Republic of the Philippines

SUPREME COURT
Manila

EN BANC

G.R. No. L-1179 January 8, 1913

In re application of MARIO GUARIÑA for admission to the bar.

Mario Guariña in his behalf.

CARSON, J.:

Relying upon the provisions of section 2 of Act No. 1597, the applicant in this case seeks
admission to the bar, without taking the prescribed examination, on the ground that he holds the
office of provincial fiscal for the Province of Batanes.

Section 2 of Act No. 1597, enacted February 28, 1907, is as follows:

SEC. 2. Paragraph one of section thirteen of Act Numbered One hundred and ninety,
entitled "An Act providing a Code of Procedure in Civil Actions and Special Proceedings
in the Philippine Islands," is hereby amended to read as follows:

1. Those who have been duly licensed under the laws and orders of the Islands under the
sovereignty of Spain or of the United States and are in good and regular standing as
members of the bar of the Philippine Islands at the time of the adoption of this
Code: Provided, That any person who, prior to the passage of this Act, or at any time
thereafter, shall have held, under the authority of the United States, the position of justice
of the Supreme Court, judge of the Court of First Instance, or judge or associate judge of
the Court of Land Registration, of the Philippine Islands, or the position of Attorney-
General, Solicitor-General, Assistant Attorney-General, assistant attorney in the office of
the Attorney-General, prosecuting attorney for the city of Manila, assistant prosecuting
attorney for the city of Manila, city attorney of Manila, assistant city attorney of Manila,
provincial fiscal, attorney for the Moro Province, or assistant attorney for the Moro
Province, may be licensed to practice law in the courts of the Philippine Islands without
an examination, upon motion before the Supreme Court and establishing such fact to the
satisfaction of said court."

The records of this court disclose that on a former occasion this applicant took, and failed to pass
the prescribed examination. The report of the examining board, dated March 23, 1907, shows
that he received an average of only 71 per cent in the various branches of legal learning upon
which he was examined, thus falling four points short of the required percentage of 75. We would
be delinquent in the performance of our duty to the public and to the bar, if, in the face of this
affirmative indication of the deficiency of the applicant in the required qualifications of learning in
the law at the time when he presented his former application for admission to the bar, we should
grant him a license to practice law in the courts of these Islands, without first satisfying ourselves
that despite his failure to pass the examination on that occasion, he now "possesses the
necessary qualifications of learning and ability."

But it is contended that under the provisions of the above-cited statute the applicant is entitled as
of right to be admitted to the bar without taking the prescribed examination "upon motion before
the Supreme Court" accompanied by satisfactory proof that he has held and now holds the office
of provincial fiscal of the Province of Batanes. It is urged that having in mind the object which the
legislator apparently sought to attain in enacting the above-cited amendment to the earlier
statute, and in view of the context generally and especially of the fact that the amendment was
inserted as a proviso in that section of the original Act which specifically provides for the
admission of certain candidates without examination, the clause "may be licensed to practice law
in the courts of the Philippine Islands without and examination" should be construed so as to
mean "shall be licensed to practice law in the Philippine Islands without an examination." It is
contended that this mandatory construction is imperatively required in order to give effect to the
apparent intention of the legislator, and to the candidate's claimde jure to have the power
exercised.

It must be confessed that were the inquiry limited strictly to the provisions of local law touching
this matter, the contentions of the applicant would have great weight . For it is well settled that in
statutory interpretation the word "may" should be read "shall" where such construction is
necessary to give effect to the apparent intention of the legislator. In Rock Island County
Supervisors vs. United States (71 U.S., 435, 446), Mr. Justice Swayne says:

The conclusion to be deduced from the authorities is that where power is given to public
officers, in the language of the Act before us, or in equivalent language, whenever the
public interest or individual rights call for its exercise, the language used, though
permissive in form, is in fact peremptory. What they are empowered to do for a third
person the law requires shall be done. The power is given, not for their benefit, but for
his. It is placed with the depository to meet the demands of right, and to prevent a failure
of justice. It is given as a remedy to those entitled to invoke its aid, who would otherwise
be remediless. In all such cases it is held that the intent of the Legislature, which is the
test, was not to devolve a mere discretion, but to impose a positive and absolute duty.

Whether the word "may" in a statute is to be construed as mandatory and imposing a duty, or
merely as permissive and conferring discretion, is to be determined in each case from the
apparent intention of the statute as gathered from the context, as well as from the language of the
particular provision. The question in each case is whether, taken as a whole and viewed in the
light of surrounding circumstances, it can be said that a purpose existed on the part of the
legislator to enact a law mandatory in its character. If it can, then it should be given a mandatory
effect. (Colby University vs. Village of Canandaigua (U.S.), 69 Fed., 671, 673; Kansas Pacific Ry.
Co.vs. Reynolds, 8 Kan., 623, 628; Kemble vs. McPhaill, 60 Pac., 1092, 1093, 128 Cal., 444;
Inhabitants of Worcester County vs. Schlesinger, 82 Mass. (16 Gray), 166, 168;
People vs. Sanitary Dist. of Chicago, 56 N.E., 953, 956, 184 Ill., 597; State vs. Withrow (Mo.), 24
S.W., 638, 641; Leavenworth & D. M.R. Co. vs. Platte County Court, 42 Mo., 171, 174.)

Applying these canons of construction to the statute under consideration, and limiting ourselves
strictly to the provisions of local law touching the admission of candidates to the bar, we might, as
we have said, be inclined to give the statute the mandatory effect which applicant claims should
be placed upon it. But we are of opinion that such a construction is precluded by the provisions of
the Act of Congress enacted July 1, 1902, which confirm and secure to this court the jurisdiction
theretofore conferred upon it. Section 9 of that Act is as follows:

That the Supreme Courts of First Instance of the Philippine Islands shall possess and
exercise jurisdiction as heretofore provided and such additional jurisdiction as shall
hereafter be prescribed by the Government of said Islands, subject to the power of said
Government to change the practice and method of procedure. The municipal courts of
said Islands shall possess and exercise jurisdiction as heretofore provided by the
Philippine Commission, subject in all matters to such alteration and amendment as may
be hereafter enacted by law; and the Chief Justice and Associate Justices of the
Supreme Court shall hereafter be appointed by the President, by and with the advice and
consent of the Senate, and shall receive the compensation heretofore prescribed by the
 Commission until otherwise provided by Congress. The judges of the Court of First
Instance shall be appointed by the Civil Governor, by and with the advice and consent of
the Philippine Commission: Provided, That the admiralty jurisdiction of the Supreme
Court and Courts of First Instance shall not be changed except by Act of Congress.

Prior to the passage of this Act the power and jurisdiction of this court in relation to the admission
of candidates to the bar of the Philippine Islands had been fixed by the provisions of the Organic
Act (No. 136) and the Code of Civil Procedure (Act No. 190); and as we understand these
provisions this court was vested thereby with authority, and charged with a duty to pass upon the
"moral character" and the "qualifications and ability" of all candidates for admission to the bar.

The pertinent provisions of these statutes are as follows:

(Act No. 136.) "SEC . 2. Constitution of judiciary. — The judicial power of the Government
of the Philippine Islands shall be vested in a Supreme Court, Courts of First Instance, and
courts of justices of the peace, together with such special jurisdictions of municipal
courts, and other special tribunals as now are or hereafter may be authorized by law. The
two courts first named shall be courts of record.

(Act No. 136.) "SEC. 16. Jurisdiction of the Supreme Court. — The jurisdiction of the
Supreme Court shall be of two kinds:

1. Original; and

2. Appellate.

SEC. 17. Its original jurisdiction. — The Supreme Court shall have original jurisdiction to
issue writs ofmandamus, certiorari, prohibition, habeas corpus, and quo warranto in the
cases and in the manner prescribed in the Code of Civil Procedure, and to hear and to
determine the controversies thus brought before it, and in other cases provided by law.

(Act No. 190.) "SEC. 13. Who may practice as lawyers. — The following persons, if not
specially declared ineligible, are entitled to practice law in the courts of the Philippine
Islands:

1. Those who have been duly licensed under the laws and orders of the Islands under the
sovereignty of Spain or of the United States and are in good and regular standing as
members of the bar of the Philippine Islands at the time of the adoption of this Code;

2. Those who are hereafter licensed in the manner herein prescribed.

SEC. 14. Qualifications of applicants. — Any resident of the Philippine Islands, not a
subject or citizen of any foreign government, of the age of twenty-three years, of good
moral character, and who possesses the necessary qualifications of learning and ability,
is entitled to admission as a member of the bar of the Islands and to practice as such in
all their courts.

SEC. 15. Certificate of good character required. — Every applicant for admission as a
member of the bar must produce the Supreme Court satisfactory testimonials of good
moral character, and must satisfactorily pass a proper examination upon all the codes of
law and procedure in force in the Philippine Islands, and upon such other branches of
legal learning as the Supreme Court by general rule shall provide. . . .
 SEC. 16. Place and manner of examinations. — Such examinations shall be conducted
at Manila, by the judges of the Supreme Court or by a committee of competent lawyers
by them to be appointed, and shall be held at such times as the judges of the court shall
provide by general or special rules.

Manifestly, the jurisdiction thus conferred upon this court by the Commission and confirmed to it
by the Act of Congress would be limited and restricted, and in a case such as that under
consideration wholly destroyed, by giving the word "may," as used in the above citation from Act
No. 1597, a mandatory rather than a permissive effect. But any Act of the Commission which has
the effect of setting at naught in whole or in part the Act of Congress of July 1, 1902, or of any Act
of Congress prescribing, defining or limiting the power conferred upon the Commission is to that
extent invalid and void, as transcending its rightful limits and authority.

