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Persons and Family relations cases to read

Republic of the Philippines


SUPREME COURT
Manila

EN BANC

G.R. No. L-63915 April 24, 1985

LORENZO M. TAADA, ABRAHAM F. SARMIENTO, and


MOVEMENT OF ATTORNEYS FOR BROTHERHOOD, INTEGRITY
AND NATIONALISM, INC. [MABINI], petitioners,
vs.
HON. JUAN C. TUVERA, in his capacity as Executive Assistant to
the President, HON. JOAQUIN VENUS, in his capacity as Deputy
Executive Assistant to the President , MELQUIADES P. DE LA
CRUZ, in his capacity as Director, Malacaang Records Office,
and FLORENDO S. PABLO, in his capacity as Director, Bureau of
Printing, respondents.

ESCOLIN, J.:

Invoking the people's right to be informed on matters of public


concern, a right recognized in Section 6, Article IV of the 1973
Philippine Constitution, 1 as well as the principle that laws to be valid
and enforceable must be published in the Official Gazette or otherwise
effectively promulgated, petitioners seek a writ of mandamus to
compel respondent public officials to publish, and/or cause the
publication in the Official Gazette of various presidential decrees,
letters of instructions, general orders, proclamations, executive orders,
letter of implementation and administrative orders.

Specifically, the publication of the following presidential issuances is


sought:

a] Presidential Decrees Nos. 12, 22, 37, 38, 59, 64, 103,
171, 179, 184, 197, 200, 234, 265, 286, 298, 303, 312,
324, 325, 326, 337, 355, 358, 359, 360, 361, 368, 404,
406, 415, 427, 429, 445, 447, 473, 486, 491, 503, 504,
521, 528, 551, 566, 573, 574, 594, 599, 644, 658, 661,
718, 731, 733, 793, 800, 802, 835, 836, 923, 935, 961,
1017-1030, 1050, 1060-1061, 1085, 1143, 1165, 1166,
1242, 1246, 1250, 1278, 1279, 1300, 1644, 1772, 1808,
1810, 1813-1817, 1819-1826, 1829-1840, 1842-1847.

b] Letter of Instructions Nos.: 10, 39, 49, 72, 107, 108,


116, 130, 136, 141, 150, 153, 155, 161, 173, 180, 187,
188, 192, 193, 199, 202, 204, 205, 209, 211-213, 215-
224, 226-228, 231-239, 241-245, 248, 251, 253-261, 263-
269, 271-273, 275-283, 285-289, 291, 293, 297-299, 301-
303, 309, 312-315, 325, 327, 343, 346, 349, 357, 358,
362, 367, 370, 382, 385, 386, 396-397, 405, 438-440,
444- 445, 473, 486, 488, 498, 501, 399, 527, 561, 576,
587, 594, 599, 600, 602, 609, 610, 611, 612, 615, 641,
642, 665, 702, 712-713, 726, 837-839, 878-879, 881, 882,
939-940, 964,997,1149-1178,1180-1278.

c] General Orders Nos.: 14, 52, 58, 59, 60, 62, 63, 64 &
65.

d] Proclamation Nos.: 1126, 1144, 1147, 1151, 1196,


1270, 1281, 1319-1526, 1529, 1532, 1535, 1538, 1540-
1547, 1550-1558, 1561-1588, 1590-1595, 1594-1600,
1606-1609, 1612-1628, 1630-1649, 1694-1695, 1697-
1701, 1705-1723, 1731-1734, 1737-1742, 1744, 1746-
1751, 1752, 1754, 1762, 1764-1787, 1789-1795, 1797,
1800, 1802-1804, 1806-1807, 1812-1814, 1816, 1825-
1826, 1829, 1831-1832, 1835-1836, 1839-1840, 1843-
1844, 1846-1847, 1849, 1853-1858, 1860, 1866, 1868,
1870, 1876-1889, 1892, 1900, 1918, 1923, 1933, 1952,
1963, 1965-1966, 1968-1984, 1986-2028, 2030-2044,
2046-2145, 2147-2161, 2163-2244.

e] Executive Orders Nos.: 411, 413, 414, 427, 429-454,


457- 471, 474-492, 494-507, 509-510, 522, 524-528, 531-
532, 536, 538, 543-544, 549, 551-553, 560, 563, 567-568,
570, 574, 593, 594, 598-604, 609, 611- 647, 649-677,
679-703, 705-707, 712-786, 788-852, 854-857.
f] Letters of Implementation Nos.: 7, 8, 9, 10, 11-22, 25-
27, 39, 50, 51, 59, 76, 80-81, 92, 94, 95, 107, 120, 122,
123.

g] Administrative Orders Nos.: 347, 348, 352-354, 360-


378, 380-433, 436-439.

