Republic of the Philippines

SUPREME COURT
Manila
EN BANC

G.R. No. L-34964 January 31, 1973

CHINA BANKING CORPORATION and TAN KIM LIONG, petitioners-appellants,
vs.
HON. WENCESLAO ORTEGA, as Presiding Judge of the Court of First Instance of Manila,
Branch VIII, and VICENTE G. ACABAN, respondents-appellees.
Sy Santos, Del Rosario and Associates for petitioners-appellants.
Tagalo, Gozar and Associates for respondents-appellees.

MAKALINTAL, J.:
The only issue in this petition for certiorari to review the orders dated March 4, 1972 and March 27,
1972, respectively, of the Court of First Instance of Manila in its Civil Case No. 75138, is whether or
not a banking institution may validly refuse to comply with a court process garnishing the bank
deposit of a judgment debtor, by invoking the provisions of Republic Act No. 1405. *
On December 17, 1968 Vicente Acaban filed a complaint in the court a quo against Bautista Logging
Co., Inc., B & B Forest Development Corporation and Marino Bautista for the collection of a sum of
money. Upon motion of the plaintiff the trial court declared the defendants in default for failure to
answer within the reglementary period, and authorized the Branch Clerk of Court and/or Deputy
Clerk to receive the plaintiff's evidence. On January 20, 1970 judgment by default was rendered
against the defendants.
To satisfy the judgment, the plaintiff sought the garnishment of the bank deposit of the defendant B &
B Forest Development Corporation with the China Banking Corporation. Accordingly, a notice of
garnishment was issued by the Deputy Sheriff of the trial court and served on said bank through its
cashier, Tan Kim Liong. In reply, the bank' cashier invited the attention of the Deputy Sheriff to the
provisions of Republic Act No. 1405 which, it was alleged, prohibit the disclosure of any information
relative to bank deposits. Thereupon the plaintiff filed a motion to cite Tan Kim Liong for contempt of
court.
In an order dated March 4, 1972 the trial court denied the plaintiff's motion. However, Tan Kim Liong
was ordered "to inform the Court within five days from receipt of this order whether or not there is a
deposit in the China Banking Corporation of defendant B & B Forest Development Corporation, and
if there is any deposit, to hold the same intact and not allow any withdrawal until further order from
this Court." Tan Kim Liong moved to reconsider but was turned down by order of March 27, 1972. In

the same order he was directed "to comply with the order of this Court dated March 4, 1972 within
ten (10) days from the receipt of copy of this order, otherwise his arrest and confinement will be
ordered by the Court." Resisting the two orders, the China Banking Corporation and Tan Kim Liong
instituted the instant petition.
The pertinent provisions of Republic Act No. 1405 relied upon by the petitioners reads:
Sec. 2. All deposits of whatever nature with banks or banking institutions in the
Philippines including investments in bonds issued by the Government of the
Philippines, its political subdivisions and its instrumentalities, are hereby considered
as of absolutely confidential nature and may not be examined, inquired or looked into
by any person, government official, bureau or office, except upon written permission
of the depositor, or in cases of impeachment, or upon order of a competent court in
cases of bribery or dereliction of duty of public officials, or in cases where the money
deposited or invested is the subject matter of the litigation.
Sec 3. It shall be unlawful for any official or employee of a banking institution to
disclose to any person other than those mentioned in Section two hereof any
information concerning said deposits.
Sec. 5. Any violation of this law will subject offender upon conviction, to an
imprisonment of not more than five years or a fine of not more than twenty thousand
pesos or both, in the discretion of the court.
The petitioners argue that the disclosure of the information required by the court does not fall within
any of the four (4) exceptions enumerated in Section 2, and that if the questioned orders are
complied with Tan Kim Liong may be criminally liable under Section 5 and the bank exposed to a
possible damage suit by B & B Forest Development Corporation. Specifically referring to this case,
the position of the petitioners is that the bank deposit of judgment debtor B & B Forest Development
Corporation cannot be subject to garnishment to satisfy a final judgment against it in view of the
aforequoted provisions of law.
We do not view the situation in that light. The lower court did not order an examination of or inquiry
into the deposit of B & B Forest Development Corporation, as contemplated in the law. It merely
required Tan Kim Liong to inform the court whether or not the defendant B & B Forest Development
Corporation had a deposit in the China Banking Corporation only for purposes of the garnishment
issued by it, so that the bank would hold the same intact and not allow any withdrawal until further
order. It will be noted from the discussion of the conference committee report on Senate Bill No. 351
and House Bill No. 3977, which later became Republic Act 1405, that it was not the intention of the
lawmakers to place bank deposits beyond the reach of execution to satisfy a final judgment. Thus:
Mr. MARCOS. Now, for purposes of the record, I should like the Chairman of the
Committee on Ways and Means to clarify this further. Suppose an individual has a
tax case. He is being held liable by the Bureau of Internal Revenue for, say,
P1,000.00 worth of tax liability, and because of this the deposit of this individual is
attached by the Bureau of Internal Revenue.
Mr. RAMOS. The attachment will only apply after the court has pronounced sentence
declaring the liability of such person. But where the primary aim is to determine

whether he has a bank deposit in order to bring about a proper assessment by the
Bureau of Internal Revenue, such inquiry is not authorized by this proposed law.
Mr. MARCOS. But under our rules of procedure and under the Civil Code, the
attachment or garnishment of money deposited is allowed. Let us assume, for
instance, that there is a preliminary attachment which is for garnishment or for
holding liable all moneys deposited belonging to a certain individual, but such
attachment or garnishment will bring out into the open the value of such deposit. Is
that prohibited by this amendment or by this law?
Mr. RAMOS. It is only prohibited to the extent that the inquiry is limited, or rather, the
inquiry is made only for the purpose of satisfying a tax liability already declared for
the protection of the right in favor of the government; but when the object is merely to
inquire whether he has a deposit or not for purposes of taxation, then this is fully
covered by the law.
Mr. MARCOS. And it protects the depositor, does it not?
Mr. RAMOS. Yes, it protects the depositor.
Mr. MARCOS. The law prohibits a mere investigation into the existence and the
amount of the deposit.
Mr. RAMOS. Into the very nature of such deposit.
Mr. MARCOS. So I come to my original question. Therefore, preliminary garnishment
or attachment of the deposit is not allowed?
Mr. RAMOS. No, without judicial authorization.
Mr. MARCOS. I am glad that is clarified. So that the established rule of procedure as
well as the substantive law on the matter is amended?
Mr. RAMOS. Yes. That is the effect.
Mr. MARCOS. I see. Suppose there has been a decision, definitely establishing the
liability of an individual for taxation purposes and this judgment is sought to be
executed ... in the execution of that judgment, does this bill, or this proposed law, if
approved, allow the investigation or scrutiny of the bank deposit in order to execute
the judgment?
Mr. RAMOS. To satisfy a judgment which has become executory.
Mr. MARCOS. Yes, but, as I said before, suppose the tax liability is P1,000,000 and
the deposit is half a million, will this bill allow scrutiny into the deposit in order that the
judgment may be executed?

Mr. RAMOS. Merely to determine the amount of such money to satisfy that obligation
to the Government, but not to determine whether a deposit has been made in
evasion of taxes.
xxx xxx xxx
Mr. MACAPAGAL. But let us suppose that in an ordinary civil action for the recovery
of a sum of money the plaintiff wishes to attach the properties of the defendant to
insure the satisfaction of the judgment. Once the judgment is rendered, does the
gentleman mean that the plaintiff cannot attach the bank deposit of the defendant?
Mr. RAMOS. That was the question raised by the gentleman from Pangasinan to
which I replied that outside the very purpose of this law it could be reached by
attachment.
Mr. MACAPAGAL. Therefore, in such ordinary civil cases it can be attached?
Mr. RAMOS. That is so.
(Vol. II, Congressional Record, House of Representatives, No. 12, pp. 3839-3840,
July 27, 1955).
It is sufficiently clear from the foregoing discussion of the conference committee report of the two
houses of Congress that the prohibition against examination of or inquiry into a bank deposit under
Republic Act 1405 does not preclude its being garnished to insure satisfaction of a judgment. Indeed
there is no real inquiry in such a case, and if the existence of the deposit is disclosed the disclosure
is purely incidental to the execution process. It is hard to conceive that it was ever within the
intention of Congress to enable debtors to evade payment of their just debts, even if ordered by the
Court, through the expedient of converting their assets into cash and depositing the same in a bank.
WHEREFORE, the orders of the lower court dated March 4 and 27, 1972, respectively, are hereby
affirmed, with costs against the petitioners-appellants.
Zaldivar, Castro, Fernando, Barredo, Makasiar, Antonio and Esguerra, JJ., concur.
Concepcion, C.J. and Teehankee, J., took no part.

Footnotes
* An Act Probihiting Disclosure of or Inquiry into, Deposits with any Banking
Institution and Providing Penalty Therefor.

Republic of the Philippines

SUPREME COURT
Manila
FIRST DIVISION
G.R. No. L-37867 February 22, 1982
BOARD OF ADMINISTRATORS, PHILIPPINES VETERANS ADMINISTRATION, petitioner,
vs.
HON. JOSE G. BAUTISTA, in his capacity as Presiding Judge of the CFI Manila, Branch III,
and CALIXTO V. GASILAO, respondents.

GUERRERO, J.:
This is a petition to review on certiorari the decision of respondent Court of First Instance of Manila,
Branch III, rendered on October 25, 1973 in Civil Case No. 90450 for mandamus filed by Calixto V.
Gasilao against the Board of Administrators of the Philippine Veterans Administration.
The facts as found by the Court a quo to have been established by the pleadings find by the parties
are stated in the decision under review from which We quote the following:
Calixto V. Gasilao, pauper litigant and petitioner in the above-entitled case, was a
veteran in good standing during World War II. On October 19, 1955, he filed a claim
for disability pension under Section 9, Republic Act No. 65. The claim was
disapproved by the Philippine Veterans Board (now Board of Administrators,
Philippine Veterans Administration).
Meanwhile, Republic Act 65 was amended by Republic Act 1362 on June 22, 1955
by including as part of the benefit of P50.00, P10.00 a month for each of the
unmarried minor children below 18 of the veteran Republic Act No. 1362 was
implemented by the respondents only on July 1, 1955.
On June 18, 1957, Section 9 of Republic Act No. 65 was further amended by
Republic Act 1920 increasing the life pension of the veteran to P100.00 a month and
maintaining the P10.00 a month each for the unmarried minor children below 18.

