STATUTORY CONSTRUCTION CASES: CHAPTER V 1

Republic of the Philippines pendency of the appeal. The right to appeal, however, is not a constitutional, natural
SUPREME COURT or inherent right. It is a statutory privilege of statutory origin and, therefore, available
Manila only if granted or provided by statute. The law may then validly provide limitations or
qualifications thereto or relief to the prevailing party in the event an appeal is
EN BANC interposed by the losing party. Execution pending appeal is one such relief long
recognized in this jurisdiction. The Revised Rules of Court allows execution pending
G.R. No. 90501 August 5, 1991 appeal and the grant thereof is left to the discretion of the court upon good reasons
to be stated in a special order.
ARIS (PHIL.) INC., petitioner,
vs.
NATIONAL LABOR RELATIONS COMMISSION, LABOR ARBITER FELIPE Statutory Construction; Constitution; Laws are presumed consti-tutional.—To justify
GARDUQUE III, LEODEGARIO DE GUZMAN, LILIA PEREZ, ROBERTO nullification of a law, there must be a clear and unequivocal breach of the
BESTAMONTE, AIDA OPENA, REYNALDO TORIADO, APOLINARIO constitution, not a doubtful and argumentative implication; a law shall not be
GAGAHINA, RUFINO DE CASTRO, FLORDELIZA RAYOS DEL SOL, STEVE declared invalid unless the conflict with the constitution is clear beyond reasonable
SANCHO, ESTER CAIRO, MARIETA MAGALAD, and MARY B. doubt.
NADALA, respondents.
DAVIDE, JR., J.:
Cesar C. Cruz & Partners for petitioner.
Zosimo Morillo for respondent Rayos del Sol. Petitioner assails the constitutionality of the amendment introduced by Section 12 of
Republic Act No. 6715 to Article 223 of the Labor Code of the Philippines (PD No.
Banzuela, Flores, Miralles, Raneses, Sy & Associates for private respondents. 442, as amended) allowing execution pending appeal of the reinstatement aspect of
a decision of a labor arbiter reinstating a dismissed or separated employee and of
Labor Law; Dismissal of Laborers; Police Power; Provision concerning the mandatory Section 2 of the NLRC Interim Rules on Appeals under R.A. No. 6715 implementing
and automatic reinstatement of an employee whose dismissal is found unjustified by the same. It also questions the validity of the Transitory Provision (Section 17) of the
the labor arbiter is a valid exercise of the police power of the state and the contested said Interim Rules.
provision “is then a police legislation.”—Respondent NLRC, through the Office of the
Solicitor General, filed its Comment on 20 November 1989. Meeting squarely the The challenged portion of Section 12 of Republic Act No. 6715, which took effect on
issues raised by petitioner, it submits that the provision concerning the mandatory 21 March 1989, reads as follows:
and automatic reinstatement of an employee whose dismissal is found unjustified by
the labor arbiter is a valid exercise of the police power of the state and the contested SEC 12. Article 223 of the same code is amended to read as follows:
provision “is then a police legislation.”

ART. 223. Appeal.

Remedial Law; Execution Pending Appeal; Appeal; The right to appeal is not a
constitutional, natural or inherent right. It is a statutory privilege of statutory origin
and, therefore, available only if granted or provided by statute.—Execution pending
appeal is interlinked with the right to appeal. One cannot be divorced from the other.
The latter may be availed of by the losing party or a party who is not satisfied with a
judgment, while the former may be applied for by the prevailing party during the
xxx xxx xxx
In any event, the decision of the Labor Arbiter reinstating a dismissed or
separated employee, in so far as the reinstatement aspect is concerned,
shall immediately be executory, even pending appeal. The employee shall
either be admitted back to work under the same terms and conditions

prevailing prior to his dismissal or separation or, at the option of the
employer, merely reinstated in the payroll. The posting of a bond by the
employer shall not stay the execution for reinstatement provided therein.
This is a new paragraph ingrafted into the Article.
Sections 2 and 17 of the "NLRC Interim Rules On Appeals Under R.A. No. 6715,
Amending the Labor Code", which the National Labor Relations Commission (NLRC)
promulgated on 8 August 1989, provide as follows:
Section 2. Order of Reinstatement and Effect of Bond. — In so far as the
reinstatement aspect is concerned, the decision of the Labor Arbiter
reinstating a dismissed or separated employee shall immediately be
executory even pending appeal. The employee shall either be admitted back
to work under the same terms and conditions prevailing prior to his
dismissal or separation, or, at the option of the employer, merely be
reinstated in the payroll.
The posting of a bond by the employer shall not stay the execution for
reinstatement.
xxx xxx xxx
Section 17. Transitory provision. — Appeals filed on or after March 21, 1989,
but prior to the effectivity of these Interim Rules must conform to the
requirements as herein set forth or as may be directed by the Commission.
The antecedent facts and proceedings which gave rise to this petition are not
disputed:
On 11 April 1988, private respondents, who were employees of petitioner, aggrieved
by management's failure to attend to their complaints concerning their working
surroundings which had become detrimental and hazardous, requested for a
grievance conference. As none was arranged, and believing that their appeal would
be fruitless, they grouped together after the end of their work that day with other
employees and marched directly to the management's office to protest its long
silence and inaction on their complaints.
On 12 April 1988, the management issued a memorandum to each of the private
respondents, who were identified by the petitioner's supervisors as the most active
STATUTORY CONSTRUCTION CASES: CHAPTER V 2
participants in the rally requiring them to explain why they should not be terminated
from the service for their conduct. Despite their explanation, private respondents
were dismissed for violation of company rules and regulations, more specifically of
the provisions on security and public order and on inciting or participating in illegal
strikes or concerted actions.
Private respondents lost no time in filing a complaint for illegal dismissal against
petitioner and Mr. Gavino Bayan with the regional office of the NLRC at the National
Capital Region, Manila, which was docketed therein as NLRC-NCR-00-0401630-88.
After due trial, Labor Arbiter Felipe Garduque III handed down on 22 June 1989 a
decision' the dispositive portion of which reads:
ACCORDINGLY, respondent Aris (Phils.), Inc. is hereby ordered to reinstate
within ten (10) days from receipt hereof, herein complainants Leodegario de
Guzman, Rufino de Castro, Lilia M. Perez, Marieta Magalad, Flordeliza Rayos
del Sol, Reynaldo Toriado, Roberto Besmonte, Apolinario Gagahina, Aidam
(sic) Opena, Steve C. Sancho Ester Cairo, and Mary B. Nadala to their
former respective positions or any substantial equivalent positions if already
filled up, without loss of seniority right and privileges but with limited
backwages of six (6) months except complainant Leodegario de Guzman.
All other claims and prayers are hereby denied for lack of merit.
SO ORDERED.
On 19 July 1989, complainants (herein private respondents) filed a Motion For
Issuance of a Writ of Execution2pursuant to the above-quoted Section 12 of R.A. No.
6715.
On 21 July 1989, petitioner filed its Appeal.3
On 26 July 1989, the complainants, except Flor Rayos del Sol, filed a Partial Appeal.4
On 10 August 1989, complainant Flor Rayos del Sol filed a Partial Appeal.5
On 29 August 1989, petitioner filed an Opposition6 to the motion for execution
alleging that Section 12 of R.A. No. 6715 on execution pending appeal cannot be
applied retroactively to cases pending at the time of its effectivity because it does not

expressly provide that it shall be given retroactive effect7 and to give retroactive
effect to Section 12 thereof to pending cases would not only result in the imposition
of an additional obligation on petitioner but would also dilute its right to appeal since
it would be burdened with the consequences of reinstatement without the benefit of
a final judgment. In their Reply8 filed on 1 September 1989, complainants argued
that R.A. No. 6715 is not sought to be given retroactive effect in this case since the
decision to be executed pursuant to it was rendered after the effectivity of the Act.
The said law took effect on 21 March 1989, while the decision was rendered on 22
June 1989.
Petitioner submitted a Rejoinder to the Reply on 5 September 1989.9
On 5 October 1989, the Labor Arbiter issued an Order granting the motion for
execution and the issuance of a partial writ of execution10 as far as reinstatement of
herein complainants is concerned in consonance with the provision of Section 2 of the
rules particularly the last sentence thereof.
In this Order, the Labor Arbiter also made reference to Section 17 of the NLRC
Interim Rules in this wise:
Since Section 17 of the said rules made mention of appeals filed on or after
March 21, 1989, but prior to the effectivity of these interim rules which must
conform with the requirements as therein set forth (Section 9) or as may be
directed by the Commission, it obviously treats of decisions of Labor Arbiters
before March 21,1989. With more reason these interim rules be made to
apply to the instant case since the decision hereof (sic) was rendered
thereafter.11
Unable to accept the above Order, petitioner filed the instant petition on 26 October
198912 raising the issues adverted to in the introductory portion of this decision under
the following assignment of errors:
A. THE LABOR ARBITER A QUO AND THE NLRC, IN ORDERING THE
REINSTATEMENT OF THE PRIVATE RESPONDENTS PENDING APPEAL AND
IN PROVIDING FOR SECTION 2 OF THE INTERIM RULES, RESPECTIVELY,
ACTED WITHOUT AND IN EXCESS OF JURISDICTION SINCE THE BASIS FOR
SAID ORDER AND INTERIM RULE, i.e., SECTION 12 OF R.A. 6715 IS
VIOLATIVE OF THE CONSTITUTIONAL GUARANTY OF DUE PROCESS IT
BEING OPPRESSIVE AND UNREASONABLE.
STATUTORY CONSTRUCTION CASES: CHAPTER V 3
B. GRANTING ARGUENDO THAT THE PROVISION IN(SIC) REINSTATEMENT
PENDING APPEAL IS VALID, NONETHELESS, THE LABOR ARBITER A QUO
AND THE NLRC STILL ACTED IN EXCESS AND WITHOUT JURISDICTION IN
RETROACTIVELY APPLYING SAID PROVISION TO PENDING LABOR CASES.
In Our resolution of 7 March 1989, We required the respondents to comment on the
petition.
Respondent NLRC, through the Office of the Solicitor General, filed its Comment on
20 November 1989.13 Meeting squarely the issues raised by petitioner, it submits that
the provision concerning the mandatory and automatic reinstatement of an employee
whose dismissal is found unjustified by the labor arbiter is a valid exercise of the
police power of the state and the contested provision "is then a police legislation."
As regards the retroactive application thereof, it maintains that being merely
procedural in nature, it can apply to cases pending at the time of its effectivity on the
theory that no one can claim a vested right in a rule of procedure. Moreover, such a
law is compatible with the constitutional provision on protection to labor.
On 11 December 1989, private respondents filed a Manifestation14 informing the
Court that they are adopting the Comment filed by the Solicitor General and stressing
that petitioner failed to comply with the requisites for a valid petition for certiorari
under Rule 65 of the Rules of Court.
On 20 December 1989, petitioner filed a Rejoinder15 to the Comment of the Solicitor
General.
In the resolution of 11 January 1990,16 We considered the Comments as respondents'
Answers, gave due course to the petition, and directed that the case be calendared
for deliberation.
In urging Us to declare as unconstitutional that portion of Section 223 of the Labor
Code introduced by Section 12 of R.A. No. 6715, as well as the implementing
provision covered by Section 2 of the NLRC Interim Rules, allowing immediate
execution, even pending appeal, of the reinstatement aspect of a decision of a labor
arbiter reinstating a dismissed or separated employee, petitioner submits that said
portion violates the due process clause of the Constitution in that it is oppressive and
unreasonable. It argues that a reinstatement pending appeal negates the right of the
employer to self-protection for it has been ruled that an employer cannot be
compelled to continue in employment an employee guilty of acts inimical to the

interest of the employer; the right of an employer to dismiss is consistent with the
legal truism that the law, in protecting the rights of the laborer, authorizes neither
the oppression nor the destruction of the employer. For, social justice should be
implemented not through mistaken sympathy for or misplaced antipathy against any
group, but even-handedly and fairly.17
To clinch its case, petitioner tries to demonstrate the oppressiveness of reinstatement
pending appeal by portraying the following consequences: (a) the employer would be
compelled to hire additional employees or adjust the duties of other employees
simply to have someone watch over the reinstated employee to prevent the
commission of further acts prejudicial to the employer, (b) reinstatement of an
undeserving, if not undesirable, employee may demoralize the rank and file, and (c) it
may encourage and embolden not only the reinstated employees but also other
employees to commit similar, if not graver infractions.
These rationalizations and portrayals are misplaced and are purely conjectural which,
unfortunately, proceed from a misunderstanding of the nature and scope of the relief
of execution pending appeal.
Execution pending appeal is interlinked with the right to appeal. One cannot be
divorced from the other. The latter may be availed of by the losing party or a party
who is not satisfied with a judgment, while the former may be applied for by the
prevailing party during the pendency of the appeal. The right to appeal, however, is
not a constitutional, natural or inherent right. It is a statutory privilege of statutory
origin18 and, therefore, available only if granted or provided by statute. The law may
then validly provide limitations or qualifications thereto or relief to the prevailing party
in the event an appeal is interposed by the losing party. Execution pending appeal is
one such relief long recognized in this jurisdiction. The Revised Rules of Court allows
execution pending appeal and the grant thereof is left to the discretion of the court
upon good reasons to be stated in a special order.19
Before its amendment by Section 12 of R.A. No. 6715, Article 223 of the Labor Code
already allowed execution of decisions of the NLRC pending their appeal to the
Secretary of Labor and Employment.
In authorizing execution pending appeal of the reinstatement aspect of a decision of
the Labor Arbiter reinstating a dismissed or separated employee, the law itself has
laid down a compassionate policy which, once more, vivifies and enhances the
provisions of the 1987 Constitution on labor and the working-man.
STATUTORY CONSTRUCTION CASES: CHAPTER V 4
These provisions are the quintessence of the aspirations of the workingman for
recognition of his role in the social and economic life of the nation, for the protection
of his rights, and the promotion of his welfare. Thus, in the Article on Social Justice
and Human Rights of the Constitution,20 which principally directs Congress to give
highest priority to the enactment of measures that protect and enhance the right of
all people to human dignity, reduce social, economic, and political inequalities, and
remove cultural inequities by equitably diffusing wealth and political power for the
common good, the State is mandated to afford full protection to labor, local and
overseas, organized and unorganized, and promote full employment and equality of
employment opportunities for all; to guarantee the rights of all workers to self-
organization, collective bargaining and negotiations, and peaceful concerted activities,
including the right to strike in accordance with law, security of tenure, human
conditions of work, and a living wage, to participate in policy and decision-making
processes affecting their rights and benefits as may be provided by law; and to
promote the principle of shared responsibility between workers and employers and
the preferential use of voluntary modes in settling disputes. Incidentally, a study of
the Constitutions of various nations readily reveals that it is only our Constitution
which devotes a separate article on Social Justice and Human Rights. Thus, by no
less than its fundamental law, the Philippines has laid down the strong foundations of
a truly just and humane society. This Article addresses itself to specified areas of
concern labor, agrarian and natural resources reform, urban land reform and
housing, health, working women, and people's organizations and reaches out to the
underprivileged sector of society, for which reason the President of the Constitutional
Commission of 1986, former Associate Justice of this Court Cecilia Muñoz-Palma,
aptly describes this Article as the "heart of the new Charter."21
These duties and responsibilities of the State are imposed not so much to express
sympathy for the workingman as to forcefully and meaningfully underscore labor as a
primary social and economic force, which the Constitution also expressly affirms With
equal intensity.22 Labor is an indispensable partner for the nation's progress and
stability.
If in ordinary civil actions execution of judgment pending appeal is authorized for
reasons the determination of which is merely left to the discretion of the judge, We
find no plausible reason to withhold it in cases of decisions reinstating dismissed or
separated employees. In such cases, the poor employees had been deprived of their
only source of livelihood, their only means of support for their family their very
lifeblood. To Us, this special circumstance is far better than any other which a judge,
in his sound discretion, may determine. In short, with respect to decisions reinstating
 STATUTORY CONSTRUCTION CASES: CHAPTER V 5

employees, the law itself has determined a sufficiently overwhelming reason for its
execution pending appeal.
The validity of the questioned law is not only supported and sustained by the
foregoing considerations. As contended by the Solicitor General, it is a valid exercise
of the police power of the State. Certainly, if the right of an employer to freely
discharge his employees is subject to regulation by the State, basically in the exercise
of its permanent police power on the theory that the preservation of the lives of the
citizens is a basic duty of the State, that is more vital than the preservation of
corporate profits.23 Then, by and pursuant to the same power, the State may
authorize an immediate implementation, pending appeal, of a decision reinstating a
dismissed or separated employee since that saving act is designed to stop, although
temporarily since the appeal may be decided in favor of the appellant, a continuing
threat or danger to the survival or even the life of the dismissed or separated
employee and its family.
The charge then that the challenged law as well as the implementing rule are
unconstitutional is absolutely baseless.1âwphi1 Laws are presumed
constitutional.24 To justify nullification of a law, there must be a clear and
unequivocal breach of the Constitution, not a doubtful and argumentative implication;
a law shall not be declared invalid unless the conflict with the constitution is clear
beyond reasonable doubt.25 In Parades, et al. vs. Executive Secretary26 We stated:
2. For one thing, it is in accordance with the settled doctrine that between
two possible constructions, one avoiding a finding of unconstitutionality and
the other yielding such a result, the former is to be preferred. That which
will save, not that which will destroy, commends itself for acceptance. After
all, the basic presumption all these years is one of validity. The onerous task
of proving otherwise is on the party seeking to nullify a statute. It must be
proved by clear and convincing evidence that there is an infringement of a
constitutional provision, save in those cases where the challenged act is void
on its face. Absent such a showing, there can be no finding of
unconstitutionality. A doubt, even if well-founded, does not suffice. Justice
Malcolm's aphorism is apropos: To doubt is to sustain.27
authorities, a law is supposed to have been carefully studied and determined
to be constitution before it was finally enacted. Hence, as long as there is
some other basis that can be used by the courts for its decision, the
constitutionality of the challenged law will not be touched upon and the case
will be decided on other available grounds.28
The issue concerning Section 17 of the NLRC Interim Rules does not deserve a
measure of attention. The reference to it in the Order of the Labor Arbiter of 5
October 1989 was unnecessary since the procedure of the appeal proper is not
involved in this case. Moreover, the questioned interim rules of the NLRC,
promulgated on 8 August 1989, can validly be given retroactive effect. They are
procedural or remedial in character, promulgated pursuant to the authority vested
upon it under Article 218(a) of the Labor Code of the Philippines, as amended.
Settled is the rule that procedural laws may be given retroactive effect. 29 There are
no vested rights in rules of procedure.30 A remedial statute may be made applicable
to cases pending at the time of its enactment.31
WHEREFORE, the petition is hereby DISMISSED for lack of merit. Costs against
petitioner.
SO ORDERED.
Fernan, C.J., Narvasa, Melencio-Herrera, Gutierrez, Jr., Cruz, Paras, Feliciano,
Gancayco, Padilla, Bidin, Sarmiento, Griño-Aquino, Medialdea and Regalado, JJ.,
concur.

The reason for this:

... can be traced to the doctrine of separation of powers which enjoins on

each department a proper respect for the acts of the other departments. ...
The theory is that, as the joint act of the legislative and executive

Republic of the Philippines
SUPREME COURT
Manila
EN BANC
G.R. No. 115044 January 27, 1995
HON. ALFREDO S. LIM, in his capacity as Mayor of Manila, and the City of
Manila, petitioners,
vs.
HON. FELIPE G. PACQUING, as Judge, branch 40, Regional Trial Court of
Manila and ASSOCIATED CORPORATION, respondents.
G.R. No. 117263 January 27, 1995
TEOFISTO GUINGONA, JR. and DOMINADOR R. CEPEDA, petitioners,
vs.
HON. VETINO REYES and ASSOCIATED DEVELOPMENT
CORPORATION, respondents.
Constitutional Law; Validity of Statutes; PD No. 771; All laws (PD No. 771 included)
are presumed valid and constitutional until or unless otherwise ruled by the Court.—
The time-honored doctrine is that all laws (PD No. 771 included) are presumed valid
and constitutional until or unless otherwise ruled by this Court. Not only this; Article
XVIII, Section 3 of the Constitution states: “Section 3. All existing laws, decrees,
executive orders, proclamations, letters of instructions and other executive issuances
not inconsistent with this Constitution shall remain operative until amended, repealed
or revoked.”
Same; Same; Same.—There is nothing on record to show or even suggest that PD
No. 771 has been repealed, altered or amended by any subsequent law or
presidential issuance (when the executive still exercised legislative powers).
Same; Constitution; Article VIII, Section 4(2); Only the Court En Banc can declare a
law unconstitutional under Article VIII, Section 4(2) of the Constitution.—Neither can
it be tenably stated that the issue of the continued existence of ADC’s franchise by
reason of the unconstitutionality of PD No. 771 was settled in G.R. No. 115044, for
the decision of the Court’s First Division in said case, aside from not being final,
STATUTORY CONSTRUCTION CASES: CHAPTER V 6
cannot have the effect of nullifying PD No. 771 as unconstitutional, since only the
Court En Banc has that power under Article VIII, Section 4(2) of the Constitution.
Same; Estoppel; The well-settled rule is that the State cannot be put in estoppel by
the mistakes or errors, if any, of its officials or agents.—And on the question of
whether or not the government is estopped from contesting ADC’s possession of a
valid franchise, the well-settled rule is that the State cannot be put in estoppel by the
mistakes or errors, if any, of its officials or agents (Republic v. Intermediate Appellate
Court, 209 SCRA 90).
Same; Intervention; The Republic is intervening in G.R. No. 115044 in the exercise of
its governmental functions to protect public morals and promote the general
welfare.—Consequently, in the light of the foregoing expostulation, we conclude that
the Republic (in contra distinction to the City of Manila) may be allowed to intervene
in G.R. No. 115044. The Republic is intervening in G.R. No. 115044 in the exercise,
not of its business or proprietary functions, but in the exercise of its governmental
functions to protect public morals and promote the general welfare.
Same; Delegation of Power; Rep. Act No. 409; What Congress delegated to the City
of Manila in Rep. Act No. 409, with respect to wagers or betting, was the power to
“license, permit, or regulate” which would not amount to something meaningful
unless the holder of the permit or license was also franchised by the national
government to so operate.—It is clear from the foregoing that Congress did not
delegate to the City of Manila the power “to franchise” wagers or betting, including
the jai-alai, but retained for itself such power “to franchise.” What Congress
delegated to the City of Manila in Rep. Act No. 409, with respect to wagers or
betting. was the power to ‘license, permit. or regulate” which therefore means that a
license or permit issued by the City of Manila to operate a wager or betting activity,
such as the jai-alai where bets are accepted, would not amount to something
meaningful UNLESS the holder of the permit or license was also FRANCHISED by the
national government to so operate. Moreover, even this power to license, permit, or
regulate wagers or betting on jai-alai was removed from local governments, including
the City of Manila, and transferred to the GAB on 1 January 1951 by Executive Order
No. 392. The net result is that the authority to grant franchises for the operation of
jaialai frontons is in Congress, while the regulatory function is vested in the GAB.
Same; Same; Same; Legislative Franchise; ADC has no franchise from Congress to
operate the jai-alai.—In relation, therefore, to the facts of this case, since ADC has no
franchise from Congress to operate the jai-alai, it may not so operate even if it has a
license or permit from the City Mayor to operate the jai-alai in the City of Manila.