The respondents, through the Solicitor General, would have this case
dismissed outright on the ground that petitioners have no legal
personality or standing to bring the instant petition. The view is
submitted that in the absence of any showing that petitioners are
personally and directly affected or prejudiced by the alleged non-
publication of the presidential issuances in question 2 said petitioners
are without the requisite legal personality to institute this mandamus
proceeding, they are not being "aggrieved parties" within the meaning
of Section 3, Rule 65 of the Rules of Court, which we quote:

SEC. 3. Petition for Mandamus.When any tribunal,


corporation, board or person unlawfully neglects the
performance of an act which the law specifically enjoins as
a duty resulting from an office, trust, or station, or
unlawfully excludes another from the use a rd enjoyment of
a right or office to which such other is entitled, and there is
no other plain, speedy and adequate remedy in the ordinary
course of law, the person aggrieved thereby may file a
verified petition in the proper court alleging the facts with
certainty and praying that judgment be rendered
commanding the defendant, immediately or at some other
specified time, to do the act required to be done to Protect
the rights of the petitioner, and to pay the damages
sustained by the petitioner by reason of the wrongful acts
of the defendant.

Upon the other hand, petitioners maintain that since the subject of the
petition concerns a public right and its object is to compel the
performance of a public duty, they need not show any specific interest
for their petition to be given due course.

The issue posed is not one of first impression. As early as the 1910
case of Severino vs. Governor General, 3 this Court held that while the
general rule is that "a writ of mandamus would be granted to a private
individual only in those cases where he has some private or particular
interest to be subserved, or some particular right to be protected,
independent of that which he holds with the public at large," and "it is
for the public officers exclusively to apply for the writ when public
rights are to be subserved [Mithchell vs. Boardmen, 79 M.e., 469],"
nevertheless, "when the question is one of public right and the object
of the mandamus is to procure the enforcement of a public duty, the
people are regarded as the real party in interest and the relator at
whose instigation the proceedings are instituted need not show that he
has any legal or special interest in the result, it being sufficient to
show that he is a citizen and as such interested in the execution of the
laws [High, Extraordinary Legal Remedies, 3rd ed., sec. 431].

Thus, in said case, this Court recognized the relator Lope Severino, a
private individual, as a proper party to the mandamus proceedings
brought to compel the Governor General to call a special election for
the position of municipal president in the town of Silay, Negros
Occidental. Speaking for this Court, Mr. Justice Grant T. Trent said:

We are therefore of the opinion that the weight of authority


supports the proposition that the relator is a proper party to
proceedings of this character when a public right is sought
to be enforced. If the general rule in America were
otherwise, we think that it would not be applicable to the
case at bar for the reason 'that it is always dangerous to
apply a general rule to a particular case without keeping in
mind the reason for the rule, because, if under the
particular circumstances the reason for the rule does not
exist, the rule itself is not applicable and reliance upon the
rule may well lead to error'

No reason exists in the case at bar for applying the general


rule insisted upon by counsel for the respondent. The
circumstances which surround this case are different from
those in the United States, inasmuch as if the relator is not
a proper party to these proceedings no other person could
be, as we have seen that it is not the duty of the law officer
of the Government to appear and represent the people in
cases of this character.
The reasons given by the Court in recognizing a private citizen's legal
personality in the aforementioned case apply squarely to the present
petition. Clearly, the right sought to be enforced by petitioners herein
is a public right recognized by no less than the fundamental law of the
land. If petitioners were not allowed to institute this proceeding, it
would indeed be difficult to conceive of any other person to initiate the
same, considering that the Solicitor General, the government officer
generally empowered to represent the people, has entered his
appearance for respondents in this case.

