Atty. Pagaduan F.

Last Antecedent Rule

Statutory Construction 2013

Sumira 1F

EN BANC [G.R. No. 128772. February 3, 2000] RICARDO C. CADAYONA, petitioner, vs. COURT OF APPEALS and THE PROVINCIAL GOVERNOR OF LEYTE, respondents. DECISION GONZAGA_REYES, J.: On January 13, 1997, petitioner Ricardo C. Cadayona filed a Petition for Review with the Court of Appeals to annul Resolution Nos. 96-7418 and 96-2569 of the Civil Service Commission, which affirmed his preventive suspension. The Petition was docketed as CA-G.R. SP. No.43104 entitled "Ricardo C. Cadayona vs. Provincial Governor of Leyte". In a Resolution[1] dated February 19, 1997, the Court of Appeals dismissed the petition outright on the following grounds: a. the certificate of non-forum shopping attached thereto was not executed by the petitioner himself but by his counsel; b. three annexes attached to it (Annexes D, E and F) were mere xerox or plain copies and not certified true copies. On March 31, 1997, the Court of Appeals denied petitioner's motion for reconsideration of the dismissal stating that although there was substantial compliance with the Circular on forum shopping, the failure to submit certified true copies of Annexes D, E and F of the petition is a fatal flaw justifying dismissal of the petition: xxx "The petitioner posits that under the Circular, 'What is required to be certified are the award, judgment, final order or resolution appealed from and material portions of, the record referred to in the petition. The other supporting papers do not have to be certified true copies. He backs up his theory with the so-called doctrine of last antecedent supposedly enunciated in Felipe vs. De la Cruz, 99 Phil. 940, under which the qualifier succeeding phase "such material portions of the record as are referred to therein," and does not include the remote phrase "other supporting papers." Esmm is Petitioner's legal hermeneutics is faulty and his reliance on the Felipe case is misplaced. The term "certified true copies," being the only qualifier in the phrase 'such material portions of the record as are referred to therein and other supporting papers,' must refer to both 'material portions of the record' and 'other supporting papers'. In the Felipe case , there were two qualifiers; hence, it was held that each must refer to the object nearest to it. But even granting that petitioner's interpretation is correct, Annexes "D" (order of suspension), "E" (petitioner's letter refusing to sit and serve as a Page 1 of 65

member of the special committee tasked to inspect/re-inspect the heavy equipment imported from Japan) and "F" (administrative charge against the petitioner) are portions of the record referred to in the petition. They were all mentioned in the Resolution of Civil Service Commission (CSC) Regional Director Vicente-Escarian as well as in the appealed Resolutions of the CSC. The purpose of the requirement that they should have been certified as true copies is to expedite the determination by this Court of whether or not the petition is prima facie meritorious on the basis of authentic documents so as to warrant further action or proceedings. Petitioner's proffered excuse that it was totally impossible to obtain certified true copies of these annexes because the originals are with the respondent deserves no consideration. He could have secured certified true copies from the CSC. What is more, a copy, if not the original, of Annexes "D" and "F" were presumably served on him while Annex "E" is his own le,tter. He can not successfully plead time constraint for his counsel's office and the CSC's are both in Quezon City. The alleged political undertones of the case 'could not have prevented him or his counsel from going to the CSC to obtain the necessary certified true copies. Accordingly, for being fatally flawed under Revised Administrative circular No.1-95, the dismissal of the petition is justified."[2] Esmso Hence this petition where the petitioner assigns the following errors: "I. THE HONORABLE COURT OF APPEALS COMMITTED AN ERROR OF LAW WHEN IT IMPOSED THE REQUIREMENT THAT ALL ANNEXES TO THE PETITION FOR REVIEW BE CERTIFIED. II. THE HONORABLE COURT OF APPEALS COMMITTED AN ERROR OF LAW WHEN IT DISMISSED THE PETITION FOR REVIEW."[3] Petitioner maintains that Administrative Circular 1-95 requires that only copies of the award, judgment, final order or resolution appealed from and material points of record referred in the petition shall be certified; said circular does not require that the annexes be certified true copies. Under the so-called doctrine of last antecedent, the phrase "certified true copies" does not qualify the remote phrase "other supporting papers"; the qualifier phrase "certified true copies" only refers to the immediately succeeding phrase "such material portions of the record as referred to therein". Petitioner further argues that even assuming that some of the annexes he submitted were not certified, the Court of Appeals could still have made a prima facie determination of the case based on the authentic or certified documents. Moreover, the Court of Appeals could have ordered the transmitta1 of certified true copies of the entire record of the proceeding

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under review. Petitioner also alleges that his failure to attach certified true copies of the questioned annexes was excusable. He claims that he only had a limited period of time within which to obtain certified documents after he received the resolution of the Civil Service Commission. This was impossible to do since he had to file his petition with the Court of Appeals on January 13, 1997 but he was only able to engage the services of counsel on January 5, 1997. Finally, petitioner begs that this court liberally construe the rules in his favor given that his appeal was dismissed on a technicality.[4] Mse sm On the other hand, respondents contend that the right to appeal is merely a statutory right and one must comply with the requirements of the law in order to properly exercise said right. Respondent's application of the doctrine of last antecedent is misleading for the proper application of the doctrine shows that the phrase "certified true copies" qualifies the words nearest to it i.e. "such material portion of the record as are referred to therein and other supporting papers" (emphasis supplied). We find merit in the petition. The outright dismissal of the petition for review is a reversible error. A decision of the Civil Service Commission may be appealed to t e Court of Appeals under Section 6 of Rule 43,[5] which provides: "Sec. 6. Contents of the Petition. The petition or review shall (a) state the full names of the parties to the case, without impleading the court or agencies either as petitioners or respondents; (b ) contain a concise statement of the facts and issues involved and the grounds relied upon for the review; (c) be accompanied by a clearly legible duplicate original or a certified true copy of the award, judgment, final order or resolution appealed from, together with certified true copies of such material portions of the record referred to therein and other supporting papers; and (d) contain a sworn certification against forum shopping as provided in the last paragraph of section 2, Rule 42. The petition shall state the specific material dates showing that it was filed within the period fixed herein." The failure of the petitioner to comply with any of the requirements under Rule 43 including the contents of the petition and the documents which should accompany the petition, is a sufficient ground for the dismissal thereof.[6] Ex sm Section 6 of Rule 1 states that the Rules "shall be liberally construed in order to promote their objective of securing a just, speedy and inexpensive disposition of every action and proceeding." In line with this guideline, we do not construe the above-quoted section as imposing the requirement that all supporting papers accompanying the petition should be certified true copies. A comparison of this provision with the counterpart provision Page 2 of 65

in Rule 42 (governing petitions for review from the RTC to the CA) would show that under the latter, only the judgments or final orders of the lower courts need be certified true copies or duplicate originals.[7] Also under Rule 45 of the Rules of Court (governing Appeals by Certiorari to the Supreme Court), only the judgment or final order or resolution accompanying the petition must be a clearly legible duplicate original or a certified true copy thereof certified by the clerk of court of the court a quo.[8] Even under Rule 65 governing certiorari and prohibition, petitions need be accompanied by certified true copies of the questioned judgment,[9] it being sufficient that copies of all other relevant documents should accompany the petition. Numerous resolutions issued by this Court emphasize that in appeals by certiorari under Rules 45 and original civil actions for certiorari under Rule 65 in relation to Rules 46 and 56, what is required to be a certified true copy is the copy of the questioned judgment, final order or resolution.[10] No plausible reason suggests itself why a different treatment, i.e. a stricter requirement, should be given to petitions under Rule 43, which governs appeals from the Court of Tax Appeals and quasi-judicial agencies to the Court of Appeals. None could have been intended by the framers of the Rules. A contrary ruling would be too harsh and would not promote the underlying objective of securing a just, speedy and inexpensive disposition of every action and proceeding. It must be conceded that obtaining certified true copies necessary entails additional expenses that will make litigation more onerous to the litigants. Moreover, certified true copies are not easily procurable and party litigants must wait for a period of time before the certified true copies are released. At any rate, the entire records of the case will eventually be elevated to the appellate court. In giving due course to the petition, we note that the petitioner substantially complied with the requirement of Section 6 since only three (Annexes D,[11] E[12] and F[13]) out of seven annexes were not certified true copies. The allegation of petitioner that the annexes which were certified are the most important to the resolution of the case and a prima facie determination of the merits of the case could have been made on the basis thereof has not been disputed in the comment filed by respondent Provincial Governor. Neither is there any controversion of petitioner's allegation that the original of Annexes "D", "E" and "F" are in the possession of respondent rendering his failure to secure certificates thereof excusable. Kyle The rules of procedure are not to be applied in a very rigid or technical sense, which would frustrate and not promote substantial justice. If a technical and rigid enforcement of the rules were made, their aim would be defeated.[14] Under the circumstances of this case, the Court of Appeals

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should have directed the petitioner to comply with the rule if it doubted the authenticity of some of the supporting documents instead of dismissing the case outright WHEREFORE, the instant petition is hereby GRANTED. The order of the Court of Appeals dismissing the petition of herein petitioner is REVERSED and SET ASIDE and the case is REMANDED to the Court of Appeals for further proceedings. SO ORDERED. Republic of the Philippines SUPREME COURT Manila SECOND DIVISION G.R. No. 78585 July 5, 1989 JOSE ANTONIO MAPA, petitioner, vs. HON. JOKER ARROYO, in his Capacity as Executive Secretary, and LABRADOR DEVELOPMENT CORPORATION, respondents. Francisco T. Mamaug for petitioner. Emiliano S. Samson for private respondent. REGALADO, J.: We are called upon once again, in this special civil action for certiorari, for a pronouncement as to whether or not there has been grave abuse of discretion amounting to lack or excess of jurisdiction on the part of the executive branch of Government, particularly in the adjudication of a controversy originally commenced in one of its regulatory agencies. Petitioner herein seeks the reversal of the decision of the Office of the President, rendered by the Deputy Executive Secretary on April 24,1987, 1 which dismissed his appeal from the resolution of the Commission Proper, Human Settlements Regulatory Commission (HSRC, for short), promulgated on January 10, 1986 and affirming the decision of July 3, 1985 of the Office of Adjudication and Legal Affairs (OAALA, for brevity) of HSRC. Petitioner avers that public respondent "gravely transcended the sphere of his discretion" in finding that Presidential Decree No. 957 is inapplicable to the contracts to sell involved in this case and in consequently dismissing the same. 2 The established facts on which the assailed decision is based are set out therein as follows: Records disclose that, on September 18, 1975, appellant Jose Antonio Mapa and appellee Labrador Development Corporation (Labrador, for short), owner/developer of the Barangay Hills Subdivision in Antipolo, Rizal, entered into two contracts to sell over lots 12 and 13 of said subdivision. On different months in 1976, they again entered into two similar contracts involving lots 15 and 16 in the same subdivision. Under Page 3 of 65

said contracts, Mapa undertook to make a total monthly installment of P2,137.54 over a period of ten (10) years. Mapa, however, defaulted in the payment thereof starting December 1976, prompting Labrador to send to the former a demand letter, dated May 5, 1977, giving him until May 18, 1977, within which to settle his unpaid installments for the 4 lots amounting to P15,411.66, with a warning that non-payment thereof will result in the cancellation of the four (4) contracts. Despite receipt of said letter on May 6,1977, Mapa failed to take any action thereon. Labrador subsequently wrote Mapa another letter, dated June 15, 1982, which the latter received on June 21, 1982, reminding him of his total arrears amounting to P180,065.27 and demanding payment within 5 days from receipt thereof, but which letter Mapa likewise ignored. Thus, on August 16, 1982, Labrador sent Mapa a notarial cancellation of the four (4) contracts to sell, which Mapa received on August 20, 1982. On September 10, 1982, however, Mapa's counsel sent Labrador a letter calling Labrador's attention to, and demanding its compliance with, Clause 20 of the four (4) contracts to sell which relates to Labrador's obligation to provide, among others, lighting/water facilities to subdivision lot buyers. On September 10, 1982, Labrador issued a certification holding the implementation of the letter dated August 16, 1982 (re notarial cancellation) pending the complete development of road lot cul de sac within the properties of Mapa at Barangay Hills Subdivision.' Thereafter on October 25,1982, Labrador sent Mapa a letter informing him 'that the construction of road, sidewalk, curbs and gutters adjacent to Block 11 Barangay Hills Subdivision are already completed' and further requesting Mapa to 'come to our office within five (5) days upon receipt of this letter to settle your account.' On December 10, 1982, Mapa tendered payment by means of a check in the amount of P 2,137.54, but Labrador refused to accept payment for the reason that it was agreed 'that after the development of the cul de sac, he (complainant) will pay in full the total amount due,' which Labrador computed at P 260,138.61. On December 14, 1982, Mapa wrote Labrador claiming that 'you have not complied with the requirements for water and light facilities in lots 12, 13, 15 & 16 Block 2 of Barangay Hills Subdivision.' The following day, Mapa filed a complaint against Labrador for the latter's neglect to put 1) a water system that meets the minimum standard as specified by HSRC, and 2) electrical power supply. By way of relief, Mapa requested the HSRC to direct Labrador to provide the facilities aforementioned, and to issue a cease and desist order enjoining Labrador from cancelling the contracts to sell. After due hearing/investigation, which included an on-site inspection of the subdivision, OAALA, issued its decision of July 3, 1985, dismissing the

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Statutory Construction 2013

Sumira 1F

complaint and declaring that after the lapse of 5 years from complainant's default respondent had every right to rescind the contract pursuant to Clause 7 thereof. . . Per its resolution of January 10, 1986, the Commission Proper, HSRC, affirmed the aforesaid OAALA decision.3 It was petitioner's adamant submission in the administrative proceedings that the provisions of Presidential Decree No. 957 4 and implementing rules form part of the contracts to sell executed by him and respondent corporation, hence the obligations imposed therein had to be complied with by Labrador within the period provided. Since, according to petitioner, Labrador failed to perform the aforementioned obligations, it is precluded from rescinding the subject contracts to sell since petitioner consequently did not incur in delay on his part. Such intransigent position of petitioner has not changed in the petition at bar and unyielding reliance is placed on the provisions of Presidential Decree No. 957 and its implementing rules. The specific provisions of the Decree which are persistently relied upon read: SEC. 20. Time of Completion. Every owner or developer shall construct and provide the facilities, improvements, infrastructures and other forms of development, including water supply and lighting facilities, which are offered and indicated in the approved subdivision or condominium plans, brochures, prospectus, printed matters letters or in any form of advertisements, within one year from the date of the issuance of the license for the subdivision or condominium project or such other period of time as may be fixed by the Authority. SEC. 21. Sales Prior to Decree. In cases of subdivision lots or condominium units sold or disposed of prior to the effectivity of this Decree, it shall be incumbent upon the owner or developer of the subdivision or condominium project to complete compliance with his or its obligations as provided in the preceding section within two years from the date of this Decree unless otherwise extended by the Authority or unless an adequate performance bond is filed in accordance with Section 6 hereof. Failure of the owner or developer to comply with the obligations under this and the preceding provisions shall constitute a violation punishable under Sections 38 and 39 of this Decree. Rule V of the implementing rules, on the other hand, requires two (2) sources of electric power, two (2) deep-well and pump sets with a specified capacity and two standard fire hose flows with a capacity of 175 gallons per minute.5

The provision, in said contracts to sell which, according to petitioner, includes and incorporates the aforequoted statutory provisions, is Clause 20 of said contracts which provides: Clause 20. SUBDIVISION DEVELOPMENT To insure the physical development of the subdivision, the SELLER hereby obliges itself to provide the individual lot buyer with the following: a) PAVED ROADS b) UNDERGROUND DRAINAGE c) CONCRETE CURBS AND GUTTERS d) WATER SYSTEM e) PARK AND OPEN SPACE These improvements shall apply only to the portions of the subdivision which are for sale or have been sold. All improvements except those requiring the services of a public utility company or the government shall be completed within a period of three (3) years from date of this contract. Failure by the SELLER to reasonably comply with the above schedule shall permit the BUYER/ S to suspend his monthly installments without any penalties or interest charges until such time that these improvements shall have been made as scheduled. 6 As recently reiterated, it is jurisprudentially settled that absent a clear, manifest and grave abuse of discretion amounting to want of jurisdiction, the findings of the administrative agency on matters falling within its competence will not be disturbed by the courts. 7 Specifically with respect to factual findings, they are accorded respect, if not finality, because of the special knowledge and expertise gained by these tribunals from handling the specific matters falling under their jurisdiction. Such factual findings may be disregarded only if they "are not supported by evidence; where the findings are vitiated by fraud, imposition or collusion; where the procedure which led to the factual findings is irregular; when palpable errors are committed; or when grave abuse of discretion, arbitrariness or capriciousness is manifest." 8 A careful scrutiny of the records of the instant case reveals that the circumstances thereof do not fag under the aforesaid excepted cases, with the findings duly supported by the evidence. Petitioner's insistence on the applicability of Presidential Decree No. 957 must be rejected. Said decree was issued on July 12, 1976 long after the execution of the contracts involved. Obviously and necessarily, what subsequently were statutorily provided therein as obligations of the owner or developer could not have been intended by the parties to be a part of their contracts. No intention to give restrospective application to the provisions of said decree can be gathered from the language thereof. Section 20, in relation to Section 21, of the decree merely requires the Page 4 of 65

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Statutory Construction 2013

Sumira 1F

owner or developer to construct the facilities, improvements, infrastructures and other forms of development but only such as are offered and indicated in the approved subdivision or condominium plans, brochures, prospectus, printed matters, letters or in any form of advertisements. Other than what are provided in Clause 20 of the contract, no further written commitment was made by the developer in this respect. To read into the contract the matters desired by petitioner would have the law impose additional obligations on the parties to a contract executed before that very law existed or was contemplated. We further reject petitioner's strained and tenuous application of the socalled doctrine of last antecedent in the interpretation of Section 20 and, correlatively, of Section 21. He would thereby have the enumeration of "facilities, improvements, infrastructures and other forms of development" interpreted to mean that the demonstrative phrase "which are offered and indicated in the approved subdivision plans, etc." refer only to "other forms of development" and not to "facilities, improvements and infrastructures." While this subserves his purpose, such bifurcation whereby the supposed adjectival phrase is set apart from the antecedent words, is illogical and erroneous. The complete and applicable rule is ad proximum antecedens fiat relatio nisi impediatur sentencia. 9Relative words refer to the nearest antecedent, unless it be prevented by the context. In the present case, the employment of the word "and" between "facilities, improvements, infrastructures" and "other forms of development," far from supporting petitioner's theory, enervates it instead since it is basic in legal hermeneutics that "and" is not meant to separate words but is a conjunction used to denote a joinder or union. Thus, if ever there is any valid ground to suspend the monthly installments due from petitioner, it would only be based on non-performance of the obligations provided in Clause 20 of the contract, particularly the alleged non-construction of the cul-de-sac. But, even this is unavailing and is obviously being used only to justify petitioner's default. The on-site inspection of the subdivision conducted by the OAALA and its subsequent report reveal that Labrador substantially complied with its obligation. 10 Furthermore, the initial non-construction of the cul-de-sac, as private respondent Labrador explained, was because petitioner Mapa requested the suspension of its construction since his intention was to purchase the adjoining lots and thereafter enclose the same. 11 If these were not true, petitioner would have invoked that supposed default in the first instance. As the OAALA noted, petitioner "stopped payments of his monthly obligations as early as December, 1976, which is a mere five months after the effectivity of P.D. No. 957 or about a year after the execution of the Page 5 of 65

contracts. This means that respondent still has 1 and 1/2 years to comply with its legal obligation to develop the subdivision under said P.D. and two years to do so under the agreement, hence, it was improper for complainant to have suspended payments in December, 1976 on the ground of non-development since the period allowed for respondent's obligation to undertake such development has not yet expired." 12 ON THE FOREGOING CONSIDERATIONS, the petition should be, as it is hereby DISMISSED. SO ORDERED. G. Reddendo Singula Singulus EN BANC [G.R. No. 118127. April 12, 2005] CITY OF MANILA, HON. ALFREDO S. LIM as the Mayor of the City of Manila, HON. JOSELITO L. ATIENZA, in his capacity as Vice-Mayor of the City of Manila and Presiding Officer of the City Council of Manila, HON. ERNESTO A. NIEVA, HON. GONZALO P. GONZALES, HON. AVELINO S. CAILIAN, HON. ROBERTO C. OCAMPO, HON. ALBERTO DOMINGO, HON. HONORIO U. LOPEZ, HON. FRANCISCO G. VARONA, JR., HON. ROMUALDO S. MARANAN, HON. NESTOR C. PONCE, JR., HON. HUMBERTO B. BASCO, HON. FLAVIANO F. CONCEPCION, JR., HON. ROMEO G. RIVERA, HON. MANUEL M. ZARCAL, HON. PEDRO S. DE JESUS, HON. BERNARDITO C. ANG, HON. MANUEL L. QUIN, HON. JHOSEP Y. LOPEZ, HON. CHIKA G. GO, HON. VICTORIANO A. MELENDEZ, HON. ERNESTO V.P. MACEDA, JR., HON. ROLANDO P. NIETO, HON. DANILO V. ROLEDA, HON. GERINO A. TOLENTINO, JR., HON. MA. PAZ E. HERRERA, HON. JOEY D. HIZON, HON. FELIXBERTO D. ESPIRITU, HON. KARLO Q. BUTIONG, HON. ROGELIO P. DELA PAZ, HON. BERNARDO D. RAGAZA, HON. MA. CORAZON R. CABALLES, HON. CASIMIRO C. SISON, HON. BIENVINIDO M. ABANTE, JR., HON. MA. LOURDES M. ISIP, HON. ALEXANDER S. RICAFORT, HON. ERNESTO F. RIVERA, HON. LEONARDO L. ANGAT, and HON. JOCELYN B. DAWIS, in their capacity as councilors of the City of Manila, petitioners, vs. HON. PERFECTO A.S. LAGUIO, JR., as Presiding Judge, RTC, Manila and MALATE TOURIST DEVELOPMENT CORPORATION, respondents. DECISION TINGA, J.:

Atty. Pagaduan

Statutory Construction 2013

Sumira 1F

I know only that what is moral is what you feel good after and what is immoral is what you feel bad after. Ernest Hermingway Death in the Afternoon, Ch. 1 It is a moral and political axiom that any dishonorable act, if performed by oneself, is less immoral than if performed by someone else, who would be well-intentioned in his dishonesty. J. Christopher Gerald Bonaparte in Egypt, Ch. I The Courts commitment to the protection of morals is secondary to its fealty to the fundamental law of the land. It is foremost a guardian of the Constitution but not the conscience of individuals. And if it need be, the Court will not hesitate to make the hammer fall, and heavily in the words of Justice Laurel, and uphold the constitutional guarantees when faced with laws that, though not lacking in zeal to promote morality, nevertheless fail to pass the test of constitutionality. The pivotal issue in this Petition[1] under Rule 45 (then Rule 42) of the Revised Rules on Civil Procedure seeking the reversal of the Decision[2] in Civil Case No. 93-66511 of the Regional Trial Court (RTC) of Manila, Branch 18 (lower court),[3] is the validity of Ordinance No. 7783 (the Ordinance) of the City of Manila.[4] The antecedents are as follows: Private respondent Malate Tourist Development Corporation (MTDC) is a corporation engaged in the business of operating hotels, motels, hostels and lodging houses.[5] It built and opened Victoria Court in Malate which was licensed as a motel although duly accredited with the Department of Tourism as a hotel.[6] On 28 June 1993, MTDC filed a Petition for Declaratory Relief with Prayer for a Writ of Preliminary Injunction and/or Temporary Restraining Order[7] (RTC Petition) with the lower court impleading as defendants, herein petitioners City of Manila, Hon. Alfredo S. Lim (Lim), Hon. Joselito L. Atienza, and the members of the City Council of Manila (City Council). MTDC prayed that the Ordinance, insofar as it includes motels and inns as among its prohibited establishments, be declared invalid and unconstitutional.[8] Enacted by the City Council[9] on 9 March 1993 and approved by petitioner City Mayor on 30 March 1993, the said Ordinance is entitled AN ORDINANCE PROHIBITING THE ESTABLISHMENT OR OPERATION OF BUSINESSES PROVIDING CERTAIN FORMS OF AMUSEMENT, ENTERTAINMENT, SERVICES AND FACILITIES IN THE ERMITA-MALATE AREA, PRESCRIBING PENALTIES FOR VIOLATION THEREOF, AND FOR OTHER PURPOSES.[10] The Ordinance is reproduced in full, hereunder: Page 6 of 65

SECTION 1. Any provision of existing laws and ordinances to the contrary notwithstanding, no person, partnership, corporation or entity shall, in the Ermita-Malate area bounded by Teodoro M. Kalaw Sr. Street in the North, Taft Avenue in the East, Vito Cruz Street in the South and Roxas Boulevard in the West, pursuant to P.D. 499 be allowed or authorized to contract and engage in, any business providing certain forms of amusement, entertainment, services and facilities where women are used as tools in entertainment and which tend to disturb the community, annoy the inhabitants, and adversely affect the social and moral welfare of the community, such as but not limited to: 1. Sauna Parlors 7. Super Clubs 2. Massage Parlors 8. Discotheques 3. Karaoke Bars 9. Cabarets 4. Beerhouses 10. Dance Halls 5. Night Clubs 11. Motels 6. Day Clubs 12. Inns SEC. 2 The City Mayor, the City Treasurer or any person acting in behalf of the said officials are prohibited from issuing permits, temporary or otherwise, or from granting licenses and accepting payments for the operation of business enumerated in the preceding section. SEC. 3. Owners and/or operator of establishments engaged in, or devoted to, the businesses enumerated in Section 1 hereof are hereby given three (3) months from the date of approval of this ordinance within which to wind up business operations or to transfer to any place outside of the Ermita-Malate area or convert said businesses to other kinds of business allowable within the area, such as but not limited to: 1. Curio or antique shop 2. Souvenir Shops 3. Handicrafts display centers 4. Art galleries 5. Records and music shops 6. Restaurants 7. Coffee shops 8. Flower shops 9. Music lounge and sing-along restaurants, with well-defined activities for wholesome family entertainment that cater to both local and foreign clientele. 10. Theaters engaged in the exhibition, not only of motion pictures but also of cultural shows, stage and theatrical plays, art exhibitions, concerts and the like.

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11. Businesses allowable within the law and medium intensity districts as provided for in the zoning ordinances for Metropolitan Manila, except new warehouse or open-storage depot, dock or yard, motor repair shop, gasoline service station, light industry with any machinery, or funeral establishments. SEC. 4. Any person violating any provisions of this ordinance, shall upon conviction, be punished by imprisonment of one (1) year or fine of FIVE THOUSAND (P5,000.00) PESOS, or both, at the discretion of the Court, PROVIDED, that in case of juridical person, the President, the General Manager, or person-in-charge of operation shall be liable thereof; PROVIDED FURTHER, that in case of subsequent violation and conviction, the premises of the erring establishment shall be closed and padlocked permanently. SEC. 5. This ordinance shall take effect upon approval. Enacted by the City Council of Manila at its regular session today, March 9, 1993. Approved by His Honor, the Mayor on March 30, 1993. (Emphasis supplied) In the RTC Petition, MTDC argued that the Ordinance erroneously and improperly included in its enumeration of prohibited establishments, motels and inns such as MTDCs Victoria Court considering that these were not establishments for amusement or entertainment and they were not services or facilities for entertainment, nor did they use women as tools for entertainment, and neither did they disturb the community, annoy the inhabitants or adversely affect the social and moral welfare of the community.[11] MTDC further advanced that the Ordinance was invalid and unconstitutional for the following reasons: (1) The City Council has no power to prohibit the operation of motels as Section 458 (a) 4 (iv)[12] of the Local Government Code of 1991 (the Code) grants to the City Council only the power to regulate the establishment, operation and maintenance of hotels, motels, inns, pension houses, lodging houses and other similar establishments; (2) The Ordinance is void as it is violative of Presidential Decree (P.D.) No. 499[13] which specifically declared portions of the Ermita-Malate area as a commercial zone with certain restrictions; (3) The Ordinance does not constitute a proper exercise of police power as the compulsory closure of the motel business has no reasonable relation to the legitimate municipal interests sought to be protected; (4) The Ordinance constitutes an ex post facto law by punishing the operation of Victoria Court which was a legitimate business prior to its enactment; (5) The Ordinance violates MTDCs constitutional rights in that: (a) it is confiscatory and constitutes an invasion of plaintiffs property rights; (b) Page 7 of 65

the City Council has no power to find as a fact that a particular thing is a nuisance per se nor does it have the power to extrajudicially destroy it; and (6) The Ordinance constitutes a denial of equal protection under the law as no reasonable basis exists for prohibiting the operation of motels and inns, but not pension houses, hotels, lodging houses or other similar establishments, and for prohibiting said business in the Ermita-Malate area but not outside of this area.[14] In their Answer[15] dated 23 July 1993, petitioners City of Manila and Lim maintained that the City Council had the power to prohibit certain forms of entertainment in order to protect the social and moral welfare of the community as provided for in Section 458 (a) 4 (vii) of the Local Government Code,[16] which reads, thus: Section 458. Powers, Duties, Functions and Compensation. (a) The sangguniang panlungsod, as the legislative body of the city, shall enact ordinances, approve resolutions and appropriate funds for the general welfare of the city and its inhabitants pursuant to Section 16 of this Code and in the proper exercise of the corporate powers of the city as provided for under Section 22 of this Code, and shall: .... (4) Regulate activities relative to the use of land, buildings and structures within the city in order to promote the general welfare and for said purpose shall: .... (vii) Regulate the establishment, operation, and maintenance of any entertainment or amusement facilities, including theatrical performances, circuses, billiard pools, public dancing schools, public dance halls, sauna baths, massage parlors, and other places for entertainment or amusement; regulate such other events or activities for amusement or entertainment, particularly those which tend to disturb the community or annoy the inhabitants, or require the suspension or suppression of the same; or, prohibit certain forms of amusement or entertainment in order to protect the social and moral welfare of the community. Citing Kwong Sing v. City of Manila,[17] petitioners insisted that the power of regulation spoken of in the above-quoted provision included the power to control, to govern and to restrain places of exhibition and amusement.[18] Petitioners likewise asserted that the Ordinance was enacted by the City Council of Manila to protect the social and moral welfare of the community in conjunction with its police power as found in Article III, Section 18(kk) of Republic Act No. 409,[19] otherwise known as the Revised Charter of the City of Manila (Revised Charter of Manila)[20] which reads, thus:

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ARTICLE III THE MUNICIPAL BOARD . . . Section 18. Legislative powers. The Municipal Board shall have the following legislative powers: . . . (kk) To enact all ordinances it may deem necessary and proper for the sanitation and safety, the furtherance of the prosperity, and the promotion of the morality, peace, good order, comfort, convenience, and general welfare of the city and its inhabitants, and such others as may be necessary to carry into effect and discharge the powers and duties conferred by this chapter; and to fix penalties for the violation of ordinances which shall not exceed two hundred pesos fine or six months imprisonment, or both such fine and imprisonment, for a single offense. Further, the petitioners noted, the Ordinance had the presumption of validity; hence, private respondent had the burden to prove its illegality or unconstitutionality.[21] Petitioners also maintained that there was no inconsistency between P.D. 499 and the Ordinance as the latter simply disauthorized certain forms of businesses and allowed the Ermita-Malate area to remain a commercial zone.[22] The Ordinance, the petitioners likewise claimed, cannot be assailed as ex post facto as it was prospective in operation.[23] The Ordinance also did not infringe the equal protection clause and cannot be denounced as class legislation as there existed substantial and real differences between the Ermita-Malate area and other places in the City of Manila.[24] On 28 June 1993, respondent Judge Perfecto A.S. Laguio, Jr. (Judge Laguio) issued an ex-parte temporary restraining order against the enforcement of the Ordinance.[25] And on 16 July 1993, again in an intrepid gesture, he granted the writ of preliminary injunction prayed for by MTDC.[26] After trial, on 25 November 1994, Judge Laguio rendered the assailed Decision, enjoining the petitioners from implementing the Ordinance. The dispositive portion of said Decision reads:[27] WHEREFORE, judgment is hereby rendered declaring Ordinance No. 778[3], Series of 1993, of the City of Manila null and void, and making permanent the writ of preliminary injunction that had been issued by this Court against the defendant. No costs. SO ORDERED.[28] Petitioners filed with the lower court a Notice of Appeal[29] on 12 December 1994, manifesting that they are elevating the case to this Court under then Rule 42 on pure questions of law.[30] Page 8 of 65

On 11 January 1995, petitioners filed the present Petition, alleging that the following errors were committed by the lower court in its ruling: (1) It erred in concluding that the subject ordinance is ultra vires, or otherwise, unfair, unreasonable and oppressive exercise of police power; (2) It erred in holding that the questioned Ordinance contravenes P.D. 499[31] which allows operators of all kinds of commercial establishments, except those specified therein; and (3) It erred in declaring the Ordinance void and unconstitutional.[32] In the Petition and in its Memorandum,[33] petitioners in essence repeat the assertions they made before the lower court. They contend that the assailed Ordinance was enacted in the exercise of the inherent and plenary power of the State and the general welfare clause exercised by local government units provided for in Art. 3, Sec. 18 (kk) of the Revised Charter of Manila and conjunctively, Section 458 (a) 4 (vii) of the Code.[34] They allege that the Ordinance is a valid exercise of police power; it does not contravene P.D. 499; and that it enjoys the presumption of validity.[35] In its Memorandum[36] dated 27 May 1996, private respondent maintains that the Ordinance is ultra vires and that it is void for being repugnant to the general law. It reiterates that the questioned Ordinance is not a valid exercise of police power; that it is violative of due process, confiscatory and amounts to an arbitrary interference with its lawful business; that it is violative of the equal protection clause; and that it confers on petitioner City Mayor or any officer unregulated discretion in the execution of the Ordinance absent rules to guide and control his actions. This is an opportune time to express the Courts deep sentiment and tenderness for the Ermita-Malate area being its home for several decades. A long-time resident, the Court witnessed the areas many turn of events. It relished its glory days and endured its days of infamy. Much as the Court harks back to the resplendent era of the Old Manila and yearns to restore its lost grandeur, it believes that the Ordinance is not the fitting means to that end. The Court is of the opinion, and so holds, that the lower court did not err in declaring the Ordinance, as it did, ultra vires and therefore null and void. The Ordinance is so replete with constitutional infirmities that almost every sentence thereof violates a constitutional provision. The prohibitions and sanctions therein transgress the cardinal rights of persons enshrined by the Constitution. The Court is called upon to shelter these rights from attempts at rendering them worthless. The tests of a valid ordinance are well established. A long line of decisions has held that for an ordinance to be valid, it must not only be within the corporate powers of the local government unit to enact and must be

