RELATIVE AND QUALIFYING TERMS (#73)

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
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 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) deepwell 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 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 so-called 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 nonconstruction 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 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 nondevelopment 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.

USE OF PUNCTUATION MARKS (#74)

FIRST DIVISION
[G.R. No. 8848. November 21, 1913. ]
THE UNITED STATES, Plaintiff-Appellee, v. WILLIAM C. HART, C.J. MILLER, and SERVILLANO
NATIVIDAD, Defendants-Appellants.
Pedro Abad Santos for appellants Hart and Natividad.
W.H. Booram for appellant Miller.

Solicitor-General Harvey for Appellee.

SYLLABUS
1. VAGRANCY; LOITERING ABOUT SALOONS, DRAM SHOPS, OR GAMBLING HOUSES; VISIBLE
MEANS OF SUPPORT. A person is not guilty of vagrancy under the second paragraph of section 1 of the
Vagrancy Act for frequenting saloons, dram shops, or gambling houses, unless it be shown that he is without
visible
means
of
support.
2. STATUTORY CONSTRUCTION; PUNCTUATION EMPLOYED. If the punctuation of a statute gives it
a meaning which is reasonable and in apparent accord with the legislative will, it may be used as an additional
argument for adopting the literal meaning of the words of a statute as thus punctuated. But an argument based
upon punctuation alone is not conclusive, and the courts will not hesitate change the punctuation when
necessary, to give to the Act the effect intended by the Legislature, disregarding superfluous or incorrect
punctuation marks, and inserting others where necessary.
DECISION
TRENT, J. :
The appellants, Hart, Miller, and Natividad, were arraigned in the Court of First Instance of Pampanga on a
charge of vagrancy under the provision of Act No. 519, found guilty, and were each sentenced to six months
imprisonment. Hart and Miller were further sentenced to a fine of P200, and Natividad to a fine of P100. All
appealed.
The evidence of the prosecution as to the defendant Hart shows that he pleaded guilty and was convicted on a
gambling charge about two or three weeks before his arrest on the vagrancy charge; that he had been conducting
two gambling games, one in his saloon and the other in another house, for a considerable length of time, the
games running every night. The defense showed that Hart and one Dunn operated a hotel and saloon at Angeles
which did a business, according to the bookkeeper, of P96,000 during the nineteen months preceding the trial;
that Hart was also the sole proprietor of a saloon in the barrio of Tacondo; that he raised imparted hogs which he
sold to the Army garrison at Camp Stotsenberg, which business netted him during the preceding year about
P4,000; that he was authorized to sell several hundred hectares of land owned by one Carrillo in Tacondo; that
he administered, under power of attorney, the same property; and that he furnished a building for and paid the
teacher of the first public school in Tacondo, said school being under Government supervision. The evidence of
the prosecution as to Miller was that he had the reputation of being a gambler; that he pleaded guilty and was
fined for participating in a gambling game about two weeks before his arrest on the present charge of vagrancy;
and that he was seen in houses of prostitution and in a public dance hall in Tacondo on various occasions. The
defense showed without contradiction that Miller had been discharged from the Army about the year previously;
that during his term of enlistment he had been made sergeant; that he received rating as "excellent" on being
discharged; that since his discharge he had been engaged in tailoring business near Camp Stotsenberg under
articles of partnership with one Buckerd, Miller having contributed P1,000 to the partnership; that the business
netted each partner about P300 per month; that Miller attended to business in an efficient manner every day; and
that
his
work
was
first
class.
The evidence of the prosecution as to Natividad was that he had gambled nearly every night for a considerable
time prior to his arrest on the charge of vagrancy, in the saloon of one Raymundo, as well as in Harts saloon;
that Natividad sometimes acted as banker; and that he had pleaded guilty to a charge of gambling and had been
sentenced to pay a fine therefor about two weeks before his arrest on the vagrancy charge. The defense showed

that Natividad was a tailor, married, and had a house of his own; that he made good clothes, and earned from
P80
to
P100
per
month,
which
was
sufficient
to
support
his
family.
From his evidence it will be noted that each of the defendants was earning a living at a lawful trade or business,
quite sufficient to support himself in comfort, and that the evidence which the prosecution must rely upon for a
conviction consists of their having spent their evenings in regularly licensed saloons, participating in gambling
games which are expressly made unlawful by the Gambling Act, No. 1757, and that Miller frequented a dance
hall
and
houses
of
prostitution.
Section 1 of Act No. 519 is divided into seven clauses, separated by semicolons. Each clause enumerates a
certain calls of person who, within the meaning of this statute, are to be considered as vagrants. For the purpose
of this discussion, we quote this section below, and number each of these seven clauses.
"(1) Every person having no apparent means of subsistence, who had the physical ability to work, and who
neglects to apply himself or herself to some lawful calling; (2) every person found loitering about saloons or
dram shops or gambling housed, or tramping or straying through the country without visible means of support;
(3) every person known to be a pickpocket, thief, burglar, ladrone, either by his own confession or by his having
been convicted of either said offenses, and having no visible or lawful means of support when found loitering
about any gambling house, cockpit, or in any outlying barrio of a pueblo; (4) every idle or dissolute person of
associate of known thieves or ladrones who wanders about the country at unusual hours of the night; (5) every
idle person who lodges in any barn, shed, outhouse, vessel, or place other than such as is kept for lodging
purposed, without the permission of the owner or a person entitled to the possession thereof; (6) every lewd or
dissolute person who lives in and about houses of ill fame; every common prostitute and common drunkard, is a
vagrant."cralaw
virtua1aw
library
It is insisted by the Attorney-General that as visible means of support would not be a bar to a conviction under
any one of the last four clauses of this act, it was not the intention of the Legislature to limit the crime of
vagrancy to those having no visible means of support. Relying upon the second clause to sustain the guilt of the
defendant, the Attorney-General then proceeds to argue that "visible means of support" as used in that clause
does not apply to "every person found loitering about saloons or dram shops on gambling houses," but is
confined entirely to "or tramping or straying through the country." It is insisted that had it been intended for
"without visible means of support" to qualify the first part of the clause, either the comma after gambling house
would have been omitted, or else a comma after country would have been inserted.
When the meaning of legislative enactment is in question, it is the duty of the courts to ascertain, if possible, the
true legislative intention, and adopt that the construction of the statute of the statute which will give it effect.
The construction finally adopted should be based upon something more substantial than the mere punctuation
found in the printed Act. If the punctuation of the statute gives it a meaning which is reasonable and in apparent
accord with the legislative will, it may be used as an additional argument for adopting the literal meaning of the
words of the statute as thus punctuated. But an argument based upon punctuation alone is not conclusive, and
the courts will not hesitate to a change the punctuation when necessary, to give to the Act the effect intended by
the Legislature, disregarding superfluous or incorrect punctuation marks, and inserting others where necessary.
The Attorney-General has based his argument upon the proposition that neither visible means of support not a
lawful calling is a sufficient defense under the last four paragraphs of the section; hence, not being universally a
defense to a charge of vagrancy, they should not be allowed except where the Legislature has so provided. He
then proceeds to show, by a "mere grammatical criticism: of the second paragraph, that the Legislature did not
intend to allow visible means of support or a lawful calling to block a prosecution for vagrancy founded on the
charge that the defendant was found loitering around saloons, dram shops, and gambling houses.
A most important step in this reasoning, necessary to make it sound, is to ascertain the consequences flowing
from such a construction of the law. What is loitering? The dictionaries say it is idling or wasting ones time.

The time spent in saloons, dram shops, and gambling houses is seldom anything but that. So that under the
proposed construction, practically all who frequent such places commit a crime in so doing, for which they are
liable to punishment under the Vagrancy Law. We cannot believe that it was the intention of the Legislature to
penalize what, in the case of saloons and dram shops, is under the laws protection. If it be urged that what is
true of saloons and dram shops is not true of gambling houses in this respect, we encounter the wording of the
law, which makes no distinction whatever between loitering around saloon and dram shops, and loitering
around
gambling
houses.
The offense of vagrancy and defined in Act No. 519 is the Anglo-Saxon method of dealing with the habitually
idle and harmful parasites society. While the statutes of the various States of the American Union differ greatly
as to the classification of such persons, their scope is substantially the same. Of those statutes we have had an
opportunity to examine, but two or three contain a provision similar to the second paragraph of Act No. 519.
(Mo. Ann. Stat., sec. 2228; sec 1314.) That the absence of visible means of support or a lawful calling is
necessary under these statutes to a conviction for loitering around saloons, dram shops, and gambling houses is
not even negatived by the punctuation employed. In the State of Tennessee, however, we find an exact
counterpart for paragraph 2 of section 1 of our own Act (Code of Tenn., sec 3023), with the same
punctuation:jgc:chanrobles.com.ph
". . . or for any person to be found loitering about saloons or dram shops, gambling houses, or houses of ill
fame, or tramping or strolling through the country without any visible means of support."cralaw virtua1aw
library
A further thought suggests itself on connection with the punctuation of the paragraph in question. The section,
as stated above, is divided into seven clauses, separated by semicolons. To say that two classes of vagrants are
defined in paragraph 2, as to one of which visible means of support or a lawful calling is not a good defense,
and as to the other which such a defense is sufficient, would imply a lack of logical classification on the part of
the legislature of the various classes of vagrants. this we are not inclined to do.
In the case at bar, all three of the defendants were earning a living by legitimate methods in a degree of comfort
higher than the average. Their sole offense was gambling, which the legislature deemed advisable to make the
subject of a penal law. the games in which they participated were apparently played openly, in a licenses public
saloon, where the officers of the law could have entered as easily as did the patrons. It is believed that Act No.
1757 is adequate, if enforced, to suppress the gambling proclivities of any person making a good living ar a
lawful
trade
of
business.
For

these

reasons,

the

Arellano, C.J.,

defendants

Torres

are

acquitted,
and

Johnson and Moreland, JJ., concur the result.

WORDS AND PHRASES:
PROVISO (#75)
Republic of the Philippines
SUPREME COURT
Manila
EN BANC
G.R. No. L-14880

April 29, 1960

with

the

Carson, JJ.,

costs

de

oficio.
concur.

COMMISSIONER OF INTERNAL REVENUE, petitioner,

vs.
FILIPINAS COMPAIA DE SEGUROS, respondent.
Assistant Solicitor General Jose P. Alejandro and Special Attorney Jaime M. Maza for petitioner.
Ramon T. Garcia for respondent.
BARRERA, J.:
Respondent Filipinas Compaia de Seguros, an insurance company, is also engaged in business as a real estate
dealer. On January 4, 1956, respondent, in accordance with the single rate then prescribed under Section 182 of
the National Internal Revenue Code.1 paid the amount of P150.00 as real estate dealer's fixed annual tax for the
year 1956. Subsequently said Section 182 of the Code was amended by Republic Act No. 1612, which took
effect on August 24, 1956, by providing a small of graduated rates: P150 if the annual income of the real estate
dealer from his business as such is P4,000, but does not exceed P10,000; P300, if such annual income exceeds
P10,000 but does not exceed P30,000; and P500 if such annual income exceeds P30,000.
On June 17, 1957, petitioner Commissioner of Internal Revenue assessed and demanded from respondent
(whose annual income exceeded P30,000.00) the amount of P350.00 as additional real estate dealer's fixed
annual tax for the year 1956. On July 16, 1957, respondent wrote a letter to petitioner stating that the "records
will show that the real estate dealer's fixed tax for 1956 of this Company was fully paid by us prior to the
effectivity of Republic Act No. 1612 which amended, among other things, Sections 178 and 192 of the National
Internal Revenue Code." And, as to the retroactive effect of said Republic Act No. 1612, respondent added that
the Republic Act No. 1856 which, among other things, amended Section 182 of the National Internal Revenue
Code, Congress has clearly shown its intention when it provided that the increase in rates of taxes envisioned by
Republic Act No. 1612 is to be made effective as of 1 January 1957".
On October 23, 1957, petitioner informed respondent that "Republic Act No. 1856 which took effect June 22,
1957 amended the date of effectivity of Republic Act 1612 to January 1, 1957. However, the said amendment
applies only to fixed taxes on occupation and not to fixed taxes on business." Hence, petitioner insisted that
respondent should pay the amount of P350.00 as additional real estate dealer's fixed annual tax for the year
1956.
On November 20, 1957, respondent filed with the Court of Tax Appeals a petition for review. To this petition,
petitioner filed his answer on December 6, 1957. As petitioner practically admitted the material factual
allegations in the petition for review, the case was submitted for judgment on the pleadings.
On November 22, 1958, the Court of Tax Appeals rendered a decision sustaining the contention of respondent
company and ordering the petitioner Commissioner of Internal Revenue to desist from collecting the P350.00
additional assessment. From this decision, petitioner appealed to us.
As a rule, laws have no retroactive effect, unless the contrary is provided. (Art. 4, Civil Code of the Philippines;
Manila Trading and Supply Co. vs. Santos, et al., 66 Phil., 237; La Provisora Filipina vs. Ledda, 66 Ph 573.)
Otherwise stated, a state shou!d be consider as prospective in its operation whether it enacts, amen or repeals a
tax, unless the language of the statute clearly demands or expresses that it shall have a retroactive effect (61 C.
J. 1602, cited in Loremo vs. Posadas, 64 Phi 353.) The rule applies with greater force to the case bar,
considering that Republic Act No. 1612, which imposes the new and higher rates of real estate dealer's annual
fixed tax, expressly provides in Section 21 thereof the said Act "shall take effect upon its approval" on August
24, 1956.

The instant case involves the fixed annual real estat dealer's tax for 1956. There is no dispute that before the
enactment of Republic Act No. 1612 on August 2 1956, the uniform fixed annual real estate dealer's was
P150.00 for all owners of rental properties receiving an aggregate amount of P3,000.00 or more a year in the
form of rentals2 and that. "the yearly fixed taxes are due on the first of January of each year" unless tendered in
semi-annual or quarterly installments.3 Since the petitioner indisputably paid in full on January 4, 1956, the total
annual tax then prescribed for the year 1956, require it to pay an additional sum of P350.00 to complete the
P500.00 provided in Republic Act No. 1612 which became effective by its very terms only on August 24 1956,
would, in the language of the Court of Tax Appeals result in the imposition upon respondent of a tax burden to
which it was not liable before the enactment of said amendatory act, thus rendering its operation retroactive
rather than prospective, which cannot be done, as it would contravene the aforecited Section 21 of Republic Act
No. 1612 as well as the established rule regarding prospectivity of operation of statutes.
The view that Congress did intend to impose said increased rates of real estate dealer's annual tax prospectively
and not retroactively, finds some affirmation in Republic Act No. 1856, approved on June 22, 1957, which fixed
the effective date of said new rates under Republic Act No. 1612 by inserting the following proviso in Section
182 of the National Internal Revenue Code:
Provided, further, That any amount collected in excess of the rates in effect prior to January one, nineteen
hundred and fifty-seven, shall be refunded or credited to the taxpayer concerned subject to the provisions of
section three hundred and nine of this Code. (Sec. 182 (b) (2) (1).)
Petitioner, however, contends that the above-quoted provision refers only to fixed taxes on occupation and does
not cover fixed taxes on business, such as the real estate dealer's fixed tax herein involved. This is technically
correct, but we note from the deliberations in the Senate, where the proviso in question was introduced as an
amendment, that said House Bill No. 5919 which became Republic Act No. 1856 was considered, amended, and
enacted into law, in order precisely that the "iniquitous effects" which were then being felt by taxpayers. in
general, on account of the approval of Republic Act No. 1612, Which was being given retroactive effect by the
Bureau of Internal Revenue by collecting these taxes retroactively from January 1, 1956, be eliminated and
complaints against such action be finally settled. (See Senate Congressional Record, May 4, 1957, pp.
10321033.)
It is also to be observed that said House Bill No. 5819 as originally presented, was expressly intended to amend
certain provisions of the National Internal Revenue Code dealing on fixed taxes on business. The provisions in
respect of fixed tax on occupation were merely subsequently added. This would seem to indicate that the
proviso in question was intended to cover not only fixed taxes on occupation, but also fixed taxes on business.
(Senate Congressional Record, March 7, 1957, p. 444.)The fact that said proviso was placed only at the end of
paragraph "(B) On occupation" is not, therefore, view of the circumstances, decisive and unmistakable
indication that Congress limited the proviso to occupation taxes.
Even though the primary purpose of the proviso is to limit restrain the general language of a statute, the
legislature, unfotunately, does not always use it with technical correctness; consequently, where its use creates
an ambiguity, it is the duty of the court to ascertain the legislative intention, through resort to usual rules of
construction applicable to statutes, generally an give it effect even though the statute is thereby enlarged, or the
proviso made to assume the force of an independent enactment and although a proviso as such has no existence
apart from provision which it is designed to limit or to qualify. (Statutory Construction by E. T. Crawford, pp.
604-605.)
. . . When construing a statute, the reason for its enactment should be kept in mind, and the statute should be
construe with reference to its intended scope and purpose. (Id. at p. 249.)

On the general principle of prospectivity of statute on the language of Republic Act 1612 itself, especially
Section 21 thereof, and on the basis of its intended scope and purpose as disclosed in the Congressional Record
we find ourselves in agreement with the Court of Tax Appeals.
Wherefore, the decision appealed from is hereby affirmed without costs. So ordered.
#76
Republic of the Philippines
SUPREME COURT
Manila
SECOND DIVISION
G.R. No. 79869 September 5, 1991
FORTUNATO MERCADO, SR., ROSA MERCADO, FORTUNATO MERCADO, JR., ANTONIO
MERCADO, JOSE CABRAL, LUCIA MERCADO, ASUNCION GUEVARA, ANITA MERCADO,
MARINA MERCADO, JULIANA CABRAL, GUADALUPE PAGUIO, BRIGIDA ALCANTARA,
EMERLITA MERCADO, ROMEO GUEVARA, ROMEO MERCADO and LEON
SANTILLAN, petitioners,
vs.
NATIONAL LABOR RELATIONS COMMISSION (NLRC), THIRD DIVISION; LABOR ARBITER
LUCIANO AQUINO, RAB-III; AURORA L. CRUZ; SPOUSES FRANCISCO DE BORJA and
LETICIA DE BORJA; and STO. NIO REALTY, INCORPORATED, respondents.
Servillano S. Santillan for petitioners.
Luis R. Mauricio for private respondents.