Respondents further contend that publication in the Official Gazette is


not a sine qua non requirement for the effectivity of laws where the
laws themselves provide for their own effectivity dates. It is thus
submitted that since the presidential issuances in question contain
special provisions as to the date they are to take effect, publication in
the Official Gazette is not indispensable for their effectivity. The point
stressed is anchored on Article 2 of the Civil Code:

Art. 2. Laws shall take effect after fifteen days following the
completion of their publication in the Official Gazette, unless
it is otherwise provided, ...

The interpretation given by respondent is in accord with this Court's


construction of said article. In a long line of decisions, 4 this Court has
ruled that publication in the Official Gazette is necessary in those cases
where the legislation itself does not provide for its effectivity date-for
then the date of publication is material for determining its date of
effectivity, which is the fifteenth day following its publication-but not
when the law itself provides for the date when it goes into effect.

Respondents' argument, however, is logically correct only insofar as it


equates the effectivity of laws with the fact of publication. Considered
in the light of other statutes applicable to the issue at hand, the
conclusion is easily reached that said Article 2 does not preclude the
requirement of publication in the Official Gazette, even if the law itself
provides for the date of its effectivity. Thus, Section 1 of
Commonwealth Act 638 provides as follows:

Section 1. There shall be published in the Official Gazette


[1] all important legisiative acts and resolutions of a public
nature of the, Congress of the Philippines; [2] all executive
and administrative orders and proclamations, except such
as have no general applicability; [3] decisions or abstracts
of decisions of the Supreme Court and the Court of Appeals
as may be deemed by said courts of sufficient importance
to be so published; [4] such documents or classes of
documents as may be required so to be published by law;
and [5] such documents or classes of documents as the
President of the Philippines shall determine from time to
time to have general applicability and legal effect, or which
he may authorize so to be published. ...

The clear object of the above-quoted provision is to give the general


public adequate notice of the various laws which are to regulate their
actions and conduct as citizens. Without such notice and publication,
there would be no basis for the application of the maxim "ignorantia
legis non excusat." It would be the height of injustice to punish or
otherwise burden a citizen for the transgression of a law of which he
had no notice whatsoever, not even a constructive one.

Perhaps at no time since the establishment of the Philippine Republic


has the publication of laws taken so vital significance that at this time
when the people have bestowed upon the President a power
heretofore enjoyed solely by the legislature. While the people are kept
abreast by the mass media of the debates and deliberations in the
Batasan Pambansaand for the diligent ones, ready access to the
legislative recordsno such publicity accompanies the law-making
process of the President. Thus, without publication, the people have no
means of knowing what presidential decrees have actually been
promulgated, much less a definite way of informing themselves of the
specific contents and texts of such decrees. As the Supreme Court of
Spain ruled: "Bajo la denominacion generica de leyes, se comprenden
tambien los reglamentos, Reales decretos, Instrucciones, Circulares y
Reales ordines dictadas de conformidad con las mismas por el
Gobierno en uso de su potestad. 5

The very first clause of Section I of Commonwealth Act 638 reads:


"There shall be published in the Official Gazette ... ." The word "shall"
used therein imposes upon respondent officials an imperative duty.
That duty must be enforced if the Constitutional right of the people to
be informed on matters of public concern is to be given substance and
reality. The law itself makes a list of what should be published in the
Official Gazette. Such listing, to our mind, leaves respondents with no
discretion whatsoever as to what must be included or excluded from
such publication.

The publication of all presidential issuances "of a public nature" or "of


general applicability" is mandated by law. Obviously, presidential
decrees that provide for fines, forfeitures or penalties for their violation
or otherwise impose a burden or. the people, such as tax and revenue
measures, fall within this category. Other presidential issuances which
apply only to particular persons or class of persons such as
administrative and executive orders need not be published on the
assumption that they have been circularized to all concerned. 6

It is needless to add that the publication of presidential issuances "of a


public nature" or "of general applicability" is a requirement of due
process. It is a rule of law that before a person may be bound by law,
he must first be officially and specifically informed of its contents. As
Justice Claudio Teehankee said in Peralta vs. COMELEC 7:

In a time of proliferating decrees, orders and letters of


instructions which all form part of the law of the land, the
requirement of due process and the Rule of Law demand
that the Official Gazette as the official government
repository promulgate and publish the texts of all such
decrees, orders and instructions so that the people may
know where to obtain their official and specific contents.