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passed according to the procedure prescribed by law, it must also conform to the following substantive requirements: (1) must not contravene the Constitution or any statute; (2) must not be unfair or oppressive; (3) must not be partial or discriminatory; (4) must not prohibit but may regulate trade; (5) must be general and consistent with public policy; and (6) must not be unreasonable.[37] Anent the first criterion, ordinances shall only be valid when they are not contrary to the Constitution and to the laws.[38] The Ordinance must satisfy two requirements: it must pass muster under the test of constitutionality and the test of consistency with the prevailing laws. That ordinances should be constitutional uphold the principle of the supremacy of the Constitution. The requirement that the enactment must not violate existing law gives stress to the precept that local government units are able to legislate only by virtue of their derivative legislative power, a delegation of legislative power from the national legislature. The delegate cannot be superior to the principal or exercise powers higher than those of the latter.[39] This relationship between the national legislature and the local government units has not been enfeebled by the new provisions in the Constitution strengthening the policy of local autonomy. The national legislature is still the principal of the local government units, which cannot defy its will or modify or violate it.[40] The Ordinance was passed by the City Council in the exercise of its police power, an enactment of the City Council acting as agent of Congress. Local government units, as agencies of the State, are endowed with police power in order to effectively accomplish and carry out the declared objects of their creation.[41] This delegated police power is found in Section 16 of the Code, known as the general welfare clause, viz: SECTION 16. General Welfare. Every local government unit shall exercise the powers expressly granted, those necessarily implied therefrom, as well as powers necessary, appropriate, or incidental for its efficient and effective governance, and those which are essential to the promotion of the general welfare. Within their respective territorial jurisdictions, local government units shall ensure and support, among other things, the preservation and enrichment of culture, promote health and safety, enhance the right of the people to a balanced ecology, encourage and support the development of appropriate and self-reliant scientific and technological capabilities, improve public morals, enhance economic prosperity and social justice, promote full employment among their residents, maintain peace and order, and preserve the comfort and convenience of their inhabitants. Page 9 of 65

Local government units exercise police power through their respective legislative bodies; in this case, the sangguniang panlungsod or the city council. The Code empowers the legislative bodies to enact ordinances, approve resolutions and appropriate funds for the general welfare of the province/city/municipality and its inhabitants pursuant to Section 16 of the Code and in the proper exercise of the corporate powers of the province/city/ municipality provided under the Code.[42] The inquiry in this Petition is concerned with the validity of the exercise of such delegated power. The Ordinance contravenes the Constitution The police power of the City Council, however broad and far-reaching, is subordinate to the constitutional limitations thereon; and is subject to the limitation that its exercise must be reasonable and for the public good.[43] In the case at bar, the enactment of the Ordinance was an invalid exercise of delegated power as it is unconstitutional and repugnant to general laws. The relevant constitutional provisions are the following: SEC. 5. The maintenance of peace and order, the protection of life, liberty, and property, and the promotion of the general welfare are essential for the enjoyment by all the people of the blessings of democracy.[44] SEC. 14. The State recognizes the role of women in nation-building, and shall ensure the fundamental equality before the law of women and men.[45] SEC. 1. No person shall be deprived of life, liberty or property without due process of law, nor shall any person be denied the equal protection of laws.[46] Sec. 9. Private property shall not be taken for public use without just compensation.[47] A. The Ordinance infringes the Due Process Clause The constitutional safeguard of due process is embodied in the fiat (N)o person shall be deprived of life, liberty or property without due process of law. . . .[48] There is no controlling and precise definition of due process. It furnishes though a standard to which governmental action should conform in order that deprivation of life, liberty or property, in each appropriate case, be valid. This standard is aptly described as a responsiveness to the supremacy of reason, obedience to the dictates of justice,[49] and as such it is a limitation upon the exercise of the police power.[50] The purpose of the guaranty is to prevent governmental encroachment against the life, liberty and property of individuals; to secure the individual from the arbitrary exercise of the powers of the government, unrestrained by the established principles of private rights and distributive justice; to

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protect property from confiscation by legislative enactments, from seizure, forfeiture, and destruction without a trial and conviction by the ordinary mode of judicial procedure; and to secure to all persons equal and impartial justice and the benefit of the general law.[51] The guaranty serves as a protection against arbitrary regulation, and private corporations and partnerships are persons within the scope of the guaranty insofar as their property is concerned.[52] This clause has been interpreted as imposing two separate limits on government, usually called procedural due process and substantive due process. Procedural due process, as the phrase implies, refers to the procedures that the government must follow before it deprives a person of life, liberty, or property. Classic procedural due process issues are concerned with what kind of notice and what form of hearing the government must provide when it takes a particular action.[53] Substantive due process, as that phrase connotes, asks whether the government has an adequate reason for taking away a persons life, liberty, or property. In other words, substantive due process looks to whether there is a sufficient justification for the governments action.[54] Case law in the United States (U.S.) tells us that whether there is such a justification depends very much on the level of scrutiny used.[55] For example, if a law is in an area where only rational basis review is applied, substantive due process is met so long as the law is rationally related to a legitimate government purpose. But if it is an area where strict scrutiny is used, such as for protecting fundamental rights, then the government will meet substantive due process only if it can prove that the law is necessary to achieve a compelling government purpose.[56] The police power granted to local government units must always be exercised with utmost observance of the rights of the people to due process and equal protection of the law. Such power cannot be exercised whimsically, arbitrarily or despotically[57] as its exercise is subject to a qualification, limitation or restriction demanded by the respect and regard due to the prescription of the fundamental law, particularly those forming part of the Bill of Rights. Individual rights, it bears emphasis, may be adversely affected only to the extent that may fairly be required by the legitimate demands of public interest or public welfare.[58] Due process requires the intrinsic validity of the law in interfering with the rights of the person to his life, liberty and property.[59] Requisites for the valid exercise of Police Power are not met To successfully invoke the exercise of police power as the rationale for the enactment of the Ordinance, and to free it from the imputation of constitutional infirmity, not only must it appear that the interests of the Page 10 of 65

public generally, as distinguished from those of a particular class, require an interference with private rights, but the means adopted must be reasonably necessary for the accomplishment of the purpose and not unduly oppressive upon individuals.[60] It must be evident that no other alternative for the accomplishment of the purpose less intrusive of private rights can work. A reasonable relation must exist between the purposes of the police measure and the means employed for its accomplishment, for even under the guise of protecting the public interest, personal rights and those pertaining to private property will not be permitted to be arbitrarily invaded.[61] Lacking a concurrence of these two requisites, the police measure shall be struck down as an arbitrary intrusion into private rights[62] a violation of the due process clause. The Ordinance was enacted to address and arrest the social ills purportedly spawned by the establishments in the Ermita-Malate area which are allegedly operated under the deceptive veneer of legitimate, licensed and tax-paying nightclubs, bars, karaoke bars, girlie houses, cocktail lounges, hotels and motels. Petitioners insist that even the Court in the case of Ermita-Malate Hotel and Motel Operators Association, Inc. v. City Mayor of Manila[63] had already taken judicial notice of the alarming increase in the rate of prostitution, adultery and fornication in Manila traceable in great part to existence of motels, which provide a necessary atmosphere for clandestine entry, presence and exit and thus become the ideal haven for prostitutes and thrill-seekers.[64] The object of the Ordinance was, accordingly, the promotion and protection of the social and moral values of the community. Granting for the sake of argument that the objectives of theOrdinance are within the scope of the City Councils police powers, the means employed for the accomplishment thereof were unreasonable and unduly oppressive. It is undoubtedly one of the fundamental duties of the City of Manila to make all reasonable regulations looking to the promotion of the moral and social values of the community. However, the worthy aim of fostering public morals and the eradication of the communitys social ills can be achieved through means less restrictive of private rights; it can be attained by reasonable restrictions rather than by an absolute prohibition. The closing down and transfer of businesses or their conversion into businesses allowed under the Ordinance have no reasonable relation to the accomplishment of its purposes. Otherwise stated, the prohibition of the enumerated establishments will not per se protect and promote the social and moral welfare of the community; it will not in itself eradicate the alluded social ills of prostitution, adultery, fornication nor will it arrest the spread of sexual disease in Manila.

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Conceding for the nonce that the Ermita-Malate area teems with houses of ill-repute and establishments of the like which the City Council may lawfully prohibit,[65] it is baseless and insupportable to bring within that classification sauna parlors, massage parlors, karaoke bars, night clubs, day clubs, super clubs, discotheques, cabarets, dance halls, motels and inns. This is not warranted under the accepted definitions of these terms. The enumerated establishments are lawful pursuits which are not per se offensive to the moral welfare of the community. That these are used as arenas to consummate illicit sexual affairs and as venues to further the illegal prostitution is of no moment. We lay stress on the acrid truth that sexual immorality, being a human frailty, may take place in the most innocent of places that it may even take place in the substitute establishments enumerated under Section 3 of the Ordinance. If the flawed logic of theOrdinance were to be followed, in the remote instance that an immoral sexual act transpires in a church cloister or a court chamber, we would behold the spectacle of the City of Manila ordering the closure of the church or court concerned. Every house, building, park, curb, street or even vehicles for that matter will not be exempt from the prohibition. Simply because there are no pure places where there are impure men. Indeed, even the Scripture and the Tradition of Christians churches continually recall the presence and universality of sin in mans history.[66] The problem, it needs to be pointed out, is not the establishment, which by its nature cannot be said to be injurious to the health or comfort of the community and which in itself is amoral, but the deplorable human activity that may occur within its premises. While a motel may be used as a venue for immoral sexual activity, it cannot for that reason alone be punished. It cannot be classified as a house of ill-repute or as a nuisance per se on a mere likelihood or a naked assumption. If that were so and if that were allowed, then the Ermita-Malate area would not only be purged of its supposed social ills, it would be extinguished of its soul as well as every human activity, reprehensible or not, in its every nook and cranny would be laid bare to the estimation of the authorities. The Ordinance seeks to legislate morality but fails to address the core issues of morality. Try as the Ordinance may to shape morality, it should not foster the illusion that it can make a moral man out of it because immorality is not a thing, a building or establishment; it is in the hearts of men. The City Council instead should regulate human conduct that occurs inside the establishments, but not to the detriment of liberty and privacy which are covenants, premiums and blessings of democracy. While petitioners earnestness at curbing clearly objectionable social ills is commendable, they unwittingly punish even the proprietors and operators Page 11 of 65

of wholesome, innocent establishments. In the instant case, there is a clear invasion of personal or property rights, personal in the case of those individuals desirous of owning, operating and patronizing those motels and property in terms of the investments made and the salaries to be paid to those therein employed. If the City of Manila so desires to put an end to prostitution, fornication and other social ills, it can instead impose reasonable regulations such as daily inspections of the establishments for any violation of the conditions of their licenses or permits; it may exercise its authority to suspend or revoke their licenses for these violations;[67] and it may even impose increased license fees. In other words, there are other means to reasonably accomplish the desired end. Means employed are constitutionally infirm The Ordinance disallows the operation of sauna parlors, massage parlors, karaoke bars, beerhouses, night clubs, day clubs, super clubs, discotheques, cabarets, dance halls, motels and inns in the Ermita-Malate area. In Section 3 thereof, owners and/or operators of the enumerated establishments are given three (3) months from the date of approval of the Ordinance within which to wind up business operations or to transfer to any place outside the Ermita-Malate area or convert said businesses to other kinds of business allowable within the area. Further, it states in Section 4 that in cases of subsequent violations of the provisions of the Ordinance, the premises of the erring establishment shall be closed and padlocked permanently. It is readily apparent that the means employed by the Ordinance for the achievement of its purposes, the governmental interference itself, infringes on the constitutional guarantees of a persons fundamental right to liberty and property. Liberty as guaranteed by the Constitution was defined by Justice Malcolm to include the right to exist and the right to be free from arbitrary restraint or servitude. The term cannot be dwarfed into mere freedom from physical restraint of the person of the citizen, but is deemed to embrace the right of man to enjoy the facilities with which he has been endowed by his Creator, subject only to such restraint as are necessary for the common welfare.[68] In accordance with this case, the rights of the citizen to be free to use his faculties in all lawful ways; to live and work where he will; to earn his livelihood by any lawful calling; and to pursue any avocation are all deemed embraced in the concept of liberty.[69] The U.S. Supreme Court in the case of Roth v. Board of Regents,[70] sought to clarify the meaning of liberty. It said: While the Court has not attempted to define with exactness the liberty. . . guaranteed [by the Fifth and Fourteenth Amendments], the term denotes not merely freedom from bodily restraint but also the right of the

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individual to contract, to engage in any of the common occupations of life, to acquire useful knowledge, to marry, establish a home and bring up children, to worship God according to the dictates of his own conscience, and generally to enjoy those privileges long recognizedas essential to the orderly pursuit of happiness by free men. In a Constitution for a free people, there can be no doubt that the meaning of liberty must be broad indeed. In another case, it also confirmed that liberty protected by the due process clause includes personal decisions relating to marriage, procreation, contraception, family relationships, child rearing, and education. In explaining the respect the Constitution demands for the autonomy of the person in making these choices, the U.S. Supreme Court explained: These matters, involving the most intimate and personal choices a person may make in a lifetime, choices central to personal dignity and autonomy, are central to the liberty protected by the Fourteenth Amendment. At the heart of liberty is the right to define ones own concept of existence, of meaning, of universe, and of the mystery of human life. Beliefs about these matters could not define the attributes of personhood where they formed under compulsion of the State.[71] Persons desirous to own, operate and patronize the enumerated establishments under Section 1 of the Ordinance may seek autonomy for these purposes. Motel patrons who are single and unmarried may invoke this right to autonomy to consummate their bonds in intimate sexual conduct within the motels premises be it stressed that their consensual sexual behavior does not contravene any fundamental state policy as contained in the Constitution.[72] Adults have a right to choose to forge such relationships with others in the confines of their own private lives and still retain their dignity as free persons. The liberty protected by the Constitution allows persons the right to make this choice.[73] Their right to liberty under the due process clause gives them the full right to engage in their conduct without intervention of the government, as long as they do not run afoul of the law. Liberty should be the rule and restraint the exception. Liberty in the constitutional sense not only means freedom from unlawful government restraint; it must include privacy as well, if it is to be a repository of freedom. The right to be let alone is the beginning of all freedom it is the most comprehensive of rights and the right most valued by civilized men.[74] The concept of liberty compels respect for the individual whose claim to privacy and interference demands respect. As the case of Morfe v. Mutuc,[75] borrowing the words of Laski, so very aptly stated: Page 12 of 65

Man is one among many, obstinately refusing reduction to unity. His separateness, his isolation, are indefeasible; indeed, they are so fundamental that they are the basis on which his civic obligations are built. He cannot abandon the consequences of his isolation, which are, broadly speaking, that his experience is private, and the will built out of that experience personal to himself. If he surrenders his will to others, he surrenders himself. If his will is set by the will of others, he ceases to be a master of himself. I cannot believe that a man no longer a master of himself is in any real sense free. Indeed, the right to privacy as a constitutional right was recognized in Morfe, the invasion of which should be justified by a compelling state interest. Morfe accorded recognition to the right to privacy independently of its identification with liberty; in itself it is fully deserving of constitutional protection. Governmental powers should stop short of certain intrusions into the personal life of the citizen.[76] There is a great temptation to have an extended discussion on these civil liberties but the Court chooses to exercise restraint and restrict itself to the issues presented when it should. The previous pronouncements of the Court are not to be interpreted as a license for adults to engage in criminal conduct. The reprehensibility of such conduct is not diminished. The Court only reaffirms and guarantees their right to make this choice. Should they be prosecuted for their illegal conduct, they should suffer the consequences of the choice they have made. That, ultimately, is their choice. Modality employed is unlawful taking In addition, the Ordinance is unreasonable and oppressive as it substantially divests the respondent of the beneficial use of its property.[77] The Ordinance in Section 1 thereof forbids the running of the enumerated businesses in the Ermita-Malate area and in Section 3 instructs its owners/operators to wind up business operations or to transfer outside the area or convert said businesses into allowed businesses. An ordinance which permanently restricts the use of property that it can not be used for any reasonable purpose goes beyond regulation and must be recognized as a taking of the property without just compensation.[78] It is intrusive and violative of the private property rights of individuals. The Constitution expressly provides in Article III, Section 9, that private property shall not be taken for public use without just compensation. The provision is the most important protection of property rights in the Constitution. This is a restriction on the general power of the government to take property. The constitutional provision is about ensuring that the government does not confiscate the property of some to give it to others.

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In part too, it is about loss spreading. If the government takes away a persons property to benefit society, then society should pay. The principal purpose of the guarantee is to bar the Government from forcing some people alone to bear public burdens which, in all fairness and justice, should be borne by the public as a whole.[79] There are two different types of taking that can be identified. A possessory taking occurs when the government confiscates or physically occupies property. A regulatory taking occurs when the governments regulation leaves no reasonable economically viable use of the property.[80] In the landmark case of Pennsylvania Coal v. Mahon,[81] it was held that a taking also could be found if government regulation of the use of property went too far. When regulation reaches a certain magnitude, in most if not in all cases there must be an exercise of eminent domain and compensation to support the act. While property may be regulated to a certain extent, if regulation goes too far it will be recognized as a taking.[82] No formula or rule can be devised to answer the questions of what is too far and when regulation becomes a taking. In Mahon, Justice Holmes recognized that it was a question of degree and therefore cannot be disposed of by general propositions. On many other occasions as well, the U.S. Supreme Court has said that the issue of when regulation constitutes a taking is a matter of considering the facts in each case. The Court asks whether justice and fairness require that the economic loss caused by public action must be compensated by the government and thus borne by the public as a whole, or whether the loss should remain concentrated on those few persons subject to the public action.[83] What is crucial in judicial consideration of regulatory takings is that government regulation is a taking if it leaves no reasonable economically viable use of property in a manner that interferes with reasonable expectations for use.[84] A regulation that permanently denies all economically beneficial or productive use of land is, from the owners point of view, equivalent to a taking unless principles of nuisance or property law that existed when the owner acquired the land make the use prohibitable.[85] When the owner of real property has been called upon to sacrifice all economically beneficial uses in the name of the common good, that is, to leave his property economically idle, he has suffered a taking.[86] A regulation which denies all economically beneficial or productive use of land will require compensation under the takings clause. Where a regulation places limitations on land that fall short of eliminating all economically beneficial use, a taking nonetheless may have occurred, depending on a complex of factors including the regulations economic Page 13 of 65

effect on the landowner, the extent to which the regulation interferes with reasonable investment-backed expectations and the character of government action. These inquiries are informed by the purpose of the takings clause which is to prevent the government from forcing some people alone to bear public burdens which, in all fairness and justice, should be borne by the public as a whole.[87] A restriction on use of property may also constitute a taking if not reasonably necessary to the effectuation of a substantial public purpose or if it has an unduly harsh impact on the distinct investment-backed expectations of the owner.[88] The Ordinance gives the owners and operators of the prohibited establishments three (3) months from its approval within which to wind up business operations or to transfer to any place outside of the ErmitaMalate area or convert said businesses to other kinds of business allowable within the area. The directive to wind up business operations amounts to a closure of the establishment, a permanent deprivation of property, and is practically confiscatory. Unless the owner converts his establishment to accommodate an allowed business, the structure which housed the previous business will be left empty and gathering dust. Suppose he transfers it to another area, he will likewise leave the entire establishment idle. Consideration must be given to the substantial amount of money invested to build the edifices which the owner reasonably expects to be returned within a period of time. It is apparent that the Ordinance leaves no reasonable economically viable use of property in a manner that interferes with reasonable expectations for use. The second and third options to transfer to any place outside of the Ermita-Malate area or to convert into allowed businesses are confiscatory as well. The penalty of permanent closure in cases of subsequent violations found in Section 4 of the Ordinance is also equivalent to a taking of private property. The second option instructs the owners to abandon their property and build another one outside the Ermita-Malate area. In every sense, it qualifies as a taking without just compensation with an additional burden imposed on the owner to build another establishment solely from his coffers. The proffered solution does not put an end to the problem, it merely relocates it. Not only is this impractical, it is unreasonable, onerous and oppressive. The conversion into allowed enterprises is just as ridiculous. How may the respondent convert a motel into a restaurant or a coffee shop, art gallery or music lounge without essentially destroying its property? This is a taking of private property without due process of law, nay, even without compensation.

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The penalty of closure likewise constitutes unlawful taking that should be compensated by the government. The burden on the owner to convert or transfer his business, otherwise it will be closed permanently after a subsequent violation should be borne by the public as this end benefits them as a whole. Petitioners cannot take refuge in classifying the measure as a zoning ordinance. A zoning ordinance, although a valid exercise of police power, which limits a wholesome property to a use which can not reasonably be made of it constitutes the taking of such property without just compensation. Private property which is not noxious nor intended for noxious purposes may not, by zoning, be destroyed without compensation. Such principle finds no support in the principles of justice as we know them. The police powers of local government units which have always received broad and liberal interpretation cannot be stretched to cover this particular taking. Distinction should be made between destruction from necessity and eminent domain. It needs restating that the property taken in the exercise of police power is destroyed because it is noxious or intended for a noxious purpose while the property taken under the power of eminent domain is intended for a public use or purpose and is therefore wholesome.[89] If it be of public benefit that a wholesome property remain unused or relegated to a particular purpose, then certainly the public should bear the cost of reasonable compensation for the condemnation of private property for public use.[90] Further, the Ordinance fails to set up any standard to guide or limit the petitioners actions. It in no way controls or guides the discretion vested in them. It provides no definition of the establishments covered by it and it fails to set forth the conditions when the establishments come within its ambit of prohibition. The Ordinance confers upon the mayor arbitrary and unrestricted power to close down establishments. Ordinances such as this, which make possible abuses in its execution, depending upon no conditions or qualifications whatsoever other than the unregulated arbitrary will of the city authorities as the touchstone by which its validity is to be tested, are unreasonable and invalid. The Ordinance should have established a rule by which its impartial enforcement could be secured.[91] Ordinances placing restrictions upon the lawful use of property must, in order to be valid and constitutional, specify the rules and conditions to be observed and conduct to avoid; and must not admit of the exercise, or of an opportunity for the exercise, of unbridled discretion by the law enforcers in carrying out its provisions.[92] Thus, in Coates v. City of Cincinnati,[93] as cited in People v. Nazario,[94] the U.S. Supreme Court struck down an ordinance that had Page 14 of 65

made it illegal for three or more persons to assemble on any sidewalk and there conduct themselves in a manner annoying to persons passing by. The ordinance was nullified as it imposed no standard at all because one may never know in advance what annoys some people but does not annoy others. Similarly, the Ordinance does not specify the standards to ascertain which establishments tend to disturb the community, annoy the inhabitants, and adversely affect the social and moral welfare of the community. The cited case supports the nullification of the Ordinance for lack of comprehensible standards to guide the law enforcers in carrying out its provisions. Petitioners cannot therefore order the closure of the enumerated establishments without infringing the due process clause. These lawful establishments may be regulated, but not prevented from carrying on their business. This is a sweeping exercise of police power that is a result of a lack of imagination on the part of the City Council and which amounts to an interference into personal and private rights which the Court will not countenance. In this regard, we take a resolute stand to uphold the constitutional guarantee of the right to liberty and property. Worthy of note is an example derived from the U.S. of a reasonable regulation which is a far cry from the ill-considered Ordinance enacted by the City Council. In FW/PBS, INC. v. Dallas,[95] the city of Dallas adopted a comprehensive ordinance regulating sexually oriented businesses, which are defined to include adult arcades, bookstores, video stores, cabarets, motels, and theaters as well as escort agencies, nude model studio and sexual encounter centers. Among other things, the ordinance required that such businesses be licensed. A group of motel owners were among the three groups of businesses that filed separate suits challenging the ordinance. The motel owners asserted that the city violated the due process clause by failing to produce adequate support for its supposition that renting room for fewer than ten (10) hours resulted in increased crime and other secondary effects. They likewise argued than the ten (10)-hour limitation on the rental of motel rooms placed an unconstitutional burden on the right to freedom of association. Anent the first contention, the U.S. Supreme Court held that the reasonableness of the legislative judgment combined with a study which the city considered, was adequate to support the citys determination that motels permitting room rentals for fewer than ten (10 ) hours should be included within the licensing scheme. As regards the second point, the Court held that limiting motel room rentals to ten (10) hours will have no discernible effect on personal bonds as those bonds that are formed from the use of a motel room for fewer than ten

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(10) hours are not those that have played a critical role in the culture and traditions of the nation by cultivating and transmitting shared ideals and beliefs. The ordinance challenged in the above-cited case merely regulated the targeted businesses. It imposed reasonable restrictions; hence, its validity was upheld. The case of Ermita Malate Hotel and Motel Operators Association, Inc. v. City Mayor of Manila,[96] it needs pointing out, is also different from this case in that what was involved therein was a measure which regulated the mode in which motels may conduct business in order to put an end to practices which could encourage vice and immorality. Necessarily, there was no valid objection on due process or equal protection grounds as the ordinance did not prohibit motels. The Ordinance in this case however is not a regulatory measure but is an exercise of an assumed power to prohibit.[97] The foregoing premises show that the Ordinance is an unwarranted and unlawful curtailment of property and personal rights of citizens. For being unreasonable and an undue restraint of trade, it cannot, even under the guise of exercising police power, be upheld as valid. B. The Ordinance violates Equal Protection Clause Equal protection requires that all persons or things similarly situated should be treated alike, both as to rights conferred and responsibilities imposed. Similar subjects, in other words, should not be treated differently, so as to give undue favor to some and unjustly discriminate against others.[98] The guarantee means that no person or class of persons shall be denied the same protection of laws which is enjoyed by other persons or other classes in like circumstances.[99] The equal protection of the laws is a pledge of the protection of equal laws.[100] It limits governmental discrimination. The equal protection clause extends to artificial persons but only insofar as their property is concerned.[101] The Court has explained the scope of the equal protection clause in this wise: What does it signify? To quote from J.M. Tuason & Co. v. Land Tenure Administration: The ideal situation is for the laws benefits to be available to all, that none be placed outside the sphere of its coverage. Only thus could chance and favor be excluded and the affairs of men governed by that serene and impartial uniformity, which is of the very essence of the idea of law. There is recognition, however, in the opinion that what in fact exists cannot approximate the ideal. Nor is the law susceptible to the reproach that it does not take into account the realities of the situation. The constitutional guarantee then is not to be given a meaning that disregards what is, what does in fact exist. To assure that the Page 15 of 65

general welfare be promoted, which is the end of law, a regulatory measure may cut into the rights to liberty and property. Those adversely affected may under such circumstances invoke the equal protection clause only if they can show that the governmental act assailed, far from being inspired by the attainment of the common weal was prompted by the spirit of hostility, or at the very least, discrimination that finds no support in reason. Classification is thus not ruled out, it being sufficient to quote from the Tuason decision anew that the laws operate equally and uniformly on all persons under similar circumstances or that all persons must be treated in the same manner, the conditions not being different, both in the privileges conferred and the liabilities imposed. Favoritism and undue preference cannot be allowed. For the principle is that equal protection and security shall be given to every person under circumstances which, if not identical, are analogous. If law be looked upon in terms of burden or charges, those that fall within a class should be treated in the same fashion, whatever restrictions cast on some in the group equally binding on the rest.[102] Legislative bodies are allowed to classify the subjects of legislation. If the classification is reasonable, the law may operate only on some and not all of the people without violating the equal protection clause.[103] The classification must, as an indispensable requisite, not be arbitrary. To be valid, it must conform to the following requirements: 1) It must be based on substantial distinctions. 2) It must be germane to the purposes of the law. 3) It must not be limited to existing conditions only. 4) It must apply equally to all members of the class.[104] In the Courts view, there are no substantial distinctions between motels, inns, pension houses, hotels, lodging houses or other similar establishments. By definition, all are commercial establishments providing lodging and usually meals and other services for the public. No reason exists for prohibiting motels and inns but not pension houses, hotels, lodging houses or other similar establishments. The classification in the instant case is invalid as similar subjects are not similarly treated, both as to rights conferred and obligations imposed. It is arbitrary as it does not rest on substantial distinctions bearing a just and fair relation to the purpose of the Ordinance. The Court likewise cannot see the logic for prohibiting the business and operation of motels in the Ermita-Malate area but not outside of this area. A noxious establishment does not become any less noxious if located outside the area. The standard where women are used as tools for entertainment is also discriminatory as prostitution one of the hinted ills the Ordinance aims to

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banish is not a profession exclusive to women. Both men and women have an equal propensity to engage in prostitution. It is not any less grave a sin when men engage in it. And why would the assumption that there is an ongoing immoral activity apply only when women are employed and be inapposite when men are in harness? This discrimination based on gender violates equal protection as it is not substantially related to important government objectives.[105] Thus, the discrimination is invalid. Failing the test of constitutionality, the Ordinance likewise failed to pass the test of consistency with prevailing laws. C. The Ordinance is repugnant to general laws; it is ultra vires The Ordinance is in contravention of the Code as the latter merely empowers local government units to regulate, and not prohibit, the establishments enumerated in Section 1 thereof. The power of the City Council to regulate by ordinances the establishment, operation, and maintenance of motels, hotels and other similar establishments is found in Section 458 (a) 4 (iv), which provides that: Section 458. Powers, Duties, Functions and Compensation. (a) The sangguniang panlungsod, as the legislative body of the city, shall enact ordinances, approve resolutions and appropriate funds for the general welfare of the city and its inhabitants pursuant to Section 16 of this Code and in the proper exercise of the corporate powers of the city as provided for under Section 22 of this Code, and shall: . . . (4) Regulate activities relative to the use of land, buildings and structures within the city in order to promote the general welfare and for said purpose shall: . . . (iv) Regulate the establishment, operation and maintenance of cafes, restaurants, beerhouses, hotels, motels, inns, pension houses, lodging houses, and other similar establishments, including tourist guides and transports . . . . While its power to regulate the establishment, operation and maintenance of any entertainment or amusement facilities, and to prohibit certain forms of amusement or entertainment is provided under Section 458 (a) 4 (vii) of the Code, which reads as follows: Section 458. Powers, Duties, Functions and Compensation. (a) The sangguniang panlungsod, as the legislative body of the city, shall enact ordinances, approve resolutions and appropriate funds for the general welfare of the city and its inhabitants pursuant to Section 16 of this Code and in the proper exercise of the corporate powers of the city as provided for under Section 22 of this Code, and shall: Page 16 of 65

. . . (4) Regulate activities relative to the use of land, buildings and structures within the city in order to promote the general welfare and for said purpose shall: . . . (vii) Regulate the establishment, operation, and maintenance of any entertainment or amusement facilities, including theatrical performances, circuses, billiard pools, public dancing schools, public dance halls, sauna baths, massage parlors, and other places for entertainment or amusement; regulate such other events or activities for amusement or entertainment, particularly those which tend to disturb the community or annoy the inhabitants, or require the suspension or suppression of the same; or, prohibit certain forms of amusement or entertainment in order to protect the social and moral welfare of the community. Clearly, with respect to cafes, restaurants, beerhouses, hotels, motels, inns, pension houses, lodging houses, and other similar establishments, the only power of the City Council to legislate relative thereto is to regulate them to promote the general welfare. The Code still withholds from cities the power to suppress and prohibit altogether the establishment, operation and maintenance of such establishments. It is well to recall the rulings of the Court in Kwong Sing v. City of Manila[106] that: The word regulate, as used in subsection (l), section 2444 of the Administrative Code, means and includes the power to control, to govern, and to restrain; but regulate should not be construed as synonymous with suppress or prohibit. Consequently, under the power to regulate laundries, the municipal authorities could make proper police regulations as to the mode in which the employment or business shall be exercised.[107] And in People v. Esguerra,[108] wherein the Court nullified an ordinance of the Municipality of Tacloban which prohibited the selling, giving and dispensing of liquor ratiocinating that the municipality is empowered only to regulate the same and not prohibit. The Court therein declared that: (A)s a general rule when a municipal corporation is specifically given authority or power to regulate or to license and regulate the liquor traffic, power to prohibit is impliedly withheld.[109] These doctrines still hold contrary to petitioners assertion[110] that they were modified by the Code vesting upon City Councils prohibitory powers. Similarly, the City Council exercises regulatory powers over public dancing schools, public dance halls, sauna baths, massage parlors, and other places for entertainment or amusement as found in the first clause of Section 458

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(a) 4 (vii). Its powers to regulate, suppress and suspend such other events or activities for amusement or entertainment, particularly those which tend to disturb the community or annoy the inhabitants and to prohibit certain forms of amusement or entertainment in order to protect the social and moral welfare of the community are stated in the second and third clauses, respectively of the same Section. The several powers of the City Council as provided in Section 458 (a) 4 (vii) of the Code, it is pertinent to emphasize, are separated by semi-colons (;), the use of which indicates that the clauses in which these powers are set forth are independent of each other albeit closely related to justify being put together in a single enumeration or paragraph.[111] These powers, therefore, should not be confused, commingled or consolidated as to create a conglomerated and unified power of regulation, suppression and prohibition.[112] The Congress unequivocably specified the establishments and forms of amusement or entertainment subject to regulation among which are beerhouses, hotels, motels, inns, pension houses, lodging houses, and other similar establishments (Section 458 (a) 4 (iv)), public dancing schools, public dance halls, sauna baths, massage parlors, and other places for entertainment or amusement (Section 458 (a) 4 (vii)). This enumeration therefore cannot be included as among other events or activities for amusement or entertainment, particularly those which tend to disturb the community or annoy the inhabitants or certain forms of amusement or entertainment which the City Council may suspend, suppress or prohibit. The rule is that the City Council has only such powers as are expressly granted to it and those which are necessarily implied or incidental to the exercise thereof. By reason of its limited powers and the nature thereof, said powers are to be construed strictissimi juris and any doubt or ambiguity arising out of the terms used in granting said powers must be construed against the City Council.[113] Moreover, it is a general rule in statutory construction that the express mention of one person, thing, or consequence is tantamount to an express exclusion of all others.Expressio unius est exclusio alterium. This maxim is based upon the rules of logic and the natural workings of human mind. It is particularly applicable in the construction of such statutes as create new rights or remedies, impose penalties or punishments, or otherwise come under the rule of strict construction.[114] The argument that the City Council is empowered to enact the Ordinance by virtue of the general welfare clause of the Code and of Art. 3, Sec. 18 (kk) of the Revised Charter of Manila is likewise without merit. On the first point, the ruling of the Court in People v. Esguerra,[115] is instructive. It held that: Page 17 of 65