Same; Same; Same; Legislative Enactment; Gambling is generally prohibited by law,
unless another law is enacted by Congress expressly exempting or excluding certain
forms of gambling from the reach of criminal law.—It cannot be overlooked, in this
connection, that the Revised Penal Code punishes gambling and betting under
Articles 195 to 199 thereof. Gambling is thus generally prohibited by law, unless
another law is enacted by Congress expressly exempting or excluding certain forms
of gambling from the reach of criminal law. Among these forms of gambling allowed
by special law are the horse races authorized by Republic Acts Nos. 309 and 983 and
gambling casinos authorized under Presidential Decree No. 1869.
Same; Same; Same; Same.—While jai-alai as a sport is not illegal per se, the
accepting of bets or wagers on the results of jai-alai games is undoubtedly gambling
and, therefore, a criminal offense punishable under Articles 195–199 of the Revised
Penal Code, unless it is shown that a later or special law had been passed allowing it.
ADC has not shown any such special law.
Same; Same; Same; Republic Act No. 409 (the Revised Charter of the City of Manila)
enacted by Congress on 18 June 1949 gave the Municipal Board powers that are
basically regulatory in nature.—Republic Act No. 409 (the Revised Charter of the City
of Manila) which was enacted by Congress on 18 June 1949 gave the Municipal Board
certain delegated legislative powers under Section 18. A perusal of the powers
enumerated under Section 18 shows that these powers are basically regulatory in
nature. The regulatory nature of these powers finds support not only in the plain
words of the enumerations under Section 18 but also in this Court’s ruling in People
v. Vera (65 Phil. 56).
Same; Same; Same; A law which gives the Provincial Board the discretion to
determine whether or not a law of general application would be operative within the
province is unconstitutional for being an undue delegation of legislative power.—ln
Vera, this Court declared that a law which gives the Provincial Board the discretion to
determine whether or not a law of general application (such as, the Probation Law-
Act No. 4221) would or would not be operative within the province, is
unconstitutional for being an undue delegation of legislative power.
Same; Same; Same.—From the ruling in Vera, it would be logical to conclude that, if
ADC’s arguments were to prevail, this Court would likewise declare Section 18(jj) of
the Revised Charter of Manila unconstitutional for the power it would delegate to the
Municipal Board of Manila would give the latter the absolute and unlimited discretion
to render the penal code provisions on gambling inapplicable or inoperative to
STATUTORY CONSTRUCTION CASES: CHAPTER V 7
persons or entities issued permits to operate gambling establishments in the City of
Manila.
Same; Same; Same; Presumption of Validity; The rule is that laws must be presumed
valid, constitutional and in harmony with other laws.—We need not go to this extent,
however, since the rule is that laws must be presumed valid, constitutional and in
harmony with other laws. Thus, the relevant provisions of Rep. Acts Nos. 409 and
954 and Ordinance No. 7065 should be taken together and it should then be clear
that the legislative powers of the Municipal Board should be understood to be
regulatory in nature and that Republic Act No. 954 should be understood to refer to
congressional franchises, as a necessity for the operation of jai-alais.
Same; Same; Same; Legislative Franchise; Franchises to operate jai-alais are for the
national government (not local governments) to consider and approve.—On the other
hand, it is noteworthy that while then President Aquino issued Executive Order No.
169 revoking PD No. 810 (which granted a franchise to a Marcos-crony to operate the
jaialai), she did not scrap or repeal PD No. 771 which had revoked all franchises to
operate jai-alais issued by local governments, thereby reaffirming the government
policy that franchises to operate jai-alais are for the national government (not local
governments) to consider and approve.
Same; Same; Same; Same; Police Power; A gambling franchise is always subject to
the exercise of police power for the public welfare.—On the alleged violation of the
non-impairment and equal protection clauses of the Constitution, it should be
remembered that a franchise is not in the strict sense a simple contract but rather it
is, more importantly, a mere privilege specially in matters which are within the
government’s power to regulate and even prohibit through the exercise of the police
power. Thus, a gambling franchise is always subject to the exercise of police power
for the public welfare.
Same; Same; PD No. 771; Legislative Franchise; Gambling; The purpose of PD No.
771 is to give to the national government the exclusive power to grant gambling
franchises.—As earlier noted, ADC has not alleged ever applying for a franchise under
the provisions of PD No. 771. And yet, the purpose of PD No. 771 is quite clear from
its provisions, i.e., to give to the national government the exclusive power to grant
gambling franchises. Thus, all franchises ‘then existing were revoked but were made
subject to reissuance by the national government upon compliance by the applicant
with government-set qualifications and requirements.

Same; Same; Same; Same; PD No. 771 did not violate the equal protection clause
since the decree revoked all franchises issued by the local governments without
qualification or exception.—There was no violation by PD No. 771 of the equal
protection clause since the decree revoked all franchises issued by local governments
without qualification or exception. ADC cannot allege violation of the equal protection
clause simply because it was the only one affected by the decree, for as correctly
pointed out by the government, ADC was not singled out when all jai-alai franchises
were revoked. Besides, it is too late in the day for ADC to seek redress for alleged
violation of its constitutional rights for it could have raised these issues as early as
1975, almost twenty (20) years ago.
Same; Statutory Construction; Validity of Statute; Requirement that all laws should
embrace only one subject which shall be expressed in the title is sufficiently met if
the title is comprehensive enough to include the general object which the statute
seeks to effect.—Finally, we do not agree that Section 3 of PD No. 771 and the
requirement of a legislative franchise in Republic Act No. 954 are “riders” to the two
(2) laws and are violative of the rule that laws should embrace one subject which
shall be expressed in the title, as argued by ADC. In Cordero v. Cabatuando (6 SCRA
418), this Court ruled that the requirement under the Constitution that all laws should
embrace only one subject which shall be expressed in the title is sufficiently met if
the title is comprehensive enough reasonably to include the general object which the
statute seeks to effect, without expressing each and every end and means necessary
or convenient for the accomplishing of the objective. Lim vs. Pacquing, 240 SCRA
649, G.R. No. 115044, G.R. No. 117263 January 27, 1995
PADILLA, J.:
These two (2) cases which are inter-related actually involve simple issues. if these
issues have apparently become complicated, it is not by reason of their nature
because of the events and dramatis personae involved.
The petition in G.R. No. 115044 was dismissed by the First Division of this Court on
01 September 1994 based on a finding that there was "no abuse of discretion, much
less lack of or excess of jurisdiction, on the part of respondent judge [Pacquing]", in
issuing the questioned orders. Judge Pacquing had earlier issued in Civil Case No. 88-
45660, RTC of Manila, Branch 40, the following orders which were assailed by the
Mayor of the City of Manila, Hon. Alfredo S. Lim, in said G.R. No. 115044:
STATUTORY CONSTRUCTION CASES: CHAPTER V 8
a. order dated 28 March 1994 directing Manila mayor Alfredo S.
Lim to issue the permit/license to operate the jai-alai in favor of
Associated Development Corporation (ADC).
b. order dated 11 April 1994 directing mayor Lim to explain why he
should not be cited for contempt for non-compliance with the order
dated 28 March 1994.
c. order dated 20 April 1994 reiterating the previous order directing
Mayor Lim to immediately issue thepermit/license to Associated
Development Corporation (ADC).
The order dated 28 march 1994 was in turn issued upon motion by ADC for execution
of a final judgment rendered on 9 September 1988 which ordered the Manila Mayor
to immediately issue to ADC the permit/license to operate the jai-alai in Manila, under
Manila Ordinance No. 7065.
On 13 September 1994, petitioner Guingona (as executive secretary) issued a
directive to then chairman of the Games and Amusements Board (GAB) Francisco R.
Sumulong, jr. to hold in abeyance the grant of authority, or if any had been issued, to
withdraw such grant of authority, to Associated Development Corporation to operate
the jai-alai in the City of Manila, until the following legal questions are properly
resolved:
1. Whether P.D. 771 which revoked all existing Jai-Alai franchisers
issued by local governments as of 20 August 1975 is
unconstitutional.
2. Assuming that the City of Manila had the power on 7 September
1971 to issue a Jai-Alai franchise to Associated Development
Corporation, whether the franchise granted is valied considering
that the franchise has no duration, and appears to be granted in
perpetuity.
3. Whether the City of Manila had the power to issue a Jai-Alai
franchise to Associated Development Corporation on 7 September
1971 in view of executive Order No. 392 dated 1 January 1951
which transferred from local governments to the Games and
Amusements Board the power to regulate Jai-Alai.1

On 15 September 1994, respondent Associated Development Corporation (ADC) filed
a petition for prohibition, mandamus, injunction and damages with prayer for
temporary restraining order and/or writ of preliminary injunction in the Regional Trial
Court of Manila against petitioner Guingona and then GAB chairman Sumulong,
docketed as Civil Case No. 94-71656, seeking to prevent GAB from withdrawing the
provisional authority that had earlier been granted to ADC. On the same day, the RTC
of Manila, Branch 4, through presiding Judge Vetino Reyes, issued a temporary
restraining order enjoining the GAB from withdrawing ADC's provisional authority.
This temporary restraining order was converted into a writ of preliminary injunction
upon ADC's posting of a bond in the amount of P2,000,000.00.2
Subsequently, also in G.R. No. 115044, the Republic of the Philippines, through the
Games and Amusements Board, filed a "Motion for Intervention; for Leave to File a
Motion for reconsideration in Intervention; and to Refer the case to the Court En
Banc" and later a "Motion for Leave to File Supplemental Motion for Reconsideration-
in-Intervention and to Admit Attached Supplemental Motion for Reconsideration-in-
Intervention".
In an En Banc Resolution dated 20 September 1994, this Court referred G.R. No.
115044 to the Court En Banc and required the respondents therein to comment on
the aforementioned motions.
Meanwhile, Judge Reyes on 19 October 1994 issued another order, this time,
granting ADC a writ of preliminary mandatory injunction against Guingona and GAB
to compel them to issue in favor of ADC the authority to operate jai-alai.
Guingona, as executive secretary, and Dominador Cepeda, Jr. as the new GAB
chairman, then filed the petition in G.R. No. 117263 assailing the abovementioned
orders of respondent Judge Vetino Reyes.
On 25 October 1994, in G.R. No. 117263, this Court granted petitioner's motion
for leave to file supplemental petition and to admit attached supplemental petition
with urgent prayer for restraining order. The Court further required respondents to
file their comment on the petition and supplemental petition with urgent prayer for
restraining order. The Court likewise set the case and all incidents thereof for hearing
on 10 November 1994.
At the hearing on 10 November 1994, the issues to be resolved were formulated by
the Court as follows:
STATUTORY CONSTRUCTION CASES: CHAPTER V 9
1. whether or not intervention by the Republic of the Philippines at
this stage of the proceedings is proper;
2. assuming such intervention is proper, whether or not the
Associated Development Corporation has a valid and subsisting
franchise to maintain and operate the jai-alai;
3. whether or not there was grave abuse of discretion committed
by respondent Judge Reyes in issuing the aforementioned
temporary restraining order (later writ of preliminary injunction);
and
4. whether or not there was grave abuse of discretion committed
by respondent Judge Reyes in issuing the aforementioned writ of
preliminary mandatory injunction.
On the issue of the propriety of the intervention by the Republic of the Philippines, a
question was raised during the hearing on 10 November 1994 as to whether
intervention in G.R. No. 115044 was the proper remedy for the national government
to take in questioning the existence of a valid ADC franchise to operate the jai-alai or
whether a separate action for quo warranto under Section 2, Rule 66 of the Rules of
Court was the proper remedy.
We need not belabor this issue since counsel for respondent ADC agreed to the
suggestion that this Court once and for all settle all substantive issues raised by the
parties in these cases. Moreover, this Court can consider the petition filed in G.R. No.
117263 as one for quo warranto which is within the original jurisdiction of the Court
under section 5(1), Article VIII of the Constitution. 3
On the propriety of intervention by the Republic, however, it will be recalled that this
Court in Director of Lands v. Court of Appeals (93 SCRA 238) allowed intervention
even beyond the period prescribed in Section 2 Rule 12 of the Rules of Court. The
Court ruled in said case that a denial of the motions for intervention would "lead the
Court to commit an act of injustice to the movants, to their successor-in-interest and
to all purchasers for value and in good faith and thereby open the door to fraud,
falsehood and misrepresentation, should intervenors' claim be proven to be true."
In the present case, the resulting injustice and injury, should the national
government's allegations be proven correct, are manifest, since the latter has
squarely questioned the very existence of a valid franchise to maintain and operate

the jai-alai (which is a gambling operation) in favor of ADC. As will be more
extensively discussed later, the national government contends that Manila Ordinance
No. 7065 which purported to grant to ADC a franchise to conduct jai-alai operations is
void and ultra vires since Republic Act No. 954, approved on 20 June 1953, or very
much earlier than said Ordinance No. 7065, the latter approved 7 September 1971, in
Section 4 thereof, requires a legislative franchise, not a municipal franchise, for the
operation of jai-alai. Additionally, the national government argues that even
assuming, arguendo, that the abovementioned ordinance is valid, ADC's franchise
was nonetheless effectively revoked by Presidential decree No. 771, issued on 20
August 1975, Sec. 3 of which expressly revoked all existing franchises and permits to
operate all forms of gambling facilities (including the jai-alai) issued by local
governments.
On the other hand, ADC's position is that Ordinance No. 7065 was validly enacted by
the City of Manila pursuant to its delegated powers under it charter, Republic Act No.
409. ADC also squarely assails the constitutionality of PD No. 771 as violative of the
equal protection and non-impairment clauses of the Constitution. In this connection,
counsel for ADC contends that this Court should really rule on the validity of PD No.
771 to be able to determine whether ADC continues to possess a valid franchise.
It will undoubtedly be a grave injustice to both parties in this case if this Court were
to shirk from ruling on the issue of constitutionality of PD No. 771. Such issue has, in
our view, become the very lis mota in resolving the present controversy, in view of
ADC's insistence that it was granted a valid and legal franchise by Ordinance No.
7065 to operate the jai-alai.
The time-honored doctrine is that all laws (PD No. 771 included) are presumed valid
and constitutional until or unless otherwise ruled by this Court. Not only this; Article
XVIII Section 3 of the Constitution states:
Sec. 3. All existing laws, decrees, executive orders, proclamations,
letters of instructions and other executive issuances not
inconsistent with this Constitution shall remain operative until
amended, repealed or revoked.
There is nothing on record to show or even suggest that PD No. 771 has been
repealed, altered or amended by any subsequent law or presidential issuance (when
the executive still exercised legislative powers).
STATUTORY CONSTRUCTION CASES: CHAPTER V 10
Neither can it be tenably stated that the issue of the continued existence of ADC's
franchise by reason of the unconstitutionality of PD No. 771 was settled in G.R. No.
115044, for the decision of the Court's First Division in said case, aside from not
being final, cannot have the effect of nullifying PD No. 771 as unconstitutional, since
only the Court En Banc has that power under Article VIII, Section 4(2) of the
Constitution.4
And on the question of whether or not the government is estopped from contesting
ADC's possession of a valid franchise, the well-settled rule is that the State cannot be
put in estoppel by the mistakes or errors, if any, of its officials or agents ( Republic v.
Intermediate Appellate Court, 209 SCRA 90)
Consequently, in the light of the foregoing expostulation, we conclude that the
republic (in contra distinction to the City of Manila) may be allowed to intervene in
G.R. No. 115044. The Republic is intervening in G.R. No. 115044 in the exercise, not
of its business or proprietary functions, but in the exercise of its governmental
functions to protect public morals and promote the general welfare.
II
Anent the question of whether ADC has a valid franchise to operate the Jai-Alai de
Manila, a statement of the pertinent laws is in order.
1. The Charter of the City of Manila was enacted by Congress on 18 June 1949.
Section 18 thereof provides:
Sec. 18. Legislative Powers. — The Municipal Board shall have the
following legislative powers:
xxx xxx xxx
(jj) To tax, license, permit and regulate wagers or betting by the
public on boxing, sipa, bowling, billiards, pools, horse and dog
races, cockpits, jai-alai, roller or ice-skating on any sporting or
athletic contests, as well as grant exclusive rights to establishments
for this purpose, notwithstanding any existing law to the contrary.
2. On 1 January 1951, Executive Order No. 392 was issued transferring the authority
to regulate jai-alais from local government to the Games and Amusements Board
(GAB).

3. On 20 June 1953, Congress enacted Republic Act No. 954, entitled "An Act to
Prohibit With Horse Races and Basque Pelota Games (Jai-Alai), And To Prescribe
Penalties For Its Violation". The provisions of Republic Act No. 954 relating to jai-alai
are as follows:
Sec. 4. No person, or group of persons other than the operator or
maintainer of a fronton with legislative franchise to conduct basque
pelota games (Jai-alai), shall offer, to take or arrange bets on any
basque pelota game or event, or maintain or use a totalizator or
other device, method or system to bet or gamble on any basque
pelota game or event. (emphasis supplied).
Sec. 5. No person, operator or maintainer of a fronton with
legislative franchise to conduct basque pelota games shall offer,
take, or arrange bets on any basque pelota game or event, or
maintain or use a totalizator or other device, method or system to
bet or gamble on any basque pelota game or event outside the
place, enclosure, or fronton where the basque pelota game is held.
(emphasis supplied).
4. On 07 September 1971, however, the Municipal Board of Manila nonetheless
passed Ordinance No. 7065 entitled "An Ordinance Authorizing the Mayor To Allow
And Permit The Associated Development Corporation To Establish, Maintain And
Operate A Jai-Alai In The City Of Manila, Under Certain Terms And Conditions And
For Other Purposes."
5. On 20 August 1975, Presidential Decree No. 771 was issued by then President
Marcos. The decree, entitled "Revoking All Powers and Authority of Local
Government(s) To Grant Franchise, License or Permit And Regulate Wagers Or
Betting By The Public On Horse And Dog Races, Jai-Alai Or Basque Pelota, And Other
Forms Of Gambling", in Section 3 thereof, expressly revoked all existing franchises
and permits issued by local governments.
6. On 16 October 1975, Presidential Decree No. 810, entitled "An Act granting The
Philippine Jai-Alai And Amusement Corporation A Franchise To Operate, Construct
And Maintain A Fronton For Basque Pelota And Similar Games of Skill In THE Greater
Manila Area," was promulgated.
7 On 08 May 1987, then President Aquino, by virtue of Article XVIII, Section 6, of the
Constitution, which allowed the incumbent legislative powers until the first Congress
STATUTORY CONSTRUCTION CASES: CHAPTER V 11
was convened, issued Executive Order No. 169 expressly repealing PD 810 and
revoking and cancelling the franchise granted to the Philippine Jai-Alai and
Amusement Corporation.
Petitioners in G.R. No. 117263 argue that Republic Act No. 954 effectively removed
the power of the Municipal Board of Manila to grant franchises for gambling
operations. It is argued that the term "legislative franchise" in Rep. Act No. 954 is
used to refer to franchises issued by Congress.
On the other hand, ADC contends that Republic Act N. 409 (Manila Chapter) gives
legislative powers to the Municipal Board to grant franchises, and since Republic Act
No. 954 does not specifically qualify the word "legislative" as referring exclusively to
Congress, then Rep. Act No. 954 did not remove the power of the Municipal Board
under Section 18(jj) of Republic Act No. 409 and consequently it was within the
power of the City of Manila to allow ADC to operate the jai-alai in the City of Manila.
On this point, the government counter-argues that the term "legislative powers" is
used in Rep. Act No. 409 merely to distinguish the powers under Section 18 of the
law from the other powers of the Municipal Board, but that the term "legislative
franchise" in Rep. Act No. 954 refers to a franchise granted solely by Congress.
Further, the government argues that Executive Order No. 392 dated 01 January 1951
transferred even the power to regulate Jai-Alai from the local governments to the
Games and Amusements Board (GAB), a national government agency.
It is worthy of note that neither of the authorities relied upon by ADC to support its
alleged possession of a valid franchise, namely the Charter of the City of Manila (Rep.
Act No. 409) and Manila Ordinance No. 7065 uses the word "franchise". Rep. Act No.
409 empowers the Municipal Board of Manila to "tax, license,
permit and regulatewagers or betting" and to "grant exclusive rights to
establishments", while Ordinance No. 7065 authorized the Manila City Mayor to
"allow and permit" ADC to operate jai-alai facilities in the City of Manila.
It is clear from the foregoing that Congress did not delegate to the City of Manila the
power "to franchise" wagers or betting, including the jai-alai, but retained for itself
such power "to franchise". What Congress delegated to the City of Manila in Rep. Act
No. 409, with respect to wagers or betting, was the power to "license, permit, or
regulate" which therefore means that a license or permit issued by the City of Manila
to operate a wager or betting activity, such as the jai-alai where bets are accepted,
would not amount to something meaningful UNLESS the holder of the permit or

license was also FRANCHISED by the national government to so operate. Moreover,
even this power to license, permit, or regulate wagers or betting on jai-alai was
removed from local governments, including the City of Manila, and transferred to the
GAB on 1 January 1951 by Executive Order No. 392. The net result is that the
authority to grant franchises for the operation of jai-alai frontons is in Congress, while
the regulatory function is vested in the GAB.
In relation, therefore, to the facts of this case, since ADC has no franchise from
Congress to operate the jai-alai, it may not so operate even if its has a license or
permit from the City Mayor to operate the jai-alai in the City of Manila.
It cannot be overlooked, in this connection, that the Revised Penal Code punishes
gambling and betting under Articles 195 to 199 thereof. Gambling is thus generally
prohibited by law, unless another law is enacted by Congress expressly exempting or
excluding certain forms of gambling from the reach of criminal law . Among these
form the reach of criminal law. Among these forms of gambling allowed by special
law are the horse races authorized by Republic Acts Nos. 309 and 983 and gambling
casinos authorized under Presidential Decree No. 1869.
While jai-alai as a sport is not illegal per se, the accepting of bets or wagers on the
results of jai-alai games is undoubtedly gambling and, therefore, a criminal offense
punishable under Articles 195-199 of the Revised Penal Code, unless it is shown that
a later or special law had been passed allowing it. ADC has not shown any such
special law.
Republic Act No. 409 (the Revised Charter of the City of Manila) which was enacted
by Congress on 18 June 1949 gave the Municipal Board certain delegated legislative
powers under Section 18. A perusal of the powers enumerated under Section 18
shows that these powers are basically regulatory in nature. 5 The regulatory nature of
these powers finds support not only in the plain words of the enumerations under
Section 28 but also in this Court's ruling in People v. Vera (65 Phil. 56).
In Vera, this Court declared that a law which gives the Provincial Board the discretion
to determine whether or not a law of general application (such as, the Probation law-
Act No. 4221) would or would not be operative within the province, is
unconstitutional for being an undue delegation of legislative power.
From the ruling in Vera, it would be logical to conclude that, if ADC's arguments were
to prevail, this Court would likewise declare Section 18(jj) of the Revised Charter of
Manila unconstitutional for the power it would delegate to the Municipal Board of
STATUTORY CONSTRUCTION CASES: CHAPTER V 12
Manila would give the latter the absolute and unlimited discretion to render the penal
code provisions on gambling inapplicable or inoperative to persons or entities issued
permits to operate gambling establishments in the City of Manila.
We need not go to this extent, however, since the rule is that laws must be presumed
valid, constitutional and in harmony with other laws. Thus, the relevant provisions of
Rep. Acts Nos. 409 and 954 and Ordinance No. 7065 should be taken together and it
should then be clear that the legislative powers of the Municipal Board should be
understood to be regulatory in nature and that Republic Act No. 954 should be
understood to refer to congressional franchises, as a necessity for the operation of
jai-alai.
We need not, however, again belabor this issue further since the task at hand which
will ultimately, and with finality, decide the issues in this case is to determine whether
PD No. 771 validly revoked ADC's franchise to operate the jai-alai, assuming (without
conceding) that it indeed possessed such franchise under Ordinance No. 7065.
ADC argues that PD No. 771 is unconstitutional for being violative of the equal
protection and non-impairment provisions of the Constitution. On the other hand, the
government contends that PD No. 771 is a valid exercise of the inherent police power
of the State.
The police power has been described as the least limitable of the inherent powers of
the State. It is based on the ancient doctrine — salus populi est suprema lex (the
welfare of the people is the supreme law.) In the early case of Rubi v. Provincial
Board of Mindoro (39 Phil. 660), this Court through Mr. Justice George A. Malcolm
stated thus:
The police power of the State . . . is a power co-extensive with self-
protection, and is not inaptly termed the "law of overruling
necessity." It may be said to be that inherent and plenary power in
the State which enables it to prohibit all things hurtful to the
comfort, safety and welfare of society. Carried onward by the
current of legislation, the judiciary rarely attempts to dam the
onrushing power of legislative discretion, provided the purposes of
the law do not go beyond the great principles that mean security
for the public welfare or do not arbitrarily interfere with the right of
the individual.