The Act of Congress was the creator of the Commission and indeed of the Government of these
Islands, which is the creature of its creator. Its powers are defined, prescribed and limited by the
Act which created it, and by such other lawful acts of its creator as may further define, prescribe,
limit or expand these powers. It cannot lawfully transcend or infringe upon the limits thus
prescribed, and any Act of the Commission repugnant to the Act of Congress which created it, or
which is repugnant to any other lawful Act of its creator defining, prescribing or limiting its
authority is void and invalid. The various Acts of Congress conferring power upon the Philippine
Legislature, and defining, prescribing and limiting this power, especially the Act of Congress of
July 1, 1902, are to that Legislature in the nature of an organic act with its amendments, binding
on it in like manner as is the Constitution of the United States upon Congress itself.

In the great case of Marbury vs. Madison (1 Cranch, 175), the Supreme Court of the United
States, in a decision written by Chief Justice Marshall, laid down the doctrine in this regard which
has been followed by that court unhesitatingly ever since. In that case the court held that an Act
of Congress repugnant to the Constitution cannot become law, and that the courts of the United
States are bound to take notice if the Constitution.

Applying the reasoning of that case to the question of the validity of an Act of the Philippine
Commission enacted since the date of the passage of the Philippine Bill which is found to be in
conflict with the provisions of the Act of Congress dealing with the same subject matter, and
especially with the provisions of the Philippine Bill itself, we think there can be no doubt as to the
result. The Act of the Commission in so far as it is in conflict with or in any wise repugnant to the
various Acts of Congress dealing with the same subject matter must be held to be void and of no
effect. Paraphrasing slightly the language used in the early case of Kemper vs. Hawkins (1 Va.
Cases, 20-24), it may be said that the Acts of the Congress of the United States are to the
Commission, or rather to all the departments of the Philippine Government, what a law is to
individuals; nay, they constitute not only a rule of action to the various branches of the
Government, but it is from them that the very existence of the power of the Government flows,
and it is by virtue of the Acts of Congress that the powers (or portions of the right to govern) which
may have been committed to this Government are prescribed. The Act of Congress was the
Commission's commission; nay, it was its creator.

Section 9 of the Act of Congress, set out above, placed it beyond the power of the local
Legislature to deprive this court of the jurisdiction or power theretofore granted to it; leaving
however, to local legislative authority the right to confer additional jurisdiction, or to change the
practice and method of procedure. The above-cited provisions of Act No. 190, in force at the time
when the Act of Congress was enacted, conferred upon this court the power and jurisdiction to
deny admission to candidates for the bar unless, in addition to certain other prescribed
conditions, they satisfy the court that they possess the necessary learning in the law, by passing
an examination prescribed by general rule. It seems clear, therefore, that the Commission, while it
was undoubtedly authorized to modify the provision requiring the holding of examinations under
general rules (that being merely the prescribed mode of procedure whereby the court was
required to ascertain the qualifications of the candidate), had no authority to deprive this court of
its power to deny admission to any candidate who fails to satisfy it that he possesses the
necessary qualifications for admission to the bar of the Philippine Islands.

In construing a statute enacted by the Philippine Commission we deem it our duty not to give it a
construction which would be repugnant to an Act of Congress, if the language of the statute is
fairly susceptible of another construction not in conflict with the higher law. In doing so, we think
we should not hesitate to disregard contentions touching the apparent intention of the legislator
which would lead to the conclusion that the Commission intended to enact a law in violation of the
Act of Congress. However specious the argument may be in favor of one of two possible
constructions, it must be disregarded if on examination it is found to rest on the contention that
the legislator designed an attempt to transcend the rightful limits of his authority, and that his
apparent intention was to enact an invalid law.

Black on Interpretation of Laws at page 87 says: "In construing a doubtful or ambiguous statute,
the courts will presume that it was the intention of the legislature to enact a valid, sensible, and
just law, and one which should change the prior law no further than may be necessary to
effectuate the specific purpose of the act in question. The construction should be in harmony with
this assumption whenever possible."

The same author, at pages 93 and 94, says: "Hence it follows that the courts will not so construe
the law as to make it conflict with the constitution, but will rather put such an interpretation upon it
as will avoid conflict with the constitution and give it full force and effect, if this can be done
without extravagance. If there is doubt or uncertainty as to the meaning of the legislature, if the
words of provisions of the statute are obscure, or if the enactment is fairly susceptible of two or
more constructions, that interpretation will be adopted which will avoid the effect of
unconstitutionality, even though it may be necessary, for this purpose, to disregard the more usual
or apparent import of the language employed."

Without undue straining of the language used in the statute under consideration, the word "may"
may be construed as either mandatory or permissive in its effect. But to construe it as mandatory
would bring it in direct conflict with the Act of Congress, and we conclude therefore, despite the
contentions of the applicant as to the apparent intention of the legislator, that it should be given its
permissive and not its mandatory effect, and that the true intention of the legislator was to leave it
within the discretion of the court to admit to the bar without examination the officials mentioned in
the Act in any case wherein the court is otherwise satisfied that they possess the necessary
qualifications.

Ordinarily, and in the absence of any showing to the contrary, it may fairly be assumed that an
applicant who has held one of the offices mentioned in the statute, and who, prior to his
appointment, had been admitted to the practice of law in the courts of these Islands under the
former sovereign or in some other jurisdiction is duly qualified for admission to the bar of these
Islands. In the case In re Du Fresne (20 Phil. Rep., 488, 492), speaking of the provisions of this
Act, we said:

Appointments to the positions mentioned in Act No. 1597 are made either by the
President of the United States by and with the advice and consent of the Senate, or by
the Governor-General of the Philippine Islands by and with the advice and consent of the
Philippine Commission, and the legislator evidently conceived that the fact that such an
appointment is made is a sufficient guaranty that after due inquiry the appointee has been
found to be possessed of at least the necessary qualifications for admission to the bar.

In the various cases wherein applications for admission to the bar under the provisions of this
statute have been considered heretofore, we have accepted the fact that such appointments had
been made as satisfactory evidence of the qualifications of the applicant. But in all of those cases
we had reason to believe that the applicants had been practicing attorneys prior to the date of
their appointment.

In the case under consideration, however, it affirmatively appears that the applicant was not and
never had been a practicing attorney in this or any other jurisdiction prior to the date of his
appointment as provincial fiscal, and it further affirmatively appears that he was deficient in the
required qualifications at the time when he last applied for admission to the bar.

In the light of this affirmative proof of his deficiency on that occasion, we do not think that his
appointment to the office of provincial fiscal is in itself satisfactory proof of his possession of the
necessary qualifications of learning and ability. We conclude therefore that this application for
license to practice in the courts of the Philippines should be denied.

In view, however, of the fact that when he took the examination he fell only four points short of the
necessary grade to entitle him to a license to practice; and in view also of the fact that since that
time he has held the responsible office of governor of the Province of Sorsogon and presumably
gave evidence of such marked ability in the performance of the duties of that office that the Chief
Executive, with the consent and approval of the Philippine Commission, sought to retain him in
the Government service by appointing him to the office of provincial fiscal, we think we would be
justified under the above-cited provisions of Act No. 1597 in waiving in his case the ordinary
examination prescribed by general rule, provided he offers satisfactory evidence of his proficiency
in a special examination which will be given him by a committee of the court upon his application
therefor, without prejudice to his right, if he desires so to do, to present himself at any of the
ordinary examinations prescribed by general rule. So ordered.

Republic of the Philippines

SUPREME COURT
Manila

EN BANC

G.R. No. L-48699 March 30, 1943

GIL GONZALES, petitioner,

vs.
LA PREVISORA FILIPINA, Mutual Building and Loan Association, and JOSE D.
MENDOZA, respondents.

Feliciano Gomez for petitioner.

Pedro A. Revilla for respondent La Previsora Filipina.

OZAETA, J.:

On or before July 31, 1931, Jose D. Mendoza applied to La Previsora Filipina, Mutual Building
and Loan Association, for a loan of P9,000 to be invested in the construction of a house of strong
materials and other improvements on his lot situate on Fraternidad street, Pandacan, Manila, with
an area of 251.6 square meters and covered by transfer certificate of title No. 38244. Inasmuch
as the loan value of said lot together with the proposed improvements thereon was appraised by
the said building and loan association at 5,200 only, Mendoza was required to put up an
additional security to cover the deficiency of P3,800. To meet that requirement Mendoza
approached his friend Gil Gonzales, who consented to mortgage his land and building situate on
Tayuman street, Santa Cruz, Manila, with an area of 229 square meters and covered by transfer
certificate of title No. 23695, as collateral security for the loan applied for by Mendoza. The
contract of loan and mortgage signed by the parties, upon the interpretation of which the present
case hinges, reads in part as follows:

Este contrato celebrado en la Ciudad de Manila, Islas Filipinas, entre "La Previsora
Filipina", Sociedad Mutua de Construccion y Prestamos, incorporada bajo las leyes de
las Islas Filipinas, de una parte; y Jose de Mendoza (filipino) casado con Benilda Bonus;
y Gil Gonzales (filipino) casado con Segundina Tuason de Manila, Islas Filipinas, mayor
de edad, domiciliado en No. 45 Jesus, Pandacan Manila, Is. Fil., y accionista de la
misma Sociedad, de otra parte,

Atestigua:

Por cuanto, Jose D. Mendoza y Gil Gonzales conociendo las condiciones y estando
impuesto de la forma en que "La Previsora Filipina" pero en sus prestamos bajo el plan
de la Triple transaccion, y encontrando esta forma de operar altamente benficiosa y
ventajosa para el accionista prestatario, desea hacer constar, como por la presente lo
hace, su conformidad y aprobacion de la misma; y

Por cuanto Jose D. Mendoza y Gil Gonzales haciendo uso del privlegio y derecho que la
Sociedad arriba nombrada concede a sus accionistas ha solicitado de la misma un
prestamo de nueve mil pesos (P9,000), moneda filipina, con la garantia hipotecaria que
mas adelante se consignara y mediante la pignoracion de la acciones de la Serie "E" de
la misma Sociedad que suscribe en este acto y que ira pagando en la forma convenida y
que aparece consignada en el Certificado de dichas acciones; y

