exchanged. The confidence with which the appellee insisted upon its position was matched only by the obstinacy with which the appellant stood his ground. And this impasse was climaxed by the appellant's open warning to the appellee that if the proposed contest was "conducted, a fraud order will have to be issued against it and all its representatives." Against this backdrop, the stage was indeed set for the remedy prayed for. The appellee's insistent assertion of its claim to the use of the mails for its proposed contest, and the challenge thereto and consequent denial by the appellant of the privilege demanded, undoubtedly spawned a live controversy. The justiciability of the dispute cannot be gainsaid. There is an active antagonistic assertion of a legal right on one side and a denial thereof on the other, concerning a real not a mere theoretical question or issue. The contenders are as real as their interests are substantial. To the appellee, the uncertainty occasioned by the divergence of views on the issue of construction hampers or disturbs its freedom to enhance its business. To the appellant, the suppression of the appellee's proposed contest believed to transgress a law he has sworn to uphold and enforce is an unavoidable duty. With the appellee's bent to hold the contest and the appellant's threat to issue a fraud order therefor if carried out, the contenders are confronted by the ominous shadow of an imminent and inevitable litigation unless their differences are settled and stabilized by a tranquilizing declaration (Pablo y Sen, et al. vs. Republic of the Philippines, G.R. No. L-6868, April 30, 1955). And, contrary to the insinuation of the appellant, the time is long past when it can rightly be said that merely the appellee's "desires are thwarted by its own doubts, or by the fears of others" which admittedly does not confer a cause of action. Doubt, if any there was, has ripened into a justiciable controversy when, as in the case at bar, it was translated into a positive claim of right which is actually contested (III Moran, Comments on the Rules of Court, 1963 ed., pp. 132-133, citing: Woodward vs. Fox West Coast Theaters, 36 Ariz., 251, 284 Pac. 350). We cannot hospitably entertain the appellant's pretense that there is here no question of construction because the said appellant "simply applied the clear provisions of the law to a given set of facts as embodied in the rules of the contest", hence, there is no room for declaratory relief. The infirmity of this pose lies in the fact that it proceeds from the assumption that, if the circumstances here presented, the construction of the legal provisions can be divorced from the matter of their application to the appellee's contest. This is not feasible. Construction, verily, is the art or process of discovering and expounding the meaning and intention of the authors of the law with respect to its application to a given case, where that intention is rendered doubtful, amongst others, by reason of the fact that the given case is not explicitly provided for in the law

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

that the corporation was entitled to maintain a declaratory relief action against the county prosecutor to determine the legality of its sales promotion plan. In pari materia, see also: Bunis vs. Conway, 17 App. Div. 2d., 207, 234 N.Y.S. 2d., 435; Zeitlin vs. Arnebergh, supra; Thrillo, Inc. vs. Scott, 15 N.J. Super. 124, 82 A. 2d., 903. In fine, we hold that the appellee has made out a case for declaratory relief. 2. The Postal Law, chapter 52 of the Revised Administrative Code, using almost identical terminology in sections 1954(a), 1982 and 1983 thereof, supra, condemns as absolutely nonmailable, and empowers the Postmaster General to issue fraud orders against, or otherwise deny the use of the facilities of the postal service to, any information concerning "any lottery, gift enterprise, or scheme for the distribution of money, or of any real or personal property by lot, chance, or drawing of any kind". Upon these words hinges the resolution of the second issue posed in this appeal. Happily, this is not an altogether untrodden judicial path. As early as in 1922, in "El Debate", Inc. vs. Topacio, 44 Phil., 278, 283-284, which significantly dwelt on the power of the postal authorities under the abovementioned provisions of the Postal Law, this Court declared that While countless definitions of lottery have been attempted, the authoritative one for this jurisdiction is that of the United States Supreme Court, in analogous cases having to do with the power of the United States Postmaster General, viz.: The term "lottery" extends to all schemes for the distribution of prizes by chance, such as policy playing, gift exhibitions, prize concerts, raffles at fairs, etc., and various forms of gambling. The three essential elements of a lottery are: First, consideration; second, prize; and third, chance. (Horner vs. States [1892], 147 U.S. 449; Public Clearing House vs. Coyne [1903], 194 U.S., 497; U.S. vs. Filart and Singson [1915], 30 Phil., 80; U.S. vs. Olsen and Marker [1917], 36 Phil., 395; U.S. vs. Baguio [1919], 39 Phil., 962; Valhalla Hotel Construction Company vs. Carmona, p. 233, ante.) Unanimity there is in all quarters, and we agree, that the elements of prize and chance are too obvious in the disputed scheme to be the subject of contention. Consequently as the appellant himself concedes, the field of inquiry is narrowed down to the existence of the element of consideration therein. Respecting this matter, our task is considerably lightened inasmuch as in the same case just cited, this Court has laid down a definitive yard-stick in the following terms In respect to the last element of consideration, the law does not condemn the gratuitous distribution of property by chance, if no consideration is derived directly or indirectly from the party receiving the chance, but does condemn as criminal schemes in which a valuable consideration of some kind is paid directly or indirectly for the chance to draw a prize. Reverting to the rules of the proposed contest, we are struck by the clarity of the language in which the invitation to participate therein is couched. Thus

No puzzles, no rhymes? You don't need wrappers, labels or boxtops? You don't have to buy anything? Simply estimate the actual number of liter the Caltex gas pump with the hood at your favorite Caltex dealer will dispense from to , and win valuable prizes . . . ." . Nowhere in the said rules is any requirement that any fee be paid, any merchandise be bought, any service be rendered, or any value whatsoever be given for the privilege to participate. A prospective contestant has but to go to a Caltex station, request for the entry form which is available on demand, and accomplish and submit the same for the drawing of the winner. Viewed from all angles or turned inside out, the contest fails to exhibit any discernible consideration which would brand it as a lottery. Indeed, even as we head the stern injunction, "look beyond the fair exterior, to the substance, in order to unmask the real element and pernicious tendencies which the law is seeking to prevent" ("El Debate", Inc. vs. Topacio, supra, p. 291), we find none. In our appraisal, the scheme does not only appear to be, but actually is, a gratuitous distribution of property by chance. There is no point to the appellant's insistence that non-Caltex customers who may buy Caltex products simply to win a prize would actually be indirectly paying a consideration for the privilege to join the contest. Perhaps this would be tenable if the purchase of any Caltex product or the use of any Caltex service were a pre-requisite to participation. But it is not. A contestant, it hardly needs reiterating, does not have to buy anything or to give anything of value.1awphl.nt Off-tangent, too, is the suggestion that the scheme, being admittedly for sales promotion, would naturally benefit the sponsor in the way of increased patronage by those who will be encouraged to prefer Caltex products "if only to get the chance to draw a prize by securing entry blanks". The required element of consideration does not consist of the benefit derived by the proponent of the contest. The true test, as laid down in People vs. Cardas, 28 P. 2d., 99, 137 Cal. App. (Supp.) 788, is whether the participant pays a valuable consideration for the chance, and not whether those conducting the enterprise receive something of value in return for the distribution of the prize. Perspective properly oriented, the standpoint of the contestant is all that matters, not that of the sponsor. The following, culled from Corpus Juris Secundum, should set the matter at rest: The fact that the holder of the drawing expects thereby to receive, or in fact does receive, some benefit in the way of patronage or otherwise, as a result of the drawing; does not supply the element of consideration. Griffith Amusement Co. vs. Morgan, Tex. Civ. App., 98 S.W., 2d., 844" (54 C.J.S., p. 849). Thus enlightened, we join the trial court in declaring that the "Caltex Hooded Pump Contest" proposed by the appellee is not a lottery that may be administratively and adversely dealt with under the Postal Law. But it may be asked: Is it not at least a "gift enterprise, or scheme for the distribution of money, or of any real or personal property by lot, chance, or drawing of any kind", which is equally prescribed? Incidentally, while the appellant's brief appears to have concentrated on the issue of consideration, this aspect of the case cannot be avoided if the remedy here invoked is to

achieve its tranquilizing effect as an instrument of both curative and preventive justice. Recalling that the appellant's action was predicated, amongst other bases, upon Opinion 217, Series 1953, of the Secretary of Justice, which opined in effect that a scheme, though not a lottery for want of consideration, may nevertheless be a gift enterprise in which that element is not essential, the determination of whether or not the proposed contest wanting in consideration as we have found it to be is a prohibited gift enterprise, cannot be passed over sub silencio. While an all-embracing concept of the term "gift enterprise" is yet to be spelled out in explicit words, there appears to be a consensus among lexicographers and standard authorities that the term is commonly applied to a sporting artifice of under which goods are sold for their market value but by way of inducement each purchaser is given a chance to win a prize (54 C.J.S., 850; 34 Am. Jur., 654; Black, Law Dictionary, 4th ed., p. 817; Ballantine, Law Dictionary with Pronunciations, 2nd ed., p. 55; Retail Section of Chamber of Commerce of Plattsmouth vs. Kieck, 257 N.W., 493, 128 Neb. 13; Barker vs. State, 193 S.E., 605, 56 Ga. App., 705; Bell vs. State, 37 Tenn. 507, 509, 5 Sneed, 507, 509). As thus conceived, the term clearly cannot embrace the scheme at bar. As already noted, there is no sale of anything to which the chance offered is attached as an inducement to the purchaser. The contest is open to all qualified contestants irrespective of whether or not they buy the appellee's products. Going a step farther, however, and assuming that the appellee's contest can be encompassed within the broadest sweep that the term "gift enterprise" is capable of being extended, we think that the appellant's pose will gain no added comfort. As stated in the opinion relied upon, rulings there are indeed holding that a gift enterprise involving an award by chance, even in default of the element of consideration necessary to constitute a lottery, is prohibited (E.g.: Crimes vs. States, 235 Ala 192, 178 So. 73; Russell vs. Equitable Loan & Sec. Co., 129 Ga. 154, 58 S.E., 88; State ex rel. Stafford vs. Fox-Great Falls Theater Corporation, 132 P. 2d., 689, 694, 698, 114 Mont. 52). But this is only one side of the coin. Equally impressive authorities declare that, like a lottery, a gift enterprise comes within the prohibitive statutes only if it exhibits the tripartite elements of prize, chance and consideration (E.g.: Bills vs. People, 157 P. 2d., 139, 142, 113 Colo., 326; D'Orio vs. Jacobs, 275 P. 563, 565, 151 Wash., 297; People vs. Psallis, 12 N.Y.S., 2d., 796; City and County of Denver vs. Frueauff, 88 P., 389, 394, 39 Colo., 20, 7 L.R.A., N.S., 1131, 12 Ann. Cas., 521; 54 C.J.S., 851, citing: Barker vs. State, 193 S.E., 605, 607, 56 Ga. App., 705; 18 Words and Phrases, perm. ed., pp. 590-594). The apparent conflict of opinions is explained by the fact that the specific statutory provisions relied upon are not identical. In some cases, as pointed out in 54 C.J.S., 851, the terms "lottery" and "gift enterprise" are used interchangeably (Bills vs. People, supra); in others, the necessity for the element of consideration or chance has been specifically eliminated by statute. (54 C.J.S., 351352, citing Barker vs. State, supra; State ex rel. Stafford vs. Fox-Great Falls Theater Corporation, supra). The lesson that we derive from this state of the pertinent jurisprudence is, therefore, that every case must be resolved upon the particular phraseology of the applicable statutory provision. Taking this cue, we note that in the Postal Law, the term in question is used in association with the word "lottery". With the meaning of lottery settled, and consonant to the well-known principle of legal hermeneutics noscitur a sociis which Opinion 217 aforesaid also relied upon although only insofar as the element of chance is concerned it is only logical that the term