The Court therefore declares that presidential issuances of general


application, which have not been published, shall have no force and
effect. Some members of the Court, quite apprehensive about the
possible unsettling effect this decision might have on acts done in
reliance of the validity of those presidential decrees which were
published only during the pendency of this petition, have put the
question as to whether the Court's declaration of invalidity apply to
P.D.s which had been enforced or implemented prior to their
publication. The answer is all too familiar. In similar situations in the
past this Court had taken the pragmatic and realistic course set forth
in Chicot County Drainage District vs. Baxter Bank 8 to wit:

The courts below have proceeded on the theory that the Act
of Congress, having been found to be unconstitutional, was
not a law; that it was inoperative, conferring no rights and
imposing no duties, and hence affording no basis for the
challenged decree. Norton v. Shelby County, 118 U.S. 425,
442; Chicago, 1. & L. Ry. Co. v. Hackett, 228 U.S. 559,
566. It is quite clear, however, that such broad statements
as to the effect of a determination of unconstitutionality
must be taken with qualifications. The actual existence of a
statute, prior to such a determination, is an operative fact
and may have consequences which cannot justly be
ignored. The past cannot always be erased by a new judicial
declaration. The effect of the subsequent ruling as to
invalidity may have to be considered in various aspects-
with respect to particular conduct, private and official.
Questions of rights claimed to have become vested, of
status, of prior determinations deemed to have finality and
acted upon accordingly, of public policy in the light of the
nature both of the statute and of its previous application,
demand examination. These questions are among the most
difficult of those which have engaged the attention of
courts, state and federal and it is manifest from numerous
decisions that an all-inclusive statement of a principle of
absolute retroactive invalidity cannot be justified.

Consistently with the above principle, this Court in Rutter vs.


Esteban 9 sustained the right of a party under the Moratorium Law,
albeit said right had accrued in his favor before said law was declared
unconstitutional by this Court.

Similarly, the implementation/enforcement of presidential decrees


prior to their publication in the Official Gazette is "an operative fact
which may have consequences which cannot be justly ignored. The
past cannot always be erased by a new judicial declaration ... that an
all-inclusive statement of a principle of absolute retroactive invalidity
cannot be justified."

From the report submitted to the Court by the Clerk of Court, it


appears that of the presidential decrees sought by petitioners to be
published in the Official Gazette, only Presidential Decrees Nos. 1019
to 1030, inclusive, 1278, and 1937 to 1939, inclusive, have not been
so published. 10 Neither the subject matters nor the texts of these PDs
can be ascertained since no copies thereof are available. But whatever
their subject matter may be, it is undisputed that none of these
unpublished PDs has ever been implemented or enforced by the
government. In Pesigan vs. Angeles, 11 the Court, through Justice
Ramon Aquino, ruled that "publication is necessary to apprise the
public of the contents of [penal] regulations and make the said
penalties binding on the persons affected thereby. " The cogency of
this holding is apparently recognized by respondent officials
considering the manifestation in their comment that "the government,
as a matter of policy, refrains from prosecuting violations of criminal
laws until the same shall have been published in the Official Gazette or
in some other publication, even though some criminal laws provide
that they shall take effect immediately.

WHEREFORE, the Court hereby orders respondents to publish in the


Official Gazette all unpublished presidential issuances which are of
general application, and unless so published, they shall have no
binding force and effect.

SO ORDERED.

Relova, J., concurs.

Aquino, J., took no part.

Concepcion, Jr., J., is on leave.

Separate Opinions

FERNANDO, C.J., concurring (with qualification):

There is on the whole acceptance on my part of the views expressed in


the ably written opinion of Justice Escolin. I am unable, however, to
concur insofar as it would unqualifiedly impose the requirement of
publication in the Official Gazette for unpublished "presidential
issuances" to have binding force and effect.
I shall explain why.