The powers conferred upon a municipal council in the general welfare clause, or section 2238 of the Revised Administrative Code, refers to matters not covered by the other provisions of the same Code, and therefore it can not be applied to intoxicating liquors, for the power to regulate the selling, giving away and dispensing thereof is granted specifically by section 2242 (g) to municipal councils. To hold that, under the general power granted by section 2238, a municipal council may enact the ordinance in question, notwithstanding the provision of section 2242 (g), would be to make the latter superfluous and nugatory, because the power to prohibit, includes the power to regulate, the selling, giving away and dispensing of intoxicating liquors. On the second point, it suffices to say that the Code being a later expression of the legislative will must necessarily prevail and override the earlier law, the Revised Charter of Manila. Legis posteriores priores contrarias abrogant, or later statute repeals prior ones which are repugnant thereto. As between two laws on the same subject matter, which are irreconcilably inconsistent, that which is passed later prevails, since it is the latest expression of legislative will.[116] If there is an inconsistency or repugnance between two statutes, both relating to the same subject matter, which cannot be removed by any fair and reasonable method of interpretation, it is the latest expression of the legislative will which must prevail and override the earlier.[117] Implied repeals are those which take place when a subsequently enacted law contains provisions contrary to those of an existing law but no provisions expressly repealing them. Such repeals have been divided into two general classes: those which occur where an act is so inconsistent or irreconcilable with an existing prior act that only one of the two can remain in force and those which occur when an act covers the whole subject of an earlier act and is intended to be a substitute therefor. The validity of such a repeal is sustained on the ground that the latest expression of the legislative will should prevail.[118] In addition, Section 534(f) of the Code states that All general and special laws, acts, city charters, decrees, executive orders, proclamations and administrative regulations, or part or parts thereof which are inconsistent with any of the provisions of this Code are hereby repealed or modified accordingly. Thus, submitting to petitioners interpretation that the Revised Charter of Manila empowers the City Council to prohibit motels, that portion of the Charter stating such must be considered repealed by the Code as it is at variance with the latters provisions granting the City Council mere regulatory powers. It is well to point out that petitioners also cannot seek cover under the general welfare clause authorizing the abatement of nuisances without

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judicial proceedings. That tenet applies to a nuisance per se, or one which affects the immediate safety of persons and property and may be summarily abated under the undefined law of necessity. It can not be said that motels are injurious to the rights of property, health or comfort of the community. It is a legitimate business. If it be a nuisance per accidens it may be so proven in a hearing conducted for that purpose. A motel is not per se a nuisance warranting its summary abatement without judicial intervention.[119] Notably, the City Council was conferred powers to prevent and prohibit certain activities and establishments in another section of the Code which is reproduced as follows: Section 458. Powers, Duties, Functions and Compensation. (a) The sangguniang panlungsod, as the legislative body of the city, shall enact ordinances, approve resolutions and appropriate funds for the general welfare of the city and its inhabitants pursuant to Section 16 of this Code and in the proper exercise of the corporate powers of the city as provided for under Section 22 of this Code, and shall: (1) Approve ordinances and pass resolutions necessary for an efficient and effective city government, and in this connection, shall: . . . (v) Enact ordinances intended to prevent, suppress and impose appropriate penalties for habitual drunkenness in public places, vagrancy, mendicancy, prostitution, establishment and maintenance of houses of ill repute, gambling and other prohibited games of chance, fraudulent devices and ways to obtain money or property, drug addiction, maintenance of drug dens, drug pushing, juvenile delinquency, the printing, distribution or exhibition of obscene or pornographic materials or publications, and such other activities inimical to the welfare and morals of the inhabitants of the city; . . . If it were the intention of Congress to confer upon the City Council the power to prohibit the establishments enumerated in Section 1 of the Ordinance, it would have so declared in uncertain terms by adding them to the list of the matters it may prohibit under the above-quoted Section. The Ordinance now vainly attempts to lump these establishments with houses of ill-repute and expand the City Councils powers in the second and third clauses of Section 458 (a) 4 (vii) of the Code in an effort to overreach its prohibitory powers. It is evident that these establishments may only be regulated in their establishment, operation and maintenance. It is important to distinguish the punishable activities from the establishments themselves. That these establishments are recognized legitimate enterprises can be gleaned from another Section of the Code. Page 18 of 65

Section 131 under the Title on Local Government Taxation expressly mentioned proprietors or operators of massage clinics, sauna, Turkish and Swedish baths, hotels, motels and lodging houses as among the contractors defined in paragraph (h) thereof. The same Section also defined amusement as a pleasurable diversion and entertainment, synonymous to relaxation, avocation, pastime or fun; and amusement places to include theaters, cinemas, concert halls, circuses and other places of amusement where one seeks admission to entertain oneself by seeing or viewing the show or performances. Thus, it can be inferred that the Code considers these establishments as legitimate enterprises and activities. It is well to recall the maxim reddendo singula singulis which means that words in different parts of a statute must be referred to their appropriate connection, giving to each in its place, its proper force and effect, and, if possible, rendering none of them useless or superfluous, even if strict grammatical construction demands otherwise. Likewise, where words under consideration appear in different sections or are widely dispersed throughout an act the same principle applies.[120] Not only does the Ordinance contravene the Code, it likewise runs counter to the provisions of P.D. 499. As correctly argued by MTDC, the statute had already converted the residential Ermita-Malate area into a commercial area. The decree allowed the establishment and operation of all kinds of commercial establishments except warehouse or open storage depot, dump or yard, motor repair shop, gasoline service station, light industry with any machinery or funeral establishment. The rule is that for an ordinance to be valid and to have force and effect, it must not only be within the powers of the council to enact but the same must not be in conflict with or repugnant to the general law.[121] As succinctly illustrated in Solicitor General v. Metropolitan Manila Authority:[122] The requirement that the enactment must not violate existing law explains itself. Local political subdivisions are able to legislate only by virtue of a valid delegation of legislative power from the national legislature (except only that the power to create their own sources of revenue and to levy taxes is conferred by the Constitution itself). They are mere agents vested with what is called the power of subordinate legislation. As delegates of the Congress, the local government units cannot contravene but must obey at all times the will of their principal. In the case before us, the enactment in question, which are merely local in origin cannot prevail against the decree, which has the force and effect of a statute.[123] Petitioners contend that the Ordinance enjoys the presumption of validity. While this may be the rule, it has already been held that although the presumption is always in favor of the validity or reasonableness of the ordinance, such presumption must nevertheless be set aside when the

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invalidity or unreasonableness appears on the face of the ordinance itself or is established by proper evidence. The exercise of police power by the local government is valid unless it contravenes the fundamental law of the land, or an act of the legislature, or unless it is against public policy or is unreasonable, oppressive, partial, discriminating or in derogation of a common right.[124] Conclusion All considered, the Ordinance invades fundamental personal and property rights and impairs personal privileges. It is constitutionally infirm. The Ordinance contravenes statutes; it is discriminatory and unreasonable in its operation; it is not sufficiently detailed and explicit that abuses may attend the enforcement of its sanctions. And not to be forgotten, the City Council under the Code had no power to enact the Ordinance and is therefore ultra vires, null and void. Concededly, the challenged Ordinance was enacted with the best of motives and shares the concern of the public for the cleansing of the Ermita-Malate area of its social sins. Police power legislation of such character deserves the full endorsement of the judiciary we reiterate our support for it. But inspite of its virtuous aims, the enactment of the Ordinance has no statutory or constitutional authority to stand on. Local legislative bodies, in this case, the City Council, cannot prohibit the operation of the enumerated establishments under Section 1 thereof or order their transfer or conversion without infringing the constitutional guarantees of due process and equal protection of laws not even under the guise of police power. WHEREFORE, the Petition is hereby DENIED and the decision of the Regional Trial Court declaring the Ordinance void is AFFIRMED. Costs against petitioners. SO ORDERED. Republic of the Philippines SUPREME COURT Manila SPECIAL SECOND DIVISION G.R. No. 131457 August 19, 1999 HON. CARLOS O. FORTICH, PROVINCIAL GOVERNOR OF BUKIDNON, HON. REY B. BAULA, MUNICIPAL MAYOR OF SUMILAO, BUKIDNON, NQSR MANAGEMENT AND DEVELOPMENT CORPORATION, petitioners, vs. HON. RENATO C. CORONA, DEPUTY EXECUTIVE SECRETARY, HON. ERNESTO D. GARILAO, SECRETARY OF THE DEPARTMENT OF AGRARIAN REFORM, respondents. RESOLUTION YNARES-SANTIAGO, J.: Page 19 of 65

This resolves the pending incidents before us, namely, respondents' and intervenors' separate motions for reconsideration of our Resolution dated November 17, 1998, as well as their motions to refer this case to this Court En banc. Respondents and intervenors jointly argue, in fine, that our Resolution dated November 17, 1998, wherein we voted two-two on the separate motions for reconsideration of our earlier Decision or April 24, 1998, as a result of which the Decision was deemed affirmed, did not effectively resolve the said motions for reconsideration inasmuch as the matter should have been referred to the Court sitting en banc, pursuant to Article VIII, Section 4(3) of the Constitution. Respondents and intervenors also assail our Resolution dated January 27, 1999, wherein we noted without action the intervenors' "Motion For Reconsideration With Motion To Refer The Matter To The Court En Banc" filed on December 3, 1998, on the following considerations, to wit: the movants have no legal personality to further seek redress before the Court after their motion for leave to intervene in this case was denied in the April 24, 1998 Decision. Their subsequent motion for reconsideration of the said decision, with a prayer to resolve the motion to the Court En Banc, was also denied in the November 17, 1998 Resolution of the Court. Besides, their aforesaid motion of December 3, 1998 is in the nature of a second motion for reconsideration which is a forbidden motion (Section 2, Rule 52 in relation to Section 4, Rule 56 of the 1997 Rules of Civil Procedure). The impropriety of movants' December 3, 1998 motion becomes all the more glaring considering that all the respondents in this case did not anymore join them (movants) ill seeking a reconsideration of the November 17, 1998 Resolution.1 Subsequently, respondents, through the Office of the Solicitor General, filed their "Motion For Reconsideration Of The Resolution Dated November 17, 1998 And For Referral Of The Case To This Honorable Court En Banc (With Urgent Prayer For Issuance Of A Restraining Order)" on December 3, 1998, accompanied by a "Manifestation and Motion"2 and a copy of the Registered Mail Bill3 evidencing filing of the said motion for reconsideration to this Court by registered mail. In their respective motions for reconsideration, both respondents and intervenors pray that this case be referred to this Court en banc. They contend that inasmuch as their earlier motions for reconsideration (of the Decision dated April 24, 1998) were resolved by a vote of two-two, the required number to carry a decision, i.e., three, was not met. Consequently, the case should be referred to and be decided by this Court en banc, relying on the following constitutional provision:

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Cases or matters heard by a division shall be decided or resolved with the concurrence of a majority of the Members who actually took part in the deliberations on the issues in the case and voted thereon, and in no case without the concurrence of at least three of such Members. When the required number is not obtained, the case shall be decided en banc: Provided, that no doctrine or principle of law laid down by the Court in a decision rendered en banc or in division may be modified or reversed except by the Court sitting en banc.4 A careful reading of the above constitutional provision, however, reveals the intention of the framers to draw a distinction between cases, on the one hand, and matters, on the other hand, such that cases are "decided" whilematters, which include motions, are "resolved". Otherwise put, the word "decided" must refer to "cases"; while the word "resolved" must refer to "matters", applying the rule of reddendo singula singulis. This is true not only in the interpretation of the above-quoted Article VIII, Section 4(3), but also of the other provisions of the Constitution where these words appear.5 With the aforesaid rule of construction in mind, it is clear that only cases are referred to the Court en banc for decision whenever the required number of votes is not obtained. Conversely, the rule does not apply where, as in this case, the required three votes is not obtained in the resolution of a motion for reconsideration. Hence, the second sentence of the aforequoted provision speaks only of "case" and not "matter". The reason is simple. The above-quoted Article VIII, Section 4(3) pertains to the disposition of cases by a division. If there is a tie in the voting, there is no decision. The only way to dispose of the case then is to refer it to the Court en banc. On the other hand, if a case has already been decided by the division and the losing party files a motion for reconsideration, the failure of the division to resolve the motion because of a tie in the voting does not leave the case undecided. There is still the decision which must stand in view of the failure of the members of the division to muster the necessary vote for its reconsideration. Quite plainly, if the voting results in a tie, the motion for reconsideration is lost. The assailed decision is not reconsidered and must therefore be deemed affirmed. Such was the ruling of this Court in the Resolution of November 17, 1998. It is the movants' further contention in support of their plea for the referral of this case to the Court en banc that the issues submitted in their separate motions are of first impression. In the opinion penned by Mr. Justice Antonio M. Martinez during the resolution of the motions for reconsideration on November 17, 1998, the following was expressed: Regrettably, the issues presented before us by the movants are matters of no extraordinary import to merit the attention of the Court En Banc. Page 20 of 65

Specifically, the issue of whether or not the power of the local government units to reclassify lands is subject to the approval of the DAR is no longer novel, this having been decided by this Court in the case of Province of Camarines Sur, et al. vs. Court of Appeals wherein we held that local government units need not obtain the approval of the DAR to convert or reclassify lands from agricultural to non-agricultural use. The dispositive portion of the Decision in the aforecited case states: WHEREFORE, the petition is GRANTED and the questioned decision of the Court of Appeals is set aside insofar as it (a) nullifies the trial court's order allowing the Province of Camarines Sur to take possession of private respondent's property (b) orders the trial court to suspended the exportation proceedings; and (c) requires the Province of Camarines Sur to obtain the approval of the Department of Agrarian Reform to convert or reclassify private respondents' property from agricultural to nonagricultural use. xxx xxx x x x(Emphasis supplied) Moreover, the Decision sought to be reconsidered was arrived at by a unanimous vote of all five (5) members of the Second Division of this Court, Stated otherwise, this Second Division is of the opinion that the matters raised by movants are nothing new and do not deserve the consideration of the Court en banc. Thus, the participation of the full Court in the resolution of movants' motions for reconsideration would be inappropriate.6 The contention, therefore, that our Resolution of November 17, 1998 did not dispose of the earlier motions for reconsideration of the Decision dated April 24, 1998 is flawed. Consequently, the present motions for reconsideration necessarily partake of the nature of a second motion for reconsideration which, according to the clear and unambiguous language of Rule 56, Section 4, in relation to Rule 52, Section 2, of the 1997 Rules of Civil Procedure, is prohibited. True, there are exceptional cases when this Court may entertain a second motion for reconsideration, such as where there are extraordinarily persuasive reasons. Even then, we have ruled that such second motions for reconsideration must be filed with express leave of court first obtained.7 In this case, not only did movants fail to ask for prior leave of court, but more importantly, they have been unable to show that there are exceptional reasons for us to give due course to their second motions for reconsideration. Stripped of the arguments for referral of this incident to the Court en banc, the motions subject of this resolution are nothing more but rehashes of the motions for reconsideration which have been denied in the Resolution of November 17, 1998. To be sure, the allegations

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contained therein have already been raised before and passed upon by this Court in the said Resolution. The crux of the controversy is the validity of the "Win-Win" Resolution dated November 7, 1997. We maintain that the same is void and of no legal effect considering that the March 29, 1996 decision of the Office of the President had already become final and executory even prior to the filing of the motion for reconsideration which became the basis of the said "Win-Win" Resolution. This ruling, quite understandably, sparked a litany of protestations on the part of respondents and intervenors including entreaties for a liberal interpretation of the rules. The sentiment was that notwithstanding its importance and far-reaching effects, the case was disposed of on a technicality. The situation, however, is not as simple as what the movants purport it to be. While it may be true that on its face the nullification of the "Win-Win" Resolution was grounded on a procedural rule pertaining to the reglementary period to appeal or move for reconsideration, the underlying consideration therefor was the protection of the substantive rights of petitioners. The succinct words of Mr. Justice Artemio V. Panganiban are quoted in the November 17, 1998 opinion of Mr. Justice Martinez, viz.: "Just as a losing party has the right to file an appeal within the prescribed period, the winning party also has the correlative right to enjoy the finality of the resolution of his/her case."8 In other words, the finality of the March 29, 1996 OP Decision accordingly vested appurtenant rights to the land in dispute on petitioners as well as on the people of Bukidnon and other parts of the country who stand to be benefited by the development of the property. The issue in this case, therefore, is not a question of technicality but of substance and merit.9 Before finally disposing of these pending matters, we feel it necessary to rule once and for all on the legal standing of intervenors in this case. In their present motions, intervenors insist that they are real parties in interest inasmuch as they have already been issued certificates of land ownership award, or CLOAs, and that while they are seasonal farmworkers at the plantation, they have been identified by the DAR as qualified beneficiaries of the property. These arguments are, however, nothing new as in fact they have already been raised in intervenors' earlier motion for reconsideration of our April 24, 1998 Decision. Again as expressed in the opinion of Mr. Justice Martinez, intervenors, who are admittedly not regular but seasonal farmworkers, have no legal or actual and substantive interest over the subject land inasmuch as they have no right to own the land. Rather, their right is limited only to a just share of the fruits of the land.10 Moreover, the "Win-Win" Resolution itself states that the qualified beneficiaries have yet to be carefully and meticulously determined by the Page 21 of 65

Department of Agrarian Reform.11 Absent any definitive finding of the Department of Agrarian Reform, intervenors cannot as yet be deemed vested with sufficient interest in the controversy as to be qualified to intervene in this case. Likewise, the issuance of the CLOA's to them does not grant them the requisite standing in view of the nullity of the "WinWin" Resolution. No legal rights can emanate from a resolution that is null and void. WHEREFORE, based on the foregoing, the following incidents, namely: intervenors' "Motion For Reconsideration With Motion To Refer The Matter To The Court En Banc," dated December 3, 1998; respondents' "Motion For Reconsideration Of The Resolution Dated November 17, 1998 And For Referral Of The Case To This Honorable Court En Banc (With Urgent Prayer For Issuance Of A Restraining Order)," dated December 2, 1998; and intervenors' "Urgent Omnibus Motion For The Supreme Court Sitting En Banc To Annul The Second Division's Resolution Dated 27 January 1999 And Immediately Resolve The 28 May 1998 Motion For Reconsideration Filed By The Intervenors," dated March 2, 1999; are all DENIED with FINALITY. No further motion, pleading, or paper will be entertained in this case. SO ORDERED. H. Use of the word SHALL MUST OUGHT SECOND DIVISION [G.R. No. 128448. February 1, 2001] SPOUSES ALEJANDRO MIRASOL and LILIA E. MIRASOL, petitioners, vs. THE COURT OF APPEALS, PHILIPPINE NATIONAL BANK, and PHILIPPINE EXCHANGE CO., INC., respondents. DECISION QUISUMBING, J.: This is a petition for review on certiorari of the decision of the Court of Appeals dated July 22, 1996, in CA-G.R. CV No. 38607, as well as of its resolution of January 23, 1997, denying petitioners motion for reconsideration. The challenged decision reversed the judgment of the Regional Trial Court of Bacolod City, Branch 42 in Civil Case No. 14725. The factual background of this case, as gleaned from the records, is as follows: The Mirasols are sugarland owners and planters. In 1973-1974, they produced 70,501.08 piculs[1] of sugar, 25,662.36 of which were assigned for export. The following crop year, their acreage planted to the same crop was lower, yielding 65,100 piculs of sugar, with 23,696.40 piculs marked for export.

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Private respondent Philippine National Bank (PNB) financed the Mirasols sugar production venture for crop years, 1973-1974 and 1974-1975 under a crop loan financing scheme. Under said scheme, the Mirasols signed Credit Agreements, a Chattel Mortgage on Standing Crops, and a Real Estate Mortgage in favor of PNB. The Chattel Mortgage empowered PNB as the petitioners attorney-in-fact to negotiate and to sell the latters sugar in both domestic and export markets and to apply the proceeds to the payment of their obligations to it. Exercising his law-making powers under Martial Law, then President Ferdinand Marcos issued Presidential Decree (P.D.) No. 579[2] in November, 1974. The decree authorized private respondent Philippine Exchange Co., Inc. (PHILEX) to purchase sugar allocated for export to the United States and to other foreign markets. The price and quantity was determined by the Sugar Quota Administration, PNB, the Department of Trade and Industry, and finally, by the Office of the President. The decree further authorized PNB to finance PHILEXs purchases. Finally, the decree directed that whatever profit PHILEX might realize from sales of sugar abroad was to be remitted to a special fund of the national government, after commissions, overhead expenses and liabilities had been deducted. The government offices and entities tasked by existing laws and administrative regulations to oversee the sugar export pegged the purchase price of export sugar in crop years 1973-1974 and 1974-1975 at P180.00 per picul. PNB continued to finance the sugar production of the Mirasols for crop years 1975-1976 and 1976-1977. These crop loans and similar obligations were secured by real estate mortgages over several properties of the Mirasols and chattel mortgages over standing crops. Believing that the proceeds of their sugar sales to PNB, if properly accounted for, were more than enough to pay their obligations, petitioners asked PNB for an accounting of the proceeds of the sale of their export sugar. PNB ignored the request. Meanwhile, petitioners continued to avail of other loans from PNB and to make unfunded withdrawals from their current accounts with said bank. PNB then asked petitioners to settle their due and demandable accounts. As a result of these demands for payment, petitioners on August 4, 1977, conveyed to PNB real properties valued atP1,410,466.00 by way of dacion en pago, leaving an unpaid overdrawn account of P1,513,347.78. On August 10, 1982, the balance of outstanding sugar crop and other loans owed by petitioners to PNB stood at P15,964,252.93. Despite demands, the Mirasols failed to settle said due and demandable accounts. PNB then proceeded to extrajudicially foreclose the mortgaged properties. After applying the proceeds of the auction sale of the mortgaged realties, PNB still had a deficiency claim of P12,551,252.93. Page 22 of 65

Petitioners continued to ask PNB to account for the proceeds of the sale of their export sugar for crop years 1973-1974 and 1974-1975, insisting that said proceeds, if properly liquidated, could offset their outstanding obligations with the bank. PNB remained adamant in its stance that under P.D. No. 579, there was nothing to account since under said law, all earnings from the export sales of sugar pertained to the National Government and were subject to the disposition of the President of the Philippines for public purposes. On August 9, 1979, the Mirasols filed a suit for accounting, specific performance, and damages against PNB with the Regional Trial Court of Bacolod City, docketed as Civil Case No. 14725. On June 16, 1987, the complaint was amended to implead PHILEX as party-defendant. The parties agreed at pre-trial to limit the issues to the following: 1. The constitutionality and/or legality of Presidential Decrees numbered 338, 579, and 1192; 2. The determination of the total amount allegedly due the plaintiffs from the defendants corresponding to the allege(d) unliquidated cost price of export sugar during crop years 1973-1974 and 1974-1975.[3] After trial on the merits, the trial court decided as follows: WHEREFORE, the foregoing premises considered, judgment is hereby rendered in favor of the plaintiffs and against the defendants Philippine National Bank (PNB) and Philippine Exchange Co., Inc. (PHILEX): (1)Declaring Presidential Decree 579 enacted on November 12, 1974 and all circulars, as well as policies, orders and other issuances issued in furtherance thereof, unconstitutional and therefore, NULL and VOID being in gross violation of the Bill of Rights; (2) Ordering defendants PNB and PHILEX to pay, jointly and severally, plaintiffs the whole amount corresponding to the residue of the unliquidated actual cost price of 25,662 piculs in export sugar for crop year 1973-1974 at an average price of P300.00 per picul, deducting therefrom however, the amount of P180.00 already paid in advance plus the allowable deductions in service fees and other charges; (3) And also, for the same defendants to pay, jointly and severally, same plaintiffs the whole amount corresponding to the unpaid actual price of 14,596 piculs of export sugar for crop year 1974-1975 at an average rate of P214.14 per picul minus however, the sum of P180.00 per picul already paid by the defendants in advance and the allowable deducting (sic) in service fees and other charges. The unliquidated amount of money due the plaintiffs but withheld by the defendants, shall earn the legal rate of interest at 12% per annum

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computed from the date this action was instituted until fully paid; and, finally (4) Directing the defendants PNB and PHILEX to pay, jointly and severally, plaintiffs the sum of P50,000.00 in moral damages and the amount of P50,000.00 as attorneys fees, plus the costs of this litigation. SO ORDERED.[4] The same was, however, modified by a Resolution of the trial court dated May 14, 1992, which added the following paragraph: This decision should however, be interpreted without prejudice to whatever benefits that may have accrued in favor of the plaintiffs with the passage and approval of Republic Act 7202 otherwise known as the Sugar Restitution Law, authorizing the restitution of losses suffered by the plaintiffs from Crop year 1974-1975 to Crop year 1984-1985 occasioned by the actuations of government-owned and controlled agencies. (Underscoring in the original). SO ORDERED.[5] The Mirasols then filed an appeal with the respondent court, docketed as CA-G.R. CV No. 38607, faulting the trial court for not nullifying the dacion en pago and the mortgage contracts, as well as the foreclosure of their mortgaged properties. Also faulted was the trial courts failure to award them the full money claims and damages sought from both PNB and PHILEX. On July 22, 1996, the Court of Appeals reversed the trial court as follows: WHEREFORE, this Court renders judgment REVERSING the appealed Decision and entering the following verdict: 1. Declaring the dacion en pago and the foreclosure of the mortgaged properties valid; 2. Ordering the PNB to render an accounting of the sugar account of the Mirasol[s] specifically stating the indebtedness of the latter to the former and the proceeds of Mirasols 1973-1974 and 1974-1975 sugar production sold pursuant to and in accordance with P.D. 579 and the issuances therefrom; 3. Ordering the PNB to recompute in accordance with RA 7202 Mirasols indebtedness to it crediting to the latter payments already made as well as the auction price of their foreclosed real estate and stipulated value of their properties ceded to PNB in the dacon (sic) en pago; 4. Whatever the result of the recomputation of Mirasols account, the outstanding balance or the excess payment shall be governed by the pertinent provisions of RA 7202. SO ORDERED.[6] On August 28, 1996, petitioners moved for reconsideration, which the appellate court denied on January 23, 1997. Hence, the instant petition, with petitioners submitting the following issues for our resolution: Page 23 of 65

1. Whether the Trial Court has jurisdiction to declare a statute unconstitutional without notice to the Solicitor General where the parties have agreed to submit such issue for the resolution of the Trial Court. 2. Whether PD 579 and subsequent issuances[7] thereof are unconstitutional. 3. Whether the Honorable Court of Appeals committed manifest error in not applying the doctrine of piercing the corporate veil between respondents PNB and PHILEX. 4. Whether the Honorable Court of Appeals committed manifest error in upholding the validity of the foreclosure on petitioners property and in upholding the validity of the dacion en pago in this case. 5. Whether the Honorable Court of Appeals committed manifest error in not awarding damages to petitioners grounds relied upon the allowance of the petition. (Underscored in the original)[8] On the first issue. It is settled that Regional Trial Courts have the authority and jurisdiction to consider the constitutionality of a statute, presidential decree, or executive order.[9] The Constitution vests the power of judicial review or the power to declare a law, treaty, international or executive agreement, presidential decree, order, instruction, ordinance, or regulation not only in this Court, but in all Regional Trial Courts.[10] In J.M. Tuason and Co. v. Court of Appeals, 3 SCRA 696 (1961) we held: Plainly, the Constitution contemplates that the inferior courts should have jurisdiction in cases involving constitutionality of any treaty or law, for it speaks of appellate review of final judgments of inferior courts in cases where such constitutionality happens to be in issue.[11] Furthermore, B.P. Blg. 129 grants Regional Trial Courts the authority to rule on the conformity of laws or treaties with the Constitution, thus: SECTION 19. Jurisdiction in civil cases. Regional Trial Courts shall exercise exclusive original jurisdiction: (1) In all civil actions in which the subject of the litigations is incapable of pecuniary estimation; The pivotal issue, which we must address, is whether it was proper for the trial court to have exercised judicial review. Petitioners argue that the Court of Appeals erred in finding that it was improper for the trial court to have declared P.D. No. 579[12] unconstitutional, since petitioners had not complied with Rule 64, Section 3, of the Rules of Court. Petitioners contend that said Rule specifically refers only to actions for declaratory relief and not to an ordinary action for accounting, specific performance, and damages. Petitioners contentions are bereft of merit. Rule 64, Section 3 of the Rules of Court provides:

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SEC. 3. Notice to Solicitor General. In any action which involves the validity of a statute, or executive order or regulation, the Solicitor General shall be notified by the party attacking the statute, executive order, or regulation, and shall be entitled to be heard upon such question. This should be read in relation to Section 1 [c] of P.D. No. 478,[13] which states in part: SECTION 1. Functions and Organizations (1) The Office of the Solicitor General shallhave the following specific powers and functions: xxx [c] Appear in any court in any action involving the validity of any treaty, law, executive order or proclamation, rule or regulation when in his judgment his intervention is necessary or when requested by the court. It is basic legal construction that where words of command such as shall, must, or ought are employed, they are generally and ordinarily regarded as mandatory.[14] Thus, where, as in Rule 64, Section 3 of the Rules of Court, the word shall is used, a mandatory duty is imposed, which the courts ought to enforce. The purpose of the mandatory notice in Rule 64, Section 3 is to enable the Solicitor General to decide whether or not his intervention in the action assailing the validity of a law or treaty is necessary. To deny the Solicitor General such notice would be tantamount to depriving him of his day in court. We must stress that, contrary to petitioners stand, the mandatory notice requirement is not limited to actions involving declaratory relief and similar remedies. The rule itself provides that such notice is required in any action and not just actions involving declaratory relief. Where there is no ambiguity in the words used in the rule, there is no room for construction.[15] In all actions assailing the validity of a statute, treaty, presidential decree, order, or proclamation, notice to the Solicitor General is mandatory. In this case, the Solicitor General was never notified about Civil Case No. 14725. Nor did the trial court ever require him to appear in person or by a representative or to file any pleading or memorandum on the constitutionality of the assailed decree. Hence, the Court of Appeals did not err in holding that lack of the required notice made it improper for the trial court to pass upon the constitutional validity of the questioned presidential decrees. As regards the second issue, petitioners contend that P.D. No. 579 and its implementing issuances are void for violating the due process clause and the prohibition against the taking of private property without just compensation. Petitioners now ask this Court to exercise its power of judicial review. Page 24 of 65

Jurisprudence has laid down the following requisites for the exercise of this power: First, there must be before the Court an actual case calling for the exercise of judicial review. Second, the question before the Court must be ripe for adjudication. Third, the person challenging the validity of the act must have standing to challenge. Fourth, the question of constitutionality must have been raised at the earliest opportunity, and lastly, the issue of constitutionality must be the very lis mota of the case. [16] As a rule, the courts will not resolve the constitutionality of a law, if the controversy can be settled on other grounds.[17] The policy of the courts is to avoid ruling on constitutional questions and to presume that the acts of the political departments are valid, absent a clear and unmistakable showing to the contrary. To doubt is to sustain. This presumption is based on the doctrine of separation of powers. This means that the measure had first been carefully studied by the legislative and executive departments and found to be in accord with the Constitution before it was finally enacted and approved.[18] The present case was instituted primarily for accounting and specific performance. The Court of Appeals correctly ruled that PNBs obligation to render an accounting is an issue, which can be determined, without having to rule on the constitutionality of P.D. No. 579. In fact there is nothing in P.D. No. 579, which is applicable to PNBs intransigence in refusing to give an accounting. The governing law should be the law on agency, it being undisputed that PNB acted as petitioners agent. In other words, the requisite that the constitutionality of the law in question be the very lis mota of the case is absent. Thus we cannot rule on the constitutionality of P.D. No. 579. Petitioners further contend that the passage of R.A. No. 7202[19] rendered P.D. No. 579 unconstitutional, since R.A. No. 7202 affirms that under P.D. 579, the due process clause of the Constitution and the right of the sugar planters not to be deprived of their property without just compensation were violated. A perusal of the text of R.A. No. 7202 shows that the repealing clause of said law merely reads: SEC. 10. All laws, acts, executive orders and circulars in conflict herewith are hereby repealed or modified accordingly. The settled rule of statutory construction is that repeals by implication are not favored.[20] R.A. No. 7202 cannot be deemed to have repealed P.D. No. 579. In addition, the power to declare a law unconstitutional does not lie with the legislature, but with the courts.[21] Assuming arguendo that R.A. No. 7202 did indeed repeal P.D. No. 579, said repeal is not a legislative declaration finding the earlier law unconstitutional.