Fortunately, on August 8, 1968, the claim of the petitioner which was disapproved in
December, 1955 was reconsidered and his claim was finally approved at the rate of
P100.00 a month, life pension, and the additional Pl0.00 for each of his ten
unmarried minor children below 18. In view of the approval of the claim of petitioner,
he requested respondents that his claim be made retroactive as of the date when his
original application was flied or disapproved in 1955. Respondents did not act on his
request.
On June 22, 1969, Section 9 of Republic Act No. 65 was amended by Republic Act
No. 5753 which increased the life pension of the veteran to P200.00 a month and
granted besides P30.00 a month for the wife and P30.00 a month each for his
unmarried minor children below 18. In view of the new law, respondents increased
the monthly pension of petitioner to P125.00 effective January 15, 1971 due to
insufficient funds to cover full implementation. His wife was given a monthly pension
of P7.50 until January 1, 1972 when Republic Act 5753 was fully implemented.
Petitioner now claims that he was deprived of his right to the pension from October
19, 1955 to June 21, 1957 at the rate of P50.00 per month plus P10.00 a month each
for his six (6) unmarried minor children below 18. lie also alleges that from June 22,
1957 to August 7, 1968 he is entitled to the difference of P100.00 per month plus
P10.00 a month each for his seven (7) unmarried nor children below 18. Again,
petitioner asserts the difference of P100.00 per month, plus P30.00 a month for his
wife and the difference of P20.00 a month each for his four (4) unmarried minor
children below 18 from June 22, 1969 up to January 14, 1971 and finally, the
difference of P75.00 per month plus P30.00 a month for his wife and the difference of
P20.00 a month for his three (3) unmarried minor children below 18 from January 15,
1971 to December 31, 1971. 1
According to the records, the parties, through their respective counsels, filed on September 24, 1973
the following stipulation of facts in the lower Court:
STIPULATION OF FACTS
COME NOW the parties thru their respective counsel, and unto this Honorable Court,
respectfully state that they agree on the following facts which may be considered as
proved without the need of the introduction of any evidence thereon, to wit:
1. Petitioner was a veteran in good standing during the last World War that took
active participation in the liberation drive against the enemy, and due to his military
service, he was rendered disabled.
2. The Philippine Veterans Administration, formerly the Philippine Veterans Board,
(now Philippine Veterans Affairs Office) is an agency of the Government charged with
the administration of different laws giving various benefits in favor of veterans and
their orphans/or widows and parents; that it has the power to adopt rules and
regulations to implement said laws and to pass upon the merits and qualifications of
persons applying for rights and privileges extended by this Act pursuant to such rules
and regulations as it may adopt to insure the speedy and honest fulfillment of its aims
and purposes.

3. On July 23, 1955, petitioner filed a claim (Claim No. Dis-12336) for disability
pension under Section 9 of RA 65, with the Philippine Veterans Board (later
succeeded by the Philippine Veterans Administration, now Philippine Veterans Affairs
Office), alleging that he was suffering from PTB, which he incurred in line of duty.
4. Due to petitioner's failure to complete his supporting papers and submit evidence
to establish his service connected illness, his claim was disapproved by the Board of
the defunct Philippine Veterans Board on December 18, 1955.
5. On August 8, 1968, petitioner was able to complete his supporting papers and,
after due investigation and processing, the Board of Administrators found out that his
disability was 100% thus he was awarded the full benefits of section 9 of RA 65, and
was therefore given a pension of P100.00 a month and with an additional P 10.00 a
month for each of his unmarried minor children pursuant to RA 1920, amending
section 9 of RA 65.
6. RA 5753 was approved on June 22, 1969, providing for an increase in the basic
pension to P200.00 a month and the additional pension, to P30.00 a month for the
wife and each of the unmarried minor children. Petitioner's monthly pension was,
however, increased only on January 15, 1971, and by 25% of the increases provided
by law, due to the fact that it was only on said date that funds were released for the
purpose, and the amount so released was only sufficient to pay only 25% of the
increase.
7. On January 15, 1972, more funds were released to implement fully RA 5753 and
snow payment in full of the benefits thereunder from said date.
WHEREFORE, it is respectfully prayed that a decision be rendered in accordance
with the foregoing stipulation of facts. It is likewise prayed that the parties be granted
a period of (15) days within which to file their memoranda. 2
Upon consideration of the foregoing and the Memoranda filed by the parties, the lower Court
rendered judgment against therein respondent Board of Administrators, the dispositive portion of
which reads as follows:
WHEREFORE, premises considered, judgment is hereby rendered for petitioner and
the respondents are ordered to make petitioner's pension effective as of December
18, 1955 at the rate of P50.00 per month; and the rate increased to P100.00 per
month plus P10.00 per month each for his ten unmarried minor children below 18
years of age from June 22, 1957 up to August 7..1968; to pay the difference of
P100.00 per month plus P30.00 per month and P20.00 per month each for his ten
unmarried children below 18 years of age from June 22, 1969 up to January 15,
1971, the difference of P75.00 per month plus P22.50 per month for his wife and
P20.00 per month each for his unmarried nor children then below 18 years of age
from January 16, 1971 up to December 31, 1971.
SO ORDERED.
Manila, October 25, 1973. 3

In its Petition before this Court, the Board of Administrators of the Philippine Veterans Administration,
through the Office of the Solicitor General, challenges the abovementioned decision of the Court a
quo on the following grounds:
1. The lower Court erred in ordering the petitioners to retroact the effectivity of their
award to respondent Calixto V. Gasilao of full benefits under section 9 of RA 65 to
December 18, 1955, the date when his application was disapproved due to dis failure
to complete his supporting papers and submit evidence to establish his service
connected illness, and not August 8, 1968, the date when he was able to complete
his papers and allow processing and approval of his application.
2. The lower Court erred in ordering payment of claims which had prescribed.
3. The lower Court erred in allowing payment of claims under a law for which no
funds had been released. 4
The question raised under the first assigned error is: When should private respondent Gasilao's
pension benefits start
The lower Court, quoting excerpts from Our decision in Begosa vs. Chairman Philippine Veterans
Administration,5 ruled that Gasilao's pension benefits should retroact to the date of the disapproval of his
claim on December 18, 1955, and not commence from the approval thereon on August 8, 1968 as
contended by the Board of Administrators.
Petitioner maintains the stand that the facts of the Begosa case are not similar to those of the case
at bar to warrant an application of the ruling therein on the retroactivity of a pension award to the
date of prior disapproval of the claim. In the Begosa case, the Supreme Court speaking thru then
Associate Justice, now Chief Justice Fernando, affirmed the decision of the lower Court, and ruled in
part as follows:
From the facts just set out, it will be noted that plaintiff filed his said claim for
disability pension as far back as March 4, 1955; that it was erroneously disapproved
on June 21, 1955, because his dishonorable discharge from the Army was not a
good or proper ground for the said disapproval and that on reconsideration asked for
by him on November 1, 1957, which he continued to follow up, the Board of
Administrators, Philippine Veterans Administration, composed of herein defendants,
which took over the duties of the Philippine Veterans Board, finally approved his
claim on September 2, 1964, at the rate of P30.00 a month. 6
Had it not been for the said error, it appears that there was no good ground to deny
the said claim, so that the latter was valid and meritorious even as of the date of its
filing on March 4, 1955, hence to make the same effective only as of the date of its
approval on September 2, 1964 according to defendant's stand would be
greatly unfair and prejudicial to plaintiff. 7
In other words, the favorable award which claimant Begosa finally obtained on September 2, 1964
was made to retroact to the date of prior disapproval of the claim on June 2, 1955 for the reason that
such disapproval was erroneously made.

In the instant case, on the other hand, the herein claim of respondent Gasilao was denied on
December 18, 1955 because of his "failure to complete his supporting papers and submit evidence
to establish his service-connected illness" (Stipulation of Facts, Par. 4, ante). Nonetheless, the
Stipulation of Facts admitted in par. 1 that "Petitioner was a veteran in good standing during the last
World War that took active participation in the liberation drive against the enemy, and due to his
military service, he was rendered disabled." From this admission in par. 1, it can reasonably be
deduced that the action on the claim of Gasilao was merely suspended by the Philippine Veterans
Administration pending the completion of the required supporting papers and evidence to establish
his service-connected illness. Hence, Our ruling in the Begosa case making retroactive the award in
favor of the veteran still holds.
Republic Act No. 65 otherwise known as the Veterans' Bill of Rights, as amended, does not explicitly
provide for the effectivity of pension awards. However, petitioner seeks to remedy this legislative
deficiency by citing Section 15 of the law which in part reads as follows:
Sec. 15. Any person who desires to take advantage of the rights and privileges
provided for in this Act should file his application with the Board ...
Petitioner contends that since the foregoing section impliedly requires that the application filed
should first be approved by the Board of Administrators before the claimant could receive his
pension, therefore, an award of pension benefits should commence form the date of he approval of
the application.
This stand of the petitioner does not appear to be in consonance with the spirit and intent of the law,
considering that Republic Act 65 is a veteran pension law which must be accorded a liberal
construction and interpretation in order to favor those entitled to the rights, privileges and benefits
granted thereunder, among which are the right to resume old positions in the government,
educational benefits, the privilege to take promotional examinations, a life pension for the
incapacitated, pensions for widow and children, hospitalization and medical care benefits.
As it is generally known, the purpose of Congress in granting veteran pensions is to compensate, as
far as may be, a class of men who suffered in the service for the hardships they endured and the
dangers they encountered,8 and more particularly, those who have become incapacitated for work owing
to sickness, disease or injuries sustained while in line of duty. 9 A veteran pension law is, therefore, a
governmental expression of gratitude to and recognition of those who rendered service for the country,
especially during times of war or revolution, by extending to them regular monetary aid. For this reason, it
is the general rule that a liberal construction is given to pension statutes in favor of those entitled to
pension. Courts tend to favor the pensioner, but such constructional preference is to be considered with
other guides to interpretation, and a construction of pension laws must depend on its own particular
language. 10
Significantly, the original text of RA 65 provided that:
Sec. 6. It also shall be the duty of the Board (then the Philippine Veterans Board) to
pass upon the merits and qualifications of persons applying for the rights and/or
privileges extended by this Act, pursuant to such rules as it may adopt to insure the
speedy and honest fulfillment of its aims and purposes. (Emphasis supplied.)