PADILLA, J.:p
Assailed in this petition for certiorari is the decision * of the respondent national Labor Relations Commission
(NLRC) dated 8 August 1984 which affirmed the decision of respondent Labor Arbiter Luciano P. Aquino with
the slight modification of deleting the award of financial assistance to petitioners, and the resolution of the
respondent NLRC dated 17 August 1987, denying petitioners' motion for reconsideration.
This petition originated from a complaint for illegal dismissal, underpayment of wages, non-payment of
overtime pay, holiday pay, service incentive leave benefits, emergency cost of living allowances and 13th month
pay, filed by above-named petitioners against private respondents Aurora L. Cruz, Francisco Borja, Leticia C.
Borja and Sto. Nio Realty Incorporated, with Regional Arbitration Branch No. III, National Labor Relations
Commission in San Fernando, Pampanga. 1
Petitioners alleged in their complaint that they were agricultural workers utilized by private respondents in all
the agricultural phases of work on the 7 1/2 hectares of ace land and 10 hectares of sugar land owned by the
latter; that Fortunato Mercado, Sr. and Leon Santillan worked in the farm of private respondents since 1949,
Fortunato Mercado, Jr. and Antonio Mercado since 1972 and the rest of the petitioners since 1960 up to April

1979, when they were all allegedly dismissed from their employment; and that, during the period of their
employment, petitioners received the following daily wages:
From
1963-1965
1965-1967
1967-1970
1970-1973
1973-1975
1975-1978
1978-1979 P7.00

1962-1963

P1.50
P2.00
P3.00
P4.00
P5.00
P5.00
P6.00

Private respondent Aurora Cruz in her answer to petitioners' complaint denied that said petitioners were her
regular employees and instead averred that she engaged their services, through Spouses Fortunato Mercado, Sr.
and Rosa Mercado, their "mandarols", that is, persons who take charge in supplying the number of workers
needed by owners of various farms, but only to do a particular phase of agricultural work necessary in rice
production and/or sugar cane production, after which they would be free to render services to other farm owners
who need their services. 2
The other private respondents denied having any relationship whatsoever with the petitioners and state that they
were merely registered owners of the land in question included as corespondents in this case. 3
The dispute in this case revolves around the issue of whether or not petitioners are regular and permanent farm
workers and therefore entitled to the benefits which they pray for. And corollary to this, whether or not said
petitioners were illegally dismissed by private respondents.
Respondent Labor Arbiter Luciano P. Aquino ruled in favor of private respondents and held that petitioners
were not regular and permanent workers of the private respondents, for the nature of the terms and conditions of
their hiring reveal that they were required to perform phases of agricultural work for a definite period of time
after which their services would be available to any other farm owner. 4 Respondent Labor Arbiter deemed
petitioners' contention of working twelve (12) hours a day the whole year round in the farm, an exaggeration,
for the reason that the planting of lice and sugar cane does not entail a whole year as reported in the findings of
the Chief of the NLRC Special Task Force. 5Even the sworn statement of one of the petitioners, Fortunato
Mercado, Jr., the son of spouses Fortunato Mercado, Sr. and Rosa Mercado, indubitably show that said
petitioners were hired only as casuals, on an "on and off" basis, thus, it was within the prerogative of private
respondent Aurora Cruz either to take in the petitioners to do further work or not after any single phase of
agricultural work had been completed by them. 6
Respondent Labor Arbiter was also of the opinion that the real cause which triggered the filing of the complaint
by the petitioners who are related to one another, either by consanguinity or affinity, was the filing of a criminal
complaint for theft against Reynaldo Mercado, son of spouses Fortunate Mercado, Sr. and Rosa Mercado, for
they even asked the help of Jesus David, Zone Chairman of the locality to talk to private respondent, Aurora
Cruz regarding said criminal case. 7 In his affidavit, Jesus David stated under oath that petitioners were never
regularly employed by private respondent Aurora Cruz but were, on-and-off hired to work and render services
when needed, thus adding further support to the conclusion that petitioners were not regular and permanent
employees of private respondent Aurora Cruz. 8
Respondent Labor Arbiter further held that only money claims from years 1976-1977, 1977-1978 and 19781979 may be properly considered since all the other money claims have prescribed for having accrued beyond
the three (3) year period prescribed by law. 9 On grounds of equity, however, respondent Labor Arbiter awarded
petitioners financial assistance by private respondent Aurora Cruz, in the amount of Ten Thousand Pesos

(P10,000.00) to be equitably divided among an the petitioners except petitioner Fortunato Mercado, Jr. who had
manifested his disinterest in the further prosecution of his complaint against private respondent. 10
Both parties filed their appeal with the National Labor Relations Commissions (NLRC). Petitioners questioned
respondent Labor Arbiter's finding that they were not regular and permanent employees of private respondent
Aurora Cruz while private respondents questioned the award of financial assistance granted by respondent
Labor Arbiter.
The NLRC ruled in favor of private respondents affirming the decision of the respondent Labor Arbiter, with the
modification of the deletion of the award for financial assistance to petitioners. The dispositive portion of the
decision of the NLRC reads:
WHEREFORE, the Decision of Labor Arbiter Luciano P. Aquino dated March 3, 1983 is hereby modified in
that the award of P10,000.00 financial assistance should be deleted. The said Decision is affirmed in all other
aspects.
SO ORDERED. 11
Petitioners filed a motion for reconsideration of the Decision of the Third Division of the NLRC dated 8 August
1984; however, the NLRC denied tills motion in a resolution dated 17 August 1987. 12
In the present Petition for certiorari, petitioners seek the reversal of the above-mentioned rulings. Petitioners
contend that respondent Labor Arbiter and respondent NLRC erred when both ruled that petitioners are not
regular and permanent employees of private respondents based on the terms and conditions of their hiring, for
said findings are contrary to the provisions of Article 280 of the Labor Code. 13 They submit that petitioners'
employment, even assuming said employment were seasonal, continued for so many years such that, by express
provision of Article 280 of the Labor Code as amended, petitioners have become regular and permanent
employees. 14
Moreover, they argue that Policy Instruction No. 12 15 of the Department of Labor and Employment clearly
lends support to this contention, when it states:
PD 830 has defined the concept of regular and casual employment. What determines regularity or casualness is
not the employment contract, written or otherwise, but the nature of the job. If the job is usually necessary or
desirable to the main business of the employer, then employment is regular. If not, then the employment is
casual. Employment for a definite period which exceeds one (1) year shall be considered re for the duration of
the definite period.
This concept of re and casual employment is designed to put an end to casual employment in regular jobs which
has been abused by many employers to prevent so-called casuals from enjoying the benefits of regular
employees or to prevent casuals from joining unions.
This new concept should be strictly enforced to give meaning to the constitutional guarantee of employment
tenure. 16
Tested under the laws invoked, petitioners submit that it would be unjust, if not unlawful, to consider them as
casual workers since they have been doing all phases of agricultural work for so many years, activities which
are undeniably necessary, desirable and indispensable in the rice and sugar cane production business of the
private respondents. 17

In the Comment filed by private respondents, they submit that the decision of the Labor Arbiter, as aimed by
respondent NLRC, that petitioners were only hired as casuals, is based on solid evidence presented by the
parties and also by the Chief of the Special Task Force of the NLRC Regional Office and, therefore, in
accordance with the rule on findings of fact of administrative agencies, the decision should be given great
weight.18 Furthermore, they contend that the arguments used by petitioners in questioning the decision of the
Labor Arbiter were based on matters which were not offered as evidence in the case heard before the regional
office of the then Ministry of Labor but rather in the case before the Social Security Commission, also between
the same parties. 19
Public respondent NLRC filed a separate comment prepared by the Solicitor General. It submits that it has long
been settled that findings of fact of administrative agencies if supported by substantial evidence are entitled to
great weight. 20 Moreover, it argues that petitioners cannot be deemed to be permanent and regular employees
since they fall under the exception stated in Article 280 of the Labor Code, which reads:
The provisions of written agreements to the contrary notwithstanding and regardless of the oral agreements of
the parties, an employment shall be deemed to be regular where the employee has been engaged to perform
activities which are usually necessary or desirable in the usual business or trade of the employer, except where
the employment has been fixed for a specific project or undertaking the completion or termination of which has
been determined at the time of the engagement of the employee or where the work or services to be performed
is seasonal in nature and the employment is for the duration of the season. 21 (emphasis supplied)
The Court resolved to give due course to the petition and required the parties to submit their respective
memoranda after which the case was deemed submitted for decision.
The petition is not impressed with merit.
The invariable rule set by the Court in reviewing administrative decisions of the Executive Branch of the
Government is that the findings of fact made therein are respected, so long as they are supported by substantial
evidence, even if not overwhelming or preponderant; 22 that it is not for the reviewing court to weigh the
conflicting evidence, determine the credibility of the witnesses or otherwise substitute its own judgment for that
of the administrative agency on the sufficiency of the evidence; 23 that the administrative decision in matters
within the executive's jurisdiction can only be set aside upon proof of gross abuse of discretion, fraud, or error
of law. 24
The questioned decision of the Labor Arbiter reads:
Focusing the spotlight of judicious scrutiny on the evidence on record and the arguments of both parties, it is
our well-discerned opinion that the petitioners are not regular and permanent workers of the respondents. The
very nature of the terms and conditions of their hiring reveal that the petitioners were required to perform p of
cultural work for a definite period, after which their services are available to any farm owner. We cannot share
the arguments of the petitioners that they worked continuously the whole year round for twelve hours a day.
This, we feel, is an exaggeration which does not deserve any serious consideration inasmuch as the plan of rice
and sugar cane does not entail a whole year operation, the area in question being comparatively small. It is
noteworthy that the findings of the Chief of the Special Task Force of the Regional Office are similar to this.
In fact, the sworn statement of one of the petitioners Fortunato Mercado, Jr., the son of spouses Fortunato
Mercado, Sr. and Rosa Mercado, indubitably shows that said petitioners were only hired as casuals, on-and-off
basis. With this kind of relationship between the petitioners and the respondent Aurora Cruz, we feel that there
is no basis in law upon which the claims of the petitioners should be sustained, more specially their complaint
for illegal dismissal. It is within the prerogative of respondent Aurora Cruz either to take in the petitioners to do
further work or not after any single phase of agricultural work has been completed by them. We are of the

opinion that the real cause which triggered the filing of this complaint by the petitioners who are related to one
another, either by consanguinity or affinity was due to the filing of a criminal complaint by the respondent
Aurora Cruz against Reynaldo Mercado, son of spouses Fortunato Mercado, Sr. and Rosa Mercado. In April
1979, according to Jesus David, Zone Chairman of the locality where the petitioners and respondent reside,
petitioner Fortunato Mercado, Sr. asked for help regarding the case of his son, Reynaldo, to talk with respondent
Aurora Cruz and the said Zone Chairman also stated under oath that the petitioners were never regularly
employed by respondent Aurora Cruz but were on-and-off hired to work to render services when needed. 25
A careful examination of the foregoing statements reveals that the findings of the Labor Arbiter in the case are
ably supported by evidence. There is, therefore, no circumstance that would warrant a reversal of the questioned
decision of the Labor Arbiter as affirmed by the National Labor Relations Commission.
The contention of petitioners that the second paragraph of Article 280 of the Labor Code should have been
applied in their case presents an opportunity to clarify the afore-mentioned provision of law.
Article 280 of the Labor Code reads in full:
Article 280. Regular and Casual Employment. The provisions of written agreement to the contrary
notwithstanding and regardless of the oral agreement of the parties, an employment shall be deemed to be
regular where the employee has been engaged to perform activities which are usually necessary or desirable in
the usual business or trade of the employer, except where the employment has been fixed for a specific project
or undertaking the completion or termination of which has been determined at the time of the engagement of the
employee or where the work or services to be performed is seasonal in nature and the employment is for the
duration of the season.
An employment shall be deemed to be casual if it is not covered by the preceding paragraph: Provided, That,
any employee who has rendered at least one year of service whether such service is continuous or broken, shall
be considered a regular employee with respect to the activity in which he is employed and his employment shall
continue while such actually exists.
The first paragraph answers the question of who are employees. It states that, regardless of any written or oral
agreement to the contrary, an employee is deemed regular where he is engaged in necessary or desirable
activities in the usual business or trade of the employer, except for project employees.
A project employee has been defined to be one whose employment has been fixed for a specific project or
undertaking, the completion or termination of which has been determined at the time of the engagement of the
employee, or where the work or service to be performed is seasonal in nature and the employment is for the
duration of the season 26 as in the present case.
The second paragraph of Art. 280 demarcates as "casual" employees, all other employees who do not fan under
the definition of the preceding paragraph. The proviso, in said second paragraph, deems as regular employees
those "casual" employees who have rendered at least one year of service regardless of the fact that such service
may be continuous or broken.
Petitioners, in effect, contend that the proviso in the second paragraph of Art. 280 is applicable to their case and
that the Labor Arbiter should have considered them regular by virtue of said proviso. The contention is without
merit.
The general rule is that the office of a proviso is to qualify or modify only the phrase immediately preceding it
or restrain or limit the generality of the clause that it immediately follows. 27 Thus, it has been held that a
proviso is to be construed with reference to the immediately preceding part of the provision to which it is

attached, and not to the statute itself or to other sections thereof. 28 The only exception to this rule is where the
clear legislative intent is to restrain or qualify not only the phrase immediately preceding it (the proviso) but
also earlier provisions of the statute or even the statute itself as a whole. 29
Policy Instruction No. 12 of the Department of Labor and Employment discloses that the concept of regular and
casual employees was designed to put an end to casual employment in regular jobs, which has been abused by
many employers to prevent called casuals from enjoying the benefits of regular employees or to prevent casuals
from joining unions. The same instructions show that the proviso in the second paragraph of Art. 280 was not
designed to stifle small-scale businesses nor to oppress agricultural land owners to further the interests of
laborers, whether agricultural or industrial. What it seeks to eliminate are abuses of employers against their
employees and not, as petitioners would have us believe, to prevent small-scale businesses from engaging in
legitimate methods to realize profit. Hence, the proviso is applicable only to the employees who are deemed
"casuals" but not to the "project" employees nor the regular employees treated in paragraph one of Art. 280.
Clearly, therefore, petitioners being project employees, or, to use the correct term, seasonal employees, their
employment legally ends upon completion of the project or the season. The termination of their employment
cannot and should not constitute an illegal dismissal. 30
WHEREFORE, the petition is DISMISSED. The decision of the National Labor Relations Commission
affirming that of the Labor Arbiter, under review, is AFFIRMED. No pronouncement as to costs.
SO ORDERED.
INCLUDING (#77)
SECOND DIVISION
[G.R. No. 171427, March 30 : 2011]
STERLING SELECTIONS CORPORATION, PETITIONER, VS. LAGUNA LAKE DEVELOPMENT
AUTHORITY (LLDA) AND JOAQUIN G. MENDOZA, IN HIS CAPACITY AS GENERAL MANAGER
OF LLDA, RESPONDENTS.
DECISION
NACHURA, J.:
Before this Court is a Petition for Review on Certiorari under Rule 45 of the Rules of Court. Petitioner Sterling
Selections Corporation (petitioner) is assailing the Decision[1] dated May 30, 2005 and the Resolution[2] dated
January 31, 2006 of the Court of Appeals (CA) in CA-G.R. SP No. 79889.
Petitioner is a company engaged in the fabrication of sterling silver jewelry. Its products are manufactured in the
home of its principal stockholders, Asuncion Maria and Juan Luis Faustmann (Faustmanns), located in
Barangay
(Brgy.)
Mariana,
New
Manila,
Quezon
City.[3]
Sometime in 1992, one of petitioner's neighbors in Brgy. Mariana filed a complaint with the Office of the
Chairman of Brgy. Mariana against petitioner for "creating loud unceasing noise and emitting toxic fumes,"
coming from the manufacturing plant of the latter's predecessor, Unson, Faustmann and Company, Inc. [4] During
conciliation proceedings, petitioner's management undertook to relocate its operations within a month. The
parties signed an Agreement to that effect. [5] However, petitioner failed to abide by the undertaking and

continued

to

manufacture

its

products

in

its

Brgy.

Mariana

workshop.

On January 16, 1998, Alicia P. Maceda (Maceda), another neighbor of petitioner, wrote a letter to the Brgy.
Chairman to complain about the loud noise and offensive toxic fumes coming from petitioner's manufacturing
plant.[6] She also filed a formal complaint with the Department of Environment and Natural Resources (DENR)National Capital Region office. The complaint was endorsed by the DENR to one of the agencies under it,
respondent Laguna Lake Development Authority (LLDA), which had territorial and functional jurisdiction over
the
matter.[7]
Subsequently, the Monitoring and Enforcement Section-Pollution Control Division of LLDA conducted an
inspection of petitioner's premises. According to the LLDA, it was observed that the wastewater generated by
petitioner's operations was drained directly to the sewer canal. However, since the wastewater was not yet for
disposal,
no
sample
could
be
collected
during
the
inspection.
On November 19, 1998, a Notice of Violation and a Cease and Desist Order (CDO) were served on petitioner
after it was found that it was operating without an LLDA Clearance and Permit, as required by Republic Act
(R.A.)
No.
4850.[8]
Meanwhile, Maceda's complaint was endorsed by the LLDA to the Office of the Mayor of Quezon City. After
hearing and investigation, the Office of the Mayor issued a Closure Order against petitioner after finding that it
was operating without the requisite business permit, since it was running a jewelry manufacturing plant with an
"Office
Only"
permit,
and
for
violation
of
Zoning
and
Environmental
Laws. [9]
Petitioner then filed a petition for mandamus before the Regional Trial Court (RTC), Branch 167, Pasig City.
Contending that, as a cottage industry, its jewelry business is exempt from the requirement to secure a permit
from the LLDA, petitioner asked the court to order the latter to issue a certificate of exemption in its favor. The
RTC denied the petition, ruling that mandamus does not lie to compel the performance of a discretionary duty.
Nonetheless, the RTC allowed petitioner to file an amended petition for certiorari and mandamus.[10]
In its amended petition, petitioner averred that its business was classified as a cottage industry. It argued that
under R.A. No. 6977, the law prevailing at the time of its registration with the Securities and Exchange
Commission (SEC) in December 1996, cottage industry was defined as one with assets worth P50,001.00 to
P500,000.00.[11] Since, based on its Articles of Incorporation and Certified Public Accountant (CPA)'s Balance
Sheet, its total assets when it was incorporated amounted only to P312,500.00, it qualified as a cottage industry.
Intervenors Maceda, Ma. Corazon G. Logarta (Logarta), and Rosario "Charito" Planas (Planas) filed a motion
for intervention. Their Answer-in-Intervention was subsequently admitted by the RTC.
On April 1, 2002, the RTC promulgated a decision [12] denying the petition. In rejecting petitioner's claim that it
was a cottage industry, the RTC said:
While it is true that plaintiff [petitioner]'s economic activity is carried on in a home, which incidentally gained
the ire of the neighbors that culminated in a complaint against the plaintiff, it was manned not with the members
of the family but by at least two hundred employees who were strangers and not known to the community.
Moreso, being an accredited exporter recognized by the Bureau of Export Trade Promotion, Department of
Trade
and
Industry, seemed
a
deviation
from
the
connotation
of
"small
scale."
Worthy to note is the observation of respondent-intervenors that to be considered a cottage industry, plaintiff
should have been registered under the [National Cottage Industries Development Authority (NACIDA)],
Section 12 of R.A. [No.] 3470 substantially provides; (sic) that the plaintiff corporation who desires to avail of
the benefits and assistance of the law should have registered with the board. In the absence of any indication
that affirm the status of the plaintiff corporation as a cottage industry, proof to the contrary may be reasonably

accepted, for he who alleged the affirmative of the issue has the burden of proof and in this aspect plaintiff
miserably
failed.
On the contention that LLDA Resolution No. 41, series of 1997, exempt the plaintiff corporation from the
requirements imposed by the LLDA, the interpretation given by [the] government agency itself should be given
greater probative value. As a regulatory and quasi-judicial body, the LLDA is mandated to pass upon, approve
or disapprove all plans, programs and project[s] proposed by local government offices/agencies, public
corporations and private [corporations]. It is in the position to construe its own rules and regulation. By
implication, plaintiff corporation arrogates unto itself the privilege bestowed upon a cottage industry. However,
there is nothing in the Resolution that includes jewelry making as included in the term cottage industry.[13]
Thus, the RTC held that petitioner must subscribe to the rules and regulations of the LLDA governing clearance.
[14]

Petitioner filed a motion for reconsideration of the RTC decision. The same was denied in an Order dated May
17, 2002. Hence, it filed a Notice of Appeal. Subsequently, it filed its appeal with the CA.
In a Decision[15] dated May 30, 2005, the CA dismissed the appeal. The CA brushed aside the issue of whether
petitioner qualified as a cottage industry. It said that even if petitioner belonged to that category, it still needed
to prove that its business was exempted by law from the coverage of LLDA Resolution No. 41, Series of 1997.
Specifically, the CA cited Section 2(30) of said resolution, to wit:
Section 2. Exemptions. The following activities, projects, and installations are exempt from the above subject
requirements:
x

30. Cottage Industries, including

stuffed
- rattan/furniture manufacturing.[16]

toys
handicrafts,

manufacturing
and

The CA held that, following the principle of ejusdem generis, the enumeration in the foregoing provision must
be taken to include businesses of the same kind, which were, as averred by the LLDA, not as environmentally
critical as those enumerated.[17] Thus, the CA declared that the LLDA did not contemplate the inclusion of the
manufacture of jewelry in the exemptions.[18] Additionally, the CA held that the opinions and rulings of officials
of the government called upon to execute or implement administrative laws command respect and weight.
[19]
The CA further held that since petitioner was claiming to be within the exemption, it had the duty to prove
that the law intended to include it, or that it is within the contemplation of the law, to be exempted.[20]
Petitioner moved for the reconsideration of the Decision, but the CA denied the same in a Resolution dated
January 31, 2006. Hence, petitioner filed this petition for review.
Petitioner argues that the CA committed the following errors:
1. The appellate court erred when it failed or refused to make a definitive pronouncement as to whether
petitioner qualifies as a cottage industry. This, even after the appellate court (on page 7 of the assailed
Decision) scored the trial court for having "failed to consider the fact that the predicament of Sterling
rests primarily on the determination of its status," i.e., whether petitioner is a cottage industry or not.