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To resolve the third issue, petitioners ask us to apply the doctrine of piercing the veil of corporate fiction with respect to PNB and PHILEX. Petitioners submit that PHILEX was a wholly-owned subsidiary of PNB prior to the latters privatization. We note, however, that the appellate court made the following finding of fact: 1. PNB and PHILEX are separate juridical persons and there is no reason to pierce the veil of corporate personality. Both existed by virtue of separate organic acts. They had separate operations and different purposes and powers.[22] Findings of fact by the Court of Appeals are conclusive and binding upon this Court unless said findings are not supported by the evidence.[23] Our jurisdiction in a petition for review under Rule 45 of the Rules of Court is limited only to reviewing questions of law and factual issues are not within its province.[24] In view of the aforequoted finding of fact, no manifest error is chargeable to the respondent court for refusing to pierce the veil of corporate fiction. On the fourth issue, the appellate court found that there were two sets of accounts between petitioners and PNB, namely: 1. The accounts relative to the loan financing scheme entered into by the Mirasols with PNB (PNBs Brief, p. 16) On the question of how much the PNB lent the Mirasols for crop years 1973-1974 and 1974-1975, the evidence recited by the lower court in its decision was deficient. We are offered (sic) PNB the amount of FIFTEEN MILLION NINE HUNDRED SIXTY FOUR THOUSAND TWO HUNDRED FIFTY TWO PESOS and NINETY THREE Centavos (Ps15,964,252.93) but this is the alleged balance the Mirasols owe PNB covering the years 1975 to 1982. 2. The account relative to the Mirasols current account Numbers 5186 and 5177 involving the amount of THREE MILLION FOUR HUNDRED THOUSAND Pesos (P3,400,000.00) PNB claims against the Mirasols. (PNBs Brief, p. 17) In regard to the first set of accounts, besides the proceeds from PNBs sale of sugar (involving the defendant PHILEX in relation to the export portion of the stock), the PNB foreclosed the Mirasols mortgaged properties realizing therefrom in 1982 THREE MILLION FOUR HUNDRED THIRTEEN THOUSAND Pesos (P3,413,000.00), the PNB itself having acquired the properties as the highest bidder. As to the second set of accounts, PNB proposed, and the Mirasols accepted, a dacion en pago scheme by which the Mirasols conveyed to PNB pieces of property valued at ONE MILLION FOUR HUNDRED Page 25 of 65

TEN THOUSAND FOUR HUNDRED SIXTY-SIX Pesos (Ps1,410,466.00) (PNBs Brief, pp. 16-17).[25] Petitioners now claim that the dacion en pago and the foreclosure of their mortgaged properties were void for want of consideration. Petitioners insist that the loans granted them by PNB from 1975 to 1982 had been fully paid by virtue of legal compensation. Hence, the foreclosure was invalid and of no effect, since the mortgages were already fully discharged. It is also averred that they agreed to the dacion only by virtue of a martial law Arrest, Search, and Seizure Order (ASSO). We find petitioners arguments unpersuasive. Both the lower court and the appellate court found that the Mirasols admitted that they were indebted to PNB in the sum stated in the latters counterclaim.[26] Petitioners nonetheless insist that the same can be offset by the unliquidated amounts owed them by PNB for crop years 1973-74 and 1974-75. Petitioners argument has no basis in law. For legal compensation to take place, the requirements set forth in Articles 1278 and 1279 of the Civil Code must be present. Said articles read as follows: Art. 1278. Compensation shall take place when two persons, in their own right, are creditors and debtors of each other. Art. 1279. In order that compensation may be proper, it is necessary: (1) That each one of the obligors be bound principally, and that he be at the same time a principal creditor of the other; (2) That both debts consist in a sum of money, or if the things due are consumable, they be of the same kind, and also of the same quality if the latter has been stated; (3) That the two debts are due; (4) That they be liquidated and demandable; (5) That over neither of them there be any retention or controversy, commenced by third persons and communicated in due time to the debtor. In the present case, set-off or compensation cannot take place between the parties because: First, neither of the parties are mutually creditors and debtors of each other. Under P.D. No. 579, neither PNB nor PHILEX could retain any difference claimed by the Mirasols in the price of sugar sold by the two firms. P.D. No. 579 prescribed where the profits from the sales are to be paid, to wit: SECTION 7. x x x After deducting its commission of two and one-half (2-1/2%) percent of gross sales, the balance of the proceeds of sugar trading operations for every crop year shall be set aside by the Philippine Exchange Company, Inc,. as profits which shall be paid to a special fund

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of the National Government subject to the disposition of the President for public purposes. Thus, as correctly found by the Court of Appeals, there was nothing with which PNB was supposed to have off-set Mirasols admitted indebtedness.[27] Second, compensation cannot take place where one claim, as in the instant case, is still the subject of litigation, as the same cannot be deemed liquidated.[28] With respect to the duress allegedly employed by PNB, which impugned petitioners consent to the dacion en pago, both the trial court and the Court of Appeals found that there was no evidence to support said claim. Factual findings of the trial court, affirmed by the appellate court, are conclusive upon this Court.[29] On the fifth issue, the trial court awarded petitioners P50,000.00 in moral damages and P50,000.00 in attorneys fees. Petitioners now theorize that it was error for the Court of Appeals to have deleted these awards, considering that the appellate court found PNB breached its duty as an agent to render an accounting to petitioners. An agents failure to render an accounting to his principal is contrary to Article 1891 of the Civil Code.[30] The erring agent is liable for damages under Article 1170 of the Civil Code, which states: Those who in the performance of their obligations are guilty of fraud, negligence, or delay, and those who in any manner contravene the tenor thereof, are liable for damages. Article 1170 of the Civil Code, however, must be construed in relation to Article 2217 of said Code which reads: Moral damages include physical suffering, mental anguish, fright, serious anxiety, besmirched reputation, wounded feelings, moral shock, social humiliation, and similar injury. Though incapable of pecuniary computation, moral damages may be recovered if they are the proximate result of the defendants wrongful act or omission. Moral damages are explicitly authorized in breaches of contract where the defendant acted fraudulently or in bad faith.[31] Good faith, however, is always presumed and any person who seeks to be awarded damages due to the acts of another has the burden of proving that the latter acted in bad faith, with malice, or with ill motive. In the instant case, petitioners have failed to show malice or bad faith[32] on the part of PNB in failing to render an accounting. Absent such showing, moral damages cannot be awarded. Nor can we restore the award of attorneys fees and costs of suit in favor of petitioners. Under Article 2208 (5) of the Civil Code, attorneys fees are allowed in the absence of stipulation only if the defendant acted in gross Page 26 of 65

and evident bad faith in refusing to satisfy the plaintiffs plainly valid, just, and demandable claim. As earlier stated, petitioners have not proven bad faith on the part of PNB and PHILEX. WHEREFORE, the instant petition is DENIED and the assailed decision of the respondent court in CA-G.R. CV 38607 AFFIRMED. Costs against petitioners. SO ORDERED. Republic of the Philippines SUPREME COURT Manila EN BANC G.R. No. 112099 February 21, 1995 ACHILLES C. BERCES, SR., petitioner, vs. HON. EXECUTIVE SECRETARY TEOFISTO T. GUINGONA, JR., CHIEF PRESIDENTIAL LEGAL COUNSEL ANTONIO CARPIO and MAYOR NAOMI C. CORRAL OF TIWI, ALBAY, respondents. QUIASON, J.: This is a petition for certiorari and prohibition under Rule 65 of the Revised Rules of Court with prayer for mandatory preliminary injunction, assailing the Orders of the Office of the President as having been issued with grave abuses of discretion. Said Orders directed the stay of execution of the decision of the Sangguniang Panlalawigan suspending the Mayor of Tiwi, Albay from office. I. Petitioner filed two administrative cases against respondent Naomi C. Corral, the incumbent Mayor of Tiwi, Albay with the Sangguniang Panlalawigan of Albay, to wit: (1) Administrative Case No. 02-92 for abuse of authority and/or oppression for non-payment of accrued leave benefits due the petitioner amounting to P36,779.02. (2) Administrative Case No. 05-92 for dishonesty and abuse of authority for installing a water pipeline which is being operated, maintained and paid for by the municipality to service respondent's private residence and medical clinic. On July 1, 1993, the Sangguniang Panlalawigan disposed the two Administrative cases in the following manner: (1) Administrative Case No. 02-92 ACCORDINGLY, respondent Mayor Naomi C. Corral of Tiwi, Albay, is hereby ordered to pay Achilles Costo Berces, Sr. the sum of THIRTY-SIX THOUSAND AND SEVEN HUNDRED SEVENTY-NINE PESOS and TWO CENTAVOS (P36,779.02) per Voucher No. 352, plus legal interest due thereon from the time it was approved in audit up to final payment, it being legally due the Complainant representing the money

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value of his leave credits accruing for services rendered in the municipality from 1988 to 1992 as a duly elected Municipal Councilor. IN ADDITION, respondent Mayor NAOMI C. CORRAL is hereby ordered SUSPENDED from office as Municipal Mayor of Tiwi, Albay, for a period of two (2) months, effective upon receipt hereof for her blatant abuse of authority coupled with oppression as a public example to deter others similarly inclined from using public office as a tool for personal vengeance, vindictiveness and oppression at the expense of the Taxpayer (Rollo, p. 14). (2) Administrative Case No. 05-92 WHEREFORE, premises considered, respondent Mayor NAOMI C. CORRAL of Tiwi, Albay, is hereby sentenced to suffer the penalty of SUSPENSION from office as Municipal Mayor thereof for a period of THREE (3) MONTHS beginning after her service of the first penalty of suspension ordered in Administrative Case No. 02-92. She is likewise ordered to reimburse the Municipality of Tiwi One-half of the amount the latter have paid for electric and water bills from July to December 1992, inclusive (Rollo, p. 16). Consequently, respondent Mayor appealed to the Office of the President questioning the decision and at the same time prayed for the stay of execution thereof in accordance with Section 67(b) of the Local Government Code, which provides: Administrative Appeals. Decision in administrative cases may, within thirty (30) days from receipt thereof, be appealed to the following: xxx xxx xxx (b) The Office of the President, in the case of decisions of the sangguniang panlalawigan and the sangguniang panglungsod of highly urbanized cities and independent component cities. Acting on the prayer to stay execution during the pendency of the appeal, the Office of the President issued an Order on July 28, 1993, the pertinent portions of which read as follows: xxx xxx xxx The stay of the execution is governed by Section 68 of R.A. No. 7160 and Section 6 of Administrative Order No. 18 dated 12 February 1987, quoted below: Sec. 68. Execution Pending Appeal. An appeal shall not prevent a decision from becoming final or executory. The respondent shall be considered as having been placed under preventive suspension during the pendency of an appeal in the events he wins such appeal. In the event the appeal results in an exoneration, he shall be paid his salary and such other emoluments during the pendency of the appeal (R.A. No. 7160). Sec. 6 Except as otherwise provided by special laws, the execution of the decision/resolution/order appealed from is stayed upon filing of the appeal within the period prescribed herein. However, in all cases, at any Page 27 of 65

time during the pendency of the appeal, the Office of the President may direct or stay the execution of the decision/resolution/order appealed from upon such terms and conditions as it may deem just and reasonable (Adm. Order No. 18). xxx xxx xxx After due consideration, and in the light of the Petition for Review filed before this Office, we find that a stay of execution pending appeal would be just and reasonable to prevent undue prejudice to public interest. WHEREFORE, premises considered, this Office hereby orders the suspension/stay of execution of: a) the Decision of the Sangguniang Panlalawigan of Albay in Administrative Case No. 02-92 dated 1 July 1993 suspending Mayor Naomi C. Corral from office for a period of two (2) months, and b) the Resolution of the Sangguniang Panlalawigan of Albay in Administrative Case. No. 05-92 dated 5 July 1993 suspending Mayor Naomi C. Corral from office for a period of three (3) months (Rollo, pp. 55-56). Petitioner then filed a Motion for Reconsideration questioning the aforesaid Order of the Office of the President. On September 13, 1990, the Motion for Reconsideration was denied. Hence, this petition. II. Petitioner claims that the governing law in the instant case is R.A. No. 7160, which contains a mandatory provision that an appeal "shall not prevent a decision from becoming final and executory." He argues that administrative Order No. 18 dated February 12, 1987, (entitle "Prescribing the Rules and Regulations Governing Appeals to Office the President") authorizing the President to stay the execution of the appealed decision at any time during the pendency of the appeal, was repealed by R.A. No. 7160, which took effect on January 1, 1991 (Rollo, pp. 5-6). The petition is devoid of merit. Petitioner invokes the repealing clause of Section 530 (f), R.A. No. 7160, which provides: All general and special laws, acts, city charters, decrees, executive orders, administrative regulations, part or parts thereof, which are incosistent with any of the provisions of this Code, are hereby repealed or modified accordingly. The aforementioned clause is not an express repeal of Section 6 of Administrative Order No. 18 because it failed to identify or designate the laws or executive orders that are intended to be repealed (cf. I Sutherland, Statutory Construction 467 [1943]). If there is any repeal of Administrative Order No. 18 by R.A. No. 7160, it is through implication though such kind of repeal is not favored (The Philippine American Management Co., Inc. v. The Philippine American

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Management Employees Association, 49 SCRA 194 [1973]). There is even a presumption against implied repeal. An implied repeal predicates the intended repeal upon the condition that a substantial conflict must be found between the new and prior laws. In the absence of an express repeal, a subsequent law cannot be construed as repealing a prior law unless an irreconcible inconsistency and repugnancy exists in the terms of the new and old laws (Iloilo Palay and Corn Planters Association, Inc. v. Feliciano, 13 SCRA 377 [1965]). The two laws must be absolutely incompatible (Compania General de Tabacos v. Collector of Customs, 46 Phil. 8 [1924]). There must be such a repugnancy between the laws that they cannot be made to stand together (Crawford, Construction of Statutes 631 [1940]). We find that the provisions of Section 68 of R.A. No. 7160 and Section 6 of Administrative Order No. 18 are not irreconcillably inconsistent and repugnant and the two laws must in fact be read together. The first sentence of Section 68 merely provides that an "appeal shall not prevent a decision from becoming final or executory." As worded, there is room to construe said provision as giving discretion to the reviewing officials to stay the execution of the appealed decision. There is nothing to infer therefrom that the reviewing officials are deprived of the authority to order a stay of the appealed order. If the intention of Congress was to repeal Section 6 of Administrative Order No. 18, it could have used more direct language expressive of such intention. The execution of decisions pending appeal is procedural and in the absence of a clear legislative intent to remove from the reviewing officials the authority to order a stay of execution, such authority can provided in the rules and regulations governing the appeals of elective officials in administrative cases. The term "shall" may be read either as mandatory or directory depending upon a consideration of the entire provisions in which it is found, its object and the consequences that would follow from construing it one way or the other (cf. De Mesa v. Mencias, 18 SCRA 533 [1966]). In the case at bench, there is no basis to justify the construction of the word as mandatory. The Office of the President made a finding that the execution of the decision of the Sagguniang Panlalawigan suspending respondent Mayor from office might be prejudicial to the public interest. Thus, in order not to disrupt the rendition of service by the mayor to the public, a stay of the execution of the decision is in order. WHEREFORE, the petition is DISMISSED.

Republic of the Philippines SUPREME COURT Manila EN BANC G.R. No. L-4712 July 11, 1952 RAMON DIOKNO, plaintiff-appellant, vs. REHABILITATION FINANCE CORPORATION, defendantappellee. Sixto de la Costa for appellee. LABRADOR, J.: Plaintiff is the holder of a backpay certificate of indebtedness issued by the Treasurer of the Philippines under the provisions of Republic Act No. 304 of a face value of P75,857.14 dated August 30, 1948. On or about November 10, 1050, when the action was brought, he had an outstanding loan with the Rehabilitation Finance Corporation, contracted therewith on January 27, 1950, in the total sum of P50,000, covered by a mortgage on his property situated at 44 Alhambra, Ermita, Manila, with interest at 4 per cent per annum, of which P47,355.28 was still unpaid. In this action he seeks to compel the defendant corporation to accept payment of the balance of his indebted with his backpay certificate. The defendant resists the suit on the ground that plaintiffs' demand is not only not authorized by section 2 of Republic Act No. 304 but contrary to the provisions thereof, and furthermore because plaintiff's loan was obtain on January 27, 1950, much after the passage of Republic Act No. 304, and because the law permits only "acceptance or discount of backpay certificates," not the repayment of loans. The court a quo held that section 2 of Republic Act No. 304 is permissive merely, and that even if where mandatory, plaintiff's case can not fall thereunder because he is not acquiring property for a home or construing a residential house, but compelling the acceptance of his backpay certificate to pay a debt he contracted after the enactment of Republic Act No. 304. It, therefore, dismissed the complaint with costs. The appeal involves the interpretation of section 2 of Republic Act No. 302, which provides: . . . And provided, also, That investment funds or banks or other financial institutions owned or controlled by the Government shall, subject to the availability of loanable funds, and any provision of the their charters, articles of incorporation's, by-laws, or rules and regulations to the contrary notwithstanding, accept or discount at not more than two per centum per annum for ten years such certificate for the following purposes only: (1) the acquisition of real property for use as the applicant's home, or (2) the building or construction of the residential house of the payee of said certificate: . . . Page 28 of 65

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It is first contended by the appellant that the above provision is mandatory, not only because it employs the word "shall", which in its ordinary signification is mandatory, not permissive, but also because the provision is applicable to institutions of credit under the control of the Government, and because otherwise the phrases "subject to availability of loanable funds" and "any provisions of this charter, . . . and regulations to the contrary notwithstanding" would be superfluous. It is true that its ordinary signification the word "shall" is imperative. In common or ordinary parlance, and in its ordinary signification, the term "shall" is a word of command, and one which has always or which must be given compulsory meaning; as denoting obligation. It has a preemptory meaning, and it is generally imperative or mandatory. It has the invariable significance of operating to impose a duty which may be enforced, particularly if public policy is in favor of this meaning or when addressed to public officials, or where a public interest is involved, or where the public or persons have rights which ought to be exercised or enforced, unless a contrary intent appears. People vs. O'Rourke, 13 P. 2d. 989, 992, 124 Cal. App. 752. (39 Words and Phrases, Permanent Ed., p. 90.) The presumption is that the word "shall" in a statute is used is an imperative, and not in a directory, sense. If a different interpretation is sought, it must rest upon something in the character of the legislation or in the context which will justify a different meaning. Haythorn vs. Van Keuren & Son, 74 A. 502, 504, 79 N. J. L. 101; Board of Finance of School City of Aurora vs. People's Nat. Bank of Lawrenceburg, 89 N. E. 904, 905 44 Ind. App. 578. (39 Words and Phrases, Permanent Ed., p. 93.) However, the rule is not absolute; it may be construed as "many", when so required by the context or by the intention of the statute. In the ordinary signification, "shall" is imperative, and not permissive, though it may have the latter meaning when required by the context. Town of Milton vs. Cook, 138 N.E. 589, 590, 244 Mass. 93. (39 Words and Phrases, Permanent Ed., p. 89.) "Must" or "shall" in a statute is not always imperative, but may be consistent with an exercise of discretion. In re O'Hara, 82 N.Y.S. 293, 296, 40 Misc. 355, citing In re Thurber's Estate, 162 N.Y. 244, 252, 56 N.E. 638, 639. (Ibid. p. 92.) The word "shall" is generally regarded as imperative, but in some context it is given a permissive meaning, the intended meaning being determined by what is intended by the statute. National Transit Corporation Co.vs. Boardman, 197 A. 239, 241, 328, Pa. 450. The word "shall" is to be construed as merely permissive, where no public benefit or private right requires it to be given an imperative meaning Sheldon vs. Sheldon, 134 A. 904, 905, 100 N.J. Ex. 24. Page 29 of 65

Presumption is that word "shall" in ordinance, is mandatory; but, where it is necessary to give effect to legislative intent, the word will be construed as "may." City of Colorado Springs vs. Street, 254 p. 440, 441, 81 Colo. 181. The word "shall" does not necessarily indicate a mandatory behest. Grimsrud vs. Johnson, 202 N. W. 72, 73, 162 Minn. 98. Words like "may," "must," "shall" etc., are constantly used in statutes without intending that they shall be taken literally, and in their construction the object evidently designed to be reached limits and controls the literal import of the terms and phrases employed. Fields vs. United States, 27 App. D. C. 433, 440. (39 Words and Phrases, Permanent Ed., 89, 92). In this jurisdiction the tendency has been to interpret the word "shall" as the context or a reasonable construction of the statute in which it is used demands or requires. Thus the provision of section 11 of Rule 4 of the Rules requiring a municipal judge or a justice of the peace to render judgment of the conclusion of the trial has been held in the directory. (Alejandro vs. Judge of First Instance1 40 Off. Gaz., 9th Supp., 261). In like manner section 178 of the Election Law, in so far a it requires that appeals shall be decided in three months, has been to the directory for the Court of Appeals. (Querubin vs. The Court of Appeals,2 46 Off. Gaz., 155). In the provision subject controversy, it is to be noted that the verb-phrase "shall accept or discount" has two modifiers, namely, "subject to availability of loanable funds" and "at not more that two per centum per annum for ten years." As to the second modifier, the interest to be charged, there seems to be no question that the verb phrase is mandatory, because not only does the law use "at not more" but the legislative purpose and intent, to conserve the value of the backpay certificate for the benefit of the holders, for whose benefit the same have been issued, can be carried out by fixing a maximum limit for discounts. But as to when the discounting or acceptance shall be made, the context and the sense demand a contrary interpretation. The phrase "subject" means "being under the contingency of" (Webster's Int. Dict.) a condition. If the acceptance or discount of the certificates to be "subject" to the condition of the availability of a loanable funds, it is evident that the Legislature intended that the acceptance shall be allowed on the condition that there are "available loanable funds." In other words, acceptance or discount is to be permitted only if there are loanable funds. Let us now consider the meaning of the condition imposed for accepting or discounting certificates, the "availability of loanable funds." On this issue the appellant contends that the mere fact that P50,000 was loaned to

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him and that the Rehabilitation Finance Corporation has been granting loans up to the time plaintiff offered to pay the loan with his certificate these prove that there are "available loanable funds". As the court a quo did not pass on such availability, he also contends that this is a question of fact to be determined by the courts. The defendant denies the existence of "available loanable funds." The gist of plaintiffs' contention is that any and all funds of the Rehabilitation Finance Corporation are subject to the provision of the discount or acceptance of the certificates; that of defendant-appellee is that only funds made available for the purpose of discounting backpay certificates may be used for such purpose and that at the time the action was filed there was no such funds. The Rehabilitation Finance Corporation was created by Republic Act No. 85, which was approved on October 29, 1946. The corporation was created "to provide credit facilities for the rehabilitation and development of agriculture, commerce, and industry, the reconstruction of property damaged by war, and the broadening and diversification of the national economy" (section 1), and to achieve the above aims it was granted the following powers: SEC. 2. Corporate powers. The Rehabilitation Finance Corporation shall have the power: (a) To grant loans for home building and for the rehabilitation, establishment or development of any agricultural, commercial or industrial enterprise, including public utilities; (b) To grant loans to provincial, city and municipal governments for the rehabilitation, construction or reconstruction of public markets, waterworks, toll bridges, slaughterhouses, and other self-liquidating or income-producing services; (c) To grant loans to agencies and corporations owned or controlled by the Government of the Republic of the Philippines for the production and distribution of electrical power, for the purchase and subdivision of rural and urban estates, for housing projects, for irrigation and waterworks systems, and for other essential industrial and agricultural enterprises; (d) To grant loans to cooperative associations to facilitate production, the marketing of crops, and the acquisition of essential commodities; (e) To underwrite, purchase, own, sell, mortgage or otherwise dispose of stocks, bonds, debentures, securities and other evidences of indebtedness issued for or in connection with any project or enterprise referred to in the proceeding paragraphs; (f) To issue bonds, debentures, securities, collaterals, and other obligations with the approval of the President, but in no case to exceed at any one time an aggregate amount equivalent to one hundred per centum of its subscribed capital and surplus. . . . Page 30 of 65

If the Rehabilitation Finance Corporation is to carry out the aims and purposes for which it was created, It must evolve a definite plan of the industries or activities which it should be rehabilitate, establish, or develop, and apportion its available funds and resources among these, consistent with the policies outlined in its charter. As of May 31, 1948, immediately prior to the passage of the Backpay Law, it had granted the following classes of loans: Agricultural loans ........................................................ P23,610,350.74 Industrial ............................................................ Real Estate ........................................................ loans 22,717,565.87 Loans 34,601,258.29

Loans for purchase, Subdivision and Resale of Landed Estates ......................................................... 7,271,258.78 Loans to Provinces, Cities, and Municipalities for Self-liquidating Projects .............................................. 1,889,763.00 Total Loans P90,090,77.68 .................................................. (Exhibit 2) As of February 2, 1951, the corporation had accepted in payment of loans granted before June 18, 1948, the total amount of P8,225,229.96, as required by section 2 of the Backpay Law. (See Exhibit 11, p.4.). The third anniversary report of the Rehabilitation Finance Corporation dated January 2, 1950 (Exhibit 1,), shows that the funds originally available to the corporation came from the following sources: Funds made available: Initial cash capital ................................................................ Cash Transferred from Financial Rehabilitation Funds .... 2,423,079.94 Cash received from Surplus Property Commission ....... Cash payment of capital .................................................. Proceeds of bond issues .................................................. 26,350,000.00 82,473,079.74 58,909,148.18 Cash received from Phil. Shipping Adm. ........................... 3,700,000.00

P50,000,000,0

Advances from the Central Bank ....................................... 10,000,000.00

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There was also collectible from the loans the total amount of P28,659,442.12, so that the total cash available to the corporation from January 2, 1947, to November 30, 1949, was P180,041,670.04. But the Total amount of loans already approved as of the last date was P203,667,403.78 and the total of approved loans pending release was P25,342,020.78, and the only cash balance available in November, 1949, to meet these approved loans was P1,716,286.71. It may readily be seen from the above data that were we to follow appellant's theory and contention that the law is mandatory, the loan he had applied for, as well as that of any holder of a backpay certificate, would have to be paid out of this available cash, pursuant to the alleged mandate of section 2 of the Backpay Law. The compulsory acceptance and discount of certificates will bring about, as a direct and necessary consequence, the suspension of all, if not of most, of the activities of the Rehabilitation Finance Corporation; and no agricultural or industrial loans, or loans to financial institutions and local governments for their markets, waterworks, etc., would be granted until all the backpay certificates (amounting to some hundred millions of pesos) shall heave been accepted or discounted. And as the defendant-appellant forcefully argues, even funds obtained by the Rehabilitation Finance Corporation by the issue of the bonds, at rates of interest of more than 2 per cent, the rate fixed for the discount of the backpay certificates, will have to be loaned to holders of backpay certificates at a loss, to the prejudice of the corporation. There would be loans for holders of backpay certificates, but none for rehabilitation or reconstruction, or development of industries, or of the national economy; there would be funds for employees' loans, but none for the improvements of public services, etc., as all Rehabilitation Finance Corporation funds will be necessary to meet the demands of holders of backpay certificates. And if it be remembered that the provision is intended for all financial institutions controlled by the Government, the consequences would be felt by all industries and activities, and the whole scheme of national financial organization and development disrupted. It seems evident that the legislature never could have intended such absurd consequences, even with all the sympathy that it is showing for holders of backpay certificates. But while we agree with the appellee that it could not have been the intention of Congress to disrupt the whole scheme of rehabilitation, reconstruction, and development envisioned in the Rehabilitation Act, by its passage of section 2 of the Backpay Law, neither we are prepared to follow appellee's insinuation that the section is impracticable or impossible of execution by the Rehabilitation Finance Corporation in the situation in which its funds and resources were at the time of the trial. In our opinion, Page 31 of 65

what the Legislature intended by the provision in dispute is that the Rehabilitation Finance Corporation, through its Board of Directors, should from time to time set aside some reasonable amount for the discount of backpay certificates, when this can be done without unduly taxing its resources, or unduly prejudicing the plan of rehabilitation and development that it has mapped out, or that which the corresponding authority has laid down as a policy. This legislative intention can be inferred from the fact that Congress itself expressly ordered that all financial institutions accept or discount backpay certificates in payment of those loans, evidently laying down an example to be followed by financial institutions under its control. The loans granted under section 2 of the law by the Rehabilitation Finance Corporation amounted to P8,225,229.96. It is shown or even presented that the payment of this considerable amount has impaired or disrupted the activities of the Rehabilitation Finance Corporation. It is not claimed, either, that at the time of the filing of appellant's action the Rehabilitation Finance Corporation was in no position to set aside a modest sum, in a manner similar to the creation of a sinking fund, for the discount of backpay certificates to help the Government comply with its financial commitments. We are convinced that the Rehabilitation Finance Corporation may, without impairment of its activities, set aside from time to time, say, half a million pesos or a considerable part thereof, for the payment of backpay certificates. But these circumstances notwithstanding, we are of the opinion that the law in question (section 2 of the Backpay Law), in so far as the discount and acceptance of backpay certificates are concerned, should be interpreted to be directory merely, not mandatory, as claimed by plaintiff-appellant, the same to be construed as a directive for the Rehabilitation Finance Corporation to invest a reasonable portion of its funds for the discount of backpay certificates, from time to time and in its sound discretion, as circumstances and its resources may warrant. Having come to the conclusion that section 2 of the Backpay Law is directly merely, we now address ourselves to the propriety of the action, which the plaintiff and appellant labels specific performance. As the action is not based on any contractual relation between the plaintiff and appellant and the defendant and appellee, it may be one for specific performance; it is in effect predicated on a supposed legal duty imposed by law and is properly the designated as a special civil action of mandamus because the appellant seeks to compel the appellee to accept his backpay certificate in payment of his outstanding obligation. We are not impressed by the defense technical in a sense, that the Rehabilitation Finance Corporation is not expressly authorized to accept certificates in payment of outstanding loans. There is no provision expressly authorizing this procedure or

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system; but neither is there one prohibiting it. The legislature has once ordered it; the Rehabilitation Finance Corporation has once authorized it. We believe the legislature could not have intended to discriminate against those who have already built their houses, who have contracted obligations in so doing. We prefer to predicate court ruling that this special action does not lie on the ground that the duty imposed by the Backpay Law upon the appellee as to the acceptance or discount of backpay certificates is neither clear nor ministerial, but discretionary merely and that mandamus does not issue to control the exercise of discretion of public officer. (Viuda e hijos de Crispulo Zamora vs. Wright and Segado, 53 Phil., 613, 621; Blanco vs. Board of Medical Examiners, 46 Phil., 190 192, citing Lamb vs. Phipps, 22 Phil., 456; Gonzales vs. Board of Pharmacy, 20 Phil., 367, etc.) It is, however, argued on behalf of the appellant that inasmuch as the Board of Directors of the Rehabilitation Finance Corporation has seen fit to approve a resolution accepting backpay certificates amounting to P151,000 (Exhibit H), law and equity demand that the same privilege should be accorded him. The trial court held that the above resolution was illegal and that its unauthorized enactment (which he called a "wrong") does not justify its repetition for the benefit of appellant. As we have indicated above, we believe that its approval (not any supposed discrimination on behalf of some special holders) can be defended under the law, but that the passage of a similar resolution can not be enjoined by an action of mandamus. We must admit, however, that appellant's case is not entirely without any merit or justification; similar situations have already been favorably acted upon by the Congress, when it ordered that certificates be accepted in payment of outstanding obligations, and by the Rehabilitation Finance Corporation in its above-mentioned resolution. But we feel we are powerless to enforce his claim, as the acceptance and discount to backpay certificates has been placed within the sound discretion of the rehabilitation Finance Corporation, and subject to the availability of loanable funds, and said discretion may not be reviewed or controlled by us. It is clear that this remedy must be available in other quarters, not in the courts of justice. For all the foregoing considerations, we are constrained to dismiss the appeal, with costs against the appellant. Republic of the Philippines SUPREME COURT Manila THIRD DIVISION G.R. No. 168617 February 19, 2007 BERNADETTE L. ADASA, petitioner, vs. CECILLE S. ABALOS, Respondent. Page 32 of 65

DECISION CHICO-NAZARIO, J.: This Petition for Review under Rule 45 of the Rules of Court, filed by petitioner Bernadette L. Adasa, seeks to nullify and set aside the 21 July 2004 Decision1 and 10 June 2005 Resolution2 of the Court of Appeals in CA-G.R. SP No. 76396 which nullified the Resolutions of the Department of Justice (DOJ). The Resolutions of the DOJ reversed and set aside the Resolution of the Office of the City Prosecutor of Iligan City, which found on reinvestigation probable cause against petitioner, and directed the Office of the City Prosecutor of Iligan City to withdraw the information for Estafa against petitioner. The instant case emanated from the two complaints-affidavits filed by respondent Cecille S. Abalos on 18 January 2001 before the Office of the City Prosecutor of Iligan City, against petitioner for Estafa. Respondent alleged in the complaints-affidavits that petitioner, through deceit, received and encashed two checks issued in the name of respondent without respondents knowledge and consent and that despite repeated demands by the latter, petitioner failed and refused to pay the proceeds of the checks. On 23 March 2001, petitioner filed a counter-affidavit admitting that she received and encashed the two checks issued in favor of respondent. In her Supplemental Affidavit filed on 29 March 2001, petitioner, however, recanted and alleged instead that it was a certain Bebie Correa who received the two checks which are the subject matter of the complaints and encashed the same; and that said Bebie Correa left the country after misappropriating the proceeds of the checks. On 25 April 2001, a resolution was issued by the Office of the City Prosecutor of Iligan City finding probable cause against petitioner and ordering the filing of two separate Informations for Estafa Thru Falsification of Commercial Document by a Private Individual, under Article 315 in relation to Articles 171 and 172 of the Revised Penal Code, as amended. Consequently, two separate criminal cases were filed against petitioner docketed as Criminal Cases No. 8781 and No. 8782, raffled to Branches 4 and 5, Regional Trial Court of Iligan City, respectively. This instant petition pertains only to Criminal Case No. 8782. On 8 June 2001, upon motion of the petitioner, the trial court in Criminal Case No. 8782 issued an order directing the Office of the City Prosecutor of Iligan City to conduct a reinvestigation. After conducting the reinvestigation, the Office of the City Prosecutor of Iligan City issued a resolution dated 30 August 2001, affirming the finding of probable cause against petitioner.