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

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

FERNANDO, C.J.: This Court is confronted once again with the question of whether or not it is a court or a labor arbiter that can pass on a suit for damages filed by the employer, here private respondent Zamboanga Wood Products. Respondent Judge Carlito A. Eisma 1 then of the Court of First Instance, now of the Regional Trial Court of Zamboanga City, was of the view that it is a court and denied a motion to dismiss filed by petitioners National Federation of labor and Zambowood Monthly Employees Union, its officers and members. It was such an order dated July 20, 1982 that led to the filing of this certiorari and prohibition proceeding. In the order assailed, it was required that the officers and members of petitioner union appear before the court to show cause why a writ of preliminary injunction should not be issued against them and in the meanwhile such persons as well as any other persons acting under their command and on their behalf were "temporarily restrained and ordered to desist and refrain from further obstructing, impeding and impairing plaintiff's use of its property and free ingress to or egress from plaintiff's Manufacturing Division facilities at Lumbayao, Zamboanga City and on its road right of way leading to and from said plaintiff's facilities, pending the determination of the litigation, and unless a contrary order is issued by this Court." 2 The record discloses that petitioner National Federation of Labor, on March 5, 1982, filed with the Ministry of Labor and Employment, Labor Relations Division, Zamboanga City, a petition for direct certification as the sole exclusive collective bargaining representative of the monthly paid employees of the respondent Zamboanga Wood Products, Inc. at its manufacturing plant in Lumbayao, Zamboanga City. 3 Such employees, on April 17, 1982 charged respondent firm before the same office of the Ministry of Labor for underpayment of monthly living allowances. 4 Then came, on May 3, 1982, from petitioner union, a notice of strike against private respondent, alleging illegal termination of Dionisio Estioca, president of the said local union; unfair labor practice, non-payment of living allowances; and "employment of oppressive alien

management personnel without proper permit. 5 It was followed by the union submitting the minutes of the declaration of strike, "including the ninety (90) ballots, of which 79 voted for yes and three voted for no." 6 The strike began on May 23, 1982. 7 On July 9, 1982, private respondent Zambowood filed a complaint with respondent Judge against the officers and members of petitioners union, for "damages for obstruction of private property with prayer for preliminary injunction and/or restraining order." 8 It was alleged that defendants, now petitioners, blockaded the road leading to its manufacturing division, thus preventing customers and suppliers free ingress to or egress from such premises. 9 Six days later, there was a motion for the dismissal and for the dissolution of the restraining order and opposition to the issuance of the writ of preliminary injunction filed by petitioners. It was contended that the acts complained of were incidents of picketing by defendants then on strike against private respondent, and that therefore the exclusive jurisdiction belongs to the Labor Arbiter pursuant to Batas Pambansa Blg. 227, not to a court of first instance.10 There was, as noted earlier, a motion to dismiss, which was denied. Hence this petition for certiorari. Four days after such petition was filed, on August 3, 1982, this Court required respondents to answer and set the plea for a preliminary injunction to be heard on Thursday, August 5, 1982. 11 After such hearing, a temporary restraining order was issued, "directing respondent Judge and the commanding officer in Zamboanga and his agents from enforcing the ex-parte order of injunction dated July 20, 1982; and to restrain the respondent Judge from proceeding with the hearing of the until otherwise case effective as of [that] date and continuing ordered by [the] Court. In the exercise of the right to peaceful picketing, petitioner unions must abide strictly with Batas Pambansa Blg. 227, specifically Section 6 thereof, amending Article 265 of the Labor Code, which now reads: '(e) No person engaged in picketing shall commit any act of violence, coercion or intimidation or obstruct the free ingress to or egress from the employer's premises for lawful purposes, or obstruct public thoroughfares.' " 12 On August 13, 1982, the answer of private respondent was filed sustaining the original jurisdiction of respondent Judge and maintaining that the order complained of was not in excess of such jurisdiction, or issued with grave abuse of discretion. Solicitor General Estelito P. Mendoza, 13 on the other hand, instead of filing an answer, submitted a Manifestation in lieu thereof. He met squarely the issue of whether or not respondent Judge had jurisdiction, and answered in the negative. He (i)ncluded that "the instant petition has merit and should be given due course." He traced the changes undergone by the Labor Code, citing at the same time the decisions issued by this Court after each of such changes. As pointed out, the original wording of Article 217 vested the labor arbiters with jurisdictional. 14 So it was applied by this Court in Garcia v. Martinez 15 and in Bengzon v. Inciong. 16 On May 1, 1978, however, Presidential Decree No. 1367 was issued, amending Article 217, and provided "that the Regional Directors shall not indorse and Labor Arbiters shall not entertain claims for moral and other forms of damages." 17 The ordinary courts were thus vested with jurisdiction to award actual and moral damages in the case of illegal dismissal of employees. 18 That is not, as pointed out by the Solicitor General, the end of the story,

for on May 1, 1980, Presidential Decree No. 1691 was issued, further amending Article 217, returning the original jurisdiction to the labor arbiters, thus enabling them to decide "3. All money claims of workers, including those based on non-payment or underpayment of wages, overtime compensation, separation pay and other benefits provided by law or appropriate agreement, except claims for employees compensation, social security, medicare and maternity benefits; [and] (5) All other claims arising from employer-employee relations unless expressly excluded by tills Code." 19 An equally conclusive manifestation of the lack of jurisdiction of a court of first instance then, a regional trial court now, is Batas Pambansa Blg. 130, amending Article 217 of the Labor Code. It took effect on August 21, 1981. Subparagraph 2, paragraph (a) is now worded thus: "(2) those that involve wages, hours of work and other terms and conditions of employment." 20 This is to be compared with the former phraseology "(2) unresolved issue in collective bargaining, including those that involve wages, hours of work and other terms and conditions of employment." 21 It is to be noted that Batas Pambansa Blg. 130 made no change with respect to the original and exclusive jurisdiction of Labor Arbiters with respect to money claims of workers or claims for damages arising from employer-employee relations. Nothing becomes clearer, therefore, than the meritorious character of this petition. certiorari and prohibition lie, respondent Judge being devoid of jurisdiction to act on the matter. 1. Article 217 is to be applied the way it is worded. The exclusive original jurisdiction of a labor arbiter is therein provided for explicitly. It means, it can only mean, that a court of first instance judge then, a regional trial court judge now, certainly acts beyond the scope of the authority conferred on him by law when he entertained the suit for damages, arising from picketing that accompanied a strike. That was squarely within the express terms of the law. Any deviation cannot therefore be tolerated. So it has been the constant ruling of this Court even prior to Lizarraga Hermanos v. Yap Tico, 22 a 1913 decision. The ringing words of the ponencia of Justice Moreland still call for obedience. Thus, "The first and fundamental duty of courts, in our judgment, is to apply the law. Construction and interpretation come only after it has been demonstrated that application is impossible or inadequate without them." 23 It is so even after the lapse of sixty years. 24 2. On the precise question at issue under the law as it now stands, this Court has spoken in three decisions. They all reflect the utmost fidelity to the plain command of the law that it is a labor arbiter, not a court, that ossesses original and exclusive jurisdiction to decide a claim for damages arising from picketing or a strike. In PepsiCola Bottling Co. v. Martinez, 25 the issue was set forth in the opening paragraph, in the ponencia of Justice Escolin: "This petition for certiorari, prohibition and mandamus raises anew the legal question often brought to this Court: Which tribunal has exclusive jurisdiction over an action filed by an employee against his employer for recovery of unpaid salaries, separation benefits and damages the court of general jurisdiction or the Labor Arbiter of the National Labor Relations Commission [NLRC]?" 26 It was categorically held: "We rule that the Labor Arbiter has exclusive jurisdiction over the

case." 27 Then came this portion of the opinion: "Jurisdiction over the subject matter in a judicial proceeding is conferred by the sovereign authority which organizes the court; and it is given only by law. Jurisdiction is never presumed; it must be conferred by law in words that do not admit of doubt. Since the jurisdiction of courts and judicial tribunals is derived exclusively from the statutes of the forum, the issue before us should be resolved on the basis of the law or statute now in force. We find that law in presidential Decree 1691 which took effect on May 1, 1980, Section 3 of which reads as follows: ... Article 217. Jurisdiction of Labor Arbiters and the Commission. (a) The Labor Arbiters shall have the original and exclusive jurisdiction to hear and decide the following cases involving all workers, whether agricultural or non-agricultural: ... 3. All money claims of workers, including those based on nonpayment or underpayment of wages, overtime compensation, separation pay and other benefits provided by law or appropriate agreement, except claims for employees' compensation, social security, medicare and maternity benefits; 4. Cases involving household services; and 5. All other claims arising from employer-employee relations, unless expressly excluded by this Code." 28 That same month, two other cases were similarly decided, Ebon v. De Guzman 29 and Aguda v. Vallejos. 30 3. It is regrettable that the ruling in the above three decisions, decided in March of 1982, was not followed by private respondent when it filed the complaint for damages on July 9, 1982, more than four months later. 31 On this point, reference may be made to our decision in National Federation of Labor, et al. v. The Honorable Minister of Labor and Employment, 32 promulgated on September 15, 1983. In that case, the question involved was the failure of the same private respondent, Zamboanga Wood Products, Inc., to admit the striking petitioners, eighty-one in number, back to work after an order of Minister Blas F. Ople certifying to the National Labor Relations Commission the labor dispute for compulsory arbitration pursuant to Article 264 (g) of the Labor Code of the Philippines. It was noted in the first paragraph of our opinion in that case: "On the face of it, it seems difficult to explain why private respondent would not comply with such order considering that the request for compulsory arbitration came from it. It ignored this notification by the presidents of the labor unions involved to its resident manager that the striking employees would lift their picket line and start returning to work on August 20, 1982. Then, too, Minister Ople denied a partial motion for reconsideration insofar as the return-to-work aspect is concerned which reads: 'We find no merit in the said Motion for Reconsideration. The Labor code, as amended, specifically Article 264 (g), mandates that whenever a labor dispute is certified by the Minister of Labor and Employment to the National Labor Relations Commission for compulsory arbitration and a strike has already taken place at the time of certification, "all striking employees shall immediately return to work and the employees shall immediately resume operations and readmit all workers under the same terms and conditions prevailing before the strike." ' " 33 No valid distinction can be made between the exercise of compulsory arbitration vested in the Ministry of Labor and the jurisdiction of a labor arbiter to pass over claims for damages in the light of the express provision of the Labor Code as set forth in Article 217. In both cases, it is the Ministry, not a court of justice, that is vested by law with competence to act on the matter.

4. The issuance of Presidential Decree No. 1691 and the enactment of Batas Pambansa Blg. 130, made clear that the exclusive and original jurisdiction for damages would once again be vested in labor arbiters. It can be affirmed that even if they were not that explicit, history has vindicated the view that in the appraisal of what was referred to by Philippine American Management & Financing Co., Inc. v. Management & Supervisors Association of the Philippine-American Management & Financing Co., Inc. 34 as "the rather thorny question as to where in labor matters the dividing line is to be drawn" 35 between the power lodged in an administrative body and a court, the unmistakable trend has been to refer it to the former. Thus: "Increasingly, this Court has been committed to the view that unless the law speaks clearly and unequivocally, the choice should fall on [an administrative agency]." 36 Certainly, the present Labor Code is even more committed to the view that on policy grounds, and equally so in the interest of greater promptness in the disposition of labor matters, a court is spared the often onerous task of determining what essentially is a factual matter, namely, the damages that may be incurred by either labor or management as a result of disputes or controversies arising from employer-employee relations. WHEREFORE, the writ of certiorari is granted and the order of July 20, 1982, issued by respondent Judge, is nullified and set aside. The writ of prohibition is likewise granted and respondent Judge, or whoever acts in his behalf in the Regional Trial Court to which this case is assigned, is enjoin from taking any further action on Civil Case No. 716 (2751), except for the purpose of dismissing it. The temporary restraining order of August 5, 1982 is hereby made permanent.