2. The appellate court erred when it deliberately ignored the provisions of various statutes and regulations
pertaining to cottage industries, which if the same had been taken into account and accorded due
consideration, would have led the appellate court to correctly conclude that petitioner is indeed a cottage
industry.
3. The appellate court erred when it declared, after misapplying the rules of statutory construction, that No.
30 of Sec. 2 of LLDA Resolution No. 41, Series of 1997, does not serve to exempt petitioner from the
clearance requirement.[21]
Petitioner also argues that Section 2(30) of LLDA Resolution No. 41, Series of 1997, contains no restriction
limiting the exemptions to only certain kinds of cottage industries.[22] It contends that the word "including"
connotes a sense of "containing" or "comprising," and not a sense of exclusivity or exclusion. The provision,
petitioner points out, is devoid of any restrictive or limiting words; thus, the LLDA should avoid limiting the
kinds or classes of cottage industries exempted from the clearance requirement.[23]
Next, petitioner avers that the CA erred when it refused to rule on whether it qualified as a cottage industry. It
claims that the CA deliberately ignored the provisions in various statutes and regulations pertaining to cottage
industries, which would have led to the conclusion that petitioner was such, and thus would fall within the
exemption.[24] Petitioner argues that its total assets were worth only P312,500.00 during its incorporation, which,
under R.A. No. 6977, would qualify it as a cottage industry. Further, petitioner argues that, even with the
enactment of R.A. No. 8502, the Jewelry Industry Development Act of 1998, jewelry-making remains a cottage
industry.[25]
Finally, petitioner puts in question the factual basis for the issuance of the CDO by the LLDA.
By way of comment, intervenors Maceda, Logarta, and Planas allege that petitioner has been operating illegally,
violating ordinances and laws, operating without the required permits and clearances, and continuing its
operations despite LLDA's issuance of a CDO.[26] They further allege that petitioner's business is located in an
area classified as "R-1" or low density residential zone under Quezon City Ordinance SP-918, Series of 2000,
and preceding zoning ordinances. Despite having only an "Office Only" permit, petitioner deliberately uses the
premises to manufacture jewelry.[27]
Intervenors also refute petitioner's claim that it is exempted from obtaining the required LLDA clearance
because it is a cottage industry. First, intervenors allege that petitioner is not registered with the National
Cottage Industries Development Authority (NACIDA). Next, intervenors point out that, as admitted by
petitioner itself, it employs at least 229 employees who are strangers to the family, and its operations yield
annual sales of at least P25 million.[28]
Intervenors also aver that, in R.A. No. 8502, there is no provision categorizing jewelry-making as acottage
industry. Going by the classification of jewelry-making companies in the Implementing Rules and Regulations
of R.A. No. 8502[29] and petitioner's financial statements filed with the SEC, which state that petitioner had
assets amounting to P2,454,459.01 in 1999 and P4,628,900.80 in 1998,[30] it cannot be characterized as a micro
jewelry enterprise.
Next, intervenors insist that the LLDA has jurisdiction over petitioner. They argue that LLDA Resolution No.
41, Series of 1997, does not in any manner waive the LLDA jurisdiction even over those exempted in the list of
activities, projects, and installations. Jurisdiction is provided for by law and cannot be diminished by an act of
the agency concerned. In fact, there is no provision of waiver of jurisdiction contained in the said regulation.
Exemption from securing prior clearance before implementing an activity does not carry with it a waiver of
jurisdiction.[31]
Intevernors also point out that cottage industry, as contemplated under LLDA Resolution No. 41, Series of

1997, includes only the activities enumerated therein, namely, stuffed toys manufacturing, handicrafts, and
rattan/furniture manufacturing. Further, intervenors aver that, under existing laws, the term cottage industry no
longer exists and has been deleted. Jewelry-making is now classified as an independent and separate industry
under R.A. No. 8502, apart from the general term cottage industry. Therefore, petitioner's activity cannot be
included as among those exempted from obtaining a clearance from the LLDA because jewelry-making is not at
all mentioned as an exception to the general rule, intervenors claim.[32]
On the other hand, the LLDA and its former General Manager Joaquin G. Mendoza (respondents) also filed
their Comment. Respondents narrated that in 1998, petitioner was found to be operating its business without
clearance and permit from the LLDA. Accordingly, a Notice of Violation was issued against petitioner.
Subsequently, the LLDA conducted a public hearing, which was attended by petitioner, its company physician,
and legal counsels. During the hearing, petitioner committed to relocate its facilities. Meanwhile, the same
would remain padlocked to erase all doubts of its continued operation despite the Closure Order from the
Quezon City Mayor's Office.[33] After the public hearing, the LLDA issued the assailed CDO against petitioner.
Thereafter, proceedings before the RTC, then the CA, ensued, resulting in the now-assailed decision and
resolution.
In their Comment, respondents posit that petitioner is not a cottage industry within the contemplation of the law.
They argue that to qualify as such, the conditions in the laws must be complied with. Thus, while metalcraft
activities are considered as cottage industry, asset requirements and NACIDA registration requirements must
also be complied with.[34]
Respondents contend that petitioner cannot be considered a cottage industry considering that it has assets way
above the threshold fixed in the law. Respondents aver that what petitioner claims as its assets amounting to
P312,500.00 refer only to the minimum paid-up capital stock required by law for purposes of incorporation and
registration with the SEC. Respondents argue that petitioner would have other properties contributed and
owned for purposes of starting the enterprise, such as furniture, fixtures, machinery, and equipment. Likewise,
respondents point out that petitioner actually has a capitalization of P5 million, of which P1.25 million had been
subscribed. The amount subscribed minus the paid-up capital is a subscription receivable from the incorporators
and is an asset.[35]
Next, respondents argue that the CA did not err in ruling that petitioner is not exempted from securing a
clearance from the LLDA. The respondents posit that, under LLDA Resolution No. 41, Series of 1997,
the cottage industries exempted are those of the same nature and category as those enumerated therein,
following the principle of ejusdem generis.[36] The activities enumerated, respondents claim, are those whose
operations are basically dry and whose environmental impact is not so significant.[37] Likewise, respondents
argue that, following the principle expressio unius est exclusio alterius, the express mention of the three
activities excluded all other cottage industries. If the LLDA had intended to exempt all types of cottage
industries, it would not have made an enumeration of those exempt activities, respondents posit.[38]
In its Reply, petitioner claims that intervenors are illegally suppressing petitioner's legitimate business because
it is competing with the jewelry business of intervenor Logarta's cousin.[39]Petitioner claims that Logarta's
cousin also operates his business within the same area as its facilities. It further claims that there is a total of 34
other businesses, including a manufacturer of garments, a wholesaler of cement, and a manufacturer of leather
bags, operating in the same supposedly-residential zone where its office is located.[40] Petitioner also accuses
intervenors Maceda and Planas of going to court with "unclean hands," considering that they also run businesses
in the same area.[41]
Petitioner also denies that Mrs. Faustmann, then operating Unson, Faustmann and Company, Inc., reneged on a
promise, made in 1992, to relocate the company's operations. Petitioner claims that Mrs. Faustmann was
pressured into signing the Agreement before the Lupon, through threats and intimidation. As to the later
complaint, petitioner claims that intervenors succeeded in pressing residents to sign the complaint, but those

who signed were in fact from other streets, further away from its office.[42]
Petitioner also claims that there was no public hearing conducted before the Quezon City Mayor's Office issued
and enforced the CDO.
Petitioner likewise insists that its business qualifies as a cottage industry.[43] It maintains that pertinent laws have
identified jewelry-making as a cottage industry. The Cottage Industry Technology Center (CITC) designates
jewelry-making as one of the industries it actively assists. Petitioner also maintains that its paid-up capital
qualifies its business as a cottage industry.[44]
The petition is unmeritorious; hence, the same is denied.
The main issue to be resolved is whether petitioner is exempted from complying with the requirement to obtain
a clearance from the LLDA to operate its business.
Petitioner insists that it is exempted from complying with the clearance requirements because it is acottage
industry. In order to resolve this issue, a review of the laws pertinent to cottage industries is in order.
Section 11 of R.A. No. 3470, approved on June 16, 1962, defined cottage industry as an "economic activity in a
small scale which is carried on mainly in the homes or in other places for profit and which is mainly done with
the help of the members of the family." Among the activities considered as acottage industry is "metalcraft such
as making of jewelries, knives, boloes (sic), scissors, razors, silverwares and brassworks (sic)."[45]
The same law required persons, corporations, partnerships, or associations that wished to avail of the benefits of
the law to register with the NACIDA.[46]
In 1968, R.A. No. 5326 amended certain sections of R.A. No. 3470. In particular, Section 11 was amended to
read:
SEC. 11. Definition. - The term `cottage industry' as used in this Act shall mean an economic activity in a small
scale carried on mainly in the homes or in other places for profit and mainly done with the help of the members
of the family with capitalization not exceeding fifteen thousand pesos. The term shall also include economic
activities carried on by students of public and private schools, within school premises, as a cooperative effort,
under supervision of a teacher or other person approved by and acting under the supervision and control of
school authorities, either as part of or in addition to ordinary vocational training, provided all profits shall
accrue to the students working therein. it shall include the following: x x x (5) metal craft such as making of
jewelries, knives, boloes (sic), scissors, razors, silverwares and brassworks (sic); x x x All cottage industries
shall be owned and operated by Filipino citizens, or by a corporation, partnership or cooperative, at least
seventy-five per cent of the capital or investment of which is owned by Filipino citizens. All members of its
Board
of
Directors
shall
be
Filipino
citizens.
The word capitalization as used in this section shall mean the total current assets and fixed assets, excluding the
value of the land and building leased, rented and/or used at least six months of each year. For purpose of this
Act, any and all branches, agencies, outlets or divisions of a licensed cottage industry shall be collated to
determine the capitalization thereof.
R.A. No. 3470 was further amended on October 22, 1975, by Presidential Decree (P.D.) No. 817. The first
sentence of Section 11 was amended, to read:
The term "cottage industry" as used in this Act shall mean an economic activity carried on in the homes or in
other places for profit, with a capitalization of not exceeding P100,000 at the time of registration.

In 1981, then President Ferdinand Marcos issued P.D. No. 1788, the Cottage Industries Development Decree of
1981, amending and consolidating R.A. Nos. 3470 and 5326, P.D. No. 817, and other related Laws, Decrees,
Executive Orders, Letters of Instructions, and Acts concerning the NACIDA. Section 10 of P.D. No. 1788
states:
Section 10. Cottage Industry - The term "cottage industry" shall mean a modest economic activity for profit
using primarily indigenous raw materials in the production of various articles of the country. Provided,
however, that all cottage industries shall be owned and operated by Filipino citizens, or by corporations,
partnerships, or cooperatives at least seventy-five percent (75%) of the capital investment of which shall be
owned by Filipino citizens. Provided, further, that the total assets of which shall not exceed one hundred
thousand pesos (P100,000.00) at the time of registration with the NACIDA. Provided, finally that the maximum
total assets allowable for cottage industries for purposes of registration may be modified and/or increased
accordingly by the NACIDA Board subject to the approval of the President of the Republic of the Philippines.
For facility of implementation, coordination and statistical gathering, cottage industries shall be classified as
follows:
x

a) Metalcraft Industry - That sector using metals or its alloys as principal raw material component in producing
articles such as brasswares, cutlery items, fabricated tools, implements and equipment and other items requiring
a certain degree of craftsmanship in the making thereof including the making of jewelry items involving the use
metals and/or its alloys in combination with semiprecious or artificial stones.
Executive Order (E.O.) No. 917, issued on October 15, 1983, amended the definition of cottage industry by
increasing the capitalization requirement to a maximum of P250,000.00, which amount may be modified or
increased accordingly, subject to the approval of the President.[47]
In 1986, the National Economic Development Authority (NEDA) redefined cottage, small and medium scale
industries. Considered as cottage industries were enterprises, excluding agriculture, with total assets after
financing of over P500,000.00 but less than P5 million.[48]
When Corazon Aquino became President, she issued E.O. No. 133, reorganizing the Department of Trade and
Industry (DTI). Section 18 thereof provided that the NACIDA was reorganized into the CITC, and its functions,
other than technology development and training, were transferred to the Bureau of Small and Medium Business
Development and relevant line operating units of the DTI.
In 1990, Congress enacted R.A. No. 6977, the Magna Carta for Small Enterprises. The capitalization for
a cottage enterprise was changed, viz.:
SEC. 3. Small and Medium Enterprises as Beneficiaries. - "Small and medium enterprise" shall be defined as
any business activity or enterprise engaged in industry, agribusiness and/or services, whether single
proprietorship, cooperative, partnership or corporation whose total assets, inclusive of those arising from loans
but exclusive of the land on which the particular business entity's office, plant, and equipment are situated, must
have value falling under the following categories:
micro
cottage
small
medium:

:
:
:
P5,000,001 - P20,000,000

less
P50,001
P500,001

than
-

P50,000
P500,000
P5,000,000

In a generic sense, all enterprises with total assets of Five million pesos (P5,000,000) and below shall be called
small enterprises.
R.A. No. 6977 was amended by R.A. No. 8289 in 1998. Amending Section 1 of R.A. No. 6977, the
term cottage industry or cottage enterprise was completely eliminated:
SEC. 3. Small and Medium Enterprise as Beneficiaries. - "Small and Medium Enterprise" shall be defined as
any business activity or enterprise engaged in industry, agribusiness and/or services, whether single
proprietorship, cooperative, partnership or corporation whose total assets, inclusive of those arising from loans
but exclusive of the land on which the particular business entity's office, plant, and equipment are situated, must
have value falling under the following categories:
micro
:
less
than
P1,500,001
small
:
P1,500,001
P15,000,000
medium: P15,000,001 - P60,000,00
The above definitions shall be subject to review and adjustment by the said Councilmotu proprio or upon
recommendation of sectoral organization(s) taking into account inflation and other economic indicators. The
Council may use as variables the number of employees, equity capital and asset size.
Finally, in 1998, Congress enacted R.A. No. 8502, the Jewelry Industry Development Act of 1998, a law to
support, promote, and encourage the growth and development of the predominantly small and medium scale
jewelry industries. R.A. No. 8502 did not use the term cottage industry; instead, it characterized businesses
engaged in jewelry-making as:
a)
micro
jewelry
enterprise
b)
small
scale
jewelry
enterprise
c)
medium
jewelry
enterprise
d) large scale jewelry enterprise
more than P60,000,000.[49]

less
P1,500,001
P15,000,001

than
-

P1,500,001
P15,000,000
P60,000,000

On the other hand, the LLDA was created by R.A. No. 4850 to carry out the development of the Laguna Lake
region with due regard and adequate provisions for environmental management and control, preservation of the
quality of human life and ecological systems, and prevention of undue ecological disturbances, deterioration,
and pollution.[50]
The LLDA was granted the power to pass upon and approve or disapprove all plans, programs, and projects
proposed by the local government offices/agencies within their regions, by public corporations, and by private
persons or enterprises, where such plans, programs and/or projects are related to those of the Authority for the
development of the region, as well as to issue the necessary clearance for the approved plans, programs and/or
projects.[51]
Thus, in LLDA Resolution No. 41, Series of 1997, the LLDA specified the development activities, projects, and
installations required to secure a clearance from the LLDA before these can be constructed, operated,
maintained, expanded, modified, or implemented by any government office/agency or government corporation
or private person or enterprise.[52] Section 2 of the LLDA Resolution then set out the activities exempted from
complying with the clearance requirement, to wit:
Section 2. Exemptions. The following activities, projects, [or] installations are exempted from the above subject
requirements:
xxxx

30. Cottage industries including

stuffed
- rattan/furniture manufacturing.

toys

manufacturing
and

handicrafts

Contrary to the CA's pronouncement and to respondents' claim, the provision did not restrict the exemption to
the three activities therein mentioned.
The word include means "to take in or comprise as a part of a whole."[53]
Thus, this Court has previously held that it necessarily conveys the very idea of non-exclusivity of the
enumeration.[54] The principle of expressio unius est exclusio alterius does not apply where other circumstances
indicate that the enumeration was not intended to be exclusive, or where the enumeration is by way of example
only.[55] The maxim expressio unius est exclusio alterius does not apply when words are mentioned by way of
example.[56] Said legal maxim should be applied only as a means of discovering legislative intent which is not
otherwise manifest.[57]
In another case, the Court said:
[T]he word "involving," when understood in the sense of "including," as in includingtechnical or financial
assistance, necessarily implies that there are activities other thanthose that are being included. In other words, if
an agreement includes technical or financial assistance, there is [-] apart from such assistance - something else
already in[,] and covered or may be covered by, the said agreement.[58]
As the regulation stands, therefore, all cottage industries including, but not limited to, those enumerated therein
are exempted from securing prior clearance from the LLDA. Hence, the CA erred in ruling that only the three
activities enumerated therein are exempted.
Next, the Court must determine if petitioner is in fact a cottage industry entitled to claim the exemption under
LLDA Resolution No. 41, Series of 1997.
That jewelry-making is one of the activities considered as a cottage industry is undeniable. The laws bear this
out. However, based on these same laws, the nature of the activity is only one of several factors to be
considered in determining whether the same is a cottage industry.
In view of the emphasis in law after law on the capitalization or asset requirements, it is crystal clear that the
same is a defining element in determining if an enterprise is a cottage industry.
Petitioner argues that its assets amount to only P312,500.00, representing its paid-up capital at the time of its
SEC registration. The law then in force was R.A. No. 6977, which, to recapitulate, states:
SEC. 3. Small and Medium Enterprises as Beneficiaries. - "Small and medium enterprise" shall be defined as
any business activity or enterprise engaged in industry, agribusiness and/or services, whether single
proprietorship, cooperative, partnership or corporation whose total assets, inclusive of those arising from
loans but exclusive of the land on which the particular business entity's office, plant, and equipment are
situated, must have value falling under the following categories:
micro
cottage:
small
medium:

:
P50,001
:
P5,000,001 - P20,000,000

less
P500,001

than
-

P50,000
P500,000
P5,000,000

In a generic sense, all enterprises with total assets of Five million pesos (P5,000,000) and below shall be called
small enterprises.
Accordingly, it should be considered as a cottage industry, petitioner insists.
However, petitioner's contention that its total assets amounts only to P312,500.00 is misleading.
The P312,500.00 represents the total amount of the capital stock already subscribed and paid up by the
company's stockholders. It does not, however, represent the totality of its assets, even at the time of its
registration. By the expert opinion of petitioner's own consultant, independent CPA Maximiano P. Sorongon, Jr.,
it does not mean that the paid-up capital is the only source of funds of the corporation for it to support its
recurring operational requirements, as well as its increased financial requirements later on, as and when the
business grows and expands.[59]
In other words, its paid-up capital is not the only asset of the company. Under R.A. No. 6977, the term total
assets was understood to mean "inclusive of those arising from loans but exclusive of the land on which the
particular business entity's office, plant, and equipment are situated."
Assets consist of property of all kinds, real and personal, tangible and intangible, including, inter alia, for
certain purposes, patents and causes of action which belong to any person, including a corporation and the
estate of a decedent. It is the entire property of a person, association, corporation, or estate that is applicable or
subject to the payment of his, her, or its debts.[60]
Consider these details as found by the Board of Investments and set forth in a Memorandum dated June 8, 1999
addressed to the undersecretary of the DENR, listing the basic information of petitioner as follows:
Name
:
Sterling
Selections
Corporation
Address
: 55-A, 11th St., New Manila, Quezon City
Business
Activity
:
Producer
of
gift
items
made
of
silver
Chairman
&
Managing
Director:
Asuncion
Maria
S.
de
Faustmann
SEC
Registration
:
A
1996-10845
dated
December
2,
1996
BOI
Accreditation
:
98-003
dated
August
13,
1998
under
R.A.
8502
BETP
Accreditation
:
98-0010
dated
July
17,
1998
under
R.A.
7844
No.
of
Employees
:
189
(Direct
Labor;
Salaries
&
Allowances
P16,064,000)
Value
of
Export
Sales
:
P19,732,692.00
[61]
Total Sales
: P37,160,340.00 (based on 1998 ITR)
The same figures are reflected in petitioner's own income statement.[62] Petitioner cannot insist on using merely
its paid-up capital as basis to determine its assets. The law speaks of total assets. Petitioner's own evidence, i.e.,
balance sheets prepared by CPAs it commissioned itself, shows that it has assets other than its paid-up capital.
According to the Consolidated Balance Sheet presented by petitioner, it had assets amounting to P4,628,900.80
by the end of 1998, and P1,746,328.17 by the end of 1997.[63] Obviously, these amounts are over the maximum
prescribed by law for cottage industries.
Thus, the conclusion is that petitioner is not a cottage industry and, hence, is not exempted from the
requirement to secure an LLDA clearance.
Further militating against petitioner's claim is the RTC's astute observation that being an accredited exporter
recognized by the Bureau of Export Trade Promotion (BETP) of the DTI seemed like a deviation from the
connotation of "small scale."[64]

The Court notes that, to be accredited by the BETP as an exporter, there are strict standards that the enterprise
must meet. Under R.A. No. 7844, the Export Development Act of 1994, an exporter is any person, natural or
juridical, licensed to do business in the Philippines, engaged directly or indirectly in the production,
manufacture or trade of products or services, which earns at least fifty percent (50%) of its normal operating
revenues from the sale of its products or services abroad for foreign currency.[65]
The same law provides for tax incentives to exporters, with the qualification that the incentives shall be granted
only upon presentation of their BETP certification of the exporter's eligibility.[66] Qualified exporters applying
for BETP certification must present a report of their export revenue/sales for the immediately preceding year.[67]
DTI Administrative Order No. 3, Series of 1995, provides for the mechanisms of accreditation for exporters vis -vis the tax incentives granted under R.A. No. 7844. Under Procedure for Accreditation of Exporters, the
following schedule of application fees was set forth:
Export
Value
$1M
Above
$1M
Above
$5M
Above
$10M
Above $15M 5,000.00[68]

Per

Year
5M

5M
-

Application
Max.
Max.
10M

15M

Max.