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Meanwhile, during her arraignment on 1 October 2001 in Criminal Case No. 8782, petitioner entered an unconditional plea of not guilty.3 Dissatisfied with the finding of the Office of the City Prosecutor of Iligan City, petitioner filed a Petition for Review before the DOJ on 15 October 2001. In a Resolution dated 11 July 2002, the DOJ reversed and set aside the 30 August 2001 resolution of the Office of the City Prosecutor of Iligan City and directed the said office to withdraw the Information for Estafa against petitioner. The said DOJ resolution prompted the Office of the City Prosecutor of Iligan City to file a "Motion to Withdraw Information" on 25 July 2002. On 26 July 2002, respondent filed a motion for reconsideration of said resolution of the DOJ arguing that the DOJ should have dismissed outright the petition for review since Section 7 of DOJ Circular No. 70 mandates that when an accused has already been arraigned and the aggrieved party files a petition for review before the DOJ, the Secretary of Justice cannot, and should not take cognizance of the petition, or even give due course thereto, but instead deny it outright. Respondent claimed Section 12 thereof mentions arraignment as one of the grounds for the dismissal of the petition for review before the DOJ. In a resolution dated 30 January 2003, the DOJ denied the Motion for Reconsideration opining that under Section 12, in relation to Section 7, of DOJ Circular No. 70, the Secretary of Justice is not precluded from entertaining any appeal taken to him even where the accused has already been arraigned in court. This is due to the permissive language "may" utilized in Section 12 whereby the Secretary has the discretion to entertain an appealed resolution notwithstanding the fact that the accused has been arraigned. Meanwhile, on 27 February 2003, the trial court issued an order granting petitioners "Motion to Withdraw Information" and dismissing Criminal Case No. 8782. No action was taken by respondent or any party of the case from the said order of dismissal. Aggrieved by the resolution of the DOJ, respondent filed a Petition for Certiorari before the Court of Appeals. Respondent raised the following issues before the appellate court: 1. Whether or not the Department of Justice gravely abused its discretion in giving due course to petitioners petition for review despite its having been filed after the latter had already been arraigned; 2. Whether or not there is probable cause that the crime of estafa has been committed and that petitioner is probably guilty thereof;

3. Whether or not the petition before the Court of Appeals has been rendered moot and academic by the order of the Regional Trial Court dismissing Criminal Case No. 8782. The Court of Appeals in a Decision dated 21 July 2004 granted respondents petition and reversed the Resolutions of the DOJ dated 11 July 2002 and 30 January 2003. In resolving the first issue, the Court of Appeals, relying heavily on Section 7 of DOJ Circular No. 70 which states "[i]f an information has been filed in court pursuant to the appealed resolution, the petition shall not be given due course if the accused had already been arraigned," ruled that since petitioner was arraigned before she filed the petition for review with the DOJ, it was imperative for the DOJ to dismiss such petition. It added that when petitioner pleaded to the charge, she was deemed to have waived her right to reinvestigation and right to question any irregularity that surrounds it. Anent the second issue, the Court of Appeals declared that the existence of probable cause or the lack of it, cannot be dealt with by it since factual issues are not proper subjects of a Petition for Certiorari. In disposing of the last issue, the Court of Appeals held that the order of the trial court dismissing the subject criminal case pursuant to the assailed resolutions of the DOJ did not render the petition moot and academic. It said that since the trial courts order relied solely on the resolutions of the DOJ, said order is void as it violated the rule which enjoins the trial court to assess the evidence presented before it in a motion to dismiss and not to rely solely on the prosecutors averment that the Secretary of Justice had recommended the dismissal of the case. Dissatisfied by the Court of Appeals ruling, petitioner filed a Motion f or Reconsideration setting forth the following grounds: 1. that the over-all language of Sections 7 and 12 of Department Circular No. 70 is permissive and directory such that the Secretary of Justice may entertain an appeal despite the fact that the accused had been arraigned; 2. that the contemporaneous construction by the Secretary of Justice should be given great weight and respect; 3. that Section 7 of the Circular applies only to resolutions rendered pursuant to a preliminary investigation, not on a reinvestigation; 4. that the trial courts order of dismissal of the criminal case has rendered the instant petition moot and academic; 5. that her arraignment was null and void it being conducted despite her protestations; and 6. that despite her being arraigned, the supposed waiver of her right to preliminary investigation has been nullified or recalled by virtue of the trial courts order of reinvestigation.4 Page 33 of 65

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The Court of Appeals stood firm by its decision. This time, however, it tried to construe Section 7 side by side with Section 12 of DOJ Circular No. 70 and attempted to reconcile these two provisions. According to the appellate court, the phrase "shall not" in paragraph two, first sentence of Section 7 of subject circular, to wit: If an information has been filed in court pursuant to the appealed resolution, the petition shall not be given due course if the accused had already been arraigned. x x x. (Emphasis supplied.) employed in the circular denotes a positive prohibition. Applying the principle in statutory construction - that when a statute or provision contains words of positive prohibition, such as "shall not," "cannot," or "ought not" or which is couched in negative terms importing that the act shall not be done otherwise than designated, that statute or provision is mandatory, thus rendering the provision mandatory it opined that the subject provision simply means that the Secretary of Justice has no other course of action but to deny or dismiss a petition before him when arraignment of an accused had already taken place prior to the filing of the petition for review. On the other hand, reading Section 12 of the same circular which reads: The Secretary may reverse, affirm or modify the appealed resolution. He may, motu proprio or upon motion, dismiss the petition for review on any of the following grounds: xxxx (e) That the accused had already been arraigned when the appeal was taken; x x x. the Court of Appeals opined that the permissive word "may" in Section 12 would seem to imply that the Secretary of Justice has discretion to entertain an appeal notwithstanding the fact that the accused has been arraigned. This provision should not be treated separately, but should be read in relation to Section 7. The two provisions, taken together, simply meant that when an accused was already arraigned when the aggrieved party files a petition for review, the Secretary of Justice cannot, and should not take cognizance of the petition, or even give due course thereto, but instead dismiss or deny it outright. The appellate court added that the word "may" in Section 12 should be read as "shall" or "must" since such construction is absolutely necessary to give effect to the apparent intention of the rule as gathered from the context. As to the contemporaneous construction of the Secretary of Justice, the Court of Appeals stated that the same should not be given weight since it was erroneous. Anent petitioners argument that Section 7 of the questioned circular applies only to original resolutions that brought about the filing of the Page 34 of 65

corresponding informations in court, but not to resolutions rendered pursuant to a motion for reinvestigation, the appellate court simply brushed aside such contention as having no basis in the circular questioned. It also rejected petitioners protestation that her arraignment was forced upon her since she failed to present any evidence to substantiate the same. It is petitioners contention that despite her being arraigned, the supposed waiver of her right to preliminary investigation has been nullified by virtue of the trial courts order or reinvestigation. On this score, the Court of Appeals rebuffed such argument stating that there was no "supposed waiver of preliminary investigation" to speak of for the reason that petitioner had actually undergone preliminary investigation. Petitioner remained unconvinced with the explanations of the Court of Appeals. Hence, the instant petition. Again, petitioner contends that the DOJ can give due course to an appeal or petition for review despite its having been filed after the accused had already been arraigned. It asserts that the fact of arraignment of an accused before the filing of an appeal or petition for review before the DOJ "is not at all relevant" as the DOJ can still take cognizance of the appeal or Petition for Review before it. In support of this contention, petitioner set her sights on the ruling of this Court in Crespo v. Mogul,5 to wit: The rule therefore in this jurisdiction is that once a complaint or information is filed in Court any disposition of the case as to its dismissal or the conviction or acquittal of the accused rests in the sound discretion of the Court. Although the fiscal retains the direction and control of the prosecution of criminal cases even while the case is already in Court he cannot impose his opinion on the trial court. The Court is the best and sole judge on what to do with the case before it. The determination of the case is within its exclusive jurisdiction and competence. A motion to dismiss the case filed by the fiscal should be addressed to the Court who has the option to grant or deny the same. It does not matter if this is done before or after the arraignment of the accused or that the motion was filed after a reinvestigation or upon instructions of the Secretary of Justice who reviewed the records of the investigation. (Emphasis supplied.) To bolster her position, petitioner cites Roberts v. Court of Appeals,6 which stated: There is nothing in Crespo vs. Mogul which bars the DOJ from taking cognizance of an appeal, by way of a petition for review, by an accused in a criminal case from an unfavorable ruling of the investigating prosecutor. It merely advised the DOJ to, "as far as practicable, refrain from entertaining a petition for review or appeal from the action of the fiscal,

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when the complaint or information has already been filed in Court. x x x. (Emphasis supplied.) Petitioner likewise invokes Marcelo v. Court of Appeals7 where this Court declared: Nothing in the said ruling forecloses the power or authority of the Secretary of Justice to review resolutions of his subordinates in criminal cases. The Secretary of Justice is only enjoined to refrain as far as practicable from entertaining a petition for review or appeal from the action of the prosecutor once a complaint or information is filed in court. In any case, the grant of a motion to dismiss, which the prosecution may file after the Secretary of Justice reverses an appealed resolution, is subject to the discretion of the court. The Court is unconvinced. A cursory reading of Crespo v. Mogul reveals that the ruling therein does not concern the issue of an appeal or petition for review before the DOJ after arraignment. Verily, the pronouncement therein has to do with the filing of a motion to dismiss and the courts discretion to deny or grant the same. As correctly pointed out by respondent, the emphasized portion in the Crespo ruling is a parcel of the entire paragraph which relates to the duty and jurisdiction of the trial court to determine for itself whether or not to dismiss a case before it, and which states that such duty comes into play regardless of whether such motion is filed before or after arraignment and upon whose instructions. The allusion to the Secretary of Justice as reviewing the records of investigation and giving instructions for the filing of a motion to dismiss in the cited ruling does not take into consideration of whether the appeal or petition before the Secretary of Justice was filed after arraignment. Significantly, in the Crespo case, the accused had not yet been arraigned when the appeal or petition for review was filed before the DOJ. Undoubtedly, petitioners reliance on the said case is misplaced. Also unavailing is petitioners invocation of the cases of Roberts v. Court of Appeals and Marcelo v. Court of Appeals. As in Crespo v. Mogul, neither Roberts v. Court of Appeals nor Marcelo v. Court of Appeals took into account of whether the appeal or petition before the Secretary of Justice was filed after arraignment. Just like in the Crespo case, the accused in both Roberts v. Court of Appeals and Marcelo v. Court of Appeals had not yet been arraigned when the appeal or petition for review was filed before the DOJ. Moreover, petitioner asserts that the Court of Appeals interpretation of the provisions of DOJ Circular No. 70 violated three basic rules in statutory construction. First, the rule that the provision that appears last in the order of position in the rule or regulation must prevail. Second, the rule that the contemporaneous construction of a statute or regulation by the officers who enforce it should be given weight. Third, petitioner lifted Page 35 of 65

a portion from Agpalos Statutory Construction8 where the word "shall" had been construed as a permissive, and not a mandatory language. The all too-familiar rule in statutory construction, in this case, an administrative rule9 of procedure, is that when a statute or rule is clear and unambiguous, interpretation need not be resorted to.10 Since Section 7 of the subject circular clearly and categorically directs the DOJ to dismiss outright an appeal or a petition for review filed after arraignment, no resort to interpretation is necessary. Petitioners reliance to the statutory principle that "the last in order of position in the rule or regulation must prevail" is not applicable. In addition to the fact that Section 7 of DOJ Circular No. 70 needs no construction, the cited principle cannot apply because, as correctly observed by the Court of Appeals, there is no irreconcilable conflict between Section 7 and Section 12 of DOJ Circular No. 70. Section 7 of the circular provides: SECTION 7. Action on the petition. The Secretary of Justice may dismiss the petition outright if he finds the same to be patently without merit or manifestly intended for delay, or when the issues raised therein are too unsubstantial to require consideration. If an information has been filed in court pursuant to the appealed resolution, the petition shall not be given due course if the accused had already been arraigned. Any arraignment made after the filing of the petition shall not bar the Secretary of Justice from exercising his power of review. (Italics supplied.) On the other hand, Section 12 of the same circular states: SECTION 12. Disposition of the Appeal. The Secretary may reverse, affirm or modify the appealed resolution. He may, motu proprio or upon motion, dismiss the petition for review on any of the following grounds: (a) That the petition was filed beyond the period prescribed in Section 3 hereof; (b) That the procedure or any of the requirements herein provided has not been complied with; (c) That there is no showing of any reversible error; (d) That the appealed resolution is interlocutory in nature, except when it suspends the proceedings based on the alleged existence of a prejudicial question; (e) That the accused had already been arraigned when the appeal was taken; (f) That the offense has already prescribed; and (g) That other legal or factual grounds exist to warrant a dismissal. (Emphases supplied.) It is noteworthy that the principle cited by petitioner reveals that, to find application, the same presupposes that "one part of the statute cannot be

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reconciled or harmonized with another part without nullifying one in favor of the other." In the instant case, however, Section 7 is neither contradictory nor irreconcilable with Section 12. As can be seen above, Section 7 pertains to the action on the petition that the DOJ must take, while Section 12 enumerates the options the DOJ has with regard to the disposition of a petition for review or of an appeal. As aptly observed by respondent, Section 7 specifically applies to a situation on what the DOJ must do when confronted with an appeal or a petition for review that is either clearly without merit, manifestly intended to delay, or filed after an accused has already been arraigned, i.e., he may dismiss it outright if it is patently without merit or manifestly intended to delay, or, if it was filed after the acccused has already been arraigned, the Secretary shall not give it due course. Section 12 applies generally to the disposition of an appeal. Under said section, the DOJ may take any of four actions when disposing an appeal, namely: (1) reverse the appealed resolution; (2) modify the appealed resolution; (3) affirm the appealed resolution; (4) dismiss the appeal altogether, depending on the circumstances and incidents attendant thereto. As to the dismissal of a petition for review or an appeal, the grounds are provided for in Section 12 and, consequently, the DOJ must evaluate the pertinent circumstances and the facts of the case in order to determine which ground or grounds shall apply. Thus, when an accused has already been arraigned, the DOJ must not give the appeal or petition for review due course and must dismiss the same. This is bolstered by the fact that arraignment of the accused prior to the filing of the appeal or petition for review is set forth as one of the grounds for its dismissal. Therefore, in such instance, the DOJ, noting that the arraignment of an accused prior to the filing of an appeal or petition for review is a ground for dismissal under Section 12, must go back to Section 7 and act upon as mandated therein. In other words, the DOJ must not give due course to, and must necessarily dismiss, the appeal. Likewise, petitioners reliance on the principle of contemporary construction, i.e., the DOJ is not precluded from entertaining appeals where the accused had already been arraigned, because it exercises discretionary power, and because it promulgated itself the circular in question, is unpersuasive. As aptly ratiocinated by the Court of Appeals: True indeed is the principle that a contemporaneous interpretation or construction by the officers charged with the enforcement of the rules and regulations it promulgated is entitled to great weight by the court in the latters construction of such rules and regulations. That does not, however, make such a construction necessarily controlling or binding. For equally Page 36 of 65

settled is the rule that courts may disregard contemporaneous construction in instances where the law or rule construed possesses no ambiguity, where the construction is clearly erroneous, where strong reason to the contrary exists, and where the court has previously given the statute a different interpretation. If through misapprehension of law or a rule an executive or administrative officer called upon to implement it has erroneously applied or executed it, the error may be corrected when the true construction is ascertained. If a contemporaneous construction is found to be erroneous, the same must be declared null and void. Such principle should be as it is applied in the case at bar.11 Petitioners posture on a supposed exception to the mandatory import of the word "shall" is misplaced. It is petitioners view that the language of Section 12 is permissive and therefore the mandate in Section 7 has been transformed into a matter within the discretion of the DOJ. To support this stance, petitioner cites a portion of Agpalos Statutory Construction which reads: For instance, the word "shall" in Section 2 of Republic Act 304 which states that "banks or other financial institutions owned or controlled by the Government shall, subject to availability of funds xxx, accept at a discount at not more than two per centum for ten years such (backpay) certificate" implies not a mandatory, but a discretionary, meaning because of the phrase "subject to availability of funds." Similarly, the word "shall" in the provision to the effect that a corporation violating the corporation law "shall, upon such violation being proved, be dissolved by quo warranto proceedings" has been construed as "may."12 After a judicious scrutiny of the cited passage, it becomes apparent that the same is not applicable to the provision in question. In the cited passage, the word "shall" departed from its mandatory import connotation because it was connected to certain provisos/conditions: "subject to the availability of funds" and "upon such violation being proved." No such proviso/condition, however, can be found in Section 7 of the subject circular. Hence, the word "shall" retains its mandatory import. At this juncture, the Court of Appeals disquisition in this matter is enlightening: Indeed, if the intent of Department Circular No. 70 were to give the Secretary of Justice a discretionary power to dismiss or to entertain a petition for review despite its being outrightly dismissible, such as when the accused has already been arraigned, or where the crime the accused is being charged with has already prescribed, or there is no reversible error that has been committed, or that there are legal or factual grounds warranting dismissal, the result would not only be incongruous but also

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irrational and even unjust. For then, the action of the Secretary of Justice of giving due course to the petition would serve no purpose and would only allow a great waste of time. Moreover, to give the second sentence of Section 12 in relation to its paragraph (e) a directory application would not only subvert the avowed objectives of the Circular, that is, for the expeditious and efficient administration of justice, but would also render its other mandatory provisions - Sections 3, 5, 6 and 7, nugatory.13 In her steadfast effort to champion her case, petitioner contends that the issue as to whether the DOJ rightfully entertained the instant case, despite the arraignment of the accused prior to its filing, has been rendered moot and academic with the order of dismissal by the trial court dated 27 February 2003. Such contention deserves scant consideration. It must be stressed that the trial court dismissed the case precisely because of the Resolutions of the DOJ after it had, in grave abuse of its discretion, took cognizance of the petition for review filed by petitioner. Having been rendered in grave abuse of its discretion, the Resolutions of the DOJ are void. As the order of dismissal of the trial court was made pursuant to the void Resolutions of the DOJ, said order was likewise void. The rule in this jurisdiction is that a void judgment is a complete nullity and without legal effect, and that all proceedings or actions founded thereon are themselves regarded as invalid and ineffective for any purpose.14 That respondent did not file a motion for reconsideration or appeal from the dismissal order of the trial court is of no moment. Since the dismissal was void, there was nothing for respondent to oppose. Petitioner further asserts that Section 7 of DOJ Circular No. 70 applies only to appeals from original resolution of the City Prosecutor and does not apply in the instant case where an appeal is interposed by petitioner from the Resolution of the City Prosecutor denying her motion for reinvestigation. This claim is baseless.1avvphi1.net A reading of Section 7 discloses that there is no qualification given by the same provision to limit its application to appeals from original resolutions and not to resolutions on reinvestigation. Hence, the rule stating that "when the law does not distinguish, we must not distinguish"15 finds application in this regard. Petitioner asserts that her arraignment was null and void as the same was improvidently conducted. Again, this contention is without merit. Records reveal that petitioners arraignment was without any restriction, condition or reservation.16 In fact she was assisted by her counsels Atty. Arthur Abudiente and Atty. Maglinao when she pleaded to the charge.17 Moreover, the settled rule is that when an accused pleads to the charge, he is deemed to have waived the right to preliminary investigation and the right to question any irregularity that surrounds it.18 This precept is also Page 37 of 65

applicable in cases of reinvestigation as well as in cases of review of such reinvestigation. In this case, when petitioner unconditionally pleaded to the charge, she effectively waived the reinvestigation of the case by the prosecutor as well as the right to appeal the result thereof to the DOJ Secretary. Thus, with the arraignment of the petitioner, the DOJ Secretary can no longer entertain the appeal or petition for review because petitioner had already waived or abandoned the same. Lastly, while there is authority19 permitting the Court to make its own determination of probable cause, such, however, cannot be made applicable in the instant case. As earlier stated, the arraignment of petitioner constitutes a waiver of her right to preliminary investigation or reinvestigation. Such waiver is tantamount to a finding of probable cause. For this reason, there is no need for the Court to determine the existence or non-existence of probable cause. Besides, under Rule 45 of the Rules of Court, only questions of law may be raised in, and be subject of, a petition for review on certiorari since this Court is not a trier of facts. This being the case, this Court cannot review the evidence adduced by the parties before the prosecutor on the issue of the absence or presence of probable cause.20 WHEREFORE, the petition is DENIED. The Decision of the Court of Appeals dated 21 July 2004 and its Resolution dated 10 June 2005 in CA-G.R. SP No. 76396 are AFFIRMED. Costs against petitioner. SO ORDERED. I. Use of the word MAY Republic of the Philippines SUPREME COURT Manila EN BANC G.R. No. L-48848 May 11, 1988 FEDERATION OF FREE WORKERS and ALLIED SUGAR CENTRALS EMPLOYEES & WORKERS UNIONFFW,petitioners, vs. HON. AMADO G. INCIONG, in his capacity as Acting Secretary of Labor, HON. RACHEL FIDELINO, in her capacity as Chairman of the Wage Commission and ALLIED SUGAR CENTRALS COMPANY, respondents. Jaime D. Lauron, Romeo P. Torres, Edgar Parker, Jr. and Alexis Zerrudo for petitioners. Felipe, Torres & Associates for private respondent. The Solicitor General for public respondents. GANCAYCO, J.: This is a Petition erroneously captioned as one for certiorari and declaratory relief. This notwithstanding, and in the interest of justice, We

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have treated the same as one for certiorari under Rule 65 of the Rules of Court on account of the jurisdictional issues raised herein. The record of the case discloses that the herein petitioner Federation of Free Workers is a labor organization registered with the Department of Labor and Employment. It is the certified collective bargaining agent of all the rank and file employees of the herein private respondent, the Allied Sugar Centrals Company, a registered partnership. On April 21, 1977, Presidential Decree No. 1123 was promulgated requiring all employers in the private sector to pay their employees an across-the-board increase of P60.00 in their existing monthly emergency allowance as provided for in an earlier law, Presidential Decree No. 525. The increase was to take effect on May 1, 1977. The Decree also authorizes the Secretary of Labor to issue the appropriate rules necessary to implement the provisions of the said law, including such regulations to govern the procedure through which financially distressed employers may be exempted from the requirements of the same. This authorization is recited in Section 4 thereof to witSEC. 4. The Secretary of Labor and the Commissioner of the Budget shall issue appropriate rules and regulations to implement this Decree for their respective sectors. Under such rules and regulations, distressed employers whether public or private may be exempted while in such condition in the interest of development and employment. On May 1, 1977, the Secretary of Labor issued the implementing rules and regulations pertaining to the Decree. The procedure prescribed in the said Rules regarding exemptions from the requirement of the law is found in Section 6 thereof, viz Section 6. Application for exemption. Employers falling under Section 1, paragraph (1) thereof, may apply for exemption with the Secretary of Labor within thirty (30) days from the effectivity of these Rules. The application shall be under oath showing their inability to implement the Decree and the reasons therefor which shall be accompanied by a certified copy of the Income Statement and the Statement of Assets and Liabilities for the last two (2} calendar years filed with Government entities such as the Securities and Exchange Commission and the Bureau of Internal Revenue, and such other proofs as way be required by the Secretary of Labor. xxx xxx xxx Under Section 19 thereof, the said Rules were to take effect on the date of issuance, May 1, 1977. Sometime in May, 1977, the private respondent was about to pay the increase in emergency living allowance mandated by the Decree. Preparations were made in order to effectuate the payment but the attempt Page 38 of 65

to do so was short-lived. The private respondent decided against the payment and the plan was, therefore, aborted. Meanwhile, on August 2, 1977, the petitioner wrote to the Secretary of Labor inquiring if the private respondent filed an application for exemption in accordance with the abovecited Section 6. The petitioner also requested that it be furnished a copy of such application if one had indeed been filed by the private respondent. On August 30,1977, the herein respondent Chairman of the Wage Commission of the Department of Labor Rachel Fidelino sent her reply to the petitioner stating therein that there was no application in the name of the private respondent in the records of their office. 1 On September 27, 1977 or more than 100 days after the said rules took effect, the private respondent filed with the Wage Commission its application for exemption from paying the P60.00 increase mandated under Presidential Decree No. 1123. The application was accompanied by some financial statements. In support of the application, the private respondent stressed, inter alia, that it had suffered substantial losses from its operations during the fiscal years 1974-1975 and 1975-1976, and that if the company were to pay the increase, the financial position of the firm would be adversely affected and this could lead to an inevitable shutdown of the business. On October 19, 1977, the private respondent submitted its income tax return for the fiscal year concerned, a sworn statement regarding the total number of employees in the company, and other pertinent information relating to the same. 2 Sometime thereafter, the respondent Chairman of the Wage Commission submitted her report to the Secretary of Labor recommending the approval of the said application. 3 On November 21, 1977, the herein respondent Acting Secretary of Labor Amado Inciong wrote to the private respondent informing it that its application was approved for a period of one year, effective May 1, 1977. The letter of approval recited therein that the same is final and unappealable. 4 A notice of the order of approval was sent to both the president of the petitioner labor organization and the private respondent. On December 2, 1977, Chairman Fidelino received a letter from the petitioner dated November 17, 1977 again inquiring on the existence of any application on the part of the private respondent. Chairman Fidelino did not send any reply. On December 15, 1977, the petitioner filed with the Office of the Secretary a motion for reconsideration seeking a reversal of the approval of the said application on the grounds that the exemption granted to the

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private respondent is discriminatory and that the firm is not in unsound financial condition. 5 On March 3, 1978, the private respondent filed another application for exemption, this time for the year 1978. In a letter addressed to the Secretary of Labor dated May 31, 1978, the petitioner opposed the application and reiterated its objection to the exemption granted to the firm for 1977 for the same reasons earlier mentioned. 6 On June 5,1978, Chairman Fidelino overruled the opposition and motion for reconsideration which stressed that the private respondent does not appear to be in distressed financial condition as observed by a financial analyst of the Commission. 7 Thus, on June 9, 1 978, Acting Secretary Inciong issued an order approving the second application for exemption covering 1978, for a period of one year effective May 1 thereof. The approval also recited therein that the same is final and unappealable. 8 Hence this Petition. The petitioner argues that the herein public respondents-Acting Secretary Inciong and Chairman Fidelino committed a grave abuse of their discretion, amounting to loss of jurisdiction, in effecting the approval of both applications for exemption sought by the private respondent. The Petition seeks the annulment of the orders issued by the Acting Secretary relating to such approval. The substantial grounds relied upon are as follows (1) The first application for exemption was filed beyond the 30 day reglementary period prescribed in Section 6 of the rules implementing the provisions of Presidential Decree No. 1123; (2) The first application for exemption was not under oath as required under Section 6 of the same rules; (3) The first application for exemption was not supported by the documents required also under Section 6 aforecited; (4) Chairman Fidelino had no basis for recommending approval of the applications; (5) The petitioner was not afforded the opportunity to be heard in its opposition to the applications in violation of the due process clause of the Constitution; (6) The petitioner was never served a copy of the pertinent documents relating to the approval of both applications filed by the private respondent; (7) The first application for exemption was tainted with bad faith and unfair labor practice on the part of the private respondent; (8) The private respondent is in a financial position to pay the additional emergency allowance mandated by Presidential Decree No. 1123; and

(9) The private respondent is using its corporate personality to avoid paying the said additional emergency allowance to the prejudice of the petitioner. This Court required the respondents to file their Answer to the Petition. 9 So the respondents filed their Answer contesting therein the substantial allegations in the Petition. Thereafter, the parties submitted other additional pleadings. In due time, the case was deemed submitted for decision. After a careful examination of the entire record of the case, We find the instant Petition to be devoid of merit. (1) Although the private respondent admits that the first application was filed beyond the 30 day reglementary period mentioned in Section 6 of the implementing rules, We believe that compliance with the said period is merely directory. The cited provision itself employs the word to wit. ... Employers falling under Section 1, paragraph (1) thereof, may apply for exemption with the Secretary of Labor within (30) days from the effectivity of these Rules. ... (emphasis supplied.) In In re Guarina, 10 this Court had this to say on the proper interpretation of the use of this word in a statute, vizWhether the word "may", a statute is to be construed as mandatory and imposing a duty, or merely as permissive and conferring discretion, is to be determined in each case from the apparent intention of the statute as gathered from the context, as well as from the language of the particular provision. The question in each case is whether, taken as a whole and viewed in the light of surrounding circumstances, it can be said that a purpose existed on the part of the legislator to enact a law mandatory in his character. If it can, then it should be given a mandatory effect; if not, then it should be given its ordinary permissive effect. .... It must be stressed that Presidential Decree No. 1123 did not set a deadline within which employers may seek exemption therefrom. While the ostensible purpose behind Presidential Decree No. 1123 is to protect wages, incomes and employment,11 the law also takes into consideration the possibility that some private employers may not be in a financial position to pay an increase in the monetary benefits of their employees. Thus, the Decree allows distressed employers to seek exemptions while in such condition and the Secretary of Labor has been mandated to issue the pertinent rules governing the procedure by which distressed employers can seek such exemption. The standard set by the law to guide the Secretary in determining which employer should be so entitled is "the interest of development and employment. 12 The Decree, therefore, seeks a balancing of the interests of" both employer and employee as regards the matter of exemption, i.e., the business ought to remain viable Page 39 of 65

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for the benefit of the private employer without prejudice to the pecuniary rights of the employee. Taking into account this purpose of the Decree, We believe that a liberal construction of the 30-day period is in accord with that purpose. An employer who is distressed immediately before the lapse of the 30-day period is no different from one who becomes distressed immediately after the said period, as in the case of the private respondent. Both distressed employers would certainly need the benefit of the Decree. On the basis of the observations mentioned earlier, the Decree could not have intended to preclude from its coverage the latter employer. The implementing rules should echo, and not subvert, the purpose underlying the enabling law. Inasmuch as compliance with the 30-day period recited in Section 6 is merely permissive, the approval of applications filed beyond the said period is addressed to the discretion of the Secretary of Labor. On this score, the petitioner has not satisfactorily demonstrated grave abuse of discretion on the part of the respondent Acting Secretary in approving the first application filed by the private respondent beyond the 30-day deadline. (2) The allegation of the petitioner that the first application for exemption was not under oath is unavailing. Assuming, arguendo, that the application was not under oath, the infirmity appears to have been cured by the financial statement and report submitted to the Wage Commission by the private respondent. The statement and the report are certified by public accountants under their professional oath. The verification of the financial statements and the report is, under the circumstances obtaining in this case, more important than the verification of the application itself because the financial statement and report demonstrated the financial distress more comprehensively than the application. However, compliance with the requirement as to verification should be emphasized. That should be the Ideal situation. While a liberal attitude has been taken by this Court on this matter under the circumstances of this case, the Court reminds all litigants that the requirement as to verification must be complied with. (3) The petitioner also failed to show that the first application for exemption was not supported by the required financial documents. On the contrary, the application was accompanied by a financial statement for 1975 and a financial report for 1976. (4) The petitioner points out that the respondent Chairman of the Wage Commission had no basis to support her recommendation that the first application ought to be approved by the Secretary of Labor. This claim is belied by the fact that the applications had indeed been accompanied by Page 40 of 65

pertinent documents and that financial statements were later submitted by the private respondent for the consideration of the Wage Commission. (5) The petitioner alleges that it was not afforded the opportunity to be heard in its opposition to the applications in violation of the due process clause of the Constitution. This contention is also unavailing. The petitioner was given the opportunity to contest the approval of the first application when it actually sought a reconsideration of the same in 1977. Moreover, the petitioner actually opposed the second application for exemption in 1978. The right to due process is not denied when an aggrieved party was given the opportunity to be heard. 13 (6) It is also alleged by the petitioner that it was never served copies of the pertinent documents relating to the approval of both applications filed by the private respondent. The claim does not appear to be substantiated. Moreover, the law and implementing rules do not require notice to employees of such application. (7) The petitioner also stresses that the first application was tainted with bad faith because the same was filed only after the private respondent had second thoughts about paying the mandated increase in emergency allowance. The petitioner calls attention to the fact that the private respondent was actually ready to pay the same as early as May, 1977. Whatever reason prompted the private respondent to change its mind is of no moment. A change of mind does not automatically amount to bad faith. Bad faith cannot be presumed. It is possible that the private respondent had reconsidered the Idea of paying the increase for some reason or another and opted instead to avail of the benefit under Presidential Decree No. 1123. The private respondent had the right to do so if it believes that it ought to be within the coverage of the said law. The issue as to whether or not the private respondent is guilty of unfair labor practice is beyond the scope of the instant Petition which relates to a case proceeding from the Wage Commission. That issue should be ventilated in the proper forum, the National Labor Relations Commission. 8) The claim that the private respondent is in a financial position to pay the additional emergency allowance provided for in Presidential Decree No. 1123 is likewise untenable. The Wage Commission and the Department of Labor and Employment are the administrative agencies which are in a better position to assess the matter on account of their expertise in the same. In the absence of any grave abuse of discretion on their part, and none has been shown in the instant Petition, their recommendations will be respected by this Court. Indeed, public respondents stressed that it is of public knowledge that in 1977 and 1978, the sugar industry was in financial straits due to the worldwide decline in the price of sugar.