Por cuanto, el objeto para el cual dichos Jose D. Mendoza y Gil Gonzales ha solicitado el
prestamo es:

Para construir la casa en el solar de Pandacan objeto de esta hipoteca, y el resto para
construir un muro de contencion y el cerco de piedra alrededor del solar y un garage — y

Por cuanto, "La Previsora Filipina", Sociedad Mutua de Construction y Prestamos, ha

accedido a conceder a dichos Jose D. Mendoza y Gil Gonzales el prestamo solicitado,
de nueve mil pesos (P9,000), moneda filipina, segun acuerdo adoptado por la Junata
Directiva en su sesion de fecha 25 de Julio de 1931, en el cual tambien se autoriza a
Don Miguel Romualdez, en su concepto de Presidente de dicha Sotecario y otorgar en
nombre de la Sociedad esta escritura de prestamo;

Por tanto, las partes aqui contrantantes, a saber: "La Previsora Filipina", Sociedad Mutua
de Construccion y Prestamos, incorporada bajo las leyes de las Islas Filipinas,
representada en este acto por su Presidente Don Miguel Romualdez, el cual de aqui en
adelante se llamara "La Sociedad", de una parte; y Jose D. Mendoza y Gil Gonzales,
accionista de esta Sociedad, a quien de aqui en adelante se llamara "Accionista
Prestatario", de otra parte, han convenido y otorgado el presente contrato de prestamo
sujeto a las siguientes.

Bases

I. — "La Sociedad" entrega en este acto al "Accinista Prestatario" y este declara haber
recibido de "La Sociedad" en calidad de prestamo la cantidad de nueve mil pesos
 (P9,000), moneda filipina, por el tiempo y bajo las condiciones que a continuacion se
establecen;

xxx xxx xxx

IX. — Para garatizar el fiel y puntual cumplimiento de todas las obligciones sin perjuico
de la responsabilidad personal que contrae en virtud de la presente escritura, el
"Accionista Prestatario" por la presente cede y traspasa en calidad de primera hipoteca a
favor de "La Sociedad" el inmueble de su propriedad que a continuacion se describe, a
saber:

Certificado de Transferencia de titulo No. 38244

A parcel of land (Lot No. 1 of Block No. 1017 of the Cadastral Survey of the City
of Manila), with the buildings and improvements thereon; situated on the NW. line
of Calle Fraternindad, District of Pandacan. Bounded on the NE. by lot No. 2 of
Block No. 1017; on the SE. by Calle Fraternidad; on the SW. by Callejon Tercius;
and on the W. by the Estero de Pandacan. . . . Containing an area of two
hundred and fifty-one square meters and sixty square decimters (251.60), more
or less.

Como garantia colateral queda tambien pignorado a favor de la Sociedad "La Previsora
Filipina" el terreno del Sr. Gil Gonzales que se describe a continuacion:

Certificado de Transferencia de titulo No. 23695

Un terreno, situado en la Calle Tayuman, Distrito de Santa Cruz, compuesto del

Lote No. 13-B, Block No. 2259 de la Propiedad subdividida del Gobierno de las
Islas Filipinas, conocida con el nombre de "Hacienda de San Lazaro", segun el
plano que obra unido al Expediente No. 235, Record No. 11546 de la Oficina
General del Registro de Terrenos, copia del cual plano se halla archivada con el
No. 45, Dicho lote mide una extension superficial de doscientos veinte-nueva
(229.00) metros cuadrados, y sus linderos constan en el citado plano.

Sobre dicho terreno se halla levantada una casa de materiales fuerte con techo de hierro
galvanizado.

Entendiendose, sin embargo, que cuando la deuda se haya quedado reducida a P5,200,
entonces la Sociedad "La Previsora Filipina" podra cancelar el gravamen que pesa sobre
la finca descrita que constituye como garantia colateral y de la propiedad del Sr. Gil
Gonzales.

xxx xxx xxx

(Exhibit A-1.)

The money loaned by the Association under said contract was duly invested in the construction of
the building and other improvements on the lot of Mendoza, and it was the latter alone who made
payments on account of the principal and interest of said loan; but Mendoza's payments were far
from sufficient to cover the monthly installments stipulated in the contract, for which reason La
Previsora Filipina, on July 22, 1937, foreclosed the mortgage extrajudicially and bought the
mortgaged premises of Mendoza's and Gonzales' for the lump sum of P12,245.98, representing
the amount then due on said mortgage.
Upon learning of the extrajudicial sale of this property, and before the expiration of the one-year
period of redemption, Gil Gonzales offered to pay La Previsora Filipina the sum of P3,800 and, in
view of the latter's refusal to accept it, deposited the amount with the Clerk of the Court of First
Instance of Manila on July 20, 1938.

The present action was commenced by Gil Gonzales on June 6, 1938 (a) to annul and set aside
the extrajudicial sale of his property, (b) to declare that his property should only respond for the
sum of P3,800, and (c) to order the defendant corporation to receive the said sum.

The trial court held that the plaintiff Gil Gonzales was a mere guarantor to the extent of P3,800
and found that, after deducting Mendoza's payments, Gonzales' liability to the defendant
corporation amount to only P650, which should be satisfied out of the P3,800 deposited by him,
and declare the extrajudicial sale null and void insofar as it affected Gonzales' property.

The Court of Appeals, reversing the judgment of the trial court, held that Gil Gonzales was a
coborrower and was jointly and severally liable with Mendoza for the full amount of the loan; but,
in equity and justice, it conceded to Gonzales the right to redeem his property from La Previsora
Filipina by paying to the latter the sum of P4,691.49, applying on account thereof the sum of
P3,800 which Gonzales had deposited with the clerk of court. The said sum of P4,691.49 was
arrived at by the Court of Appeals by deducting the sum of P9,000, for which La Previsora Filipina
sold Mendoza's property to Mr. Pio Pedrosa during the pendency of this action, from the total
amount due under the contract in question including the expenses incurred by La Previsora
Filipina for repairs, insurance, and taxes on the property of Mendoza before it was sold to
Pedrosa. From that judgment Gil Gonzales has appealed to this Court by certiorari.

As we have already intimated, the case hinges on the interpretation of the contract of loan and
mortgage executed by the parties. The Court of Appeals considered the terms of said contract as
"clear and explicit." It also considered entirely immaterial the fact that the loan of P9,000 was
invested in the construction of the house and other improvements on Mendoza's exclusive
property, as well as the fact that the only one who made payments on account of the
indebtedness was Mendoza. It held that the fact that Gonzales' property was included in the
mortgage expressly as a collateral security only and with the stipulation that once the
indebtedness was reduced to P5,200 La Previsora Filipina could cancel the incumbrance
thereon, cannot be invoked in favor of Gonzales, first, because the latter is a co-borrower of
Mendoza with a solidary liability as to the loan in question and, second, because the cancellation
of the incumbrance on Gonzales' property upon the reduction of the debt of P5,200 was
discretional and not obligatory on the respondent corporation. We disagree with the Court of
Appeals upon these considerations.

First. It does not clearly and unequivocally appear from the contract in question that Gil Gonzales
is a coborrower of Mendoza; nor is there any express stipulation therein that Gonzales is jointly
and severally liable with Mendoza for the entire amount of the loan. It seems that the Court of
Appeals deduced Gonzales' solidary liability from the assumption that he was a coborrower. That
is untenable because even if Mendoza and Gonzales were coborrowers they would not be
bound in solido in the absence of an express stipulation to the effect. (Articles 1137 and 1138,
Civil Code.) But as we have said, it does not clearly appear that Gonzales was a coborrower. It is
true that Gonzales signed the loan application as well as the contract of mortgage together with
Mendoza without stating that he was a mere guarantor or surety of the latter. But, as the trial
court observed, the respondent mutual building and loan association is allowed by law to grant
loans only to its stockholders in order "to encourage industry, frugality, and home building among
its stockholders" (section 171-190, Corporation Law); and the loan in question was applied for
and granted expressly for the purpose of constructing a house and other improvements on the
land belonging exclusively to Mendoza. It is noteworthy that altho Gonzales appears together with
Mendoza in said contract as one of the contracting parties, the stockholder-borrower (accionista
prestatario) is referred to in singular throughout said contract. In clause IX of the contract the
stockholder-borrower cedes and transfers by way of first mortgage in favor of the Association the
property belonging to him and described in transfer certificate of title No. 38244; and that was
Mendoza's land in Pandacan on which the building and other improvements were to be
constructed with the borrowed money. In the same clause Gonzales is specifically referred to not
as stockholder-borrower but simply as Mr. Gil Gonzales who by way of collateral
security "pledges" in favor of the Association his land described in transfer certificate of title No.
23695, situate on Tayuman street, on which there is a building of strong materials, with the
express proviso that once the indebtedness is reduced to P5,200 the Association may cancel the
incumbrance thereon. It seems apparent to us than only one stockholder-borrower was
contemplated in said contract, and that one could not be other than Mendoza because it was
originally at his instance and for his exclusive benefit that the loan in question was granted; it was
on the land belonging exclusively to him that the building constructed with the borrowed money
was erected; and it was he along who made payments on account of said loan.

Second. Articles 1281, 1282, and 1288 of the Civil code are applicable to this situation. Said
articles read as follows:

Art. 1281. — If the terms of a contract are clear and leave no doubt as to the intention of
the contracting parties, the literal sense of its wording shall be followed.

If the words appear to be contrary to the evident intention of the contracting parties, the
intention shall prevail.

Art. 1282. — In order to judge as to the intention of the contracting parties, attention must
be paid principally to their conduct at the time of making the contract and subsequently
thereto.