The foregoing provision clearly makes it incumbent upon the implementing Board to carry out the
provisions of the statute in the most expeditious way possible and without unnecessary delay. In
the Begosa case, it took nine years (from June 2, 1955 to September 2, 1964) before the claimant
finally obtained his pension grant, whereas in the instant case, it took about twelve years (from
December, 1955 to August 8, 1968) for respondent Gasilao to receive his pension claim. To Our
mind, it would be more in consonance with the spirit and intentment of the law that the benefits
therein granted be received and enjoyed at the earliest possible time by according retroactive effect
to the grant of the pension award as We have done in the Begosa case.
On the other hand, if the pension awards are made effective only upon approval of the
corresponding application which would be dependent on the discretion of the Board of
Administrators which as noted above had been abused through inaction extending to nine years,
even to twelve years, the noble and humanitarian purposes for which the law had enacted could
easily be thwarted or defeated.
On the issue of prescription, petitioner cites Article 1144 of the Civil Code which provides:
Art. 1144. The following actions must be brought within ten years from the time the
right of action accrues:
(1) Upon a written contract;
(2) Upon an obligation created by law; and
(3) Upon a judgment.
Petitioner now contends that since the action was filed in the lower Court on April 13, 1973 seeking
the payment of alleged claims which have accrued more than ten (10) years prior to said date, the
same should have been disallowed as to the prescribed claims.
The obligation of the government to pay pension was created by law (Sec. 9, R.A. 65). Hence, the
ten-year prescriptive period should be counted from the date of passage of the law which is
September 25, 1946, the reason being that it is only from said date that private respondent could
have filed his application. Taking September 25, 1946 as the point of reference, the actual filing of
Gasilao's application on July 23, 1955 was clearly made within and effectively interrupted the
prescriptive period. It is not the date of the commencement of the action in the lower Court which
should be reckoned with, for it was not on said date that Gasilao first sought to claim his pension
benefits, but on July 23, 1955 when he filed his application with the defunct Philippine Veterans
Board. As We had the occasion to state in the case of Vda. de Nator vs. C.I.R., 11 "the basis of
prescription is the unwarranted failure to bring the matter to the attention of those who are by law
authorized to take cognizance thereof."
The Stipulation of Facts do not show and neither do the records indicate when Gasilao attempted to
reinstate his claim after the same was disapproved on December 18, 1955. What is evident is that
he did take steps to reinstate his claim because on August 8, 1968, herein petitioner finally approved
his application. We find it more logical to presume that upon being properly notified of the
disapproval of his application and the reasons therefor, Gasilao, being the interested party that he
was proceeded to work for the completion of the requirements of the Board, as in fact he was

successful in meeting such requirements. There is nothing in the record to show intentional
abandonment of the claim to as to make the prescriptive period continue to run again.
The third ground relied upon in support of this Petition involves the issue as to whether or not the
payment of increased pension provided in the amendatory Act, R.A. 5753, could be ordered, even
where there was no actual release of funds for the purpose, although the law itself expressly
provided for an appropriation. In the case ofBoard of Adminitrators, Philippine Veterans
Administration vs. Hon. Agcoili, et al., 12 penned by Chief Justice Fred Ruiz Castro, the same issue was
treated in this wise:
... The inability of the petitioner to pay Abrera the differential of P60.00 in monthly
pension is attributed by it, in its own words, "to the failure of Congress to appropriate
the necessary funds to cover all claims for benefits, pensions and allowances." And
the petitioner states that it has "no alternative but to suspend (full implementation of
said laws until such time, as sufficient funds have been appropriated by Congress" to
cover the total amount of all approved claims.
We find the explanation of the petitioner satisfactory, but we nevertheless hold that
as a matter of law Abrera is entitled to a monthly pension of P120.00 from January 1,
1972 when Republic Act 5753 was implemented up to the present, if his physical
disability rating has continued and continues to be 60%. Payment to him of what is
due him from January 1, 1972 must however remain subject to the availability of
Government funds duly set aside for the purpose and subject further periodic rerating of his physical disability.
But even if we have thus defined the precise terms, nature and scope of the
entitlement of the respondent Abrera, for the guidance of petitioner, we nevertheless
refrain from ordering the petitioner to pay the amount of P120.00 per month from
January 1, 1972 that is due to the respondent by virtue of the mandate of section 9 of
Republic Act 65, as amended by Republic Act 5753, because the Government has
thus far not provided the necessary funds to pay all valid claims duly approved under
the authority of said statute. 13 (Emphasis supplied.)
ACCORDINGLY, the judgment of the Court a quo is hereby modified to read as follows:
WHEREFORE, premises considered, the Board of Administrators of the Philippine
Veterans Administration (now the Philippine Veterans Affairs Office) is hereby
ordered to make Gasilao's pension effective December 18, 1955 at the rate of P5000 per month plus P10.00 per month for each of his then unmarried minor children
below 18, and the former amount increased to P100.00 from June 22, 1957 to
August 7, 1968.
The differentials in pension to which said Gasilao, his wife and his unmarried minor
children below 18 are entitled for the period from June 22, 1969 to January 14, 1972
by virtue of Republic Act No. 5753 are hereby declared subject to the availability of
Government funds appropriated for the purpose.
SO ORDERED.

Republic of the Philippines

SUPREME COURT
Manila
EN BANC

G.R. No. 123169 November 4, 1996

DANILO E. PARAS, petitioner,
vs.
COMMISSION ON ELECTIONS, respondent.
RESOLUTION

FRANCISCO, J.:
Petitioner Danilo E. Paras is the incumbent Punong Barangay of Pula, Cabanatuan City who won
during the last regular barangay election in 1994. A petition for his recall as Punong Barangay was
filed by the registered voters of the barangay. Acting on the petition for recall, public respondent
Commission on Elections (COMELEC) resolved to approve the petition, scheduled the petition

signing on October 14, 1995, and set the recall election on November 13,
1995. 1 At least 29.30% of the registered voters signed the petition, well above the 25% requirement
provided by law. The COMELEC, however, deferred the recall election in view of petitioner's 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 an 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 General's 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
Petitioner's 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 official's assumption to office or one (1) year immediately preceding
a regular local election", petitioner insists that the scheduled January 13, 1996 recall election is now
barred as the Sangguniang Kabataan (SK) election was set by Republic Act No. 7808 on the first
Monday of May 1996, and every three years thereafter. In support thereof, petitioner
cites Associated Labor Union v. Letrondo-Montejo, 237 SCRA 621, where the Court considered the
SK election as a regular local election. Petitioner maintains that as the SK election is a regular local
election, hence no recall election can be had for barely four months separate the SK election from
the recall election. We do not agree.
The subject provision of the Local Government Code provides:
Sec. 74. Limitations on Recall. (a) Any elective local official may be the subject of
a recall election only once during his term of office for loss of confidence.
(b) No recall shall take place within one (1) year from the date of the official's
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 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.

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
mechanism of recall, initiative, and referendum . . . ."
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". . . 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 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.
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.
Narvasa, C.J., Padilla, Regalado, Romero, Bellosillo, Melo, Puno, Vitug, Kapunan, Mendoza,
Hermosisima, Jr., Panganiban and Torres, Jr., JJ., concur.

Separate Opinions

DAVIDE, JR., J., concurring:

I concur with Mr. Justice Ricardo J. Francisco in his ponencia.
However, I wish to add another reason as to why the SK election cannot be considered a "regular
local election" for purposes of recall under Section 74 of the Local Government Code of 1991.
The term "regular local election" must be confined to the regular election of elective local officials, as
distinguished from the regular election of national officials. The elective national officials are the
President, Vice-President, Senators and Congressmen. The elective local officials are Provincial
Governors, Vice-Governors of provinces, Mayors and Vice-Mayors of cities and municipalities,
Members of the Sanggunians of provinces, cities and municipalities, punong barangays and
members of the sangguniang barangays, and the elective regional officials of the Autonomous
Region of Muslim Mindanao. These are the only local elective officials deemed recognized by
Section 2(2) of Article IX-C of the Constitution, which provides:
Sec. 2. The Commission on Elections shall exercise the following powers and
functions:
xxx xxx xxx
(2) Exercise exclusive original jurisdiction over all contests relating to the elections,
returns, and qualifications of all elective regional, provincial, and city officials, and
appellate jurisdiction over all contests involving elective municipal officials decided by
trial courts of general jurisdiction, or involving elective barangay officials decided by
trial courts of limited jurisdiction.
A regular election, whether national or local, can only refer to an election participated in by those
who possess the right of suffrage, are not otherwise disqualified by law, and who are registered
voters. One of the requirements for the exercise of suffrage under Section 1, Article V of the
Constitution is that the person must be at least 18 years of age, and one requisite before he can vote
is that he be a registered voter pursuant to the rules on registration prescribed in the Omnibus
Election Code (Section 113-118).
Under the law, the SK includes the youth with ages ranging from 15 to 21 (Sec. 424, Local
Government Code of 1991). Accordingly, they include many who are not qualified to vote in a regular
election, viz., those from ages 15 to less than 18. In no manner then may SK elections be
considered a regular election (whether national or local).

Indeed the Sangguniang Kabataan is nothing more than a youth organization, and although fully
recognized in the Local Government Code and vested with certain powers and functions, its elective
officials have not attained the status of local elective officials. So, in Mercado vs. Board of Election
Supervisors (243 SCRA 422 [1995]), this Court ruled that although the SK Chairman is an exofficio member of the sangguniang barangay an elective body that fact does not make him "an
elective barangay official," since the law specifically provides who comprise the elective officials of
the sangguniang barangay, viz., the punong barangay and the seven (7) regularsangguniang
barangay members elected at large by those qualified to exercise the right of suffrage under Article V
of the Constitution, who are likewise registered voters of the barangay. This shows further that the
SK election is not a regular local election for purposes of recall under Section 74 of the Local
Government Code.