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(9) Finally, there is no cogent basis for the allegation that the private respondent is using its corporate personality in such a way as to avoid its responsibility under the provisions of the Decree. The private respondent is a registered commercial partnership, not a corporate entity. The doctrine of piercing the corporate veil is not applicable in this case. For their part, the respondents argue that the petitioner did not exhaust all administrative remedies available before it sought judicial review. They are of the view that the rulings of the respondent Acting Secretary of Labor can still be elevated to the President of the Philippines for review. This view is traversed by the fact that, as stated by the respondent Acting Secretary in approving both applications, such approval is final and unappealable. 14Moreover, in the absence of a constituttional provision or a statute to the contrary, the official acts of a Department Secretary are deemed the acts of the President himself unless disapproved or reprobated by the latter. This is the doctrine of qualified political agency announced in Villena v. The Secretary of the Interior," to wit 15 ... under the presidential type of government which we have adopted and considering the departmental organization established and continued in force by ... our Constitution, all executive and administrative organizations are adjuncts of the Executive Department, the heads of the various executive departments are assistants and agents of the Chief Executive, and, except in cases where the Chief Executive is required by the Constitution or the law ta act in person or the agencies of the situation demand that he act personally, the multifarious executive and administrative functions of the Chief Executive are performed by and through the executive departments, and the acts of the secretaries of such departments, performed and promulgated in the regular course of business, are, unless disapproved or reprobated by the Chief Executive, presumptively the acts of the Chief Executive. ... Inasmuch as no grave abuse of discretion appears to have been committed by the herein public respondents, the writ of certiorari sought by the petitioner cannot issue, WHEREFORE, in view of the foregoing, the instant Petition is hereby DISMISSED for lack of merit. We make no pronouncement as to costs. SO ORDERED. FIRST DIVISION [G.R. No. 152058. September 27, 2004] SOCIAL SECURITY COMMISSION and SOCIAL SECURITY SYSTEM, petitioners, vs. COURT OF APPEALS and JOSE RAGO, respondents. DECISION DAVIDE, JR., C.J.: Page 41 of 65

This is a petition for the review of the decision[1] of 18 October 2001 and the resolution of 30 January 2002 of the Court of Appeals in CA-G.R. SP No. 63389 entitled Jose Rago vs. Social Security Commission and Social Security System. The decision reversed the 20 December 2000 Resolution of the Social Security Commission (SSC) in SSC Case No. 4-15009-2000 denying respondent Jose Ragos request to convert his monthly pension from permanent partial disability to permanent total disability. The resolution denied the motion to reconsider the decision. Private respondent Jose Rago (hereafter Rago) worked as an electrician for Legend Engineering in Basak, Pardo, Cebu City. On 1 December 1993, at about 6:15 p.m., while working on the ceiling of a building, he stepped on a weak ceiling joist. The structure gave way and he crashed into the corridor twelve feet below. The x-rays taken that day revealed that he had a (1) marked compression fracture of L1 vertebra without signs of dislocation and bone destruction; and (2) slight kyphosis at the level of L1 vertebrae, with the alignment of the spine still normal.[2] He was confined at the Perpetual Succour Hospital in Cebu City for twenty-four (24) days from 1 December 1993 to 24 December 1993,[3] and, thereafter, he was confined in his home from 25 December 1993 to 25 August 1994.[4] On 20 May 1994, Rago filed a claim for permanent partial disability with the Cebu City office of the Social Security System (SSS). Since he had only 35 monthly contributions, he was granted only a lump sum benefit.[5] He made additional premium contributions on 6 November 1995, and sought the adjustment of his approved partial disability benefits from lump sum to monthly payments. The adjustment was resolved in his favor on 18 October 1995.[6] On 9 November 1995, Rago filed a claim for Employees Compensation (EC) sickness benefit, which was supported by an x-ray report dated 1 December 1993. This was approved for a maximum of 120 days to cover the period of illness from 1 December 1993 to 30 March 1994. On 7 June 1996, Rago filed another claim to convert his SSS disability to EC disability. Again, it was resolved in his favor on 14 June 1996.[7] Two years later, on 16 June 1998, Rago claimed for the extension of his EC partial disability. A rating of 50% OB (of the body) was granted corresponding to the maximum benefit allowed under the Manual on Ratings of Physical Impairment.[8] Thereafter, Rago filed several requests for the adjustment of his partial disability to total disability. This time, his requests were denied by the Cebu City office of the SSS in its letters of 11 April 1999, 10 September 1999, 28 September 1999, 4 April 2000, and 17 April 2000. The

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denial was based on the medical findings of the Cebu City office that he was not totally prevented from engaging in any gainful occupation.[9] Undaunted, on 3 April 2000, Rago filed with the petitioner Social Security Commission (SSC) a petition for total permanent disability benefits based on the following grounds: 1. his convalescence period from the time of his hospital confinement to home confinement totaled 268 days and under SSS guidelines, if the injury persisted for more than 240 days, the injury would be considered as a permanent total disability; 2. his x-ray results showed a deterioration of his condition without any visible improvement on the disabilities resulting from the accident; and 3. he had lost his original capacity to work as an electrician and has been unemployed since the accident. The petition was docketed as SSC Case No. 4-15009-2000.[10] In its position paper dated 24 August 2000, the SSS argued that Rago had already been granted the maximum partial disability benefits. The physical examination conducted by the Cebu City office of the SSS showed that he was more than capable of physically engaging in any gainful occupation and that there was no manifestation of progression of illness. Thus, the SSS recommended the denial of Ragos petition.[11] In a resolution dated 20 December 2000, the SSC denied Ragos petition for lack of merit. The SSC ruled that he was not entitled to permanent partial disability more than what was already granted, more so to permanent total disability benefits since he was already granted the maximum allowable benefit for his injury.[12] Without filing a motion for reconsideration, Rago appealed to the Court of Appeals by filing a petition for review and reiterating his claim for permanent disability benefits under Section 13-A (g) of R.A. No. 1161, as amended by R.A. No. 8282.[13] The petition was docketed as CA-G.R. SP No. 63389. In its decision of 18 October 2001, the Court of Appeals reversed the SSCs resolution, and decreed as follows: WHEREFORE, the assailed decision of the Social Security Commission is hereby reversed and set aside. Petitioners plea for conversion of his disability status from permanent partial to permanent total is granted. The SSS is hereby directed to pay him the necessary compensation benefits in accordance with the proper computation. The SSS seasonably filed a motion for reconsideration on the ground that the Court of Appeals should have considered an order issued by the SSC dated 11 July 2001 which affirmed, but clarified, its 20 December 2000 Resolution under appeal. The SSS then referred to the findings and conclusions of the SSC in said 11 July 2001 order, which emphasized that: Page 42 of 65

(1) Rago failed to file a motion for reconsideration with the SSC, which is mandatory, before filing a petition for review with the Court of Appeals; (2) the manual verification of the monthly contributions of Rago revealed that he had only 35 contributions and not 59; and (3) thus, whether or not the sickness or disability of Rago had showed signs of progression, a conversion of the same from permanent partial disability to permanent total disability could not be granted. This is because Rago lacked the required number of contributions mentioned in Section 13-A (a) of R.A. 1161, as amended, which reads: SEC. 13-A. Permanent disability benefits. (a) Upon the permanent total disability of a member who has paid at least thirty-six (36) monthly contributions prior to the semester of disability, he shall be entitled to the monthly pension: Provided, That if he has not paid the required thirty-six (36) monthly contributions, he shall be entitled to a lump sum benefit equivalent to the monthly pension times the number of monthly contributions paid to the SSS or twelve (12) times the monthly pension, whichever is higher. A member who (1) has received a lump sum benefit and (2) is re-employed or has resumed self-employment or has resumed self-employment not earlier than one (1) year from the date of his disability shall again be subject to compulsory coverage and shall be considered a new member. With that, the SSC ordered the SSS to re-compute the lump sum benefit due Rago and his EC benefit on the basis of the actual monthly contributions remitted in his behalf and to collect all excess payments made to him.[14] In its resolution of 30 January 2002, the Court of Appeals denied the motion for reconsideration. It explained the denial in this wise: At the outset, the Court strikes down the Commissions July 11, 2001 clarificatory order as an exercise of grave abuse of authority amounting to lack and/or excess of jurisdiction. The said Order was issued at a time when the Commission itself was knowledgeable of the petition for review pending before this Court. It must be pointed out that when petitioner timely filed his petition for review, [the] appeal from the Commissions resolution had thus become perfected, and it is this Court which therefore had jurisdiction over the matter, and sole authority to make any affirmation or modification of the assailed resolution. Once appeal is perfected, the lower tribunal loses its jurisdiction over the case, in favor of the appellate tribunal. The Court deems it the height of injustice for the Commission to add to and bolster its final ruling with additional observations and justifications, not otherwise embodied in the original ruling, after the losing claimant had already perfected and was actively pursuing his appeal. It behooves upon the Commission, therefore, to

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refrain from making any substantial addition, or modification of its assailed ruling, such authority in law, now having been transferred to this Court. What prompted the Social Security Commission to issue its clarificatory order is not made clear in its motion for reconsideration, nor in the clarificatory order itself. In any case, any modification of the tenor and justification of the assailed resolution of the Commission by the same body effectively altered the tenor of the earlier ruling, amounting to a violation of the petitioners right to due process and fair play, and, therefore, null and void. Moreover, the specific arguments raised by the Commission are not convincing to encourage a reversal of our earlier decision. To be sure, the alleged failure to file a motion for reconsideration of the Commissions December 20, 2000 resolution is not a fatal mistake, it appearing that the same was in clear violation of the petitioners rights and claims, as a member of the Social Security System. It is the established rule that the filing of a motion for reconsideration may be dispensed with when the assailed ruling is a patent nullity. Furthermore, the fact that the petitioner as credited by SSS monthly contributions short to entitle him to be qualified for permanent total disability benefits appear to be largely due to the SSS and its branches failure to accurately account the petitioners total payments, and not on the petitioners or his employers failure to do so. The same July 11, 2001 Order shows that the SSS Cotabato City Branch and the SSS Davao Hub Branch Office were unable to account for the complete contributions of the petitioner while he was employed by the San Miguel Corporation.[15] Thus, in their petition in the case at bar, the SSS and the SSC pray to set aside the Court of Appeals decision of 18 October 2001 and resolution of 30 January 2002 and to remand the case to the SSC for further proceedings.[16] In support of their prayer, the petitioners assert that the Court of Appeals erred in disregarding the established jurisprudence that the filing of a motion for reconsideration is a prerequisite to the filing of a petition for review to enable the tribunal, board or office concerned to pass upon and correct its mistakes without the intervention of the higher court. Failure to do so is a fatal procedural defect.[17] The petitioners likewise argue that they had not violated Ragos rights; hence, his case does not fall within the purview of Arroyo v. House of Representatives Electoral Tribunal[18] where we held that a prior motion for reconsideration could be dispensed with if fundamental rights to due process were violated. Additionally, the petitioners contend that the SSCs 11 July 2001 clarificatory order was issued to rectify its perceived error in the 20 Page 43 of 65

January 2000 resolution relative to the number of Ragos contributions which directly affected the computation of his disability benefits. Petitioners further maintain that the Court of Appeals relied heavily on the x-ray reports which contained no statement that Rago could no longer work. However, a certain Alvin C. Cabreros attested in an affidavit that Rago went out disco[e]ing after the accident, for which reason, Rago is not totally helpless as he portrayed himself to be. On 20 March 2003, we received a handwritten letter from Rago informing us that his lawyer had withdrawn from the case and of his difficulty in securing a new counsel. After naming Attys. Pedro Rosito, Arturo Fernan or Fritz Quianola of the IBP Cebu City at Capitol Compound as his informal lawyers, he asked us to consider, in lieu of his Comment, an attached copy of the opposition to the motion for reconsideration he filed with the Court of Appeals. In said pleading, Rago argued that the word may as used in the provision concerning the filing of a motion for reconsideration in the SSCs 1997 Revised Rules of Procedure is not mandatory but merely permissive. He also agreed with the conclusion of the Court of Appeals that a very strict interpretation of procedural rules would defeat the constitutional mandate on social justice. We gave due course to the petition and required the parties to submit their Memoranda, which they did. We shall first dispose of the procedural issue of prematurity raised by petitioners which is Ragos failure to file a motion for reconsideration. Section 5, Rule VI of the SSCs 1997 Revised Rules of Procedure provides: The party aggrieved by the order, resolution, award or decision of the Commission may file a motion for reconsideration thereof within fifteen (15) days from receipt of the same. Only one motion for reconsideration shall be allowed any party. The filing of the motion for reconsideration shall interrupt the running of the period to appeal, unless said motion is pro forma. The ordinary acceptations of the terms may and shall may be resorted to as guides in ascertaining the mandatory or directory character of statutory provisions. As regards adjective rules in general, the term may is construed as permissive and operating to confer discretion, while the word shall is imperative and operating to impose a duty which may be enforced.[19] However, these are not absolute and inflexible criteria in the vast areas of law and equity. Depending upon a consideration of the entire provision, its nature, its object and the consequences that would follow from construing it one way or the other, the convertibility of said terms either as mandatory or permissive is a standard recourse in statutory construction.[20]

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Conformably therewith, we have consistently held that the term may is indicative of a mere possibility, an opportunity or an option. The grantee of that opportunity is vested with a right or faculty which he has the option to exercise.[21] If he chooses to exercise the right, he must comply with the conditions attached thereto.[22] Applying these guidelines, we can construe Section 5, Rule VI as granting Rago, or any member of the System aggrieved by the SSCs resolution, the option of filing a motion for reconsideration which he may or may not exercise. Should he choose to do so, he is allowed to file only one motion for reconsideration within fifteen days from the promulgation of the questioned resolution. This is as far as we go in construing the provision in isolation because a second procedural rule now comes into play: the requirements for appeals filed against the rulings of quasi-judicial agencies in the exercise of its quasi-judicial functions. Section 1 of Rule VII of the SSC rules provides: [A]ny order, resolution, award or decision of the Commission, in the absence of an appeal therefrom as herein provides, shall become final and executory fifteen (15) days after the date of notification to the parties, and judicial review thereof shall be permitted only after any party claiming to be aggrieved thereby has exhausted his remedies before the Commission. It now becomes apparent that the permissive nature of a motion for reconsideration with the SSC must be read in conjunction with the requirements for judicial review, or the conditions sine qua non before a party can institute certain civil actions. A combined reading of Section 5 of Rule VI, quoted earlier, and Section 1 of Rule VII of the SSCs 1997 Revised Rules of Procedure reveals that the petitioners are correct in asserting that a motion for reconsideration is mandatory in the sense that it is a precondition to the institution of an appeal or a petition for review before the Court of Appeals. Stated differently, while Rago certainly had the option to file a motion for reconsideration before the SSC, it was nevertheless mandatory that he do so if he wanted to subsequently avail of judicial remedies. This rule is explicit in Rule 43 of the Rules of Court, which states: Sec. 1. Scope This Rule shall apply to appeals from judgments or final orders of the Court of Tax Appeals and from awards, judgments, final orders or resolutions of or authorized by any quasi-judicial agency in the exercise of its quasi-judicial functions. Among these agencies are theSocial Security Commission. Sec. 4. Period of appeal. The appeal shall be taken within fifteen (15) days from notice of the award, judgment, final order or resolution, or from the Page 44 of 65

date of its last publication, if publication is required by law for its effectivity, or of the denial of petitioners motion for new trial or reconsideration duly filed in accordance with the governing law of the court or agency a quo. Only one (1) motion for reconsideration shall be allowed. The policy of judicial bodies to give quasi-judicial agencies, such as the SSC, an opportunity to correct its mistakes by way of motions for reconsideration or other statutory remedies before accepting appeals therefrom finds extensive doctrinal support in the well-entrenched principle of exhaustion of administrative remedies. The reason for the principle rests upon the presumption that the administrative body, if given the chance to correct its mistake or error, may amend its decision on a given matter and decide it properly.[23] The principle insures orderly procedure and withholds judicial interference until the administrative process would have been allowed to duly run its course. This is but practical since availing of administrative remedies entails lesser expenses and provides for a speedier disposition of controversies.[24] Even comity dictates that unless the available administrative remedies have been resorted to and appropriate authorities given an opportunity to act and correct the errors committed in the administrative forum, judicial recourse must be held to be inappropriate, impermissible,[25] premature, and even unnecessary.[26] However, we are not unmindful of the doctrine that the principle of exhaustion of administrative remedies is not an ironclad rule. It may be disregarded (1) when there is a violation of due process, (2) when the issue involved is purely a legal question, (3) when the administrative action is patently illegal amounting to lack or excess of jurisdiction, (4) when there is estoppel on the part of the administrative agency concerned, (5) when there is irreparable injury, (6) when the respondent is a department secretary whose acts as an alter ego of the President bears the implied and assumed approval of the latter, (7) when to require exhaustion of administrative remedies would be unreasonable, (8) when it would amount to a nullification of a claim, (9) when the subject matter is a private land in land case proceedings, (10) when the rule does not provide a plain, speedy and adequate remedy, (11) when there are circumstances indicating the urgency of judicial intervention,[27] (12) when no administrative review is provided by law, (13) where the rule of qualified political agency applies, and (14) when the issue of non-exhaustion of administrative remedies has been rendered moot.[28] Fortunately for Rago, his case falls within some of these exceptions as discussed below.

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Petitioners attempts to distinguish Arroyo v. House of Representatives Electoral Tribunal[29] from this case is misplaced. The ground relied upon by the Court of Appeals for exempting this case from exhaustion of administrative remedies was not the denial of due process but of the patent nullity of the SSC decision in question. It is true that Rago disregarded procedural and curative rules in taking immediate recourse to the appellate court. The Court of Appeals similarly erred in taking cognizance of Ragos appeal. We likewise do not subscribe to issuing rulings or decisions that do not acknowledge or give reason for the disregard of the procedural defect of the petition, especially when it was specifically raised as an issue in respondents answer.[30] Nevertheless, to require Rago to comply with the principle of exhaustion of administrative remedies at this stage of the proceedings would be unreasonable, unjust and inequitable. It would prolong needlessly and uselessly the resolution of his claim. Petitioners SSS and SSC have consistently shown their obstinacy in their stand to deny Ragos request to convert his permanent partial disability to permanent total disability. The SSCs reliance on the SSS recommendations, which did not consider other evidence of the illness progression and its disregard of long-standing jurisprudence, made for the patent nullity of the SSC decision. The error was made more blatant when, in the SSCs clarificatory order, it classified the disability based on the amount of contributions Rago had paid.[31] To give the SSC another chance to rectify its error in accordance with the principle of exhaustion of administrative remedies would inevitably result in the same inflexible stance in defense of its error. We say another chance because we can consider the SSCs clarificatory order as in the nature of a judgment on Ragos motion for reconsideration as if he had filed one. Otherwise, to admit the misnamed order which was issued when the SSC no longer had jurisdiction over the case, and which modified and altered the contents and tenor of its original resolution, would have amounted to a violation of Ragos right to due process. To this extent we give imprimatur to the assailed decision and resolution of the Court of Appeals, and uphold its factual determination that Rago is entitled to the conversion of his permanent partial disability to permanent total disability. Thus: There is merit in the petition. Evidently clear from the recitals of the assailed decision some indicia of petitioners state of permanent total disability. To emphasize, he was granted sickness benefit for a maximum period of 120 days from December 1, 1993 to March 30, 1994. Then he was awarded lump sum permanent partial disability benefits paid on June 15, 1994, which was then adjusted on October 18, 1995 to monthly Page 45 of 65

pension benefit covering the period of 30 months from May 20, 1994 to October 1996. More, the permanent partial disability benefit was extended for another eight (8) months from July 3, 1998 to February 1999, all in all covering a period of 38 months. If temporary total disability lasting continuously for more than 120 days is deemed total and permanent, it is not therefore amiss to consider the payment of permanent partial disability benefits for 38 months as recognition of permanent total disability. Award of permanent partial disability benefits for 19 months was considered by the Supreme Court as an acknowledgment that the awardee was suffering from permanent total disability. (Diopenes vs. GSIS (205 SCRA 331[1992]). x x x The test of whether or not an employee suffers from permanent total disability is a showing of the capacity of the employee to continue performing his work notwithstanding the disability he incurred. (IJARES v. Court of Appeals, 313 SCRA 141 [1999]). The cited radiologic report under date of February 26, 1999 is demonstrative of the fact that petitioner is still in a state which at the time of the taking deters him from performing his job or any such related function. It is evident that the pain caused to petitioner by his injuries still persists even after more than 5 years when the accident occurred on December 1, 1993. The disability caused thereby which had earlier been diagnosed as permanent partial had possibly became permanent total. (GSIS vs. CA 260 SCRA 133, [1996]). Also in the case of Tria vs. ECC, (supra) a disability is total and permanent if as a result of the injury, the employee is not able to perform any gainful occupation for a period exceeding 120 days. Moreover, prior payment of compensation benefits for permanent partial disability may not foreclose his right to compensation benefits for permanent total disability. Otherwise, the social justice policy underlying the enactment of labor laws would lose its meaning. Caution should be taken against a too strict interpretation of the rules lest the constitutional mandate of social justice policy calls for a liberal and sympathetic approval of the pleas of disabled employees like herein petitioner. Compassion for him is not a dole out. It is a right. (GSIS vs. Court of Appeals, 285 SCRA 430 [1998]).[32] The Court of Appeals correctly observed that Ragos injury made him unable to perform any gainful occupation for a continuous period exceeding 120 days. The SSS had granted Rago sickness benefit for 120 days and, thereafter, permanent partial disability for 38 months. Such grant is an apparent recognition by the SSS that his injury is permanent and total as we have pronounced in several cases.[33] This is in conformity with Section 2 (b), Rule VII of the Amended Rules on Employees Compensation which defines a disability to be total and permanent if, as a

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result of the injury or sickness, the employee is unable to perform any gainful occupation for a continuous period exceeding 120 days, and Section 1, b (1) of Rule XI of the same Amended Rules which provides that a temporary total disability lasting continuously for more than 120 days, shall be considered permanent. In Vicente vs. Employees Compensation Commission,[34] we laid down the litmus test and distinction between Permanent Total Disability and Permanent Partial Disability, to wit: [W]hile permanent total disability invariably results in an employees loss of work or inability to perform his usual work, permanent partial disability, on the other hand, occurs when an employee loses the use of any particular anatomical part of his body which disables him to continue with his former work. Stated otherwise, the test of whether or not an employee suffers from permanent total disability is a showing of the capacity of the employee to continue performing his work notwithstanding the disability he incurred. Thus, if by reason of the injury or sickness he sustained, the employee is unable to perform his customary job for more than 120 days and he does not come within the coverage of Rule X of the Amended Rules on Employees Compensability (which, in a more detailed manner, describes what constitutes temporary total disability), then the said employee undoubtedly suffers from permanent total disability regardless of whether or not he loses the use of any part of his body. We further reiterate that disability should be understood less on its medical significance than on the loss of earning capacity. Permanent total disability means disablement of an employee to earn wages in the same kind of work, or work of similar nature that he was trained for or accustomed to perform, or any kind of work which a person of his mentality and attainment could do. It does not mean absolute helplessness.[35] Moreover, a persons disability may not manifest fully at one precise moment in time but rather over a period of time. It is possible that an injury which at first was considered to be temporary may later on become permanent or one who suffers a partial disability becomes totally and permanently disabled from the same cause.[36] With this, petitioners additional arguments that the x-ray reports lacked a physicians finding that Rago could no longer work and that Mr. Cabreros affidavit attested to the contrary lose persuasive worth. X-ray reports and its confirmation by a physician are simply appraised for their evidentiary value and are not considered as indispensable prerequisites to compensation.[37]Even then, the three x-ray reports submitted by Rago clearly show the degenerative condition of his injury, viz. (a) Radiology report stated 1 December 1993 revealed Mark compression fracture o L1 vertebra without signs of dislocation and bone

destruction and slight kyphosis at the level of L1 vertebra but the alignment of the spine is normal; (b) Radiology report dated 4 may 1994 showed that consistent with compression fracture with mild posterior dislocation of the L1; and (c) Radiology report dated 26 February 1999 showed anterior wedging or compression fracture of L1 with gibbus deformity and thoraco-lumber junction and suggested lumbo-sacral AP for further study. [emphasis supplied] Clearly, Rago is entitled to permanent total disability benefits. One final note. Although the SSS and the SSC should be commended for their vigilance against unjustified claims that will deplete the funds intended to be disbursed for the benefit only of deserving disabled employees, they should be cautioned against a very strict interpretation of the rules lest it results in the withholding of full assistance from those whose capabilities have been diminished, if not completely impaired, as a consequence of their dedicated service. A humanitarian impulse, dictated by no less than the Constitution under its social justice policy, calls for a liberal and sympathetic approach to the legitimate appeals of disabled workers like Rago. Compassion for them is not a dole out but a right.[38] WHEREFORE, the decision of the Court of Appeals dated 18 October 2001 and its resolution of 30 January 2002 in CA-G.R. SP No. 63389 reversing the Social Security Commissions Resolution of 20 December 2000 in SSC Case No. 4-15009-2000 are hereby AFFIRMED. No pronouncement as to costs.SO ORDERED. J. Use of the word OR Republic of the Philippines SUPREME COURT Manila EN BANC G.R. No. L-33487 May 31, 1971 THE PEOPLE OF THE PHILIPPINES, plaintiff-appellant, vs. MAXIMO MARTIN, CANDIDO MARTIN and RODOLPO HIGASHI, defendants-appellees. Office of the Solicitor General Felix V. Makasiar, Assistant Solicitor General Isidro C. Borromeo and Solicitor Dominador L. Quiroz for plaintiff-appellant. Marianito Licudan for defendants-appellees. CASTRO, J.: This appeal by the People of the Philippines from the order dated August 2, 1968 of the Court of First Instance of La Union dismissing criminal case A-392 on the ground of lack of jurisdiction, was certified by the Court of Appeals to this Court, the issues raised being purely of law. Page 46 of 65

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The central issue is the proper interpretation of the provisions Section 46 of Commonwealth Act 613, as amended by Rep. Act 144 and Rep. Act 327, otherwise known as the Philippine Immigration Act. The defendants Maximo Martin, Candido Martin and Rodolfo Higashi were charged in criminal case A-392 of the CFI of La Union with a violation of section 46 of Com. Act 613, as amended. The information dated January 12, 1968 recites as follows: The undersigned Acting State Prosecutor, and Asst. Provincial Fiscal accuse MAXIMO MARTIN, CANDIDO MARTIN and RODOLFO HIGASHI of Sec. 46 of Commonwealth Act NO. 613 otherwise known as Philippine Immigration Act of 1940, as amended by Republic Act No. 827, committed as follows: That on or about the 22nd day of September, 1966, in the Municipality of Sto. Tomas, Province of La Union, Philippines, and within the jurisdiction of this Honorable court, the above-named accused, conspiring and confederating together and mutually helping one another and in active aid with Filipino nationals who are presently charged before the Court of First Instance of Bulacan in Crim. Case No. 6252-M, did then and there wilfully, unlawfully and feloniously bring in and carry into the Philippines thirty nine (39) Chinese aliens who traveled by the Chinese vessel "Chungking" from the port of Hongkong and who are not duly admitted by any immigration officer or not lawfully entitled to enter the Philippines, and from the Chinese vessel "Chungking," accused took delivery, loaded, and ferried the Chinese aliens in the vessel "MARU XI" owned, operated, under the charge and piloted by all the herein accused from outside into the Philippines, sureptitiously landing the said aliens at Barrio Damortis, Sto. Tomas, La Union, Philippines which place of landing is not a duly authorized port of entry in the Philippines. After the thirty-nine (39) illegal entrants were landed in barrio Damortis, as charged in the indictment, they were loaded in a car and two jeepneys for transport to Manila. They did not however reach their destination because they were intercepted by Philippine Constabulary agents in Malolos, Bulacan. For concealing and harboring these thirty-nine aliens, Jose Pascual, Filipinas Domingo, Jose Regino, Alberto Bunyi, Emerdoro Santiago and Ibarra Domingo were charged before the Court of First Instance of Bulacan in criminal case 6258-M. The amended information in the said criminal case reads as follows: The undersigned Provincial Fiscal accuses Jose Pascual, Filipinas Domingo, Jose Regino, Alberto Bunyi, Emerdoro Santiago and Ibarra Domingo of the violation of Section 46 of Commonwealth Act No. 613, Page 47 of 65

otherwise known as the Philippine Immigration Act of 1940, as amended by Republic Act No. 827, committed as follows: That on or about the 22nd day of September, 1966, in the municipality of Malolos, Province of Bulacan, Philippines, and within the jurisdiction of this Honorable Court, the above named accused and several others whose identities are still unknown, conspiring and confederating and aiding one another, did then and there wilfully, unlawfully and, feloniously, bring conceal and harbor 39 Chinese aliens not duly admitted by any immigration officer or not lawfully entitled to enter or reside within the Philippines under the terms of the Immigration Laws, whose names are as follows: Hung Chang Cheong, Hung Ling Choo, Sze Lin Chuk, Chian Giok Eng, Mung Bun Bung, Lee Chin Kuo, Gan Kee Chiong, See Sei Hong Chun, Go Kian Sim, Kho Ming Jiat, See Lee Giok, Uy Chin Chu, Go Su Kim, Go Chu, Chiang Tian, Chua Tuy Tee, Sy Jee Chi, Sy Sick Bian, Sy Kang Liu, Ang Chi Hun, Kho Chu, Chua Hong, Lim Chin Chin, Ang Lu Him, William Ang, Sy Siu Cho, Ang Puy Hua, Sy Chi Tek, Lao Sing Tee, Cua Tiong Bio, Kho Lee Fun, Kho Lee Fong, Ang Giok, Sy Si Him, Sy Lin Su, Lee Hun, Sy SiongGo and Sy Cho Lung, who previously earlier on the same day, thru the aid, help and manipulation of the abovenamed accused, were loaded and ferried to the shore from the Chinese vessel "CHIUNG HING" in a fishing vessel known as the "MARU Xl" and landed at barrio Damortis, Sto. Tomas, La Union, and immediately upon landing were loaded in 3 vehicles an automobile bearing plate No. H-3812-Manila driven and operated by Emerdoro Santiago and 2 jeepneys with plates Nos. S-27151- Philippines, 1966 and S-26327Philippines, 1966 driven and operated by Jose Regino and Alberto Bunyi, respectively, and brought southwards along the MacArthur highway and upon reaching Malolos, Bulacan, were apprehended by the agents of the Philippine Constabulary, the latter confiscating and impounding the vehicles used in carrying and transporting the aid aliens and including the sum of P15,750.00 found in the possession of the accused Jose Pascual which was used and/or to be used in connection with the commission of the crime charged. On July 1, 1968 the three accused in criminal case A-392 filed a "motion to dismiss" [quash] on the ground that the CFI of La Union has no jurisdiction over the offense charged in the said indictment as the court had been pre-empted from taking cognizance of the case by the dependency in the CFI of Bulacan of criminal case 6258-M. This motion was opposed by the prosecution. On August 2, 1968 the Court of First Instance of La Union dismissed the case, with costs de oficio. The Government's motion for reconsideration was denied; hence the present recourse.