Art. 1288. — Obscure terms of a contract shall not be so construed as to favor the party
who occasioned the obscurity.

In construing the contract in question with complete detachment from the antecedent
circumstances and with absolute disregard of the conduct of the parties at the time of making the
contract and subsequently thereto — in brushing aside the important fact that the respondent
mutual building and loan association is authorized by law to loan money only to its stockholders
to encourage home building, and that it was Mendoza alone who built a home with the money
borrowed from the respondent, and in disregarding the fact that Gonzales never paid and was
never required to pay a single centavo on account of the shares of stock of the Association
supposedly subscribed for him together with Mendoza, the latter alone having made such
payments — the Court of Appeals did not follow as it should have followed the provisions of
articles 1281 and 1282 above quoted. Neither did it follow article 1288, it being undisputed that
the contract in question was prepared by the respondent and that the use in singular of the words
"accionista prestario" and the inclusion of the property of Gonzales as mere collateral security to
be released once the indebtedness was reduced to P5,200, made said contract obscure, to say
the least, insofar as it purported to bind Gonzales as a co-borrower and co-stockholder of the
Association.

The proviso contained in clause IX of said contract to the effect that once the indebtedness is
reduced to P5,200 the Association may cancel the incumbrance on the property of Gonzales, was
not correctly interpreted by the Court of Appeals, in our opinion. It is true that the word "may"
(podra) ordinarily indicates potestative condition, but it may and should be read as "shall" when
the apparent intention of the parties demands such construction. In the instant case the nature of
Gonzales' intervention in the transaction demands such construction of the proviso in question.
Said proviso would be not only superfluous to the respondent Association but illusory to the
petitioner if it be construed in the potestative sense give to it by the Court of Appeals. The
mortgagee does not need permission from the mortgagor to cancel the mortgage, if he wants to,
at any time before the obligation is fully satisfied; that is to the mortgagor's advantage and the
mortgagee's inherent power. To construe the proviso in question as a mere authorization from
Gonzales to the Association to cancel the mortgage on Gonzales' property once the indebtedness
was reduced to P5,200, is to say that by such important stipulation the Association merely
intended a gesture of supererogation and Gonzales, a means of self-delusion. Obviously, such
stipulation in favor of petitioner would not have been made if he were a coborrower obligated to
the same extent as Mendoza was.

Interpreting the contract in question in the light of its antecedents and of the coetaneous and
subsequent conduct of the parties, in relation to the following: (a) the use thruout the whole
document of the singular term "accionista prestatario", (b) the inclusion of Gonzales' properly in
said contract as a mere collateral security, and (c) the stipulation that once the indebtedness is
reduced to P5,200 the incumbrance thereon may (shall) be released, we find that the petitioner
was not bound thereunder as a co-stockholder and coborrower with Mendoza, but that he merely
agreed to put up his own property as a collateral security for the payment of Mendoza's obligation
to the extent of P3,800. It is of no consequence whether his liability for that the amount is joint or
solidary with Mendoza, for we find that he has fully discharged that liability by tendering to the
Association the said sum of P3,800 and be depositing it with the clerk of court upon the
Association's refusal to accept the payment.

The reduction found by the trial court of Gonzales' obligation from P3,800 to P650 was based on
Gonzales' testimony to the effect that there was an unwritten agreement between the parties that
Mendoza's payments were to be applied first to the 3,800 for which Gonzales' property
responded. That testimony was not given credence by the Court of Appeals; and, as this phase of
the case involves a question of fact and not an interpretation of the written contract, we cannot
review it.

The judgment of the Court of Appeals is hereby modified in the sense that instead of P4,691.49
awarded by the Court of Appeals to the respondent La Previsora Filipina, the latter is hereby
declared entitled to only the sum of P3,800 deposited with the clerk of court by the petitioner, who
is hereby relieved of any further obligation towards the said respondent. Said judgment is
affirmed insofar as it declares void the final deed of sale exhibit 10 and orders the register of
deeds of the city of Manila to cancel transfer certificate of title No. 54098 in the name of La
Previsora Filipina and to issue a new one in the name of Gil Gonzales. The respondent La
Previsora Filipina shall pay the costs in the three instances. So ordered.
 Republic of the Philippines
SUPREME COURT
Manila

EN BANC

G.R. No. L-3443 May 26, 1950

FELIPE LUNA, petitioner,

vs.
GAVINO S. ABAYA, Judge of the Court of First Instance of Rizal (Caloocan Branch), and
HORTENSIO A. DOMINGO, respondents.

Jose H. Guevara for petitioner.

Dominador D. Pichay, for respondent Domingo.

BENGZON, J.:

A. Statement: This is a petition to annul three orders of the Court of First Instance of Rizal in
connection with its civil case No. 75, entitled, "Eustaquio C. Olvina vs. Felipe Luna." the first order
dated September 29, 1947, declared both plaintiff and defendant in default as against the
complaint in intervention of Hortensio A. Domingo; the second, dated August 31, 1948, rendered
judgment against both, adjudging Hortensio A. Domingo the owner of the premises in question;
and the third required the execution of such judgment.
At the request of petitioner we issued a writ of preliminary injunction after he had filed a suitable
bond.

B. The facts: (1) On November 20, 1946, Eustaquio C. Olvina brought suit against Felipe Luna,
alleging that he was owner of a house and lot in Caloocan, Rizal; that on January 26, 1945, he
borrowed money from Felipe Luna and mortgaged said realty; that through deceit he signed a
deed of pacto de retro instead of mortgage, and that through ejectment proceedings Luna
obtained possession. He asked for declaration of dominion and other allied remedies.

(2) On January 12, 1947, the defendant Luna answered, and asserting their contract was a
conditional sale, pleaded

(3) On June 21, 1947, Hortensio A. Domingo filed a res judicata.

complaint in intervention averring that on October 15, 1942, he purchased the property from
Olvina, who reserved the right to repurchase it within one year; that Olvina failed the right to buy it
back; and that Luna knew this sale when he purchased the realty in 1945. Domingo therefore
prayed for declaration of ownership and other consequent relief against both parties.

(4) On August 4, 1947, that court admitted the complaint in intervention.

(5) On September 3, 1947, the intervenor submitted a motion asking that plaintiff and defendant
be declared in default to failure "to file their answer to intervenor's complaint of intervention"
within ten days "under section 5, Rule 13, of the Rules of Court".

(6) As requested, on September 29, 1947, the court issued an order holding the plaintiff and the
defendant in default.

(7) The intervenor was subsequently permitted to prevent his evidence, and on August 31, 1948,
a decision was rendered upholding Domingo's ownership of the house and, among other things,
ordering Felipe Luna to vacate it and pay rents from November, 1946.

(8) On October 23, 1948, Felipe Luna moved that the judgment be set aside, and the case
reinstated, alleging that he had just been notified of the decision and that he had a good defense
because he was an innocent purchaser for value without notice, whose document was duly
inscribed in the Registry, etc. The petition was supported by an affidavit of merit.

(9) On March 15, 1949, the motion was denied.

(10) On April 19, 1949, the defendant through another attorney reiterated the petition for
reinstatement and, upon equitable considerations, asked that the default order be lifted.

(11) On July 14, 1949, the motion was denied.

(12) On September 13, 1949, Felipe Luna through a third attorney moved that the default order
and the judgment against him be set aside, for the reason that said default order was not
authorized by law.

(13) On October 28, 1949, the court denied the motion and directed the issuance of execution.

(14) On November 8, 1949, this petition for certiorari was filed. It is mainly grounded upon the
illegality of the order of default.
C. Discussion: In Applying for the default order and issuing it, Hortensio A. Domingo and the
lower court expressly invoked section 5 of Rule 13, which reads as follows:

SEC. 5. Time. — Unless a different period is fixed by the court, the complaint or answer
in intervention shall be filed within ten (10) days from notice of the order permitting such
intervention.

There was plain error. The ten-day period is fixed for the intervenor, who may either his petition
for intervention has been granted. In the Olvina-Luna litigation the intervenor already submitted
his complaint. The 10-day period was not meant for the plaintiff nor the defendant.

Realizing their mistake, respondents presently quote section 4, Rule 13, which prescribes:

SEC. 4. Complaint or answer in intervention if permitted. — If permitted, the intervention

shall be made by complaint filed and served in regular form, and may be answered as if it
were an original complaint; but where intervenor unites with the defendant in resisting the
claims of the plaintiff, the intervention may be made in the form an answer to the
complaint.

And they argue that plaintiff and defendant were duty bound to answer the complaint in
intervention within fifteen days from service, and that such period had expired on September 29,
1947, when the default order was entered. The reply to this that the section says, "may be
answered" and the word "may" is usually permissive, not mandatory. Furthermore, supposing that
it is mandatory, by the very count of respondents, the 15-day period had not yet expired on
September 3, 1947 when the motion for default was made. Obviously this is reckoning date —
not the day of the order.

Respondents maintain that the service of the notice of hearing "cured whatever irregularity the
order of default may have created". The service was not actual. If at all, it was merely
constructive. And even if actually received, the notice would have afforded no remedy, for the
reason that even if defendant had appeared at the hearing pursuant to such notice, he could
adduce no evidence, nor could he be heard because of the default orde.r 1 The service of such
notice was unnecessary and useless, and therefore it could have no curative effect. It is just the
same as if the court had not sent the notice and had proceeded to admit the intervenor's evidence
in the absence and without the knowledge of the adverse parties.

As the judgment of August 31, 1948, was promulgated almost a year after the order of default, the
idea crossed our minds that herein petitioner should be held negligent for not having requested
the lifting thereof within that long period of time; but the thought had to be promptly rejected
because the date is not shown when he was advised of such default order, if he was notified at
all. The possible suggestion that he would have been alerted by the receipt of copy of the
application for default, may be answered with the statement that he understood he was not in
default and had every right to relax, expecting the court to rule accordingly.