G.R. No. L-26100

February 28, 1969

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

On May 8, 1962, upon Lutes' opposition, the cadastral court denied private petitioners' right to intervene in the case because of a final declaratory relief judgment dated March 9, 1962 in Yaranon vs. Castrillo [Civil Case 946, Court of First Instance of Baguio] which declared that such tree farm leases were null and void. On May 18, 1962, private petitioners moved to reconsider. They averred that said declaratory relief judgment did not bind them, for they were not parties to that action. On September 14, 1962, the cadastral court reversed its own ruling of May 8, 1962, allowed petitioners to cross-examine the witnesses of respondent Lutes. On October 16, 1962, Lutes replied to and moved to dismiss private petitioners' opposition to his reopening petition. On October 25, 1962, private petitioners' rejoinder was filed. On August 5, 1963, the cadastral court dismissed private petitioners' opposition to the reopening. A motion to reconsider was rejected by the court on November 5, 1963. On January 6, 1964, it was the turn of the City of Baguio to lodge a motion to dismiss the petition to reopen. This motion was adopted as its own by the Reforestation Administration. They maintained the position that the declaratory judgment in Civil Case 946 was not binding on those not parties thereto. Respondent Lutes opposed on February 24, 1964. On April 6, 1964, private petitioners reiterated their motion to dismiss on jurisdictional grounds. On September 17, 1964, the court denied for lack of merit the City's motion as well as the April 6, 1964 motion to dismiss made by private petitioners. On November 13, 1964, all the petitioners went to the Court of Appeals on certiorari, prohibition, and mandamus with preliminary injunction. 1 They then questioned the cadastral court's jurisdiction over the petition to reopen and the latter's order of August 5, 1963 dismissing private petitioners' opposition. The appellate court issued a writ of preliminary injunction upon a P500-bond. Then came the judgment of the Court of Appeals of September 30, 1965. The court held that petitioners were not bound by the declaratory judgment heretofore hated. Nevertheless, the appellate court ruled that as lessees, private petitioners had no right to oppose the reopening of the cadastral case. Petitioners moved to reconsider. It was thwarted on May 6, 1966. Petitioners now seek redress from this Court. On July 6, 1966, respondents moved to dismiss the petition before us. On August 5, 1966, petitioners opposed. On August 12, 1966, we gave due course. 1. Do private petitioners have personality to appear in the reopening proceedings? First, to the controlling statute, Republic Act 931, effective June 20, 1953. The title of the Act reads

AN ACT TO AUTHORIZE THE FILING IN THE PROPER COURT, UNDER CERTAIN CONDITIONS, OF CERTAIN CLAIMS OF TITLE TO PARCELS OF LAND THAT HAVE BEEN DECLARED PUBLIC LAND, BY VIRTUE OF JUDICIAL DECISIONS RENDERED WITHIN THE FORTY YEARS NEXT PRECEDING THE APPROVAL OF THIS ACT. Section 1 thereof provides SECTION 1. All persons claiming title to parcels of land that have been the object of cadastral proceedings, who at the time of the survey were in actual possession of the same, but for some justifiable reason had been unable to file their claim in the proper court during the time limit established by law, in case such parcels of land, on account of their failure to file such claims, have been, or are about to be declared land of the public domain by virtue of judicial proceedings instituted within the forty years next preceding the approval of this Act, are hereby granted the right within five years 2 after the date on which this Act shall take effect, to petition for a reopening of the judicial proceedings under the provisions of Act Numbered Twenty-two hundred and fifty-nine, as amended, only with respect to such of said parcels of land as have not been alienated, reserved, leased, granted, or otherwise provisionally or permanently disposed of by the Government, and the competent Court of First Instance, upon receiving such petition, shall notify the Government through the Solicitor General, and if after hearing the parties, said court shall find that all conditions herein established have been complied with, and that all taxes, interests and penalties thereof have been paid from the time when land tax should have been collected until the day when the motion is presented, it shall order said judicial proceedings reopened as if no action has been taken on such parcels. 3 We concede that in Leyva vs. Jandoc, L-16965, February 28, 1962, a land registration case where oppositors were "foreshore lessees of public land", a principle was hammered out that although Section 34, Land Registration Act, 4 "apparently authorizes any person claiming any kind of interest to file an opposition to an application for registration, ... nevertheless ... the opposition must be based on a right of dominion or some other real right independent of, and not at all subordinate to, the rights of the Government."5 The opposition, according to the Leyva decision, "must necessarily be predicated upon the property in question being part of the public domain." Leyva thus pronounced that "it is incumbent upon the duly authorized representatives of the Government to represent its interests as well as private claims intrinsically dependent upon it." But the Leyva case concerned an ordinary land registration proceeding under the provisions of the Land Registration Act. Normally and logically, lessees cannot there present issues of ownership. The case at bar, however, stands on a different footing. It involves a special statute R.A. 931, which allows a petition for reopening on lands "about to be declared" or already "declared land of the public domain" by virtue of judicial proceedings. Such right, however, is made to cover limited cases, i.e., "only with respect to such of said parcels of land as have not been alienated, reserved, leased, granted, or otherwise provisionally or permanently disposed of by the Government." 6 The lessee's right is thus impliedly recognized by R.A. 931. This statutory phrase steers the present case clear from the impact of the precept forged by

Leyva. So it is, that if the land subject of a petition to reopen has already been leased by the government, that petition can no longer prosper. This was the holding in Director of Land vs. Benitez, L-21368, March 31, 1966. The reopening petition there filed was opposed by the Director of Lands in behalf of 62 lessees of public land holding revocable permits issued by the government. We struck down the petition in that Case because the public land, subject-matter of the suit, had already been leased by the government to private persons. Of course, the Benitez ruling came about not by representations of the lessees alone, but through the Director of Lands. But we may well scale the heights of injustice or abet violations of R.A. 931 if we entertain the view that only the Director of Lands 7 can here properly oppose the reopening petition. Suppose the lands office fails to do so? Will legitimate lessees be left at the mercy of government officials? Should the cadastral court close its eyes to the fact of lease that may be proved by the lessees themselves, and which is enough to bar the reopening petition? R.A. 931 could not have intended that this situation should happen. The point is that, with the fact of lease, no question of ownership need be inquired into pursuant to R.A. 931. From this standpoint, lessees have sufficient legal interest in the proceedings. The right of private petitioners to oppose a reopening petition here becomes the more patent when we take stock of their averment that they have introduced improvements on the land affected. It would seem to us that lessees insofar as R.A. 931 is concerned, come within the purview of those who, according to the Rules of Court, 8 may intervene in an action. For, they are persons who have "legal interest in the matter in litigation, or in the success of either of the parties." 9 In the event herein private petitioners are able to show that they are legitimate lessees, then their lease will continue. And this because it is sufficient that it be proven that the land is leased to withdraw it from the operation of Republic Act 931 and place it beyond the reach of a petition for reopening. 10 In line with the Court of Appeals' conclusion, not disputed by respondent Lutes herein, the cadastral court should have ruled on the validity of private petitioners 'tree farm leases on the merits. Because there is need for Lutes' right to reopen and petitioners' right to continue as lessees to be threshed out in that court. We, accordingly, hold that private petitioners, who aver that they are lessees, have the necessary personality to intervene in and oppose respondent Lutes' petition for reopening. 2. Petitioners next contend that the reopening petition below, filed under R.A. 931, should have been published in accordance with the Cadastral Act. To resolve this contention, we need but refer to a very recent decision of this Court in De Castro vs. Marcos, supra, involving exactly the same set of facts bearing upon the question. We there held, after a discussion of law and jurisprudence, that: "In sum, the subject matter of the petition for reopening a parcel of land claimed by respondent Akia was already embraced in the cadastral proceedings filed by the Director of Lands. Consequently, the Baguio cadastral

court already acquired jurisdiction over the said property. The petition, therefore, need not be published." We find no reason to break away from such conclusion. Respondent Lutes attached to the record a certified true copy of the November 13, 1922 decision in the Baguio Townsite Reservation case to show, amongst others, that the land here involved was part of that case. Petitioners do not take issue with respondent Lutes on this point of fact. We here reiterate our ruling in De Castro, supra, that the power of the cadastral court below over petitions to reopen, as in this case, is not jurisdictionally tainted by want of publication. 3. A question of transcendental importance is this: Does the cadastral court have power to reopen the cadastral proceedings upon the application of respondent Lutes? The facts are: The cadastral proceedings sought to be reopened were instituted on April 12, 1912. Final decision was rendered on November 13, 1922. Lutes filed the petition to reopen on July 25, 1961. It will be noted that the title of R.A. 931, heretofore transcribed, authorizes "the filing in the proper court, under certain conditions, of certain claims of title to parcels of land that have been declared public land, by virtue of judicial decisions rendered within the forty years next preceding the approval of this Act." The body of the statute, however, in its Section 1, speaks of parcels of land that "have been, or are about to be declared land of the public domain, by virtue of judicial proceedings instituted within the forty years next preceding the approval of this Act." There thus appears to be a seeming inconsistency between title and body. It must be stressed at this point that R.A. 931 is not under siege on constitutional grounds. No charge has been made hero or in the courts below that the statute offends the constitutional injunction that the subject of legislation must be expressed in the title thereof. Well-entrenched in constitutional law is the precept that constitutional questions will not be entertained by courts unless they are "specifically raised, insisted upon and adequately argued." 11 At any rate it cannot be seriously disputed that the subject of R.A. 931 is expressed in its title. This narrows our problem down to one of legal hermeneutics. Many are the principles evolved in the interpretation of laws. It is thus not difficult to stray away from the true path of construction, unless we constantly bear in mind the goal we seek. The office of statutory interpretation, let us not for a moment forget, is to determine legislative intent. In the words of a well-known authority, "[t]he true object of all interpretation is to ascertain the meaning and will of the law-making body, to the end that it may be enforced." 12 In varying language, "the, purpose of all rules or maxims" in interpretation "is to discover the true intention of the law." 13 They "are only valuable when they subserve this purpose." 14 In fact, "the spirit or intention of a statute prevails over the letter thereof." 15 A statute "should be construed according to its spirit and reason, disregarding as far as necessary, the letter of the law." 16 By this, we do

not "correct the act of the Legislature, but rather ... carry out and give due course to" its true intent. 17 It should be certain by now that when engaged in the task of construing an obscure expression in the law 18 or where exact or literal rendering of the words would not carry out the legislative intent, 19 the title thereof may be resorted to in the ascertainment of congressional will. Reason therefor is that the title of the law may properly be regarded as an index of or clue or guide to legislative intention. 20 This is especially true in this jurisdiction. For the reason that by specific constitutional precept, "[n]o bill which may be enacted into law shall embrace more than one subject which shall be expressed in the title of the bill." 21 In such case, courts "are compelled by the Constitution to consider both the body and the title in order to arrive at the legislative intention." 22 With the foregoing guideposts on hand, let us go back to the situation that confronts us. We take another look at the title of R.A. 931, viz: "AN ACT TO AUTHORIZE THE FILING IN THE PROPER COURT, UNDER CERTAIN CONDITIONS, OF CERTAIN CLAIMS OF TITLE TO PARCELS OF LAND THAT HAVE BEEN DECLARED PUBLIC LAND, BY VIRTUE OF JUDICIAL DECISIONS RENDERED WITHIN THE FORTY YEARS NEXT PRECEDING THE APPROVAL OF THIS ACT." Readily to be noted is that the title is not merely composed of catchwords. 23 It expresses in language clear the very substance of the law itself. From this, it is easy to see that Congress intended to give some effect to the title of R.A. 931. To be carefully noted is that the same imperfection in the language of R.A. 931 aforesaid from which surfaces a seeming inconsistency between the title and the body attended Commonwealth Act 276, the present statute's predecessor. That prior law used the very same language in the body thereof and in its title. We attach meaning to this circumstance. Had the legislature meant to shake off any legal effects that the title of the statute might have, it had a chance to do so in the reenactment of the law. Congress could have altered with great facility the wording of the title of R.A. 931. The fact is that it did not. It has been observed that "in modern practice the title is adopted by the Legislature, more thoroughly read than the act itself, and in many states is the subject of constitutional regulation." 24 The constitutional in jurisdiction that the subject of the statute must be expressed in the title of the bill, breathes the spirit of command because "the Constitution does not exact of Congress the obligation to read during its deliberations the entire text of the bill." 25 Reliance, therefore, may be placed on the title of a bill, which, while not an enacting part, no doubt "is in some sort a part of the act, although only a formal part." 26 These considerations are all the more valid here because R.A. 931 was passed without benefit of congressional debate in the House from which it originated as House Bill 1410, 27 and in the Senate. 28 The title now under scrutiny possesses the strength of clarity and positiveness. It recites that it authorizes court proceedings of claims to parcels of land declared public land "by virtue of judicial decisions rendered within the forty years next preceding the approval of this Act." That title is written "in capital letters" by Congress itself; such kind of a title then "is not to be classed with words or titles used by compilers of statutes" because "it is the legislature

speaking." 29 Accordingly, it is not hard to come to a deduction that the phrase last quoted from R.A. 931 "by virtue of judicial decisions rendered" was but inadvertently omitted from the body. Parting from this premise, there is, at bottom, no contradiction between title and body. In line with views herein stated, the title belongs to that type of titles which; should be regarded as part of the rules or provisions expressed in the body. 30 At the very least, the words "by virtue of judicial decisions rendered" in the title of the law stand in equal importance to the phrase in Section 1 thereof, "by virtue of judicial proceedings instituted." Given the fact then that there are two phrases to consider the choice of construction we must give to the statute does not need such reflection. We lean towards a liberal view. And this, because of the principle long accepted that remedial legislation should receive the blessings of liberal construction. 31 And, there should be no quibbling as to the fact that R.A. 931 is a piece of remedial legislation. In essence, it provides a mode of relief to landowners who, before the Act, had no legal means of perfecting their titles. This is plainly evident from the explanatory note thereof, which reads: This bill is intended to give an opportunity to any person or claimant who has any interest in any parcel of land which has been declared as public land in cadastral proceeding for failure of said person or claimant to present his claim within the time prescribed by law. There are many meritorious cases wherein claimants to certain parcels of land have not had the opportunity to answer or appear at the hearing of cases affecting their claims in the corresponding cadastral proceedings for lack of sufficient notice or for other reasons and circumstances which are beyond their control. Under C.A. No. 276, said persons or claimants have no more legal remedy as the effectivity of said Act expired in 1940. This measure seeks to remedy the lack of any existing law within said persons or claimants with meritorious claims or interests in parcels of land may seek justice and protection. This bill proposes to give said persons or claimants their day in court. Approval of this bill is earnestly requested. In fine, we say that lingual imperfections in the drafting of a statute should never be permitted to hamstring judicial search for legislative intent, which can otherwise be discovered. Legal technicalities should not abort the beneficent effects intended by legislation. The sum of all the foregoing is that, as we now view Republic Act 931, claims of title that may be filed thereunder embrace those parcels of land that have been declared public land "by virtue of judicial decisions rendered within the forty years next preceding the approval of this Act." Therefore, by that statute, the July 25, 1961 petition of respondent Belong Lutes to reopen Civil Reservation Case No. 1, GLRO Record No. 211 of the cadastral court of Baguio, the decision on which was rendered on November 13, 1922, comes within the 40-year period.lawphi1.nt