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In this appeal the Government contends that the lower court erred (1) "in declaring that the information in the instant case [A-392] alleges conspiracy between the accused herein and the persons accused in criminal case 6258-M of the Court of First Instance of Bulacan;" (2) "in holding that by reason of said allegation of conspiracy in the information in this case [A-3921], the act of one of the accused in both criminal cases is deemed the act of all the accused and that as a consequence all those accused in the two cases are liable and punishable for one offense or violation of section 46 of Commonwealth Act 613, as amended, although committed by and through the different means specified in said section;" (3) "in holding that the violation of section 46 of Commonwealth Act 613, as amended, committed by the accused in both criminal cases partakes of the nature of a transitory or continuing offense;" and (4) "in declaring that it lacks jurisdiction and is now excluded from taking cognizance of this case [A-392] and in dismissing it." Section 46 of Commonwealth Act 613, as amended, reads as follows: Any individual who shall bring into or land in the Philippines or conceal or harbor any alien not duly admitted by any immigration officer or not lawfully entitled to enter or reside within the Philippines under the terms of the immigration laws, or attempts, conspires with, or aids another to commit any such act, and any alien who enters the Philippines without inspection of admission by the immigration officials, or obtains entry into the Philippines by wilful, false, or misleading representation or wilful concealment of a material fact, shall be guilty of an offense and upon conviction thereof, shall be fined not more than ten thousand pesos, imprisoned for not more than ten years, and deported if he is an alien. If the individual who brings into or lands in the Philippines or conceals or harbors any alien not duly admitted by any immigration officer or not lawfully entitled to enter or reside herein, or who attempts, conspires with or aids another to commit any such act, is the pilot, master, agent, owner, consignee, or any person in charge of the vessel or aircraft which brought the alien into the Philippines from any place outside thereof, the fine imposed under the first paragraph hereof shall constitute a lien against the vessel or aircraft and may be enforced in the same manner as fines are collected and enforced against vessels under the customs laws: Provided, however, That if the court shall in its discretion consider forfeiture to be justified by the circumstances of the case, it shall order, in lieu of the fine imposed, the forfeiture of the vessel or aircraft in favor of the Government, without prejudice to the imposition to the penalty of imprisonment provided in the preceding paragraph. To be stressed at the outset is the significant repetition, in the second paragraph above-quoted, of basic words and concepts set forth in the first Page 48 of 65

paragraph. Thus, the first paragraph begins with: "Any individual who shall bring into or land in the Philippines or conceal or harbor any alien ...;" the second paragraph starts with "If the individual who brings into or lands in the Philippines or conceals or harbors any alien ..." (emphasis supplied) Scanning section 46 in its entire context, it is at once apparent, there being no indication to the contrary, that the act ofbringing into, the act of landing, the act of concealing, the act of harboring, are four separate acts, each act possessing its own distinctive, different and disparate meaning. "Bring into" has reference to the act of placing an alien within the territorial waters of the Philippines. "Land" refers to the act of putting ashore an alien. "Conceal" refers to the act of hiding an alien. "Harbor" refers to the act of giving shelter and aid to an alien. It is of course understood that the alien brought into or landed in the Philippines, or concealed or harbored, is an "alien not duly admitted by any immigration officer or not lawfully entitled to enter or reside within the Philippines under the terms of the immigration laws." 1 The rule is too well-settled to require any citation of authorities that the word "or" is a disjunctive term signifying dissociation and independence of one thing from each of the other things enumerated unless the context requires a different interpretation. While in the interpretation of statutes, 'or' may read 'and' and vice versa, it is so only when the context so requires. 2 A reading of section 46 above-quoted does not justify giving the word "or" a non-disjunctive meaning. Bringing into and landing in the Philippines of the 39 aliens were completed when they were placed ashore in the barrio of Damortis on September 22, 1966. The act of the six accused in criminal case 6258-M before the CFI of Bulacan of transporting the aliens constitutes the offenses of "concealing" and "harboring," as the terms are used in section 46 of our Immigration Laws. The court a quo in point of fact accepted this interpretation when it observed that "it could happen that different individuals, acting separately from, and independently of each other could violate and be criminally liable for violation of the immigration Act, if each individual independently commits any of the means specified under said section 46 of Commonwealth Act 613, as amended by Republic Act 827. For example, an individual act independently, with the use of a motor boat, brings into the country and lands several Chinese aliens and after doing so he goes away. There is no question that said individual violated said section 46 of the Immigration Act, for bringing into and landing in the Philippines some alien. Now, after the said landing of the said aliens another individual also acting independently, without connection whatsoever with the one who brought and landed the said aliens, and

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knowing that the Chinese aliens have no right to enter the country or unlawfully conceals or harbors the said aliens. There is no doubt that this is also liable and punishable for another separate violation of said section 46 of Commonwealth Act 613." This notwithstanding, the court dismissed this case on the ground that there is an express allegation in the information of connivance between the three defendant-appellees herein and the six accused in criminal case 6258M of the CFI of Bulacan. In our view the court a quo incurred in error in reading this conclusion. This error, which is one of misinterpretation of the phraseology of the information, was induced by a reading of the first of the said information which states as follows: That on or about the 22nd day of September, 1966, in the Municipality of Sto. Tomas, Province of La Union, Philippines, and within the jurisdiction of this Honorable Court, the abovenamed accused, conspiring and confederating together and mutually helping one another and in active aid with Filipino nationals who are presently charged before the CFI of Bulacan in Crim. Case No. 6258-M, did then and there wilfully, unlawfully and feloniously bring in and ferry into the Philippines thirty-nine (39) Chinese aliens who traveled by the Chinese vessel 'Chungking' from the port of Hongkong ... (Emphasis ours) It is crystal-clear that the words, "the above-named accused, conspiring and confederating together and mutually helping one another," can refer only and exclusively to the three persons accused in this case, namely Maximo Martin, Candido Martin and Rodolfo Higashi. While the unfortunate insertion in the information of the clause reading, "and in active aid with Filipino nationals who are presently charged before the CFI of Bulacan in Criminal Case No. 6258-M," may yield the implication that the three defendants-appellees and the six accused in criminal case 6258-M before the CFI of Bulacan may have agreed on the sequence of the precise steps to be taken in the smuggling of the Chinese aliens and on the identities of the persons charged with consummating each step, still there seems to be no question that the three defendants-appellees are charged only with bringing in and landing on Philippine soil the thirty-nine aliens, whereas the six accused in criminal case 6258-M are charged only with concealing and harboring the said aliens. It is technically absurd to draw a conclusion of conspiracy among the three defendants-appellees and the six accused in the criminal case 6258-M before the CFI of Bulacan who are not named defendants in this case. At all events, the words, "and in active aid with Filipino nationals who are presently charged before the CFI of Bulacan in Crim. Case No. 6258-M," can and should be considered as a surplusage, and may be omitted from the information without doing violence to or detracting from the Page 49 of 65

intendment of the said indictment. These words should therefore be disregarded. Finally, the court a quo erred in maintaining the view that the acts of bringing into and landing aliens in the Philippines illegally and the acts of concealing and harboring them constitute one "transitory and continuing violation". We here repeat and emphasize that the acts of bringing into and landing an alien in the Philippines are completed once the alien is brought ashore on Philippine territory, and are separate and distinct from the acts of concealing and harboring such alien. If the aliens in this case were apprehended immediately after landing, there would be no occasion for concealing and harboring them. Upon the other hand, one set of persons may actually accomplish the act of bringing in and/or landing aliens in the Philippines, and another completely different set of persons may conceal and/or harbor them. The general concept of a continuing offense is that the essential ingredients of the crime are committed in different provinces. An example is the complex offense of kidnapping with murder if the victim is transported through different provinces before he is actually killed. In such case the CFI of any province in which any one of the essential elements of said complex offense has been committed, has jurisdiction to take cognizance of the offense. 3 The conclusion thus become ineluctable that the court a quo erred in refusing to take cognizance of the case at bar. ACCORDINGLY, the order of the Court of First Instance of La Union of August 2, 1968, dismissing this case and cancelling the bail bond posted by the three defendants-appellees, is set aside, and this case is remanded for further proceedings in accordance with law. EN BANC G.R. No. 182380 [August 28, 2009] ROBERT P. GUZMAN, Petitioner, vs. COMMISSION ON ELECTIONS, MAYOR RANDOLPH S. TING AND SALVACION GARCIA, Respondents. x-------------------------------------------------------------------------------------x DECISION BERSAMIN, J.: Through certiorari under Rule 64, in relation to Rule 65, Rules of Court, the petitioner assails the February 18, 2008 resolution of the Commission of Elections en banc(COMELEC),[1] dismissing his criminal complaint against respondents City Mayor Randolph Ting and City Treasurer Salvacion Garcia, both of Tuguegarao City, charging them with alleged violations of the prohibition against disbursing public funds and undertaking public works, as embodied in Section 261, paragraphs (v) and (w), of the Omnibus Election Code, during the 45-day period of the election

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ban by purchasing property to be converted into a public cemetery and by issuing the treasury warrant in payment. He asserts that the COMELEC committed grave abuse of discretion amounting to lack or excess of jurisdiction in thereby exonerating City Mayor Ting and City Treasurer Garcia based on its finding that the acquisition of the land for use as a public cemetery did not constitute public works covered by the ban. Antecedents On March 31, 2004, the Sangguniang Panlungsod of Tuguegarao City passed Resolution No. 048-2004 to authorize City Mayor Ting to acquire two parcels of land for use as a public cemetery of the City. Pursuant to the resolution, City Mayor Ting purchased the two parcels of land, identified as Lot Nos. 5860 and 5861 and located at Atulayan Sur, Tuguegarao City, with an aggregate area of 24,816 square meters (covered by Transfer Certificates of Title [TCT] No. T-36942 and TCT No. T-36943 of the Register of Deeds in Tuguegarao City), from Anselmo Almazan, Angelo Almazan and Anselmo Almazan III. As payment, City Treasurer Garcia issued and released Treasury Warrant No. 0001534514 dated April 20, 2004 in the sum of P8,486,027.00. On May 5, 2004, the City Government of Tuguegarao caused the registration of the sale and the issuance of new certificates in its name (i.e., TCT No. T-144428 and TCT No. T-144429). Based on the transaction, the petitioner filed a complaint in the Office of the Provincial Election Supervisor of Cagayan Province against City Mayor Ting and City Treasurer Garcia, charging them with a violation of Section 261, paragraphs (v) and (w), of the Omnibus Election Code, for having undertaken to construct a public cemetery and for having released, disbursed and expended public funds within 45 days prior to the May 9, 2004 election, in disregard of the prohibitions under said provisions due to the election ban period having commenced on March 26, 2004 and ended on May 9, 2004. City Mayor Ting denied the accusations in his counter-affidavit but City Treasurer Garcia opted not to answer. After investigation, the Acting Provincial Election Supervisor of Cagayan recommended the dismissal of the complaint by a resolution dated December 13, 2006, to wit: WHEREFORE, premises considered, the undersigned investigator finds that respondents did not violate Section 261 subparagraphs (v) and (w) of the Omnibus Election Code and Sections 1 and 2 of Comelec Resolution No. 6634 and hereby recommends the DISMISSAL of the above-entitled case for lack of merit.[2] Page 50 of 65

The COMELEC en banc adopted the foregoing recommendation in its own resolution dated February 18, 2008 issued in E.O. Case No. 06-14[3] and dismissed the complaint for lack of merit, holding that the acquisition of the two parcels of land for a public cemetery was not considered as within the term public works; and that, consequently, the issuance of Treasury Warrant No. 0001534514 was not for public works and was thus in violation of Section 261 (w) of the Omnibus Election Code. Not satisfied but without first filing a motion for reconsideration, the petitioner has commenced this special civil action under Rule 64, in relation to Rule 65, Rules of Court, claiming that the COMELEC committed grave abuse of discretion in thereby dismissing his criminal complaint. Parties Positions The petitioner contended that the COMELEC's point of view was unduly restrictive and would defeat the very purpose of the law; that it could be deduced from the exceptions stated in Section 261 (v) of the Omnibus Election Code that the disbursement of public funds within the prohibited period should be limited only to the ordinary prosecution of public administration and for emergency purposes; and that any expenditure other than such was proscribed by law. For his part, City Mayor Ting claimed that the mere acquisition of land to be used as a public cemetery could not be classified as public works; that there would be public works only where and when there was an actual physical activity being undertaken and after an order to commence work had been issued by the owner to the contractor. The COMELEC stated that the petition was premature because the petitioner did not first present a motion for reconsideration, as required by Section 1(d), Rule 13 of the 1993 COMELEC Rules of Procedure;[4] and that as the primary body empowered by the Constitution to investigate and prosecute cases of violations of election laws, including acts or omissions constituting election frauds, offenses and malpractices,[5] it assumed full discretion and control over determining whether or not probable cause existed to warrant the prosecution in court of an alleged election offense committed by any person. The Office of the Solicitor General (OSG) concurred with the COMELEC to the effect that the acquisition of the land within the election period for use as a public cemetery was not covered by the 45-day public works ban under Section 261(v) of the Omnibus Election Code; but differed from the COMELEC as to the issuance of Treasury Warrant No. 0001534514, opining that there was probable cause to hold City Mayor Ting and City Treasurer Garcia liable for a violation of Section 261(w), subparagraph (b), of theOmnibus Election Code.

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Issues The issues to be resolved are: (1) Whether or not the petition was premature; (2) Whether or not the acquisition of Lots 5860 and 5881 during the period of the election ban was covered by the term public works as to be in violation of Section 261 (v) of the Omnibus Election Code; and (3) Whether or not the issuance of Treasury Warrant No. 0001534514 during the period of the election ban was in violation of Section 261 (w) of the Omnibus Election Code. Ruling of the Court The petition is meritorious. I. The Petition Was Not Premature The indispensable elements of a petition for certiorari are: (a) that it is directed against a tribunal, board or officer exercising judicial or quasijudicial functions; (b) that such tribunal, board or officer has acted without or in excess of jurisdiction or with grave abuse of discretion; and (c) that there is no appeal or any plain, speedy and adequate remedy in the ordinary course of law.[6] The COMELEC asserts that the plain, speedy and adequate remedy available to the petitioner was to file a motion for reconsideration vis--vis the assailed resolution, as required in the 1993 COMELEC Rules of Procedure; and that his omission to do so and his immediately invoking the certiorari jurisdiction of the Supreme Court instead rendered his petition premature. We do not sustain the COMELEC. As a rule, it is necessary to file a motion for reconsideration in the court of origin before invoking the certiorari jurisdiction of a superior court. Hence, a petition forcertiorari will not be entertained unless the public respondent has been given first the opportunity through a motion for reconsideration to correct the error being imputed to him.[7] The rule is not a rigid one, however, for a prior motion for reconsideration is not necessary in some situations, including the following: a. Where the order is a patent nullity, as where the court a quo has no jurisdiction; b. Where the questions raised in the certiorari proceedings have been duly raised and passed upon by the lower court, or are the same as those raised and passed upon in the lower court; c. Where there is an urgent necessity for the resolution of the question, and any further delay would prejudice the interests of the Government or of the petitioner, or the subject matter of the action is perishable;

Where, under the circumstances, a motion for reconsideration would be useless; e. Where the petitioner was deprived of due process and there is extreme urgency for relief; f. Where, in a criminal case, relief from an order of arrest is urgent and the granting of such relief by the trial court is improbable; g. Where the proceedings in the lower court are a nullity for lack of due process; h. Where the proceedings were ex parte or in which the petitioner had no opportunity to object; and i. Where the issue raised is one purely of law or where public interest is involved.[8] That the situation of the petitioner falls under the last exception is clear enough. The petitioner challenges only the COMELECs interpretation of Section 261(v) and (w) of the Omnibus Election Code. Presented here is an issue purely of law, considering that all the facts to which the interpretation is to be applied have already been established and become undisputed. Accordingly, he did not need to first seek the reconsideration of the assailed resolution. The distinctions between a question of law and a question of fact are well known. There is a question of law when the doubt or difference arises as to what the law is on a certain state of facts. Such a question does not involve an examination of the probative value of the evidence presented by the litigants or any of them. But there is a question of fact when the doubt arises as to the truth or falsehood of the alleged facts or when the query necessarily invites calibration of the whole evidence, considering mainly the credibility of witnesses, existence and relevancy of specific surrounding circumstances, their relation to one another and to the whole, and the probabilities of the situation.[9] II. Acquisition of Lots 5860 And 5881 During the Period of the Election Ban, Not Considered as Public Works in Violation of Sec. 261 (v), Omnibus Election Code The COMELEC held in its resolution dated February 18, 2008 that: To be liable for violation of Section 261 (v), supra, four (4) essential elements must concur and they are: 1. A public official or employee releases, disburses, or expends any public funds; 2. The release, disbursement or expenditure of such funds must be within forty-five days before regular election; Page 51 of 65

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The release, disbursement or expenditure of said public funds is for any and all kinds of public works; and 4. The release, disbursement or expenditure of the public funds should not cover any exceptions of Section 261 (v). (Underscoring supplied). Applying the foregoing as guideline, it is clear that what is prohibited by law is the release, disbursement or expenditure of public funds for any and all kinds of public works. Public works is defined as fixed works (as schools, highways, docks) constructed for public use or enjoyment esp. when financed and owned by the government. From this definition, the purchase of the lots purportedly to be utilized as cemetery by the City Government of Tuguegarao cannot by any stretch of imagination be considered as public works, hence it could not fall within the proscription as mandated under the aforementioned section of the Omnibus Election Code. And since the purchase of the lots is not within the contemplation of the word public works, the third of the elements stated in the foregoing guideline is not present in this case. Hence since not all the elements concurred, the respondents are not liable for violation of Section 261 (v) of the Omnibus Election Code. The foregoing ratiocination of the COMELEC is correct. Section 261(v) of the Omnibus Election Code provides as follows: Section 261. Prohibited acts.- The following shall be guilty of an election offense: x x x (v) Prohibition against release, disbursement or expenditure of public funds.Any public official or employee including barangay officials and those of government-owned or controlled corporations and their subsidiaries, who, during forty-five days before a regular election and thirty days before a special election, releases, disburses or expends any public funds: (1) Any and all kinds of public works, except the following: (a) Maintenance of existing and/or completed public works project: Provided, that not more than the average number of laborers or employees already employed therein during the sixth- month period immediately prior to the beginning of the forty-five day period before election day shall be permitted to work during such time: Provided, further, That no additional laborer shall be employed for maintenance work within the said period of forty-five days; (b) Work undertaken by contract through public bidding held, or negotiated contract awarded, before the forty-five day period before election: Provided, That work for the purpose of this section undertaken under the so-called takay or paquiao system shall not be considered as work by contract; Page 52 of 65

(c) Payment for the usual cost of preparation for working drawings, specifications, bills of materials and equipment, and all incidental expenses for wages of watchmen and other laborers employed for such work in the central office and field storehouses before the beginning of such period: Provided, That the number of such laborers shall not be increased over the number hired when the project or projects were commenced; and (d) Emergency work necessitated by the occurrence of a public calamity, but such work shall be limited to the restoration of the damaged facility. No payment shall be made within five days before the date of election to laborers who have rendered services in projects or works except those falling under subparagraphs (a), (b), (c), and (d), of this paragraph. This prohibition shall not apply to ongoing public works projects commenced before the campaign period or similar projects under foreign agreements. For purposes of this provision, it shall be the duty of the government officials or agencies concerned to report to the Commission the list of all such projects being undertaken by them. (2) The Ministry of Social Services and Development and any other office in other ministries of the government performing functions similar to the said ministry, except for salaries of personnel and for such other expenses as the Commission may authorize after due and necessary hearing. Should a calamity or disaster occur, all releases normally or usually coursed through the said ministries shall be turned over to, and administered and disbursed by, the Philippine National Red Cross, subject to the supervision of the Commission on Audit or its representatives, and no candidate or his or her spouse or member of his family within the second civil degree of affinity or consanguinity shall participate, directly or indirectly, in the distribution of any relief or other goods to the victims of the calamity or disaster; and (3) The Ministry of Human Settlements and any other office in any other ministry of the government performing functions similar to the said ministry, except for salaries of personnel and for such other necessary administrative or other expenses as the Commission may authorize after due notice and hearing. As the legal provision shows, the prohibition of the release, disbursement or expenditure of public funds for any and all kinds of public works depends on the following elements: (a) a public official or employee releases, disburses or spends public funds; (b) the release, disbursement and expenditure is made within 45 days before a regular election or 30 days before a special election; and (c) the public funds are

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intended for any and all kinds of public works except the four situations enumerated in paragraph (v) of Section 261. It is decisive to determine, therefore, whether the purchase of the lots for use as a public cemetery constituted public works within the context of the prohibition under theOmnibus Election Code. We first construe the term public works which the Omnibus Election Code does not define with the aid of extrinsic sources. The Local Government Code of 1991 considers public works to be the fixed infrastructures and facilities owned and operated by the government for public use and enjoyment. According to the Code, cities have the responsibility of providing infrastructure facilities intended primarily to service the needs of their residents and funded out of city funds, such as, among others, roads and bridges; school buildings and other facilities for public elementary and secondary schools; and clinics, health centers and other health facilities necessary to carry out health services.[10] Likewise, the Department of Public Works and Highways (DPWH), the engineering and construction arm of the government, associates public works with fixed infrastructures for the public. In the declaration of policy pertinent to the DPWH, Sec. 1, Chapter 1, Title V, Book IV, Administrative Code of 1987, states: Sec. 1. Declaration of Policy. - The State shall maintain an engineering and construction arm and continuously develop its technology, for the purposes of ensuring the safety of all infrastructure facilities and securing for all public works and highways the highest efficiency and the most appropriate quality in construction. The planning, design, construction and maintenance of infrastructure facilities, especially national highways, flood control and water resources development systems, and other public works in accordance with national development objectives, shall be the responsibility of such an engineering and construction arm. However, the exercise of this responsibility shall be decentralized to the fullest extent feasible. The enumeration in Sec. 1, supra infrastructure facilities, especially national highways, flood control and water resources development systems, and other public works in accordance with national development objectives means that only the fixed public infrastructures for use of the public are regarded as public works. This construction conforms to the rule of ejusdem generis, which Professor Black has restated thuswise:[11] It is a general rule of statutory construction that 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 Page 53 of 65

construed in their widest extent, but are to be held as applying only to persons or things of the same general kind or class as those specifically mentioned. But this rule must be discarded where the legislative intention is plain to the contrary. Accordingly, absent an indication of any contrary legislative intention, the term public works as used in Section 261 (v) of the Omnibus Election Code is properly construed to refer to any building or structure on land or to structures (such as roads or dams) built by the Government for public use and paid for by public funds. Public works are clearly works, whether of construction or adaptation undertaken and carried out by the national, state, or municipal authorities, designed to subserve some purpose of public necessity, use or convenience, such as public buildings, roads, aqueducts, parks, etc.; or, in other words, all fixed works constructed for public use.[12] It becomes inevitable to conclude, therefore, that the petitioner's insistence that the acquisition of Lots 5860 and 5881 for use as a public cemetery be considered a disbursement of the public funds for public works in violation of Section 261(v) of the Omnibus Election Code was unfounded and unwarranted. III. Issuance of the Treasury Warrant During the Period of the Election Ban Violated Section 261 (w), Omnibus Election Code Section 261(w) of the Omnibus Election Code reads thus: xxx (w) Prohibition against construction of public works, delivery of materials for public works and issuance of treasury warrants and similar devices.- During the period of forty five days preceding a regular election and thirty days before a special election, any person who: (a) undertakes the construction of any public works, except for projects or works exempted in the preceding paragraph; or (b) issues, uses or avails of treasury warrants or any device undertaking future delivery of money, goods or other things of value chargeable against public funds. x x x The OSG posits that the foregoing provision is violated in either of two ways: (a) by any person who, within 45 days preceding a regular election and 30 days before a special election, undertakes the construction of any public works except those enumerated in the preceding paragraph; or (b) by any person who issues, uses or avails of treasury warrants or any device undertaking future delivery of money, goods or other things of value chargeable against public funds within 45 days preceding a regular election and 30 days before a special election. We concur with the OSGs position.

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Section 261 (w) covers not only one act but two, i.e., the act under subparagraph (a) above and that under subparagraph (b) above. For purposes of the prohibition, the acts are separate and distinct, considering that Section 261(w) uses the disjunctive or to separate subparagraphs (a) and (b). In legal hermeneutics, or is a disjunctive that expresses an alternative or gives a choice of one among two or more things.[13] The word signifies disassociation and independence of one thing from another thing in an enumeration. It should be construed, as a rule, in the sense that it ordinarily implies as a disjunctive word.[14] According to Black,[15] too, the word and can never be read as or, or vice versa, in criminal and penal statutes, where the rule of strict construction prevails. Consequently, whether or not the treasury warrant in question was intended for public works was even of no moment in determining if the legal provision was violated. There was a probable cause to believe that Section 261(w), subparagraph (b), of the Omnibus Election Code was violated when City Mayor Ting and City Treasurer Garcia issued Treasury Warrant No. 0001534514 during the election ban period. For this reason, our conclusion that the COMELEC en banc gravely abused its discretion in dismissing E.O. Case No. 06-14 for lack of merit is inevitable and irrefragable. True, the COMELEC, as the body tasked by no less than the 1987 Constitution to investigate and prosecute violations of election laws,[16] has the full discretion to determine whether or not an election case is to be filed against a person and, consequently, its findings as to the existence of probable cause are not subject to review by courts. Yet, this policy of non-interference does not apply where the COMELEC, as the prosecuting or investigating body, was acting arbitrarily and capriciously, like herein, in reaching a different but patently erroneous result.[17] The COMELEC was plainly guilty of grave abuse of discretion. Grave abuse of discretion is present when there is a capricious and whimsical exercise of judgment as is equivalent to lack of jurisdiction, such as where the power is exercised in an arbitrary or despotic manner by reason of passion or personal hostility, and it must be so patent and gross as to amount to an evasion of positive duty or to a virtual refusal to perform the duty enjoined or to act at all in contemplation of law.[18] WHEREFORE, WE grant the petition for certiorari and set aside the resolution dated February 18, 2008 issued in E.O. Case No. 06-14 by the Commission of Elections en banc. The Commission on Elections is ordered to file the appropriate criminal information against respondents City Mayor Randolph S. Ting and City Treasurer Salvacion Garcia of Tuguegarao City for violation of Page 54 of 65

Section 261 (w), subparagraph (b), of the Omnibus Election Code. Costs of suit to be paid by the private respondents. SO ORDERED. Republic of the Philippines SUPREME COURT Manila EN BANC G.R. No. L-30761 July 11, 1973 THE SAN MIGUEL CORPORATION, petitioner, vs. THE MUNICIPAL COUNCIL, THE MAYOR, and THE MUNICIPAL TREASURER OF THE MUNICIPALITY OF MANDAUE, PROVINCE OF CEBU, respondents. Gadioma and Josue for petitioner. Acting City Fiscal Lawrence A. Parawan for respondents. ANTONIO, J.: Petition for writ of certiorari to review the judgment of the Court of First Instance of Cebu, in Civil Case No. R-10631, upholding the validity of Ordinance No. 23, series of 1966, as amended by Ordinance No. 25, series of 1967, of the Municipality of Mandaue, Cebu, imposing "a graduated quarterly fixed tax based on the gross value of money or actual market value at the time of removal of the manufactured articles from their factories or other manufacture or processing establishments." In enacting the said ordinances, the municipal council of Mandaue invoked as basis of its authority Republic Act No. 2264 (Local Autonomy Act). The relevant portion of Section 1, Ordinance No. 23 (1966), as amended by Ordinance No. 25 (1967), provides as follows: SECTION 1. Municipal License Tax On Proprietors Or Operators Of ... Breweries, ... Proprietors or operators of ... breweries, ... within the territorial limits of this municipality shall pay a graduated quarterly fixed tax based on the gross value in money or actual market value at the time of removal, of the manufactured articles from their factories ... during the preceding quarter in accordance with the following schedules: ...: CLASS QUARTERLY LICENSE TAX P160.00 and P0.30 for QUARTERLY GROSS VALUE each P1,000.00 or fraction thereof in excess 1 P37,500.00 or over of P37,500.00 gross value. 2 P31.250.00 to P37,499.99 P158.00 per quarter 3 25,000.00 to 31,249.99 132.00 " " 4 20,000.00 to 24,999.99 105.00 " " 5 15.000.00 to 19,999.99 83.00 " " 6 12.500.00 to 14,999.99 63.00 " " 7 10,000.00 to 12,499.99 50.00 " "

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8 8,750.00 to 9,999.99 42.00 " " 9 7,500.00 to 8,749.99 37.00 " " 10 6,500.00 to 7,499.99 31.00 " " 11 5,500.00 to 6,499.99 27.00 " " 12 4,500.00 to 5,499.99 23.00 " " 13 3,750.00 to 4,499.99 19.00 " " 14 3,000.00 to 3,749.99 16.00 " " 15 2,500.00 to 2,999.99 13.00 " " 16 2,000.00 to 2,499.99 11.00 " " 17 1,750.00 to 1,999.99 9.00 " " 18 1,500.00 to 1,749.99 8.00 " " 19 1,250.00 to 1,499.99 7.00 " " 20 Less than P1,250.00 5.00 " " The pertinent portion of Section 2 of Ordinance No. 23 which was not amended by Ordinance No. 25 states: Payment of Municipal License Tax. A fixed tax imposed on this ordinance must first be paid before any person can engage in business and is payable for each taxable business; ... The graduated fixed tax provided in this ordinance shall be paid at the Office of the Municipal Treasurer quarterly, on or before the twentieth of January, April, July and October; ... . Provided further, That as regards businesses already operating at the time this ordinance takes effect, the tax for the initial quarter shall be paid pursuant to the provisions of this ordinance and shall be based on the gross value in money during the quarter immediately preceding, ... . Within the time fixed for the payment of the license taxes herein imposed, the taxpayers shall prepare and file with the Municipal Treasurer, a sworn statement of the gross value in money during the preceding quarter on the basis of which the tax shall be assessed and collected. ... . The basic Ordinance was No. 88, 1 which took effect on September 25, 1962, but this was amended by Ordinance No. 23 (January 1, 1967), and by Ordinance No. 25 (January 1, 1968). Petitioner, a domestic corporation engaged in the business of manufacturing beer and other products with a subsidiary manufacturing plant in Mandaue, Cebu, since December, 1967, paid the taxes prescribed in the aforesaid ordinance, protest thus: P309.40 on January 22, 1968 and P5,171.80 as of July 18, 1968, computed respectively "on the basis of 70,412 and 2,203.070 cases of beer manufactured and removed from said Mandaue plant, multiplied by P7.60 which is the prevailing market price (wholesaler's price) per case of beer at the time of the removal". Claiming that it is adversely affected by the ordinance, which in its view was beyond the power and authority of the municipality to enact, Page 55 of 65

petitioner brought and action in the Court of First Instance of Cebu, Branch VI, for the annulment of said ordinance. Petitioner contends that (1) the phrase "gross value in money or actual market value" employed in the questioned ordinance clearly referred to "sales or market price" of the articles or commodities manufactured thereby indicating a manifest intent to impose a tax based on sales, and (2) that to impose a tax upon the privilege of manufacturing beer, when the amount of the tax is measured by the gross receipts from its sales of beer, is the same as imposing a tax upon the product itself. Respondents upon the other hand insist that the tax imposed in the questioned ordinance (1) is not a percentage tax or a tax on the sales of beer but is a tax on the privilege to engage in the business of manufacturing beer, and the phrase "actual market value" was merely employed as a basis for the classification and graduation of the tax sought to be imposed; (2) that it is not a specific tax because it is not a tax on the beer itself, but on the privilege of manufacturing beer; and (3) that with conversion of Mandaue into a city on June 21, 1969, the appeal has become moot, because the prohibition against the imposition of any privilege tax on sales or other taxes in any form based thereon, is applicable only to municipalities. While We have heretofore announced the doctrine that the grant of power to tax to charterred cities and municipalities under Section 2 of the Local Autonomy Act is sufficiently plenary, 2 it is, however, subject to the exceptions and limitations contained in the two (2) provisos of the same statute. In other words, the municipal corporation should not transcend the limitations imposed by the statute on the basis of which the power to tax is sought to be exercised. Thus, We held in the Marinduque case, 3 that an ordinance providing for a graduated tax based on either "gross output or sales" violates the prohibition on municipalities against imposing any percentage tax on sales, or other taxes in any form based thereon, as the only standard provided for measuring the gross output is its peso value, as determined from true copies of receipts and/or invoices that the taxpayer is required to submit to the municipal treasurer. We are thus confined to the narrow issue of whether or not the challenged ordinance has transcended the exceptions and limitations imposed by section 2 of Republic Act 2264. Section 2 of the aforecited statute provides: Provided, That municipalities and municipal districts shall, in no case, impose any percentage tax on sales or other taxes in any form based thereon nor impose taxes on articles subject to specific tax ... . Section 1 of Ordinance No. 88 of the Municipality of Mandaue, as amended by Ordinances Nos. 23 (1967) and 25 (1968), specifically

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provides that the graduated quarterly tax shall be "based on the gross value in money or actual market value at the time of removal, of the manufactured products ... from their factories ... during the preceding calendar year ... . Well settled is the rule that in the absence of legislative intent to the contrary, technical or commercial terms and phrases, when used in tax statutes, are presumed to have been used in their technical sense or in their trade or commercial meaning. Thus, the phrase "gross value in money" has a well-defined meaning in our tax statutes. For instance, the term "gross value in money" of articles sold, bartered, exchanged or transferred, as used in Sections 184, 185 and 186 of the National Internal Revenue Code, has been invariably used as equivalent to "gross selling price" and has been construed as the total amount of money or its equivalent which the purchaser pays to the vendor to receive or get the goods. 4 It must be noted that the ordinance specifically provides that the basis of the tax is the "gross value in money or actual market value" of the manufactured article. The phrase "actual market value" has been construed as the price which an article "would command in the ordinary course of business, that is to say, when offered for sale by one willing to sell, but not under compulsion to sell, and purchased by another who is willing to buy, but under no obligation purchase it, 5 or the price which the property will bring in a fair market after fair and reasonable efforts have been made to find a purchaser who will give the highest price for it. 6 The "actual market value" of property, for purposes of taxation, therefore means the selling price of the article in the course of ordinary business. Considering that the phrase "gross value in money" is followed by the words "or actual market value", it is evident that the latter was intended to explain and clarify the preceding phrase. For the word "or" may be used as the equivalent of "that is to say" and gives that which precedes it the same significance as that which follows it. It is not always disjunctive and is sometimes interpretative or expository of the preceding word. 7 Certainly We cannot assume that the phrase "or actual market value" was a mere surplusage, for it serves to clarify and explain the meaning and import of the preceding phrase. In any event, it is the duty of the courts, so far reasonably practicable, to read and interpret a statute as to give life and effect to its provisions, so as to render it a harmonious whole. It is also significant to note, that there is a set ratio between the amount of the tax and the volume of sales. Thus if the "gross value in money or actual market value" of the beer removed from the factory exceeds P37,500.00 per quarter, the taxpayer is required to pay a quarterly license tax of P160.00 plus P0.30 for every P1,000.00 or fraction of the excess. In other words in excess of P37,500.00, the taxpayer will pay to the Page 56 of 65

municipality a certain amount of tax measured by a percentage of the sales. It is therefore evident that the challenged ordinance was a transparent attempt on the part of the municipality to impose a tax based on sales. Although section 2 of the ordinance in question provides in a vague manner that the tax shall be assessed and collected on the basis of the sworn statement of the manager of a firm or corporation "of the gross value in money during the preceding quarter," in actual practice the quarterly tax levied upon the petitioner, was computed on the basis of the total market of the beer, per quarter, as shown by the shipping memorandum certified to by the storekeeper of the Bureau Internal Revenue assigned to the brewery. Thus the amounting to P309.40 and P5,171.80, paid by petition January 22, 1968 and July 18, 1968, were actually determined respectively on the basis of 70,412 and 2,203.070 cases manufactured and removed from the Mandaue plant, multiplied by P7.60 which is the prevailing market price (wholesaler's price) per case of beer. In Laoag Producers' Cooperative Marketing Association, Inc. vs. Municipality of Laoag, 8 We held that the challenged ordinance imposed a tax based on sales, although the ordinance merely imposed a "municipal tax or inspection fee of on one-half (1/2) centavo on every kilo of Virginia leaf tobacco, garlic and onion on all wholesale dealers and vendors" because, in its application, it does impose a tax based on sales, as it is based the number of kilos sold and purchased by him and when the wholesaler or vendor accumulates his stock, he does so for only one purpose, to sell the same at the appropriate time, and "he cannot by its very nature, carry on his business unless he sells what he has bought." Similarly, in the case at bar, the circumstance that the tax is imposed upon petitioner at time of removal from the factory of the manufactured beer, and not on the date of actual sale, is not of important consequence since petitioner will, in the end, sell the beer removed from the factory, because by the nature of its business, it has no alternative but to sell what it has manufactured. We therefore hold that the questioned ordinance imposed tax based on sales and therefore beyond the authority of the municipality to enact. Having reached this conclusion, it becomes unnecessary to pass upon the additional question posed, i.e., whether or not the challenged ordinance imposes a tax on a product subject to specific tax. Respondents however claim that with the conversion Mandaue into a city pursuant to Republic Act No. 5519, which was approved on June 21, 1969, the issue has already become moot, since the prohibition contained in section 2 of Republic Act 2264 applies only to municipalities and not to chartered cities. The same contention has been rejected in City of Naga v. Court of Appeals, 9 and Laoag Producers' Cooperative Marketing Association, Inc. v. Municipality of Laoag, supra, where We ruled that the legality of an ordinance

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depends upon the power of the municipality at the time of the enactment the challenged ordinance. Since the municipality of Mandaue had no authority to enact the said ordinance, the subsequent approval of Republic Act No. 5519 which became effective June 21, 1969, did not remove the original infirmity of the ordinance. Indeed there is no provision in the aforecited statute which invests a curative effect upon the ordinances of the municipality which when enacted were beyond its statutory authority. IN VIEW WHEREOF, the appealed judgment is hereby reversed and Ordinance No. 23, series of 1966, as amended by Ordinance No. 23, series of 1966, which became effective January 1, 1968, of the Municipality of Mandaue, Cebu, is hereby declared null and void. Respondents are also ordered to refund the taxes paid by Petitioners under the said ordinance, with legal interest thereon. No costs. K. Use of the word AND SECOND DIVISION G.R. No. 164152 [January 21, 2010] COMMISSIONER OF INTERNAL REVENUE, Petitioner, vs. JULIETA ARIETE, Respondent. x - -- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - x DECISION CARPIO, J.: The Case The Commissioner of Internal Revenue (petitioner) filed this Petition for Review[1] to reverse the Court of Appeals (CA) Decision[2] dated 14 June 2004 in CA-G.R. SP No. 70693. In the assailed decision, the CA affirmed the Court of Tax Appeals (CTA) Decision[3] and Resolution dated 15 January 2002 and 3 May 2002, respectively. The CTA cancelled the assessments issued against Julieta Ariete (respondent) for deficiency income taxes of P191,463.04 for the years 1993, 1994, 1995, and 1996. The Facts On 21 May 1997, George P. Mercado filed an Affidavit with the Special Investigation Division, Revenue Region No. 19, Davao City. The affidavit attested that respondent earned substantial income in 1994, 1995, and 1996 without paying income tax.[4] The Chief of the Special Investigation Division (SID Chief) issued Mission Order No. 118-97 dated 23 May 1997, directing a Revenue Officer to conduct preliminary verification of the denunciation made and submit a progress report. The SID Chief also sent a request to access the BIR records of Revenue District No. 112, Tagum, Davao del Norte Page 57 of 65

(RDO), inquiring if the income tax returns of respondent for the years 1993 to 1996 are available for examination. The RDO replied that respondent had no records of income tax returns for the years 1993 to 1996.[5] On 15 October 1997, the Revenue Officer submitted a report stating that respondent admitted her non-filing of income tax returns.[6] On 2 December 1997, respondent filed her income tax returns for the years 1993, 1994, 1995, and 1996 under Revenue Memorandum Order (RMO) No. 59-97 as amended by RMO No. 60-97 and RMO No. 63-97, otherwise known as the Voluntary Assessment Program (VAP).[7] On 28 July 1998, the Regional Director issued a Letter of Authority to investigate respondent for tax purposes covering the years 1993 to 1996. On 14 October 1998, the Revenue Officer submitted a Memorandum to the SID Chief recommending that respondent be assessed with deficiency income taxes for the years 1993 to 1996. On 22 January 1999, four assessment notices were issued against respondent. The total deficiency income taxes, inclusive of interests and surcharges amounted toP191,463.04: 1993 P 6,462.18[8] 1994 47,187.39[9] 1995 24,729.64[10] 1996 113,083.83[11] P 191,463.04 On 22 February 1999, respondent filed an Assessment Protest with Prayer for Reinvestigation. On 30 March 1999, the assessment protest was denied. On 16 April 1999, respondent offered a compromise settlement but the same was denied. Respondent filed a petition for review with the CTA assailing the Bureau of Internal Revenues (BIR) decision denying with finality the request for reinvestigation and disapproving her availment of the VAP. Respondent also contested the issuance of the four assessment notices. On 15 January 2002, the CTA rendered a decision cancelling the deficiency assessments. Petitioner filed a motion for reconsideration but the CTA denied the same in a Resolution dated 3 May 2002. Petitioner appealed the CTAs decision to the CA. In a decision dated 14 June 2004, the CA affirmed the CTAs decision. Aggrieved by the CAs decision affirming the cancellation of the tax deficiency assessments, petitioner elevated the case before this Court.