In the matter of PD No. 771, the purpose of the law is clearly stated in the "whereas
clause" as follows:
WHEREAS, it has been reported that in spite of the current drive of
our law enforcement agencies against vices and illegal gambling,
these social ills are still prevalent in many areas of the country;
WHEREAS, there is need to consolidate all the efforts of the
government to eradicate and minimize vices and other forms of
social ills in pursuance of the social and economic development
program under the new society;
WHEREAS, in order to effectively control and regulate wagers or
betting by the public on horse and dog races, jai-alai and other
forms of gambling there is a necessity to transfer the issuance of
permit and/or franchise from local government to the National
Government.
It cannot be argued that the control and regulation of gambling do not promote
public morals and welfare. Gambling is essentially antagonistic and self-reliance. It
breeds indolence and erodes the value of good, honest and hard work. It is, as very
aptly stated by PD No. 771, a vice and a social ill which government must minimize (if
not eradicate) in pursuit of social and economic development.
In Magtajas v. Pryce Properties Corporation (20 July 1994, G.R. No. 111097), this
Court stated thru Mr. Justice Isagani A. Cruz:
In the exercise of its own discretion, the legislative power may
prohibit gambling altogether or allow it without limitation or it may
prohibit some forms of gambling and allow others for whatever
reasons it may consider sufficient. Thus, it has
prohibited jueteng and monte but permits lotteries, cockfighting
and horse-racing. In making such choices, Congress has consulted
its own wisdom, which this Court has no authority to review, much
less reverse. Well has it been said that courts do not sit to resolve
the merits of conflicting theories. That is the prerogative of the
political departments. It is settled that questions regarding wisdom,
morality and practicability of statutes are not addressed to the
judiciary but may be resolved only by the executive and legislative
STATUTORY CONSTRUCTION CASES: CHAPTER V 13
departments, to which the function belongs in our scheme of
government. (Emphasis supplied)
Talks regarding the supposed vanishing line between right and privilege in American
constitutional law has no relevance in the context of these cases since the reference
there is to economic regulations. On the other hand, jai-alai is not a mere economic
activity which the law seeks to regulate. It is essentially gambling and whether it
should be permitted and, if so, under what conditions are questions primarily for the
lawmaking authority to determine, talking into account national and local interests.
Here, it is the police power of the State that is paramount.
ADC questions the motive for the issuance of PD Nos. 771. Clearly, however, this
Court cannot look into allegations that PD No. 771 was enacted to benefit a select
group which was later given authority to operate the jai-alai under PD No. 810. The
examination of legislative motivation is generally prohibited. (Palmer v. Thompson,
403 U.S. 217, 29 L. Ed. 2d 438 [1971] per Black, J.) There is, the first place, absolute
lack of evidence to support ADC's allegation of improper motivation in the issuance of
PD No. 771. In the second place, as already averred, this Court cannot go behind the
expressed and proclaimed purposes of PD No. 771, which are reasonable and even
laudable.
It should also be remembered that PD No. 771 provides that the national
government can subsequently grant franchises "upon proper application and
verification of the qualifications of the applicant." ADC has not alleged that it filed an
application for a franchise with the national government subsequent to the enactment
of PD No. 771; thus, the allegations abovementioned (of preference to a select
group) are based on conjectures, speculations and imagined biases which do not
warrant the consideration of this Court.
On the other hand, it is noteworthy that while then president Aquino issued Executive
Order No. 169 revoking PD No. 810 (which granted a franchise to a Marcos-crony to
operate the jai-alai), she did not scrap or repeal PD No. 771 which had revoked all
franchises to operate jai-alais issued by local governments, thereby re-affirming the
government policy that franchises to operate jai-alais are for the national government
(not local governments) to consider and approve.
On the alleged violation of the non-impairment and equal protection clauses of the
Constitution, it should be remembered that a franchise is not in the strict sense a
simple contract but rather it is more importantly, a mere privilege specially in matters
which are within the government's power to regulate and even prohibit through the

exercise of the police power. Thus, a gambling franchise is always subject to the
exercise of police power for the public welfare.
In RCPI v. NTC (150 SCRA 450), we held that:
A franchise started out as a "royal privilege or (a) branch of the
King's prerogative, subsisting in the hands of a subject." This
definition was given by Finch, adopted by Blackstone, and accepted
by every authority since . . . Today, a franchise being merely a
privilege emanating from the sovereign power of the state and
owing its existence to a grant, is subject to regulation by the state
itself by virtue of its police power through its administrative
agencies.
There is a stronger reason for holding ADC's permit to be a mere privilege because
jai-alai, when played for bets, is pure and simple gambling. To analogize a gambling
franchise for the operation of a public utility, such as public transportation company,
is to trivialize the great historic origin of this branch of royal privilege.
As earlier noted, ADC has not alleged ever applying for a franchise under the
provisions of PD No. 771. and yet, the purpose of PD No. 771 is quite clear from its
provisions, i.e., to give to the national government the exclusive power to grant
gambling franchises. Thus, all franchises then existing were revoked but were made
subject to reissuance by the national government upon compliance by the applicant
with government-set qualifications and requirements.
There was no violation by PD No. 771 of the equal protection clause since the decree
revoked all franchises issued by local governments without qualification or exception.
ADC cannot allege violation of the equal protection clause simply because it was the
only one affected by the decree, for as correctly pointed out by the government, ADC
was not singled out when all jai-alai franchises were revoked. Besides, it is too late in
the day for ADC to seek redress for alleged violation of its constitutional rights for it
could have raised these issues as early as 1975, almost twenty 920) years ago.
Finally, we do not agree that Section 3 of PD No. 771 and the requirement of a
legislative franchise in Republic Act No. 954 are "riders" to the two 92) laws and are
violative of the rule that laws should embrace one subject which shall be expressed in
the title, as argued by ADC. In Cordero v. Cabatuando (6 SCRA 418), this Court ruled
that the requirement under the constitution that all laws should embrace only one
subject which shall be expressed in the title is sufficiently met if the title is
STATUTORY CONSTRUCTION CASES: CHAPTER V 14
comprehensive enough reasonably to include the general object which the statute
seeks to effect, without expressing each and every end and means necessary or
convenient for the accomplishing of the objective.
III
On the issue of whether or not there was grave abuse of discretion committed by
respondent Judge Reyes in issuing the temporary restraining order (later converted to
a writ of preliminary injunction) and the writ of preliminary mandatory injunction, we
hold and rule there was.
Section 3, Rule 58 of the rules of Court provides for the grounds for the issuance of a
preliminary injunction. While ADC could allege these grounds, respondent judge
should have taken judicial notice of Republic Act No. 954 and PD 771, under Section
1 rule 129 of the Rules of court. These laws negate the existence of any legal right
on the part of ADC to the reliefs it sought so as to justify the issuance of a writ of
preliminary injunction. since PD No. 771 and Republic Act No. 954 are presumed valid
and constitutional until ruled otherwise by the Supreme Court after due hearing, ADC
was not entitled to the writs issued and consequently there was grave abuse of
discretion in issuing them.
WHEREFORE, for the foregoing reasons, judgment is hereby rendered:
1. allowing the Republic of the Philippines to intervene in G.R. No.
115044.
2. declaring Presidential Decree No. 771 valid and constitutional.
3. declaring that respondent Associated Development corporation
(ADC) does not possess the required congressional franchise to
operate and conduct the jai-alai under Republic Act No. 954 and
Presidential Decree No. 771.
4. setting aside the writs of preliminary injunction and preliminary
mandatory injunction issued by respondent Judge Vetino Reyes in
civil Case No. 94-71656.
SO ORDERED.
Feliciano, Bidin, Regalado, Romero, Bellosillo and Mendoza, JJ., concur.
Narvasa, C.J. and Francisco, JJ., took no part.

EN BANC
[G.R. No. 149276. September 27, 2002]
JOVENCIO LIM and TERESITA LIM, petitioners, vs. THE PEOPLE OF THE
PHILIPPINES, THE REGIONAL TRIAL COURT OF QUEZON CITY,
BRANCH 217, THE CITY PROSECUTOR OF QUEZON CITY, AND
WILSON CHAM, respondents.
Constitutional Law; Criminal Law; Judgments; Cruel and Excessive Punishment;
Settled is the rule that punishment authorized by statute is not cruel, degrading or
disproportionate to the nature of the offense unless it is flagrantly and plainly
oppressive and wholly disproportionate to the nature of the offense as to shock the
moral sense of the community.—Settled is the rule that a punishment authorized by
statute is not cruel, degrading or disproportionate to the nature of the offense unless
it is flagrantly and plainly oppressive and wholly disproportionate to the nature of the
offense as to shock the moral sense of the community. It takes more than merely
being harsh, excessive, out of proportion or severe for a penalty to be obnoxious to
the Constitution. Based on this principle, the Court has consistently overruled
contentions of the defense that the penalty of fine or imprisonment authorized by the
statute involved is cruel and degrading.
Same; Same; Same; Same; The prohibition against cruel and unusual punishment is
generally aimed at the form or character of the punishment rather than its severity in
respect of its duration or amount, and applies to punishments which never existed in
America or which public sentiment regards as cruel or obsolete.—In People vs.
Tongko, this Court held that the prohibition against cruel and unusual punishment is
generally aimed at the form or character of the punishment rather than its severity in
respect of its duration or amount, and applies to punishments which never existed in
America or which public sentiment regards as cruel or obsolete. This refers, for
instance, to those inflicted at the whipping post or in the pillory, to burning at the
stake, breaking on the wheel, disemboweling and the like. The fact that the penalty is
severe provides insufficient basis to declare a law unconstitutional and does not, by
that circumstance alone, make it cruel and inhuman.
Same; Same; Same; Same; Presidential Decree 818; The increase in penalty in PD
818 is to effectuate the repression of an evil that undermines the country’s
commercial and economic growth, and to serve as a necessary precaution to deter
people from issuing bouncing checks.—Clearly, the increase in the penalty, far from
being cruel and degrading, was motivated by a laudable purpose, namely, to
effectuate the repression of an evil that undermines the country’s commercial and
economic growth, and to serve as a necessary precaution to deter people from
issuing bouncing checks. The fact that PD 818 did not increase the amounts
STATUTORY CONSTRUCTION CASES: CHAPTER V 15
corresponding to the new penalties only proves that the amount is immaterial and
inconsequential. What the law sought to avert was the proliferation of estafa cases
committed by means of bouncing checks. Taking into account the salutary purpose
for which said law was decreed, we conclude that PD 818 does not violate Section 19
of Article III of the Constitution.
Same; Same; Same; The burden of proving the invalidity of a law rests on those who
challenge it.—When a law is questioned before the Court, the presumption is in favor
of its constitutionality. To justify its nullification, there must be a clear and
unmistakable breach of the Constitution, not a doubtful and argumentative one. The
burden of proving the invalidity of a law rests on those who challenge it. In this case,
petitioners failed to present clear and convincing proof to defeat the presumption of
constitutionality of PD 818.
DECISION
CORONA, J.:
The constitutionality of PD 818, a decree which amended Article 315 of the
Revised Penal Code by increasing the penalties for estafa committed by means of
bouncing checks, is being challenged in this petition for certiorari, for being violative
of the due process clause, the right to bail and the provision against cruel, degrading
or inhuman punishment enshrined under the Constitution.
The antecedents of this case, as gathered from the parties pleadings and
documentary proofs, follow.
In December 1991, petitioner spouses issued to private respondent two
postdated checks, namely, Metrobank check no. 464728 dated January 15, 1992 in
the amount of P365,750 and Metrobank check no. 464743 dated January 22, 1992 in
the amount of P429,000. Check no. 464728 was dishonored upon presentment for
having been drawn against insufficient funds while check no. 464743 was not
presented for payment upon request of petitioners who promised to replace the
dishonored check.
When petitioners reneged on their promise to cover the amount of check no.
464728, the private respondent filed a complaint-affidavit before the Office of the
City Prosecutor of Quezon City charging petitioner spouses with the crime of estafa
under Article 315, par. 2 (d) of the Revised Penal Code, as amended by PD 818.
On February 16, 2001, the City Prosecutor issued a resolution finding probable
cause against petitioners and recommending the filing of an information for
estafa with no bail recommended. On the same day, an information for the crime of

estafa was filed with Branch 217 of the Regional Trial Court of Quezon City against
petitioners. The case was docketed as Criminal Case No. Q-01-101574. Thereafter,
the trial court issued a warrant for the arrest of herein petitioners, thus:
It appearing on the face of the information and from supporting affidavit of the
complaining witness and its annexes that probable cause exists, that the crime
charged was committed and accused is probably guilty thereof, let a warrant for the
arrest of the accused be issued.
No Bail Recommended.
SO ORDERED.[1]
On July 18, 2001, petitioners filed an Urgent Motion to Quash Information and
Warrant of Arrest which was denied by the trial court. Likewise, petitioners motion for
bail filed on July 24, 2001 was denied by the trial court on the same day. Petitioner
Jovencio Lim was arrested by virtue of the warrant of arrest issued by the trial court
and was detained at the Quezon City Jail.However, petitioner Teresita Lim remained
at large.
On August 22, 2001, petitioners filed the instant petition for certiorari imputing
grave abuse of discretion on the part of the lower court and the Office of the City
Prosecutor of Quezon City, arguing that PD 818 violates the constitutional provisions
on due process, bail and imposition of cruel, degrading or inhuman punishment.
In a resolution dated February 26, 2002, this Court granted the petition of
Jovencio Lim to post bail pursuant to Department of Justice Circular No. 74 dated
November 6, 2001 which amended the 2000 Bail Bond Guide involving estafa under
Article 315, par. 2 (d), and qualified theft. Said Circular specifically provides as
follows:
xxx xxx xxx
3) Where the amount of fraud is P32,000.00 or over in which the
imposable penalty is reclusion temporal to reclusion perpetua, bail shall
be based on reclusion temporal maximum, pursuant to Par. 2 (a) of
the 2000 Bail Bond Guide, multiplied by P2,000.00, plus an additional
of P2,000.00 for every P10,000.00 in excess of P22,000.00; Provided,
however, that the total amount of bail shall not exceed P60,000.00.
STATUTORY CONSTRUCTION CASES: CHAPTER V 16
In view of the aforementioned resolution, the matter concerning bail shall no
longer be discussed. Thus, this decision will focus on whether or not PD 818 violates
Sections 1 and 19 of Article III of the Constitution, which respectively provide:
Section 1. No person shall be deprived of life, liberty or property without due process
of law, nor shall any person be denied the equal protection of the laws.
xxx
Section 19 (1) Excessive fines shall not be imposed, nor cruel, degrading or inhuman
punishment inflicted. x x x.
We shall deal first with the issue of whether PD 818 was enacted in
contravention of Section 19 of Article III of the Constitution. In this regard, the
impugned provision of PD 818 reads as follows:
SECTION 1. Any person who shall defraud another by means of false pretenses or
fraudulent acts as defined in paragraph 2(d) of Article 315 of the Revised Penal Code,
as amended by Republic Act No. 4885, shall be punished by:
1st. The penalty of reclusion temporal if the amount of the fraud is over 12,000 pesos
but does not exceed 22,000 pesos, and if such amount exceeds the later sum, the
penalty provided in this paragraph shall be imposed in its maximum period, adding
one year for each additional 10,000 pesos but the total penalty which may be
imposed shall in no case exceed thirty years. In such cases, and in connection with
the accessory penalties which may be imposed under the Revised Penal Code, the
penalty shall be termed reclusion perpetua;
2nd. The penalty of prision mayor in its maximum period, if the amount of the fraud is
over 6,000 pesos but does not exceed 12,000 pesos.
3rd. The penalty of prision mayor in its medium period, if such amount is over 200
pesos but does not exceed 6,000 pesos; and
4th. By prision mayor in its minimum period, if such amount does not exceed 200
pesos.
Petitioners contend that, inasmuch as the amount of the subject check is
P365,750, they can be penalized with reclusion perpetua or 30 years of
 STATUTORY CONSTRUCTION CASES: CHAPTER V 17

imprisonment. This penalty, according to petitioners, is too severe and WHEREAS, it is vitally necessary to arrest and curb the rise in this kind of estafa
disproportionate to the crime they committed and infringes on the express mandate cases by increasing the existing penalties provided therefor.
of Article III, Section 19 of the Constitution which prohibits the infliction of cruel,
degrading and inhuman punishment. Clearly, the increase in the penalty, far from being cruel and degrading, was
motivated by a laudable purpose, namely, to effectuate the repression of an evil that
Settled is the rule that a punishment authorized by statute is not cruel,
undermines the countrys commercial and economic growth, and to serve as a
degrading or disproportionate to the nature of the offense unless it is flagrantly and
necessary precaution to deter people from issuing bouncing checks. The fact that PD
plainly oppressive and wholly disproportionate to the nature of the offense as to
818 did not increase the amounts corresponding to the new penalties only proves
shock the moral sense of the community. It takes more than merely being harsh,
that the amount is immaterial and inconsequential. What the law sought to avert was
excessive, out of proportion or severe for a penalty to be obnoxious to the
the proliferation of estafa cases committed by means of bouncing checks. Taking into
Constitution.[2] Based on this principle, the Court has consistently overruled
account the salutary purpose for which said law was decreed, we conclude that PD
contentions of the defense that the penalty of fine or imprisonment authorized by the
818 does not violate Section 19 of Article III of the Constitution.
statute involved is cruel and degrading.
Moreover, when a law is questioned before the Court, the presumption is in
In People vs. Tongko,[3] this Court held that the prohibition against cruel and
favor of its constitutionality. To justify its nullification, there must be a clear and
unusual punishment is generally aimed at the form or character of the punishment
unmistakable breach of the Constitution, not a doubtful and argumentative
rather than its severity in respect of its duration or amount, and applies to
one.[4] The burden of proving the invalidity of a law rests on those who challenge
punishments which never existed in America or which public sentiment regards as
it. In this case, petitioners failed to present clear and convincing proof to defeat the
cruel or obsolete. This refers, for instance, to those inflicted at the whipping post or
presumption of constitutionality of PD 818.
in the pillory, to burning at the stake, breaking on the wheel, disemboweling and the
like. The fact that the penalty is severe provides insufficient basis to declare a law With respect to the issue of whether PD 818 infringes on Section 1 of Article III
unconstitutional and does not, by that circumstance alone, make it cruel and of the Constitution, petitioners claim that PD 818 is violative of the due process
inhuman. clause of the Constitution as it was not published in the Official Gazette. This claim is
incorrect and must be rejected. Publication, being an indispensable part of due
Petitioners also argue that while PD 818 increased the imposable penalties for
process, is imperative to the validity of laws, presidential decrees and executive
estafa committed under Article 315, par. 2 (d) of the Revised Penal Code, it did not
orders.[5] PD 818 was published in the Official Gazette on December 1, 1975.[6]
increase the amounts corresponding to the said new penalties. Thus, the original
amounts provided for in the Revised Penal Code have remained the same With the foregoing considerations in mind, this Court upholds the
notwithstanding that they have become negligible and insignificant compared to the constitutionality of PD 818.
present value of the peso.
WHEREFORE, the petition is hereby DISMISSED.
This argument is without merit. The primary purpose of PD 818 is emphatically
and categorically stated in the following: SO ORDERED.

Davide, Jr., C.J., Bellosillo, Vitug, Panganiban, Quisumbing, Ynares-Santiago,

WHEREAS, reports received of late indicate an upsurge of estafa (swindling) cases Sandoval-Gutierrez, Carpio, Austria-Martinez, Morales, and Callejo, Sr., JJ., concur.
committed by means of bouncing checks;
Puno, J., no part due to relation to counsel.
WHEREAS, if not checked at once, these criminal acts would erode the peoples
confidence in the use of negotiable instruments as a medium of commercial Mendoza, J., on leave.
transaction and consequently result in the retardation of trade and commerce and the
undermining of the banking system of the country;

EN BANC
[G.R. No. 94723. August 21, 1997]
KAREN E. SALVACION, minor, thru Federico N. Salvacion, Jr., father and
Natural Guardian, and Spouses FEDERICO N. SALVACION, JR., and
EVELINA E. SALVACION, petitioners, vs. CENTRAL BANK OF THE
PHILIPPINES, CHINA BANKING CORPORATION and GREG
BARTELLI y NORTHCOTT, respondents.
Remedial Law; Jurisdiction; Declaratory Relief; Court has no original and exclusive
jurisdiction over a petition for declaratory relief.—This Court has no original and
exclusive jurisdiction over a petition for declaratory relief. However, exceptions to this
rule have been recognized. Thus, where the petition has far-reaching implications and
raises questions that should be resolved, it may be treated as one for mandamus.
Statutory Construction; Statutes; In case of doubt in the interpretation or application
of laws, it is presumed that the lawmaking body intended right and justice to
prevail.—In fine, the application of the law depends on the extent of its justice.
Eventually, if we rule that the questioned Section 113 of Central Bank Circular No.
960 which exempts from attachment, garnishment, or any other order or process of
any court, legislative body, government agency or any administrative body
whatsoever, is applicable to a foreign transient, injustice would result especially to a
citizen aggrieved by a foreign guest like accused Greg Bartelli. This would negate
Article 10 of the New Civil Code which provides that “in case of doubt in the
interpretation or application of laws, it is presumed that the lawmaking body intended
right and justice to prevail. “Ninguno non deue enriquecerse tortizeramente con dano
de otro.” Simply stated, when the statute is silent or ambiguous, this is one of those
fundamental solutions that would respond to the vehement urge of conscience.
DECISION
TORRES, JR., J.:
In our predisposition to discover the original intent of a statute, courts become
the unfeeling pillars of the status quo. Little do we realize that statutes or even
constitutions are bundles of compromises thrown our way by their framers. Unless we
exercise vigilance, the statute may already be out of tune and irrelevant to our day.
The petition is for declaratory relief. It prays for the following reliefs:
a.) Immediately upon the filing of this petition, an Order be issued
restraining the respondents from applying and enforcing Section 113 of
Central Bank Circular No. 960;
b.) After hearing, judgment be rendered:
STATUTORY CONSTRUCTION CASES: CHAPTER V 18
1.) Declaring the respective rights and duties of petitioners and
respondents;
2.) Adjudging Section 113 of Central Bank Circular No. 960 as
contrary to the provision of the Constitution, hence void;
because its provision that Foreign currency deposits shall be
exempt from attachment, garnishment, or any other order to
process of any court, legislative body, government agency or
any administrative body whatsoever
i.) has taken away the right of petitioners to have the
bank deposit of defendant Greg Bartelli y Northcott
garnished to satisfy the judgment rendered in petitioners
favor in violation of substantive due process guaranteed
by the Constitution;
ii.) has given foreign currency depositors an undue favor
or a class privilege in violation of the equal protection
clause of the Constitution;
iii.) has provided a safe haven for criminals like the herein
respondent Greg Bartelli y Northcott since criminals could
escape civil liability for their wrongful acts by merely
converting their money to a foreign currency and
depositing it in a foreign currency deposit account with an
authorized bank.
The antecedents facts:
On February 4, 1989, Greg Bartelli y Northcott, an American tourist, coaxed and
lured petitioner Karen Salvacion, then 12 years old to go with him to his
apartment. Therein, Greg Bartelli detained Karen Salvacion for four days, or up to
February 7, 1989 and was able to rape the child once on February 4, and three times
each day on February 5, 6, and 7, 1989. On February 7, 1989, after policemen and
people living nearby, rescued Karen, Greg Bartelli was arrested and detained at the
Makati Municipal Jail. The policemen recovered from Bartelli the following
items: 1.) Dollar Check No. 368, Control No. 021000678-1166111303, US
3,903.20; 2.) COCOBANK Bank Book No. 104-108758-8 (Peso Acct.); 3.) Dollar
Account China Banking Corp., US $/A#54105028-2; 4.) ID-122-30-
8877; 5.) Philippine Money (P234.00) cash; 6.) Door Keys 6 pieces; 7.) Stuffed Doll
(Teddy Bear) used in seducing the complainant.
On February 16, 1989, Makati Investigating Fiscal Edwin G. Condaya filed
against Greg Bartelli, Criminal Case No. 801 for Serious Illegal Detention and Criminal
Cases Nos. 802, 803, 804, and 805 for four (4) counts of Rape. On the same day,
petitioners filed with the Regional Trial Court of Makati Civil Case No. 89-3214 for
damages with preliminary attachment against Greg Bartelli. On February 24, 1989,
the day there was a scheduled hearing for Bartellis petition for bail the latter escaped
from jail.