Separate Opinions
DAVIDE, JR., J., concurring:
I concur with Mr. Justice Ricardo J. Francisco in his ponencia.
However, I wish to add another reason as to why the SK election cannot be considered a "regular
local election" for purposes of recall under Section 74 of the Local Government Code of 1991.
The term "regular local election" must be confined to the regular election of elective local officials, as
distinguished from the regular election of national officials. The elective national officials are the
President, Vice-President, Senators and Congressmen. The elective local officials are Provincial
Governors, Vice-Governors of provinces, Mayors and Vice-Mayors of cities and municipalities,
Members of the Sanggunians of provinces, cities and municipalities, punong barangays and
members of the sangguniang barangays, and the elective regional officials of the Autonomous
Region of Muslim Mindanao. These are the only local elective officials deemed recognized by
Section 2(2) of Article IX-C of the Constitution, which provides:
Sec. 2. The Commission on Elections shall exercise the following powers and
functions:
xxx xxx xxx
(2) Exercise exclusive original jurisdiction over all contests relating to the elections,
returns, and qualifications of all elective regional, provincial, and city officials, and
appellate jurisdiction over all contests involving elective municipal officials decided by
trial courts of general jurisdiction, or involving elective barangay officials decided by
trial courts of limited jurisdiction.
A regular election, whether national or local, can only refer to an election participated in by those
who possess the right of suffrage, are not otherwise disqualified by law, and who are registered
voters. One of the requirements for the exercise of suffrage under Section 1, Article V of the
Constitution is that the person must be at least 18 years of age, and one requisite before he can vote
is that he be a registered voter pursuant to the rules on registration prescribed in the Omnibus
Election Code (Section 113-118).

Under the law, the SK includes the youth with ages ranging from 15 to 21 (Sec. 424, Local
Government Code of 1991). Accordingly, they include many who are not qualified to vote in a regular
election, viz., those from ages 15 to less than 18. In no manner then may SK elections be
considered a regular election (whether national or local).
Indeed the Sangguniang Kabataan is nothing more than a youth organization, and although fully
recognized in the Local Government Code and vested with certain powers and functions, its elective
officials have not attained the status of local elective officials. So, in Mercado vs. Board of Election
Supervisors (243 SCRA 422 [1995]), this Court ruled that although the SK Chairman is an exofficio member of the sangguniang barangay an elective body that fact does not make him "an
elective barangay official," since the law specifically provides who comprise the elective officials of
the sangguniang barangay, viz., the punong barangay and the seven (7) regularsangguniang
barangay members elected at large by those qualified to exercise the right of suffrage under Article V
of the Constitution, who are likewise registered voters of the barangay. This shows further that the
SK election is not a regular local election for purposes of recall under Section 74 of the Local
Government Code.

Republic of the Philippines

SUPREME COURT
Manila
SECOND DIVISION
G.R. No. L-34568 March 28, 1988
RODERICK DAOANG, and ROMMEL DAOANG, assisted by their father, ROMEO
DAOANG, petitioners,
vs.
THE MUNICIPAL JUDGE, SAN NICOLAS, ILOCOS NORTE, ANTERO AGONOY and AMANDA
RAMOS-AGONOY, respondents.

PADILLA, J.:
This is a petition for review on certiorari of the decision, dated 30 June 1971, rendered by the
respondent judge *in Spec. Proc. No. 37 of Municipal Court of San Nicolas, Ilocos Norte, entitled: "In re Adoption of the Minors
Quirino Bonilla and Wilson Marcos; Antero Agonoy and Amanda R. Agonoy, petitioners", the dispositive part of which reads, as follows:

Wherefore, Court renders judgment declaring that henceforth Quirino Bonilla and
Wilson Marcos be, to all legitimate intents and purposes, the children by adoption of
the joint petitioners Antero Agonoy and Amanda R. Agonoy and that the former be
freed from legal obedience and maintenance by their respective parents, Miguel
Bonilla and Laureana Agonoy for Quirino Bonilla and Modesto Marcos and
Benjamina Gonzales for Wilson Marcos and their family names 'Bonilla' and 'Marcos'
be changed with "Agonoy", which is the family name of the petitioners.
Successional rights of the children and that of their adopting parents shall be
governed by the pertinent provisions of the New Civil Code.
Let copy of this decision be furnished and entered into the records of the Local Civil
Registry of San Nicolas, Ilocos Norte, for its legal effects at the expense of the
petitioners. 1
The undisputed facts of the case are as follows:
On 23 March 1971, the respondent spouses Antero and Amanda Agonoy filed a petition with the
Municipal Court of San Nicolas, Ilocos Norte, seeking the adoption of the minors Quirino Bonilla and
Wilson Marcos. The case, entitled: "In re Adoption of the Minors Quirino Bonilla and Wilson Marcos,
Antero Agonoy and Amanda Ramos-Agonoy, petitioners", was docketed therein as Spec. Proc. No.
37. 2
The petition was set for hearing on 24 April 1971 and notices thereof were caused to be served upon
the office of the Solicitor General and ordered published in the ILOCOS TIMES, a weekly newspaper
of general circulation in the province of Ilocos Norte, with editorial offices in Laoag City. 3
On 22 April 1971, the minors Roderick and Rommel Daoang, assisted by their father and
guardian ad litem, the petitioners herein, filed an opposition to the aforementioned petition for
adoption, claiming that the spouses Antero and Amanda Agonoy had a legitimate daughter named
Estrella Agonoy, oppositors' mother, who died on 1 March 1971, and therefore, said spouses were
disqualified to adopt under Art. 335 of the Civil Code. 4
After the required publication of notice had been accomplished, evidence was presented. Thereafter,
the Municipal Court of San Nicolas, Ilocos Norte rendred its decision, granting the petition for
adoption. 5
Hence, the present recourse by the petitioners (oppositors in the lower court).

The sole issue for consideration is one of law and it is whether or not the respondent spouses Antero
Agonoy and Amanda Ramos-Agonoy are disqualified to adopt under paragraph (1), Art. 335 of the
Civil Code.
The pertinent provision of law reads, as follows:
Art. 335. The following cannot adopt:
(1) Those who have legitimate, legitimated, acknowledged natural children, or
children by legal fiction;
xxx xxx xxx
In overruling the opposition of the herein petitioners, the respondents judge held that "to add
grandchildren in this article where no grandchil is included would violate to (sic) the legal maxim that
what is expressly included would naturally exclude what is not included".
But, it is contended by the petitioners, citing the case of In re Adoption of Millendez, 6 that the
adoption of Quirino Bonilla and Wilson Marcos would not only introduce a foreign element into the family
unit, but would result in the reduction of their legititimes. It would also produce an indirect, permanent and
irrevocable disinheritance which is contrary to the policy of the law that a subsequent reconciliation
between the offender and the offended person deprives the latter of the right to disinherit and renders
ineffectual any disinheritance that may have been made.
We find, however, that the words used in paragraph (1) of Art. 335 of the Civil Code, in enumerating
the persons who cannot adopt, are clear and unambiguous. The children mentioned therein have a
clearly defined meaning in law and, as pointed out by the respondent judge, do not include
grandchildren.
Well known is the rule of statutory construction to the effect that a statute clear and unambiguous on
its face need not be interpreted; stated otherwise, the rule is that only statutes with an ambiguous or
doubtful meaning may be the subject of statutory construction. 7
Besides, it appears that the legislator, in enacting the Civil Code of the Philippines, obviously
intended that only those persons who have certain classes of children, are disqualified to adopt. The
Civil Code of Spain, which was once in force in the Philippines, and which served as the pattern for
the Civil Code of the Philippines, in its Article 174, disqualified persons who have legitimate or
legitimated descendants from adopting. Under this article, the spouses Antero and Amanda Agonoy
would have been disqualified to adopt as they have legitimate grandchildren, the petitioners herein.
But, when the Civil Code of the Philippines was adopted, the word "descendants" was changed to
"children", in paragraph (1) of Article 335.
Adoption used to be for the benefit of the adoptor. It was intended to afford to persons who have no
child of their own the consolation of having one, by creating through legal fiction, the relation of
paternity and filiation where none exists by blood relationship. 8 The present tendency, however, is
geared more towards the promotion of the welfare of the child and the enhancement of his opportunities
for a useful and happy life, and every intendment is sustained to promote that objective. 9 Under the law
now in force, having legitimate, legitimated, acknowledged natural children, or children by legal fiction, is
no longer a ground for disqualification to adopt. 10

WHEREFORE, the petition is DENIED. The judgment of the Municipal Court of San Nicolas, Ilocos
Norte in Spec. Proc. No. 37 is AFFIRMED. Without pronouncement as to costs in this instance.
SO ORDERED.