Fee
P1,000.00
2,000.00
Max.3,000.00
4,000.00

Consequently, an exporter must be able to generate and export enough products, with an export value of $1
million per year, in order to be accredited by the BETP for tax incentives. Petitioner's accreditation shows that it
complied with this requirement.
Based on the foregoing, it is clear that petitioner cannot be considered a cottage industry. Therefore, it is not
exempted from complying with the clearance requirement of the LLDA.
It is a doctrine of long-standing that factual findings of administrative bodies on technical matters within their
area of expertise should be accorded not only respect but even finality if they are supported by substantial
evidence even if they are not overwhelming or preponderant.[69] Courts will not interfere in matters which are
addressed to the sound discretion of the government agency entrusted with regulation of activities coming under
the special and technical training and knowledge of such agency. The exercise of administrative discretion is a
policy decision and a matter that is best discharged by the government agency concerned and not by the courts.
[70]

The motives of the intervenors for filing the complaint are no longer relevant. Regardless of what these motives
may have been, the fact remains that the LLDA found petitioner to have violated the pertinent environmental
and regulatory laws.
The Court recognizes the right of petitioner to engage in business and to profit from its industry. However, the
exercise of the right must conform to the laws and regulations laid down by the competent authorities.
WHEREFORE, the foregoing premises considered, the Petition is DENIED. The Decision dated May 30,
2005 and the Resolution dated January 31, 2006 of the Court of Appeals in CA-G.R. SP No. 79889
are AFFIRMED.
SO ORDERED.
NEGATIVE VS. AFFIRMATIVE WORDS (#78)

Republic of the Philippines

SUPREME COURT
Manila
EN BANC
G.R. No. L-5387

April 27, 1954

In the matter of the Adoption of the minors MARIA LUALHATI MAGPAYO and AMADA MAGPAYO.
CLYDE E. MCGEE, petitioner-appellee,
vs.
REPUBLIC OF THE PHILIPPINES, oppositor-appellant.
Quijano, Alidio and Azores for appellee.
Assistant Solicitor General Guillermo E. Torres and Solicitor Estrella Abad Santos for appellant.
MONTEMAYOR, J.:
Appellee Clyde E. McGee, an American citizen is married to Leonardo S. Crisostomo by whom he has one
child. The minors Maria and Amada, both surnamed Magpayo are Leonarda's children by her first husband
Ernesto Magpayo who was killed by the Japanese during the occupation. McGee filed a petition in the Court of
First Instance of Manila to adopt his two minor step-children Maria and Amada.
At the hearing, the Government filed its opposition to the petition on the ground that petitioner has a legitimate
child and consequently, is disqualified to adopt under article 335, paragraph 1, of the new Civil Code which
provides:
ART. 335. The following cannot adopt:
(1) Those who have legitimate, legitimated, acknowledged natural children, or natural children by legal fiction;
ART. 338. The following may be adopted:
xxx

xxx

xxx

(3) A step-child, by the step-father or step-mother.

The Government is appealing from that decision. Only recently (December 21, 1953), and during the pendency
of the present appeal, we have had occasion to decide a similar case wherein the same question was
involved,1namely, whether a husband having a legitimate child may adopt a step-child. Applying the provisions
of article 335, we held that it cannot be done for the reason that although article 338 of the new Civil Code
permits the adoption of a step-child by the step-father or the step-mother, nevertheless, because of the negative
provisions of article 335, said permission is confined to those step-fathers and step-mothers who have no
children of their own.
With the doctrine laid down in the Ball vs. Republic case, we could stop right here and sustain the appeal of the
Government in the present case. However, it may not be unprofitable to further elaborate on the relation
between the two articles 335 and 338, new Civil Code. The strongest argument of the trial court and of the
appellee in support of the decision granting the adoption is that to hold that a step-father having a legitimate
child may not adopt a step-child would be to render article 338, paragraph 3, meaningless and a surplusage
inasmuch as without said article 338, a husband without a legitimate child may adopt a step-child anyway; or

worse, article 338 contradicts article 335. At first blush, that is a formidable argument because the Legislature in
enacting a law is supposed and presumed not to insert any section or provision which is unnecessary and a mere
surplusage; that all provisions contained in a law should be given effect, and that contradictions are to be
avoided. Futhermore, it is contended by appellee that article 335 prohibiting adoption by a parent who already
has a child of his own should not be considered exclusively but rather in relation with article 338 so as to regard
the latter as an exception to an exception. To meet and dispose of this argument we have to go into the
philosophy of adoption.
The purpose of adoption is to establish a relationship of paternity and filiation where none existed before.
Where therefore the relationship of parent and child already exists whether by blood or by affinity as in the case
of illegitimate and step-children, it would be unnecessary and superfluous to establish and superimpose another
relationship of parent and child through adoption. Consequently, an express authorization of law like article 338
is necessary, if not to render it proper and legal, at least, to remove any and all doubt on the subject-matter.
Under this view, article 338 may not be regarded as a surplusage. That may have been the reason why in the old
Code of Civil Procedure, particularly its provisions regarding adoption, authority to adopt a step-child by a stepfather was provided in section 766 notwithstanding the general authorization in section 765 extended to any
inhabitant of the Philippines to adopt a minor child. The same argument of surplusage could plausibly have
been advanced as regards section 766, that is to say, section 766 was unnecessary and superfluous because
without it a step-father could adopt a minor step-child anyway. However, the insertion of section 766 was not
entirely without reason. The Code of Civil Procedure was of common law origin. It seems to be an established
principle in American jurisprudence that a person may not adopt his own relative, the reason being that it is
unnecessary to establish a relationship where such already exists (the same philosophy underlying our codal
provisions on adoption). So, some states have special laws authorizing the adoption of relatives such as a
grandfather adopting a grandchild and a father adopting his illegitimate or natural child.
Another possible reason for the insertion of section 766 in the Code of Civil Procedure and article 338,
paragraph 3, in the new Civil Code, authorizing the adoption of a step-child by the step-father or step-mother is
that without said express legal sanction, there might be some doubt as to the propriety and advisability of said
adoption due to the possibility, if not probability, of pressure brought to bear upon the adopting step-father or
mother by the legitimate and natural parent.
One additional reason for holding that article 338 of the new Civil Code should be subordinated and made
subject to the provisions of article 335 so as to limit the permission to adopt granted in article 338, to parents
who have no children of their own, is that the terms of article 335 are phrased in a negative manner the
following cannotbe adopted, while the phraseology of article 338 is only affirmative the following may be
adopted. Under the rule of statutory construction, negative words and phrases are to be regarded as mandatory
while those in the affirmative are merely directory.
. . . negative (prohibitory and exclusive words or terms are indicative of the legislative intent that the statute is
to be mandatory, . . . (Crawford, Statutory Construction, sec. 263, p. 523.)
Ordinarily ... the word "may" is directory, . . . (Crawford, op. cit., sec. 262, p. 519.)
Prohibitive or negative words can rarely, if ever, be directory, or, as it has been aptly stated, there is but one way
to obey the command "thou shalt not", and that is to completely refrain from doing the forbidden act. And this is
so, even though the statute provides no penalty for disobedience. (Crawford, op. cit., sec. 263, p. 523.)
The principal reason behind article 335, paragraph 1 denying adoption to those who already have children is
that adoption would not only create conflicts within the family but it would also materially affect or diminish
the successional rights of the child already had. This objection may not appear as formidable and real when the
child had by the adopting parent is by the very spouse whose child is to be adopted, because in that case, the

legitimate child and the adopted one would be half-brothers or half-sisters, would not be total strangers to each
other, and the blood relationship though half may soften and absorb the loss of successional rights and the
possible diminution of the attention and affection previously enjoyed. But as not infrequently happens, the stepfather or step-mother adopting a child of his or her second wife or husband already may have a child of his or
her own by a previous marriage, in which case, said child and the adopted one would be complete strangers to
each other, with no family ties whatsoever to bind them, in which event, there would be nothing to soften and
reconcile the objection and resentment, natural to the legitimate child.
In conclusion, we hold that pursuant to the provisions of article 335, paragraph 1, a step-father who already has
a child may not adopt a step-child regardless of the provisions of article 338, paragraph 3 of the same Code, the
latter provisions being confined and applicable to those step-fathers and step-mothers who have no children of
their own. The decision appealed from is hereby reversed, and the petition for adoption is denied. No
pronouncement as to costs.

MANDATORY VS. PERMISSIVE (#79)

Republic of the Philippines

SUPREME COURT
Manila
FIRST DIVISION
G.R. No. L-35910 July 21, 1978
PURITA BERSABAL, petitioner,
vs.
HONORABLE JUDGE SERAFIN SALVADOR, as Judge of the Court of First Instance of Caloocan City,
Branch XIV, TAN THAT and ONG PIN TEE, respondents.

MAKASIAR, J.:
On March 23, 1972, petitioner Purita Bersabal seeks to annul the orders of respondent Judge of August 4, 1971,
October 30, 1971 and March 15, 1972 and to compel said respondent Judge to decide petitioner's perfected
appeal on the basis of the evidence and records of the case submitted by the City Court of Caloocan City plus
the memorandum already submitted by the petitioner and respondents.
Since only questions of law were raised therein, the Court of Appeals, on October 13, 1972, issued a resolution
certifying said case to this Court pursuant to Section 17, paragraph (4) of the Judiciary Act of 1948, as amended.
As found by the Court of Appeals, the facts of this case are as follows:
It appears that private respondents Tan That and Ong Pin Tee filed an ejectment suit, docketed as Civil Case No.
6926 in the City Court of Caloocan City, against the petitioner. A decision was rendered by said Court on
November 25, 1970, which decision was appealed by the petitioner to the respondent Court and docketed
therein as Civil Case No. C-2036.

During the pendency of the appeal the respondent court issued on March 23, 1971 an order which reads:
Pursuant to the provisions of Rep. Act No. 6031, the Clerk of Court of Caloocan City, is hereby directed to
transmit to this Court within fifteen (15) days from receipt hereof the transcripts of stenographic notes taken
down during the hearing of this case before the City Court of Caloocan City, and likewise, counsels for both
parties are given thirty (30) days from receipt of this order within which to file their respective memoranda, and
thereafter, this case shall be deemed submitted for decision by this Court.
which order was apparently received by petitioner on April 17, 1971.
The transcript of stenographic notes not having yet been forwarded to the respondent court, petitioner filed on
May 5, 1971 a 'MOTION EX-PARTE TO SUBMIT MEMORANDUM WITHIN 30 DAYS FROM RECEIPT
OF NOTICE OF SUBMISSION OF THE TRANSCRIPT OF STENOGRAPHIC NOTES TAKEN DURING
THE HEARING OF THE CASE BEFORE THE CITY COURT OF CALOOCAN CITY' which was granted by
respondent court on May 7, 1971. However, before the petitioner could receive any such notice from the
respondent court, the respondent Judge issued an order on August 4, 1971 which says:
For failure of the defendant-appellant to prosecute her appeal the same is hereby ordered DISMISSED with
costs against her.
Petitioner filed a motion for reconsideration of the order on September 28, 1971, citing as a ground the granting
of his ex-parte motion to submit memorandum within 30 days from notice of the submission of the stenographic
notes taken before the City Court. Private respondents filed their opposition to the motion on September
30,1971. In the meantime, on October 20,1971, petitioner filed her memorandum dated October 18, 1971. On
October 30, 1971 the respondent Court denied the motion for reconsideration. Then on January 25, 1972,
petitioner filed a motion for leave to file second motion for reconsideration which was likewise denied by the
respondent court on March 15, 1972. Hence this petition.
The sole inquiry in the case at bar can be stated thus: Whether, in the light of the provisions of the second
paragraph of Section 45 of Republic Act No. 296, as amended by R.A. No. 6031, the mere failure of an
appellant to submit on nine the memorandum mentioned in the same paragraph would empower the Court of
First Instance to dismiss the appeal on the ground of failure to Prosecute; or, whether it is mandatory upon said
Court to proceed to decide the appealed case on the basis of the evidence and records transmitted to it, the
failure of the appellant to submit a memorandum on time notwithstanding.
The second paragraph of Section 45 of R.A. No. 296, otherwise known as the Philippine Judiciary Act of 1948,
as amended by R.A. No. 6031 provides, in part, as follows:
Courts of First Instance shall decide such appealed cases on the basis of the evidence and records transmitted
from the city or municipal courts: Provided, That the parties may submit memoranda and/or brief with oral
argument if so requested ... . (Emphasis supplied).
The foregoing provision is clear and leaves no room for doubt. It cannot be interpreted otherwise than that the
submission of memoranda is optional on the part of the parties. Being optional on the part of the parties, the
latter may so choose to waive submission of the memoranda. And as a logical concomitant of the choice given
to the Parties, the Court cannot dismiss the appeal of the party waiving the submission of said memorandum the
appellant so chooses not to submit the memorandum, the Court of First Instance is left with no alternative but to
decide the case on the basis of the evidence and records transmitted from the city or municipal courts. In other
words, the Court is not empowered by law to dismiss the appeal on the mere failure of an appellant to submit
his memorandum, but rather it is the Court's mandatory duty to decide the case on the basis of the available
evidence and records transmitted to it.

As a general rule, the word "may" when used in a statute is permissive only and operates to confer discretion;
while the word "shall" is imperative, operating to impose a duty which may be enforced (Dizon vs.
Encarnacion, L-18615, Dec. 24, 1963, 9 SCRA 714, 716-717). The implication is that the Court is left with no
choice but to decide the appealed case either on the basis of the evidence and records transmitted to it, or on the
basis of the latter plus memoranda and/or brief with oral argument duly submitted and/or made on request.
Moreover, memoranda, briefs and oral arguments are not essential requirements. They may be submitted and/or
made only if so requested.
Finally, a contrary interpretation would be unjust and dangerous as it may defeat the litigant's right to appeal
granted
to
him
by
law.
In
the
case
of Republic
vs.
Rodriguez
(L-26056, May 29, 1969, 28 SCRA 378) this Court underscored "the need of proceeding with caution so that a
party may not be deprived of its right to appeal except for weighty reasons." Courts should heed the rule
inMunicipality
of
Tiwi,
Albay
vs.
Cirujales
(L-37520, Dec. 26, 1973, 54 SCRA 390, 395), thus:
The appellate court's summary dismissal of the appeal even before receipt of the records of the appealed case as
ordered by it in a prior mandamus case must be set aside as having been issued precipitously and without an
opportunity to consider and appreciate unavoidable circumstances of record not attributable to petitioners that
caused the delay in the elevation of the records of the case on appeal.
In the instant case, no notice was received by petitioner about the submission of the transcript of the
stenographic notes, so that his 30-day period to submit his memorandum would commence to run. Only after
the expiration of such period can the respondent Judge act on the case by deciding it on the merits, not by
dismissing the appeal of petitioner.
WHEREFORE, THE CHALLENGED ORDERS OF RESPONDENT JUDGE DATED AUGUST 4, 1971,
OCTOBER 30, 1971 AND MARCH 15, 1971 ARE HEREBY SET ASIDE AS NULL AND VOID AND THE
RESPONDENT COURT IS HEREBY DIRECTED TO DECIDE CIVIL CASE NO. C-2036 ON THE MERITS.
NO COSTS.
Muoz Palma, Fernandez and Guerrero, JJ., concur.

Separate Opinions

TEEHANKEE, J, concurring:
I concur with the setting aside of the questioned dismissal of petitioner's appeal on the ground that the record
shows quite clearly that there was no failure on part of petitioner-appellant to prosecute her appeal in respondent
judge's court. Petitioner had been granted in respondent judge's Order of May 7, 1971, 30 days from notice of
submission of the transcripts within which to file her memorandum on appeal, yet her appeal was dismissed per
his Order of August 4, 1971 for alleged failure to prosecute (by failure to file the memorandum) even before she
had received any such notice. Upon receipt of the dismissal order, petitioner had promptly moved for
reconsideration and filed her memorandum on appeal.

I am not prepared at this stage to concur with the ratio decidendi of the decision penned by Mr. Justice
Makasiar that the Court is not empowered by law to dismiss the appeal on the mere failure of an appellant to
submit his memorandum, but rather it is the Court's mandatory duty to decide the case on the basis of the
available evidence and records transmitted to it." I entertain serious doubts about such pronouncement, once
when the court of first instance "requests" the party-appellant to submit a memorandum or brief on appeal under
the provisions of Republic Act No. 6031 amending section 45 of Republic Act No. 296, such "request" is
tantamount to a requirement for the proper prosecution of the appeal; thus, when the appellant willfuly fails to
file such memorandum or brief, the judge should be empowered to dismiss the appeal, applying suppletorily the
analogous provisions of Rule 50, section 1 for dismissal of appeal by the higher appellate courts and taking into
account that Rule 40, section 9 of the Rules of Court now expressly authorizes the court of first instance to
dismiss an appeal before it "for failure to prosecute."