On February 28, 1989, the court granted the fiscals Urgent Ex-Parte Motion for
the Issuance of Warrant of Arrest and Hold Departure Order. Pending the arrest of
the accused Greg Bartelli y Northcott, the criminal cases were archived in an Order
dated February 28, 1989.
Meanwhile, in Civil Case No. 89-3214, the Judge issued an Order dated
February 22, 1989 granting the application of herein petitioners, for the issuance of
the writ of preliminary attachment. After petitioners gave Bond No. JCL (4) 1981 by
FGU Insurance Corporation in the amount P100,000.00, a Writ of Preliminary
Attachment was issued by the trial court on February 28, 1989.
On March 1, 1989, the Deputy Sheriff of Makati served a Notice of Garnishment
on China Banking Corporation. In a letter dated March 13, 1989 to the Deputy Sheriff
of Makati, China Banking Corporation invoked Republic Act No. 1405 as its answer to
the notice of garnishment served on it. On March 15, 1989, Deputy Sheriff of Makati
Armando de Guzman sent his reply to China Banking Corporation saying that the
garnishment did not violate the secrecy of bank deposits since the disclosure is
merely incidental to a garnishment properly and legally made by virtue of a court
order which has placed the subject deposits in custodia legis. In answer to this letter
of the Deputy Sheriff of Makati, China Banking Corporation, in a letter dated March
20, 1989, invoked Section 113 of Central Bank Circular No. 960 to the effect that the
dollar deposits of defendant Greg Bartelli are exempt from attachment, garnishment,
or any other order or process of any court, legislative body, government agency or
any administrative body, whatsoever.
This prompted the counsel for petitioners to make an inquiry with the Central
Bank in a letter dated April 25, 1989 on whether Section 113 of CB Circular No. 960
has any exception or whether said section has been repealed or amended since said
section has rendered nugatory the substantive right of the plaintiff to have the claim
sought to be enforced by the civil action secured by way of the writ of preliminary
attachment as granted to the plaintiff under Rule 57 of the Revised Rules of
Court. The Central Bank responded as follows:
May 26, 1989
Ms. Erlinda S. Carolino
12 Pres. Osmea Avenue
South Admiral Village
Paranaque, Metro Manila
Dear Ms. Carolino:
This is in reply to your letter dated April 25, 1989 regarding your inquiry on
Section 113, CB Circular No. 960 (1983).
The cited provision is absolute in application. It does not admit of any
exception, nor has the same been repealed nor amended.
STATUTORY CONSTRUCTION CASES: CHAPTER V 19
The purpose of the law is to encourage dollar accounts within the countrys
banking system which would help in the development of the
economy. There is no intention to render futile the basic rights of a person
as was suggested in your subject letter. The law may be harsh as some
perceive it, but it is still the law. Compliance is, therefore, enjoined.
Very truly yours,
(SGD) AGAPITO S. FAJARDO
Director[1]
Meanwhile, on April 10, 1989, the trial court granted petitioners motion for
leave to serve summons by publication in the Civil Case No. 89-3214 entitled Karen
Salvacion. et al. vs. Greg Bartelli y Northcott. Summons with the complaint was
published in the Manila Times once a week for three consecutive weeks. Greg Bartelli
failed to file his answer to the complaint and was declared in default on August 7,
1989. After hearing the case ex-parte, the court rendered judgment in favor of
petitioners on March 29, 1990, the dispositive portion of which reads:
WHEREFORE, judgment is hereby rendered in favor of plaintiffs and against
defendant, ordering the latter:
1. To pay plaintiff Karen E. Salvacion the amount of P500,000.00 as moral
damages;
2. To pay her parents, plaintiffs spouses Federico N. Salvacion, Jr., and
Evelina E. Salvacion the amount of P150,000.00 each or a total
of P300,000.00 for both of them;
3. To pay plaintiffs exemplary damages of P100,000.00; and
4. To pay attorneys fees in an amount equivalent to 25% of the total
amount of damages herein awarded;
5. To pay litigation expenses of P10,000.00; plus
6. Costs of the suit.
SO ORDERED.
The heinous acts of respondents Greg Bartelli which gave rise to the award
were related in graphic detail by the trial court in its decision as follows:
The defendant in this case was originally detained in the municipal jail of
Makati but was able to escape therefrom on February 24, 1989 as per
report of the Jail Warden of Makati to the Presiding Judge, Honorable
Manuel M. Cosico of the Regional Trial Court of Makati, Branch 136, where
he was charged with four counts of Rape and Serious Illegal Detention
(Crim. Cases Nos. 802 to 805).Accordingly, upon motion of plaintiffs,
through counsel, summons was served upon defendant by publication in
the Manila Times, a newspaper of general circulation as attested by the

Advertising Manager of the Metro Media Times, Inc., the publisher of the
said newspaper. Defendant, however, failed to file his answer to the
complaint despite the lapse of the period of sixty (60) days from the last
publication; hence, upon motion of the plaintiffs through counsel,
defendant was declared in default and plaintiffs were authorized to present
their evidence ex parte.
In support of the complaint, plaintiffs presented as witness the minor Karen
E. Salvacion, her father, Federico N. Salacion, Jr., a certain Joseph Aguilar
and a certain Liberato Mandulio, who gave the following testimony:
Karen took her first year high school in St. Marys Academy in Pasay City but has
recently transferred to Arellano University for her second year.
In the afternoon of February 4, 1989, Karen was at the Plaza Fair Makati Cinema
Square, with her friend Edna Tangile whiling away her free time. At about 3:30 p.m.
while she was finishing her snack on a concrete bench in front of Plaza Fair, an
American approached her. She was then alone because Edna Tangile had already
left, and she was about to go home. (TSN, Aug. 15, 1989, pp. 2 to 5)
The American asked her name and introduced himself as Greg Bartelli. He sat beside
her when he talked to her. He said he was a Math teacher and told her that he has a
sister who is a nurse in New York. His sister allegedly has a daughter who is about
Karens age and who was with him in his house along Kalayaan Avenue. (TSN, Aug.
15, 1989, pp. 4-5).
The American asked Karen what was her favorite subject and she told him its
Pilipino. He then invited her to go with him to his house where she could teach
Pilipino to his niece. He even gave her a stuffed toy to persuade her to teach his
niece. (Id., pp.5-6)
They walked from Plaza Fair along Pasong Tamo, turning right to reach the
defendants house along Kalayaan Avenue. (Id., p.6)
When they reached the apartment house, Karen notices that defendants alleged
niece was not outside the house but defendant told her maybe his niece was
inside. When Karen did not see the alleged niece inside the house, defendant told her
maybe his niece was upstairs, and invited Karen to go upstairs. (Id., p. 7)
Upon entering the bedroom defendant suddenly locked the door. Karen became
nervous because his niece was not there. Defendant got a piece of cotton cord and
tied Karens hands with it, and then he undressed her. Karen cried for help but
defendant strangled her. He took a packing tape and he covered her mouth with it
and he circled it around her head. (Id., p. 7)
STATUTORY CONSTRUCTION CASES: CHAPTER V 20
Then, defendant suddenly pushed Karen towards the bed which was just near the
door. He tied her feet and hands spread apart to the bed posts. He knelt in front of
her and inserted his finger in her sex organ.She felt severe pain. She tried to shout
but no sound could come out because there were tapes on her mouth. When
defendant withdrew his finger it was full of blood and Karen felt more pain after the
withdrawal of the finger. (Id., p.8)
He then got a Johnsons Baby Oil and he applied it to his sex organ as well as to her
sex organ. After that he forced his sex organ into her but he was not able to do
so. While he was doing it, Karen found it difficult to breathe and she perspired a lot
while feeling severe pain. She merely presumed that he was able to insert his sex
organ a little, because she could not see. Karen could not recall how long the
defendant was in that position. (Id., pp. 8-9)
After that, he stood up and went to the bathroom to wash. He also told Karen to take
a shower and he untied her hands. Karen could only hear the sound of the water
while the defendant, she presumed, was in the bathroom washing his sex
organ. When she took a shower more blood came out from her. In the meantime,
defendant changed the mattress because it was full of blood. After the shower, Karen
was allowed by defendant to sleep. She fell asleep because she got tired crying. The
incident happened at about 4:00 p.m. Karen had no way of determining the exact
time because defendant removed her watch.Defendant did not care to give her food
before she went to sleep. Karen woke up at about 8:00 oclock the following
morning. (Id., pp. 9-10)
The following day, February 5, 1989, a Sunday, after breakfast of biscuit and coke at
about 8:30 to 9:00 a.m. defendant raped Karen while she was still bleeding. For
lunch, they also took biscuit and coke. She was raped for the second time at about
12:00 to 2:00 p.m. In the evening, they had rice for dinner which defendant had
stored downstairs; it was he who cooked the rice that is why it looks like lugaw. For
the third time, Karen was raped again during the night. During those three times
defendant succeeded in inserting his sex organ but she could not say whether the
organ was inserted wholly.
Karen did not see any firearm or any bladed weapon. The defendant did not tie her
hands and feet nor put a tape on her mouth anymore but she did not cry for help for
fear that she might be killed; besides, all those windows and doors were closed. And
even if she shouted for help, nobody would hear her. She was so afraid that if
somebody would hear her and would be able to call a police, it was still possible that
as she was still inside the house, defendant might kill her. Besides, the defendant did
not leave that Sunday, ruling out her chance to call for help. At nighttime he slept
with her again. (TSN, Aug. 15, 1989, pp. 12-14)
On February 6, 1989, Monday, Karen was raped three times, once in the morning for
thirty minutes after breakfast of biscuits; again in the afternoon; and again in the

evening. At first, Karen did not know that there was a window because everything
was covered by a carpet, until defendant opened the window for around fifteen
minutes or less to let some air in, and she found that the window was covered by
styrofoam and plywood. After that, he again closed the window with a hammer and
he put the styrofoam, plywood, and carpet back. (Id., pp. 14-15)
That Monday evening, Karen had a chance to call for help, although defendant left
but kept the door closed. She went to the bathroom and saw a small window covered
by styrofoam and she also spotted a small hole. She stepped on the bowl and she
cried for help through the hole. She cried: Maawa na po kayo sa akin. Tulungan nyo
akong makalabas dito. Kinidnap ako! Somebody heard her. It was a woman, probably
a neighbor, but she got angry and said she was istorbo. Karen pleaded for help and
the woman told her to sleep and she will call the police. She finally fell asleep but no
policeman came. (TSN, Aug. 15, 1989, pp. 15-16)
She woke up at 6:00 oclock the following morning, and she saw defendant in bed,
this time sleeping. She waited for him to wake up. When he woke up, he again got
some food but he always kept the door locked. As usual, she was merely fed with
biscuit and coke. On that day, February 7, 1989, she was again raped three
times. The first at about 6:30 to 7:00 a.m., the second at about 8:30 9:00, and the
third was after lunch at 12:00 noon. After he had raped her for the second time he
left but only for a short while. Upon his return, he caught her shouting for help but
he did not understand what she was shouting about.After she was raped the third
time, he left the house. (TSN, Aug. 15, 1989, pp. 16-17) She again went to the
bathroom and shouted for help. After shouting for about five minutes, she heard
many voices. The voices were asking for her name and she gave her name as Karen
Salvacion. After a while, she heard a voice of a woman saying they will just call the
police. They were also telling her to change her clothes.She went from the bathroom
to the room but she did not change her clothes being afraid that should the
neighbors call the police and the defendant see her in different clothes, he might kill
her. At that time she was wearing a T-shirt of the American bacause the latter
washed her dress. (Id., p. 16)
Afterwards, defendant arrived and opened the door. He asked her if she had asked
for help because there were many policemen outside and she denied it. He told her
to change her clothes, and she did change to the one she was wearing on
Saturday. He instructed her to tell the police that she left home and willingly; then he
went downstairs but he locked the door. She could hear people conversing but she
could not understand what they were saying. (Id., p. 19)
When she heard the voices of many people who were conversing downstairs, she
knocked repeatedly at the door as hard as she could. She heard somebody going
upstairs and when the door was opened, she saw a policeman. The policeman asked
her name and the reason why she was there. She told him she was
kidnapped. Downstairs, he saw about five policemen in uniform and the defendant
STATUTORY CONSTRUCTION CASES: CHAPTER V 21
was talking to them. Nakikipag-areglo po sa mga pulis, Karen added. The policeman
told him to just explain at the precinct. (Id., p. 20)
They went out of the house and she saw some of her neighbors in front of the
house. They rode the car of a certain person she called Kuya Boy together with
defendant, the policeman, and two of her neighbors whom she called Kuya Bong
Lacson and one Ate Nita. They were brought to Sub-Station I and there she was
investigated by a policeman. At about 2:00 a.m., her father arrived, followed by her
mother together with some of their neighbors. Then they were brought to the second
floor of the police headquarters. (Id., p. 21)
At the headquarters, she was asked several questions by the investigator. The written
statement she gave to the police was marked Exhibit A. Then they proceeded to the
National Bureau of Investigation together with the investigator and her parents. At
the NBI, a doctor, a medico-legal officer, examined her private parts. It was already
3:00 in early morning, of the following day when they reached the NBI, (TSN, Aug.
15, 1989, p. 22) The findings of the medico-legal officer has been marked as Exhibit
B.
She was studying at the St. Marys Academy in Pasay City at the time of the Incident
but she subsequently transferred to Apolinario Mabini, Arellano University, situated
along Taft Avenue, because she was ashamed to be the subject of conversation in
the school. She first applied for transfer to Jose Abad Santos, Arellano University
along Taft Avenue near the Light Rail Transit Station but she was denied admission
after she told the school the true reason for her transfer. The reason for their denial
was that they might be implicated in the case. (TSN, Aug. 15, 1989, p. 46)
xxx xxx xxx
After the incident, Karen has changed a lot. She does not play with her brother and
sister anymore, and she is always in a state of shock; she has been absent-minded
and is ashamed even to go out of the house. (TSN, Sept. 12, 1989, p. 10) She
appears to be restless or sad. (Id., p. 11) The father prays for P500,000.00 moral
damages for Karen for this shocking experience which probably, she would always
recall until she reaches old age, and he is not sure if she could ever recover from this
experience. (TSN, Sept. 24, 1989, pp. 10-11)
Pursuant to an Order granting leave to publish notice of decision, said notice
was published in the Manila Bulletin once a week for three consecutive weeks. After
the lapse of fifteen (15) days from the date of the last publication of the notice of
judgment and the decision of the trial court had become final, petitioners tried to
execute on Bartellis dollar deposit with China Banking Corporation. Likewise, the bank
invoked Section 113 of Central Bank Circular No. 960.
Thus, petitioners decided to seek relief from this Court.

The issues raised and the arguments articulated by the parties boil down to
two:
May this Court entertain the instant petition despite the fact that original
jurisdiction in petitions for declaratory relief rests with the lower court? She Section
113 of Central Bank Circular No. 960 and Section 8 of R.A. 6426, as amended by P.D.
1246, otherwise known as the Foreign Currency Deposit Act be made applicable to a
foreign transient?
Petitioners aver as heretofore stated that Section 113 of Central Bank Circular
No. 960 providing that Foreign currency deposits shall be exempt from attachment,
garnishment, or any other order or process of any court, legislative body, government
agency or any administrative body whatsoever. should be adjudged as
unconstitutional on the grounds that: 1.) it has taken away the right of petitioners to
have the bank deposit of defendant Greg Bartelli y Northcott garnished to satisfy the
judgment rendered in petitioners favor in violation of substantive due process
guaranteed by the Constitution; 2.) it has given foreign currency depositors an undue
favor or a class privilege n violation of the equal protection clause of the
Constitution; 3.) it has provided a safe haven for criminals like the herein respondent
Greg Bartelli y Northcott since criminal could escape civil liability for their wrongful
acts by merely converting their money to a foreign currency and depositing it in a
foreign currency deposit account with an authorized bank; and 4.) The Monetary
Board, in issuing Section 113 of Central Bank Circular No. 960 has exceeded its
delegated quasi- legislative power when it took away: a.) the plaintiffs substantive
right to have the claim sought to be enforced by the civil action secured by way of
the writ of preliminary attachment as granted by Rule 57 of the Revised Rules of
Court; b.) the plaintiffs substantive right to have the judgment credit satisfied by way
of the writ of execution out of the bank deposit of the judgment debtor as granted to
the judgment creditor by Rule 39 of the Revised Rules of Court, which is beyond its
power to do so.
On the other hand, respondent Central Bank, in its Comment alleges that the
Monetary Board in issuing Section 113 of CB Circular No. 960 did not exceed its
power or authority because the subject Section is copied verbatim from a portion of
R.A. No. 6426 as amended by P.D. 1246. Hence, it was not the Monetary Board that
grants exemption from attachment or garnishment to foreign currency deposits, but
the law (R.A. 6426 as amended) itself; that it does not violate the substantive due
process guaranteed by the Constitution because a.) it was based on a law; b.) the
law seems to be reasonable; c.) it is enforced according to regular methods of
procedure; and d.) it applies to all members of a class.
Expanding, the Central Bank said; that one reason for exempting the foreign
currency deposits from attachment, garnishment or any other order process of any
court, is to assure the development and speedy growth of the Foreign Currency
Deposit System and the Offshore Banking System in the Philippines; that another
reason is to encourage the inflow of foreign currency deposits into the banking
institutions thereby placing such institutions more in a position to properly channel
the same to loans and investments in the Philippines, thus directly contributing to the
STATUTORY CONSTRUCTION CASES: CHAPTER V 22
economic development of the country; that the subject section is being enforced
according to the regular methods of procedure; and that it applies to all currency
deposits made by any person and therefore does not violate the equal protection
clause of the Constitution.
Respondent Central Bank further avers that the questioned provision is needed
to promote the public interest and the general welfare; that the State cannot just
stand idly by while a considerable segment of the society suffers from economic
distress; that the State had to take some measures to encourage economic
development; and that in so doing persons and property may be subjected to some
kinds of restraints or burdens to secure the general welfare or public
interest. Respondent Central Bank also alleges that Rule 39 and Rule 57 of the
Revised Rules of Court provide that some properties are exempted from
execution/attachment especially provided by law and R.A. No. 6426 as amended is
such a law, in that it specifically provides, among others, that foreign currency
deposits shall be exempted from attachment, garnishment, or any other order or
process of any court, legislative body, government agency or any administrative body
whatsoever.
For its part, respondent China Banking Corporation, aside from giving reasons
similar to that of respondent Central Bank, also stated that respondent China Bank is
not unmindful of the inhuman sufferings experienced by the minor Karen E. Salvacion
from the beastly hands of Greg Bartelli; that it is not only too willing to release the
dollar deposit of Bartelli which may perhaps partly mitigate the sufferings petitioner
has undergone; but it is restrained from doing so in view of R.A. No. 6426 and
Section 113 of Central Bank Circular No. 960; and that despite the harsh effect to
these laws on petitioners, CBC has no other alternative but to follow the same.
This court finds the petition to be partly meritorious.
Petitioner deserves to receive the damages awarded to her by the court. But
this petition for declaratory relief can only be entertained and treated as a petition for
mandamus to require respondents to honor and comply with the writ of execution in
Civil Case No. 89-3214.
The Court has no original and exclusive jurisdiction over a petition for declatory
relief.[2] However, exceptions to this rule have been recognized. Thus, where the
petition has far-reaching implications and raises questions that should be resolved, it
may be treated as one for mandamus.[3]
Here is a child, a 12-year old girl, who in her belief that all Americans are good
and in her gesture of kindness by teaching his alleged niece the Filipino language as
requested by the American, trustingly went with said stranger to his apartment, and
there she was raped by said American tourist Greg Bartelli. Not once, but ten
times. She was detained therein for four (4) days. This American tourist was able to
escape from the jail and avoid punishment. On the other hand, the child, having
received a favorable judgment in the Civil Case for damages in the amount of more
than P1,000,000.00, which amount could alleviate the humiliation, anxiety, and
besmirched reputation she had suffered and may continue to suffer for a long, long

time; and knowing that this person who had wronged her has the money, could not,
however get the award of damages because of this unreasonable law. This
questioned law, therefore makes futile the favorable judgment and award of
damages that she and her parents fully deserve. As stated by the trial court in its
decision,
Indeed, after hearing the testimony of Karen, the Court believes that it was
indoubtedly a shocking and traumatic experience she had undergone which
could haunt her mind for a long, long time, the mere recall of which could
make her feel so humiliated, as in fact she had been actually humiliated
once when she was refused admission at the Abad Santos High School,
Arellano University, where she sought to transfer from another school,
simply because the school authorities of the said High School learned about
what happened to her and allegedly feared that they might be implicated in
the case.
xxx
The reason for imposing exemplary or corrective damages is due to the
wanton and bestial manner defendant had committed the acts of rape
during a period of serious illegal detention of his hapless victim, the minor
Karen Salvacion whose only fault was in her being so naive and credulous
to believe easily that defendant, an American national, could not have such
a bestial desire on her nor capable of committing such heinous
crime. Being only 12 years old when that unfortunate incident happened,
she has never heard of an old Filipino adage that in every forest there is a
snake, xxx.[4]
If Karens sad fate had happened to anybodys own kin, it would be difficult for
him to fathom how the incentive for foreign currency deposit could be more
important than his childs right to said award of damages; in this case, the victims
claim for damages from this alien who had the gall to wrong a child of tender years
of a country where he is mere visitor. This further illustrates the flaw in the
questioned provisions.
It is worth mentioning that R.A. No. 6426 was enacted in 1983 or at a time
when the countrys economy was in a shambles; when foreign investments were
minimal and presumably, this was the reason why said statute was enacted. But the
realities of the present times show that the country has recovered economically; and
even if not, the questioned law still denies those entitled to due process of law for
being unreasonable and oppressive. The intention of the questioned law may be good
when enacted. The law failed to anticipate the inquitous effects producing outright
injustice and inequality such as as the case before us.
It has thus been said that-
But I also know,[5] that laws and institutions must go hand in hand with the
progress of the human mind. As that becomes more developed, more
enlightened, as new discoveries are made, new truths are disclosed and
STATUTORY CONSTRUCTION CASES: CHAPTER V 23
manners and opinions change with the change of circumstances,
institutions must advance also, and keep pace with the times We might as
well require a man to wear still the coat which fitted him when a boy, as
civilized society to remain ever under the regimen of their barbarous
ancestors.
In his comment, the Solicitor General correctly opined, thus:
"The present petition has far-reaching implications on the right of a
national to obtain redress for a wrong committed by an alien who takes
refuge under a law and regulation promulgated for a purpose which does
not contemplate the application thereof envisaged by the allien. More
specifically, the petition raises the question whether the protection against
attachment, garnishment or other court process accorded to foreign
currency deposits PD No. 1246 and CB Circular No. 960 applies when the
deposit does not come from a lender or investor but from a mere transient
who is not expected to maintain the deposit in the bank for long.
The resolution of this question is important for the protection of nationals
who are victimized in the forum by foreigners who are merely passing
through.
xxx
xxx Respondents China Banking Corporation and Central Bank of the
Philippines refused to honor the writ of execution issued in Civil Case No.
89-3214 on the strength of the following provision of Central Bank Circular
No. 960:
Sec. 113 Exemption from attachment. Foreign currency
deposits shall be exempt from attachment, garnishment, or
any other order or process of any court, legislative body,
government agency or any administrative body whatsoever.
Central Bank Circular No. 960 was issued pursuant to Section 7 of Republic Act No.
6426:
Sec. 7. Rules and Regulations. The Monetary Board of the
Central Bank shall promulgate such rules and regulations as
may be necessary to carry out the provisions of this Act which
shall take effect after the publication of such rules and
regulations in the Official Gazette and in a newspaper of
national circulation for at least once a week for three
consecutive weeks. In case the Central Bank promulgates new
rules and regulations decreasing the rights of depositors, the
rules and regulations at the time the deposit was made shall
govern.

The aforecited Section 113 was copied from Section 8 of Republic Act No.
6426. As amended by P.D. 1246, thus:
Sec. 8. Secrecy of Foreign Currency Deposits. -- All foreign
currency deposits authorized under this Act, as amended by
Presidential Decree No. 1035, as well as foreign currency
deposits authorized under Presidential Decree No. 1034, are
hereby declared as and considered of an absolutely
confidential nature and, except upon the written permission of
the depositor, in no instance shall such foreign currency
deposits be examined, inquired or looked into by any person,
government official, bureau or office whether judicial or
administrative or legislative or any other entity whether public
or private: Provided, however, that said foreign currency
deposits shall be exempt from attachment, garnishment, or
any other order or process of any court, legislative body,
government agency or any administrative body whatsoever.
The purpose of PD 1246 in according protection against attachment,
garnishment and other court process to foreign currency deposits is stated
in its whereases, viz.:
WHEREAS, under Republic Act No. 6426, as amended by
Presidential Decree No. 1035, certain Philippine banking
institutions and branches of foreign banks are authorized to
accept deposits in foreign currency;
WHEREAS, under provisions of Presidential Decree No. 1034
authorizing the establishment of an offshore banking system in
the Philippines, offshore banking units are also authorized to
receive foreign currency deposits in certain cases;
WHEREAS, in order to assure the development and
speedy growth of the Foreign Currency Deposit System and
the Offshore Banking System in the Philippines, certain
incentives were provided for under the two Systems such as
confidentiality subject to certain exceptions and tax
exemptions on the interest income of depositors who are
nonresidents and are not engaged in trade or business in the
Philippines;
WHEREAS, making absolute the protective cloak of
confidentiality over such foreign currency deposits, exempting
such deposits from tax, and guaranteeing the vested right of
depositors would better encourage the inflow of foreign
currency deposits into the banking institutions authorized to
accept such deposits in the Philippines thereby placing such
institutions more in a position to properly channel the same to
STATUTORY CONSTRUCTION CASES: CHAPTER V 24
loans and investments in the Philippines, thus directly
contributing to the economic development of the country;
Thus, one of the principal purposes of the protection accorded to foreign
currency deposits is to assure the development and speedy growth of the
Foreign Currency Deposit system and the Offshore Banking in the
Philippines (3rd Whereas).
The Offshore Banking System was established by PD No. 1034. In turn, the
purposes of PD No. 1034 are as follows:
WHEREAS, conditions conducive to the establishment of an
offshore banking system, such as political stability, a growing
economy and adequate communication facilities, among
others, exist in the Philippines;
WHEREAS, it is in the interest of developing countries to have
as wide access as possible to the sources of capital funds for
economic development;
WHEREAS, an offshore banking system based in the Philippines
will be advantageous and beneficial to the country by
increasing our links with foreign lenders, facilitating the flow of
desired investments into the Philippines, creating employment
opportunities and expertise in international finance, and
contributing to the national development effort.
WHEREAS, the geographical location, physical and human
resources, and other positive factors provide the Philippines
with the clear potential to develop as another financial center
in Asia;
On the other hand, the Foreign Currency Deposit system was created by
PD No. 1035. Its purpose are as follows:
WHEREAS, the establishment of an offshore banking system in
the Philippines has been authorized under a separate decree;
WHEREAS, a number of local commercial banks, as depository
bank under the Foreign Currency Deposit Act (RA No. 6426),
have the resources and managerial competence to more
actively engage in foreign exchange transactions and
participate in the grant of foreign currency loans to resident
corporations and firms;
WHEREAS, it is timely to expand the foreign currency lending
authority of the said depository banks under RA 6426 and
apply to their transactions the same taxes as would be
applicable to transaction of the proposed offshore banking
units;
 STATUTORY CONSTRUCTION CASES: CHAPTER V 25

It is evident from the above [Whereas clauses] that the Offshore Banking
System and the Foreign Currency Deposit System were designed to draw
deposits from foreign lenders and investors (Vide second Whereas of PD
No. 1034; third Whereas of PD No. 1035). It is these depositors that are
induced by the two laws and given protection and incentives by them.
be INAPPLICABLE to this case because of its peculiar circumstances. Respondents are
hereby REQUIRED to COMPLY with the writ of execution issued in Civil Case No. 89-
3214, Karen Salvacion, et al. vs. Greg Bartelli y Northcott, by Branch CXLIV, RTC
Makati and to RELEASE to petitioners the dollar deposit of respondent Greg Bartelli y
Northcott in such amount as would satisfy the judgment.