Republic of the Philippines

SUPREME COURT
Manila
EN BANC
G.R. No. L-22301

August 30, 1967

THE PEOPLE OF THE PHILIPPINES, plaintiff-appellee,

vs.
MARIO MAPA Y MAPULONG, defendant-appellant.
Francisco P. Cabigao for defendant-appellant.
Office of the Solicitor General Arturo A. Alafriz, Assistant Solicitor General F. R. Rosete and Solicitor
O. C. Hernandez for plaintiff-appellee.
FERNANDO, J.:
The sole question in this appeal from a judgment of conviction by the lower court is whether or not
the appointment to and holding of the position of a secret agent to the provincial governor would
constitute a sufficient defense to a prosecution for the crime of illegal possession of firearm and
ammunition. We hold that it does not.
The accused in this case was indicted for the above offense in an information dated August 14, 1962
reading as follows: "The undersized accuses MARIO MAPA Y MAPULONG of a violation of Section
878 in connection with Section 2692 of the Revised Administrative Code, as amended by
Commonwealth Act No. 56 and as further amended by Republic Act No. 4, committed as follows:
That on or about the 13th day of August, 1962, in the City of Manila, Philippines, the said accused
did then and there wilfully and unlawfully have in his possession and under his custody and control
one home-made revolver (Paltik), Cal. 22, without serial number, with six (6) rounds of ammunition,
without first having secured the necessary license or permit therefor from the corresponding
authorities. Contrary to law."
When the case was called for hearing on September 3, 1963, the lower court at the outset asked the
counsel for the accused: "May counsel stipulate that the accused was found in possession of the
gun involved in this case, that he has neither a permit or license to possess the same and that we
can submit the same on a question of law whether or not an agent of the governor can hold a firearm
without a permit issued by the Philippine Constabulary." After counsel sought from the fiscal an
assurance that he would not question the authenticity of his exhibits, the understanding being that
only a question of law would be submitted for decision, he explicitly specified such question to be
"whether or not a secret agent is not required to get a license for his firearm."
Upon the lower court stating that the fiscal should examine the document so that he could pass on
their authenticity, the fiscal asked the following question: "Does the accused admit that this pistol cal.
22 revolver with six rounds of ammunition mentioned in the information was found in his possession
on August 13, 1962, in the City of Manila without first having secured the necessary license or permit
thereof from the corresponding authority?" The accused, now the appellant, answered categorically:
"Yes, Your Honor." Upon which, the lower court made a statement: "The accused admits, Yes, and
his counsel Atty. Cabigao also affirms that the accused admits."
Forthwith, the fiscal announced that he was "willing to submit the same for decision." Counsel for the
accused on his part presented four (4) exhibits consisting of his appointment "as secret agent of the
Hon. Feliciano Leviste," then Governor of Batangas, dated June 2, 1962; 1 another document likewise
issued by Gov. Leviste also addressed to the accused directing him to proceed to Manila, Pasay and
Quezon City on a confidential mission;2the oath of office of the accused as such secret agent, 3 a
certificate dated March 11, 1963, to the effect that the accused "is a secret agent" of Gov.
Leviste.4 Counsel for the accused then stated that with the presentation of the above exhibits he was

"willing to submit the case on the question of whether or not a secret agent duly appointed and
qualified as such of the provincial governor is exempt from the requirement of having a license of
firearm." The exhibits were admitted and the parties were given time to file their respective
memoranda.
1wph1.t

Thereafter on November 27, 1963, the lower court rendered a decision convicting the accused "of
the crime of illegal possession of firearms and sentenced to an indeterminate penalty of from one
year and one day to two years and to pay the costs. The firearm and ammunition confiscated from
him are forfeited in favor of the Government."
The only question being one of law, the appeal was taken to this Court. The decision must be
affirmed.
The law is explicit that except as thereafter specifically allowed, "it shall be unlawful for any person to
. . . possess any firearm, detached parts of firearms or ammunition therefor, or any instrument or
implement used or intended to be used in the manufacture of firearms, parts of firearms, or
ammunition."5 The next section provides that "firearms and ammunition regularly and lawfully issued
to officers, soldiers, sailors, or marines [of the Armed Forces of the Philippines], the Philippine
Constabulary, guards in the employment of the Bureau of Prisons, municipal police, provincial
governors, lieutenant governors, provincial treasurers, municipal treasurers, municipal mayors, and
guards of provincial prisoners and jails," are not covered "when such firearms are in possession of
such officials and public servants for use in the performance of their official duties." 6
The law cannot be any clearer. No provision is made for a secret agent. As such he is not exempt.
Our task is equally clear. The first and fundamental duty of courts is to apply the law. "Construction
and interpretation come only after it has been demonstrated that application is impossible or
inadequate without them."7 The conviction of the accused must stand. It cannot be set aside.
Accused however would rely on People v. Macarandang,8 where a secret agent was acquitted on
appeal on the assumption that the appointment "of the accused as a secret agent to assist in the
maintenance of peace and order campaigns and detection of crimes, sufficiently put him within the
category of a "peace officer" equivalent even to a member of the municipal police expressly covered
by section 879." Such reliance is misplaced. It is not within the power of this Court to set aside the
clear and explicit mandate of a statutory provision. To the extent therefore that this decision conflicts
with what was held in People v. Macarandang, it no longer speaks with authority.
Wherefore, the judgment appealed from is affirmed.

Republic of the Philippines

SUPREME COURT
Manila
EN BANC
G.R. No. L-19650

September 29, 1966

CALTEX (PHILIPPINES), INC., petitioner-appellee,

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

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

Caltex with the postal authorities for the contest to be cleared in advance for mailing, having in view
sections 1954(a), 1982 and 1983 of the Revised Administrative Code, the pertinent provisions of
which read as follows:
SECTION 1954. Absolutely non-mailable matter. No matter belonging to any of the
following classes, whether sealed as first-class matter or not, shall be imported into the
Philippines through the mails, or to be deposited in or carried by the mails of the Philippines,
or be delivered to its addressee by any officer or employee of the Bureau of Posts:
Written or printed matter in any form advertising, describing, or in any manner pertaining to,
or conveying or purporting to convey any information concerning any lottery, gift enterprise,
or similar scheme depending in whole or in part upon lot or chance, or any scheme, device,
or enterprise for obtaining any money or property of any kind by means of false or fraudulent
pretenses, representations, or promises.
"SECTION 1982. Fraud orders.Upon satisfactory evidence that any person or company is
engaged in conducting any lottery, gift enterprise, or scheme for the distribution of money, or
of any real or personal property by lot, chance, or drawing of any kind, or that any person or
company is conducting any scheme, device, or enterprise for obtaining money or property of
any kind through the mails by means of false or fraudulent pretenses, representations, or
promises, the Director of Posts may instruct any postmaster or other officer or employee of
the Bureau to return to the person, depositing the same in the mails, with the word
"fraudulent" plainly written or stamped upon the outside cover thereof, any mail matter of
whatever class mailed by or addressed to such person or company or the representative or
agent of such person or company.
SECTION 1983. Deprivation of use of money order system and telegraphic transfer service.
The Director of Posts may, upon evidence satisfactory to him that any person or company
is engaged in conducting any lottery, gift enterprise or scheme for the distribution of money,
or of any real or personal property by lot, chance, or drawing of any kind, or that any person
or company is conducting any scheme, device, or enterprise for obtaining money or property
of any kind through the mails by means of false or fraudulent pretenses, representations, or
promise, forbid the issue or payment by any postmaster of any postal money order or
telegraphic transfer to said person or company or to the agent of any such person or
company, whether such agent is acting as an individual or as a firm, bank, corporation, or
association of any kind, and may provide by regulation for the return to the remitters of the
sums named in money orders or telegraphic transfers drawn in favor of such person or
company or its agent.
The overtures were later formalized in a letter to the Postmaster General, dated October 31, 1960, in
which the Caltex, thru counsel, enclosed a copy of the contest rules and endeavored to justify its
position that the contest does not violate the anti-lottery provisions of the Postal Law. Unimpressed,
the then Acting Postmaster General opined that the scheme falls within the purview of the provisions
aforesaid and declined to grant the requested clearance. In its counsel's letter of December 7, 1960,
Caltex sought a reconsideration of the foregoing stand, stressing that there being involved no
consideration in the part of any contestant, the contest was not, under controlling authorities,
condemnable as a lottery. Relying, however, on an opinion rendered by the Secretary of Justice on
an unrelated case seven years before (Opinion 217, Series of 1953), the Postmaster General
maintained his view that the contest involves consideration, or that, if it does not, it is nevertheless a

"gift enterprise" which is equally banned by the Postal Law, and in his letter of December 10, 1960
not only denied the use of the mails for purposes of the proposed contest but as well threatened that
if the contest was conducted, "a fraud order will have to be issued against it (Caltex) and all its
representatives".
Caltex thereupon invoked judicial intervention by filing the present petition for declaratory relief
against Postmaster General Enrico Palomar, praying "that judgment be rendered declaring its
'Caltex Hooded Pump Contest' not to be violative of the Postal Law, and ordering respondent to
allow petitioner the use of the mails to bring the contest to the attention of the public". After issues
were joined and upon the respective memoranda of the parties, the trial court rendered judgment as
follows:
In view of the foregoing considerations, the Court holds that the proposed 'Caltex Hooded
Pump Contest' announced to be conducted by the petitioner under the rules marked as
Annex B of the petitioner does not violate the Postal Law and the respondent has no right to
bar the public distribution of said rules by the mails.
The respondent appealed.
The parties are now before us, arrayed against each other upon two basic issues: first, whether the
petition states a sufficient cause of action for declaratory relief; and second, whether the proposed
"Caltex Hooded Pump Contest" violates the Postal Law. We shall take these up in seriatim.
1. By express mandate of section 1 of Rule 66 of the old Rules of Court, which was the applicable
legal basis for the remedy at the time it was invoked, declaratory relief is available to any person
"whose rights are affected by a statute . . . to determine any question of construction or validity
arising under the . . . statute and for a declaration of his rights thereunder" (now section 1, Rule 64,
Revised Rules of Court). In amplification, this Court, conformably to established jurisprudence on the
matter, laid down certain conditions sine qua non therefor, to wit: (1) there must be a justiciable
controversy; (2) the controversy must be between persons whose interests are adverse; (3) the party
seeking declaratory relief must have a legal interest in the controversy; and (4) the issue involved
must be ripe for judicial determination (Tolentino vs. The Board of Accountancy, et al., G.R. No. L3062, September 28, 1951; Delumen, et al. vs. Republic of the Philippines, 50 O.G., No. 2, pp. 576,
578-579; Edades vs. Edades, et al., G.R. No. L-8964, July 31, 1956). The gravamen of the
appellant's stand being that the petition herein states no sufficient cause of action for declaratory
relief, our duty is to assay the factual bases thereof upon the foregoing crucible.
As we look in retrospect at the incidents that generated the present controversy, a number of
significant points stand out in bold relief. The appellee (Caltex), as a business enterprise of some
consequence, concededly has the unquestioned right to exploit every legitimate means, and to avail
of all appropriate media to advertise and stimulate increased patronage for its products. In contrast,
the appellant, as the authority charged with the enforcement of the Postal Law, admittedly has the
power and the duty to suppress transgressions thereof particularly thru the issuance of fraud
orders, under Sections 1982 and 1983 of the Revised Administrative Code, against legally nonmailable schemes. Obviously pursuing its right aforesaid, the appellee laid out plans for the sales
promotion scheme hereinbefore detailed. To forestall possible difficulties in the dissemination of
information thereon thru the mails, amongst other media, it was found expedient to request the
appellant for an advance clearance therefor. However, likewise by virtue of his jurisdiction in the
premises and construing the pertinent provisions of the Postal Law, the appellant saw a violation