Separate Opinions
TEEHANKEE, J, Concurring:
I concur with the setting aside of the questioned dismissal of petitioner's appeal on the ground that the record
shows quite clearly that there was no failure on part of petitioner-appellant to prosecute her appeal in respondent
judge's court. Petitioner had been granted in respondent judge's Order of May 7, 1971, 30 days from notice of
submission of the transcripts within which to file her memorandum on appeal, yet her appeal was dismissed per
his Order of August 4, 1971 for alleged failure to prosecute (by failure to file the memorandum) even before she
had received any such notice. Upon receipt of the dismissal order, petitioner had promptly moved for
reconsideration and filed her memorandum on appeal.
I am not prepared at this stage to concur with the ratio decidendi of the decision penned by Mr. Justice
Makasiar that the Court is not empowered by law to dismiss the appeal on the mere failure of an appellant to
submit his memorandum, but rather it is the Court's mandatory duty to decide the case on the basis of the
available evidence and records transmitted to it." I entertain serious doubts about such pronouncement, once
when the court of first instance "requests" the party-appellant to submit a memorandum or brief on appeal under
the provisions of Republic Act No. 6031 amending section 45 of Republic Act No. 296, such "request" is
tantamount to a requirement for the proper prosecution of the appeal; thus, when the appellant willfuly fails to
file such memorandum or brief, the judge should be empowered to dismiss the appeal, applying suppletorily the
analogous provisions of Rule 50, section 1 for dismissal of appeal by the higher appellate courts and taking into
account that Rule 40, section 9 of the Rules of Court now expressly authorizes the court of first instance to
dismiss an appeal before it "for failure to prosecute."
(#80)
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, defendant-appellee.
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: . . .
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.
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 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. . . .
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
loans ............................................................ 22,717,565.87
Real Estate
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 ..................................................
(Exhibit 2)

P90,090,77.68

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 ................................................................

P50,000,000,00

Cash Transferred from Financial Rehabilitation

Funds ....

2,423,079.94

Cash received from Surplus Property

Commission .......
Cash received from Phil. Shipping
Adm. ...........................

26,350,000.00

3,700,000.00

Cash payment of
capital ..................................................

82,473,079.74

Proceeds of bond
issues ..................................................

58,909,148.18

Advances from the Central

10,000,000.00

Bank .......................................
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, 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
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 coasts against the appellant.
Paras, C.J., Feria, Pablo, Padilla, Tuason, Montemayor, and Bautista Angelo, JJ., concur.

(#81)
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.
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 CAG.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.
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 for 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
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 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, 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 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 rule 9 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 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 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 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
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 nonexistence 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.

AND OR, AND AND/OR

(#82)
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.
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,
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-3812Manila driven and operated by Emerdoro Santiago and 2 jeepneys with plates Nos. S-27151- Philippines, 1966
and S-26327-Philippines, 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 6258M. 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.

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 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
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
6258-M 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 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.

(#83)
Republic of the Philippines
SUPREME COURT
Baguio City
THIRD DIVISION
G.R. No. 167022

April 4, 2011

LICOMCEN INCORPORATED, Petitioner,

vs.
FOUNDATION SPECIALISTS, INC., Respondent.
x - - - - - - - - - - - - - - - - - - - - - - -x
G.R. No. 169678
FOUNDATION SPECIALISTS, INC., Petitioner,
vs.
LICOMCEN INCORPORATED, Respondent.
DECISION
BRION, J.:
THE FACTS
The petitioner, LICOMCEN Incorporated (LICOMCEN), is a domestic corporation engaged in the business of
operating shopping malls in the country.
In March 1997, the City Government of Legaspi awarded to LICOMCEN, after a public bidding, a lease
contract over a lot located in the central business district of the city. Under the contract, LICOMCEN was

obliged to finance the construction of a commercial complex/mall to be known as the LCC Citimall (Citimall).
It was also granted the right to operate and manage Citimall for 50 years, and was, thereafter, required to turn
over the ownership and operation to the City Government.1
For the Citimall project, LICOMCEN hired E.S. de Castro and Associates (ESCA) to act as its engineering
consultant. Since the Citimall was envisioned to be a high-rise structure, LICOMCEN contracted respondent
Foundation Specialists, Inc. (FSI) to do initial construction works, specifically, the construction and installation
of bored piles foundation.2 LICOMCEN and FSI signed the Construction Agreement, 3 and the accompanying
Bid Documents4 and General Conditions of Contract5 (GCC) on September 1, 1997. Immediately thereafter, FSI
purchased the materials needed for the Citimall6 project and began working in order to meet the 90-day deadline
set by LICOMCEN.
On December 16, 1997, LICOMCEN sent word to FSI that it was considering major design revisions and the
suspension of work on the Citimall project. FSI replied on December 18, 1997, expressing concern over the
revisions and the suspension, as it had fully mobilized its manpower and equipment, and had ordered the
delivery of steel bars. FSI also asked for the payment of accomplished work amounting to P3,627,818.00.7 A
series of correspondence between LICOMCEN and FSI then followed.
ESCA wrote FSI on January 6, 1998, stating that the revised design necessitated a change in the bored piles
requirement and a substantial reduction in the number of piles. Thus, ESCA proposed to FSI that only 50% of
the steel bars be delivered to the jobsite and the rest be shipped back to Manila. 8 Notwithstanding this
instruction, all the ordered steel bars arrived in Legaspi City on January 14, 1998.9
On January 15, 1998, LICOMCEN instructed FSI to "hold all construction activities on the project," 10 in view
of a pending administrative case against the officials of the City Government of Legaspi and LICOMCEN filed
before the Ombudsman (OMB-ADM-1-97-0622).11 On January 19, 1998, ESCA formalized the suspension of
construction activities and ordered the constructions demobilization until the case was resolved. 12 In response,
FSI sent ESCA a letter, dated February 3, 1998, requesting payment of costs incurred on account of the
suspension which totaled P22,667,026.97.13 FSI repeated its demand for payment on March 3, 1998.14
ESCA replied to FSIs demands for payment on March 24, 1998, objecting to some of the claims.15 It denied the
claim for the cost of the steel bars that were delivered, since the delivery was done in complete disregard of its
instructions. It further disclaimed liability for the other FSI claims based on the suspension, as its cause was not
due to LICOMCENs fault. FSI rejected ESCAs evaluation of its claims in its April 15, 1998 letter.16
On March 14, 2001, FSI sent a final demand letter to LICOMCEN for payment of P29,232,672.83.17 Since
LICOMCEN took no positive action on FSIs demand for payment, 18 FSI filed a petition for arbitration with the
Construction Industry Arbitration Commission (CIAC) on October 2, 2002, docketed as CIAC Case No. 372002.19In the arbitration petition, FSI demanded payment of the following amounts:
a. Unpaid accomplished work billings.

P 1,264,404.12

b. Material costs at site..

15,143,638.51

c. Equipment and labor standby costs..

3,058,984.34

d. Unrealized gross profit..

9,023,575.29

e. Attorneys fees..

300,000.00

f. Interest expenses ...

equivalent to 15%
of the total claim

LICOMCEN again denied liability for the amounts claimed by FSI. It justified its decision to indefinitely
suspend the Citimall project due to the cases filed against it involving its Lease Contract with the City
Government of Legaspi. LICOMCEN also assailed the CIACs jurisdiction, contending that FSIs claims were
matters not subject to arbitration under GC-61 of the GCC, but one that should have been filed before the
regular courts of Legaspi City pursuant to GC-05.20
During the preliminary conference of January 28, 2003, LICOMCEN reiterated its objections to the CIACs
jurisdiction, which the arbitrators simply noted. Both FSI and LICOMCEN then proceeded to draft the Terms of
Reference.21
On February 4, 2003, LICOMCEN, through a collaborating counsel, filed its Ex Abundati Ad Cautela Omnibus
Motion, insisting that FSIs petition before the CIAC should be dismissed for lack of jurisdiction; thus, it prayed
for the suspension of the arbitration proceedings until the issue of jurisdiction was finally settled. The CIAC
denied LICOMCENs motion in its February 20, 2003 order,22 finding that the question of jurisdiction depends
on certain factual conditions that have yet to be established by ample evidence. As the CIACs February 20,
2003 order stood uncontested, the arbitration proceedings continued, with both parties actively participating.
The CIAC issued its decision on July 7, 2003,23 ruling in favor of FSI and awarding the following amounts:
a. Unpaid accomplished work billings. P 1,264,404.12
b. Material costs at site

14,643,638.51

c. Equipment and labor standby costs

2,957,989.94

d. Unrealized gross profit

5,120,000.00

LICOMCEN was also required to bear the costs of arbitration in the total amount of P474,407.95.
LICOMCEN appealed the CIACs decision before the Court of Appeals (CA). On November 23, 2004, the CA
upheld the CIACs decision, modifying only the amounts awarded by (a) reducing LICOMCENs liability for
material costs at site to P5,694,939.87, and (b) deleting its liability for equipment and labor standby costs and
unrealized gross profit; all the other awards were affirmed. 24 Both parties moved for the reconsideration of the
CAs Decision; LICOMCENs motion was denied in the CAs February 4, 2005 Resolution, while FSIs motion
was denied in the CAs September 13, 2005 Resolution. Hence, the parties filed their own petition for review on
certiorari before the Court.25
LICOMCENs Arguments
LICOMCEM principally raises the question of the CIACs jurisdiction, insisting that FSIs claims are nonarbitrable. In support of its position, LICOMCEN cites GC-61 of the GCC:
GC-61. DISPUTES AND ARBITRATION
Should any dispute of any kind arise between the LICOMCEN INCORPORATED and the Contractor [referring
to FSI] or the Engineer [referring to ESCA] and the Contractor in connection with, or arising out of the
execution of the Works, such dispute shall first be referred to and settled by the LICOMCEN,
INCORPORATED who shall within a period of thirty (30) days after being formally requested by either party to
resolve the dispute, issue a written decision to the Engineer and Contractor.
Such decision shall be final and binding upon the parties and the Contractor shall proceed with the execution of
the Works with due diligence notwithstanding any Contractor's objection to the decision of the Engineer. If

within a period of thirty (30) days from receipt of the LICOMCEN, INCORPORATED's decision on the
dispute, either party does not officially give notice to contest such decision through arbitration, the said decision
shall remain final and binding. However, should any party, within thirty (30) days from receipt of the
LICOMCEN, INCORPORATED's decision, contest said decision, the dispute shall be submitted for arbitration
under the Construction Industry Arbitration Law, Executive Order 1008. The arbitrators appointed under said
rules and regulations shall have full power to open up, revise and review any decision, opinion, direction,
certificate or valuation of the LICOMCEN, INCORPORATED. Neither party shall be limited to the evidence or
arguments put before the LICOMCEN, INCORPORATED for the purpose of obtaining his said decision. No
decision given by the LICOMCEN, INCORPORATED shall disqualify him from being called as a witness and
giving evidence in the arbitration. It is understood that the obligations of the LICOMCEN, INCORPORATED,
the Engineer and the Contractor shall not be altered by reason of the arbitration being conducted during the
progress of the Works.26
LICOMCEN posits that only disputes "in connection with or arising out of the execution of the Works" are
subject to arbitration. LICOMCEN construes the phrase "execution of the Works" as referring to the physical
construction activities, since "Works" under the GCC specifically refer to the "structures and facilities" required
to be constructed and completed for the Citimall project. 27 It considers FSIs claims as mere contractual
monetary claims that should be litigated before the courts of Legaspi City, as provided in GC-05 of the GCC:
GC-05. JURISDICTION
Any question between the contracting parties that may arise out of or in connection with the Contract, or breach
thereof, shall be litigated in the courts of Legaspi City except where otherwise specifically stated or except
when such question is submitted for settlement thru arbitration as provided herein.28
LICOMCEN also contends that FSI failed to comply with the condition precedent for arbitration laid down in
GC-61 of the GCC. An arbitrable dispute under GC-61 must first be referred to and settled by LICOMCEN,
which has 30 days to resolve it. If within a period of 30 days from receipt of LICOMCENs decision on the
dispute, either party does not officially give notice to contest such decision through arbitration, the said decision
shall remain final and binding. However, should any party, within 30 days from receipt of LICOMCENs
decision, contest said decision, the dispute shall be submitted for arbitration under the Construction Industry
Arbitration Law.
LICOMCEN considers its March 24, 1998 letter as its final decision on FSIs claims, but declares that FSIs
reply letter of April 15, 1998 is not the "notice to contest" required by GC-61 that authorizes resort to arbitration
before the CIAC. It posits that nothing in FSIs April 15, 1998 letter states that FSI will avail of arbitration as a
mode to settle its dispute with LICOMCEN. While FSIs final demand letter of March 14, 2001 mentioned its
intention to refer the matter to arbitration, LICOMCEN declares that the letter was made three years after its
March 24, 1998 letter, hence, long after the 30-day period provided in GC-61. Indeed, FSI filed the petition for
arbitration with the CIAC only on October 2, 2002. 29 Considering FSIs delays in asserting its claims,
LICOMCEN also contends that FSIs action is barred by laches.
With respect to the monetary claims of FSI, LICOMCEM alleges that the CA erred in upholding its liability for
material costs at site for the reinforcing steel bars in the amount of P5,694,939.87, computed as follows30:
2nd initial rebar requirements purchased from Pag-Asa Steel Works,
Inc..
Reinforcing steel bars purchased from ARCA Industrial Sales (total net
weight of 744,197.66 kilograms) 50% of net amount
due.
Subtotal.

P 799,506.83
5,395,433.04

6,194,939.87
Less
Purchase cost of steel bars by Ramon
Quinquileria..
TOTAL LIABILITY OF LICOMCEN TO FSI FOR MATERIAL
COSTS AT SITE...

(500,000.00)
5,694,939.87

Citing GC-42(2) of the GCC, LICOMCEN says it shall be liable to pay FSI "[t]he cost of materials or goods
reasonably ordered for the Permanent or Temporary Works which have been delivered to the Contractor but not
yet used, and which delivery has been certified by the Engineer." 31 None of these requisites were allegedly
complied with. It contends that FSI failed to establish that the steel bars delivered in Legaspi City, on January
14, 1998, were for the Citimall project. In fact, the steel bars were delivered not at the site of the Citimall
project, but at FSIs batching plant called Tuanzon compound, a few hundred meters from the site. Even if
delivery to Tuanzon was allowed, the delivery was done in violation of ESCAs instruction to ship only 50% of
the materials. Advised as early as December 1997 to suspend the works, FSI proceeded with the delivery of the
steel bars in January 1998. LICOMCEN declared that it should not be made to pay for costs that FSI willingly
incurred for itself.32
Assuming that LICOMCEN is liable for the costs of the steel bars, it argues that its liability should be
minimized by the fact that FSI incurred no actual damage from the purchase and delivery of the steel bars.
During the suspension of the works, FSI sold 125,000 kg of steel bars for P500,000.00 to a third person (a
certain Ramon Quinquileria). LICOMCEN alleges that FSI sold the steel bars for a ridiculously low price
of P 4.00/kilo, when the prevailing rate was P20.00/kilo. The sale could have garnered a higher price that would
offset LICOMCENs liability. LICOMCEN also wants FSI to account for and deliver to it the remaining 744
metric tons of steel bars not sold. Otherwise, FSI would be unjustly enriched at LICOMCENs expense,
receiving payment for materials not delivered to LICOMCEN.33
LICOMCEN also disagrees with the CA ruling that declared it solely liable to pay the costs of arbitration. The
ruling was apparently based on the finding that LICOMCENs "failure or refusal to meet its obligations, legal,
financial, and moral, caused FSI to bring the dispute to arbitration." 34 LICOMCEN asserts that it was FSIs
decision to proceed with the delivery of the steel bars that actually caused the dispute; it insists that it is not the
party at fault which should bear the arbitration costs.35
FSIs Arguments
FSI takes exception to the CA ruling that modified the amount for material costs at site, and deleted the awards
for equipment and labor standby costs and unrealized profits.
Proof of damage to FSI is not required for LICOMCEN to be liable for the material costs of the steel bars.
Under GC-42, it is enough that the materials were delivered to the contractor, although not used. FSI said that
the 744 metric tons of steel bars were ordered and paid for by it for the Citimall project as early as November
1997. If LICOMCEN contends that these were procured for other projects FSI also had in Legaspi City, it
should have presented proof of this claim, but it failed to do so.36
ESCAs January 6, 1998 letter simply suggested that only 50% of the steel bars be shipped to Legaspi City; it
was not a clear and specific directive. Even if it was, the steel bars were ordered and paid for long before the
notice to suspend was given; by then, it was too late to stop the delivery. FSI also claims that since it believed in
good faith that the Citimall project was simply suspended, it expected work to resume soon after and decided to
proceed with the shipment.37

Contrary to LICOMCENs arguments, GC-42 of the GCC does not require delivery of the materials at the site
of the Citimall project; it only requires delivery to the contractor, which is FSI. Moreover, the Tuanzon
compound, where the steel bars were actually delivered, is very close to the Citimall project site. FSI contends
that it is a normal construction practice for contractors to set up a "staging site," to prepare the materials and
equipment to be used, rather than stock them in the crowded job/project site. FSI also asserts that it was useless
to have the delivery certified by ESCA because by then the Citimall project had been suspended. It would be
unfair to demand FSI to perform an act that ESCA and LICOMCEN themselves had prevented from
happening.38
The CA deleted the awards for equipment and labor standby costs on the ground that FSIs documentary
evidence was inadequate. FSI finds the ruling erroneous, since LICOMCEN never questioned the list of
employees and equipments employed and rented by FSI for the duration of the suspension.39
FSI also alleges that LICOMCEN maliciously and unlawfully suspended the Citimall project. While
LICOMCEN cited several other cases in its petition for review on certiorari as grounds for suspending the
works, its letters/notices of suspension only referred to one case, OMB-ADM-1-97-0622, an administrative case
before the Ombudsman that was dismissed as early as October 12, 1998. LICOMCEN never notified FSI of the
dismissal of this case. More importantly, no restraining order or injunction was issued in any of these cases to
justify the suspension of the Citimall project. 40 FSI posits that LICOMCENs true intent was to terminate its
contract with it, but, to avoid paying damages for breach of contract, simply declared it as "indefinitely
suspended." That LICOMCEN conducted another public bidding for the "new designs" is a telling indication of
LICOMCENs intent to ease out FSI. 41 Thus, FSI states that LICOMCENs bad faith in indefinitely suspending
the Citimall project entitles it to claim unrealized profit. The restriction under GC-41 that "[t]he contractor shall
have no claim for anticipated profits on the work thus terminated," 42 will not apply because the stipulation refers
to a contract lawfully and properly terminated. FSI seeks to recover unrealized profits under Articles 1170 and
2201 of the Civil Code.
THE COURTS RULING
The jurisdiction of the CIAC
The CIAC was created through Executive Order No. 1008 (E.O. 1008), in recognition of the need to establish
an arbitral machinery that would expeditiously settle construction industry disputes. The prompt resolution of
problems arising from or connected with the construction industry was considered of necessary and vital for the
fulfillment of national development goals, as the construction industry provides employment to a large segment
of the national labor force and is a leading contributor to the gross national product. 43 Section 4 of E.O. 1008
states:
Sec. 4. Jurisdiction. The CIAC shall have original and exclusive jurisdiction over disputes arising from, or
connected with, contracts entered into by parties involved in construction in the Philippines, whether the dispute
arises before or after the completion of the contract, or after the abandonment or breach thereof. These disputes
may involve government or private contracts. For the Board to acquire jurisdiction, the parties to a dispute must
agree to submit the same to voluntary arbitration.
The jurisdiction of the CIAC may include but is not limited to violation of specifications for materials and
workmanship; violation of the terms of agreement; interpretation and/or application of contractual time and
delays; maintenance and defects; payment, default of employer or contractor and changes in contract cost.
Excluded from the coverage of this law are disputes arising from employer-employee relationships which shall
continue to be covered by the Labor Code of the Philippines.