From the foregoing considerations, we conclude that the defendant Felipe Luna was deprived of
his day in court through patently erroneous interpretation of the rules.

A default judgment may be set aside where it was entered by the clerk without any
authority therefor, as where default was improperly entered for failure of plaintiff to
answer a cross complaint which under the circumstances was unnecessary. Also a
judgment entered contrary to the course of the court be inadvertence, improvidence,
mistake, or the like may be set aside. A judgment may be set aside whether there was a
total lack of authority to enter nay judgment or only lack of authority to enter a particular
judgment, when the entry of such a judgment was premature, as where it was entered
 before expiration of the time for the filing of an answer, before expiration of a continuance
granted by the trial judge, pending an application for a change of venue, prior to the day
reserved for decision ion a demurrer. A default judgment erroneously rendered where
defendant was not in default may be vacated. (49 C.J.S., pp. 617-618.) (Emphasis ours.)

D. Judgment: Wherefore, the order of default and the proceedings subsequent or pursuant
thereto should be, and are hereby, annulled and set aside.

Republic of the Philippines

SUPREME COURT
Manila

SECOND DIVISION

G.R. No. L-28742 April 30, 1982

VIRGILIO CAPATI, plaintiff-appellant,

vs.
DR. JESUS P. OCAMPO, defendant-appellee.

ESCOLIN, J.:

We set aside the order of the Court of First Instance of Pampanga in Civil Case No. 3188 which
dismissed the plaintiff's complaint on ground of improper venue.

Plaintiff Virgilio Capati a resident of Bacolor, Pampanga, was the contractor of the Feati Bank for
the construction of its building in Iriga, Camarines Sur. On May 23, 1967, plaintiff entered into a
sub-contract with the defendant Dr. Jesus Ocampo, a resident of Naga City, whereby the latter, in
consideration of the amount of P2,200.00, undertook to construct the vault walls, exterior walls
and columns of the said Feati building in accordance with the specifications indicated therein.
Defendant further bound himself to complete said construction on or before June 5, 1967 and, to
emphasize this time frame for the completion of the construction job, defendant affixed his
signature below the following stipulation written in bold letters in the sub-contract: "TIME IS
ESSENTIAL, TO BE FINISHED 5 JUNE' 67."

Claiming that defendant finished the construction in question only on June 20, 1967, plaintiff filed
in the Court of First Instance of Pampanga an action for recovery of consequential damages in
the sum of P85,000.00 with interest, plus attorney's fees and costs. The complaint alleged inter
alia that "due to the long unjustified delay committed by defendant, in open violation of his
express written agreement with plaintiff, the latter has suffered great irreparable loss and damage
... "

Defendant filed a motion to dismiss the complaint on the ground that venue of action was
improperly laid. The motion was premised on the stipulation printed at the back of the contract
which reads:

14. That all actions arising out, or relating to this contract may be instituted in the
Court of First Instance of the City of Naga.

Plaintiff filed an opposition to the motion, claiming that their agreement to hold the venue in the
Court of First Instance of Naga City was merely optional to both contracting parties. In support
thereof, plaintiff cited the use of the word "may " in relation with the institution of any action arising
out of the contract.

The lower court, in resolving the motion to dismiss, ruled that "there was no sense in providing
the aforequoted stipulation, pursuant to Sec. 3 of Rule 4 of the Revised Rules of Court, if after all,
the parties are given the discretion or option of filing the action in their respective residences,"
and thereby ordered the dismissal of the complaint.

Hence, this appeal.

The rule on venue of personal actions cognizable by the courts of first instance is found in
Section 2 (b), Rule 4 of the Rules of Court, which provides that such "actions may be commenced
and tried where the defendant or any of the defendants resides or may be found, or where the
plaintiff or any of the plaintiffs resides, at the election of the plaintiff." The said section is qualified
by the following provisions of Section 3 of the same rule:

By written agreement of the parties the venue of an action may be changed or

transferred from one province to another.

Defendant stands firm on his contention that because of the aforequoted

covenant contained in par. 14 of the contract, he cannot be sued in any court
except the Court of First Instance of Naga City. We are thus called upon to rule
on the issue as to whether the stipulation of the parties on venue is restrictive in
the sense that any litigation arising from the contract can be filed only in the court
of Naga City, or merely permissive in that the parties may submit their disputes
not only in Naga City but also in the court where the defendant or the plaintiff
resides, at the election of the plaintiff, as provided for by Section 2 (b) Rule 4 of
the Rules of Court.

It is well settled that the word "may" is merely permissive and operates to confer
discretion upon a party. Under ordinary circumstances, the term "may be"
connotes possibility; it does not connote certainty. "May" is an auxillary verb
indicating liberty, opportunity, permission or possibility. 1
In Nicolas vs. Reparations Commission 2, a case involving the interpretation of a stipulation as to
venue along lines similar to the present one, it was held that the agreement of the parties which
provided that "all legal actions arising out of this contract ... may be brought in and submitted to
the jurisdiction of the proper courts in the City of Manila," is not mandatory.

We hold that the stipulation as to venue in the contract in question is simply permissive. By the
said stipulation, the parties did not agree to file their suits solely and exclusively with the Court of
First Instance of Naga. They merely agreed to submit their disputes to the said court, without
waiving their right to seek recourse in the court specifically indicated in Section 2 (b), Rule 4 of
the Rules of Court.

Since the complaint has been filed in the Court of First Instance of Pampanga, where the plaintiff
resides, the venue of action is properly laid in accordance with Section 2 (b), Rule 4 of the Rules
of Court.

WHEREFORE, the order appealed from is hereby set aside. Let the records be returned to the
court of origin for further proceedings. Costs against defendant-appellee.

SO ORDERED.

Republic of the Philippines

SUPREME COURT
Manila

SECOND DIVISION

G.R. No. 127367 May 3, 1999

GOLD LOOP PROPERTIES, INC., EMMANUEL ZAPANTA and FLORA

ESTRELLA, petitioners,
vs.
HON. COURT OF APPEALS and PHILIPPINE INTERNATIONAL TRADING
CORPORATION, respondent.

QUISUMBING, J.:

This petition for review, under Rule 45 of the Rules of Court, assails the decision 1 of the Court of
Appeals which affirmed in toto the judgment 2 of the Regional Trial Court, Branch CX, Pasay City,
and ruled in favor of private respondents, Philippine International Trading Corporation.

The facts as found by the trial court, which the appellate court adopted and to which we give
credence, reveal that on February 5, 1991, petitioner Gold Loop Properties (GLP), represented by
its Executive Vice-President Estrella together with Fe Zapanta, entered into a Deed of Exchange
with Philippine International Trading Corporation (PITC), a government controlled corporation. In
that Deed, GLP, owner of a 16-storey residential condominium called Gold Loop Towers, located
at Ortigas Commercial Complex, Pasig City, exchanged ten (10) condominium units with a total
value of P25,846,067.00 for 304,071.38 bags of cement belonging to PITC, each bag containing
50 kilos. Subsequently, GLP offered an additional condominium unit in exchange for what is
referred to as "bad stock" cement, or cement that was beginning to harden. In a letter dated
March 25, 1991, PITC indicated it was amenable to the offer and suggested that lawyers prepare
the necessary contract documents. On April 11, 1991, a Memorandum of Agreement (MOA) was
executed between GLP and PITC. 3 Pertinent portions of the MOA read as follows:

WHEREAS, GLP has offered to buy aforesaid unbagged or loose imported

cement at PITC-leased warehouses in Taguig, Pandacan and Paco, Metro
Manila on credit at the price set by PITC;

WHEREAS, PITC has accepted GLP's offer under terms and conditions
hereinafter specified;

NOW, THEREFORE, for and in consideration of the foregoing premises and the
covenants hereinafter stipulated, the parties hereby agree as follows:

1. SUBJECT MATTER, DELIVERY AND PRICE

1.1 GLP shall purchase on credit all PITC stock of loose or

unbagged cement located at PITC-leased warehouses in Taguig,
Pandacan and Paco, Metro Manila, which per inventory records
as of 02 April 1991 amounts to approximately 1,500 MT. Actual
quantity shall be subject to final reconciliation after all cement
shall have been withdrawn by GLP.

xxx xxx xxx

1.3 Price for unbagged/loose cement is hereby set at P1.50 per

kilo. The total value of the 1,500 MT unbagged/loose cement,
subject of this Agreement is P2,250,000.00.

2. TERMS OF PAYMENT

2.1 Payment shall be made on or before the end of six (6)

months from date of execution of this Agreement.

2.2 GLP shall issue a postdated check (PDC) in favor of PITC

dated not later than 11 October 1991 in the amount of PESOS:
TWO MILLION FIVE HUNDRED TWENTY THOUSAND PESOS
(P2,520,00.00) 4 representing the value of the cement purchased
on credit and interest for 180 days at the rate specified in Section
2.4 hereof, secured by (i) a Promissory Note (PN) with at least
two Joint and Solidary Signatories (JSS) and (ii) a Real Estate
Mortgage. The post-dated check shall be submitted by GLP to
PITC upon signing hereof. Nothing herein shall be construed as
preventing GLP from paying PITC in cash for the actual
quantities of cement purchased even before the end of the six-
month period.

xxx xxx xxx

 2.5 GLP may, in lieu of cash, offer as payment a condominium
unit acceptable to PITC whose value equals the value of cement
purchased by GLP plus other (sic) all other charges as specified
in Section 3.3 provided that such offer is expressly made to
PITC before the end of the third month from the date of this
contract. Upon acceptance by PITC of aforesaid condominium
unit offered by GLP, PITC shall return to GLP the post dated
check mentioned in Section 2.2 hereof and cancel the Real
Estate Mortgage executed by GLP in favor of PITC pursuant to
Section 2.2. If, however PITC refuses the condominium unit
offered by GLP for any justifiable reason, GLP shall remit
payment for cement and all other charges in cash in the manner
provided in Pars. 2.1 and 2.2 hereof inclusive of interests. In the
event that PITC accepts GLP's condominium unit in payment for
the cement purchased no interest charges shall be imputed on
the purchase price. 5

2.6 Payment shall be payable to: PHILIPPINE INTERNATIONAL

TRADING CORPORATION.