thereof in the proposed scheme and accordingly declined the request. A point of difference as to the
correct construction to be given to the applicable statute was thus reached. Communications in
which the parties expounded on their respective theories were exchanged. The confidence with
which the appellee insisted upon its position was matched only by the obstinacy with which the
appellant stood his ground. And this impasse was climaxed by the appellant's open warning to the
appellee that if the proposed contest was "conducted, a fraud order will have to be issued against it
and all its representatives."
Against this backdrop, the stage was indeed set for the remedy prayed for. The appellee's insistent
assertion of its claim to the use of the mails for its proposed contest, and the challenge thereto and
consequent denial by the appellant of the privilege demanded, undoubtedly spawned a live
controversy. The justiciability of the dispute cannot be gainsaid. There is an active antagonistic
assertion of a legal right on one side and a denial thereof on the other, concerning a real not a
mere theoretical question or issue. The contenders are as real as their interests are substantial.
To the appellee, the uncertainty occasioned by the divergence of views on the issue of construction
hampers or disturbs its freedom to enhance its business. To the appellant, the suppression of the
appellee's proposed contest believed to transgress a law he has sworn to uphold and enforce is an
unavoidable duty. With the appellee's bent to hold the contest and the appellant's threat to issue a
fraud order therefor if carried out, the contenders are confronted by the ominous shadow of an
imminent and inevitable litigation unless their differences are settled and stabilized by a tranquilizing
declaration (Pablo y Sen, et al. vs. Republic of the Philippines, G.R. No. L-6868, April 30, 1955).
And, contrary to the insinuation of the appellant, the time is long past when it can rightly be said that
merely the appellee's "desires are thwarted by its own doubts, or by the fears of others" which
admittedly does not confer a cause of action. Doubt, if any there was, has ripened into a justiciable
controversy when, as in the case at bar, it was translated into a positive claim of right which is
actually contested (III Moran, Comments on the Rules of Court, 1963 ed., pp. 132-133, citing:
Woodward vs. Fox West Coast Theaters, 36 Ariz., 251, 284 Pac. 350).
We cannot hospitably entertain the appellant's pretense that there is here no question of
construction because the said appellant "simply applied the clear provisions of the law to a given set
of facts as embodied in the rules of the contest", hence, there is no room for declaratory relief. The
infirmity of this pose lies in the fact that it proceeds from the assumption that, if the circumstances
here presented, the construction of the legal provisions can be divorced from the matter of their
application to the appellee's contest. This is not feasible. Construction, verily, is the art or process of
discovering and expounding the meaning and intention of the authors of the law with respect to its
application to a given case, where that intention is rendered doubtful, amongst others, by reason of
the fact that the given case is not explicitly provided for in the law (Black, Interpretation of Laws, p.
1). This is precisely the case here. Whether or not the scheme proposed by the appellee is within the
coverage of the prohibitive provisions of the Postal Law inescapably requires an inquiry into the
intended meaning of the words used therein. To our mind, this is as much a question of construction
or interpretation as any other.
Nor is it accurate to say, as the appellant intimates, that a pronouncement on the matter at hand can
amount to nothing more than an advisory opinion the handing down of which is anathema to a
declaratory relief action. Of course, no breach of the Postal Law has as yet been committed. Yet, the
disagreement over the construction thereof is no longer nebulous or contingent. It has taken a fixed
and final shape, presenting clearly defined legal issues susceptible of immediate resolution. With the
battle lines drawn, in a manner of speaking, the propriety nay, the necessity of setting the
dispute at rest before it accumulates the asperity distemper, animosity, passion and violence of a

full-blown battle which looms ahead (III Moran, Comments on the Rules of Court, 1963 ed., p. 132
and cases cited), cannot but be conceded. Paraphrasing the language in Zeitlin vs. Arnebergh 59
Cal., 2d., 901, 31 Cal. Rptr., 800, 383 P. 2d., 152, cited in 22 Am. Jur., 2d., p. 869, to deny
declaratory relief to the appellee in the situation into which it has been cast, would be to force it to
choose between undesirable alternatives. If it cannot obtain a final and definitive pronouncement as
to whether the anti-lottery provisions of the Postal Law apply to its proposed contest, it would be
faced with these choices: If it launches the contest and uses the mails for purposes thereof, it not
only incurs the risk, but is also actually threatened with the certain imposition, of a fraud order with
its concomitant stigma which may attach even if the appellee will eventually be vindicated; if it
abandons the contest, it becomes a self-appointed censor, or permits the appellant to put into effect
a virtual fiat of previous censorship which is constitutionally unwarranted. As we weigh these
considerations in one equation and in the spirit of liberality with which the Rules of Court are to be
interpreted in order to promote their object (section 1, Rule 1, Revised Rules of Court) which, in
the instant case, is to settle, and afford relief from uncertainty and insecurity with respect to, rights
and duties under a law we can see in the present case any imposition upon our jurisdiction or any
futility or prematurity in our intervention.
The appellant, we apprehend, underrates the force and binding effect of the ruling we hand down in
this case if he believes that it will not have the final and pacifying function that a declaratory
judgment is calculated to subserve. At the very least, the appellant will be bound. But more than this,
he obviously overlooks that in this jurisdiction, "Judicial decisions applying or interpreting the law
shall form a part of the legal system" (Article 8, Civil Code of the Philippines). In effect, judicial
decisions assume the same authority as the statute itself and, until authoritatively abandoned,
necessarily become, to the extent that they are applicable, the criteria which must control the
actuations not only of those called upon to abide thereby but also of those in duty bound to enforce
obedience thereto. Accordingly, we entertain no misgivings that our resolution of this case will
terminate the controversy at hand.
It is not amiss to point out at this juncture that the conclusion we have herein just reached is not
without precedent. In Liberty Calendar Co. vs. Cohen, 19 N.J., 399, 117 A. 2d., 487, where a
corporation engaged in promotional advertising was advised by the county prosecutor that its
proposed sales promotion plan had the characteristics of a lottery, and that if such sales promotion
were conducted, the corporation would be subject to criminal prosecution, it was held that the
corporation was entitled to maintain a declaratory relief action against the county prosecutor to
determine the legality of its sales promotion plan. In pari materia, see also: Bunis vs. Conway, 17
App. Div. 2d., 207, 234 N.Y.S. 2d., 435; Zeitlin vs. Arnebergh, supra; Thrillo, Inc. vs. Scott, 15 N.J.
Super. 124, 82 A. 2d., 903.
In fine, we hold that the appellee has made out a case for declaratory relief.
2. The Postal Law, chapter 52 of the Revised Administrative Code, using almost identical
terminology in sections 1954(a), 1982 and 1983 thereof, supra, condemns as absolutely nonmailable, and empowers the Postmaster General to issue fraud orders against, or otherwise deny
the use of the facilities of the postal service to, any information concerning "any lottery, gift
enterprise, or scheme for the distribution of money, or of any real or personal property by lot,
chance, or drawing of any kind". Upon these words hinges the resolution of the second issue posed
in this appeal.

Happily, this is not an altogether untrodden judicial path. As early as in 1922, in "El Debate", Inc. vs.
Topacio, 44 Phil., 278, 283-284, which significantly dwelt on the power of the postal authorities under
the abovementioned provisions of the Postal Law, this Court declared that
While countless definitions of lottery have been attempted, the authoritative one for this
jurisdiction is that of the United States Supreme Court, in analogous cases having to do with
the power of the United States Postmaster General, viz.: The term "lottery" extends to all
schemes for the distribution of prizes by chance, such as policy playing, gift exhibitions, prize
concerts, raffles at fairs, etc., and various forms of gambling. The three essential elements of
a lottery are: First, consideration; second, prize; and third, chance. (Horner vs. States [1892],
147 U.S. 449; Public Clearing House vs. Coyne [1903], 194 U.S., 497; U.S. vs. Filart and
Singson [1915], 30 Phil., 80; U.S. vs. Olsen and Marker [1917], 36 Phil., 395; U.S. vs. Baguio
[1919], 39 Phil., 962; Valhalla Hotel Construction Company vs. Carmona, p. 233, ante.)
Unanimity there is in all quarters, and we agree, that the elements of prize and chance are too
obvious in the disputed scheme to be the subject of contention. Consequently as the appellant
himself concedes, the field of inquiry is narrowed down to the existence of the element of
consideration therein. Respecting this matter, our task is considerably lightened inasmuch as in the
same case just cited, this Court has laid down a definitive yard-stick in the following terms
In respect to the last element of consideration, the law does not condemn the gratuitous
distribution of property by chance, if no consideration is derived directly or indirectly from the
party receiving the chance, but does condemn as criminal schemes in which a valuable
consideration of some kind is paid directly or indirectly for the chance to draw a prize.
Reverting to the rules of the proposed contest, we are struck by the clarity of the language in which
the invitation to participate therein is couched. Thus
No puzzles, no rhymes? You don't need wrappers, labels or boxtops? You don't have to buy
anything? Simply estimate the actual number of liter the Caltex gas pump with the hood at
your favorite Caltex dealer will dispense from to , and win valuable prizes . . . ." .
Nowhere in the said rules is any requirement that any fee be paid, any merchandise be bought, any
service be rendered, or any value whatsoever be given for the privilege to participate. A prospective
contestant has but to go to a Caltex station, request for the entry form which is available on demand,
and accomplish and submit the same for the drawing of the winner. Viewed from all angles or turned
inside out, the contest fails to exhibit any discernible consideration which would brand it as a lottery.
Indeed, even as we head the stern injunction, "look beyond the fair exterior, to the substance, in
order to unmask the real element and pernicious tendencies which the law is seeking to prevent" ("El
Debate", Inc. vs. Topacio, supra, p. 291), we find none. In our appraisal, the scheme does not only
appear to be, but actually is, a gratuitous distribution of property by chance.
There is no point to the appellant's insistence that non-Caltex customers who may buy Caltex
products simply to win a prize would actually be indirectly paying a consideration for the privilege to
join the contest. Perhaps this would be tenable if the purchase of any Caltex product or the use of
any Caltex service were a pre-requisite to participation. But it is not. A contestant, it hardly needs
reiterating, does not have to buy anything or to give anything of value.
1awphl.nt