Obviously, the foreign currency deposit made by a transient or a tourist is SO ORDERED.

not the kind of deposit encourage by PD Nos. 1034 and 1035 and given
incentives and protection by said laws because such depositor stays only Narvasa, C.J., Regalado, Davide, Jr., Romero, Bellosillo, Melo, Puno, Vitug,
for a few days in the country and, therefore, will maintain his deposit in the Kapunan, Francisco, and Panganiban, JJ., concur.
bank only for a short time. Padilla, J., no part.
Mendoza, and Hermosisima, Jr., JJ., on leave.
Respondent Greg Bartelli, as stated, is just a tourist or a transient. He
deposited his dollars with respondent China Banking Corporation only for
safekeeping during his temporary stay in the Philippines.

For the reasons stated above, the Solicitor General thus submits that the
dollar deposit of respondent Greg Bartelli is not entitled to the protection of
Section 113 of Central Bank Circular No. 960 and PD No. 1246 against
attachment, garnishment or other court processes.[6]

In fine, the application of the law depends on the extent of its

justice. Eventually, if we rule that the questioned Section 113 of Central Bank Circular
No. 960 which exempts from attachment, garnishment, or any other order or process
of any court. Legislative body, government agency or any administrative body
whatsoever, is applicable to a foreign transient, injustice would result especially to a
citizen aggrieved by a foreign guest like accused Greg Bartelli. This would negate
Article 10 of the New Civil Code which provides that in case of doubt in the
interpretation or application of laws, it is presumed that the lawmaking body intended
right and justice to prevail. Ninguno non deue enriquecerse tortizerzmente con damo
de otro.Simply stated, when the statute is silent or ambiguous, this is one of those
fundamental solutions that would respond to the vehement urge of
conscience. (Padilla vs. Padilla, 74 Phil. 377)

It would be unthinkable, that the questioned Section 113 of Central Bank No.
960 would be used as a device by accused Greg Bartelli for wrongdoing, and in so
doing, acquitting the guilty at the expense of the innocent.

Call it what it may but is there no conflict of legal policy here? Dollar against
Peso? Upholding the final and executory judgment of the lower court against the
Central Bank Circular protecting the foreign depositor? Shielding or protecting the
dollar deposit of a transient alien depositor against injustice to a national and victim
of a crime? This situation calls for fairness legal tyranny.
We definitely cannot have both ways and rest in the belief that we have served
the ends of justice.

IN VIEW WHEREOF, the provisions of Section 113 of CB Circular No. 960 and
PD No. 1246, insofar as it amends Section 8 of R.A. 6426 are hereby held to
 STATUTORY CONSTRUCTION CASES: CHAPTER V 26

Republic of the Philippines nevertheless have the power to interpret the law in such a way as to reflect the will
SUPREME COURT of the legislature. While we may not read into the law a purpose that is not there, we
Manila nevertheless have the right to read out of it the reason for its enactment. In doing
so, we defer not to "the letter that killeth" but to "the spirit that vivifieth," to give
EN BANC effect to the lawmaker's will.

G.R. No. 72873 May 28, 1987 Same; Property; Prescription; Succession; Redemption; Where co-heirs filed action
for redemption of co-heir's sold share only after thirteen years had elapsed from the
CARLOS ALONZO and CASIMIRA ALONZO, petitioners, sale, they are deemed to have been actually informed thereof sometime during those
vs. years although no written notice of sale was given to them.—While we do not here
INTERMEDIATE APPELLATE COURT and TECLA PADUA, respondents. declare that this period started from the dates of such sales in 1963 and 1964, we do
say that sometime between those years and 1976, when the first complaint for
Perpetuo L.B. Alonzo for petitioners. redemption was filed, the other co-heirs were actually informed of the sale and that
thereafter the 30-day period started running and ultimately expired. This could have
happened any time during the interval of thirteen years, when none of the co-heirs
Luis R. Reyes for private respondent.
made a move to redeem the properties sold. By 1977, in other words, when Tecla
Padua filed her complaint, the right of redemption had already been extinguished
Statutes; We test a law by its results. A law should not be interpreted so as to cause
because the period for its exercise had alr eady expired.
an injustice.—But as has also been aptly observed, we test a law by its results; and
likewise, we may add, by its purposes. It is a cardinal rule that, in seeking the
Same; Same; Same; Same; Same; Judgments; The Court's deviation from the strict
meaning of the law, the first concern of the judge should be to discover in its
letters of Art. 1088 NCC on giving of written notice to co-heirs of the sale of an heir's
provisions the intent of the lawmaker. Unquestionably, the law should never be
share is not being abandoned. The ruling here should be deemed an exception due to
interpreted in such a way as to cause injustice as this is never within the legislative
peculiar circumstances of this case.—We realize that in arriving at our conclusion
intent. An indispensable part of that intent, in fact, for we presume the good motives
today, we are deviating from the strict letter of the law, which the respondent court
of the legislature, is to render justice.
understandably applied pursuant to existing jurisprudence. The said court acted
properly as it had no competence to reverse the doctrines laid down by this Court in
Same; Law and justice are inseparable. Laws must be applied in consonance with
the above-cited cases. In fact, and this should be clearly stressed, we ourselves are
justice.—Thus, we interpret and apply the law not independently of but in
not abandoning the De Conejero and Buttle doctrines. What we are doing simply is
consonance with justice. Law and justice are inseparable, and we must keep them so.
adopting an exception to the general rule, in view of the peculiar circumstances of
To be sure, there are some laws that, while generally valid, may seem arbitrary when
this case.
applied in a particular case because of its peculiar circumstances. In such a situation,
we are not bound, because only of our nature and functions, to apply them just the
CRUZ, J.:
same, in slavish obedience to their language. What we do instead is find a balance
between the word and the will, that justice may be done even as the law is obeyed.
The question is sometimes asked, in serious inquiry or in curious conjecture, whether
we are a court of law or a court of justice. Do we apply the law even if it is unjust or
Same; Judges must not unfeelingly yield like robots to the literal command of the
do we administer justice even against the law? Thus queried, we do not equivocate.
law.—As judges, we are not automatons. We do not and must not unfeelingly apply
The answer is that we do neither because we are a court both of law and of justice.
the law as it is worded, yielding like robots to the literal command without regard to
We apply the law with justice for that is our mission and purpose in the scheme of
its cause and consequence. "Courts are apt to err by sticking too closely to the words
our Republic. This case is an illustration.
of a law," so we are warned, by Justice Holmes again, "where these words import a
policy that goes beyond them." While we admittedly may not legislate, we

Five brothers and sisters inherited in equal pro indiviso shares a parcel of land
registered in 'the name of their deceased parents under OCT No. 10977 of the
Registry of Deeds of Tarlac. 1
On March 15, 1963, one of them, Celestino Padua, transferred his undivided share of
the herein petitioners for the sum of P550.00 by way of absolute sale. 2 One year
later, on April 22, 1964, Eustaquia Padua, his sister, sold her own share to the same
vendees, in an instrument denominated "Con Pacto de Retro Sale," for the sum of P
440.00. 3
By virtue of such agreements, the petitioners occupied, after the said sales, an area
corresponding to two-fifths of the said lot, representing the portions sold to them.
The vendees subsequently enclosed the same with a fence. In 1975, with their
consent, their son Eduardo Alonzo and his wife built a semi-concrete house on a part
of the enclosed area.4
On February 25, 1976, Mariano Padua, one of the five coheirs, sought to redeem the
area sold to the spouses Alonzo, but his complaint was dismissed when it appeared
that he was an American citizen .5 On May 27, 1977, however, Tecla Padua, another
co-heir, filed her own complaint invoking the same right of redemption claimed by
her brother. 6
The trial court * also dismiss this complaint, now on the ground that the right had
lapsed, not having been exercised within thirty days from notice of the sales in 1963
and 1964. Although there was no written notice, it was held that actual knowledge of
the sales by the co-heirs satisfied the requirement of the law. 7
In truth, such actual notice as acquired by the co-heirs cannot be plausibly denied.
The other co-heirs, including Tecla Padua, lived on the same lot, which consisted of
only 604 square meters, including the portions sold to the petitioners . 8 Eustaquia
herself, who had sold her portion, was staying in the same house with her sister
Tecla, who later claimed redemption petition. 9 Moreover, the petitioners and the
private respondents were close friends and neighbors whose children went to school
together. 10
It is highly improbable that the other co-heirs were unaware of the sales and that
they thought, as they alleged, that the area occupied by the petitioners had merely
been mortgaged by Celestino and Eustaquia. In the circumstances just narrated, it
was impossible for Tecla not to know that the area occupied by the petitioners had
been purchased by them from the other. co-heirs. Especially significant was the
STATUTORY CONSTRUCTION CASES: CHAPTER V 27
erection thereon of the permanent semi-concrete structure by the petitioners' son,
which was done without objection on her part or of any of the other co-heirs.
The only real question in this case, therefore, is the correct interpretation and
application of the pertinent law as invoked, interestingly enough, by both the
petitioners and the private respondents. This is Article 1088 of the Civil Code,
providing as follows:
Art. 1088. Should any of the heirs sell his hereditary rights to a
stranger before the partition, any or all of the co-heirs may be
subrogated to the rights of the purchaser by reimbursing him for
the price of the sale, provided they do so within the period of one
month from the time they were notified in writing of the sale by the
vendor.
In reversing the trial court, the respondent court ** declared that the notice required
by the said article was written notice and that actual notice would not suffice as a
substitute. Citing the same case of De Conejero v. Court of Appeals 11 applied by the
trial court, the respondent court held that that decision, interpreting a like rule in
Article 1623, stressed the need for written notice although no particular form was
required.
Thus, according to Justice J.B.L. Reyes, who was the ponente of the Court, furnishing
the co-heirs with a copy of the deed of sale of the property subject to redemption
would satisfy the requirement for written notice. "So long, therefore, as the latter
(i.e., the redemptioner) is informed in writing of the sale and the particulars thereof,"
he declared, "the thirty days for redemption start running. "
In the earlier decision of Butte v. UY, 12 " the Court, speaking through the same
learned jurist, emphasized that the written notice should be given by the vendor and
not the vendees, conformably to a similar requirement under Article 1623, reading as
follows:
Art. 1623. The right of legal pre-emption or redemption shall not be
exercised except within thirty days from the notice in writing by the
prospective vendor, or by the vendors, as the case may be. The
deed of sale shall not be recorded in the Registry of Property,
unless accompanied by an affidavit of the vendor that he has given
written notice thereof to all possible redemptioners.

The right of redemption of co-owners excludes that of the adjoining
owners.
As "it is thus apparent that the Philippine legislature in Article 1623 deliberately
selected a particular method of giving notice, and that notice must be deemed
exclusive," the Court held that notice given by the vendees and not the vendor would
not toll the running of the 30-day period.
The petition before us appears to be an illustration of the Holmes dictum that "hard
cases make bad laws" as the petitioners obviously cannot argue against the fact that
there was really no written notice given by the vendors to their co-heirs. Strictly
applied and interpreted, Article 1088 can lead to only one conclusion, to wit, that in
view of such deficiency, the 30 day period for redemption had not begun to run,
much less expired in 1977.
But as has also been aptly observed, we test a law by its results; and likewise, we
may add, by its purposes. It is a cardinal rule that, in seeking the meaning of the law,
the first concern of the judge should be to discover in its provisions the in tent of the
lawmaker. Unquestionably, the law should never be interpreted in such a way as to
cause injustice as this is never within the legislative intent. An indispensable part of
that intent, in fact, for we presume the good motives of the legislature, is to render
justice.
Thus, we interpret and apply the law not independently of but in consonance with
justice. Law and justice are inseparable, and we must keep them so. To be sure,
there are some laws that, while generally valid, may seem arbitrary when applied in a
particular case because of its peculiar circumstances. In such a situation, we are not
bound, because only of our nature and functions, to apply them just the same, in
slavish obedience to their language. What we do instead is find a balance between
the word and the will, that justice may be done even as the law is obeyed.
As judges, we are not automatons. We do not and must not unfeelingly apply the law
as it is worded, yielding like robots to the literal command without regard to its cause
and consequence. "Courts are apt to err by sticking too closely to the words of a
law," so we are warned, by Justice Holmes again, "where these words import a policy
that goes beyond them." 13 While we admittedly may not legislate, we nevertheless
have the power to interpret the law in such a way as to reflect the will of the
legislature. While we may not read into the law a purpose that is not there, we
nevertheless have the right to read out of it the reason for its enactment. In doing
STATUTORY CONSTRUCTION CASES: CHAPTER V 28
so, we defer not to "the letter that killeth" but to "the spirit that vivifieth," to give
effect to the law maker's will.
The spirit, rather than the letter of a statute determines its
construction, hence, a statute must be read according to its spirit
or intent. For what is within the spirit is within the letter but
although it is not within the letter thereof, and that which is within
the letter but not within the spirit is not within the statute. Stated
differently, a thing which is within the intent of the lawmaker is as
much within the statute as if within the letter; and a thing which is
within the letter of the statute is not within the statute unless
within the intent of the lawmakers. 14
In requiring written notice, Article 1088 seeks to ensure that the
redemptioner is properly notified of the sale and to indicate the
date of such notice as the starting time of the 30-day period of
redemption. Considering the shortness of the period, it is really
necessary, as a general rule, to pinpoint the precise date it is
supposed to begin, to obviate any problem of alleged delays,
sometimes consisting of only a day or two.
The instant case presents no such problem because the right of redemption was
invoked not days but years after the sales were made in 1963 and 1964. The
complaint was filed by Tecla Padua in 1977, thirteen years after the first sale and
fourteen years after the second sale. The delay invoked by the petitioners extends to
more than a decade, assuming of course that there was a valid notice that tolled the
running of the period of redemption.
Was there a valid notice? Granting that the law requires the notice to be written,
would such notice be necessary in this case? Assuming there was a valid notice
although it was not in writing. would there be any question that the 30-day period for
redemption had expired long before the complaint was filed in 1977?
In the face of the established facts, we cannot accept the private respondents'
pretense that they were unaware of the sales made by their brother and sister in
1963 and 1964. By requiring written proof of such notice, we would be closing our
eyes to the obvious truth in favor of their palpably false claim of ignorance, thus
exalting the letter of the law over its purpose. The purpose is clear enough: to make
sure that the redemptioners are duly notified. We are satisfied that in this case the
 STATUTORY CONSTRUCTION CASES: CHAPTER V 29

other brothers and sisters were actually informed, although not in writing, of the
sales made in 1963 and 1964, and that such notice was sufficient.
Now, when did the 30-day period of redemption begin?
While we do not here declare that this period started from the dates of such sales in
1963 and 1964, we do say that sometime between those years and 1976, when the
first complaint for redemption was filed, the other co-heirs were actually informed of
the sale and that thereafter the 30-day period started running and ultimately expired.
This could have happened any time during the interval of thirteen years, when none
of the co-heirs made a move to redeem the properties sold. By 1977, in other words,
when Tecla Padua filed her complaint, the right of redemption had already been
extinguished because the period for its exercise had already expired.
The co-heirs in this case were undeniably informed of the sales although no notice in
writing was given them. And there is no doubt either that the 30-day period began
and ended during the 14 years between the sales in question and the filing of the
complaint for redemption in 1977, without the co-heirs exercising their right of
redemption. These are the justifications for this exception.
More than twenty centuries ago, Justinian defined justice "as the constant and
perpetual wish to render every one his due." 16 That wish continues to motivate this
Court when it assesses the facts and the law in every case brought to it for decision.
Justice is always an essential ingredient of its decisions. Thus when the facts
warrants, we interpret the law in a way that will render justice, presuming that it was
the intention of the lawmaker, to begin with, that the law be dispensed with justice.
So we have done in this case.

The following doctrine is also worth noting:
While the general rule is, that to charge a party with laches in the
assertion of an alleged right it is essential that he should have
knowledge of the facts upon which he bases his claim, yet if the
circumstances were such as should have induced inquiry, and the
means of ascertaining the truth were readily available upon inquiry,
but the party neglects to make it, he will be chargeable with laches,
the same as if he had known the facts. 15
WHEREFORE, the petition is granted. The decision of the respondent court is
REVERSED and that of the trial court is reinstated, without any pronouncement as to
costs. It is so ordered.
Teehankee, C.J., Yap, Narvasa, Melencio-Herrera Gutierrez, Jr., Paras, Gancayco,
Padilla, Bidin, Sarmiento and Cortes, JJ., concur.
Fernan and Feliciano, JJ., are on leave.

It was the perfectly natural thing for the co-heirs to wonder why the spouses Alonzo,
who were not among them, should enclose a portion of the inherited lot and build
thereon a house of strong materials. This definitely was not the act of a temporary
possessor or a mere mortgagee. This certainly looked like an act of ownership. Yet,
given this unseemly situation, none of the co-heirs saw fit to object or at least
inquire, to ascertain the facts, which were readily available. It took all
of thirteen years before one of them chose to claim the right of redemption, but then
it was already too late.

We realize that in arriving at our conclusion today, we are deviating from the strict
letter of the law, which the respondent court understandably applied pursuant to
existing jurisprudence. The said court acted properly as it had no competence to
reverse the doctrines laid down by this Court in the above-cited cases. In fact, and
this should be clearly stressed, we ourselves are not abandoning the De Conejero and
Buttle doctrines. What we are doing simply is adopting an exception to the general
rule, in view of the peculiar circumstances of this case.

EN BANC
G.R. No. 213330, November 16, 2015
ALELI C. ALMADOVAR, GENERAL MANAGER ISAWAD, ISABELA CITY,
BASILAN PROVINCE, Petitioner, v. CHAIRPERSON MA. GRACIA M. PULIDO-
TAN, COMMISSION ON AUDIT, Respondent.
Administrative Law; Salary Standardization Law; The Salary Standardization Law
(SSL) applies to all government positions, including those in government-owned or -
controlled corporations (GOCCs), without qualification. The exception to this rule is
when the GOCC’s charter specifically exempts the corporation from the coverage of
the SSL.—The increase in the salary of the petitioner was correctly disallowed
because it contravened the provisions of the SSL. In Mendoza v. COA, 705 SCRA 306
(2013), the Court ruled that the salaries of GMs of LWDs were subject to the
provision of the SSL, to wit: The Salary Standardization Law applies to all government
positions, including those in government-owned or -controlled corporations, without
qualification. The exception to this rule is when the government-owned or -controlled
corporation’s charter specifically exempts the corporation from the coverage of the
Salary Standardization Law. x x x We are not convinced that Section 23 of
Presidential Decree No. 198, as amended, or any of its provisions, exempts water
utilities from the coverage of the Salary Standardization Law. In statutes subsequent
to Republic Act No. 6758, Congress consistently provided not only for the power to fix
compensation but also the agency’s or corporation’s exemption from the Salary
Standardization Law. If Congress had intended to exempt water utilities from the
coverage of the Salary Standardization Law and other laws on compensation and
position classification, it could have expressly provided in Presidential Decree No. 198
an exemption clause similar to those provided in the respective charters of the
Philippine Postal Corporation, Trade Investment and Development Corporation, Land
Bank of the Philippines, Social Security System, Small Business Guarantee and
Finance Corporation, Government Service Insurance System, Development Bank of
the Philippines, Home Guaranty Corporation, and the Philippine Deposit Insurance
Corporation. Congress could have amended Section 23 of Presidential Decree No. 198
to expressly provide that the compensation of a general manager is exempted from
the Salary Standardization Law. However, Congress did not. Section 23 was amended
to emphasize that the general manager “shall not be removed from office, except for
cause and after due process.” This does not mean that water utilities cannot fix the
compensation of their respective general managers. Section 23 of Presidential Decree
No. 198 clearly provides that a water utility’s board of directors has the power to
define the duties and fix the compensation of a general manager. However, the
STATUTORY CONSTRUCTION CASES: CHAPTER V 30
compensation fixed must be in accordance with the position classification system
under the Salary Standardization Law.
Same; Same; The Supreme Court (SC) notes that Republic Act (RA) No. 9286 did not
expressly repeal the Salary Standardization Law (SSL). Neither did RA No. 9286
impliedly repeal the SSL because repeal by implication is not favored by law and is
only resorted to in case of irreconcilable inconsistency and repugnancy between the
new law and the old law.—Petitioner claims that R.A. No. 9286, being a later law,
repealed the SSL. The Court, however, notes that R.A. No. 9286 did not expressly
repeal the SSL. Neither did R.A. No. 9286 impliedly repeal the SSL because repeal by
implication is not favored by law and is only resorted to in case of irreconcilable
inconsistency and repugnancy between the new law and the old law. As clearly
pointed out in Mendoza, there is no irreconcilable inconsistency between R.A. No.
9286 and the SSL. It is conceded though that the board of directors has full discretion
in fixing the salary of the GM, but it is always subject to the limits under the SSL,
unless the charter of the LWD exempts it from the coverage of the said law.
Attorneys; Commission on Audit (COA) Circular No. 95-011, dated December 4, 1995,
provides that in the event that the need for the legal services of a private lawyer
cannot be avoided or is justified under extraordinary or exceptional circumstances,
the written conformity and acquiescence of the Office of the Government Corporate
Counsel (OGCC) and the written concurrence of the COA shall first be secured.—COA
Circular No. 95-011, dated December 4, 1995, provides that in the event that the
need for the legal services of a private lawyer cannot be avoided or is justified under
extraordinary or exceptional circumstances, the written conformity and acquiescence
of the OGCC and the written concurrence of the COA shall first be secured. The
failure to secure the written concurrence makes the engagement of the private
lawyer or law firm unauthorized. In the case at bench, petitioner does not deny that
there was no written concurrence from the COA when Atty. Esguerra, a private
lawyer, rendered legal services from January to October 2005. She, instead, argues
that it is not mandatory to secure the written concurrence of COA because it only
applies to the hiring or employment of a lawyer and not the renewal of a retainership
contract. Further, petitioner blames the COA because it belatedly acted on the
request of ISAWAD for a written concurrence.
Same; In The Law Firm of Laguesma Magsalin Consulta and Gastardo v. COA, 745
SCRA 269 (2015), the Supreme Court (SC), notwithstanding the fact that actual
services had been rendered, upheld the disallowance of payment made to a law firm,
which was unauthorized to act in behalf of a government-owned and -controlled
corporation (GOCC), for failure to secure the Commission on Audit’s (COA’s)
 STATUTORY CONSTRUCTION CASES: CHAPTER V 31

concurrence.—Petitioner admits that it was only on July 11, 2006 that the authority of Office) regarding Notices of Disallowances (NDs).
Atty. Operaria to render services for ISAWAD was issued. Obviously, he had no
authority to provide legal services to ISAWAD prior to the approval of the OGCC. Isabela Water District (ISAWAD) is a government owned and controlled corporation
Consequently, Atty. Operario was not entitled to the honorarium given for the alleged (GOCC) created pursuant to the provisions of Presidential Decree (P.D.) No. 198, or
services he had rendered. Petitioner cannot argue that disallowing the payments the "Provincial Water Utilities Act of 1973" (PWUA), as amended by Republic Act
made to Atty. Esguerra and Atty. Operario is tantamount to unjust enrichment. In (R.A.) No. 9286.4 Aleli G. Almadovar (petitioner) is the General Manager (GM) of
The Law Firm of Laguesma Magsalin Consulta and Gastardo v. COA, 745 SCRA 269 ISAWAD.5
(2015), the Court, notwithstanding the fact that actual services had been rendered,
upheld the disallowance of payment made to a law firm, which was unauthorized to On January 25, 2007, Catalino S. Genel (Genel), Audit Team Leader for ISAWAD,
act in behalf of a GOCC, for failure to secure the COA’s concurrence. In the case at Isabela City, issued the following NDs for ISAWAD's various payments:6
bench, there is no unjust enrichment because the NDs directed the responsible
officers of ISAWAD, who made the disbursements (including petitioner), and not the
lawyers engaged, to make the refund. ND No. Particulars Amount