2.7 Payment shall be made on or before the due date without

need of demand and failure to make such payment on time shall
entitle PITC to charge additional penalty, interest on late
payments at the PITC Financial Assistance Rate (FAR) plus two
percent (2%) per month of delinquency plus other charges as
may reasonably be imposed, without prejudice to PITC's availing
of other remedies as hereinafter outlined and those provided
under existing laws.

8. OTHER TERMS AND CONDITIONS

8.1 No modification, alteration or waiver of any provisions herein

contained, shall be binding on the parties hereto unless
evidenced by a written agreement duly signed by both parties.
Any written amendment to this AGREEMENT duly approved and
signed by authorized officers or representatives of both parties
shall be considered part of this contract and shall remain valid
and binding until properly rescinded by either or both parties
thereto. 6

Pursuant to the MOA, GLP issued a check 7 in the amount of two million five hundred twenty
thousand pesos (P2,250,000.00) bearing the signature of its president Emmanuel Zapanta. A
promissory note 8 dated April 11, 1991 for the amount of P2,250,000.00, to mature on October 11,
1991 was executed by Estrella as GLP's Executive Vice-President and in her personal capacity,
and by the spouses Emmanuel and Fe Zapanta who undertook to bind themselves liable jointly
and severally with GLP. A real estate mortgage was likewise executed on said date encumbering
UNIT NE R-51 in the Gold Loop Towers, with the certificate of title delivered to PITC. A third
transaction was later entered into by both parties wherein GLP sought to buy additional cement
from PITC worth P350,000.00. 9

On October, 18, 1991, with the issued check having reached maturity, PITC deposited the check
for encashment but it was returned for having been drawn against insufficient funds. In a demand
letter sent to GLP, dated November 5, 1991, PITC stated that since the former was not able to
give a condominium unit acceptable to the latter within three (3) months as stated in the MOA,
and with the six (6) month-period within which it was to pay for the value of the cement having
lapsed, PITC took the check given by GLP for value stated on its face and deposited it in their
account. In the said letter, PITC also attached a final statement concerning the value of the
cement GLP purchased and the pertinent charges in accordance with the MOA. The outstanding
obligation including charges totalled P2,328,824.46 as of November 4, 1991. PITC further stated
that although the total value of obligation (P2,328,824.46) is less than the value of the check
issued, (P2,520,000.00) the issued check is still deemed as payment of the obligation, pursuant
to clause 2 3 of the MOA. PITC indicated, however, that it would refund to GLP any excess in
said payment.

When GLP failed to meet the demand in terms of either making arrangements for the payment by
the drawee bank of the check or praying its obligation in cash to PITC, the latter filed charges
against Estrella and Emmanuel Zapanta for estafa and violation of Batas Pambansa Bilang 22
(Bouncing Checks Law). 10

Pending preliminary investigation of the charges, a civil complaint was filed this time by GLP
against PITC with the prayer that PITC be ordered to comply with the agreement for the swapping
of cement in exchange for the condominium unit, and that the check issued to PITC be declared
null and void for want of consideration. It also prayed that PITC pay GLP costs and damages.
Concurrently, GLP filed a Motion for Suspension of the Preliminary Investigation of the criminal
case initiated by PITC, on the ground that the civil complaint filed by GLP constitutes a prejudicial
question. 11

Private respondent PITC answered the complaint with permissive and compulsory counterclaims,
alleging that the MOA was the latter contract which superseded the barter agreement. PITC also
averred that as of April 30, 1992, the amount owed to it by GLP already totalled P3,197,660.11,
inclusive of interest and penalties. 12

The issues as formulated in the pre-trial order and adopted by the trial court were as follows:

1. Whether or not real agreement of the parties was one of "swapping";

2. If in the affirmative, whether or not the check issued by plaintiffs was intended
as a form of payment.

3. If the answer to issue No 1 is in the negative, whether or not the transaction

between the parties is covered by the Memorandum of Agreement of April 11,
1991;

4. Whether or not either the plaintiffs of (sic) the defendant is/are entitled to
damages;

5. Whether or not the plaintiffs are liable under defendant's permissive and
compulsory counterclaim. 13

The trial court found that the MOA dated April 11, 1991 was the contract between the parties and
that its provisions were clear. The exchange of the condominium unit for the bad stock of cement
was incorporated in the agreement but such was presented as an alternative. The trial court
likewise pointed out that the MOA provided that "swapping" might only be done in lieu of cash
payment and if GLP expressly made the offer before the end of the third month from the date of
the contract. Such offer by GLP was also dependent upon PITC's acceptance of the
condominium unit being offered. The trial court further characterized the agreement as a sale on
credit with the purchase price to be paid in six (6) months, and GLP was given the option to pay
in kind as long as such option was exercised within three (3) months from the date of the
execution of the agreement. Petitioners' contention — that the issuance of the check, the real
estate mortgage and the promissory note were only in compliance with the regulation of the
Commission on Audit — was negated by trial court. The dispositive portion of the trial court's
decision reads:

WHEREFORE, judgment is hereby rendered DISMISSING the Complaint. On the

Permissive Counterclaim, judgment is rendered in favor of the defendant and
against the plaintiffs, ordering them to pay defendant jointly and severally
P3,197,660.11 representing the value of 1,333,925 Metric Tons of cement at
P1.50 [per] kilo inclusive of interest and penalties of April 30, 1992, plus all
accrued interests and penalties from May 1, 1992 until the amount is fully paid.
The [Compulsory] Counterclaim is hereby DISMISSED. 14

Petitioners appealed and questioned the trial court's decision, raising the following assignment of
errors:

1. The trial court committed a serious and palpable error and grave abuse of
discretion in not holding that the real agreement between the parties was one of
swapping.

2. The trial court committed a serious and palpable error and grave abuse of
discretion in not ordering defendant to comply with the Memorandum of
Agreement for the swapping of the cement with one of the plaintiff's condominium
units;

3. The trial court committed a serious and palpable error and grave abuse of
discretion in ordering the plaintiffs jointly and severally to pay the value of the
check despite the fact that the agreement was one for swapping;

4. The trial court committed a serious and palpable error and grave abuse of
discretion in ordering plaintiffs to pay the amount of P3,197,660.11 despite the
fact that defendant failed to prove by competent evidence the amount of the
obligation, granting for the sake of debate that the transaction was one for sale
on credit;

5. The trial court committed a serious and palpable error in not holding defendant
liable to plaintiffs for the damages claimed in the complaint. 15

The appellate court upheld the trial court's decision which dismissed the complaint. It ruled that
the agreement between the parties is one of sale on credit and not swapping. It found no
ambiguities in the provisions which would require the court to go beyond its terms as it indubitably
showed that the parties contemplated a sale on credit as opposed to the Deed of Exchange,
which was the first agreement on February 5, 1991, and fully complied according to its
stipulations. The provisions on swapping as contained in paragraph 2.5 16 merely granted an
option which GLP might exercise to offer one condominium unit in payment of the cement before
the end of the third month, but PITC might accept or refuse the said offer. The exchange of
communication between the parties which made reference to an offer to swap was accepted by
PITC in its letter dated March 25, 1991, but such was not the final agreement as PITC indicated
that it will draft a final contract. GLP signed its "conforme" in said letter, after which, the
Memorandum of Agreement was executed on April 11, 1991 with its modifications clearly stated in
its provisions. 17

The appellate court's ruling, in part, affirmed the nature of the transaction as a purchase on credit,
and disbelieved petitioner GLP's theory pertaining to the purpose of the issued check, as follows:
 The introduction of evidence aliunde or extrinsic evidence would destroy stability
of written agreements, which is the underlying purpose of animating the parol
evidence rule. Accordingly, the testimony of Flora Estrella (executive vice-
president of Goldloop) tending to show that the three transactions between the
parties were all swapping agreements, does not help plaintiff's cause. Neither is
her allegation that the post-dated check was issued merely as a collateral and in
order to comply with the requirements of the Commission on Audit substantiated.
The issuance of a post-dated check (not later than October 11, 1991) for
P2,520,000.00 was expressly stipulated among the terms of payment (par. 2.2).
Likewise the execution of the promissory note and real estate mortgage was
expressly stipulated in par. 2.2 which states that the check shall be "secured by
(i) Promissory Note (PN) with at least two Joint and Solidary Signatories (JSS)
and (ii) a Real Estate Mortgage." These requirements underscore that the
Agreement completed a purchase on credit, and in no way indicate that the
parties intended a simple barter or swapping, as contended by plaintiffs-
appellants.

Neither are we persuaded by plaintiffs theory that the issuance of the check
execution of the mortgage and the promissory note were merely done to comply
with the requirements of the Commission on Audit No auditing law or rule has
been presented to support this theory. 18

Petitioners' main allegation now before this Court is that the Memorandum of Agreement did not
reflect the true intent of the parties. They claim that the MOA should only refer to the subject of
the contract, namely the bad stock cement. What governs the swapping of petitioners'
condominium unit for the cement would another matter,vide the Deed of Exchange. They state
that the testimony of Estrella should have been taken into account to explain what the parties
intended. Petitioners wondered why respondent court failed to note the previous transaction,
which was swapping of ten (10) condominium units for cement. Petitioners also claimed that
respondent PITC considered it advantageous, "a better deal", to accept the swapping because
"the condominium unit is a valuable property in existence while a postdated check could be
dishonored. 19

Petitioners Estrella also stated that the execution of the Memorandum of Agreement, the
promissory note, and the real estate mortgage, were all undertaken only to satisfy the
Commission on Audit's requirements. According to petitioners, they did not issue a check in the
first transaction because it was immediately executory. But in the second deal, the cement was
still to be rebagged and the bags counted. Seeing that this process would take some time,
petitioners alleged that PITC wanted to show something concrete to the auditors, hence, the need
for GLP to issue a check to PITC. Finally, petitioners claim that there is no legal basis or the
respondent court find them liable jointly and severally.