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Ruling of the Court of Tax Appeals The CTA stated that when respondent filed her income tax returns on 2 December 1997, she was not yet under investigation by the Special Investigation Division. The Letter of Authority to investigate respondent for tax purposes was issued only on 28 July 1998. Further, respondents case was not duly recorded in the Official Registry Book of the BIR before she availed of the VAP. The CTA, quoting RMO Nos. 59-97, 60-97, and 63-97, ruled that the requirements before a person may be excluded from the coverage of the VAP are: a. The person(s) must be under investigation by the Tax Fraud Division and/or the regional Special Investigation Division; b. The investigation must be as a result of a verified information filed by an informer under Section 281 of the NIRC, as amended; and c. The investigation must be duly registered in the Official Registry Book of the Bureau before the date of availment under the VAP.[12] The CTA ruled that the conjunctive word and is used; therefore, all of the above requisites must be present before a person may be excluded from the coverage of the VAP. The CTA explained that the word and is a conjunction connecting words or phrases expressing the idea that the latter is to be added or taken along with the first.[13] The CTA also stated that the rationale behind the VAP is to give taxpayers a final opportunity to come up with a clean slate before they will be dealt with strictly for not paying their correct taxes. The CTA noted that under the RMOs, among the benefits that can be availed by the taxpayer-applicant are: 1) A bona fide rectification of filing errors and assessment of tax liabilities under the VAP shall relieve the taxpayer-applicant from any criminal or civil liability incident to the misdeclaration of incomes, purchases, deductions, etc., and non-filing of a return. 2) The taxpayer who shall avail of the VAP shall be liable only for the payment of the basic tax due.[14] The CTA ruled that even if respondent violated the National Internal Revenue Code (Tax Code), she was given the chance to rectify her fault and be absolved of criminal and civil liabilities incident to her nonfiling of income tax by virtue of the VAP. The CTA held that respondent is not disqualified to avail of the VAP. Hence, respondent has no more liabilities after paying the corresponding taxes due.[15] Page 58 of 65

The CTA found the four assessments issued against respondent to be erroneous and ordered that the same be cancelled.[16] Ruling of the Court of Appeals The CA explained that the persons who may avail of the VAP are those who are liable to pay any of the above-cited internal revenue taxes for the above specified period who due to inadvertence or otherwise, has underdeclared his internal revenue tax liabilities or has not filed the required tax returns. The CA rationalized that the BIR used a broad language to define the persons qualified to avail of the VAP because the BIR intended to reach as many taxpayers as possible subject only to the exclusion of those cases specially enumerated. The CA ruled that in applying the rules of statutory construction, the exceptions enumerated in paragraph 3[17] of RMO No. 59-97, as well as those added in RMO No. 63-97, should be strictly construed and all doubts should be resolved in favor of the general provision stated under paragraph 2[18] rather than the said exceptions. The CA affirmed the CTAs findings of facts and ruled that neither the verified information nor the investigation was recorded in the Official Registry Book of the BIR. The CA disagreed with petitioners contention that the recording in the Official Registry Book of the BIR is merely a procedural requirement which can be dispensed with for the purpose of determining who are excluded from the coverage of RMO No. 59-97. The CA explained that it is clear from the wordings of RMO No. 5997 that the recording in the Official Registry Book of the BIR is a mandatory requirement before a taxpayer-applicant under the VAP may be excluded from its coverage as this requirement was preceded by the word and. The use of the conjunction and in subparagraph 3.4 of RMO No. 59-97 must be understood in its usual and common meaning for the purpose of determining who are disqualified from availing of the benefits under the VAP. This interpretation is more in faithful compliance with the mandate of the RMOs. Aggrieved by the CA decision, petitioner elevated the case to this Court. Issue Petitioner submits this sole issue for our consideration: whether the CA erred in holding that the recording in the Official Registry Book of the BIR of the information filed by the informer under Section 281[19] of the Tax Code is a mandatory requirement before a taxpayer-applicant may be excluded from the coverage of the VAP. Ruling of the Court

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Petitioner contends that the VAP, being in the nature of a tax amnesty, must be strictly construed against the taxpayer-applicant such that petitioners failure to record the information in the Official Registry Book of the BIR does not affect respondents disqualification from availment of the benefits under the VAP. Petitioner argues that taxpayers who are under investigation for non-filing of income tax returns before their availment of the VAP are not covered by the program and are not entitiled to its benefits. Petitioner alleges that the underlying reason for the disqualification is that availment of the VAP by such taxpayer is no longer voluntary. Petitioner asserts that voluntariness is the very essence of the Voluntary Assessment Program.[20] Respondent claims that where the terms of a statute are clear and unambiguous, no interpretation is called for, and the law is applied as written, for application is the first duty of the court, and interpretation, only where literal application is impossible or inadequate.

On 30 October 1997, the CIR issued RMO No. 60-97 which supplements RMO No. 59-97 and amended Item No. 3.4 to read as: 3. Persons/Cases not covered The following shall be excluded from the coverage of the VAP under this Order: x x x 3.4 Persons under investigation by the Tax Fraud Division and/or the Regional Special Investigation Divisions as a result of verified information filed by an informer under Section 281 of the NIRC, as amended, and duly recorded in the Official Registry Book of the Bureau before the date of availment under VAP; (Boldfacing supplied) On 27 November 1997, the CIR issued RMO No. 63-97 and clarified issues related to the implementation of the VAP. RMO No. 63-97 provides: 3. Persons/cases not covered: x x x 3.4 Persons under investigation by the Tax Fraud Division and/or the Regional Special Investigation Divisions as a result of verified information filed by an informer under Section 281 of the NIRC, as amended, and duly recorded in the Official Registry Book of the Bureau before the date of availment under the VAP; (Underscoring in the original, boldfacing supplied) It is evident from these RMOs that the CIR was consistent in using the word and and has even underscored the word in RMO No. 6397. This denotes that in addition to the filing of the verified information, the same should also be duly recorded in the Official Registry Book of the BIR. The conjunctive word and is not without legal significance. It means in addition to. The word and, whether it is used to connect words, phrases or full sentences, must be accepted as binding together and as relating to one another.[24]And in statutory construction implies conjunction or union.[25] It is sufficiently clear that for a person to be excluded from the coverage of the VAP, the verified information must not only be filed under Section 281[26] of the Tax Code, it must also be duly recorded in the Official Registry Book of the BIR before the date of availment under the VAP. This interpretation of Item 3.4 of RMO Nos. 59-97, 60-97, and 6397 is further bolstered by the fact that on 12 October 2005, the BIR issued Revenue Regulations (RR) No. 18-2005 and reiterated the same provision in the implementation of the Enhanced Voluntary Assessment Program (EVAP). RR No. 18-2005 reads: Page 59 of 65

Verba Legis

It is well-settled that where the language of the law is clear and unequivocal, it must be given its literal application and applied without interpretation.[21] The general rule of requiring adherence to the letter in construing statutes applies with particular strictness to tax laws and provisions of a taxing act are not to be extended by implication.[22] A careful reading of the RMOs pertaining to the VAP shows that the recording of the information in the Official Registry Book of the BIR is a mandatory requirement before a taxpayer may be excluded from the coverage of the VAP. On 27 October 1997, the CIR, in implementing the VAP, issued RMO No. 59-97 to give erring taxpayers a final opportunity to come up with a clean slate. Any person liable to pay income tax on business and compensation income, value-added tax and other percentage taxes under Titles II, IV and V, respectively, of the Tax Code for the taxable years 1993 to 1996, who due to inadvertence or otherwise, has not filed the required tax return may avail of the benefits under the VAP.[23] RMO No. 59-97 also enumerates the persons or cases that are excluded from the coverage of the VAP. 3. Persons/Cases not covered The following shall be excluded from the coverage of the VAP under this Order: x x x 3.4. Persons under investigation as a result of verified information filed by an informer under Section 281 of the NIRC, as amended, and duly recorded in the Official Registry Book of the Bureau before the date of availment under the VAP; x x x (Boldfacing supplied)

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SECTION 1. COVERAGE. x x x Any person, natural or juridical, including estates and trusts, liable to pay any of the above-cited internal revenue taxes for the above specified period/s who, due to inadvertence or otherwise, erroneously paid his/its internal revenue tax liabilities or failed to file tax returns/pay taxes, may avail of the EVAP, except those falling under any of the following instances: x x x b. Persons under investigation as a result of verified information filed by a Tax Informer under Section 282 of the NIRC, duly processed and recorded in the BIR Official Registry Book on or before the effectivity of these regulations. (Boldfacing supplied) When a tax provision speaks unequivocally, it is not the province of a Court to scan its wisdom or its policy.[27] The more correct course of dealing with a question of construction is to take the words to mean exactly what they say. Where a provision of law expressly limits its application to certain transactions, it cannot be extended to other transactions by interpretation.[28]

We now proceed to the question as to whether or not the requirement of recording in the Official Registry Book of the BIR is present in the respondents case. At this juncture, we affirm CTAs finding that neither the verified information nor the investigation was recorded in the Official Registry Book of the BIR. Petitioner claims that this was merely a procedural omission which does not affect respondents exclusion from the coverage of the VAP.[30] (Boldfacing supplied) Petitioners failure to effect compliance with the requirement of recording the verified information or investigation in the Official Registry Book of the BIR means that respondent, even if under investigation, can avail of the benefits of the VAP. Consequently, respondent is relieved from any criminal or civil liability incident to the non-filing of a return. WHEREFORE, we DENY the petition. We AFFIRM the Court of Appeals Decision dated 14 June 2004 in CA-G.R. SP No. 70693. SO ORDERED. L. Use of the word AND/OR THIRD DIVISION [G.R. No. 131787. May 19, 1999] CHINA BANKING CORPORATION AND CBC PROPERTIES AND COMPUTER CENTER, INC., petitioners, vs. THE MEMBERS OF THE BOARD OF TRUSTEES, HOME DEVELOPMENT MUTUAL FUND (HDMF); HDMF PRESIDENT; AND THE HOME MUTUAL DEVELOPMENT FUND,respondents. DECISION GONZAGA-REYES, J.: This is an appeal by certiorari under Rule 45 of the 1997 Rules of Civil Procedure on pure questions of law from the Order of the Regional Trial Court of Makati, Branch 59 dated October 10, 1997 and from the Order of the same court dated December 19, 1997 denying petitioners motion for reconsideration. Briefly, petitioners China Banking Corporation (CBC) and CBC Properties and Computer Center Inc. (CBC-PCCI) are both employers who were granted by the Home Development Mutual Fund (HDMF) certificates of waiver dated July 7, 1995 and January 19, 1996 (covering respectively the periods of July 1, 1995 to June 30, 1996 for CBC and January 1 to December 31, 1995 for CBC-PCCI) for the identical reason of Superior Retirement Plan pursuant to Section 19 of P. D. 1752 otherwise known as the Home Development Mutual Fund Law of 1980 whereunder employers who have their own existing provident and/or employees-housing plans may register for annual certification for Page 60 of 65

Findings of Fact

Generally, the findings of fact of the CTA, a court exercising expertise on the subject of tax, are regarded as final, binding, and conclusive upon this Court, especially if these are similar to the findings of the Court of Appeals which is normally the final arbiter of questions of fact.[29] In this case, the CA affirmed the CTAs findings of fact which states: We will start with the question as to whether or not the respondent was already under investigation for violation of the Tax Code provisions at the time she applied under VAP on December 2, 1997. The records show that she was indeed under investigation. Albeit, the Letter of Authority was issued only on 28 July 1998, there is no question that on 23 May 1997, a Mission Order No. 118-97 had already been issued by the Chief of Special Investigation Division of the BIR, Revenue Region No. 19 to Intelligence Officer Eustaquio M. Valdez authorizing the conduct of monitoring and surveillance activities on the respondent. This investigation was preceded by the filing of a verified information by a certain George Mercado alleging respondents failure to pay her income taxes for the years 1994 to 1996. xxx

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waiver or suspension from coverage or participation in the Home Development Mutual Fund created under said law. It appears that in June 1994, Republic Act No. 7742, amending P. D. 1752 was approved.[1] On September 1, 1995, respondent HDMF Board issued an Amendment to the Rules and Regulations Implementing R.A. 7742 (The Amendment) and pursuant to said Amendment, the said Board issued on October 23, 1995 HDMF Circular No. 124-B or the Revised Guidelines and Procedure for filing Application for Waiver or Suspension of Fund Coverage under P.D. 1752 (Guidelines). Under the Amendment and the Guidelines, a company must have a provident/retirement and housing plan superior to that provided under the Pag-IBIG Fund to be entitled to exemption/waiver from fund coverage. CBC and CBC-PCCI applied for renewal of waiver of coverage from the fund for the year 1996, but the applications were disapproved for the identical reason that: Our evaluation of your companys application indicates that your retirement plan is not superior to Pag-IBIG Fund. Further, the amended Implementing Rules and & Regulations of R. A. 7742 provides that to qualify for waiver, a company must have retirement/provident and housing plans which are both superior to Pag-IBIG Funds. Petitioners thus filed a petition for certiorari and prohibition before the Regional Trial Court of Makati seeking to annul and declare void the Amendment and the Guidelines for having been issued in excess of jurisdiction and with grave abuse of discretion amounting to lack of jurisdiction alleging that in requiring the employer to have both a retirement/provident plan and an employee housing plan in order to be entitled to a certificate of waiver or suspension of coverage from the HDMF, the HDMF Board exceeded its rule-making power. Respondent Board filed a Motion to Dismiss and the court a quo, in its first challenged order dated October 10, 1997 granted the same. The Court dismissed the petition for certiorari on the grounds (1) that the denial or grant of an application for waiver/coverage is within the power and authority of the HDMF Board, and the said Board did not exceed its jurisdiction or act with grave abuse of discretion in denying the applications; and (2) the petitioners have lost their right to appeal by failure to appeal within the periods provided in the Rules for appealing from the order of denial to the HDMF Board of Trustees, and thereafter, to the Court of Appeals. The Court stated that certiorari will not lie as a substitute for a lost remedy of appeal.

Motion for reconsideration of the above-Order having been denied in the Order of December 19, 1997, this petition for review was filed under Rule 45 alleging that: 1. The court a quo erred in the appreciation of the issue, as it mistakenly noted that petitioner is contesting the authority of respondent to issue rules pursuant to its rule-making power; 2. The court a quo erred in observing that the matter being assailed by the petitioners were the denial of their application for waiver (Annexes H and I), and therefore, appeal is the proper remedy. Essentially, petitioners contend that it does not question the power of respondent HDMF, as an administrative agency, to issue rules and regulations to implement P.D. 1752 and Section 5 of R.A. 7742; however, the subject Amendment and Guidelines issued by it should be set aside and declared null and void for being irrevocably inconsistent with the enabling law, P.D. 1752, as amended by R.A. 7742, which merely requires as a pre-condition for exemption for coverage, the existence of either a superior provident (retirement) plan or a superior housing plan, and not the concurrence of both plans. Petitioners claim that certiorari is the proper remedy as what are being questioned are not the orders denying petitioners application for renewal of waiver for coverage which were admittedly issued in the exercise of a quasi-judicial function, but rather the validity of the subject Amendment and Guidelines, which are a patent nullity; hence the doctrine of exhaustion of administrative remedies does not apply. In their comment, respondents contend that there is no question of law involved. The interpretation of the phrase and/or is not purely a legal question and it is susceptible of administrative determination. In denying petitioners application for waiver of coverage under Republic Act No. 7742 the respondent Board was exercising its quasi-judicial function and its findings are generally accorded not only respect but even finality. Moreover, the Amendment and the Guidelines are consistent with the enabling law, which is a piece of social legislation intended to provide both a savings generation and a house building program. We find merit in the petition. The core issue posed in the court below and in this Court is whether the respondents acted in excess of jurisdiction or with grave abuse of discretion amounting to lack of jurisdiction in issuing the Amendment to the Rules and Regulations Implementing R.A. 7742 and HDMF Circular No. 124-B on the Revised Guidelines and Procedure for Filing Application for Waiver or Suspension of Fund Coverage under P.D. 1752, as amended by R.A. 7742, insofar as said Amendment and Guidelines impose as a requirement for exemption from coverage or participation in the Home Page 61 of 65

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Development Mutual Fund the existence of both a superior housing plan and a provident plan. The procedural issue raised in the petition as to the propriety of certiorari in lieu of appeal has not been traversed by the respondents. Suffice it to note that the petitioners sought to annul or declare null and void the questioned Amendment and Guidelines and not merely the denial by the respondent Board of petitioners application for waiver or exemption from coverage of the fund. As noted by the court a quo, the petition below squarely raised in issue the validity of the Amendment to the Rules and Regulations and of HDMF Circular No. 124-B insofar as these require the existence of both provident/retirement and housing plans for the grant of waiver/suspension by the Board and prayed that the same be declared void for want of jurisdiction. We hold that it was an error for the court a quo to rule that the petitioners should have exhausted its remedy of appeal from the orders denying their application for waiver/suspension to the Board of Trustees and thereafter to the Court of Appeals pursuant to the Rules. Certiorari is an appropriate remedy to question the validity of the challenged issuances of the HDMF which are alleged to have been issued with grave abuse of discretion amounting to lack of jurisdiction.[2] Moreover, among the accepted exceptions to the rule on exhaustion of administrative remedies are: (1) where the question in dispute is purely a legal one; and (2) where the controverted act is patently illegal or was performed without jurisdiction or in excess of jurisdiction.[3] Moreover, while certiorari as a remedy may not be used as a substitute for an appeal, especially for a lost appeal, this rule should not be strictly enforced if the petition is genuinely meritorious.[4] It has been said that where the rigid application of the rules would frustrate substantial justice, or bar the vindication of a legitimate grievance, the courts are justified in exempting a particular case from the operation of the rules.[5] We vote to give the petition due course. The assailed Amendment to the Rules and Regulations and the Revised Guidelines suffer from a legal infirmity and should be set aside. The law pertinent to the Home Development Mutual Fund, otherwise known as the Pag-IBIG Fund, should be revisited. The Human Development Mutual Funds were created by Presidential Decree No. 1530, promulgated on June 11, 1978. The said funds, one for government employees and another for private employees, were to be established and maintained from contributions by the employees and counterpart contributions by their employers. P.D. No. 1752, enacted on December 13, 1980, amended P. D. 1530 to make the Home Development Mutual Fund a body corporate and to make its coverage Page 62 of 65

mandatory upon all employers covered by the Social Security System and the Government Service Insurance System. Section 19 of P.D. No. 1752 provides for waiver or suspension from coverage or participation in the fund, thus: Section 19. Existing Provident/Housing Plans. - An employer and/or employee-group who, at the time this Decree becomes effective have their own provident and/or employee-housing plans, may register with the Fund, for any of the following purposes: (a) For annual certification of waiver or suspension from coverage or participation in the Fund, which shall be granted on the basis of verification that the waiver or suspension does not contravene any effective collective bargaining agreement and that the features of the plan or plans are superior to the Fund or continue to be so; or (b) For integration with the Fund, either fully or partially. The establishment of a separate provident and/or housing plan after the effectivity of this Decree shall not be a ground for waiver of coverage in the Fund; nor shall such coverage bar any employer and/or employeegroup from establishing separate provident and/or housing plans. (underscoring ours) On June 17, 1994, Republic Act No. 7742, amending certain sections of P.D. 1752 was approved. Section 5 of the said statute provides that within sixty (60) days from the approval of the Act, the Board of Trustees of the Home Development Mutual Fund shall promulgate the rules and regulations necessary for the effective implementation of (this) Act. Pursuant to the above authority the Home Development Mutual Fund Board of Trustees promulgated The Implementing Rules and Regulations of Republic Act 7742 amending Presidential Decree No. 1752, Executive Order Nos. 35 and 90, which was published on August 1, 1994. Rule VII thereof reads: RULE VII WAIVER OR SUSPENSION SECTION 1. Waiver or Suspension-Existing Provident or Retirement Plan. An employer and/or employee group who has an existing provident or retirement plan as of the effectivity of Republic Act No. 7742, qualified under Republic Act No. 4917 and actuarially determined to be sound and reasonable by an independent actuary duly accredited by the Insurance Commission, may apply with the Fund for waiver or suspension of coverage. Such waiver or suspension may be granted by the President of the Fund on the basis of verification that the waiver or suspension does not contravene any effective collective bargaining or other existing

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agreement and that the features of the plan or plans are superior to the Fund and continue to be so. The certificate of waiver or suspension of coverage issued herein shall only be for a period of one (1) year but the same may be renewed for another year upon the filing of a proper application within a period of sixty (60) days prior to the expiration of the existing waiver or suspension. SECTION 2. Waiver or Suspension-Existing Housing Plan. An employer and/or employee group who has an existing housing plan as of the effectivity of Republic Act No. 7742 may apply with the fund for waiver or suspension of coverage. Such waiver or suspension of coverage may be granted by the President of the Fund on the basis of verification that the waiver or suspension of coverage does not contravene any effective collective bargaining or other existing agreement and that the features of the plan or plans are superior to the Fund and continue to be so. The certificate of waiver or suspension of coverage issued herein shall only be for a period of one (1) year but the same may be renewed for another year upon the filing of a proper application within a period of sixty (60) days prior to the expiration of the existing waiver or suspension. Subsequently, the HDMF Board adopted in its Special Board Meeting held on September 1, 1995, Amendments to the Rules and Regulations Implementing Republic Act 7742. As amended, Rule VII on Waiver or Suspension now reads: RULE VII WAIVER OF SUSPENSION SECTION 1. Waiver or Suspension Because of Existing Provident/Retirement and Housing Plan. Any employer with a plan providing both for a provident/retirement and housing benefits for all his employees and existing as of December 14, 1980, the effectivity date of Presidential Decree No. 1752, may apply with the Fund for waiver or suspension of coverage . The provident/retirement aspect of the plan must be qualified under R.A. 4917 and actuarially determined to be sound and reasonable by an independent, actuary duly accredited by the Insurance Commission. The provident/retirement and housing benefits as provided for under the plan must be superior to the provident/retirement and housing benefits offered by the Fund. Such waiver or suspension may be granted by the Fund on the basis of actual verification that the waiver or suspension does not contravene any collective bargaining agreement, any other existing agreement or clearly spelled out management policy and that the features of the plan or plans are superior to the Fund and continue to be so.

Provided further that the application must be endorsed by the labor union representing a majority of the employees or in the absence thereof by at least a majority vote of all the employees in the said establishment in a meeting specifically called for the purpose. Provided, furthermore that such a meeting be held or be conducted under the supervision of an authorized representative from the Fund. The certificate of waiver or suspension of coverage issued herein shall only be for a period of one (1) year effective upon issuance thereof. No certificate of waiver issued by the President of the Fund shall have retroactive effect. Application for renewal must be filled within-sixty (60) days prior to the expiration of the existing waiver or suspension and such application for renewal shall only be granted based on the same conditions and requirements under which the original application was approved. Pending the approval of the application for waiver or suspension of coverage or the application for renewal, the employer and his covered employees shall continue to be mandatorily covered by the Fund as provided for under R.A. 7742. (underscoring ours) On October 23, 1995, HDMF Circular No. 124-B entitled Revised Guidelines and Procedure for Filing Applications for Waiver or Suspension of Fund Coverage under P.D. No. 1752, as amended by Republic Act No. 7742, was promulgated. The Circular pertinently provides: I. GROUNDS FOR WAIVER OR SUSPENSION OF FUND COVERAGE A. SUPERIOR PROVIDENT/RETIREMENT PLAN AND HOUSING PLAN ANY EMPLOYER WHO HAS A PROVIDENT, RETIREMENT, GRATUITY OR PENSION PLAN AND A HOUSING PLAN, EXISTING AS OF DECEMBER 14, 1980, THE EFFECTIVITY OF P.D. NO. 1752, may file an application for waiver or suspension from Fund coverage, provided, that - 1. The retirement/provident plan is qualified as such under Republic Act No. 4917 (An Act Providing That Retirement Benefits of Employees of Private Firms Shall Not Be Subject to Attachment, Levy, or Execution or Any Tax Whatsoever), as certified by the Bureau of Internal Revenue; 2. The retirement/provident plan is actuarially determined to be financially sound and reasonable by an independent actuary duly accredited by the Insurance Commission; 3. The retirement/provident plan is superior to the retirement /provident benefits offered by the Fund in terms of: - vesting features Page 63 of 65

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-full and immediate crediting of employers contribution to the employees account, the TAV of which the employee carries with him in the event he transfers to another employer; or he becomes self-employed or unemployed; -employers contribution (* For provident plans) -must be equal to or higher than two percent (2%) of employees monthly compensation, defined in the HDMF Implementing Rules and Regulations as the employees basic monthly salary plus Cost of Living Allowance; -retirement age and years of service required to avail of plan benefits -85 or lower -10 years of service or less -amount of benefits extended to EEs (* For retirement plans) -at least fifty (50%) of monthly compensation, as defined in the HDMF IRR, for every year of service. 4. The housing plan must be superior to the PAG-IBIG Housing Loan Program in terms of: -residency requirement as employee of the company or member of the plan to avail of housing loan under the plan -six (6) months or less; -interest rates -equal to or lower than the prescribed rates under the PAG-IBIG Expanded Housing Loan Program (EHLP); - repayment period -25 years or more; -loanable amount -equal to or greater than the maximum loan amount under the PAG-IBIG Expanded Housing Loan Program; and -percentage of covered EEs benefitted by the Housing Plan -EEs who have availed of the Housing Plan benefits as of date of waiver application must be no less than five (5%) of the total. 5. The application for waiver or suspension, based on actual verification of the Fund, does not contravene any effective collective bargaining or any other agreement existing between the employer and his employees. 6. The application must be endorsed by the labor union representing a majority of the employees, or, in the absence thereof, at least a majority vote of all company employees in a meeting specifically called for the purpose and conducted under the supervision of an authorized representative of the Fund. As above stated, when petitioners CBC and CBC-PCCI applied for the renewal of waiver of Fund coverage for the year 1996, the applications were disapproved on identical grounds namely, that the retirement plan is not superior to Pag-IBIG Fund and that the amended Implementing Page 64 of 65

Rules and Regulations of R.A. 7742 provides that to qualify for waiver, a company must have retirement/provident and housing plan which are both superior to Pag-IBIG Funds. Petitioner contends that respondent, in the exercise of its rule making power has overstepped the bounds and exceeded its limit,. The law provides as a condition for exemption from coverage, the existence of either a superior provident (retirement) plan, and/or a superior housing plan, and not the existence of both plans. On the other hand, respondents claim that the use of the words and/or in Section 19 of P.D. No. 1752, which words are diametrically opposed in meaning, can only be used interchangeably and not together, and the option of making it either both or any one belongs to the Board of Trustees of HDMF, which has the power and authority to issue rules and regulations for the effective implementation of the Pag-IBIG Fund Law, and the guidelines for the grant of waiver or suspension of coverage. There is no question that the HDMF Board has rule-making powers. Section 5 of R.A. No. 7742 states that the said Board shall promulgate the rules and regulations necessary for the effective implementation of said Act. Its rule- making power is also provided in Section 13 of P.D. No. 1752 which states insofar as pertinent that the Board is authorized to make and change needful rules and regulations to provide for, among others, a. the effective administration, custody, development, utilization and disposition of the Fund or parts thereof including payment of amounts credited to members or to their beneficiaries or estates; b. Extension of Fund coverage to other working groups and waiver or suspension of coverage or its enforcement for reasons therein stated. xxx xxx xxx i. Other matters that, by express or implied provisions of this Act, shall require implementation by appropriate policies, rules and regulations. The controversy lies in the legal signification of the words and/or. In the instant case, the legal meaning of the words and/or should be taken in its ordinary signification, i.e., either and or; e.g. butter and/or eggs means butter and eggs or butter or eggs.[6] The term and/or means that effect shall be given to both the conjunctive and and the disjunctive or; or that one word or the other may be taken accordingly as one or the other will best effectuate the purpose intended by the legislature as gathered from the whole statute. The term is used to avoid a construction which by the use of the disjunctive or alone will exclude the combination of

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several of the alternatives or by the use of the conjunctive and will exclude the efficacy of any one of the alternatives standing alone.[7] It is accordingly ordinarily held that the intention of the legislature in using the term and/or is that the word and and the word or are to be used interchangeably.[8] It is seems to us clear from the language of the enabling law that Section 19 of P.D. No. 1752, intended that an employer with a provident plan or an employee housing plan superior to that of the fund may obtain exemption from coverage. If the law had intended that the employee should have both a superior provident plan and a housing plan in order to qualify for exemption, it would have used the words and instead of and/or. Notably, paragraph (a) of Section 19 requires for annual certification of waiver or suspension, that the features of the plan or plans are superior to the fund or continue to be so. The law obviously contemplates that the existence of either plan is considered as sufficient basis for the grant of an exemption; needless to state, the concurrence of both plans is more than sufficient. To require the existence of both plans would radically impose a more stringent condition for waiver which was not clearly envisioned by the basic law. By removing the disjunctive word or in the implementing rules the respondent Board has exceeded its authority. It is well settled that the rules and regulations which are the product of a deligated power to create new or additional legal provisions that have the effect of law, should be within the scope of the statutory authority granted by the legislature to the Administrative agency.[9] Department zeal may not be permitted to outrun the authority conferred by statute.[10] As aptly observed in People vs. Maceren[11]: Administrative regulations adopted under legislative authority by a particular department must be in harmony with the provisions of the law, and should be for the sole purpose of carrying into effect its general provisions. By such regulations, of course, the law itself cannot be extended. U.S. vs. Tupasi Molina, supra). An administrative agency cannot amend an act of Congress (Santos vs. Estenzo, 109 Phil. 419 422; Teoxon vs. Members of the Board of Administrators, L-25619, June 30, 1970, 33 SCRA 585; Manuel vs. General Auditing Office, L-28952, December 29, 1971, 42 SCRA 660; Deluao vs. Casteel, L-21906, August 29, 1969 SCRA 350). The rule making power must be confined to details for regulating the mode or proceeding to carry into effect the law as it has been enacted. The power cannot be extended to amending or expanding the statutory requirements or to embrace matters not covered by the statute. Rules that subvert the statute cannot be sanctioned. (University of Santo Tomas vs. Page 65 of 65

Board of Tax Appeals, 93 Phil. 376, 382, citing 12 C. J. 845-46. As to invalid regulations, see Collector of Internal Revenue vs. Villaflor, 69 Phil. 319; Wise & Co. vs. Meer, 78 Phil. 655, 676; Del Mar vs. Phil. Veterans Administration, L-27299, June 27, 1973, 51 SCRA 340, 349). While it may be conceded that the requirement of the concurrence of both plans to qualify for exemption would strengthen the Home Development Mutual Fund and make it more effective both as a savings generation and a house building program, the basic law should prevail as the embodiment of the legislative purpose, and the rules and regulations issued to implement said law cannot go beyond its terms and provisions. We accordingly find merit in petitioners contention that Section 1, Rule VII of the Rules and Regulations Implementing R.A. 7742, and HDMF Circular No. 124-B and the Revised Guidelines and Procedure for Filing Application for Waiver or Suspension of Fund Coverage under P.D. 1752, as amended by R.A. 7742, should be declared invalid insofar as they require that an employer must have both a superior retirement/provident plan and a superior employee housing plan in order to be entitled to a certificate of waiver and suspension of coverage from the HDMF. WHEREFORE, the petition is given due course and the assailed Orders of the court a quo dated October 10, 1997 and December 19, 1997 are hereby set aside. Section 1 of Rule VII of the Amendments to the Rules and Regulations Implementing R.A. 7742, and HDMF Circular No. 124-B prescribing the Revised Guidelines and Procedure for Filing Applications for Waiver or Suspension of Fund Coverage under P.D. 1752, as amended by R.A. No. 7742, insofar as they require that an employer should have both a provident/retirement plan superior to the retirement/provident benefits offered by the Fund and a housing plan superior to the Pag-IBIG housing loan program in order to qualify for waiver or suspension of fund coverage, are hereby declared null and void. SO ORDERED.