Off-tangent, too, is the suggestion that the scheme, being admittedly for sales promotion, would
naturally benefit the sponsor in the way of increased patronage by those who will be encouraged to
prefer Caltex products "if only to get the chance to draw a prize by securing entry blanks". The
required element of consideration does not consist of the benefit derived by the proponent of the
contest. The true test, as laid down in People vs. Cardas, 28 P. 2d., 99, 137 Cal. App. (Supp.) 788, is
whether the participant pays a valuable consideration for the chance, and not whether those
conducting the enterprise receive something of value in return for the distribution of the prize.
Perspective properly oriented, the standpoint of the contestant is all that matters, not that of the
sponsor. The following, culled from Corpus Juris Secundum, should set the matter at rest:
The fact that the holder of the drawing expects thereby to receive, or in fact does receive,
some benefit in the way of patronage or otherwise, as a result of the drawing; does not
supply the element of consideration.Griffith Amusement Co. vs. Morgan, Tex. Civ. App., 98
S.W., 2d., 844" (54 C.J.S., p. 849).
Thus enlightened, we join the trial court in declaring that the "Caltex Hooded Pump Contest"
proposed by the appellee is not a lottery that may be administratively and adversely dealt with under
the Postal Law.
But it may be asked: Is it not at least a "gift enterprise, or scheme for the distribution of money, or of
any real or personal property by lot, chance, or drawing of any kind", which is equally prescribed?
Incidentally, while the appellant's brief appears to have concentrated on the issue of consideration,
this aspect of the case cannot be avoided if the remedy here invoked is to achieve its tranquilizing
effect as an instrument of both curative and preventive justice. Recalling that the appellant's action
was predicated, amongst other bases, upon Opinion 217, Series 1953, of the Secretary of Justice,
which opined in effect that a scheme, though not a lottery for want of consideration, may
nevertheless be a gift enterprise in which that element is not essential, the determination of whether
or not the proposed contest wanting in consideration as we have found it to be is a prohibited
gift enterprise, cannot be passed over sub silencio.
While an all-embracing concept of the term "gift enterprise" is yet to be spelled out in explicit words,
there appears to be a consensus among lexicographers and standard authorities that the term is
commonly applied to a sporting artifice of under which goods are sold for their market value but by
way of inducement each purchaser is given a chance to win a prize (54 C.J.S., 850; 34 Am. Jur.,
654; Black, Law Dictionary, 4th ed., p. 817; Ballantine, Law Dictionary with Pronunciations, 2nd ed.,
p. 55; Retail Section of Chamber of Commerce of Plattsmouth vs. Kieck, 257 N.W., 493, 128 Neb.
13; Barker vs. State, 193 S.E., 605, 56 Ga. App., 705; Bell vs. State, 37 Tenn. 507, 509, 5 Sneed,
507, 509). As thus conceived, the term clearly cannot embrace the scheme at bar. As already noted,
there is no sale of anything to which the chance offered is attached as an inducement to the
purchaser. The contest is open to all qualified contestants irrespective of whether or not they buy the
appellee's products.
Going a step farther, however, and assuming that the appellee's contest can be encompassed within
the broadest sweep that the term "gift enterprise" is capable of being extended, we think that the
appellant's pose will gain no added comfort. As stated in the opinion relied upon, rulings there are
indeed holding that a gift enterprise involving an award by chance, even in default of the element of
consideration necessary to constitute a lottery, is prohibited (E.g.: Crimes vs. States, 235 Ala 192,
178 So. 73; Russell vs. Equitable Loan & Sec. Co., 129 Ga. 154, 58 S.E., 88; State ex rel. Stafford
vs. Fox-Great Falls Theater Corporation, 132 P. 2d., 689, 694, 698, 114 Mont. 52). But this is only

one side of the coin. Equally impressive authorities declare that, like a lottery, a gift enterprise comes
within the prohibitive statutes only if it exhibits the tripartite elements of prize, chance and
consideration (E.g.: Bills vs. People, 157 P. 2d., 139, 142, 113 Colo., 326; D'Orio vs. Jacobs, 275 P.
563, 565, 151 Wash., 297; People vs. Psallis, 12 N.Y.S., 2d., 796; City and County of Denver vs.
Frueauff, 88 P., 389, 394, 39 Colo., 20, 7 L.R.A., N.S., 1131, 12 Ann. Cas., 521; 54 C.J.S., 851,
citing: Barker vs. State, 193 S.E., 605, 607, 56 Ga. App., 705; 18 Words and Phrases, perm. ed., pp.
590-594). The apparent conflict of opinions is explained by the fact that the specific statutory
provisions relied upon are not identical. In some cases, as pointed out in 54 C.J.S., 851, the terms
"lottery" and "gift enterprise" are used interchangeably (Bills vs. People, supra); in others, the
necessity for the element of consideration or chance has been specifically eliminated by statute. (54
C.J.S., 351-352, citing Barker vs. State, supra; State ex rel. Stafford vs. Fox-Great Falls Theater
Corporation, supra). The lesson that we derive from this state of the pertinent jurisprudence is,
therefore, that every case must be resolved upon the particular phraseology of the applicable
statutory provision.
Taking this cue, we note that in the Postal Law, the term in question is used in association with the
word "lottery". With the meaning of lottery settled, and consonant to the well-known principle of legal
hermeneutics noscitur a sociis which Opinion 217 aforesaid also relied upon although only insofar
as the element of chance is concerned it is only logical that the term under a construction should
be accorded no other meaning than that which is consistent with the nature of the word associated
therewith. Hence, if lottery is prohibited only if it involves a consideration, so also must the term "gift
enterprise" be so construed. Significantly, there is not in the law the slightest indicium of any intent to
eliminate that element of consideration from the "gift enterprise" therein included.
This conclusion firms up in the light of the mischief sought to be remedied by the law, resort to the
determination thereof being an accepted extrinsic aid in statutory construction. Mail fraud orders, it is
axiomatic, are designed to prevent the use of the mails as a medium for disseminating printed
matters which on grounds of public policy are declared non-mailable. As applied to lotteries, gift
enterprises and similar schemes, justification lies in the recognized necessity to suppress their
tendency to inflame the gambling spirit and to corrupt public morals (Com. vs. Lund, 15 A. 2d., 839,
143 Pa. Super. 208). Since in gambling it is inherent that something of value be hazarded for a
chance to gain a larger amount, it follows ineluctably that where no consideration is paid by the
contestant to participate, the reason behind the law can hardly be said to obtain. If, as it has been
held
Gratuitous distribution of property by lot or chance does not constitute "lottery", if it is not
resorted to as a device to evade the law and no consideration is derived, directly or indirectly,
from the party receiving the chance, gambling spirit not being cultivated or stimulated
thereby. City of Roswell vs. Jones, 67 P. 2d., 286, 41 N.M., 258." (25 Words and Phrases,
perm. ed., p. 695, emphasis supplied).
we find no obstacle in saying the same respecting a gift enterprise. In the end, we are persuaded to
hold that, under the prohibitive provisions of the Postal Law which we have heretofore examined, gift
enterprises and similar schemes therein contemplated are condemnable only if, like lotteries, they
involve the element of consideration. Finding none in the contest here in question, we rule that the
appellee may not be denied the use of the mails for purposes thereof.

Recapitulating, we hold that the petition herein states a sufficient cause of action for declaratory
relief, and that the "Caltex Hooded Pump Contest" as described in the rules submitted by the
appellee does not transgress the provisions of the Postal Law.
ACCORDINGLY, the judgment appealed from is affirmed. No costs.

Republic of the Philippines

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

FERNANDO, C.J.:
This Court is confronted once again with the question of whether or not it is a court or a labor arbiter
that can pass on a suit for damages filed by the employer, here private respondent Zamboanga
Wood Products. Respondent Judge Carlito A. Eisma 1 then of the Court of First Instance, now of the Regional Trial
Court of Zamboanga City, was of the view that it is a court and denied a motion to dismiss filed by petitioners National Federation of labor
and Zambowood Monthly Employees Union, its officers and members. It was such an order dated July 20, 1982 that led to the filing of this
certiorari and prohibition proceeding. In the order assailed, it was required that the officers and members of petitioner union appear before
the court to show cause why a writ of preliminary injunction should not be issued against them and in the meanwhile such persons as well as
any other persons acting under their command and on their behalf were "temporarily restrained and ordered to desist and refrain from further
obstructing, impeding and impairing plaintiff's use of its property and free ingress to or egress from plaintiff's Manufacturing Division facilities
at Lumbayao, Zamboanga City and on its road right of way leading to and from said plaintiff's facilities, pending the determination of the
litigation, and unless a contrary order is issued by this Court." 2

The record discloses that petitioner National Federation of Labor, on March 5, 1982, filed with the
Ministry of Labor and Employment, Labor Relations Division, Zamboanga City, a petition for direct
certification as the sole exclusive collective bargaining representative of the monthly paid employees
of the respondent Zamboanga Wood Products, Inc. at its manufacturing plant in Lumbayao,
Zamboanga City. 3 Such employees, on April 17, 1982 charged respondent firm before the same office of
the Ministry of Labor for underpayment of monthly living allowances. 4Then came, on May 3, 1982, from
petitioner union, a notice of strike against private respondent, alleging illegal termination of Dionisio
Estioca, president of the said local union; unfair labor practice, non-payment of living allowances; and
"employment of oppressive alien management personnel without proper permit. 5 It was followed by the
union submitting the minutes of the declaration of strike, "including the ninety (90) ballots, of which 79
voted for yes and three voted for no." 6The strike began on May 23, 1982. 7 On July 9, 1982, private
respondent Zambowood filed a complaint with respondent Judge against the officers and members of
petitioners union, for "damages for obstruction of private property with prayer for preliminary injunction
and/or restraining order." 8 It was alleged that defendants, now petitioners, blockaded the road leading to
its manufacturing division, thus preventing customers and suppliers free ingress to or egress from such
premises. 9 Six days later, there was a motion for the dismissal and for the dissolution of the restraining
order and opposition to the issuance of the writ of preliminary injunction filed by petitioners. It was
contended that the acts complained of were incidents of picketing by defendants then on strike against
private respondent, and that therefore the exclusive jurisdiction belongs to the Labor Arbiter pursuant to
Batas Pambansa Blg. 227, not to a court of first instance. 10 There was, as noted earlier, a motion to dismiss, which was
denied. Hence this petition for certiorari.