1. It is of course true that without the requisite publication, a due


process question would arise if made to apply adversely to a party who
is not even aware of the existence of any legislative or executive act
having the force and effect of law. My point is that such publication
required need not be confined to the Official Gazette. From the
pragmatic standpoint, there is an advantage to be gained. It conduces
to certainty. That is too be admitted. It does not follow, however, that
failure to do so would in all cases and under all circumstances result in
a statute, presidential decree or any other executive act of the same
category being bereft of any binding force and effect. To so hold
would, for me, raise a constitutional question. Such a pronouncement
would lend itself to the interpretation that such a legislative or
presidential act is bereft of the attribute of effectivity unless published
in the Official Gazette. There is no such requirement in the
Constitution as Justice Plana so aptly pointed out. It is true that what
is decided now applies only to past "presidential issuances".
Nonetheless, this clarification is, to my mind, needed to avoid any
possible misconception as to what is required for any statute or
presidential act to be impressed with binding force or effectivity.

2. It is quite understandable then why I concur in the separate opinion


of Justice Plana. Its first paragraph sets forth what to me is the
constitutional doctrine applicable to this case. Thus: "The Philippine
Constitution does not require the publication of laws as a prerequisite
for their effectivity, unlike some Constitutions elsewhere. It may be
said though that the guarantee of due process requires notice of laws
to affected Parties before they can be bound thereby; but such notice
is not necessarily by publication in the Official Gazette. The due
process clause is not that precise. 1 I am likewise in agreement with its
closing paragraph: "In fine, I concur in the majority decision to the
extent that it requires notice before laws become effective, for no
person should be bound by a law without notice. This is elementary
fairness. However, I beg to disagree insofar as it holds that such notice
shall be by publication in the Official Gazette. 2

3. It suffices, as was stated by Judge Learned Hand, that law as the


command of the government "must be ascertainable in some form if it
is to be enforced at all. 3 It would indeed be to reduce it to the level of
mere futility, as pointed out by Justice Cardozo, "if it is unknown and
unknowable. 4 Publication, to repeat, is thus essential. What I am not
prepared to subscribe to is the doctrine that it must be in the Official
Gazette. To be sure once published therein there is the ascertainable
mode of determining the exact date of its effectivity. Still for me that
does not dispose of the question of what is the jural effect of past
presidential decrees or executive acts not so published. For prior
thereto, it could be that parties aware of their existence could have
conducted themselves in accordance with their provisions. If no legal
consequences could attach due to lack of publication in the Official
Gazette, then serious problems could arise. Previous transactions
based on such "Presidential Issuances" could be open to question.
Matters deemed settled could still be inquired into. I am not prepared
to hold that such an effect is contemplated by our decision. Where
such presidential decree or executive act is made the basis of a
criminal prosecution, then, of course, its ex post facto character
becomes evident. 5 In civil cases though, retroactivity as such is not
conclusive on the due process aspect. There must still be a showing of
arbitrariness. Moreover, where the challenged presidential decree or
executive act was issued under the police power, the non-impairment
clause of the Constitution may not always be successfully invoked.
There must still be that process of balancing to determine whether or
not it could in such a case be tainted by infirmity. 6 In traditional
terminology, there could arise then a question of unconstitutional
application. That is as far as it goes.

4. Let me make therefore that my qualified concurrence goes no


further than to affirm that publication is essential to the effectivity of a
legislative or executive act of a general application. I am not in
agreement with the view that such publication must be in the Official
Gazette. The Civil Code itself in its Article 2 expressly recognizes that
the rule as to laws taking effect after fifteen days following the
completion of their publication in the Official Gazette is subject to this
exception, "unless it is otherwise provided." Moreover, the Civil Code is
itself only a legislative enactment, Republic Act No. 386. It does not
and cannot have the juridical force of a constitutional command. A
later legislative or executive act which has the force and effect of law
can legally provide for a different rule.

5. Nor can I agree with the rather sweeping conclusion in the opinion
of Justice Escolin that presidential decrees and executive acts not thus
previously published in the Official Gazette would be devoid of any
legal character. That would be, in my opinion, to go too far. It may be
fraught, as earlier noted, with undesirable consequences. I find myself
therefore unable to yield assent to such a pronouncement.

I am authorized to state that Justices Makasiar, Abad Santos, Cuevas,


and Alampay concur in this separate opinion.