FOR THE REASONS GIVEN, the petition for certiorari is hereby granted; the cadastral court's orders of August 5, 1963, November 5, 1963 and September 17, 1964 are hereby declared null and void and the cadastral court is hereby directed to admit petitioners' oppositions and proceed accordingly. No costs. So ordered.

Floresca v phi lex mining corporation Gr no 30642 april 30 1985 Floresca et al 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. Floresca et al moved to claim their benefits pursuant to the Workmens Compensation Act before the Workmens Compensation Commission. They also petitioned before the regular courts and sue Philex for additional damages. Philex invoked that they can no longer be sued because the petitioners have already claimed benefits under the WCA.

ISSUE: Whether or not Floresca et al can claim benefits and at the same time sue.

HELD: Under the law, Floresca et al could only do either one. If they filed for benefits under the WCA then they will be estopped from proceeding with a civil case before the regular courts. Conversely, if they sued before the civil courts then they would also be estopped from claiming benefits under the WCA. The SC however ruled that Floresca et al are excused from this deficiency due to ignorance of the fact. Had they been aware of such then they may have not availed of such a remedy. However, if in case theyll win in the lower court whatever award may be granted, the amount given to them under the WCA should be deducted. The SC emphasized that if they would go strictly by the book in this case then the purpose of the law may be defeated. Idolatrous reverence for the letter of the law sacrifices the human being. The spirit of the law insures mans survival and ennobles him. As Shakespeare said, the letter of the law killeth but its spirit giveth life.

Justice Gutierrez dissenting

No civil suit should prosper after claiming benefits under the WCA. If employers are already liable to pay benefits under the WCA they should not be compelled to bear the cost of damage suits or get insurance for that purpose. The exclusion provided by the WCA can only be properly removed by the legislature NOT the SC.

G.R. No. 170735

December 17, 2007

IMMACULADA L. GARCIA, petitioner, vs. SOCIAL SECURITY COMMISSION LEGAL AND COLLECTION, SOCIAL SECURITY SYSTEM, respondents. DECISION CHICO-NAZARIO, J.: This is petition for review on Certiorari under Rule 45 of the Rules of Court is assailing the 2 June 2005 Decision1 and 8 December 2005 Resolution2 both of the Court of Appeals in CA-G.R. SP No. 85923. the appellate court affirmed the --- Order and --- Resolution both of the Social Security Commission (SSC) in SSC Case No. 10048, finding Immaculada L. Garcia (Garcia), the sole surviving director of Impact Corporation, petitioner herein, liable for unremitted, albeit collected, SSS contributions. Petitioner Immaculada L. Garcia, Eduardo de Leon, Ricardo de Leon, Pacita Fernandez, and Consuelo Villanueva were directors3 of Impact Corporation. The corporation was engaged in the business of manufacturing aluminum tube containers and operated two factories. One was a "slug" foundry-factory located in Cuyapo, Nueva Ecija, while the other was an Extrusion Plant in Cainta, Metro Manila, which processed the "slugs" into aluminum collapsible tubes and similar containers for toothpaste and other related products. Records show that around 1978, Impact Corporation started encountering financial problems. By 1980, labor unrest besieged the corporation. In March 1983, Impact Corporation filed with the Securities and Exchange Commission (SEC) a Petition for Suspension of Payments,4 docketed as SEC Case No. 02423, in which it stated that: [Impact Corporation] has been and still is engaged in the business of manufacturing aluminum tube containers x x x. xxxx In brief, it is an on-going, viable, and profitable enterprise. On 8 May 1985, the union of Impact Corporation filed a Notice of Strike with the Ministry of Labor which was followed by a declaration of strike on 28 July 1985. Subsequently, the Ministry of Labor certified the labor dispute for compulsory arbitration to the National Labor Relations Commission (NLRC) in an Order5 dated 25 August 1985. The Ministry of Labor, in the same Order, noted the inability of Impact Corporation to pay wages, 13th month pay, and SSS remittances due to cash liquidity problems. A portion of the order reads:

On the claims of unpaid wages, unpaid 13th month pay and non-remittance of loan amortization and SSS premiums, we are for directing the company to pay the same to the workers and to remit loan amortizations and SSS premiums previously deducted from their wages to the Social Security System. Such claims were never contested by the company both during the hearing below and in our office. In fact, such claims were admitted by the company although it alleged cash liquidity as the main reason for such non-payment. WHEREFORE, the dispute at Impact Corporation is hereby certified to the National Labor Relations Commission for compulsory arbitration in accordance with Article 264 (g) of the Labor Code, as amended. xxxx The company is directed to pay all the entitled workers unpaid wages, unpaid 13th month pay and to remit to the Social Security System loan amortizations and SSS premiums previously deducted from the wages of the workers.6 On 3 July 1985, the Social Security System (SSS), through its Legal and Collection Division (LCD), filed a case before the SSC for the collection of unremitted SSS premium contributions withheld by Impact Corporation from its employees. The case which impleaded Impact Corporation as respondent was docketed as SSC Case No. 10048.7 Impact Corporation was compulsorily covered by the SSS as an employer effective 15 July 1963 and was assigned Employer I.D. No. 03-2745100-21. In answer to the allegations raised in SSC Case No. 10048, Impact Corporation, through its then Vice President Ricardo de Leon, explained in a letter dated 18 July 1985 that it had been confronted with strikes in 1984 and layoffs were effected thereafter. It further argued that the P402,988.93 is erroneous. It explained among other things, that its operations had been suspended and that it was waiting for the resolution on its Petition for Suspension of Payments by the SEC under SEC Case No. 2423. Despite due notice, the corporation failed to appear at the hearings. The SSC ordered the investigating team of the SSS to determine if it can still file its claim for unpaid premium contributions against the corporation under the Petition for Suspension of Payments. In the meantime, the Petition for Suspension of Payments was dismissed which was pending before the SEC in an Order8 dated 12 December 1985. Impact Corporation resumed operations but only for its winding up and dissolution.9 Due to Impact Corporations liability and cash flow problems, all of its assets, namely, its machineries, equipment, office furniture and fixtures, were sold to scrap dealers to answer for its arrears in rentals. On 1 December 1995, the SSS-LCD filed an amended Petition10 in SSC Case No. 10048 wherein the directors of Impact Corporation were directly impleaded as respondents, namely: Eduardo de Leon, Ricardo de Leon,11 Pacita Fernandez, Consuelo Villanueva, and petitioner. The amounts sought to be collected totaled P453,845.78 and P10,856.85 for the periods August 1980 to

December 1984 and August 1981 to July 1984, respectively, and the penalties for late remittance at the rate of 3% per month from the date the contributions fell due until fully paid pursuant to Section 22(a) of the Social Security Law,12 as amended, in the amounts of P49,941.67 and P2,474,662.82. Period Unremitted Amount P 453,845.78 P 10,856.85 Penalties (3% Interest Per Month) P49, 941.67 P2, 474, 662.82 Total

August 1980 to December 1984 August 1981 to July 1984

503,787.45 2,485,519.67

Summonses were not served upon Eduardo de Leon, Pacita Fernandez, and Consuelo Villanueva, their whereabouts unknown. They were all later determined to be deceased. On the other hand, due to failure to file his responsive pleading, Ricardo de Leon was declared in default. Petitioner filed with the SSC a Motion to Dismiss13 on grounds of prescription, lack of cause of action and cessation of business, but the Motion was denied for lack of merit.14 In her Answer with Counterclaim15 dated 20 May 1999, petitioner averred that Impact Corporation had ceased operations in 1980. In her defense, she insisted that she was a mere director without managerial functions, and she ceased to be such in 1982. Even as a stockholder and director of Impact Corporation, petitioner contended that she cannot be made personally liable for the corporate obligations of Impact Corporation since her liability extended only up to the extent of her unpaid subscription, of which she had none since her subscription was already fully paid. The petitioner raised the same arguments in her Position Paper. 16 On 23 January 1998, Ricardo de Leon died following the death, too, of Pacita Fernandez died on 7 February 2000. In an Order dated 11 April 2000, the SSC directed the System to check if Impact Corporation had leviable properties to which the investigating team of respondent SSS manifested that the Impact Corporation had already been dissolved and its assets disposed of.17 In a Resolution dated 28 May 2003, the Social Security Commission ruled in favor of SSS and declared petitioner liable to pay the unremitted contributions and penalties, stating the following: WHEREFORE, premises considered, this Commission finds, and so holds, that respondents Impact Corporation and/or Immaculada L. Garcia, as director and responsible officer of the said corporation, is liable to pay the SSS the amounts of P442,988.93, representing the unpaid SS contributions of their employees for the period August 1980 to December 1984, not inclusive, and P10,856.85, representing the balance of the unpaid SS contributions in favor of Donato Campos, Jaime Mascarenas, Bonifacio Franco and Romeo Fullon for the period August 1980 to December 1984, not inclusive, as well as the 3% per month penalty imposed thereon for late payment in the amounts of P3,194,548.63 and P78,441.33, respectively, computed as of April 30, 2003. This is without prejudice to the right of the SSS to collect the penalties accruing after April 30,