Remedial Law; Provisional Remedies; Injunction; In Calawag v. University of the

2006-001 Payment of salary increase for the GM, ISAWAD, from
Philippines Visayas, 703 SCRA 373 (2013), the Supreme Court (SC) ruled that the (2005)7 P20,823.00 to P35,574-00 per month, from August to P73,755.00
right sought to be protected must not be doubtful in order for an injunctive relief to December, 2005, without legal basis.
be issued.—In Calawag v. University of the Philippines Visayas, 703 SCRA 373 (2013),
the Court ruled that the right sought to be protected must not be doubtful in order
for an injunctive relief to be issued, to wit: To be entitled to a writ of preliminary 2006- Payment of legal retainer's fee at P4,000.00 per month
injunction, x x x the petitioners must establish the following requisites: (a) the 002(2005)8 for the period from of January to December 2005
invasion of the right sought to be protected is material and substantial; (b) the right without proper authority from the Office of the P48,000.00
of the complainant is clear and unmistakable; and (c) there is an urgent and Government Corporate Counsel (OGCC) and the written
concurrence of the COA.
permanent necessity for the writ to prevent serious damage. x x x When the
complainant’s right is thus doubtful or disputed, he does not have a clear legal right
and, therefore, the issuance of injunctive relief is improper. [Emphasis supplied] 2006- Payment of honorarium to OGCC Lawyer without express
Here, petitioner failed to show sufficient reasons to justify the issuance of the 003(2005)9 authority from the OGCC, and proof of service rendered P24,000.00
injunctive relief. It has been thoroughly discussed that the disbursements were to the ISAWAD
without legal basis as they either were in excess of the limits provided for by law or
were issued without authority. Almadovar vs. Pulido-Tan, 775 SCRA 63, G.R. No.
213330 November 16, 2015 2006- Payment of Representation and Transportation
004(2005)10 Allowances (RATA) to the GM, ISAWAD over and above
the authorized rate of the Department of Budget and
DECISION P6,000.00
Management (DBM) under Corporate Budget Circular
(CBC) No. 18 and National Budget Circular (NBC) No.
MENDOZA, J.: 498

This is a petition for certiorari under Rule 64 of the Revised Rules of Court seeking to On April 26, 2007, petitioner filed an appeal with the Regional Cluster Director,
reverse and set aside the December 29, 2011 Decision1 of the Commission on Audit Cluster Ill-Public Utilities, Corporation Government Sector, which was indorsed to the
(COA) and the April 4, 2014 Resolution2 of the COA En Bane which affirmed the COA Regional Office. Petitioner insisted that the increase in her salary and her RATA
October 28, 2010 Decision3 of the COA Regional Office No.� IX (COA Regional was in accordance with R.A. No. 9286, or the law which amended the PWUA.11
 STATUTORY CONSTRUCTION CASES: CHAPTER V 32

Hence, this present petition.

Petitioner further claimed that the engagement of a private counsel, Atty. Quirino
Esguerra Jr. (Atty. Esguerra), and the designation of OGCC lawyer, Atty. Fortunato G.
Operario Jr. (Atty. Operario), were in accordance with the procedure set forth by law. ISSUES
Consequently, the payments made to them were appropriate.12
1] Whether or not the disbursements under the NDs were improper.
The COA Regional Office Ruling
2] In the event the disbursements were improper, whether or not
petitioner liable to refund the same.
On October 28, 2010, the COA Regional Office rendered a decision affirming with
modification the assailed NDs. It explained that the compensation of the GMs of local
water districts (LWDs) was still subject to the provisions of R.A. No. 6758, or the
Petitioner insists that her salary increase was proper because LWDs were exempt
Salary Standardization Law (SSL). Thus, it found that the increase in petitioner's
from the coverage of the SSL as Section 23 of R.A. No. 9286, a later law, empowered
salary was improper as it ran afoul with the provisions of R.A. No. 6758. It also
the board of directors of LWDs to fix the salary of its GM, thereby impliedly repealing
agreed that the disallowance of petitioner's RATA was correct because it exceeded
R.A. No. 6758; that her salary was within the scale provided by the Office of the
the allowable RATA for her position pursuant to CBC No. 18, 13 dated April 1, 2005,
Philippine Association of Water Districts, Inc.; and that she need not refund the
and NBC No. 498,14 dated November 14, 2000.
alleged overpaid RATA because she acted in good faith as she stopped claiming the
same after the NDs were issued.15
The COA Regional Office also agreed that the payment of honoraria to Atty. Operario
had no basis because it constituted an unnecessary and excessive expenditure. The
Petitioner also claims that the payments to Atty. Esguerra from January to October
disallowed amount in ND No. 2006-002(2005), was reduced from P48,000.00 to
2005 were valid because the OGCC concurred with the retainership contract for one
P40,000.00 because Atty. Esguerra's services from November to December 2005
year effective from November 1, 2004. She faults the COA for belatedly acting upon
were covered by a retainership contract duly approved by the OGCC and with the
the request for conformity. Likewise, petitioner posits that the written concurrence of
written concurrence of the COA.
the COA only applies to the engagement or hiring of a private lawyer and not the
renewal of the retainership. She argues that the retainership of Atty. Esguerra had
The case was automatically elevated for review to the COA pursuant to Section 7,
been effected on a yearly basis starting November 1, 2003, which necessarily follows
Rule V of the 2009 Revised Rules of Procedures of the COA.
that subsequent renewal should be in November of the succeeding year. 16

The COA Ruling

Petitioner also faults the OGCC for the delay in issuing the necessary authority for
Atty. Operario, baring that as early as 2004 the board of directors of ISAWAD already
On December 29, 2011, the COA rendered the assailed decision affirming the ruling
requested from the OGCC the necessary authority, but it was given only on July 11,
of the COA Regional Office. It stressed that before a private lawyer may be hired by
2006. She avers that denying the lawyers the remuneration for their services will be
the GOCC, the written conformity of the OGCC and the written concurrence of the
tantamount to unjust enrichment.17
COA must first be secured -which also applied in cases of contract renewal. The COA
ruled that the payments to Atty. Esguerra from January to October 2005 were
Citing Mendoza v. COA18 (Mendoza), petitioner claims that she acted in good faith in
improper because his services were retained without the necessary conformity and
making all the disbursements and, therefore, she should not be made to refund them
concurrence of both the OGCC and the COA. Only the retainership contract for a
because they were given under an honest belief that the payees were entitled to the
period of one year effective on November 1, 2005 was with the conformity and
said remunerations and these were in consideration for their services rendered.
concurrence of both the OGCC and the COA.
Petitioner likewise prays for the issuance of a Writ of Preliminary Injunction and/or
TRO because she stands to suffer grave injustice and great irreparable injury.
Aggrieved, petitioner moved for reconsideration of the decision but her motion was
denied by the COA En Banc in its assailed resolution, dated April 4, 2014.

In its Comment,19 dated July 28, 2014, the COA countered that LWDs were covered
by R.A. No. 6758 or the SSL. R.A. No. 9286 did not expressly repeal it, and an implied
repeal, as claimed by petitioner, was disfavored by law.
The COA also contended that the renewal of retainership contracts required the
written concurrence of the COA. It is also insisted that the payments of honorarium
made to Atty. Operario were improper because at the time he rendered his services,
the OGCC had yet to issue any authority. It noted that the OGCC approval and the
COA concurrence were required to ensure that there was basis for the engagement of
a private lawyer.
The COA argued that petitioner could not claim good faith because the case cited by
her, allowing the defense of good faith, was premised on the fact that there was no
prior case or rule that settled the applicability of R.A. No. 6758 to LWDs. Finally, the
COA opined that petitioner failed to state factual allegations to support the issuance
of a writ of Preliminary Injunction and/or TRO.
In her Reply,20 dated March 13, 2015, petitioner merely reiterated her previous
arguments.
The Court's Ruling
R.A. No. 6758 covers local water districts
The increase in the salary of the petitioner was correctly disallowed because it
contravened the provisions of the SSL. In Mendoza,21 the Court ruled that the salaries
of GMs of LWDs were subject to the provision of the SSL, to wit:
The Salary Standardization Law applies to all government positions, including those in
government-owned or controlled corporations, without qualification. The exception
to this rule is when the government-owned or controlled corporation's
charter specifically exempts the corporation from the coverage of the
Salary Standardization Law. xxx
We are not convinced that Section 23 of Presidential Decree No. 198, as
amended, or any of its provisions, exempts water utilities from the
coverage of the Salary Standardization Law. In statutes subsequent to Republic
Act No. 6758, Congress consistently provided not only for the power to fix
compensation but also the agency's or corporation's exemption from the Salary
Standardization Law. If Congress had intended to exempt water utilities from the
STATUTORY CONSTRUCTION CASES: CHAPTER V 33
coverage of the Salary Standardization Law and other laws on compensation and
position classification, it could have expressly provided in Presidential Decree No. 198
an exemption clause similar to those provided in the respective charters of the
Philippine Postal Corporation, Trade Investment and Development Corporation, Land
Bank of the Philippines, Social Security System, Small Business Guarantee and
Finance Corporation, Government Service Insurance System, Development Bank of
the Philippines, Home Guaranty Corporation, and the Philippine Deposit Insurance
Corporation.
Congress could have amended Section 23 of Presidential Decree No. 198 to expressly
provide that the compensation of a general manager is exempted from the Salary
Standardization Law. However, Congress did not. Section 23 was amended to
emphasize that the general manager "shall not be removed from office, except for
cause and after due process."
This does not mean that water utilities cannot fix the compensation of their
respective general managers. Section 23 of Presidential Decree No. 198 clearly
provides that a water utility's board of directors has the power to define the duties
and fix the compensation of a general manager. However, the compensation
fixed must be in accordance with the position classification system under
the Salary Standardization Law. xxx22
[Emphases Supplied]
Petitioner claims that R.A. No. 9286, being a later law, repealed the SSL. The Court,
however, notes that R.A. No. 9286 did not expressly repeal the SSL. Neither did R.A.
No. 9286 impliedly repeal the SSL because repeal by implication is not favored by law
and is only resorted to in case of irreconcilable inconsistency and repugnancy
between the new law and the old law.23 As clearly pointed out in Mendoza, there is
no irreconcilable inconsistency between R.A. No. 9286 and the SSL. It is conceded
though that the board of directors has full discretion in fixing the salary of the GM,
but it is always subject to the limits under the SSL, unless the charter of the LWD
exempts it from the coverage of the said law.
Engagements ofAtty. Esguerra
and Atty. Operario were unauthorized
COA Circular No. 95-011, dated December 4, 1995, provides that in the event that
the need for the legal services of a private lawyer cannot be avoided or is justified
under extraordinary or exceptional circumstances, the written conformity and

acquiescence of the OGCC and the written concurrence of the COA shall first be
secured. The failure to secure the written concurrence makes the engagement of the
private lawyer or law firm unauthorized.24
In the case at bench, petitioner does not deny that there was no written concurrence
from the COA when Atty. Esguerra, a private lawyer, rendered legal services from
January to October 2005. She, instead, argues that it is not mandatory to secure the
written concurrence of COA because it only applies to the hiring or employment of a
lawyer and not the renewal of a retainership contract. Further, petitioner blames the
COA because it belatedly acted on the request of ISAWAD for a written concurrence.
The arguments of petitioner fail to persuade.
ISAWAD first engaged Atty. Esguerra under a retainership contract25 for a period of
one year effective November 1, 2003, with the written concurrence of the OGCC and
the COA. The following year, another retainership contract26 was executed, effective
one year from November 1, 2004, with the concurrence of the OGCC but not the
COA. Again, in the following year, a retainership contract27 was executed for another
one year effective on November 1, 2005, with the written concurrence of both the
OGCC and the COA.
ISAWAD engaged Atty. Esguerra under a general retainer for a specific length of
time, which was regularly renewed after its termination. Each renewal constituted the
hiring of Atty. Esguerra because after the lapse of one year, the engagement was
terminated; and each renewal for another one-year term required the written
conformity of the COA.
Petitioner likewise faults the COA for failing to act on time on the request for
concurrence. This, however, is a bare assertion as petitioner failed to provide any
document showing that a request for the COA's written concurrence was even made.
Petitioner only presented the OGCC's written approval,28 dated September 5, 2005, of
the retainership contract effective November 1, 2004. The letter significantly
reminded ISAWAD to seek the conformity of the COA - which it failed to do.
With regard to Atty. Operario, Executive Order (E.O.) No. 878, series of 1983, allows
any member of the OGCC's legal staff to be designated in a concurrent capacity to
act as a corporate officer of the GOCC being serviced by the OGCC when the
exigency of the service so requires, provided that the Government Corporate Counsel
approves the designation.
Petitioner admits that it was only on July 11, 2006 that the authority of Atty. Operaria
STATUTORY CONSTRUCTION CASES: CHAPTER V 34
to render services for ISAWAD was issued. Obviously, he had no authority to provide
legal services to ISAWAD prior to the approval of the OGCC. Consequently, Atty.
Operario was not entitled to the honorarium given for the alleged services he had
rendered.
Petitioner cannot argue that disallowing the payments made to Atty. Esguerra and
Atty. Operario is tantamount to unjust enrichment. In The Law Firm of Laguesma
Magsalin Consulta and Gastardo v. COA,29 the Court, notwithstanding the fact that
actual services had been rendered, upheld the disallowance of payment made to a
law firm, which was unauthorized to act in behalf of a GOCC, for failure to secure the
COA's concurrence. In the case at bench, there is no unjust enrichment because the
NDs directed the responsible officers of ISAWAD, who made the disbursements
(including petitioner), and not the lawyers engaged, to make the refund.
Refund not necessary if the
disbursements were made
in good faith
In Mendoza, the Court excused the erring officials therein from refunding the
amounts subject of the ND, to wit:chanRoblesvirtualLawlibrary
The salaries petitioner Mendoza received were fixed by the Talisay Water District's
board of directors pursuant to Section 23 of the Presidential Decree No. 198.
Petitioner Mendoza had no hand in fixing the amount of compensation he received.
Moreover, at the time petitioner Mendoza received the disputed amount in 2005 and
2006, there was no jurisprudence yet ruling that water utilities are not exempted
from the Salary Standardization Law.
Pursuant to de Jesus v. Commission on Audit, petitioner Mendoza received the
disallowed salaries in good faith. He need not refund the disallowed
amount.cralawlawlibrary
In this case, the Court is of the view that the payment of the erroneous increase in
petitioner's salary was nonetheless made in good faith. The increase was computed
in accordance with the scale provided by the Office of the Philippine Association of
Water Districts, Inc., which also made an erroneous opinion that R.A. No. 9286
repealed the SSL. Further, at the time the disbursement was made, no categorical
pronouncement, similar to Mendoza, that the LWDs are subject to the provisions of
the SSL, had been issued.
 STATUTORY CONSTRUCTION CASES: CHAPTER V 35

Good faith, however, cannot be appreciated in petitioner's other disbursements.

Petitioner knowingly approved the payments to Atty. Esguerra and Atty. Operaria in
spite of the lack of the necessary approval by the government offices concerned.
Further, petitioner's failure to claim her excessive RATA after the NDs were issued
does not evince good faith because, at that time, CBC No. 18 and NBC No. 498
already provided for the allowable RATA to be given to GMs of LWDs.

No basis for the issuance of a writ of injunction

In Calawag v. University of the Philippines Visayas,30 the Court ruled that the right
sought to be protected must not be doubtful in order for an injunctive relief to be
issued, to wit:chanRoblesvirtualLawlibrary

To be entitled to a writ of preliminary injunction, xxx the petitioners must establish

the following requisites: (a) the invasion of the right sought to be protected is
material and substantial; (b) the right of the complainant is clear and unmistakable;
and (c) there is an urgent and permanent necessity for the writ to prevent serious
damage, xxx When the complainant's right is thus doubtful or disputed, he
does not have a clear legal right and, therefore, the issuance of injunctive
relief is improper.

[Emphasis supplied]

Here, petitioner failed to show sufficient reasons to justify the issuance of the
injunctive relief. It has been thoroughly discussed that the disbursements were
without legal basis as they either were in excess of the limits provided for by law or
were issued without authority.

WHEREFORE, the December 29, 2011 Decision of the Commission on Audit

is AFFIRMED with MODIFICATION in that petitioner be absolved from refunding
the amount paid in the increase of her salary.

SOORDERED.

Sereno, C.J., Carpio, Velasco, Jr., Leonardo-De Castro, Brion, Peralta, Bersamin, Del
Castillo, Villarama, Jr., Perez, Reyes, Perlas-Bernabe, Leonen, and Jardeleza, JJ.,
concur.

Republic of the Philippines
SUPREME COURT
Manila
EN BANC
G.R. No. 103982 December 11, 1992
ANTONIO A. MECANO, petitioner,
vs.
COMMISSION ON AUDIT, respondent.
Statutes; Administrative Code of 1987; Implied repeal.—In the case of the two
Administrative Codes in question, the ascertainment of whether or not it was the
intent of the legislature to supplant the old Code with the new Code partly depends
on the scrutiny of the repealing clause of the new Code. This provision is found in
Section 27, Book VII (Final Provisions) of the Administrative Code of 1987 which
reads: “Sec. 27. Repealing Clause.—All laws, decrees, orders, rules and regulations,
or portions thereof, inconsistent with this Code are hereby repealed or modified
accordingly.” The question that should be asked is: What is the nature of this
repealing clause? It is certainly not an express repealing clause because it fails to
identify or designate the act or acts that are intended to be repealed. Rather, it is an
example of a general repealing provision, as stated in Opinion No. 73, S. 1991. It is a
clause which predicates the intended repeal under the condition that a substantial
conflict must be found in existing and prior acts. The failure to add a specific
repealing clause indicates that the intent was not to repeal any existing law, unless
an irreconcilable inconsistency and repugnancy exist in the terms of the new and old
laws. This latter situation falls under the category of an implied repeal.
Same; Same; Same.—There are two categories of repeal by implication. The first is
where provisions in the two acts on the same subject matter are in an irreconcilable
conflict, the later act to the extent of the conflict constitutes an implied repeal of the
earlier one. The second is if the later act covers the whole subject of the earlier one
and is clearly intended as a substitute, it will operate to repeal the earlier law.
Implied repeal by irreconcilable inconsistency takes place when the two statutes
cover the same subject matter; they are so clearly inconsistent and incompatible with
each other that they cannot be reconciled or harmonized; and both cannot be given
effect, that is, that one law cannot be enforced without nullifying the other.
Comparing the two Codes, it is apparent that the new Code does not cover nor
attempt to cover the entire subject matter of the old Code. There are several matters
treated in the old Code which are not found in the new Code, such as the provisions
on notaries public, the leave law, the public bonding law, military reservations, claims
for sickness benefits under Section 699, and still others.
STATUTORY CONSTRUCTION CASES: CHAPTER V 36
Same; Same; Same.—Lastly, it is a well-settled rule of statutory construction that
repeals of statutes by implication are not favored. The presumption is against
inconsistency and repugnancy for the legislature is presumed to know the existing
laws on the subject and not to have enacted inconsistent or conflicting statutes. This
Court, in a case, explains the principle in detail as follows: “Repeals by implication are
not favored, and will not be decreed unless it is manifest that the legislature so
intended. As laws are presumed to be passed with deliberation with full knowledge of
all existing ones on the subject, it is but reasonable to conclude that in passing a
statute it was not intended to interfere with or abrogate any former law relating to
some matter, unless the repugnancy between the two is not only irreconcilable, but
also clear and convincing, and flowing necessarily from the language used, unless the
later act fully embraces the subject matter of the earlier, or unless the reason for the
earlier act is beyond peradventure renewed. Hence, every effort must be used to
make all acts stand and if, by any reasonable construction, they can be reconciled,
the later act will not operate as a repeal of the earlier.
Administrative Code of 1917; Allowances in case of injury, death or sickness incurred
in performance of duty; Payment of compensation under Employees’ Compensation
Program does not bar recovery under Sec. 699 of the Revised Administrative Code.—
Regarding respondent’s contention that recovery under this subject section shall bar
the recovery of benefits under the Employees’ Compensation Program, the same
cannot be upheld. The second sentence of Article 173, Chapter II, Title II (dealing on
Employees’ Compensation and State Insurance Fund), Book IV of the Labor Code, as
amended by P.D. 1921, expressly provides that “the payment of compensation under
this Title shall not bar the recovery of benefits as provided for in Section 699 of the
Revised Administrative Code x x x whose benefits are administered by the system
(meaning SSS or GSIS) or by other agencies of the government.” Mecano vs.
Commission on Audit, 216 SCRA 500, G.R. No. 103982 December 11, 1992
CAMPOS, JR., J.:
Antonio A. Mecano, through a petition for certiorari, seeks to nullify the decision of
the Commission on Audit (COA, for brevity) embodied in its 7th Indorsement, dated
January 16, 1992, denying his claim for reimbursement under Section 699 of the
Revised Administrative Code (RAC), as amended, in the total amount of P40,831.00.
Petitioner is a Director II of the National Bureau of Investigation (NBI). He was
hospitalized for cholecystitis from March 26, 1990 to April 7, 1990, on account of
which he incurred medical and hospitalization expenses, the total amount of which he
is claiming from the COA.
On May 11, 1990, in a memorandum to the NBI Director, Alfredo S. Lim (Director
Lim, for brevity), he requested reimbursement for his expenses on the ground that he
is entitled to the benefits under Section 6991 of the RAC, the pertinent provisions of
which read:

Sec. 699. Allowances in case of injury, death, or sickness incurred
in performance of duty. — When a person in the service of the
national government of a province, city, municipality or municipal
district is so injured in the performance of duty as thereby to
receive some actual physical hurt or wound, the proper Head of
Department may direct that absence during any period of disability
thereby occasioned shall be on full pay, though not more than six
months, and in such case he may in his discretion also authorize
the payment of the medical attendance, necessary transportation,
subsistence and hospital fees of the injured person. Absence in the
case contemplated shall be charged first against vacation leave, if
any there be.
xxx xxx xxx
In case of sickness caused by or connected directly with the
performance of some act in the line of duty, the Department head
may in his discretion authorize the payment of the necessary
hospital fees.
Director Lim then forwarded petitioner's claim, in a 1st Indorsement dated June 22,
1990, to the Secretary of Justice, along with the comment, bearing the same date, of
Gerarda Galang, Chief, LED of the NBI, "recommending favorable action thereof".
Finding petitioner's illness to be service-connected, the Committee on Physical
Examination of the Department of Justice favorably recommended the payment of
petitioner's claim.
However, then Undersecretary of Justice Silvestre H. Bello III, in a 4th Indorsement
dated November 21, 1990, returned petitioner's claim to Director Lim, having
considered the statements of the Chairman of the COA in its 5th Indorsement dated
19 September 1990, to the effect that the RAC being relied upon was repealed by the
Administrative Code of 1987.
Petitioner then re-submitted his claim to Director Lim, with a copy of Opinion No. 73,
S. 19912 dated April 26, 1991 of then Secretary of Justice Franklin M. Drilon
(Secretary Drilon, for brevity) stating that "the issuance of the Administrative Code
did not operate to repeal or abregate in its entirety the Revised Administrative Code,
including the particular Section 699 of the latter".
On May 10, 1991, Director Lim, under a 5th Indorsement transmitted anew Mecano's
claim to then Undersecretary Bello for favorable consideration. Under a 6th
Indorsement, dated July 2, 1991, Secretary Drilon forwarded petitioner's claim to the
COA Chairman, recommending payment of the same. COA Chairman Eufemio C.
Domingo, in his 7th Indorsement of January 16, 1992, however, denied petitioner's
claim on the ground that Section 699 of the RAC had been repealed by the
STATUTORY CONSTRUCTION CASES: CHAPTER V 37
Administrative Code of 1987, solely for the reason that the same section was not
restated nor re-enacted in the Administrative Code of 1987. He commented,
however, that the claim may be filed with the Employees' Compensation Commission,
considering that the illness of Director Mecano occurred after the effectivity of the
Administrative Code of 1987.
Eventually, petitioner's claim was returned by Undersecretary of Justice Eduardo
Montenegro to Director Lim under a 9th Indorsement dated February 7, 1992, with
the advice that petitioner "elevate the matter to the Supreme Court if he so desires".
On the sole issue of whether or not the Administrative Code of 1987 repealed or
abrogated Section 699 of the RAC, this petition was brought for the consideration of
this Court.
Petitioner anchors his claim on Section 699 of the RAC, as amended, and on the
aforementioned Opinion No. 73, S. 1991 of Secretary Drilon. He further maintains
that in the event that a claim is filed with the Employees' Compensation Commission,
as suggested by respondent, he would still not be barred from filing a claim under the
subject section. Thus, the resolution of whether or not there was a repeal of the
Revised Administrative Code of 1917 would decide the fate of petitioner's claim for
reimbursement.
The COA, on the other hand, strongly maintains that the enactment of the
Administrative Code of 1987 (Exec. Order No. 292) operated to revoke or supplant in
its entirety the Revised Administrative Code of 1917. The COA claims that from the
"whereas" clauses of the new Administrative Code, it can be gleaned that it was the
intent of the legislature to repeal the old Code. Moreover, the COA questions the
applicability of the aforesaid opinion of the Secretary of Justice in deciding the
matter. Lastly, the COA contends that employment-related sickness, injury or death is
adequately covered by the Employees' Compensation Program under P.D. 626, such
that to allow simultaneous recovery of benefits under both laws on account of the
same contingency would be unfair and unjust to the Government.
The question of whether a particular law has been repealed or not by a subsequent
law is a matter of legislative intent. The lawmakers may expressly repeal a law by
incorporating therein a repealing provision which expressly and specifically cites the
particular law or laws, and portions thereof, that are intended to be repealed. 3 A
declaration in a statute, usually in its repealing clause, that a particular and specific
law, identified by its number or title, is repealed is an express repeal; all others are
implied repeals.4
In the case of the two Administrative Codes in question, the ascertainment of
whether or not it was the intent of the legislature to supplant the old Code with the
new Code partly depends on the scrutiny of the repealing clause of the new Code.