The jurisdiction of courts and quasi-judicial bodies is determined by the Constitution and the law. 44 It cannot be
fixed by the will of the parties to a dispute; 45 the parties can neither expand nor diminish a tribunals jurisdiction
by stipulation or agreement. The text of Section 4 of E.O. 1008 is broad enough to cover any dispute arising
from, or connected with construction contracts, whether these involve mere contractual money claims or
execution of the works.46 Considering the intent behind the law and the broad language adopted, LICOMCEN
erred in insisting on its restrictive interpretation of GC-61. The CIACs jurisdiction cannot be limited by the
parties stipulation that only disputes in connection with or arising out of the physical construction activities
(execution of the works) are arbitrable before it.
In fact, all that is required for the CIAC to acquire jurisdiction is for the parties to a construction contract to
agree to submit their dispute to arbitration. Section 1, Article III of the 1988 CIAC Rules of Procedure (as
amended by CIAC Resolution Nos. 2-91 and 3-93) states:
Section 1. Submission to CIAC Jurisdiction. An arbitration clause in a construction contract or a submission
to arbitration of a construction dispute shall be deemed an agreement to submit an existing or future controversy
to CIAC jurisdiction, notwithstanding the reference to a different arbitration institution or arbitral body in such
contract or submission. When a contract contains a clause for the submission of a future controversy to
arbitration, it is not necessary for the parties to enter into a submission agreement before the claimant may
invoke the jurisdiction of CIAC.
An arbitration agreement or a submission to arbitration shall be in writing, but it need not be signed by the
parties, as long as the intent is clear that the parties agree to submit a present or future controversy arising from
a construction contract to arbitration.
In HUTAMA-RSEA Joint Operations, Inc. v. Citra Metro Manila Tollways Corporation, 47 the Court declared
that "the bare fact that the parties x x x incorporated an arbitration clause in [their contract] is sufficient to vest
the CIAC with jurisdiction over any construction controversy or claim between the parties. The arbitration
clause in the construction contract ipso facto vested the CIAC with jurisdiction."
Under GC-61 and GC-05 of the GCC, read singly and in relation with one another, the Court sees no intent to
limit resort to arbitration only to disputes relating to the physical construction activities.
First, consistent with the intent of the law, an arbitration clause pursuant to E.O. 1008 should be interpreted at
its widest signification. Under GC-61, the voluntary arbitration clause covers any dispute of any kind, not only
arising of out the execution of the works but also in connection therewith. The payments, demand and disputed
issues in this case namely, work billings, material costs, equipment and labor standby costs, unrealized profits
all arose because of the construction activities and/or are connected or related to these activities. In other
words, they are there because of the construction activities. Attorneys fees and interests payment, on the other
hand, are costs directly incidental to the dispute. Hence, the scope of the arbitration clause, as worded, covers
all the disputed items.
Second and more importantly, in insisting that contractual money claims can be resolved only through court
action, LICOMCEN deliberately ignores one of the exceptions to the general rule stated in GC-05:
GC-05. JURISDICTION
Any question between the contracting parties that may arise out of or in connection with the Contract, or breach
thereof, shall be litigated in the courts of Legaspi City except where otherwise specifically stated or except
when such question is submitted for settlement thru arbitration as provided herein.

The second exception clause authorizes the submission to arbitration of any dispute between LICOMCEM and
FSI, even if the dispute does not directly involve the execution of physical construction works. This was
precisely the avenue taken by FSI when it filed its petition for arbitration with the CIAC.
If the CIACs jurisdiction can neither be enlarged nor diminished by the parties, it also cannot be subjected to a
condition precedent. GC-61 requires a party disagreeing with LICOMCENs decision to "officially give notice
to contest such decision through arbitration" within 30 days from receipt of the decision. However, FSIs April
15, 1998 letter is not the notice contemplated by GC-61; it never mentioned FSIs plan to submit the dispute to
arbitration and instead requested LICOMCEN to reevaluate its claims. Notwithstanding FSIs failure to make a
proper and timely notice, LICOMCENs decision (embodied in its March 24, 1998 letter) cannot become "final
and binding" so as to preclude resort to the CIAC arbitration. To reiterate, all that is required for the CIAC to
acquire jurisdiction is for the parties to agree to submit their dispute to voluntary arbitration:
[T]he mere existence of an arbitration clause in the construction contract is considered by law as an agreement
by the parties to submit existing or future controversies between them to CIAC jurisdiction, without any
qualification or condition precedent. To affirm a condition precedent in the construction contract, which would
effectively suspend the jurisdiction of the CIAC until compliance therewith, would be in conflict with the
recognized intention of the law and rules to automatically vest CIAC with jurisdiction over a dispute should the
construction contract contain an arbitration clause.48
The CIAC is given the original and exclusive jurisdiction over disputes arising from, or connected with,
contracts entered into by parties involved in construction in the Philippines. 49 This jurisdiction cannot be altered
by stipulations restricting the nature of construction disputes, appointing another arbitral body, or making that
bodys decision final and binding.
The jurisdiction of the CIAC to resolve the dispute between LICOMCEN and FSI is, therefore, affirmed.
The validity of the indefinite
suspension of the works on the
Citimall project
Before the Court rules on each of FSIs contractual monetary claims, we deem it important to discuss the
validity of LICOMCENs indefinite suspension of the works on the Citimall project. We quote below two
contractual stipulations relevant to this issue:
GC-38. SUSPENSION OF WORKS
The Engineer [ESCA] through the LICOMCEN, INCORPORATED shall have the authority to suspend the
Works wholly or partly by written order for such period as may be deemed necessary, due to unfavorable
weather or other conditions considered unfavorable for the prosecution of the Works, or for failure on the part of
the Contractor to correct work conditions which are unsafe for workers or the general public, or failure or
refusal to carry out valid orders, or due to change of plans to suit field conditions as found necessary during
construction, or to other factors or causes which, in the opinion of the Engineer, is necessary in the interest of
the Works and to the LICOMCEN, INCORPORATED. The Contractor [FSI] shall immediately comply with
such order to suspend the work wholly or partly directed.
In case of total suspension or suspension of activities along the critical path of the approved PERT/CPM
network and the cause of which is not due to any fault of the Contractor, the elapsed time between the effective
order for suspending work and the order to resume work shall be allowed the Contractor by adjusting the time
allowed for his execution of the Contract Works.

The Engineer through LICOMCEN, INCORPORATED shall issue the order lifting the suspension of work
when conditions to resume work shall have become favorable or the reasons for the suspension have been duly
corrected.50
GC-41 LICOMCEN, INCORPORATED's RIGHT TO SUSPEND WORK OR TERMINATE THE
CONTRACT
xxxx
2. For Convenience of LICOMCEN, INCORPORATED
If any time before completion of work under the Contract it shall be found by the LICOMCEN,
INCORPORATED that reasons beyond the control of the parties render it impossible or against the interest of
the LICOMCEN, INCORPORATED to complete the work, the LICOMCEN, INCORPORATED at any time,
by written notice to the Contractor, may discontinue the work and terminate the Contract in whole or in part.
Upon the issuance of such notice of termination, the Contractor shall discontinue to work in such manner,
sequence and at such time as the LICOMCEN, INCORPORATED/Engineer may direct, continuing and doing
after said notice only such work and only until such time or times as the LICOMCEN,
INCORPORATED/Engineer may direct.51
Under these stipulations, we consider LICOMCENs initial suspension of the works valid. GC-38 authorizes the
suspension of the works for factors or causes which ESCA deems necessary in the interests of the works and
LICOMCEN. The factors or causes of suspension may pertain to a change or revision of works, as cited in the
December 16, 1997 and January 6, 1998 letters of ESCA, or to the pendency of a case before the Ombudsman
(OMB-ADM-1-97-0622), as cited in LICOMCENs January 15, 1998 letter and ESCAs January 19, 1998 and
February 17, 1998 letters. It was not necessary for ESCA/LICOMCEN to wait for a restraining or injunctive
order to be issued in any of the cases filed against LICOMCEN before it can suspend the works. The language
of GC-38 gives ESCA/LICOMCEN sufficient discretion to determine whether the existence of a particular
situation or condition necessitates the suspension of the works and serves the interests of LICOMCEN.1avvphi1
Although we consider the initial suspension of the works as valid, we find that LICOMCEN wrongfully
prolonged the suspension of the works (or "indefinite suspension" as LICOMCEN calls it). GC-38 requires
ESCA/LICOMCEN to "issue an order lifting the suspension of work when conditions to resume work shall
have become favorable or the reasons for the suspension have been duly corrected." The Ombudsman case
(OMB-ADM-1-97-0622), which ESCA and LICOMCEN cited in their letters to FSI as a ground for the
suspension, was dismissed as early as October 12, 1998, but neither ESCA nor LICOMCEN informed FSI of
this development. The pendency of the other cases 52 may justify the continued suspension of the works, but
LICOMCEN never bothered to inform FSI of the existence of these cases until the arbitration proceedings
commenced. By May 28, 2002, the City Government of Legaspi sent LICOMCEN a notice instructing it to
proceed with the Citimall project;53 again, LICOMCEN failed to relay this information to FSI. Instead,
LICOMCEN conducted a rebidding of the Citimall project based on the new design. 54 LICOMCENs claim that
the rebidding was conducted merely to get cost estimates for the new design goes against the established
practice in the construction industry. We find the CIACs discussion on this matter relevant:
But what is more appalling and disgusting is the allegation x x x that the x x x invitation to bid was issued x x x
solely to gather cost estimates on the redesigned [Citimall project] x x x. This Arbitral Tribunal finds said act of
asking for bids, without any intention of awarding the project to the lowest and qualified bidder, if true, to be
extremely irresponsible and highly unprofessional. It might even be branded as fraudulent x x x [since] the
invited bidders [were required] to pay P2,000.00 each for a set of the new plans, which amount was nonrefundable. The presence of x x x deceit makes the whole story repugnant and unacceptable.55

LICOMCENs omissions and the imprudent rebidding of the Citimall project are telling indications of
LICOMCENs intent to ease out FSI and terminate their contract. As with GC-31, GC-42(2) grants
LICOMCEN ample discretion to determine what reasons render it against its interest to complete the work in
this case, the pendency of the other cases and the revised designs for the Citimall project. Given this authority,
the Court fails to the see the logic why LICOMCEN had to resort to an "indefinite suspension" of the works,
instead of outrightly terminating the contract in exercise of its rights under GC-42(2).
We now proceed to discuss the effects of these findings with regard to FSIs monetary claims against
LICOMCEN.
The claim for material costs at site
GC-42 of the GCC states:
GC-42 PAYMENT FOR TERMINATED CONTRACT
If the Contract is terminated as aforesaid, the Contractor will be paid for all items of work executed,
satisfactorily completed and accepted by the LICOMCEN, INCORPORATED up to the date of termination, at
the rates and prices provided for in the Contract and in addition:
1. The cost of partially accomplished items of additional or extra work agreed upon by the LICOMCEN,
INCORPORATED and the Contractor.
2. The cost of materials or goods reasonably ordered for the Permanent or Temporary Works which have been
delivered to the Contractor but not yet used and which delivery has been certified by the Engineer.
3. The reasonable cost of demobilization
For any payment due the Contractor under the above conditions, the LICOMCEN, INCORPORATED, however,
shall deduct any outstanding balance due from the Contractor for advances in respect to mobilization and
materials, and any other sum the LICOMCEN, INCORPORATED is entitled to be credited. 56
For LICOMCEN to be liable for the cost of materials or goods, item two of GC-42 requires that
a. the materials or goods were reasonably ordered for the Permanent or Temporary Works;
b. the materials or goods were delivered to the Contractor but not yet used; and
c. the delivery was certified by the Engineer.
Both the CIAC and the CA agreed that these requisites were met by FSI to make LICOMCEN liable for the cost
of the steel bars ordered for the Citimall project; the two tribunals differed only to the extent of LICOMCENs
liability because the CA opined that it should be limited only to 50% of the cost of the steel bars. A review of
the records compels us to uphold the CAs finding.
Prior to the delivery of the steel bars, ESCA informed FSI of the suspension of the works; ESCAs January 6,
1998 letter reads:
As per our information to you on December 16, 1997, a major revision in the design of the Legaspi Citimall
necessitated a change in the bored piles requirement of the project. The change involved a substantial reduction
in the number and length of piles.

We expected that you would have suspended the deliveries of the steel bars until the new design has been
approved.
According to you[,] the steel bars had already been paid and loaded and out of Manila on said date.
In order to avoid double handling, storage, security problems, we suggest that only 50% of the total requirement
of steel bars be delivered at jobsite. The balance should be returned to Manila where storage and security is
better.
In order for us to consider additional cost due to the shipping of the excess steel bars, we need to know the
actual dates of purchase, payments and loading of the steel bars. Obviously, we cannot consider the additional
cost if you have had the chance to delay the shipping of the steel bars.57
From the above, it appears that FSI was informed of the necessity of suspending the works as early as
December 16, 1997. Pursuant to GC-38 of the GCC, FSI was expected to immediately comply with the order to
suspend the work.58 Though ESCAs December 16, 1997 notice may not have been categorical in ordering the
suspension of the works, FSIs reply letter of December 18, 1997 indicated that it actually complied with the
notice to suspend, as it said, "We hope for the early resolution of the new foundation plan and the resumption of
work."59 Despite the suspension, FSI claimed that it could not stop the delivery of the steel bars (nor found the
need to do so) because (a) the steel bars were ordered as early as November 1997 and were already loaded in
Manila and expected to arrive in Legaspi City by December 23, 1997, and (b) it expected immediate resumption
of work to meet the 90-day deadline.60
Records, however, disclose that these claims are not entirely accurate. The memorandum of agreement and sale
covering the steel bars specifically stated that these would be withdrawn from the Cagayan de Oro depot, not
Manila61; indeed, the bill of lading stated that the steel bars were loaded in Cagayan de Oro on January 11, 1998,
and arrived in Legaspi City within three days, on January 14, 1998.62 The loading and delivery of the steel bar
thus happened after FSI received ESCAs December 16, 1997 and January 6, 1998 letters days after the
instruction to suspend the works. Also, the same stipulation that authorizes LICOMCEN to suspend the works
allows the extension of the period to complete the works. The relevant portion of
GC-38 states:
In case of total suspension x x x and the cause of which is not due to any fault of the Contractor [FSI], the
elapsed time between the effective order for suspending work and the order to resume work shall be allowed the
Contractor by adjusting the time allowed for his execution of the Contract Works.63
The above stipulation, coupled with the short period it took to ship the steel bars from Cagayan de Oro to
Legaspi City, thus negates both FSIs
argument and the CIACs ruling64 that there was no necessity to stop the shipment so as to meet the 90-day
deadline. These circumstances prove that FSI acted imprudently in proceeding with the delivery, contrary to
LICOMCENs instructions. The CA was correct in holding LICOMCEN liable for only 50% of the costs of the
steel bars delivered.
The claim for equipment and
labor standby costs
The Court upholds the CAs ruling deleting the award for equipment and labor standby costs. We quote in
agreement pertinent portions of the CA decision:

The CIAC relied solely on the list of 37 pieces of equipment respondent allegedly rented and maintained at the
construction site during the suspension of the project with the prorated rentals incurred x x x. To the mind of
this Court, these lists are not sufficient to establish the fact that indeed [FSI] incurred the said expenses.
Reliance on said lists is purely speculative x x x the list of equipments is a mere index or catalog of the
equipments, which may be utilized at the construction site. It is not the best evidence to prove that said
equipment were in fact rented and maintained at the construction site during the suspension of the work. x x x
[FSI] should have presented the lease contracts or any similar documents such as receipts of payments x x x.
Likewise, the list of employees does not in anyway prove that those employees in the list were indeed at the
construction site or were required to be on call should their services be needed and were being paid their
salaries during the suspension of the project. Thus, in the absence of sufficient evidence, We deny the claim for
equipment and labor standby costs.65
The claim for unrealized profit
FSI contends that it is not barred from recovering unrealized profit under GC-41(2), which states:
GC-41. LICOMCEN, INCORPORATEDs RIGHT TO SUSPEND WORK OR TERMINATE THE
CONTRACT
xxxx
2. For Convenience of the LICOMCEN, INCORPORATED
x x x. The Contractor [FSI] shall not claim damages for such discontinuance or termination of the Contract, but
the Contractor shall receive compensation for reasonable expenses incurred in good faith for the performance of
the Contract and for reasonable expenses associated with termination of the Contract. The LICOMCEN,
INCORPORATED will determine the reasonableness of such expenses. The Contractor [FSI] shall have no
claim for anticipated profits on the work thus terminated, nor any other claim, except for the work actually
performed at the time of complete discontinuance, including any variations authorized by the LICOMCEN,
INCORPORATED/Engineer to be done.
The prohibition, FSI posits, applies only where the contract was properly and lawfully terminated, which was
not the case at bar. FSI also took pains in differentiating its claim for "unrealized profit" from the prohibited
claim for "anticipated profits"; supposedly, unrealized profit is "one that is built-in in the contract price, while
anticipated profit is not." We fail to see the distinction, considering that the contract itself neither defined nor
differentiated the two terms. [A] contract must be interpreted from the language of the contract itself, according
to its plain and ordinary meaning." 66 If the terms of a contract are clear and leave no doubt upon the intention of
the contracting parties, the literal meaning of the stipulations shall control.67
Nonetheless, on account of our earlier discussion of LICOMCENs failure to observe the proper procedure in
terminating the contract by declaring that it was merely indefinitely suspended, we deem that FSI is entitled to
the payment of nominal damages. Nominal damages may be awarded to a plaintiff whose right has been
violated or invaded by the defendant, for the purpose of vindicating or recognizing that right, and not for
indemnifying the plaintiff for any loss suffered by him. 68 Its award is, thus, not for the purpose of
indemnification for a loss but for the recognition and vindication of a right. A violation of the plaintiffs right,
even if only technical, is sufficient to support an award of nominal damages. 69 FSI is entitled to recover the
amount of P100,000.00 as nominal damages.
The liability for costs of arbitration

Under the parties Terms of Reference, executed before the CIAC, the costs of arbitration shall be equally
divided between them, subject to the CIACs determination of which of the parties shall eventually shoulder the
amount.70The CIAC eventually ruled that since LICOMCEN was the party at fault, it should bear the costs. As
the CA did, we agree with this finding. Ultimately, it was LICOMCENs imprudent declaration of indefinitely
suspending the works that caused the dispute between it and FSI. LICOMCEN should bear the costs of
arbitration.
WHEREFORE, premises considered, the petition for review on certiorari of LICOMCEN INCORPORATED,
docketed as G.R. No. 167022, and the petition for review on certiorari of FOUNDATION SPECIALISTS, INC.,
docketed as G.R. No. 169678, are DENIED. The November 23, 2004 Decision of the Court of Appeals in CAG.R. SP No. 78218 is MODIFIED to include the award of nominal damages in favor of FOUNDATION
SPECIALISTS, INC. Thus, LICOMCEN INCORPORATED is ordered to pay FOUNDATION SPECIALISTS,
INC. the following amounts:
a. P1,264,404.12 for unpaid balance on FOUNDATION SPECIALISTS, INC. billings;
b. P5,694,939.87 for material costs at site; and
c. P100,000.00 for nominal damages.
LICOMCEN INCORPORATED is also ordered to pay the costs of arbitration. No costs.
SO ORDERED.
(#84)
Republic of the Philippines
SUPREME COURT
Manila
FIRST DIVISION
G.R. No. 168222

April 18, 2006

SPS. TEODULO RUMARATE, (deceased) and ROSITA RUMARATE; deceased TEODULO

RUMARATE is represented herein by his Heirs/Substitutes, namely, ANASTACIA RUMARATE,
CELSO RUMARATE, MARINA RUMARATE, ROMEO RUMARATE, GUILLERMO RUMARATE,
FIDEL RUMARATE, MERLINDA RUMARATE, MARISSA RUMARATE, CLEMENCIA
RUMARATE, SANCHO RUMARATE and NENITA RUMARATE, Petitioners,
vs.
HILARIO HERNANDEZ, JOAQUIN HERNANDEZ, SALVADOR HERNANDEZ, BENJAMIN
HERNANDEZ, LEONORA HERNANDEZ-LAZA, VICTORIA HERNANDEZ-MERCURIO,
RODRIGOHERNANDEZ, BERNARDO HERNANDEZ, LOURDES HERNANDEZ-CABIDA, MARIO
SALVATIERRA, ADELAIDA FONTILA-CIPRIANO, and THE REGISTER OF DEEDS OF QUEZON
PROVINCE, Respondents.
DECISION
YNARES-SANTIAGO, J.:

Assailed in this petition for review is the May 26, 2005 Decision 1 of the Court of Appeals in CA-G.R. CV No.
57053, which reversed and set aside the March 31, 1997 Decision 2 of the Regional Trial Court of Calauag,
Quezon, Branch 63, in Civil Case No. C-964, declaring petitioners as owners of Lot No. 379 with an area of
187,765 square meters and located in Barrio Catimo,3 Municipality of Guinayangan, Province of Quezon.
The facts show that on September 1, 1992, petitioner spouses Teodulo Rumarate (Teodulo) and Rosita Rumarate
filed an action for reconveyance of real property and/or quieting of title with damages against respondent heirs
of the late spouses Cipriano Hernandez and Julia Zoleta. 4 Teodulo averred that Lot No. 379 was previously
possessed and cultivated by his godfather, Santiago Guerrero (Santiago), a bachelor, who used to live with the
Rumarate family in San Pablo City. Between 1923 and 1924, Santiago and the Rumarate family transferred
residence to avail of the land distribution in Catimo, Guinayangan, Quezon. From 1925 to 1928, Santiago
occupied Lot No. 379 cultivating five hectares thereof. Before moving to Kagakag, Lopez, Quezon in 1929,
Santiago orally bequeathed his rights over Lot No. 379 to Teodulo and entrusted to him a copy of a Decision of
the Court of First Instance (CFI) of Tayabas dated April 21, 1925 recognizing his (Santiago) rights over Lot No.
379.5 Since Teodulo was only 14 years old then, his father helped him cultivate the land. 6 Their family thereafter
cleared the land, built a house7 and planted coconut trees, corn, palay and vegetables thereon. 8In 1960, Santiago
executed an "Affidavit (quit-claim)"9 ratifying the transfer of his rights over Lot No. 379 to Teodulo. Between
1960 and 1970, three conflagrations razed the land reducing the number of coconut trees growing therein to
only 400, but by the time Teodulo testified in 1992, the remaining portions of the land was almost entirely
cultivated and planted with coconuts, coffee, jackfruits, mangoes and vegetables. 10 From 1929, Teodulo and
later, his wife and 11 children possessed the land as owners and declared the same for taxation, the earliest
being in 1961.11
In 1970, Teodulo discovered that spouses Cipriano Hernandez and Julia Zoleta, respondents predecessors-ininterest, were able to obtain a title over Lot No. 379. He did not immediately file a case against respondents
because he was advised to just remain on the land and pay the corresponding taxes thereon.12
Respondents, on the other hand, claimed that on November 11, 1964, Santiago sold the questioned lot to their
parents, the spouses Cipriano Hernandez and Julia Zoleta, for P9,000.00.13 Respondents alleged that on April
21, 1925, the CFI of Tayabas rendered a Decision written in Spanish, declaring Lot No. 379 as a public land and
recognizing Santiago as claimant thereof in Cadastral Proceeding No. 12. However, no title was issued to
Santiago because he failed to file an Answer. Spouses Cipriano Hernandez and Julia Zoleta filed a motion to reopen Cadastral Proceeding No. 12, alleging that though no title was issued in the name of Santiago, the same
decision is, nevertheless, proof that Santiago was in possession of Lot No. 379 since 1925 or for more than 30
years. Having succeeded in the rights of Santiago, the spouses prayed that Cadastral Proceeding No. 12 be reopened and that the corresponding title over Lot No. 379 be issued in their name. On September 13, 1965, the
CFI of Tayabas rendered a decision adjudicating Lot No. 379 in favor of the spouses, in whose name Original
Certificate of Title (OCT) No. O-1184414 was issued on the same date.15 Cipriano Hernandez planted coconut
trees on the land through the help of a certain Fredo16 who was instituted as caretaker. In 1970, Fredo informed
Cipriano Hernandez that he will no longer stay on the land because there are people instructing him to
discontinue tilling the same.17
After the death of the spouses,18 respondents executed a deed of partition over the subject lot and were issued
TCT No. T- 237330 on June 28, 1988 in lieu of OCT No. O-11844.19
Respondent Joaquin Hernandez (Joaquin) testified that in 1964, he accompanied his father in inspecting the lot
which was then planted with coconut trees.20 Thereafter, he visited the land twice, once in 1966 and the other in
1970. From 1966 up to the time he testified, his family declared the lot for taxation and paid the taxes due
thereon.21 Joaquin explained that after the death of his father in 1971, he no longer visited the land and it was
only when the complaint was filed against them when he learned that petitioners are in actual possession of the
property.22 He added that his siblings had planned to convert Lot No. 379 into a grazing land for cattle but

decided to put it off for fear of the rampant operations then of the New Peoples Army between the years 19651970.23 1avvphil.net
On March 31, 1997, the trial court rendered a decision in favor of petitioners. It held that since the latter
possessed the land in the concept of an owner since 1929, they became the owners thereof by acquisitive
prescription after the lapse of 10 years, pursuant to the Code of Civil Procedure. Thus, when Santiago sold the
lot to respondents parents in 1964, the former no longer had the right over the property and therefore
transmitted no title to said respondents. The dispositive portion of the trial courts decision, reads:
WHEREFORE, in the light of all the foregoing considerations judgment is hereby rendered in favor of the
plaintiffs and against the defendants, to wit:
1. Declaring that the parcel of land (Lot No. 379 of the Cadastral Survey of Guinayangan, Cadastral Case No.
12, LRC Cadastral Record No. 557), situated in Brgy. Katimo, Tagkawayan, Quezon had been fraudulently,
deceitfully and mistakenly registered in the names of the spouses Cipriano Hernandez and Julia Zoleta;
2. Declaring that herein defendants [heirs] of spouses Cipriano Hernandez and Julia Zoleta have no better rights
than their parents/predecessors-in-interest, they having stepped only on (sic) their shoes;
3. Declaring that the plaintiff Rosita Victor Rumarate and substitute plaintiffs-[heirs] of the deceased Teodulo
Rumarate are the true, real and legal owners/or the owners in fee simple absolute of the above described parcel
of land;
4. Ordering the defendants to convey the above-described parcel of land to plaintiff Rosita Victor Rumarate and
to the substitute plaintiffs (heirs) of the deceased Teodulo Rumarate;
5. Ordering the Register of Deeds for Quezon Province in Lucena City to cancel Transfer Certificate of Title
No. T-237330 and to issue in lieu thereof a new certificate of title in favor of plaintiff Rosita Victor Rumarate
and the substitute plaintiffs (heirs) of the deceased plaintiff Teodulo Rumarate, in accordance with law and
settled jurisprudence; and
6. Ordering the defendants to pay the costs of the suit.1avvphil.net
SO ORDERED.24
Respondents appealed to the Court of Appeals which on May 26, 2005, reversed and set aside the decision of
the trial court. It ruled that Teodulo did not acquire title over Lot No. 379, either by donation or acquisitive
prescription; that Teodulos bare allegation that Santiago orally bequeathed to him the litigated lot is insufficient
to prove such transfer of ownership; and that even assuming that the property was truly donated by Santiago to
Teodulo in 1929, or in the 1960 Affidavit, said conveyance is void for not complying with the formalities of a
valid donation which require the donation and the acceptance thereof by the donee to be embodied in a public
instrument. Both requirements, however, are absent in this case because in 1929, the alleged donation was not
reduced to writing while the purported 1960 donation was never accepted in a public document by Teodulo. The
appellate court thus surmised that since it was not established that Santiago donated Lot No. 379 to Teodulo, it
follows that the latter also failed to prove that he possessed the land adversely, exclusively and in the concept of
an owner, a vital requisite before one may acquire title by acquisitive prescription. In conclusion, the Court of
Appeals ruled that even assuming further that Teodulo had a right over the property, his cause of action is now
barred by laches because he filed an action only in 1992 notwithstanding knowledge as early as 1970 of the
issuance of title in the name of spouses Cipriano Hernandez and Julia Zoleta. The decretal portion of the
decision states:

WHEREFORE, premises considered, the instant appeal is GRANTED. The assailed March 31, 1997 decision of
the Regional Trial Court of Calauag, Quezon, Branch 63, in Civil Case No. C-964 is hereby REVERSED and
SET ASIDE. No costs.
SO ORDERED.25
Hence, the instant appeal.
The issue to be resolved is to whom should Lot No. 379 be awarded? To petitioners who possessed and
cultivated the lot since 1929 up to the present, but do not have a certificate of title over the property, or to
respondents who have a certificate of title but are not in possession of the controverted lot?
In an action for quieting of title, the court is tasked to determine the respective rights of the parties so that the
complainant and those claiming under him may be forever free from any danger of hostile claim. 26 Under
Article 47627 of the Civil Code, the remedy may be availed of only when, by reason of any instrument, record,
claim, encumbrance or proceeding, which appears valid but is, in fact, invalid, ineffective, voidable or
unenforceable, a cloud is thereby cast on the complainants title to real property or any interest therein. Article
477 of the same Code states that the plaintiff must have legal or equitable title to, or interest in the real property
which is the subject matter of the suit.
For an action to quiet title to prosper, two indispensable requisites must concur, namely: (1) the plaintiff or
complainant has a legal or an equitable title to or interest in the real property subject of the action; and (2) the
deed, claim, encumbrance or proceeding claimed to be casting cloud on his title must be shown to be in fact
invalid or inoperative despite its prima facie appearance of validity or legal efficacy.28
In Evangelista v. Santiago,29 it was held that title to real property refers to that upon which ownership is based.
It is the evidence of the right of the owner or the extent of his interest, by which means he can maintain control
and, as a rule, assert a right to exclusive possession and enjoyment of the property.
In the instant case, we find that Teodulos open, continuous, exclusive, notorious possession and occupation of
Lot No. 379, in the concept of an owner for more than 30 years vested him and his heirs title over the said lot.
The law applicable at the time Teodulo completed his 30-year possession (from 1929 to 1959) of Lot No. 379,
in the concept of an owner was Sec. 48(b) of Commonwealth Act No. 141 or the Public Land Act, as amended
by Republic Act (RA) No. 1942, effective June 22, 195730 which provides:
Sec. 48. The following-described citizens of the Philippines, occupying lands of the public domain or claiming
to own any such lands or an interest therein, but whose titles have not been perfected or completed, may apply
to the Court of First Instance (now Regional Trial Courts) of the province where the land is located for
confirmation of their claims and the issuance of a certificate of title thereafter, under the Land Registration Act
(now Property Registration Decree), to wit:
xxxx
(b) Those who by themselves or through their predecessors-in-interest have been, in continuous, exclusive, and
notorious possession and occupation of agricultural lands of the public domain, under a bona fide claim of
acquisition or ownership, for at least thirty years immediately preceding the filing of the application for
confirmation of title, except when prevented by war or force majeure. Those shall be conclusively presumed to
have performed all the conditions essential to a government grant and shall be entitled to a certificate of title
under the provisions of this chapter.

When the conditions specified therein are complied with, the possessor is deemed to have acquired, by
operation of law, a right to a government grant, without necessity of a certificate of title being issued, and the
land ceases to be part of the public domain. The confirmation proceedings would, in truth be little more than a
formality, at the most limited to ascertaining whether the possession claimed is of the required character and
length of time; and registration thereunder would not confer title, but simply recognize a title already vested.
The proceedings would not originally convert the land from public to private land, but only confirm such
conversion already effected by operation of law from the moment the required period of possession became
complete. 31
In the instant case, the trial court gave full faith and credence to the testimony of Teodulo and his witnesses that
his (Teodulos) possession of the land since 1929 was open, continuous, adverse, exclusive, and in the concept
of an owner. It is a settled rule in civil cases as well as in criminal cases that in the matter of credibility of
witnesses, the findings of the trial courts are given great weight and highest degree of respect by the appellate
court considering that the latter is in a better position to decide the question, having heard the witnesses
themselves and observed their deportment and manner of testifying during the trial.32
A careful examination of the evidence on record shows that Teodulo possessed and occupied Lot No. 379 in the
concept of an owner. Since 1929, Teodulo cultivated the controverted land, built his home, and raised his 11
children thereon. In 1957, he filed a homestead application over Lot No. 379 but failed to pursue the
same.33After his demise, all his 11 children, the youngest being 28 years old, 34 continued to till the land. From
1929 to 1960, Santiago never challenged Teodulos possession of Lot No. 379 nor demanded or received the
produce of said land. For 31 years Santiago never exercised any act of ownership over Lot No. 379. And, in
1960, he confirmed that he is no longer interested in asserting any right over the land by executing in favor of
Teodulo a quitclaim.
Indeed, all these prove that Teodulo possessed and cultivated the land as owner thereof since 1929. While the
oral donation in 1929 as well as the 1960 quitclaim ceding Lot No. 379 to Teodulo are void for non-compliance
with the formalities of donation, they nevertheless explain Teodulo and his familys long years of occupation
and cultivation of said lot and the nature of their possession thereof.
In Bautista v. Poblete,35 the Court sustained the registration of a parcel of land in the name of the successors-ininterest of the donee notwithstanding the invalidity of the donation inasmuch as said donee possessed the
property in the concept of an owner. Thus
There is no question that the donation in question is invalid because it involves an immovable property and the
donation was not made in a public document as required by Article 633 of the old Civil Code, in connection
with Article 1328 of the same Code (concerning gifts propter nuptias), but it does not follow that said donation
may not serve as basis of acquisitive prescription when on the strength thereof the donee has taken possession
of the property adversely and in the concept of owner.
It follows therefore that Teodulos open, continuous, exclusive, and notorious possession and occupation of Lot
No. 379 for 30 years, or from 1929 to 1959 in the concept of an owner, earned him title over the lot in
accordance with Sec. 48 (b) of the Public Land Act. Considering that Lot No. 379 became the private property
of Teodulo in 1959, Santiago had no more right to sell the same to spouses Cipriano Hernandez and Julia Zoleta
in 1964. Consequently, the latter and herein respondents did not acquire ownership over Lot No. 379 and the
titles issued in their name are void.
Interestingly, respondents adopted the theory that Santiago acquired title over Lot No. 379 not from the April
21, 1925 Decision of the CFI of Tayabas which merely recognized his rights over said lot, but from his more
than 30 years of possession since 1925 up to 1964 when he sold same lot to their (respondents) predecessors-ininterest, the spouses Cipriano Hernandez and Julia Zoleta. On the basis of said claim, said spouses filed an

action for, and successfully obtained, confirmation of imperfect title over Lot No. 379, pursuant to Sec. 48 (b)
of the Public Land Act.
However, the records do not support the argument of respondents that Santiagos alleged possession and
cultivation of Lot No. 379 is in the nature contemplated by the Public Land Act which requires more than
constructive possession and casual cultivation. As explained by the Court in Director of Lands v. Intermediate
Appellate Court:36
It must be underscored that the law speaks of "possession and occupation." Since these words are separated by
the conjunction and, the clear intention of the law is not to make one synonymous with the other. Possession is
broader than occupation because it includes constructive possession. When, therefore, the law adds the
wordoccupation, it seeks to delimit the all-encompassing effect of constructive possession. Taken together with
the words open, continuous, exclusive and notorious, the word occupation serves to highlight the fact that for
one to qualify under paragraph (b) of the aforesaid section, his possession of the land must not be mere fiction.
As this Court stated, through then Mr. Justice Jose P. Laurel, in Lasam vs. The Director of Lands:
"x x x Counsel for the applicant invokes the doctrine laid down by us in Ramos vs. Director of Lands (39 Phil.
175, 180). (See also Rosales vs. Director of Lands, 51 Phil. 302, 304). But it should be observed that the
application of the doctrine of constructive possession in that case is subject to certain qualifications, and this
court was careful to observe that among these qualifications is one particularly relating to the size of the tract
in controversy with reference to the portion actually in possession of the claimant. While, therefore,
possession in the eyes of the law does not mean that a man has to have his feet on every square meter of
ground before it can be said that he is in possession, possession under paragraph 6 of section 54 of Act No.
926, as amended by paragraph (b) of section 45 of Act No. 2874, is not gained by mere nominal claim. The
mere planting of a sign or symbol of possession cannot justify a Magellan-like claim of dominion over an
immense tract of territory. Possession as a means of acquiring ownership, while it may be constructive, is not a
mere fiction x x x."
Earlier, in Ramirez vs. The Director of Lands, this Court noted:
"x x x The mere fact of declaring uncultivated land for taxation purposes and visiting it every once in a while, as
was done by him, does not constitute acts of possession."
In the instant case, Santiagos short-lived possession and cultivation of Lot No. 379 could not vest him title.
While he tilled the land in 1925, he ceased to possess and cultivate the same since 1928. He abandoned the
property and allowed Teodulo to exercise all acts of ownership. His brief possession of Lot No. 379 could not
thus vest him title. Nemo potest plus juris ad alium transferre quam ipse habet. No one can transfer a greater
right to another than he himself has. Hence, spouses Cipriano Hernandez and Julia Zoleta and herein
respondents did not acquire any right over the questioned lot and the title issued in their names are void,
because of the legal truism that the spring cannot rise higher than the source.37
Furthermore, spouses Cipriano Hernandez and Julia Zoleta cannot be considered as purchasers in good faith
because they had knowledge of facts and circumstances that would impel a reasonably cautious man to make
such inquiry.38 The Court notes that Santiago was not residing in Lot No. 379 at the time of the sale. He was
already 81 years old, too old to cultivate and maintain an 18-hectare land. These circumstances should have
prompted the spouses to further inquire who was actually tilling the land. Had they done so, they would have
found that Teodulo and his family are the ones possessing and cultivating the land as owners thereof.
In the same vein, respondents could not be considered as third persons or purchasers in good faith and for value
or those who buy the property and pay a full and fair price for the same 39 because they merely inherited Lot
No. 379 from spouses Cipriano Hernandez and Julia Zoleta.

Then too, even if Santiago acquired title over Lot No. 379 by virtue of the April 21, 1925 Decision of the CFI of
Tayabas, and not on account of his alleged 30-year possession thereof, we will still arrive at the same
conclusion. This is so because the declaration of this Court that petitioners are the rightful owners of the
controverted lot is based on Teodulos own possession and occupation of said lot under a bona fide claim of
acquisition of ownership, regardless of the manner by which Santiago acquired ownership over same lot.
On the issue of prescription, the settled rule is that an action for quieting of title is imprescriptible, as in the
instant case, where the person seeking relief is in possession of the disputed property. A person in actual
possession of a piece of land under claim of ownership may wait until his possession is disturbed or his title is
attacked before taking steps to vindicate his right, and that his undisturbed possession gives him the continuing
right to seek the aid of a court of equity to ascertain and determine the nature of the adverse claim of a third
party and its effect on his title. 40 Considering that petitioners herein continuously possessed Lot No. 379 since
1929 up to the present, their right to institute a suit to clear the cloud over their title cannot be barred by the
statute of limitations.
Neither could petitioners action be barred by laches because they continuously enjoyed the possession of the
land and harvested the fruits thereof up to the present to the exclusion of and without any interference from
respondents. They cannot therefore be said to have slept on their rights as they in fact exercised the same by
continuously possessing Lot No. 379.
On the contrary, we find that it is respondents who are actually guilty of laches. Though not specifically
pleaded, the Court can properly address the issue of laches based on petitioners allegation in the complaint that
"[n]either spouses Cipriano Hernandez and Julia Zoleta x x x nor [herein respondents] had taken steps to
possess or lay adverse claim to said parcel of land from the date of their registration of title in November, 1965
up to the present."41 Such averment is sufficient to impute abandonment of right on the part of respondents. At
any rate, laches need not be specifically pleaded. On its own initiative, a court may consider it in determining
the rights of the parties.42
The failure or neglect, for an unreasonable length of time to do that which by exercising due diligence could or
should have been done earlier constitutes laches. It is negligence or omission to assert a right within a
reasonable time, warranting a presumption that the party entitled to assert it has either abandoned it or declined
to assert it. While it is by express provision of law that no title to registered land in derogation of that of the
registered owner shall be acquired by prescription or adverse possession, it is likewise an enshrined rule that
even a registered owner may be barred from recovering possession of property by virtue of laches.43
In applying the doctrine of laches, we have ruled that where a party allows the following number of years to
lapse from the emergence of his cause of action without enforcing his claim, laches sets in: 36 years; 12 years;
50 years; 34 years; 37 years; 32 years; 20 years; 47 years; 11 years; 25 years; 40 years; 19 years; 27 years; 7
years; 44 years; 4 years; and 67 years.44
The elements of laches are: (1) conduct of a party on the basis of which the other party seeks a remedy; (2)
delay in asserting ones rights, despite having had knowledge or notice of the other partys conduct and having
been afforded an opportunity to institute a suit; (3) lack of knowledge or notice on the part of a party that the
person against whom laches is imputed would assert the right; and (4) injury or prejudice to the party asserting
laches in the event the suit is allowed to prosper.45
All these elements are present in this case. Petitioners continuous possession and occupation of Lot No. 379
should have prompted the respondents to file an action against petitioners, but they chose not to. Respondents
cannot deny knowledge of said possession by petitioners as they even asserted in their Answer that in 1970,
Teodulo ousted the tenant they (respondents) instituted in the lot. From 1970 up to the filing of petitioners
complaint in 1992, or after 22 years, respondents never bothered to assert any right over Lot No. 379.