2003 and to institute other appropriate actions against the respondent corporation and/or its responsible officers. Should the respondents pay their liability for unpaid SSS contributions within sixty (60) days from receipt of a copy of this Resolution, the 3% per month penalty for late payment thereof shall be deemed condoned pursuant to SSC Res. No. 397-S.97, as amended by SSC Res. Nos. 112-S.98 and 982-S.99, implementing the provision on condonation of penalty under Section 30 of R.A. No. 8282. In the event the respondents fail to pay their liabilities within the aforestated period, let a writ of execution be issued, pursuant to Section 22 (c) [2] of the SS Law, as amended, for the satisfaction of their liabilities to the SSS.18 Petitioner filed a Motion for Reconsideration19 of the afore-quoted Decision but it was denied for lack of merit in an Order20 dated 4 August 2004, thus: Nowhere in the questioned Resolution dated May 28, 2003 is it stated that the other directors of the defunct Impact Corporation are absolved from their contribution and penalty liabilities to the SSS. It is certainly farthest from the intention of the petitioner SSS or this Commission to pin the entire liability of Impact Corporation on movant Immaculada L. Garcia, to the exclusion of the directors of the corporation namely: Eduardo de Leon, Ricardo de Leon, Pacita Fernandez and Conzuelo Villanueva, who were all impleaded as parties-respondents in this case. The case record shows that there was failure of service of summonses upon respondents Eduardo de Leon, Pacita Fernandez and Conzuelo Villanueva, who are all deceased, for the reason that their whereabouts are unknown. Moreover, neither the legal heirs nor the estate of the defaulted respondent Ricardo de Leon were substituted as partiesrespondents in this case when he died on January 23, 1998. Needless to state, the Commission did not acquire jurisdiction over the persons or estates of the other directors of Impact Corporation, hence, it could not validly render any pronouncement as to their liabilities in this case. Furthermore, the movant cannot raise in a motion for reconsideration the defense that she was no longer a director of Impact Corporation in 1982, when she was allegedly eased out by the managing directors of Impact Corporation as purportedly shown in the Deed of Sale and Assignment of Shares of Stock dated January 22, 1982. This defense was neither pleaded in her Motion to Dismiss dated January 17, 1996 nor in her Answer with Counterclaim dated May 18, 1999 and is, thus, deemed waived pursuant to Section 1, Rule 9 of the 1997 Rules of Civil Procedure, which has suppletory application to the Revised Rules of Procedure of the Commission. Finally, this Commission has already ruled in the Order dated April 27, 1999 that since the original Petition was filed by the SSS on July 3, 1985, and was merely amended on December 1, 1995 to implead the responsible officers of Impact Corporation, without changing its causes of action, the same was instituted well within the 20-year prescriptive

period provided under Section 22 (b) of the SS Law, as amended, considering that the contribution delinquency assessment covered the period August 1980 to December 1984. In view thereof, the instant Motion for Reconsideration is hereby denied for lack of merit. Petitioner elevated her case to the Court of Appeals via a Petition for Review. Respondent SSS filed its Comment dated 20 January 2005, and petitioner submitted her Reply thereto on 4 April 2005. The Court of Appeals, applying Section 28(f) of the Social Security Law,21 again ruled against petitioner. It dismissed the petitioners Petition in a Decision dated 2 June 2005, the dispositive portion of which reads: WHEREFORE, premises considered, the petition is DISMISSED for lack of merit. The assailed Resolution dated 28 May 2003 and the Order dated 4 August 2004 of the Social Security Commission are AFFIRMED in toto.22 Aggrieved, petitioner filed a Motion for Reconsideration of the appellate courts Decision but her Motion was denied in a Resolution dated 8 December 2005. Hence, the instant Petition in which petitioner insists that the Court of Appeals committed grave error in holding her solely liable for the collected but unremitted SSS premium contributions and the consequent late penalty payments due thereon. Petitioner anchors her Petition on the following arguments: I. SECTION 28(F) OF THE SSS LAW PROVIDES THAT A MANAGING HEAD, DIRECTOR OR PARTNER IS LIABLE ONLY FOR THE PENALTIES OF THE EMPLOYER CORPORATION AND NOT FOR UNPAID SSS CONTRIBUTIONS OF THE EMPLOYER CORPORATION. II. UNDER THE SSS LAW, IT IS THE MANAGING HEADS, DIRECTORS OR PARTNERS WHO SHALL BE LIABLE TOGETHER WITH THE CORPORATION. IN THIS CASE, PETITIONER HAS CEASED TO BE A STOCKHOLDER OF IMPACT CORPORATION IN 1982. EVEN WHILE SHE WAS A STOCKHOLDER, SHE NEVER PARTICIPATED IN THE DAILY OPERATIONS OF IMPACT CORPORATION. III. UNDER SECTION 31 OF THE CORPORATION CODE, ONLY DIRECTORS, TRUSTEES OR OFFICERS WHO PARTICIPATE IN UNLAWFUL ACTS OR ARE GUILTY OF GROSS NEGLIGENCE AND BAD FAITH SHALL BE PERSONALLY LIABLE. OTHERWISE, BEING A MERE STOCKHOLDER, SHE IS LIABLE ONLY TO THE EXTENT OF HER SUBSCRIPTION. IV. IMPACT CORPORATION SUFFERED IRREVERSIBLE ECONOMIC LOSSES, EVENTS WHICH WERE NEITHER DESIRED NOR CAUSED BY ANY ACT OF

THE PETITIONER. THUS, BY REASON OF FORTUITOUS EVENTS, THE PETITIONER SHOULD BE ABSOLVED FROM LIABILITY. V. RESPONDENT SOCIAL SECURITY SYSTEM FAILED MISERABLY IN EXERTING EFFORTS TO ACQUIRE JURISDICTION OVER THE LEVIABLE ASSETS OF IMPACT CORPORATION, PERSON/S AND/OR ESTATE/S OF THE OTHER DIRECTORS OR OFFICERS OF IMPACT CORPORATION. VI. THE HONORABLE COMMISSION SERIOUSLY ERRED IN NOT RENDERING A JUDGMENT BY DEFAULT AGAINST THE DIRECTORS UPON WHOM IT ACQUIRED JURISDICTION. Based on the foregoing, petitioner prays that the Decision dated 2 June 2005 and the Resolution dated 8 December 2005 of the Court of Appeals be reversed and set aside, and a new one be rendered absolving her of any and all liabilities under the Social Security Law. In sum, the core issue to be resolved in this case is whether or not petitioner, as the only surviving director of Impact Corporation, can be made solely liable for the corporate obligations of Impact Corporation pertaining to unremitted SSS premium contributions and penalties therefore. As a covered employer under the Social Security Law, it is the obligation of Impact Corporation under the provisions of Sections 18, 19 and 22 thereof, as amended, to deduct from its duly covered employees monthly salaries their shares as premium contributions and remit the same to the SSS, together with the employers shares of the contributions to the petitioner, for and in their behalf. From all indications, the corporation has already been dissolved. Respondents are now going after petitioner who is the only surviving director of Impact Corporation. A cursory review of the alleged grave errors of law committed by the Court of Appeals above reveals there seems to be no dispute as to the assessed liability of Impact Corporation for the unremitted SSS premiums of its employees for the period January 1980 to December 1984. There is also no dispute as to the fact that the employees SSS premium contributions have been deducted from their salaries by Impact Corporation. Petitioner in assailing the Court of Appeals Decision, distinguishes the penalties from the unremitted or unpaid SSS premium contributions. She points out that although the appellate court is of the opinion that the concerned officers of an employer corporation are liable for the penalties for non-remittance of premiums, it still affirmed the SSC Resolution holding petitioner liable for the unpaid SSS premium contributions in addition to the penalties. Petitioner avers that under the aforesaid provision, the liability does not include liability for the unremitted SSS premium contributions.

Petitioners argument is ridiculous. The interpretation petitioner would like us to adopt finds no support in law or in jurisprudence. While the Court of Appeals Decision provided that Section 28(f) refers to the liabilities pertaining to penalty for the non-remittance of SSS employee contributions, holding that it is distinct from the amount of the supposed SSS remittances, petitioner mistakenly concluded that Section 28(f) is applicable only to penalties and not to the liability of the employer for the unremitted premium contributions. Clearly, a simplistic interpretation of the law is untenable. It is a rule in statutory construction that every part of the statute must be interpreted with reference to the context, i.e., that every part of the statute must be considered together with the other parts, and kept subservient to the general intent of the whole enactment.23 The liability imposed as contemplated under the foregoing Section 28(f) of the Social Security Law does not preclude the liability for the unremitted amount. Relevant to Section 28(f) is Section 22 of the same law. SEC. 22. Remittance of Contributions. -- (a) The contributions imposed in the preceding Section shall be remitted to the SSS within the first ten (10) days of each calendar month following the month for which they are applicable or within such time as the Commission may prescribe. Every employer required to deduct and to remit such contributions shall be liable for their payment and if any contribution is not paid to the SSS as herein prescribed, he shall pay besides the contribution a penalty thereon of three percent (3%) per month from the date the contribution falls due until paid. If deemed expedient and advisable by the Commission, the collection and remittance of contributions shall be made quarterly or semi-annually in advance, the contributions payable by the employees to be advanced by their respective employers: Provided, That upon separation of an employee, any contribution so paid in advance but not due shall be credited or refunded to his employer. Under Section 22(a), every employer is required to deduct and remit such contributions penalty refers to the 3% penalty that automatically attaches to the delayed SSS premium contributions. The spirit, rather than the letter of a law determines construction of a provision of law. It is a cardinal rule in statutory construction that in interpreting the meaning and scope of a term used in the law, a careful review of the whole law involved, as well as the intendment of the law, must be made.24 Nowhere in the provision or in the Decision can it be inferred that the persons liable are absolved from paying the unremitted premium contributions. Elementary is the rule that when laws or rules are clear, it is incumbent upon the judge to apply them regardless of personal belief or predilections - when the law is unambiguous and unequivocal, application not interpretation thereof is imperative.25 However, where the language of a statute is vague and ambiguous, an interpretation thereof is resorted to. An interpretation thereof is necessary in instances where a literal interpretation would be either impossible or absurd or would lead to an injustice. A law is deemed ambiguous when it is capable of being understood by reasonably well-informed persons in either of two or more senses.26 The fact that a law admits of different interpretations is the best evidence that it is vague and ambiguous.27 In the instant case, petitioner interprets Section 28(f) of the Social Security Law as applicable only to penalties and not to the liability of the employer for the unremitted premium contributions. Respondents present a more logical interpretation that is consistent with the provisions as a whole and with the legislative intent behind the Social Security Law.

This Court cannot be made to accept an interpretation that would defeat the intent of the law and its legislators.28 Petitioner also challenges the finding of the Court of Appeals that under Section 28(f) of the Social Security Law, a mere director or officer of an employer corporation, and not necessarily a "managing" director or officer, can be held liable for the unpaid SSS premium contributions. Section 28(f) of the Social Security Law provides the following: (f) If the act or omission penalized by this Act be committed by an association, partnership, corporation or any other institution, its managing head, directors or partners shall be liable to the penalties provided in this Act for the offense. This Court agrees in petitioners observation that the SSS did not even deny nor rebut the claim that petitioner was not the "managing head" of Impact Corporation. However, the Court of Appeals rightly held that petitioner, as a director of Impact Corporation, is among those officers covered by Section 28(f) of the Social Security Law. Petitioner invokes the rule in statutory construction called ejusdem generic; that is, where general words follow an enumeration of persons or things, by words of a particular and specific meaning, such general words are not to be construed in their widest extent, but are to be held as applying only to persons or things of the same kind or class as those specifically mentioned. According to petitioner, to be held liable under Section 28(f) of the Social Security Law, one must be the "managing head," "managing director," or "managing partner." This Court though finds no need to resort to statutory construction. Section 28(f) of the Social Security Law imposes penalty on: (1) the managing head; (2) directors; or (3) partners, for offenses committed by a juridical person The said provision does not qualify that the director or partner should likewise be a "managing director" or "managing partner."29 The law is clear and unambiguous. Petitioner nonetheless raises the defense that under Section 31 of the Corporation Code, only directors, trustees or officers who participate in unlawful acts or are guilty of gross negligence and bad faith shall be personally liable, and that being a mere stockholder, she is liable only to the extent of her subscription. Section 31 of the Corporation Code, stipulating on the liability of directors, trustees, or officers, provides: SEC. 31. Liability of directors, trustees or officers. - Directors or trustees who willfully and knowingly vote for or assent to patently unlawful acts of the corporation or who are guilty of gross negligence or bad faith in directing the affairs of the corporation or

acquire any personal or pecuniary interest in conflict with their duty as such directors, or trustees shall be liable jointly and severally for all damages resulting therefrom suffered by the corporation, its stockholders or members and other persons. Basic is the rule that a corporation is invested by law with a personality separate and distinct from that of the persons composing it as well as from that of any other legal entity to which it may be related. A corporation is a juridical entity with legal personality separate and distinct from those acting for and in its behalf and, in general, from the people comprising it. Following this, the general rule applied is that obligations incurred by the corporation, acting through its directors, officers and employees, are its sole liabilities.30 A director, officer, and employee of a corporation are generally not held personally liable for obligations incurred by the corporation. Being a mere fiction of law, however, there are peculiar situations or valid grounds that can exist to warrant the disregard of its independent being and the lifting of the corporate veil. This situation might arise when a corporation is used to evade a just and due obligation or to justify a wrong, to shield or perpetrate fraud, to carry out other similar unjustifiable aims or intentions, or as a subterfuge to commit injustice and so circumvent the law.31 Thus, Section 31 of the Corporation Law provides: Taking a cue from the above provision, a corporate director, a trustee or an officer, may be held solidarily liable with the corporation in the following instances: 1. When directors and trustees or, in appropriate cases, the officers of a corporation-(a) vote for or assent to patently unlawful acts of the corporation; (b) act in bad faith or with gross negligence in directing the corporate affairs; (c) are guilty of conflict of interest to the prejudice of the corporation, its stockholders or members, and other persons. 2. When a director or officer has consented to the issuance of watered stocks or who, having knowledge thereof, did not forthwith file with the corporate secretary his written objection thereto. 3. When a director, trustee or officer has contractually agreed or stipulated to hold himself personally and solidarily liable with the Corporation. 4. When a director, trustee or officer is made, by specific provision of law, personally liable for his corporate action. 32 The aforesaid provision states: SEC. 31. Liability of directors, trustees or officers. - Directors or trustees who willfully and knowingly vote for or assent to patently unlawful acts of the corporation or who are