Private respondent PITC asserts that the issues raised by petitioners concerns questions of fact,
outside the ambit of the Court's power of review. The issues do not even merit being considered
as exceptions to the rule that purely factual matters could not be reviewed, according to the
private respondent. It adds that petitioners have failed to show that both trial and appellate courts
have decided the case in a way not in accord with the applicable decisions of this Court, nor that
the lower courts have departed from the usual course of proceedings. It avers further that findings
of fact which petitioners question are the findings of the trial court duly affirmed by the respondent
court, which are now conclusive upon the parties. Private respondent concludes that the issues
now being raised by petitioners are nothing but a rehash of those already settled by the appellate
court. 20

We find merit in private respondent's contentions. There is no ambiguity in the terms of the
contract, executed on April 11, 1991, to which both parties had indicated their consent. It was
never denied that the MOA, the promissory note and the check issued, came from the petitioners.
It is too late for petitioners to question the intent of the contract, on the self-serving ground that it
did not reflect the parties' real agreement. Petitioners' claim that the swapping (or barter) was
what the parties intended does not square with the terms of the MOA, which shows a sale on
credit. They cannot now claim that contract should not be enforced. There was no reason found
by both lower courts to go beyond the terms stated in the contract, which are unambiguous. The
issues now raised by the petitioner would require anew an examination of the terms of the
contract and what is required from both parties. These matters have already been passed upon
by the trial court, whose findings were affirmed by the appellate court.

While the March 25, 1991 letter of PITC to GLP made reference to a swap, proposed by GLP,
PITC suggested that the contract be drafted by the lawyers. Thus, the April 11, 1991 MOA by the
parties contained the final terms of the contract which are binding as therein specified. The MOA
in paragraph 2.5 indeed states that GLP may, in lieu of cash, offer a condominium
unit acceptable to PITC. But this statement requires a consideration of the entire provision, its
nature, its object and the consequences that would follow. The surrounding circumstances of the
case would show that the word "may" in the cited paragraph is used in the usual sense and
commonly understood as only permissive and not mandatory. 21 In any event, PITC did not find
the offer of a condominium unitacceptable, but preferred to go for payment in cash or check.

With regard to the issue of computation of the total amount owed to private respondent and the
solidary responsibility of the petitioners, we see no reason likewise to depart from the findings of
the appellate court, as follows:

Anent the fourth assignment of error, plaintiffs-appellant questions the basis of

the amount awarded by the trial court in a total sum of P3,197.660.11 as
purchase price of the cement as of April 30, 1992 inclusive of interest and
penalties. Record shows that the said amount was based on statements of
account nos. 91-241 dated November 4, 1991 (exhibit "5"; p. 362 Record) and
92-068 dated April 29, 1992 (exhibit "6", p 363), which documents were duly
identified in court by the supervisor of defendant-appellee's Treasury Department
[tsn. June 10, 1993]. The same were not sufficiently controverted by plaintiffs-
appellants.

Neither do We find error on the part of the trial court when it held Zapanta and
Estrella jointly and severally liable with Gold Loop Properties, Inc. as said ruling
is in accord with what was agreed upon in the Memorandum of Agreement (par.
2.2 thereof p. 19 Record; Exhibit "C") and the promissory note, where both
Zapanta and Estrella signed not only as officers of Gold Loop Properties Inc. but
likewise signed in their personal capacities as joint and solidary debtors (page
31, Record; Exhibit "E"). 22

To recapitulate, it is not the function of this Court to weigh anew the evidence already passed
upon by the Court of Appeals. Our review is generally confined to correcting errors of law, if any,
that might have been committed below. 23 In the case at bar petitioners have not shown
exceptional circumstances that merit disturbing the findings of fact below. 24 Not only are the
terms of the assailed MOA between the parties clear, in our view, but the contractual obligations
of the parties thereto are also unambiguous. No reversible error could be attributed to the
assailed decision, much less could any grave abuse of discretion be imputed to respondent court.

WHEREFORE, the instant petition is hereby DENIED, and the appealed decision is hereby
AFFIRMED. Costs against petitioners.1âwphi1.nêt

SO ORDERED.
 Republic of the Philippines
SUPREME COURT
Manila

EN BANC

G.R. No. L-48848 May 11, 1988

FEDERATION OF FREE WORKERS and ALLIED SUGAR CENTRALS EMPLOYEES &

WORKERS UNION-FFW,petitioners,
vs.
HON. AMADO G. INCIONG, in his capacity as Acting Secretary of Labor, HON. RACHEL
FIDELINO, in her capacity as Chairman of the Wage Commission and ALLIED SUGAR
CENTRALS COMPANY, respondents.

Jaime D. Lauron, Romeo P. Torres, Edgar Parker, Jr. and Alexis Zerrudo for petitioners.

Felipe, Torres & Associates for private respondent.

The Solicitor General for public respondents.

GANCAYCO, J.:

This is a Petition erroneously captioned as one for certiorari and declaratory relief. This
notwithstanding, and in the interest of justice, We have treated the same as one for certiorari
under Rule 65 of the Rules of Court on account of the jurisdictional issues raised herein.

The record of the case discloses that the herein petitioner Federation of Free Workers is a labor
organization registered with the Department of Labor and Employment. It is the certified collective
bargaining agent of all the rank and file employees of the herein private respondent, the Allied
Sugar Centrals Company, a registered partnership.

On April 21, 1977, Presidential Decree No. 1123 was promulgated requiring all employers in the
private sector to pay their employees an across-the-board increase of P60.00 in their existing
monthly emergency allowance as provided for in an earlier law, Presidential Decree No. 525. The
increase was to take effect on May 1, 1977. The Decree also authorizes the Secretary of Labor to
issue the appropriate rules necessary to implement the provisions of the said law, including such
regulations to govern the procedure through which financially distressed employers may be
exempted from the requirements of the same. This authorization is recited in Section 4 thereof to
wit-

SEC. 4. The Secretary of Labor and the Commissioner of the Budget shall issue
appropriate rules and regulations to implement this Decree for their respective
sectors. Under such rules and regulations, distressed employers whether public
 or private may be exempted while in such condition in the interest of
development and employment.

On May 1, 1977, the Secretary of Labor issued the implementing rules and regulations pertaining
to the Decree. The procedure prescribed in the said Rules regarding exemptions from the
requirement of the law is found in Section 6 thereof, viz —

Section 6. Application for exemption. — Employers falling under Section 1,

paragraph (1) thereof, may apply for exemption with the Secretary of Labor within
thirty (30) days from the effectivity of these Rules. The application shall be under
oath showing their inability to implement the Decree and the reasons therefor
which shall be accompanied by a certified copy of the Income Statement and the
Statement of Assets and Liabilities for the last two (2} calendar years filed with
Government entities such as the Securities and Exchange Commission and the
Bureau of Internal Revenue, and such other proofs as way be required by the
Secretary of Labor.

xxx xxx xxx

Under Section 19 thereof, the said Rules were to take effect on the date of issuance, May 1,
1977.

Sometime in May, 1977, the private respondent was about to pay the increase in emergency
living allowance mandated by the Decree. Preparations were made in order to effectuate the
payment but the attempt to do so was short-lived. The private respondent decided against the
payment and the plan was, therefore, aborted.

Meanwhile, on August 2, 1977, the petitioner wrote to the Secretary of Labor inquiring if the
private respondent filed an application for exemption in accordance with the abovecited Section
6. The petitioner also requested that it be furnished a copy of such application if one had indeed
been filed by the private respondent. On August 30,1977, the herein respondent Chairman of the
Wage Commission of the Department of Labor Rachel Fidelino sent her reply to the petitioner
stating therein that there was no application in the name of the private respondent in the records
of their office. 1

On September 27, 1977 or more than 100 days after the said rules took effect, the private
respondent filed with the Wage Commission its application for exemption from paying the P60.00
increase mandated under Presidential Decree No. 1123. The application was accompanied by
some financial statements.

In support of the application, the private respondent stressed, inter alia, that it had suffered
substantial losses from its operations during the fiscal years 1974-1975 and 1975-1976, and that
if the company were to pay the increase, the financial position of the firm would be adversely
affected and this could lead to an inevitable shutdown of the business. On October 19, 1977, the
private respondent submitted its income tax return for the fiscal year concerned, a sworn
statement regarding the total number of employees in the company, and other pertinent
information relating to the same. 2

Sometime thereafter, the respondent Chairman of the Wage Commission submitted her report to
the Secretary of Labor recommending the approval of the said application. 3 On November 21,
1977, the herein respondent Acting Secretary of Labor Amado Inciong wrote to the private
respondent informing it that its application was approved for a period of one year, effective May 1,
1977. The letter of approval recited therein that the same is final and unappealable. 4 A notice of
the order of approval was sent to both the president of the petitioner labor organization and the
private respondent.

On December 2, 1977, Chairman Fidelino received a letter from the petitioner dated November
17, 1977 again inquiring on the existence of any application on the part of the private respondent.
Chairman Fidelino did not send any reply.