Respondent Joaquin Hernandez testified that he and his siblings had a plan to convert the land into a grazing
land for cattle but decided to put it off for fear of the rampant operations of the New Peoples Army between the
years 1965-1970. However, even after said years, respondents took no step to implement their plan. Worse,
among the siblings of spouses Cipriano Hernandez and Julia Zoleta who are all living in the Philippines, 46 only
Joaquin Hernandez visited the land and only thrice, i.e., once in each years of 1964, 1966 and 1970. Thereafter,
not one of them paid visit to Lot No. 379, up to the time Joaquin Hernandez testified in 1996, 47 despite the fact
that two of them are living only in Calauag, Quezon; one in Agdangan, Quezon; 48 and two in Lucena
City.49Neither did they send a notice or correspondence to petitioners invoking their right over the property.
From all indications, the late spouses Cipriano Hernandez and Julia Zoleta as well respondents, have neglected
Lot No. 379. Were it not for this action instituted by petitioners in 1992, their conflicting claims over the
property could not have been settled. It goes without saying that to lose a property that has been in the family
from 1929 up to the present, or for 77 years will certainly cause irreparable pecuniary and moral injury to
petitioners, especially so if the same ancestral land will be lost under most unfair circumstances in favor of
respondents who appear to have no real interest in cultivating the same.
Finally, payment of taxes alone will not save the day for respondents. Only a positive and categorical assertion
of their supposed rights against petitioners would rule out the application of laches. It means taking the
offensive by instituting legal means to wrest possession of the property which, however, is absent in this case.
Respondents payment of taxes alone, without possession could hardly be construed as an exercise of
ownership. What stands out is their overwhelming passivity by allowing petitioners to exercise acts of
ownership and to enjoy the fruits of the litigated lot for 22 years without any interference.
In sum, the Court finds that Lot No. 379 should be adjudicated in favor of petitioners.
One last point. Notwithstanding this Courts declaration that Lot No. 379 should be awarded in favor of
petitioners, their title over the same is imperfect and is still subject to the filing of the proper application for
confirmation of title under Section 48 (b) of the Public Land Act, where the State and other oppositors may be
given the chance to be heard. It was therefore premature for the trial court to direct the Register of Deeds of
Lucena City to issue a certificate of title in the name of petitioners.
Nevertheless, the imperfect title of petitioners over Lot No. 379 is enough to defeat the certificate of title issued
to respondents.50
WHEREFORE, the petition is GRANTED and the May 26, 2005 Decision of the Court of Appeals in C.A.
GR. CV No. 57053, is REVERSED and SET ASIDE. The March 31, 1997 Decision of the Regional Trial
Court of Calauag, Quezon, Branch 63, in Civil Case No. C-964, awarding Lot No. 379 in favor petitioners and
ordering the cancellation of respondents Transfer Certificate of Title No. T- 237330, is REINSTATED with
the MODIFICATIONdeleting the trial courts order directing the Register of Deed of Lucena City to issue a
certificate of title in the name of petitioners.
SO ORDERED.

REPEALS
(#84)
Republic of the Philippines
SUPREME COURT
Manila

EN BANC

G.R. No. L-31711 September 30, 1971

ANTONIO J. VILLEGAS as Mayor of the City of Manila and MANUEL D. LAPID, petitionersappellants,
vs.
ABELARDO SUBIDO as Civil Service Commissioner, EDUARDO Z. ROMUALDEZ as Secretary of
Finance, JOSE R. GLORIA as Acting Asst. City Treasurer of Manila, and HON. CONRADO M.
VASQUEZ as Presiding Judge of Branch V, Court of First Instance of Manila, respondents-appellees.
Gregorio A. Ejercito and Restituto R. Villanueva for petitioners-appellants.
Office of the Solicitor General Felix Q. Antonio, Acting Assistant Solicitor General Hector C. Fule and
Solicitor Santiago M. Kapunan for respondents-appellees.

FERNANDO, J.:
Petitioner Antonio J. Villegas, in this appeal from a decision of the lower court dismissing a special civil action
for prohibition, quo warranto and mandamus would lay claim as the Mayor of the City of Manila to the power
of appointment of the Assistant City Treasurer to which office the other petitioner, Manuel D. Lapid, was by
him named even if under its Charter 1 such a prerogative is expressly vested in the President of the
Philippines. 2 He would invoke a provision in the Decentralization Act to the effect that all "other employees,
except teachers, paid out of provincial, city or municipal general funds, and other local funds shall, subject to
civil service law, rules and regulations, be appointed by the provincial governor, city or municipal mayor upon
recommendation of the office head concerned." 3 He is not deterred by the rather general and in explicit
character of such statutory language as he contends for a construction rather generous, if not latitudinarian, in
scope purportedly in consonance with the avowed purpose of the Act of enlarging boundaries of local
autonomy. Respondent Abelardo Subido, who was proceeded against as Commissioner of the Civil
Service, 4 takes a stand diametrically opposite not only because there is no legal basis for such a claim in the
light of what is expressly ordained in the City Charter but also because such an interpretation of the provision
related upon would disregard the well-settled doctrine that implied repeals are not favored. The lower court, in a
well-written decision by the Honorable Conrado M. Vasquez, accepted such a view. After a careful study of the
matter, we cannot discern any error. We affirm.
The facts as found by the lower court follows: "In a letter dated June 3, 1968, respondent Eduardo Z.
Romualdez, Secretary of Finance, authorized respondent Jose R. Gloria of the Office of the City Treasurer of
Manila to assume the duties of Assistant City Treasurer effective June 1, 1968, vice Felino Fineza who retired
from the government service on May 31, 1968. In administrative Order No. 40, series of 1968, dated June 17,
1968, petitioner Antonio J. Villegas, Mayor of the City of Manila, directed respondent Gloria to desist and
refrain from exercising the duties and functions of the Assistant City Treasurer,' on the ground that respondent
Romualdez "is not empowered to make such designation." On January 1, 1969, Mayor Villegas, appointed
petitioner Manuel D. Lapid, chief of the cash division of the Office of the City Treasurer of Manila, as Assistant
City Treasurer. In a 1st endorsement dated February 14, 1969, respondent Abelardo Subido, Commissioner of
Civil Service disapproved the appointment of Lapid, basing his action, on an opinion of the Secretary of Justice
dated September 19, 1968 to the effect that the appointment of Assistant Provincial Treasurers is still governed

by Section 2088 (A) of the Revised Administrative Code, and not by Section 4 of the Decentralization Law,
Republic Act No. 5185." 5
Thereafter on February 25, 1969, to quote anew from the appealed decision: "Mayor Villegas and Manuel D.
Lapid filed the instant petition for prohibition, quo warranto and mandamus, with application for writ of
preliminary injunction, praying that judgment be rendered to declare illegal and void ab initio the authorization
given by respondent Romualdez to respondent Gloria to assume the duties of assistant city treasurer of Manila,
and that a writ of mandamus be issued to respondent Commissioner of Civil Service Subido commanding him
to approve the appointment of petitioner Lapid to the said office in accordance with the civil Service Rules." 6 It
was not until the filing of the petition that respondent Jose R. Gloria was nominated by the President of the
Philippines to the position of Assistant City treasurer of Manila and thereafter duly confirmed. After the case
was submitted for judgment on the pleadings and the documentary exhibits stipulated by the parties, the court
rendered its decision on August 4, 1969 dismissing the petition. Hence this appeal by way of certiorari.
With this Tribunal, as with the court below, the decisive question is the applicable law. The Charter of the City
of Manila, enacted in 1949, in express terms did confer on the President of the Philippines, with the consent of
the Commission on Appointments, the power to appoint the Assistant City Treasurer. 7 On the other hand,
support for the petition is premised on the expansive interpretation that would be accorded the general
provisions found in the Decentralization Act of 1967 to the effect that it is a city mayor who has the power to
appoint all other employees paid out of city or local funds subject to civil service law, rules and regulations. 8
It is understandable why the choice for the lower court was not difficult to make. What has been so clearly
ordained in the Charter is controlling. It survives in the face of the assertion that the additional power granted
local officials to appoint employees paid out of local funds would suffice to transfer such authority to petitioner
Mayor. A perusal of the words of the statute, even if far from searching would not justify such an interpretation.
This is all more evident, considering the fidelity manifested by this Court to the doctrine that looks with less
than favor on implied appeals. The decision now on appeal, to repeat, must be affirmed.
1. The inherent weakness of the contention of petitioner Mayor that would seize upon the vesting of the
appointing power of all other "employees" except teachers paid out of local funds to justify his choice of
petitioner Manuel D. Lapid as Assistant City Treasurer is readily disclosed. The Revised Administrative Code
distinguishes one in that category from an "officer" to designate those "whose duties, not being of a clerical or
manual nature, may be considered to involve the exercise of discretion in the performance of the function of
government, whether such duties are precisely defined by law or not." 9 Clearly, the Assistant and City Treasurer
is an officer, not an employee. Then, too, Section 4 of the Decentralization Act relied upon by petitioner City
Mayor specifically enumerates, the officials and their assistants whom he can appoint, specifically excluding
therefrom city treasurers. 10 The expansive interpretation contended for is thus unwarranted.
Nor is the case strengthened for petitioner City Mayor by the invocation of Pineda v. Claudio. 11 It is not to be
denied that in the opinion of the Court, penned by Justice Castro, undue interference with the power and
prerogatives of a local executive is sought to be avoided, considering his primary responsibility for efficient
governmental administration. What is not to be ignored though is that such a principle was announced in
connection with the appointment of a department head, the chief of police, who necessarily must enjoy the
fullest confidence of the local executive, one moreover whose appointment is expressly vested in the city
mayor. The principle therein announced does not extend as far as the choice of an assistant city treasurer whose
functions do not require that much degree of confidence, not to mention the specific grant of such authority to
the President. Equally unavailing then is Villegas v. Subido, 12 where this Court, through the then Justice
Capistrano, recognized that the choice of who the city legal officer should be rests solely on the city mayor,
such an office requiring as it does the highest degree of confidence. It bears repeating that the situation in the
case before us is of a different category. The decision appealed from, then, is not to be impugned as a failure to
abide by controlling pronouncements of this Tribunal.

2. Much less is reversal of the lower court decision justified on the plea that the aforesaid provision in the
Decentralization Act had the effect of repealing what is specifically ordained in the city charter. It has been the
constant holding of this Court that repeals by duplication are not favored and will not be so declared unless it be
manifest that the legislature so intended. Such a doctrine goes as far back as United States v. Reyes, a 1908
decision. 13 It is necessary then before such a repeal is deemed to exist that it be shown that the statutes or
statutory provisions deal with the same subject matter and that the latter be inconsistent with the former. 14 There
must be a showing of repugnancy clear and convincing in character. The language used in the latter statute must
be such as to render it irreconcilable with what had been formerly enacted. An inconsistency that falls short of
that standard does not suffice. What is needed is a manifest indication of the legislative purpose to repeal. 15
More specifically, a subsequent statute, general in character as to its terms and application, is not to be
construed as repealing a special or specific enactment, unless the legislative purpose to do so is manifest. This is
so even if the provisions of the latter are sufficiently comprehensive to include what was set forth in the special
act. This principle has likewise been consistently applied in decisions of this Court from Manila Railroad Co. v.
Rafferty, 16decided as far back as 1919. A citation from an opinion of Justice Tuason is illuminating. Thus:
"From another angle the presumption against repeal is stronger. A special law is not regarded as having been
amended or repealed by a general law unless the intent to repeal or alter is manifest. Generalia specialibus non
derogant. And this is true although the terms of the general act are broad enough to include the matter in the
special statute. ... At any rate, in the event harmony between provisions of this type in the same law or in two
laws is impossible, the specific provision controls unless the statute, considered in its entirety, indicates a
contrary intention upon the part of the legislature. ... A general law is one which embraces a class of subjects or
places and does not omit any subject or place naturally belonging to such class while a special act is one which
relates to particular persons or things of a class. 17
WHEREFORE, the lower court decision of August 4, 1969 is affirmed. Without pronouncement as to costs.

(#85)
Republic of the Philippines
SUPREME COURT
Manila
SECOND DIVISION
G.R. No. L-38736 May 21, 1984
FELIPE G. TAC-AN, petitioner,
vs.
HONORABLE COURT OF APPEALS and ELEUTERIO ACOPIADO, MAXIMINO ACOPIADO, the
SPOUSES JESUS PAGHASIAN and PILAR LIBETARIO, respondents.
Liliano B. Neri for petitioner.
Vic T. Lacaya for private respondents.

ABAD SANTOS, J.:

The petitioner, Felipe G. Tac-An, is a lawyer whose services were engaged by the brothers Eleuterio Acopiado
and Maximino Acopiado who were accused of frustrated murder and theft of large cattle before the Municipal
Court of New Pian, Zamboanga del Norte in March, 1960.
On April 4, 1960, Tac-An caused a document entitled, "Deed of Quitclaim" to be thumb-marked by the
Acopiado brothers whereby for the sum of P1,200.00 representing his fees as their lawyer in the criminal cases,
they conveyed to him a parcel of land with an area of three hectares. The document was acknowledged before
Notary Public Pacifico Cimafranca on the same date who explained its contents to the Acopiados.
On April 6, 1960, or two days after the execution of the deed, the Acopiados told Tac-An that they were
terminating his services because their wives and parents did not agree that the land be given to pay for his
services. They also said that they had hired another lawyer, a relative, to defend them. But Tac-An continued to
represent them.
In the case for frustrated murder, the Acopiados were acquitted. The cases for theft of large cattle were
dismissed due to the desistance of the complainants.
On April 2, 1961, Eleuterio sold his share of the land previously conveyed to Tac-An to Jesus Paghasian and
Pilar Libetario but the latter did not take possession thereof.
In June, 1964, Tac-An appointed Irineo Villejo, a barrio captain, as his overseer in the land. On July 2, 1964,
Tac-An also secured the approval of the Provincial Governor of Zamboanga del Norte to the Deed of Quitclaim.
And on October 7, 1964, Tac-An filed a complaint against the Acopiado brothers, Paghasian and Libetario in
the CFI of Zamboanga del Norte. He prayed that he be declared the owner of the land; that the sale made in
favor of Paghasian and owner Libetario be annulled; and that he be paid damages, attorney's fees, etc.
The Court of First Instance decided in favor of Tac-An whereupon the Acopiados, et al. appealed to the Court of
Appeals.
The Court of Appeals voided the transfer of the land to Tac-An but held that for his services in the criminal
cases he was entitled to the agreed upon amount of P1,200.00. The judgment of the Court of Appeals reads as
follows:
WHEREFORE, the judgment appealed from is hereby reversed and set aside. In lieu thereof, another one is
rendered ordering the defendants Acopiados to pay the plaintiff the sum of P1,200.00 with interest at a legal rate
from the date of the finality of this judgment until full payment thereof. No pronouncement as to costs. (Rollo,
pp. 40-41.)
Petitioner Tac-An prays that the decision of the Court of Appeals be set aside and that the decision of the Court
of First Instance be upheld instead.
The petition is not impressed with merit.
The Court of Appeals found as a fact that the Acopiado brothers fully understood the tenor of the Deed of
Quitclaim which they executed. But the Court of Appeals also found as a fact that the Acopiado brothers are
Non-Christians, more specifically Subanons, and that each is married to a Subanon. And because they are NonChristians, the Court of Appeals applied Section 145 of the Administrative Code of Mindanao and Sulu which
reads as follows:
Sec. 145. Contracts with Non-Christians requisites. -- Save and except contracts of sale or barter of personal
property and contracts of personal service comprehended in chapter seventeen hereof no contract or agreement

shall be made in the Department by any person with any Moro or other non-Christian tribe or portion thereof
the Department or with any individual Moro or other non-Christian inhabitants of the same for the payment or
delivery of money or other things of value in present or in prospective, or in the manner affecting or relating to
any real property, unless such contract or agreement be executed and approved as follows:
xxx xxx xxx
(b) It shall be executed before a judge of a court of record, justice or auxilliary justice of the peace, or notary
public, and shall bear the approval of the provincial governor wherein the same was executed or his
representative duly authorized in writing for such purpose, indorsed upon it.
It should be stated that under Section 146 of the same Code, contracts or agreements made in violation of Sec.
145 shall be "null and void."
It should be recalled that on July 2, 1964, Tac-An secured the approval of the Provincial Governor of
Zamboanga del Norte to the Deed of Quitclaim and that should have satisfied the requirement of Sec. 145 of the
Administrative Code for Mindanao and Sulu. But it appears that on April 12, 1965, while Tac-An's suit was
pending in the trial court, the Governor of Zamboanga del Norte revoked his approval for the reasons stated
therein.
The petitioner now asserts that the revocation of the approval which had been given by the Provincial Governor
has no legal effect and cannot affect his right to the land which had already vested. But as Justice Conrado M.
Vasquez, with Justices Mateo Canonoy and Ameurfina M. Herrera concurring, said:
The approval by Provincial Governor Felipe Azcuna appearing on the face of the Deed of Quitclaim (Exh. "E ")
made on July 2, 1964 may no longer be relied upon by the plaintiff in view of the revocation thereof by the
same official on April 12, 1965 (Exh. 4). The revocation was based on the ground that the signature of Governor
Azcuna was obtained thru a false representation to the effect that the alleged transaction was legal and voluntary
when in truth and in fact, as found out later, the said parcel of land was the subject matter of a court litigation;
and, moreover, the non-Christian vendors were not brought before him for interrogation, confirmation or
ratification of the alleged deed of quitclaim. The fact that the revocation was made after the filing of instant
action on October 10, 1964 does not vitiate the aforesaid action of the Provincial Governor. Significantly, no
attempt was made to disprove the truth of the reasons stated in the certificate of revocation (Exh. 4). (Rollo, p.
37.)
The petitioner also argues that the Administrative Code of Mindanao and Sulu was repealed on June 19, 1965
by Republic Act No, 4252, hence the approval of the Provincial Governor became unnecessary. Suffice it to say
that at times material to the case, i.e. when the Deed of Quitclaim was executed, when the approval by the
Provincial Governor was given and when the approval was revoked, Sections 145 and 146 of the Administrative
Code of Mindanao and Sulu were in full force and effect and since they were substantive in nature the repealing
statute cannot be given retroactive effect. It should also be stated that the land in question must be presumed to
be conjugal in nature and since the spouses of the Acopiado brothers did not consent to its transfer to the
petitioner, the transaction was at least voidable.
WHEREFORE finding the petition to be lacking in merit, the same is hereby dismissed with costs against the
petitioner.
SO ORDERED.