guilty of gross negligence or bad faith in directing the affairs of the corporation or acquire any personal or pecuniary interest in conflict with their duty as such directors, or trustees shall be liable jointly and severally for all damages resulting therefrom suffered by the corporation, its stockholders or members and other persons. The situation of petitioner, as a director of Impact Corporation when said corporation failed to remit the SSS premium contributions falls exactly under the fourth situation. Section 28(f) of the Social Security Law imposes a civil liability for any act or omission pertaining to the violation of the Social Security Law, to wit: (f) If the act or omission penalized by this Act be committed by an association, partnership, corporation or any other institution, its managing head, directors or partners shall be liable to the penalties provided in this Act for the offense. In fact, criminal actions for violations of the Social Security Law are also provided under the Revised Penal Code. The Social Security Law provides, in Section 28 thereof, to wit: (h) Any employer who, after deducting the monthly contributions or loan amortizations from his employees compensation, fails to remit the said deductions to the SSS within thirty (30) days from the date they became due shall be presumed to have misappropriated such contributions or loan amortizations and shall suffer the penalties provided in Article Three hundred fifteen of the Revised Penal Code. (i) Criminal action arising from a violation of the provisions of this Act may be commenced by the SSS or the employee concerned either under this Act or in appropriate cases under the Revised Penal Code: x x x. Respondents would like this Court to apply another exception to the rule that the persons comprising a corporation are not personally liable for acts done in the performance of their duties. The Court of Appeals in the appealed Decision stated: Anent the unpaid SSS contributions of Impact Corporations employees, the officers of a corporation are liable in behalf of a corporation, which no longer exists or has ceased operations. Although as a rule, the officers and members of a corporation are not personally liable for acts done in performance of their duties, this rule admits of exception, one of which is when the employer corporation is no longer existing and is unable to satisfy the judgment in favor of the employee, the officers should be held liable for acting on behalf of the corporation. Following the foregoing pronouncement, petitioner, as one of the directors of Impact Corporation, together with the other directors of the defunct corporation, are liable for the unpaid SSS contributions of their employees.33 On the other hand, the SSC, in its Resolution, presented this discussion:

Although as a rule, the officers and members of a corporation are not personally liable for acts done in the performance of their duties, this rule admits of exceptions, one of which is when the employer corporation is no longer existing and is unable to satisfy the judgment in favor of the employee, the officers should be held liable for acting on behalf of the corporation. x x x.34 The rationale cited by respondents in the two preceding paragraphs need not have been applied because the personal liability for the unremitted SSS premium contributions and the late penalty thereof attaches to the petitioner as a director of Impact Corporation during the period the amounts became due and demandable by virtue of a direct provision of law. Petitioners defense that since Impact Corporation suffered irreversible economic losses, and by reason of fortuitous events, she should be absolved from liability, is also untenable. The evidence adduced totally belies this claim. A reference to the copy of the Petition for Suspension of Payments filed by Impact Corporation on 18 March 1983 before the SEC contained an admission that: "[I]t has been and still is engaged in business" and "has been and still is engaged in the business of manufacturing aluminum tube containers" and "in brief, it is an on-going, viable, and profitable enterprise" which has "sufficient assets" and "actual and potential income-generation capabilities." The foregoing document negates petitioners assertion and supports the contention that during the period involved Impact Corporation was still engaged in business and was an ongoing, viable, profitable enterprise. In fact, the latest SSS form RIA submitted by Impact Corporation is dated 7 May 1984. The assessed SSS premium contributions and penalty are obligations imposed upon Impact Corporation by law, and should have been remitted to the SSS within the first 10 days of each calendar month following the month for which they are applicable or within such time as the SSC prescribes.35 This Court also notes the evident failure on the part of SSS to issue a judgment in default against Ricardo de Leon, who was the vice-president and officer of the corporation, upon his non-filing of a responsive pleading after summons was served on him. As can be gleaned from Section 11 of the SSS Revised Rules of Procedure, the Commissioner is mandated to render a decision either granting or denying the petition. Under the aforesaid provision, if respondent fails to answer within the time prescribed, the Hearing Commissioner may, upon motion of petitioner, or motu proprio, declare respondent in default and proceed to receive petitioners evidence ex parte and thereafter recommend to the Commission either the granting or denial of the petition as the evidence may warrant.36 On a final note, this Court sees it proper to quote verbatim respondents prefatory statement in their Comment: The Social Security System is a government agency imbued with a salutary purpose to carry out the policy of the State to establish, develop, promote and perfect a sound and viable tax exempt social security system suitable to the needs of the people throughout

the Philippines which shall promote social justice and provide meaningful protection to members and their beneficiaries against the hazards of disability, sickness, maternity, oldage, death and other contingencies resulting in loss of income or financial burden. The soundness and viability of the funds of the SSS in turn depends on the contributions of its covered employee and employer members, which it invests in order to deliver the basic social benefits and privileges to its members. The entitlement to and amount of benefits and privileges of the covered members are contribution-based. Both the soundness and viability of the funds of the SSS as well as the entitlement and amount of benefits and privileges of its members are adversely affected to a great extent by the nonremittance of the much-needed contributions.37 The sympathy of the law on social security is toward its beneficiaries. This Court will not turn a blind eye on the perpetration of injustice. This Court cannot and will not allow itself to be made an instrument nor be privy to any attempt at the perpetration of injustice. Following the doctrine laid down in Laguna Transportation Co., Inc. v. Social Security System,38 this Court rules that although a corporation once formed is conferred a juridical personality separate and distinct from the persons comprising it, it is but a legal fiction introduced for purposes of convenience and to subserve the ends of justice. The concept cannot be extended to a point beyond its reasons and policy, and when invoked in support of an end subversive of this policy, will be disregarded by the courts. WHEREFORE, pursuant to the foregoing, the Decision of the Court of Appeals dated 2 June 2005 in CA-G.R. SP No. 85923 is hereby AFFIRMED WITH FINALITY. Petitioner Immaculada L. Garcia, as sole surviving director of Impact Corporation is hereby ORDERED to pay for the collected and unremitted SSS contributions of Impact Corporation. The case is REMANDED to the SSS for computation of the exact amount and collection thereof. SO ORDERED.

G.R. No. 163448. March 08, 2005 NATIONAL FOOD AUTHORITY (NFA), and JUANITO M. DAVID, in his capacity as Regional Director, NFA Regional Office No. 1, San Juan, La Union, Petitioners, vs. MASADA SECURITY AGENCY, INC., represented by its Acting President & General Manager, COL. EDWIN S. ESPEJO (RET.), Respondents. DECISION YNARES-SANTIAGO, J.: Assailed in this petition for review under Rule 45 of the Rules of Court is the February 12, 2004 decision1 of the Court of Appeals in CA-G.R. CV No. 76677, which dismissed the appeal filed by petitioner National Food Authority (NFA) and its April 30, 2004 resolution denying petitioners motion for reconsideration. The antecedent facts show that on September 17, 1996, respondent MASADA Security Agency, Inc., entered into a one year2 contract3 to provide security services to the various offices, warehouses and installations of NFA within the scope of the NFA Region I, comprised of the provinces of Pangasinan, La Union, Abra, Ilocos Sur and Ilocos Norte. Upon the expiration of said contract, the parties extended the effectivity thereof on a monthly basis under same terms and condition.4 Meanwhile, the Regional Tripartite Wages and Productivity Board issued several wage orders mandating increases in the daily wage rate. Accordingly, respondent requested NFA for a corresponding upward adjustment in the monthly contract rate consisting of the increases in the daily minimum wage of the security guards as well as the corresponding raise in their overtime pay, holiday pay, 13th month pay, holiday and rest day pay. It also claimed increases in Social Security System (SSS) and Pag-ibig premiums as well as in the administrative costs and margin. NFA, however, granted the request only with respect to the increase in the daily wage by multiplying the amount of the mandated increase by 30 days and denied the same with respect to the adjustments in the other benefits and remunerations computed on the basis of the daily wage. Respondent sought the intervention of the Office of the Regional Director, Regional Office No. I, La Union, as Chairman of the Regional Tripartite Wages and Productivity Board and the DOLE Secretary through the Executive Director of the National Wages and Productivity Commission. Despite the advisory5 of said offices sustaining the claim of respondent that the increase mandated by Republic Act No. 6727 (RA 6727) and the wage orders issued by the RTWPB is not limited to the daily pay, NFA maintained its stance that it is not liable to pay the corresponding adjustments in the wage related benefits of respondents security guards. On May 4, 2001, respondent filed with the Regional Trial Court of Quezon, City, Branch 83, a case for recovery of sum of money against NFA. Docketed as Civil Case No. Q-01-43988, the complaint6 sought reimbursement of the following amounts allegedly paid by respondent to the security guards, to wit: P2,949,302.84, for unpaid wage related benefits brought about by the

effectivity of Wage Order Nos. RB 1-05 and RB CAR-04;7 RB 1-06 and RB CAR-05;8 RB 1-07 and RB CAR-06;9 and P975,493.04 for additional cost and margin, plus interest. It also prayed for damages and litigation expenses.10 In its answer with counterclaim,11 NFA denied that respondent paid the security guards their wage related benefits and that it shouldered the additional costs and margin arising from the implementation of the wage orders. It admitted, however, that it heeded respondents request for adjustment only with respect to increase in the minimum wage and not with respect to the other wage related benefits. NFA argued that respondent cannot demand an adjustment on said salary related benefits because it is bound by their contract expressly limiting NFAs obligation to pay only the increment in the daily wage. At the pre-trial, the only issue raised was whether or not respondent is entitled to recover from NFA the wage related benefits of the security guards.12 On September 19, 2002, the trial court rendered a decision13 in favor of respondent holding that NFA is liable to pay the security guards wage related benefits pursuant to RA 6727, because the basis of the computation of said benefits, like overtime pay, holiday pay, SSS and Pag-ibig premium, is the increased minimum wage. It also found NFA liable for the consequential adjustments in administrative costs and margin. The trial court absolved defendant Juanito M. David having been impleaded in his official capacity as Regional Director of NFA Regional Office No. 1, San Juan, La Union. The dispositive portion thereof, reads: WHEREFORE, judgment is hereby rendered in favor of plaintiff MASADA Security Agency, Inc., and against defendant National Food Authority ordering said defendant to make the corresponding adjustment in the contract price in accordance with the increment mandated under the various wage orders, particularly Wage Order Nos. RBI-05, RBCAR-04, RBI-06, RBCAR05, RBI-07 and RBCAR-06 and to pay plaintiff the amounts representing the adjustments in the wage-related benefits of the security guards and consequential increase in its administrative cost and margin upon presentment by plaintiff of the corresponding voucher claims. Plaintiffs claims for damages and attorneys fees and defendants counterclaim for damages are hereby denied. Defendant Juanito M. David is hereby absolved from any liability. SO ORDERED.14 NFA appealed to the Court of Appeals but the same was dismissed on February 12, 2004. The appellate court held that the proper recourse of NFA is to file a petition for review under Rule 45 with this Court, considering that the appeal raised a pure question of law. Nevertheless, it proceeded to discuss the merits of the case for "purposes of academic discussion" and eventually sustained the ruling of the trial court that NFA is under obligation to pay the administrative costs and margin and the wage related benefits of the respondents security guards.15