Four days after such petition was filed, on August 3, 1982, this Court required respondents to
answer and set the plea for a preliminary injunction to be heard on Thursday, August 5, 1982.

11 After
such hearing, a temporary restraining order was issued, "directing respondent Judge and the commanding officer in Zamboanga and his
agents from enforcing the ex-parte order of injunction dated July 20, 1982; and to restrain the respondent Judge from proceeding with the
hearing of the until otherwise case effective as of [that] date and continuing ordered by [the] Court. In the exercise of the right to peaceful
picketing, petitioner unions must abide strictly with Batas Pambansa Blg. 227, specifically Section 6 thereof, amending Article 265 of the
Labor Code, which now reads: '(e) No person engaged in picketing shall commit any act of violence, coercion or intimidation or obstruct the
free ingress to or egress from the employer's premises for lawful purposes, or obstruct public thoroughfares.' " 12

On August 13, 1982, the answer of private respondent was filed sustaining the original jurisdiction of
respondent Judge and maintaining that the order complained of was not in excess of such
jurisdiction, or issued with grave abuse of discretion. Solicitor General Estelito P. Mendoza, 13 on the
other hand, instead of filing an answer, submitted a Manifestation in lieu thereof. He met squarely the issue of whether or not respondent
Judge had jurisdiction, and answered in the negative. He (i)ncluded that "the instant petition has merit and should be given due course."

He traced the changes undergone by the Labor Code, citing at the same time the decisions issued
by this Court after each of such changes. As pointed out, the original wording of Article 217 vested
the labor arbiters with jurisdictional. 14 So it was applied by this Court in Garcia v. Martinez 15 and in Bengzon v.
Inciong. 16 On May 1, 1978, however, Presidential Decree No. 1367 was issued, amending Article 217, and provided "that the Regional
Directors shall not indorse and Labor Arbiters shall not entertain claims for moral and other forms of damages." 17 The ordinary courts were
thus vested with jurisdiction to award actual and moral damages in the case of illegal dismissal of employees. 18 That is not, as pointed out
by the Solicitor General, the end of the story, for on May 1, 1980, Presidential Decree No. 1691 was issued, further amending Article 217,
returning the original jurisdiction to the labor arbiters, thus enabling them to decide "3. All money claims of workers, including those based on
non-payment or underpayment of wages, overtime compensation, separation pay and other benefits provided by law or appropriate
agreement, except claims for employees compensation, social security, medicare and maternity benefits; [and] (5) All other claims arising
from employer-employee relations unless expressly excluded by tills Code." 19 An equally conclusive manifestation of the lack of jurisdiction
of a court of first instance then, a regional trial court now, is Batas Pambansa Blg. 130, amending Article 217 of the Labor Code. It took effect
on August 21, 1981. Subparagraph 2, paragraph (a) is now worded thus: "(2) those that involve wages, hours of work and other terms and

This is to be compared with the former phraseology "(2) unresolved issue in

collective bargaining, including those that involve wages, hours of work and other terms and conditions of
employment." 21 It is to be noted that Batas Pambansa Blg. 130 made no change with respect to the
original and exclusive jurisdiction of Labor Arbiters with respect to money claims of workers or claims for
damages arising from employer-employee relations.
conditions of employment."

20

Nothing becomes clearer, therefore, than the meritorious character of this petition. certiorari and
prohibition lie, respondent Judge being devoid of jurisdiction to act on the matter.
1. Article 217 is to be applied the way it is worded. The exclusive original jurisdiction of a labor arbiter
is therein provided for explicitly. It means, it can only mean, that a court of first instance judge then, a
regional trial court judge now, certainly acts beyond the scope of the authority conferred on him by
law when he entertained the suit for damages, arising from picketing that accompanied a strike. That
was squarely within the express terms of the law. Any deviation cannot therefore be tolerated. So it
has been the constant ruling of this Court even prior toLizarraga Hermanos v. Yap Tico, 22 a 1913
decision. The ringing words of the ponencia of Justice Moreland still call for obedience. Thus, "The first
and fundamental duty of courts, in our judgment, is to apply the law. Construction and interpretation come
only after it has been demonstrated that application is impossible or inadequate without them." 23 It is so
even after the lapse of sixty years. 24
2. On the precise question at issue under the law as it now stands, this Court has spoken in three
decisions. They all reflect the utmost fidelity to the plain command of the law that it is a labor arbiter,
not a court, that ossesses original and exclusive jurisdiction to decide a claim for damages arising
from picketing or a strike. In Pepsi-Cola Bottling Co. v. Martinez, 25 the issue was set forth in the
opening paragraph, in the ponencia of Justice Escolin: "This petition for certiorari, prohibition and
mandamus raises anew the legal question often brought to this Court: Which tribunal has exclusive
jurisdiction over an action filed by an employee against his employer for recovery of unpaid salaries,
separation benefits and damages the court of general jurisdiction or the Labor Arbiter of the National
Labor Relations Commission [NLRC]?" 26 It was categorically held: "We rule that the Labor Arbiter has
exclusive jurisdiction over the case."27 Then came this portion of the opinion: "Jurisdiction over the subject
matter in a judicial proceeding is conferred by the sovereign authority which organizes the court; and it is
given only by law. Jurisdiction is never presumed; it must be conferred by law in words that do not admit
of doubt. Since the jurisdiction of courts and judicial tribunals is derived exclusively from the statutes of
the forum, the issue before us should be resolved on the basis of the law or statute now in force. We find
that law in presidential Decree 1691 which took effect on May 1, 1980, Section 3 of which reads as
follows: ... Article 217. Jurisdiction of Labor Arbiters and the Commission. (a) The Labor Arbiters shall
have the original and exclusive jurisdiction to hear and decide the following cases involving all workers,
whether agricultural or non-agricultural: ... 3. All money claims of workers, including those based on
nonpayment or underpayment of wages, overtime compensation, separation pay and other benefits
provided by law or appropriate agreement, except claims for employees' compensation, social security,

medicare and maternity benefits; 4. Cases involving household services; and 5. All other claims arising
from employer-employee relations, unless expressly excluded by this Code." 28 That same month, two
other cases were similarly decided, Ebon v. De Guzman 29 and Aguda v. Vallejos. 30

3. It is regrettable that the ruling in the above three decisions, decided in March of 1982, was not
followed by private respondent when it filed the complaint for damages on July 9, 1982, more than
four months later. 31 On this point, reference may be made to our decision in National Federation of
Labor, et al. v. The Honorable Minister of Labor and Employment, 32 promulgated on September 15, 1983.
In that case, the question involved was the failure of the same private respondent, Zamboanga Wood
Products, Inc., to admit the striking petitioners, eighty-one in number, back to work after an order of
Minister Blas F. Ople certifying to the National Labor Relations Commission the labor dispute for
compulsory arbitration pursuant to Article 264 (g) of the Labor Code of the Philippines. It was noted in the
first paragraph of our opinion in that case: "On the face of it, it seems difficult to explain why private
respondent would not comply with such order considering that the request for compulsory arbitration
came from it. It ignored this notification by the presidents of the labor unions involved to its resident
manager that the striking employees would lift their picket line and start returning to work on August 20,
1982. Then, too, Minister Ople denied a partial motion for reconsideration insofar as the return-to-work
aspect is concerned which reads: 'We find no merit in the said Motion for Reconsideration. The Labor
code, as amended, specifically Article 264 (g), mandates that whenever a labor dispute is certified by the
Minister of Labor and Employment to the National Labor Relations Commission for compulsory arbitration
and a strike has already taken place at the time of certification, "all striking employees shall immediately
return to work and the employees shall immediately resume operations and readmit all workers under the
same terms and conditions prevailing before the strike." ' " 33 No valid distinction can be made between
the exercise of compulsory arbitration vested in the Ministry of Labor and the jurisdiction of a labor arbiter
to pass over claims for damages in the light of the express provision of the Labor Code as set forth in
Article 217. In both cases, it is the Ministry, not a court of justice, that is vested by law with competence to
act on the matter.
4. The issuance of Presidential Decree No. 1691 and the enactment of Batas Pambansa Blg. 130,
made clear that the exclusive and original jurisdiction for damages would once again be vested in
labor arbiters. It can be affirmed that even if they were not that explicit, history has vindicated the
view that in the appraisal of what was referred to by Philippine American Management & Financing
Co., Inc. v. Management & Supervisors Association of the Philippine-American Management &
Financing Co., Inc. 34 as "the rather thorny question as to where in labor matters the dividing line is to be
drawn" 35 between the power lodged in an administrative body and a court, the unmistakable trend has
been to refer it to the former. Thus: "Increasingly, this Court has been committed to the view that unless
the law speaks clearly and unequivocally, the choice should fall on [an administrative
agency]." 36 Certainly, the present Labor Code is even more committed to the view that on policy grounds,
and equally so in the interest of greater promptness in the disposition of labor matters, a court is spared
the often onerous task of determining what essentially is a factual matter, namely, the damages that may
be incurred by either labor or management as a result of disputes or controversies arising from employeremployee relations.
WHEREFORE, the writ of certiorari is granted and the order of July 20, 1982, issued by respondent
Judge, is nullified and set aside. The writ of prohibition is likewise granted and respondent Judge, or
whoever acts in his behalf in the Regional Trial Court to which this case is assigned, is enjoin from
taking any further action on Civil Case No. 716 (2751), except for the purpose of dismissing it. The
temporary restraining order of August 5, 1982 is hereby made permanent.