On December 15, 1977, the petitioner filed with the Office of the Secretary a motion for
reconsideration seeking a reversal of the approval of the said application on the grounds that the
exemption granted to the private respondent is discriminatory and that the firm is not in unsound
financial condition. 5

On March 3, 1978, the private respondent filed another application for exemption, this time for the
year 1978. In a letter addressed to the Secretary of Labor dated May 31, 1978, the petitioner
opposed the application and reiterated its objection to the exemption granted to the firm for 1977
for the same reasons earlier mentioned. 6

On June 5,1978, Chairman Fidelino overruled the opposition and motion for reconsideration
which stressed that the private respondent does not appear to be in distressed financial condition
as observed by a financial analyst of the Commission. 7 Thus, on June 9, 1 978, Acting Secretary
Inciong issued an order approving the second application for exemption covering 1978, for a
period of one year effective May 1 thereof. The approval also recited therein that the same is final
and unappealable. 8

Hence this Petition. The petitioner argues that the herein public respondents-Acting Secretary
Inciong and Chairman Fidelino committed a grave abuse of their discretion, amounting to loss of
jurisdiction, in effecting the approval of both applications for exemption sought by the private
respondent. The Petition seeks the annulment of the orders issued by the Acting Secretary
relating to such approval. The substantial grounds relied upon are as follows —

(1) The first application for exemption was filed beyond the 30 day reglementary
period prescribed in Section 6 of the rules implementing the provisions of
Presidential Decree No. 1123;

(2) The first application for exemption was not under oath as required under
Section 6 of the same rules;

(3) The first application for exemption was not supported by the documents
required also under Section 6 aforecited;

(4) Chairman Fidelino had no basis for recommending approval of the

applications;

(5) The petitioner was not afforded the opportunity to be heard in its opposition to
the applications in violation of the due process clause of the Constitution;

(6) The petitioner was never served a copy of the pertinent documents relating to
the approval of both applications filed by the private respondent;

(7) The first application for exemption was tainted with bad faith and unfair labor
practice on the part of the private respondent;
 (8) The private respondent is in a financial position to pay the additional
emergency allowance mandated by Presidential Decree No. 1123; and

(9) The private respondent is using its corporate personality to avoid paying the
said additional emergency allowance to the prejudice of the petitioner.

This Court required the respondents to file their Answer to the Petition. 9 So the respondents filed
their Answer contesting therein the substantial allegations in the Petition. Thereafter, the parties
submitted other additional pleadings. In due time, the case was deemed submitted for decision.

After a careful examination of the entire record of the case, We find the instant Petition to be
devoid of merit.

(1) Although the private respondent admits that the first application was filed beyond the 30 day
reglementary period mentioned in Section 6 of the implementing rules, We believe that
compliance with the said period is merely directory. The cited provision itself employs the word to
wit. —

... Employers falling under Section 1, paragraph (1) thereof, may apply for
exemption with the Secretary of Labor within (30) days from the effectivity of
these Rules. ... (emphasis supplied.)

In In re Guarina, 10 this Court had this to say on the proper interpretation of the use of this word in
a statute, viz-

Whether the word "may", a statute is to be construed as mandatory and imposing

a duty, or merely as permissive and conferring discretion, is to be determined in
each case from the apparent intention of the statute as gathered from the
context, as well as from the language of the particular provision. The question in
each case is whether, taken as a whole and viewed in the light of surrounding
circumstances, it can be said that a purpose existed on the part of the legislator
to enact a law mandatory in his character. If it can, then it should be given a
mandatory effect; if not, then it should be given its ordinary permissive effect. ....

It must be stressed that Presidential Decree No. 1123 did not set a deadline within which
employers may seek exemption therefrom.

While the ostensible purpose behind Presidential Decree No. 1123 is to protect wages, incomes
and employment,11 the law also takes into consideration the possibility that some private
employers may not be in a financial position to pay an increase in the monetary benefits of their
employees. Thus, the Decree allows distressed employers to seek exemptions while in such
condition and the Secretary of Labor has been mandated to issue the pertinent rules governing
the procedure by which distressed employers can seek such exemption. The standard set by the
law to guide the Secretary in determining which employer should be so entitled is "the interest of
development and employment. 12 The Decree, therefore, seeks a balancing of the interests of"
both employer and employee as regards the matter of exemption, i.e., the business ought to
remain viable for the benefit of the private employer without prejudice to the pecuniary rights of
the employee.

Taking into account this purpose of the Decree, We believe that a liberal construction of the 30-
day period is in accord with that purpose. An employer who is distressed immediately before the
lapse of the 30-day period is no different from one who becomes distressed immediately after the
said period, as in the case of the private respondent. Both distressed employers would certainly
need the benefit of the Decree. On the basis of the observations mentioned earlier, the Decree
could not have intended to preclude from its coverage the latter employer. The implementing
rules should echo, and not subvert, the purpose underlying the enabling law.

Inasmuch as compliance with the 30-day period recited in Section 6 is merely permissive, the
approval of applications filed beyond the said period is addressed to the discretion of the
Secretary of Labor. On this score, the petitioner has not satisfactorily demonstrated grave abuse
of discretion on the part of the respondent Acting Secretary in approving the first application filed
by the private respondent beyond the 30-day deadline.

(2) The allegation of the petitioner that the first application for exemption was not under oath is
unavailing. Assuming, arguendo, that the application was not under oath, the infirmity appears to
have been cured by the financial statement and report submitted to the Wage Commission by the
private respondent. The statement and the report are certified by public accountants under their
professional oath. The verification of the financial statements and the report is, under the
circumstances obtaining in this case, more important than the verification of the application itself
because the financial statement and report demonstrated the financial distress more
comprehensively than the application.

However, compliance with the requirement as to verification should be emphasized. That should
be the Ideal situation. While a liberal attitude has been taken by this Court on this matter under
the circumstances of this case, the Court reminds all litigants that the requirement as to
verification must be complied with.

(3) The petitioner also failed to show that the first application for exemption was not supported by
the required financial documents. On the contrary, the application was accompanied by a
financial statement for 1975 and a financial report for 1976.

(4) The petitioner points out that the respondent Chairman of the Wage Commission had no basis
to support her recommendation that the first application ought to be approved by the Secretary of
Labor. This claim is belied by the fact that the applications had indeed been accompanied by
pertinent documents and that financial statements were later submitted by the private respondent
for the consideration of the Wage Commission.

(5) The petitioner alleges that it was not afforded the opportunity to be heard in its opposition to
the applications in violation of the due process clause of the Constitution. This contention is also
unavailing. The petitioner was given the opportunity to contest the approval of the first application
when it actually sought a reconsideration of the same in 1977. Moreover, the petitioner actually
opposed the second application for exemption in 1978. The right to due process is not denied
when an aggrieved party was given the opportunity to be heard. 13

(6) It is also alleged by the petitioner that it was never served copies of the pertinent documents
relating to the approval of both applications filed by the private respondent. The claim does not
appear to be substantiated. Moreover, the law and implementing rules do not require notice to
employees of such application.

(7) The petitioner also stresses that the first application was tainted with bad faith because the
same was filed only after the private respondent had second thoughts about paying the mandated
increase in emergency allowance. The petitioner calls attention to the fact that the private
respondent was actually ready to pay the same as early as May, 1977.

Whatever reason prompted the private respondent to change its mind is of no moment. A change
of mind does not automatically amount to bad faith. Bad faith cannot be presumed. It is possible
that the private respondent had reconsidered the Idea of paying the increase for some reason or
another and opted instead to avail of the benefit under Presidential Decree No. 1123. The private
respondent had the right to do so if it believes that it ought to be within the coverage of the said
law.

The issue as to whether or not the private respondent is guilty of unfair labor practice is beyond
the scope of the instant Petition which relates to a case proceeding from the Wage Commission.
That issue should be ventilated in the proper forum, the National Labor Relations Commission.

8) The claim that the private respondent is in a financial position to pay the additional emergency
allowance provided for in Presidential Decree No. 1123 is likewise untenable. The Wage
Commission and the Department of Labor and Employment are the administrative agencies
which are in a better position to assess the matter on account of their expertise in the same. In
the absence of any grave abuse of discretion on their part, and none has been shown in the
instant Petition, their recommendations will be respected by this Court. Indeed, public
respondents stressed that it is of public knowledge that in 1977 and 1978, the sugar industry was
in financial straits due to the worldwide decline in the price of sugar.

(9) Finally, there is no cogent basis for the allegation that the private respondent is using its
corporate personality in such a way as to avoid its responsibility under the provisions of the
Decree. The private respondent is a registered commercial partnership, not a corporate entity.
The doctrine of piercing the corporate veil is not applicable in this case.

For their part, the respondents argue that the petitioner did not exhaust all administrative
remedies available before it sought judicial review. They are of the view that the rulings of the
respondent Acting Secretary of Labor can still be elevated to the President of the Philippines for
review. This view is traversed by the fact that, as stated by the respondent Acting Secretary in
approving both applications, such approval is final and unappealable. 14Moreover, in the absence
of a constituttional provision or a statute to the contrary, the official acts of a Department
Secretary are deemed the acts of the President himself unless disapproved or reprobated by the
latter. This is the doctrine of qualified political agency announced in Villena v. The Secretary of
the Interior," to wit — 15

... under the presidential type of government which we have adopted and
considering the departmental organization established and continued in force
by ... our Constitution, all executive and administrative organizations are adjuncts
of the Executive Department, the heads of the various executive departments are
assistants and agents of the Chief Executive, and, except in cases where the
Chief Executive is required by the Constitution or the law ta act in person or the
agencies of the situation demand that he act personally, the multifarious
executive and administrative functions of the Chief Executive are performed by
and through the executive departments, and the acts of the secretaries of such
departments, performed and promulgated in the regular course of business, are,
unless disapproved or reprobated by the Chief Executive, presumptively the acts
of the Chief Executive. ...

Inasmuch as no grave abuse of discretion appears to have been committed by the herein public
respondents, the writ of certiorari sought by the petitioner cannot issue,

WHEREFORE, in view of the foregoing, the instant Petition is hereby

DISMISSED for lack of merit. We make no pronouncement as to costs.

SO ORDERED.