On April 30, 2004, the Court of Appeals denied NFAs motion for reconsideration.16 Hence, the instant petition. The issue for resolution is whether or not the liability of principals in service contracts under Section 6 of RA 6727 and the wage orders issued by the Regional Tripartite Wages and Productivity Board is limited only to the increment in the minimum wage. At the outset, it should be noted that the proper remedy of NFA from the adverse decision of the trial court is a petition for review under Rule 45 directly with this Court because the issue involved a question of law. However, in the interest of justice we deem it wise to overlook the procedural technicalities if only to demonstrate that despite the procedural infirmity, the instant petition is impressed with merit.17 RA 672718 (Wage Rationalization Act), which took effect on July 1, 1989,19 declared it a policy of the State to rationalize the fixing of minimum wages and to promote productivityimprovement and gain-sharing measures to ensure a decent standard of living for the workers and their families; to guarantee the rights of labor to its just share in the fruits of production; to enhance employment generation in the countryside through industrial dispersal; and to allow business and industry reasonable returns on investment, expansion and growth.20 In line with its declared policy, RA 6727, created the National Wages and Productivity Commission (NWPC),21 vested, inter alia, with the power to prescribe rules and guidelines for the determination of appropriate minimum wage and productivity measures at the regional, provincial or industry levels;22 and the Regional Tripartite Wages and Productivity Boards (RTWPB) which, among others, determine and fix the minimum wage rates applicable in their respective region, provinces, or industries therein and issue the corresponding wage orders, subject to the guidelines issued by the NWPC.23 Pursuant to its wage fixing authority, the RTWPB issue wage orders which set the daily minimum wage rates.24 Payment of the increases in the wage rate of workers is ordinarily shouldered by the employer. Section 6 of RA 6727, however, expressly lodged said obligation to the principals or indirect employers in construction projects and establishments providing security, janitorial and similar services. Substantially the same provision is incorporated in the wage orders issued by the RTWPB.25 Section 6 of RA 6727, provides: SEC. 6. In the case of contracts for construction projects and for security, janitorial and similar services, the prescribed increases in the wage rates of the workers shall be borne by the principals or clients of the construction/service contractors and the contract shall be deemed amended accordingly. In the event, however, that the principal or client fails to pay the prescribed wage rates, the construction/service contractor shall be jointly and severally liable with his principal or client. (Emphasis supplied) NFA claims that its additional liability under the aforecited provision is limited only to the payment of the increment in the statutory minimum wage rate, i.e., the rate for a regular eight (8) hour work day.

The contention is meritorious. In construing the word "wage" in Section 6 of RA 6727, reference must be had to Section 4 (a) of the same Act. It states: SEC. 4. (a) Upon the effectivity of this Act, the statutory minimum wage rates for all workers and employees in the private sector, whether agricultural or non-agricultural, shall be increased by twenty-five pesos (P25) per day (Emphasis supplied) The term "wage" as used in Section 6 of RA 6727 pertains to no other than the "statutory minimum wage" which is defined under the Rules Implementing RA 6727 as the lowest wage rate fixed by law that an employer can pay his worker.26 The basis thereof under Section 7 of the same Rules is the normal working hours, which shall not exceed eight hours a day. Hence, the prescribed increases or the additional liability to be borne by the principal under Section 6 of RA 6727 is the increment or amount added to the remuneration of an employee for an 8-hour work. Expresio unius est exclusio alterius. Where a statute, by its terms, is expressly limited to certain matters, it may not, by interpretation or construction, be extended to others.27 Since the increase in wage referred to in Section 6 pertains to the "statutory minimum wage" as defined herein, principals in service contracts cannot be made to pay the corresponding wage increase in the overtime pay, night shift differential, holiday and rest day pay, premium pay and other benefits granted to workers. While basis of said remuneration and benefits is the statutory minimum wage, the law cannot be unduly expanded as to include those not stated in the subject provision. The settled rule in statutory construction is that if the statute is clear, plain and free from ambiguity, it must be given its literal meaning and applied without interpretation. This plain meaning rule or verba legis derived from the maxim index animi sermo est (speech is the index of intention) rests on the valid presumption that the words employed by the legislature in a statute correctly express its intention or will and preclude the court from construing it differently. The legislature is presumed to know the meaning of the words, to have used words advisedly, and to have expressed its intent by use of such words as are found in the statute. Verba legis non est recedendum, or from the words of a statute there should be no departure.28 The presumption therefore is that lawmakers are well aware that the word "wage" as used in Section 6 means the statutory minimum wage. If their intention was to extend the obligation of principals in service contracts to the payment of the increment in the other benefits and remuneration of workers, it would have so expressly specified. In not so doing, the only logical conclusion is that the legislature intended to limit the additional obligation imposed on principals in service contracts to the payment of the increment in the statutory minimum wage. The general rule is that construction of a statute by an administrative agency charged with the task of interpreting or applying the same is entitled to great weight and respect. The Court, however, is not bound to apply said rule where such executive interpretation, is clearly erroneous, or when there is no ambiguity in the law interpreted, or when the language of the words used is clear and plain, as in the case at bar. Besides, administrative interpretations are at best advisory for it is the Court that finally determines what the law means.29 Hence, the

interpretation given by the labor agencies in the instant case which went as far as supplementing what is otherwise not stated in the law cannot bind this Court. It is not within the province of this Court to inquire into the wisdom of the law for indeed, we are bound by the words of the statute.30 The law is applied as it is. At any rate, the interest of the employees will not be adversely affected if the obligation of principals under the subject provision will be limited to the increase in the statutory minimum wage. This is so because all remuneration and benefits other than the increased statutory minimum wage would be shouldered and paid by the employer or service contractor to the workers concerned. Thus, in the end, all allowances and benefits as computed under the increased rate mandated by RA 6727 and the wage orders will be received by the workers. Moreover, the law secures the welfare of the workers by imposing a solidary liability on principals and the service contractors. Under the second sentence of Section 6 of RA 6727, in the event that the principal or client fails to pay the prescribed wage rates, the service contractor shall be held solidarily liable with the former. Likewise, Articles 106, 107 and 109 of the Labor Code provides: ART. 106. Contractor or Subcontractor. Whenever an employer enters into contract with another person for the performance of the formers work, the employees of the contractor and of the latters subcontractor, if any, shall be paid in accordance with the provisions of this Code. In the event that the contractor or subcontractor fails to pay the wage of his employees in accordance with this Code, the employer shall be jointly and severally liable with his contractor or subcontractor to such employees to the extent of the work performed under the contract, in the same manner and extent that he is liable to employees directly employed by him. ART. 107. Indirect Employer. The provisions of the immediately preceding Article shall likewise apply to any person, partnership, association or corporation which, not being an employer, contracts with an independent contractor for the performance of any work, task, job or project. ART. 109. Solidary Liability. The provisions of existing laws to the contrary notwithstanding, every employer or indirect employer shall be held responsible with his contractor or subcontractor for any violation of any provision of this Code. For purposes of determining the extent of their civil liability under this Chapter, they shall be considered as direct employers. Based on the foregoing interpretation of Section 6 of RA 6727, the parties may enter into stipulations increasing the liability of the principal. So long as the minimum obligation of the principal, i.e., payment of the increased statutory minimum wage is complied with, the Wage Rationalization Act is not violated. In the instant case, Article IV.4 of the service contract provides:

IV.4. In the event of a legislated increase in the minimum wage of security guards and/or in the PADPAO rate, the AGENCY may negotiate for an adjustment in the contract price. Any adjustment shall be applicable only to the increment, based on published and circulated rates and not on mere certification.31 In the same vein, paragraph 3 of NFA Memorandum AO-98-03- states: 3. For purposes of wage adjustments, consider only the rate based on the wage Order issued by the Regional Tripartite Wage Productivity Board (RTWPB). Unless otherwise provided in the Wage Order issued by the RTWPB, the wage adjustment shall be limited to the increment in the legislated minimum wage;32 The parties therefore acknowledged the application to their contract of the wage orders issued by the RTWPB pursuant to RA 6727. There being no assumption by NFA of a greater liability than that mandated by Section 6 of the Act, its obligation is limited to the payment of the increased statutory minimum wage rates which, as admitted by respondent, had already been satisfied by NFA.33 Under Article 1231 of the Civil Code, one of the modes of extinguishing an obligation is by payment. Having discharged its obligation to respondent, NFA no longer have a duty that will give rise to a correlative legal right of respondent. The latters complaint for collection of remuneration and benefits other than the increased minimum wage rate, should therefore be dismissed for lack of cause of action. The same goes for respondents claim for administrative cost and margin. Considering that respondent failed to establish a clear obligation on the part of NFA to pay the same as well as to substantiate the amount thereof with documentary evidence, the claim should be denied. WHEREFORE, the petition is GRANTED. The February 12, 2004 decision and the April 30, 2004 resolution of the Court of Appeals which dismissed petitioner National Food Authoritys appeal and motion for reconsideration, respectively, in CA-G.R. CV No. 76677, are REVERSED and SET ASIDE. The complaint filed by respondent MASADA Security Agency, Inc., docketed as Civil Case No. Q-01-43988, before the Regional Trial Court of Quezon, City, Branch 83, is ordered DISMISSED. SO ORDERED. Davide Jr., C.J., (Chairman), Quisumbing, Carpio and Azcuna, JJ., concur.

G.R. No. L-39419 April 12, 1982 MAPALAD AISPORNA, Petitioner, vs. THE COURT OF APPEALS and THE PEOPLE OF THE PHILIPPINES, Respondents.

DE CASTRO, J.:

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In this petition for certiorari, petitioner-accused Aisporna seeks the reversal of the decision dated August 14, 1974 1 in CA-G.R. No. 13243-CR entitled "People of the Philippines, PlaintiffAppellee, vs. Mapalad Aisporna, defendant-appellant" of respondent Court of Appeals affirming the judgment of the City Court of Cabanatuan 2 rendered on August 2, 1971 which found the petitioner guilty for having violated Section 189 of the Insurance Act (Act No. 2427, as amended) and sentenced her to pay a fine of P500.00 with subsidiary imprisonment in case of insolvency, and to pay the costs.
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Petitioner Aisporna was charged in the City Court of Cabanatuan for violation of Section 189 of the Insurance Act on November 21, 1970 in an information 3 which reads as follows:
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That on or before the 21st day of June, 1969, in the City of Cabanatuan, Republic of the Philippines, and within the jurisdiction of this Honorable Court, the above-named accused, did then and there, wilfully, unlawfully and feloniously act as agent in the solicitation or procurement of an application for insurance by soliciting therefor the application of one Eugenio S. Isidro, for and in behalf of Perla Compania de Seguros, Inc., a duly organized insurance company, registered under the laws of the Republic of the Philippines, resulting in the issuance of a Broad Personal Accident Policy No. 28PI-RSA 0001 in the amount not exceeding FIVE THOUSAND PESOS (P5,000.00) dated June 21, 1969, without said accused having first secured a certificate of authority to act as such agent from the office of the Insurance Commissioner, Republic of the Philippines.
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CONTRARY TO LAW. The facts, 4 as found by the respondent Court of Appeals are quoted hereunder:
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IT RESULTING: That there is no debate that since 7 March, 1969 and as of 21 June, 1969, appellant's husband, Rodolfo S. Aisporna was duly licensed by Insurance Commission as agent to Perla Compania de Seguros, with license to expire on 30 June, 1970, Exh. C; on that date, at Cabanatuan City, Personal Accident Policy, Exh. D was issued by Perla thru its author representative, Rodolfo S. Aisporna, for a period of twelve (12) months with beneficiary as Ana M. Isidro, and for P5,000.00; apparently, insured died by violence during lifetime of policy, and for reasons not explained in record, present information was filed by Fiscal, with assistance of private prosecutor, charging wife of Rodolfo with violation of Sec. 189 of Insurance Law for having, wilfully, unlawfully, and feloniously acted, "as agent in the solicitation for insurance by soliciting therefore the application of one Eugenio S. Isidro for and in behalf of Perla Compaa

de Seguros, ... without said accused having first secured a certificate of authority to act as such agent from the office of the Insurance Commission, Republic of the Philippines."
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and in the trial, People presented evidence that was hardly disputed, that aforementioned policy was issued with active participation of appellant wife of Rodolfo, against which appellant in her defense sought to show that being the wife of true agent, Rodolfo, she naturally helped him in his work, as clerk, and that policy was merely a renewal and was issued because Isidro had called by telephone to renew, and at that time, her husband, Rodolfo, was absent and so she left a note on top of her husband's desk to renew ... Consequently, the trial court found herein petitioner guilty as charged. On appeal, the trial court's decision was affirmed by the respondent appellate court finding the petitioner guilty of a violation of the first paragraph of Section 189 of the Insurance Act. Hence, this present recourse was filed on October 22, 1974. 5
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In its resolution of October 28, 1974, 6 this Court resolved, without giving due course to this instant petition, to require the respondent to comment on the aforesaid petition. In the comment 7 filed on December 20, 1974, the respondent, represented by the Office of the Solicitor General, submitted that petitioner may not be considered as having violated Section 189 of the Insurance Act. 8 On April 3, 1975, petitioner submitted his Brief 9 while the Solicitor General, on behalf of the respondent, filed a manifestation 10 in lieu of a Brief on May 3, 1975 reiterating his stand that the petitioner has not violated Section 189 of the Insurance Act.
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In seeking reversal of the judgment of conviction, petitioner assigns the following errors 11 allegedly committed by the appellate court:
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1. THE RESPONDENT COURT OF APPEALS ERRED IN FINDING THAT RECEIPT OF COMPENSATION IS NOT AN ESSENTIAL ELEMENT OF THE CRIME DEFINED BY THE FIRST PARAGRAPH OF SECTION 189 OF THE INSURANCE ACT.
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2. THE RESPONDENT COURT OF APPEALS ERRED IN GIVING DUE WEIGHT TO EXHIBITS F, F-1, TO F-17, INCLUSIVE SUFFICIENT TO ESTABLISH PETITIONER'S GUILT BEYOND REASONABLE DOUBT.
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3. THE RESPONDENT COURT OF APPEALS ERRED IN NOT ACQUITTING HEREIN PETITIONER. We find the petition meritorious.
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The main issue raised is whether or not a person can be convicted of having violated the first paragraph of Section 189 of the Insurance Act without reference to the second paragraph of the same section. In other words, it is necessary to determine whether or not the agent mentioned in the first paragraph of the aforesaid section is governed by the definition of an insurance agent found on its second paragraph.
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The pertinent provision of Section 189 of the Insurance Act reads as follows:

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No insurance company doing business within the Philippine Islands, nor any agent thereof, shall pay any commission or other compensation to any person for services in obtaining new insurance, unless such person shall have first procured from the Insurance Commissioner a certificate of authority to act as an agent of such company as hereinafter provided. No person shall act as agent, sub-agent, or broker in the solicitation of procurement of applications for insurance, or receive for services in obtaining new insurance, any commission or other compensation from any insurance company doing business in the Philippine Islands, or agent thereof, without first procuring a certificate of authority so to act from the Insurance Commissioner, which must be renewed annually on the first day of January, or within six months thereafter. Such certificate shall be issued by the Insurance Commissioner only upon the written application of persons desiring such authority, such application being approved and countersigned by the company such person desires to represent, and shall be upon a form approved by the Insurance Commissioner, giving such information as he may require. The Insurance Commissioner shall have the right to refuse to issue or renew and to revoke any such certificate in his discretion. No such certificate shall be valid, however, in any event after the first day of July of the year following the issuing of such certificate. Renewal certificates may be issued upon the application of the company.
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Any person who for compensation solicits or obtains insurance on behalf of any insurance company, or transmits for a person other than himself an application for a policy of insurance to or from such company or offers or assumes to act in the negotiating of such insurance, shall be an insurance agent within the intent of this section, and shall thereby become liable to all the duties, requirements, liabilities, and penalties to which an agent of such company is subject.
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Any person or company violating the provisions of this section shall be fined in the sum of five hundred pesos. On the conviction of any person acting as agent, sub-agent, or broker, of the commission of any offense connected with the business of insurance, the Insurance Commissioner shall immediately revoke the certificate of authority issued to him and no such certificate shall thereafter be issued to such convicted person. A careful perusal of the above-quoted provision shows that the first paragraph thereof prohibits a person from acting as agent, sub-agent or broker in the solicitation or procurement of applications for insurance without first procuring a certificate of authority so to act from the Insurance Commissioner, while its second paragraph defines who is an insurance agent within the intent of this section and, finally, the third paragraph thereof prescribes the penalty to be imposed for its violation.
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The respondent appellate court ruled that the petitioner is prosecuted not under the second paragraph of Section 189 of the aforesaid Act but under its first paragraph. Thus chanrobles virtual law library

... it can no longer be denied that it was appellant's most active endeavors that resulted in issuance of policy to Isidro, she was there and then acting as agent, and received the pay thereof her defense that she was only acting as helper of her husband can no longer be sustained, neither her point that she received no compensation for issuance of the policy because

any person who for compensation solicits or obtains insurance on behalf of any insurance company or transmits for a person other than himself an application for a policy of insurance to or from such company or offers or assumes to act in the negotiating of such insurance, shall be an insurance agent within the intent of this section, and shall thereby become liable to all the duties, requirements, liabilities, and penalties, to which an agent of such company is subject. paragraph 2, Sec. 189, Insurance Law, now it is true that information does not even allege that she had obtained the insurance, for compensation which is the gist of the offense in Section 189 of the Insurance Law in its 2nd paragraph, but what appellant apparently overlooks is that she is prosecuted not under the 2nd but under the 1st paragraph of Sec. 189 wherein it is provided that, No person shall act as agent, sub-agent, or broker, in the solicitation or procurement of applications for insurance, or receive for services in obtaining new insurance any commission or other compensation from any insurance company doing business in the Philippine Island, or agent thereof, without first procuring a certificate of authority to act from the insurance commissioner, which must be renewed annually on the first day of January, or within six months thereafter. therefore, there was no technical defect in the wording of the charge, so that Errors 2 and 4 must be overruled. 12
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From the above-mentioned ruling, the respondent appellate court seems to imply that the definition of an insurance agent under the second paragraph of Section 189 is not applicable to the insurance agent mentioned in the first paragraph. Parenthetically, the respondent court concludes that under the second paragraph of Section 189, a person is an insurance agent if he solicits and obtains an insurance for compensation, but, in its first paragraph, there is no necessity that a person solicits an insurance for compensation in order to be called an insurance agent.
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We find this to be a reversible error. As correctly pointed out by the Solicitor General, the definition of an insurance agent as found in the second paragraph of Section 189 is intended to define the word "agent" mentioned in the first and second paragraphs of the aforesaid section. More significantly, in its second paragraph, it is explicitly provided that the definition of an insurance agent is within the intent of Section 189. Hence chanrobles virtual law library

Any person who for compensation ... shall be an insurance agent within the intent of this section, ... Patently, the definition of an insurance agent under the second paragraph holds true with respect to the agent mentioned in the other two paragraphs of the said section. The second paragraph of Section 189 is a definition and interpretative clause intended to qualify the term "agent" mentioned in both the first and third paragraphs of the aforesaid section.
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Applying the definition of an insurance agent in the second paragraph to the agent mentioned in the first and second paragraphs would give harmony to the aforesaid three paragraphs of Section 189. Legislative intent must be ascertained from a consideration of the statute as a whole. The particular words, clauses and phrases should not be studied as detached and isolated expressions, but the whole and every part of the statute must be considered in fixing the meaning of any of its parts and in order to produce harmonious whole. 13 A statute must be so construed as to harmonize and give effect to all its provisions whenever possible. 14 The meaning of the law, it must be borne in mind, is not to be extracted from any single part, portion or section or from isolated words and phrases, clauses or sentences but from a general consideration or view of the act as a whole. 15 Every part of the statute must be interpreted with reference to the context. This means that every part of the statute must be considered together with the other parts, and kept subservient to the general intent of the whole enactment, not separately and independently. 16 More importantly, the doctrine of associated words (Noscitur a Sociis) provides that where a particular word or phrase in a statement is ambiguous in itself or is equally susceptible of various meanings, its true meaning may be made clear and specific by considering the company in which it is found or with which it is associated. 17
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Considering that the definition of an insurance agent as found in the second paragraph is also applicable to the agent mentioned in the first paragraph, to receive a compensation by the agent is an essential element for a violation of the first paragraph of the aforesaid section. The appellate court has established ultimately that the petitioner-accused did not receive any compensation for the issuance of the insurance policy of Eugenio Isidro. Nevertheless, the accused was convicted by the appellate court for, according to the latter, the receipt of compensation for issuing an insurance policy is not an essential element for a violation of the first paragraph of Section 189 of the Insurance Act.
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We rule otherwise. Under the Texas Penal Code 1911, Article 689, making it a misdemeanor for any person for direct or indirect compensation to solicit insurance without a certificate of authority to act as an insurance agent, an information, failing to allege that the solicitor was to receive compensation either directly or indirectly, charges no offense. 18 In the case of Bolen vs. Stake, 19 the provision of Section 3750, Snyder's Compiled Laws of Oklahoma 1909 is intended to penalize persons only who acted as insurance solicitors without license, and while acting in such capacity negotiated and concluded insurance contracts for compensation. It must be noted that the information, in the case at bar, does not allege that the negotiation of an insurance contracts by the accused with Eugenio Isidro was one for compensation. This allegation is essential, and having been omitted, a conviction of the accused could not be sustained. It is wellsettled in Our jurisprudence that to warrant conviction, every element of the crime must be alleged and proved. 20
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After going over the records of this case, We are fully convinced, as the Solicitor General maintains, that accused did not violate Section 189 of the Insurance Act.
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WHEREFORE, the judgment appealed from is reversed and the accused is acquitted of the crime charged, with costs de oficio.
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[ G.R. No. 123169. November 4, 1996 DANILO E. PARAS,Petitioner, vs. COMMISSION ON ELECTIONS, Respondent. --> RESOLUTION FRANCISCO, J.: Petitioner Danilo E. Paras is the incumbent Punong Barangay of Pula, Cabanatuan City who won during the last regular barangay election in 1994. A petition for his recall as Punong Barangay was filed by the registered voters of the barangay. Acting on the petition for recall, public respondent Commission on Elections (COMELEC) resolved to approve the petition, scheduled the petition signing on October 14, 1995, and set the recall election on November 13, 1995. 1 At least 29.30% of the registered voters signed the petition, well above the 25% requirement provided by law. The COMELEC, however, deferred the recall election in view of petitioners opposition. On December 6, 1995, the COMELEC set anew the recall election, this time on December 16, 1995. To prevent the holding of the recall election, petitioner filed before the Regional Trial Court of Cabanatuan City a petition for injunction, docketed as SP Civil Action No. 2254-AF, with the trial court issuing a temporary restraining order. After conducting a summary hearing, the trial court lifted the restraining order, dismissed the petition and required petitioner and his counsel to explain why they should not be cited for contempt for misrepresenting that the barangay recall election was without COMELEC approval. 2 In a resolution dated January 5, 1996, the COMELEC, for the third time, re-scheduled the recall election on January 13, 1996; hence, the instant petition for certiorari with urgent prayer for injunction. On January 12, 1996, the Court issued a temporary restraining order and required the Office of the Solicitor General, in behalf of public respondent, to comment on the petition. In view of the Office of the Solicitor Generals manifestation maintaining an opinion adverse to that of the COMELEC, the latter through its law department filed the required comment. Petitioner thereafter filed a reply. 3 Petitioners argument is simple and to the point. Citing Section 74 (b) of Republic Act No. 7160, otherwise known as the Local Government Code, which states that "no recall shall take place within one (1) year from the date of the officials assumption to office or one (1) year immediately preceding a regular local election", petitioner insists that the scheduled January 13, 1996 recall election is now barred as the Sangguniang Kabataan (SK) election was set by Republic Act No. 7808 on the first Monday of May 1996, and every three years thereafter. In support thereof, petitioner cites Associated Labor Union v. Letrondo-Montejo, 237 SCRA 621, where the Court considered the SK election as a regular local election. Petitioner maintains that as the SK election is a regular local election, hence no recall election can be had for barely four months separate the SK election from the recall election. We do not agree. The subject provision of the Local Government Code provides:

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

Finally, recall election is potentially disruptive of the normal working of the local government unit necessitating additional expenses, hence the prohibition against the conduct of recall election one year immediately preceding the regular local election. The proscription is due to the proximity of the next regular election for the office of the local elective official concerned. The electorate could choose the officials replacement in the said election who certainly has a longer tenure in office than a successor elected through a recall election. It would, therefore, be more in keeping with the intent of the recall provision of the Code to construe regular local election as one referring to an election where the office held by the local elective official sought to be recalled will be contested and be filled by the electorate. Nevertheless, recall at this time is no longer possible because of the limitation stated under Section 74 (b) of the Code considering that the next regular election involving the barangay office concerned is barely seven (7) months away, the same having been scheduled on May 1997. 9 ACCORDINGLY, the petition is hereby dismissed for having become moot and academic. The temporary restraining order issued by the Court on January 12, 1996, enjoining the recall election should be as it is hereby made permanent. SO ORDERED.