This provision is found in Section 27, Book VII (Final Provisions) of the Administrative
Code of 1987 which reads:
Sec. 27. Repealing Clause. — All laws, decrees, orders, rules and
regulations, or portions thereof, inconsistent with this Code are
hereby repealed or modified accordingly.
The question that should be asked is: What is the nature of this repealing clause? It
is certainly not an express repealing clause because it fails to identify or designate
the act or acts that are intended to be repealed.5 Rather, it is an example of a
general repealing provision, as stated in Opinion No. 73, S. 1991. It is a clause which
predicates the intended repeal under the condition that substantial conflict must be
found in existing and prior acts. The failure to add a specific repealing clause
indicates that the intent was not to repeal any existing law, unless an irreconcilable
inconcistency and repugnancy exist in the terms of the new and old laws.6 This latter
situation falls under the category of an implied repeal.
Repeal by implication proceeds on the premise that where a statute of later date
clearly reveals an intention on the part of the legislature to abrogate a prior act on
the subject, that intention must be given effect.7 Hence, before there can be a
repeal, there must be a clear showing on the part of the lawmaker that the intent in
enacting the new law was to abrogate the old one. The intention to repeal must be
clear and manifest;8 otherwise, at least, as a general rule, the later act is to be
construed as a continuation of, and not a substitute for, the first act and will continue
so far as the two acts are the same from the time of the first enactment.9
There are two categories of repeal by implication. The first is where provisions in the
two acts on the same subject matter are in an irreconcilable conflict, the later act to
the extent of the conflict constitutes an implied repeal of the earlier one. The second
is if the later act covers the whole subject of the earlier one and is clearly intended as
a substitute, it will operate to repeal the earlier law.10
Implied repeal by irreconcilable inconsistency takes place when the two statutes
cover the same subject matter; they are so clearly inconsistent and incompatible with
each other that they cannot be reconciled or harmonized; and both cannot be given
effect, that is, that one law cannot be enforced without nullifying the other.11
Comparing the two Codes, it is apparent that the new Code does not cover nor
attempt to cover the entire subject matter of the old Code. There are several matters
treated in the old Code which are not found in the new Code, such as the provisions
on notaries public, the leave law, the public bonding law, military reservations, claims
for sickness benefits under Section 699, and still others.
Moreover, the COA failed to demonstrate that the provisions of the two Codes on the
matter of the subject claim are in an irreconcilable conflict. In fact, there can be no
STATUTORY CONSTRUCTION CASES: CHAPTER V 38
such conflict because the provision on sickness benefits of the nature being claimed
by petitioner has not been restated in the Administrative Code of 1987. However, the
COA would have Us consider that the fact that Section 699 was not restated in the
Administrative Code of 1987 meant that the same section had been repealed. It
further maintained that to allow the particular provisions not restated in the new
Code to continue in force argues against the Code itself. The COA anchored this
argument on the whereas clause of the 1987 Code, which states:
WHEREAS, the effectiveness of the Government will be enhanced
by a new Administrative Code which incorporate in a unified
document the major structural, functional and procedural principles
and rules of governance; and
xxx xxx xxx
It argues, in effect, that what is contemplated is only one Code — the Administrative
Code of 1987. This contention is untenable.
The fact that a later enactment may relate to the same subject matter as that of an
earlier statute is not of itself sufficient to cause an implied repeal of the prior act,
since the new statute may merely be cumulative or a continuation of the old
one. 12 What is necessary is a manifest indication of legislative purpose to repeal.13
We come now to the second category of repeal — the enactment of a statute revising
or codifying the former laws on the whole subject matter. This is only possible if the
revised statute or code was intended to cover the whole subject to be a complete and
perfect system in itself. It is the rule that a subsequent statute is deemed to repeal a
prior law if the former revises the whole subject matter of the former statute. 14 When
both intent and scope clearly evidence the idea of a repeal, then all parts and
provisions of the prior act that are omitted from the revised act are deemed
repealed.15 Furthermore, before there can be an implied repeal under this category, it
must be the clear intent of the legislature that the later act be the substitute to the
prior act.16
According to Opinion No. 73, S. 1991 of the Secretary of Justice, what appears clear
is the intent to cover only those aspects of government that pertain to administration,
organization and procedure, understandably because of the many changes that
transpired in the government structure since the enactment of the RAC decades of
years ago. The COA challenges the weight that this opinion carries in the
determination of this controversy inasmuch as the body which had been entrusted
with the implementation of this particular provision has already rendered its decision.
The COA relied on the rule in administrative law enunciated in the case of Sison
vs. Pangramuyen17 that in the absence of palpable error or grave abuse of discretion,
the Court would be loathe to substitute its own judgment for that of the
administrative agency entrusted with the enforcement and implementation of the law.
 STATUTORY CONSTRUCTION CASES: CHAPTER V 39

This will not hold water. This principle is subject to limitations. Administrative
decisions may be reviewed by the courts upon a showing that the decision is vitiated
by fraud, imposition or mistake.18 It has been held that Opinions of the Secretary and
Undersecretary of Justice are material in the construction of statutes in pari
materia.19

Lastly, it is a well-settled rule of statutory construction that repeals of statutes by

implication are not favored.20 The presumption is against inconsistency and
repugnancy for the legislature is presumed to know the existing laws on the subject
and not to have enacted inconsistent or conflicting statutes.21

This Court, in a case, explains the principle in detail as follows: "Repeals by

implication are not favored, and will not be decreed unless it is manifest that the
legislature so intended. As laws are presumed to be passed with deliberation with full
knowledge of all existing ones on the subject, it is but reasonable to conclude that in
passing a statute it was not intended to interfere with or abrogate any former law
relating to some matter, unless the repugnancy between the two is not only
irreconcilable, but also clear and convincing, and flowing necessarily from the
language used, unless the later act fully embraces the subject matter of the earlier,
or unless the reason for the earlier act is beyond peradventure renewed. Hence,
every effort must be used to make all acts stand and if, by any reasonable
construction, they can be reconciled, the later act will not operate as a repeal of the
earlier.22

Regarding respondent's contention that recovery under this subject section shall bar
the recovery of benefits under the Employees' Compensation Program, the same
cannot be upheld. The second sentence of Article 173, Chapter II, Title II (dealing on
Employees' Compensation and State Insurance Fund), Book IV of the Labor Code, as
amended by P.D. 1921, expressly provides that "the payment of compensation under
this Title shall not bar the recovery of benefits as provided for in Section 699 of the
Revised Administrative Code . . . whose benefits are administered by the system
(meaning SSS or GSIS) or by other agencies of the government."

WHEREFORE, premises considered, the Court resolves to GRANT the petition;

respondent is hereby ordered to give due course to petitioner's claim for benefits. No
costs.

SO ORDERED.

Narvasa, C.J., Cruz, Feliciano, Padilla, Bidin, Griño-Aquino, Regalado, Davide, Jr.,
Romero, Nocon, Bellosillo and Melo, JJ., concur.

Gutierrez, Jr., J., concur in the result.


EN BANC
[G.R. No. 123169. November 4, 1996]
DANILO E. PARAS, petitioner, vs. COMMISSION ON
ELECTIONS, respondent.
Election Law; Recall; Statutory Construction; It is a rule in statutory construction that
every part of the statute must be interpreted with reference to the context, i.e., that
every part of the statute must be considered together with the other parts, and kept
subservient to the general intent of the whole enactment.—It is a rule in statutory
construction that every part of the statute must be interpreted with reference to the
context, i.e., that every part of the statute must be considered together with the
other parts, and kept subservient to the general intent of the whole enactment. The
evident intent of Section 74 is to subject an elective local official to recall election
once during his term of office. Paragraph (b) construed together with paragraph (a)
merely designates the period when such elective local official may be subject of a
recall election, that is, during the second year of his term of office.
Same; Same; Same; Words and Phrases; If the Sangguniang Kabataan (SK) elections
which is set by R.A. 7808 to be held every three years from May 1996 were to be
deemed within the purview of the phrase “regular local elections,” then no recall
election can be conducted rendering inutile the recall provision of the Local
Government Code.—Thus, subscribing to petitioner’s interpretation of the phrase
regular local election to include the SK election will unduly circumscribe the novel
provision of the Local Government Code on recall, a mode of removal of public
officers by initiation of the people before the end of his term. And if the SK election
which is set by R.A. No. 7808 to be held every three years from May 1996 were to be
deemed within the purview of the phrase “regular local election,” as erroneously
insisted by petitioner, then no recall election can be conducted rendering inutile the
recall provision of the Local Government Code.
Same; Same; Same; In the interpretation of a statute, the Court should start with the
assumption that the legislature intended to enact an effective law, and the legislature
is not presumed to have done a vain thing in the enactment of a statute.—In the
interpretation of a statute, the Court should start with the assumption that the
legislature intended to enact an effective law, and the legislature is not presumed to
have done a vain thing in the enactment of a statute. An interpretation should, if
possible, be avoided under which a statute or provision being construed is defeated,
or as otherwise expressed, nullified, destroyed, emasculated, repealed, explained
away, or rendered insignificant, meaningless, inoperative or nugatory.
STATUTORY CONSTRUCTION CASES: CHAPTER V 40
Same; Same; Same; It is likewise a basic precept in statutory construction that a
statute should be interpreted in harmony with the Constitution.—It is likewise a basic
precept in statutory construction that a statute should be interpreted in harmony with
the Constitution. Thus, the interpretation of Section 74 of the Local Government
Code, specifically paragraph (b) thereof, should not be in conflict with the
Constitutional mandate of Section 3 of Article X of the Constitution to “enact a local
government code which shall provide for a more responsive and accountable local
government structure instituted through a system of decentralization with effective
mechanisms of recall, initiative, and referendum x x x.”
Same; Same; Same; The spirit, rather than the letter of a law, determines its
construction.—Moreover, petitioner’s too literal interpretation of the law leads to
absurdity which we cannot countenance. Thus, in a case, the Court made the
following admonition: “We admonish against a too-literal reading of the law as this is
apt to constrict rather than fulfill its purpose and defeat the intention of its authors.
That intention is usually found not in ‘the letter that killeth but in the spirit that
vivifieth’ x x x.” The spirit, rather than the letter of a law determines its construction;
hence, a statute, as in this case, must be read according to its spirit and intent.
Same; Same; Same; Words and Phrases; It would be more in keeping with the intent
of the recall provision of the Local Government Code to construe “regular local
election” as one referring to an election where the office held by the local elective
official sought to be recalled will be contested and be filled by the electorate.—Finally,
recall election is potentially disruptive of the normal working of the local government
unit necessitating additional expenses, hence the prohibition against the conduct of
recall election one year immediately preceding the regular local election. The
proscription is due to the proximity of the next regular election for the office of the
local elective official concerned. The electorate could choose the official’s replacement
in the said election who certainly has a longer tenure in office than a successor
elected through a recall election. It would, therefore, be more in keeping with the
intent of the recall provision of the Code to construe regular local election as one
referring to an election where the office held by the local elective official sought to be
recalled will be contested and be filled by the electorate.
RESOLUTION
FRANCISCO, J.:
Petitioner Danilo E. Paras is the incumbent Punong Barangay
of Pula, Cabanatuan City who won during the last regular barangay election in
1994. A petition for his recall as Punong Barangay was filed by the registered voters
of the barangay. Acting on the petition for recall, public respondent Commission on

Elections (COMELEC) resolved to approve the petition, scheduled the petition signing
on October 14, 1995, and set the recall election on November 13, 1995.[1] At least
29.30% of the registered voters signed the petition, well above the 25% requirement
provided by law. The COMELEC, however, deferred the recall election in view of
petitioners opposition. On December 6, 1995, the COMELEC set anew the recall
election, this time on December 16, 1995. To prevent the holding of the recall
election, petitioner filed before the Regional Trial Court of Cabanatuan City a petition
for injunction, docketed as SP Civil Action No. 2254-AF, with the trial court issuing a
temporary restraining order. After conducting a summary hearing, the trial court lifted
the restraining order, dismissed the petition and required petitioner and his counsel
to explain why they should not be cited for contempt for misrepresenting that the
barangay recall election was without COMELEC approval.[2]
In a resolution dated January 5, 1996, the COMELEC, for the third time, re-
scheduled the recall election on January 13, 1996; hence, the instant petition
for certiorari with urgent prayer for injunction. On January 12, 1996, the Court issued
a temporary restraining order and required the Office of the Solicitor General, in
behalf of public respondent, to comment on the petition. In view of the Office of the
Solicitor Generals manifestation maintaining an opinion adverse to that of the
COMELEC, the latter through its law department filed the required
comment. Petitioner thereafter filed a reply.[3]
Petitioners argument is simple and to the point. Citing Section 74 (b) of
Republic Act No. 7160, otherwise known as the Local Government Code, which states
that no recall shall take place within one (1) year from the date of the officials
assumption to office or one (1) year immediately preceding a regular local election ,
petitioner insists that the scheduled January 13, 1996 recall election is now barred as
the Sangguniang Kabataan (SK) election was set by Republic Act No. 7808 on the
first Monday of May 1996, and every three years thereafter. In support thereof,
petitioner cites Associated Labor Union v. Letrondo-Montejo, 237 SCRA 621, where
the Court considered the SK election as a regular local election. Petitioner maintains
that as the SK election is a regular local election, hence no recall election can be had
for barely four months separate the SK election from the recall election. We do not
agree.
The subject provision of the Local Government Code provides:
SEC. 74. Limitations on Recall. (a) Any elective local official may be the subject of a
recall election only once during his term of office for loss of confidence.
STATUTORY CONSTRUCTION CASES: CHAPTER V 41
(b) No recall shall take place within one (1) year from the date of the officials
assumption to office or one (1) year immediately preceding a regular local
election.
[Emphasis added.]
It is a rule in statutory construction that every part of the statute must be
interpreted with reference to the context, i.e., that every part of the statute must be
considered together with the other parts, and kept subservient to the general intent
of the whole enactment.[4] The evident intent of Section 74 is to subject an elective
local official to recall election once during his term of office. Paragraph (b) construed
together with paragraph (a) merely designates the period when such elective local
official may be subject of a recall election, that is, during the second year of his term
of office. Thus, subscribing to petitioners interpretation of the phrase regular local
election to include the SK election will unduly circumscribe the novel provision of the
Local Government Code on recall, a mode of removal of public officers by initiation of
the people before the end of his term. And if the SK election which is set by R.A. No.
7808 to be held every three years from May 1996 were to be deemed within the
purview of the phrase regular local election, as erroneously insisted by petitioner,
then no recall election can be conducted rendering inutile the recall provision of the
Local Government Code.
In the interpretation of a statute, the Court should start with the assumption
that the legislature intended to enact an effective law, and the legislature is not
presumed to have done a vain thing in the enactment of a statute.[5] An
interpretation should, if possible, be avoided under which a statute or provision being
construed is defeated, or as otherwise expressed, nullified, destroyed, emasculated,
repealed, explained away, or rendered insignificant, meaningless, inoperative or
nugatory.[6]
It is likewise a basic precept in statutory construction that a statute should be
interpreted in harmony with the Constitution.[7] Thus, the interpretation of Section 74
of the Local Government Code, specifically paragraph (b) thereof, should not be in
conflict with the Constitutional mandate of Section 3 of Article X of the Constitution to
enact a local government code which shall provide for a more responsive and
accountable local government structure instituted through a system of
decentralization with effective mechanisms of recall, initiative, and referendum x x x.
Moreover, petitioners too literal interpretation of the law leads to absurdity
which we cannot countenance. Thus, in a case, the Court made the following
admonition:
 STATUTORY CONSTRUCTION CASES: CHAPTER V 42

We admonish against a too-literal reading of the law as this is apt to constrict rather
than fulfill its purpose and defeat the intention of its authors. That intention is usually
found not in the letter that killeth but in the spirit that vivifieth x x x[8]

The spirit, rather than the letter of a law determines its construction; hence, a
statute, as in this case, must be read according to its spirit and intent.

Finally, recall election is potentially disruptive of the normal working of the local
government unit necessitating additional expenses, hence the prohibition against the
conduct of recall election one year immediately preceding the regular local
election. The proscription is due to the proximity of the next regular election for the
office of the local elective official concerned.The electorate could choose the officials
replacement in the said election who certainly has a longer tenure in office than a
successor elected through a recall election. It would, therefore, be more in keeping
with the intent of the recall provision of the Code to construe regular local election as
one referring to an election where the office held by the local elective official sought
to be recalled will be contested and be filled by the electorate.

Nevertheless, recall at this time is no longer possible because of the limitation

stated under Section 74 (b) of the Code considering that the next regular election
involving the barangay office concerned is barely seven (7) months away, the same
having been scheduled on May 1997.[9]

ACCORDINGLY, the petition is hereby dismissed for having become moot and
academic. The temporary restraining order issued by the Court on January 12, 1996,
enjoining the recall election should be as it is hereby made permanent.

SO ORDERED.

Republic of the Philippines
SUPREME COURT
Manila
FIRST DIVISION
G.R. Nos. L-28502-03 April 18, 1989
COMMISSIONER OF INTERNAL REVENUE, petitioner,
vs.
ESSO STANDARD EASTERN, INC. and THE COURT OF TAX
APPEALS, respondents.
Civil Law; Obligations and Contracts; The obligation to pay money mistakenly paid
arises from the moment said payment was made, and not from the time that the
payee admits the obligation to reimburse.–––The fact is that, as respondent Court of
Tax Appeals has stressed, as early as July 15, 1960, the Government already had in
its hands the sum of P221,033.00 representing excess payment. Having been paid
and received by mistake, as petitioner Commissioner subsequently acknowledged,
that sum unquestionably belonged to ESSO, and the Government had the obligation
to return it to ESSO. That acknowledgment of the erroneous payment came some
four (4) years afterwards in nowise negates or detracts from its actuality. The
obligation to return money mistakenly paid arises from the moment that payment is
made, and not from the time that the payee admits the obligation to reimburse. The
obligation of the payee to reimburse an amount paid to him results from the mistake,
not from the payee’s confession of the mistake or recognition of the obligation to
reimburse. In other words, since the amount of P221,033.00 belonging to ESSO was
already in the hands of the Government as of July, 1960, although the latter had no
right whatever to the amount and indeed was bound to return it to ESSO, it was
neither legally nor logically possible for ESSO thereafter to be considered a debtor of
the Government in that amount of P221,033.00; and whatever other obligation ESSO
might subsequently incur in favor of the Government would have to be reduced by
that sum, in respect of which no interest could be charged.
Statutory Construction; Legislative Intent; Statutes must receive a sensible
construction such as will give effect to the legislative intention, and so as to avoid an
unjust or absurd conclusion.–––To interpret the words of the statute in such a
manner as to subvert these truisms simply can not and should not be countenanced.
“Nothing is better settled than that courts are not to give words a meaning which
would lead to absurd or unreasonable consequences. That is a principle that goes
STATUTORY CONSTRUCTION CASES: CHAPTER V 43
back to In re Allen (2 Phil. 630) decided on October 29, 1903, where it was held that
a literal interpretation is to be rejected if it would be unjust or lead to absurd results.
“Statutes should receive a sensible construction, such as will give effect to the
legislative intention and so as to avoid an unjust or absurd conclusion. Commissioner
of Internal Revenue vs. EssoStandard Eastern, Inc., 172 SCRA 364, G.R. Nos. 28502-
03 April 18, 1989
NARVASA, J.:
In two (2) cases appealed to it 1 by the private respondent, hereafter simply referred
to as ESSO, the Court of Tax Appeals rendered judgment 2sustaining the decisions of
the Commissioner of Internal Revenue excepted to, save "the refund-claim .. in the
amount of P39,787.94 as overpaid interest which it ordered refunded to ESSO
Reversal of this decision is sought by the Commissioner by a petition for review
on certiorari filed with this Court. He ascribes to the Tax Court one sole error: "of
applying the tax credit for overpayment of the 1959 income tax of .. ESSO, granted
by the petitioner (Commissioner), to .. (ESSO's) basic 1960 deficiency income tax
liability x x and imposing the 1-1/2% monthly interests 3 only on the remaining
balance thereof in the sum of P146,961.00" 4 (instead of the full amount of the 1960
deficiency liability in the amount of P367,994.00). Reversal of the same judgment of
the Court of Tax Appeals is also sought by ESSO in its own appeal (docketed as G.R.
Nos. L28508-09); but in the brief filed by it in this case, it indicates that it will not
press its appeal in the event that "the instant petition for review be denied and that
judgment be rendered affirming the decision of the Court of Tax Appeals."
The facts are simple enough and are quite quickly recounted. ESSO overpaid its 1959
income tax by P221,033.00. It was accordingly granted a tax credit in this amount by
the Comissioner on August 5,1964. However, ESSOs payment of its income tax for
1960 was found to be short by P367,994.00. So, on July 10, 1964, the Commissioner
wrote to ESSO demanding payment of the deficiency tax, together with interest
thereon for the period from April 18,1961 to April 18,1964. On August 10, 1964,
ESSO paid under protest the amount alleged to be due, including the interest as
reckoned by the Commissioner. It protested the computation of interest, contending
it was more than that properly due. It claimed that it should not have been required
to pay interest on the total amount of the deficiency tax, P367,994.00, but only on
the amount of P146,961.00—representing the difference between said deficiency,
P367,994.00, and ESSOs earlier overpayment of P221,033.00 (for which it had been
granted a tax credit). ESSO thus asked for a refund.

The Internal Revenue Commissioner denied the claim for refund. ESSO appealed to
the Court of Tax Appeals. As aforestated. that Court ordered payment to ESSO of its
"refund-claim x x in the amount of P39,787.94 as overpaid interest. Hence, this
appeal by the Commissioner. The CTA justified its award of the refund as follows:
... In the letter of August 5, 1964, .. (the Commissioner) admitted
that .. ESSO had overpaid its 1959 income tax by P221,033.00.
Accordingly .. (the Commissioner) granted to .. ESSO a tax credit of
P221,033.00. In short, the said sum of P221,033.00 of ESSO's
money was in the Government's hands at the latest on July 15,
1960 when it ESSO paid in full its second installment of income tax
for 1959. On July 10, 1964 .. (the Commissioner) claimed that for
1960, .. ESSO underpaid its income tax by P367,994.00. However,
instead of deducting from P367,994.00 the tax credit of
P221,033.00 which .. (the Commissioner) had already admitted was
due .. ESSO .. (the Commissioner) still insists in collecting the
interest on the full amount of P367,994.00 for the period April 18,
1961 to April 18,1964 when the Government had already in its
hands the sum of P221,033.00 of .. ESSOs money even before the
latter's income tax for 1960 was due and payable. If the imposition
of interest does not amount to a penalty but merely a just
compensation to the State for the delay in paying the tax, and for
the concomitant use by the taxpayer of funds that rightfully should
be in the Government's hand (Castro v. Collector, G.R. No. L-1274,
Dec. 28, 1962), the collection of the interest on the full amount of
P367,994.00 without deducting first the tax credit of P221,033.00,
which has long been in the hands of the Government, becomes
erroneous, illegal and arbitrary.
.. (ESSO) could hardly be charged of delinquency in paying
P221,033.00 out of the deficiency income tax of P367,994.00, for
which the State should be compensated by the payment of interest,
because the said amount of P221,033.00 was already in the coffers
of the Government. Neither could .. ESSO be charged for the
concomitant use of funds that rightfully belong to the Government
because as early as July 15, 1960, it was the Government that was
using .. ESSOs funds of P221,033.00. In the circumstances, we find
it unfair and unjust for .. (the Commissioner) to exact the interest
on the said sum of P221,033.00 which, after all, was paid to and
received by the Government even before the incidence of the
STATUTORY CONSTRUCTION CASES: CHAPTER V 44
deficiency income tax of P367,994.00. (Itogon-Suyoc Mines, Inc. v.
Commissioner, C.T.A. Case No. 1327, Sept. 30,1965). On the
contrary, the Government should be the first to blaze the trail and
set the example of fairness and honest dealing in the
administration of tax laws.
Accordingly, we hold that the tax credit of P221,033.00 for 1959
should first be deducted from the basic deficiency tax of
P367,994.00 for 1960 and the resulting difference of P146,961.00
would be subject to the 18% interest prescribed by Section 51 (d)
of the Revenue Code. According to the prayer of ..(ESSO) .. (the
Commissioner) is hereby ordered to refund to .. (ESSO) the amount
of P39,787.94 as overpaid interest in the settlement of its 1960
income tax liability. However, as the collection of the tax was not
attended with arbitrariness because .. (ESSO) itself followed x x
(the Commissioner's) manner of computing the tax in paying the
sum of P213,189.93 on August 10, 1964, the prayer of .. (ESSO)
that it be granted the legal rate of interest on its overpayment of
P39,787.94 from August 10, 1964 to the time it is actually refunded
is denied. (See Collector of Internal Revenue v. Binalbagan Estate,
Inc., G.R. No. 1,12752, Jan. 30, 1965).
The Commissioner's position is that income taxes are determined and paid on an
annual basis, and that such determination and payment of annual taxes are separate
and independent transactions; and that a tax credit could not be so considered until it
has been finally approved and the taxpayer duly notified thereof. Since in this case,
he argues, the tax credit of P221,033.00 was approved only on August 5, 1964, it
could not be availed of in reduction of ESSOs earlier tax deficiency for the year 1960;
as of that year, 1960, there was as yet no tax credit to speak of, which would reduce
the deficiency tax liability for 1960. In support of his position, the Commissioner
invokes the provisions of Section 51 of the Tax Code pertinently reading as follows:
(c) Definition of deficiency. As used in this Chapter in respect of tax
imposed by this Title, the term 'deficiency' means:
(1) The amount by which the tax imposed by this Title exceeds the
amount shown as the tax by the taxpayer upon his return; but the
amount so shown on the return shall first be increased by the
amounts previously assessed (or collected without assessment) as
 STATUTORY CONSTRUCTION CASES: CHAPTER V 45

a deficiency, and decreased by the amount previously abated results." 6 "Statutes should receive a sensible construction, such as will give effect to
credited, returned, or otherwise in respect of such tax; .. the legislative intention and so as to avoid an unjust or absurd conclusion." 7

xxx xxx xxx WHEREFORE, the petition for review is DENIED, and the Decision of the Court of Tax
Appeals dated October 28, 1967 subject of the petition is AFFIRMED, without
(d) Interest on deficiency. — Interest upon the amount determined pronouncement as to costs.
as deficiency shall be assessed at the same time as the deficiency
and shall be paid upon notice and demand from the Commissioner Cruz, Gancayco, Griño-Aquino and Medialdea, JJ., concur.
of Internal Revenue; and shall be collected as a part of the tax, at
the rate of six per centum per annum from the date prescribed for
the payment of the tax (or, if the tax is paid in installments, from
the date prescribed for the payment of the first installment) to the
date the deficiency is assessed; Provided, That the amount that
may be collected as interest on deficiency shall in no case exceed
the amount corresponding to a period of three years, the present
provision regarding prescription to the contrary notwithstanding.

The fact is that, as respondent Court of Tax Appeals has stressed, as early as July 15,
1960, the Government already had in its hands the sum of P221,033.00 representing
excess payment. Having been paid and received by mistake, as petitioner
Commissioner subsequently acknowledged, that sum unquestionably belonged to
ESSO, and the Government had the obligation to return it to ESSO That
acknowledgment of the erroneous payment came some four (4) years afterwards in
nowise negates or detracts from its actuality. The obligation to return money
mistakenly paid arises from the moment that payment is made, and not from the
time that the payee admits the obligation to reimburse. The obligation of the payee
to reimburse an amount paid to him results from the mistake, not from the payee's
confession of the mistake or recognition of the obligation to reimburse. In other
words, since the amount of P221,033.00 belonging to ESSO was already in the hands
of the Government as of July, 1960, although the latter had no right whatever to the
amount and indeed was bound to return it to ESSO, it was neither legally nor logically
possible for ESSO thereafter to be considered a debtor of the Government in that
amount of P221,033.00; and whatever other obligation ESSO might subsequently
incur in favor of the Government would have to be reduced by that sum, in respect of
which no interest could be charged. To interpret the words of the statute in such a
manner as to subvert these truisms simply can not and should not be countenanced.
"Nothing is better settled than that courts are not to give words a meaning which
would lead to absurd or unreasonable consequences. That is a principle that goes
back to In re Allen (2 Phil. 630) decided on October 29, 1903, where it was held that
a literal interpretation is to be rejected if it would be unjust or lead to absurd

FIRST DIVISION
[G.R. No. 112170. April 10, 1996]
CESARIO URSUA, petitioner, vs. COURT OF APPEALS AND PEOPLE OF
THE PHILIPPINES, respondents.
SYLLABUS
1. STATUTORY CONSTRUCTION; STATUTES; CONSTRUED WITH REFERENCE
TO THE INTENDED SCOPE AND PURPOSE. - Time and again we have
decreed that statutes are to be construed in the light of the purposes to be
achieved and the evils sought to be remedied. Thus in construing a statute the
reason for its enactment should be kept in mind and the statute should be
construed with reference to the intended scope and purpose. The court may
consider the spirit and reason of the statute, where a literal meaning would lead
to absurdity, contradiction, injustice, or would defeat the clear purpose of the
lawmakers.
2. ID.; COMMONWEALTH ACT 142, AS AMENDED (AN ACT TO REGULATE
THE USE OF ALIASES); PURPOSE IS TO REGULATE THE USE OF
ALIASES IN BUSINESS TRANSACTION. - The objective and purpose of C.A.
No. 142 have their origin and basis in Act No. 3883, An Act to Regulate the Use
in Business Transactions of Names other than True Names, Prescribing the
Duties of the Director of the Bureau of Commerce and Industry in its
Enforcement, Providing Penalties for Violations thereof, and for other purposes,
which was approved on 14 November 1931 and amended by Act No. 4147,
approved on 28 November 1934. The enactment of C.A. No. 142 as amended
was made primarily to curb the common practice among the Chinese of
adopting scores of different names and aliases which created tremendous
confusion in the field of trade. Such a practice almost bordered on the crime of
using fictitious names which for obvious reasons could not be successfully
maintained against the Chinese who, rightly or wrongly, claimed they possessed
a thousand and one names. C.A. No. 142 thus penalized the act of using an
alias name, unless such alias was duly authorized by proper judicial proceedings
and recorded in the civil register.
3. CRIMINAL LAW; COMMONWEALTH ACT 142, AS AMENDED (AN ACT TO
REGULATE THE USE OF ALIASES); ALIAS, DEFINED. - An alias is a name
or names used by a person or intended to be used by him publicly and
habitually usually in business transactions in addition to his real name by which
he is registered at birth or baptized the first time or substitute name authorized
by a competent authority. A mans name is simply the sound or sounds by which
STATUTORY CONSTRUCTION CASES: CHAPTER V 46
he is commonly designated by his fellows and by which they distinguish him but
sometimes a man is known by several different names and thse are known as
aliases.
4. ID.; ID.; USE OF FICTITIOUS NAME IN A SINGLE TRANSACTION
WITHOUT INTENDING TO BE KNOWN BY THIS NAME IN ADDITION TO
HIS REAL NAME, NOT A VIOLATION THEREOF. - The use of a fictitious
name or a different name belonging to another person in a single instance
without any sign or indication that the user intends to be known by this name in
addition to his real name from that day forth does not fall within the prohibition
contained in C.A. No. 142 as amended.
5. ID.; ID.; ID.; CASE AT BAR. - This is so in the case at bench. It is not disputed
that petitioner introduced himself in the Office of the Ombudsman as Oscar
Perez, which was the name of the messenger of his lawyer who should have
brought the letter to that office in the first place instead of petitioner. He did so
while merely serving the request of his lawyer to obtain a copy of the complaint
in which petitioner was a respondent. There is no question then that Oscar
Perez is not an alias name of petitioner. There is no evidence showing that he
had used or was intending to use that name as his second name in addition to
his real name. The use of the name Oscar Perez was made by petitioner in an
isolated transaction where he was not even legally required to expose his real
identity. For, even if he had identified himself properly at the Office of the
Ombudsman, petitioner would still be able to get a copy of the complaint as a
matter of right, and the Office of the Ombudsman could not refuse him because
the complaint was part of public records hence open to inspection and
examination by anyone under the proper circumstances. While the act of
petitioner may be covered by other provisions of law, such does not constitute
an offense within the concept of C.A. No. 142 as amended under which he is
prosecuted. The confusion and fraud in business transactions which the anti-
alias law and its related statutes seek to prevent are not present here as the
circumstances are peculiar and distinct from those contemplated by the
legislature in enacting C.A. No. 142 as amended. There exists a valid
presumption that undesirable consequences were never intended by a
legislative measure and that a construction of which the statute is fairly
susceptible is favored, which will avoid all objectionable, mischievous,
indefensible, wrongful, evil and injurious consequences. Indeed, our mind
cannot rest easy on the proposition that petitioner should be convicted on a law
that does not clearly penalize the act done by him.

Wherefore, the questioned decision of the Court of Appeals affirming that of the
Regional Trial Court of Davao City is REVERSED and SET ASIDE and petitioner
CESARIO URSUA is ACQUITTED of the crime charged.
6. STATUTORY CONSTRUCTION; A PENAL STATUTE LIKE COMMONWEALTH
ACT 142, AS AMENDED, CONSTRUED STRICTLY AGAINST THE STATE
AND IN FAVOR OF THE ACCUSED. - As C.A. No. 142 is a penal statute, it
should be construed strictly against the State and in favor of the accused. The
reason for this principle is the tenderness of the law for the rights of individuals
and the object is to establish a certain rule by conformity to which mankind
would be safe, and the discretion of the court limited.
APPEARANCES OF COUNSEL
Ceferino Padua Law Office for petitioner.
The Solicitor General for respondents.
DECISION
BELLOSILLO, J.:
This is a petition for a review of the decision of the Court of Appeals which
affirmed the conviction of petitioner by the Regional Trial Court of Davao City for
violation of Sec. 1 of C.A. No. 142, as amended by R.A. No. 6085, otherwise known
as An Act to Regulate the Use of Alliases.[1]
Petitioner Cesario Ursua was a Community Environment and Natural Resources
Officer assigned in Kidapawan, Cotabato. On 9 May 1989 the Provincial Governor of
Cotabato requested the Office of the Ombudsman in Manila to conduct an
investigation on a complaint for bribery, dishonesty, abuse of authority and giving of
unwarranted benefits by petitioner and other officials of the Department of
Environment and Natural Resources. The complaint was initiated by the Sangguniang
Panlalawigan of Cotabato through a resolution advising the Governor to report the
involvement of petitioner and others in the illegal cutting of mahogany trees and
hauling of illegally-cut logs in the area.[2]
On 1 August 1989 Atty. Francis Palmones, counsel for petitioner, wrote the
Office of the Ombudsman in Davao City requesting that he be furnished copy of the
complaint against petitioner. Atty. Palmones then asked his client Ursua to take his
letter-request to the Office of the Ombudsman because his law firms messenger,
Oscar Perez, had to attend to some personal matters. Before proceeding to the Office
of the Ombudsman petitioner talked to Oscar Perez and told him that he was
STATUTORY CONSTRUCTION CASES: CHAPTER V 47
reluctant to personally ask for the document since he was one of the respondents
before the Ombudsman. However, Perez advised him not to worry as he could just
sign his (Perez) name if ever he would be required to acknowledge receipt of the
complaint.[3]
When petitioner arrived at the Office of the Ombudsman in Davao City he was
instructed by the security officer to register in the visitors logbook. Instead of writing
down his name petitioner wrote the name Oscar Perez after which he was told to
proceed to the Administrative Division for the copy of the complaint he needed. He
handed the letter of Atty. Palmones to the Chief of the Administrative Division, Ms.
Loida Kahulugan, who then gave him a copy of the complaint, receipt of which he
acknowledged by writing the name Oscar Perez.[4]
Before petitioner could leave the premises he was greeted by an acquaintance,
Josefa Amparo, who also worked in the same office. They conversed for a while then
he left. When Loida learned that the person who introduced himself as Oscar Perez
was actually petitioner Cesario Ursua, a customer of Josefa Amparo in her gasoline
station, Loida reported the matter to the Deputy Ombudsman who recommended
that petitioner be accordingly charged.
On 18 December 1990, after the prosecution had completed the presentation of
its evidence, petitioner without leave of court filed a demurrer to evidence alleging
that the failure of the prosecution to prove that his supposed alias was different from
his registered name in the local civil registry was fatal to its cause. Petitioner argued
that no document from the local civil registry was presented to show the registered
name of accused which according to him was a condition sine qua non for the validity
of his conviction.
The trial court rejected his contentions and found him guilty of violating Sec. 1
of C.A. No. 142 as amended by R. A. No. 6085. He was sentenced to suffer a prison
term of one (1) year and one (1) day of prision correccional minimum as minimum, to
four (4) years of prision correccional medium as maximum, with all the accessory
penalties provided for by law, and to pay a fine of P4,000.00 plus costs.
Petitioner appealed to the Court of Appeals.
On 31 May 1993 the Court of Appeals affirmed the conviction of petitioner but
modified the penalty by imposing an indeterminate term of one (1) year as minimum
to three (3) years as maximum and a fine of P5,000.00.
Petitioner now comes to us for review of his conviction as. he reasserts his
innocence. He contends that he has not violated C.A. No. 142 as amended by R. A.
No. 6085 as he never used any alias name; neither is Oscar Perez
his alias. An alias, according to him, is a term which connotes the habitual use of

another name by which a person is also known. He claims that he has never been
known as Oscar Perez and that he only used such name on one occasion and it was
with the express consent of Oscar Perez himself. It is his position that an essential
requirement for a conviction under C.A. No. 142 as amended by R. A. No. 6085 has
not been complied with when the prosecution failed to prove that his
supposed alias was different from his registered name in the Registry of Births. He
further argues that the Court of Appeals erred in not considering the defense theory
that he was charged under the wrong law.[5]
Time and again we have decreed that statutes are to be construed in the light
of the purposes to be achieved and the evils sought to be remedied. Thus in
construing a statute the reason for its enactment should be kept in mind and the
statute should be construed with reference to the intended scope and purpose. [6] The
court may consider the spirit and reason of the statute, where a literal meaning
would lead to absurdity, contradiction, injustice, or would defeat the clear purpose of
the lawmakers.[7]
For a clear understanding of the purpose of C.A. No. 142 as amended, which
was allegedly violated by petitioner, and the surrounding circumstances under which
the law was enacted, the pertinent provisions thereof, its amendments and related
statutes are herein cited. C.A. No. 142, which was approved on 7 November 1936,
and before its amendment by R. A. No. 6085, is entitled An Act to Regulate the Use
of Aliases. It provides as follows:
Section 1. Except as a pseudonym for literary purposes, no person shall use any
name different from the one with which he was christened or by which he has been
known since his childhood, or such substitute name as may have been authorized by
a competent court. The name shall comprise the patronymic name and one or two
surnames.
Section 2. Any person desiring to use an alias or aliases shall apply for authority
therefor in proceedings like those legally provided to obtain judicial authority for a
change of name. Separate proceedings shall be had for each alias, and each new
petition shall set forth the original name and the alias or aliases for the use of which
judicial authority has been obtained, specifying the proceedings and the date on
which such authority was granted. Judicial authorities for the use of aliases shall be
recorded in the proper civil register x x x.
The above law was subsequently amended by R. A. No. 6085, approved on 4
August 1969. As amended, C.A. No. 142 now reads:
STATUTORY CONSTRUCTION CASES: CHAPTER V 48
Section 1. Except as a pseudonym solely for literary, cinema, television, radio or other
entertainment purposes and in athletic events where the use of pseudonym is a
normally accepted practice, no person shall use any name different from the one with
which he was registered at birth in the office of the local civil registry or with which
he was baptized for the first time, or in case of an alien, with which he was registered
in the bureau of immigration upon entry; or such substitute name as may have been
authorized by a competent court: Provided, That persons whose births have not been
registered in any local civil registry and who have not been baptized, have one year
from the approval of this act within which to register their names in the civil registry
of their residence. The name shall comprise the patronymic name and one or two
surnames.
Sec. 2. Any person desiring to use an alias shall apply for authority therefor in
proceedings like those legally provided to obtain judicial authority for a change of
name and no person shall be allowed to secure such judicial authority for more than
one alias. The petition for an alias shall set forth the persons baptismal and family
name and the name recorded in the civil registry, if different, his immigrants name, if
an alien, and his pseudonym, if he has such names other than his original or real
name, specifying the reason or reasons for the desired alias. The judicial authority for
the use of alias, the christian name and the alien immigrants name shall be recorded
in the proper local civil registry, and no person shall use any name or names other
than his original or real name unless the same is or are duly recorded in the proper
local civil registry.
The objective and purpose of C. A. No. 142 have their origin and basis in Act
No. 3883, An Act to Regulate the Use in Business Transactions of Names other than
True Names, Prescribing the Duties of the Director of the Bureau of Commerce And
Industry in its Enforcement, Providing Penalties for Violations thereof, and for other
purposes, which was approved on 14 November 1931 and amended by Act No. 4147,
approved on 28 November 1934.[8] The pertinent provisions of Act No. 3883 as
amended follow -Section 1. It shall be unlawful for any person to use or sign, on any
written or printed receipt including receipt for tax or business or any written or
printed contract not verified by a notary public or on any written or printed evidence
of any agreement or business transactions, any name used in connection with his
business other than his true name, or keep conspicuously exhibited in plain view in or
at the place where his business is conducted, if he is engaged in a business, any sign
announcing a firm name or business name or style without first registering such other
name, or such firm name, or business name or style in the Bureau of Commerce
together with his true name and that of any other person having a joint or common
interest with him in such contract agreement, business transaction, or business x x x.

For a bit of history, the enactment of C.A. No. 142 as amended was made
primarily to curb the common practice among the Chinese of adopting scores of
different names and aliases which created tremendous confusion in the field of
trade. Such a practice almost bordered on the crime of using fictitious names which
for obvious reasons could not be successfully maintained against the Chinese who,
rightly or wrongly, claimed they possessed a thousand and one names. CA. No. 142
thus penalized the act of using an alias name, unless such alias was duly authorized
by proper judicial proceedings and recorded in the civil register.[9]
In Yu Kheng Chiau v. Republic[10] the Court had occasion to explain the
meaning, concept and ill effects of the use of an alias within the purview of C.A. No.
142 when we ruled
There can hardly be any doubt that petitioners use of alias Kheng Chiau Young in
addition to his real name Yu Cheng Chiau would add to more confusion. That he is
known in his business, as manager of the Robert Reid, Inc., by the former name, is
not sufficient reason to allow him its use. After all, petitioner admitted that he is
known to his associates by both names. In fact, the Anselmo Trinidad, Inc., of which
he is a customer, knows him by his real name. Neither would the fact that he had
encountered certain difficulties in his transactions with government offices which
required him to explain why he bore two names, justify the grant of his petition, for
petitioner could easily avoid said difficulties by simply using and sticking only to his
real name Yu Cheng Chiau.
The fact that petitioner intends to reside permanently in the Philippines, as shown by
his having filed a petition for naturalization in Branch V of the abovementioned court,
argues the more against the grant of his petition, because if naturalized as a Filipino
citizen, there would then be no necessity for his further using said alias, as it would
be contrary to the usual Filipino way and practice of using only one name in ordinary
as well as business transactions. And, as the lower court correctly observed, if he
believes (after he is naturalized) that it would be better for him to write his name
following the Occidental method, he can easily file a petition for change of name, so
that in lieu of the name Yu Kheng Chian, he can, abandoning the same, ask for
authority to adopt the name Kheng Chiau Young.
All things considered, we are of the opinion and so hold, that petitioner has not
shown satisfactory proper and reasonable grounds under the aforequoted provisions
of Commonwealth Act No. 142 and the Rules of Court, to warrant the grant of his
petition for the use of an alias name.
STATUTORY CONSTRUCTION CASES: CHAPTER V 49
Clearly therefore an alias is a name or names used by a person or intended to
be used by him publicly and habitually usually in business transactions in addition to
his real name by which he is registered at birth or baptized the first time or substitute
name authorized by a competent authority. A mans name is simply the sound or
sounds by which he is commonly designated by his fellows and by which they
distinguish him but sometimes a man is known by several different names and these
are known as aliases.[11] Hence, the use of a fictitious name or a different name
belonging to another person in a single instance without any sign or indication that
the user intends to be known by this name in addition to his real name from that day
forth does not fall within the prohibition contained in C.A. No. 142 as amended. This
is so in the case at bench.
It is not disputed that petitioner introduced himself in the Office of the
Ombudsman as Oscar Perez, which was the name of the messenger of his lawyer
who should have brought the letter to that office in the first place instead of
petitioner. He did so while merely serving the request of his lawyer to obtain a copy
of the complaint in which petitioner was a respondent. There is no question then that
Oscar Perez is not an alias name of petitioner. There is no evidence showing that he
had used or was intending to use that name as his second name in addition to his
real name. The use of the name Oscar Perez was made by petitioner in an isolated
transaction where he was not even legally required to expose his real identity. For,
even if he had identified himself properly at the Office of the Ombudsman, petitioner
would still be able to get a copy of the complaint as a matter of right, and the Office
of the Ombudsman could not refuse him because the complaint was part of public
records hence open to inspection and examination by anyone under the proper
circumstances.
While the act of petitioner may be covered by other provisions of law, such does
not constitute an offense within the concept of C.A. No. 142 as amended under which
he is prosecuted. The confusion and fraud in business transactions which the anti-
alias law and its related statutes seek to prevent are not present here as the
circumstances are peculiar and distinct from those contemplated by the legislature in
enacting C.A. No. 142 as amended. There exists a valid presumption that undesirable
consequences were never intended by a legislative measure and that a construction
of which the statute is fairly susceptible is favored, which will avoid all objectionable,
mischievous, indefensible, wrongful, evil and injurious consequences.[12]Moreover, as
C.A. No. 142 is a penal statute, it should be construed strictly against the State and in
favor of the accused.[13] The reason for this principle is the tenderness of the law for
the rights of individuals and the object is to establish a certain rule by conformity to
which mankind would be safe, and the discretion of the court limited. [14] Indeed, our
mind cannot rest easy on the proposition that petitioner should be convicted on a law
that does not clearly penalize the act done by him.
 STATUTORY CONSTRUCTION CASES: CHAPTER V 50

WHEREFORE, the questioned decision of the Court of Appeals affirming that of

the Regional Trial Court of Davao City is REVERSED and SET ASIDE and petitioner
CESARIO URSUA is ACQUITTED of the crime charged.

SO ORDERED.

Padilla (Chairman), Vitug, Kapunan, and Hermosisima, Jr., JJ., concur.