Makasiar, Abad Santos, Cuevas and Alampay, JJ., concur.

TEEHANKEE, J., concurring:

I concur with the main opinion of Mr. Justice Escolin and the
concurring opinion of Mme. Justice Herrera. The Rule of Law connotes
a body of norms and laws published and ascertainable and of equal
application to all similarly circumstances and not subject to arbitrary
change but only under certain set procedures. The Court has
consistently stressed that "it is an elementary rule of fair play and
justice that a reasonable opportunity to be informed must be afforded
to the people who are commanded to obey before they can be
punished for its violation, 1 citing the settled principle based on due
process enunciated in earlier cases that "before the public is bound by
its contents, especially its penal provisions, a law, regulation or
circular must first be published and the people officially and specially
informed of said contents and its penalties.

Without official publication in the Official Gazette as required by Article


2 of the Civil Code and the Revised Administrative Code, there would
be no basis nor justification for the corollary rule of Article 3 of the
Civil Code (based on constructive notice that the provisions of the law
are ascertainable from the public and official repository where they are
duly published) that "Ignorance of the law excuses no one from
compliance therewith.

Respondents' contention based on a misreading of Article 2 of the Civil


Code that "only laws which are silent as to their effectivity [date] need
be published in the Official Gazette for their effectivity" is manifestly
untenable. The plain text and meaning of the Civil Code is that "laws
shall take effect after fifteen days following the completion of their
publication in the Official Gazette, unless it is otherwise provided, "
i.e. a different effectivity date is provided by the law itself. This proviso
perforce refers to a law that has been duly published pursuant to the
basic constitutional requirements of due process. The best example of
this is the Civil Code itself: the same Article 2 provides otherwise that
it "shall take effect [only] one year [not 15 days] after such
publication. 2 To sustain respondents' misreading that "most laws or
decrees specify the date of their effectivity and for this reason,
publication in the Official Gazette is not necessary for their
effectivity 3 would be to nullify and render nugatory the Civil Code's
indispensable and essential requirement of prior publication in the
Official Gazette by the simple expedient of providing for immediate
effectivity or an earlier effectivity date in the law itself before the
completion of 15 days following its publication which is the period
generally fixed by the Civil Code for its proper dissemination.

MELENCIO-HERRERA, J., concurring:

I agree. There cannot be any question but that even if a decree


provides for a date of effectivity, it has to be published. What I would
like to state in connection with that proposition is that when a date of
effectivity is mentioned in the decree but the decree becomes effective
only fifteen (15) days after its publication in the Official Gazette, it will
not mean that the decree can have retroactive effect to the date of
effectivity mentioned in the decree itself. There should be no
retroactivity if the retroactivity will run counter to constitutional rights
or shall destroy vested rights.

PLANA, J., concurring (with qualification):

The Philippine Constitution does not require the publication of laws as


a prerequisite for their effectivity, unlike some Constitutions
elsewhere. * It may be said though that the guarantee of due process
requires notice of laws to affected parties before they can be bound
thereby; but such notice is not necessarily by publication in the Official
Gazette. The due process clause is not that precise. Neither is the
publication of laws in the Official Gazette required by any statute as a
prerequisite for their effectivity, if said laws already provide for their
effectivity date.

Article 2 of the Civil Code provides that "laws shall take effect after
fifteen days following the completion of their publication in the Official
Gazette, unless it is otherwise provided " Two things may be said of
this provision: Firstly, it obviously does not apply to a law with a built-
in provision as to when it will take effect. Secondly, it clearly
recognizes that each law may provide not only a different period for
reckoning its effectivity date but also a different mode of notice. Thus,
a law may prescribe that it shall be published elsewhere than in the
Official Gazette.

Commonwealth Act No. 638, in my opinion, does not support the


proposition that for their effectivity, laws must be published in the
Official Gazette. The said law is simply "An Act to Provide for the
Uniform Publication and Distribution of the Official Gazette."
Conformably therewith, it authorizes the publication of the Official
Gazette, determines its frequency, provides for its sale and
distribution, and defines the authority of the Director of Printing in
relation thereto. It also enumerates what shall be published in the
Official Gazette, among them, "important legislative acts and
resolutions of a public nature of the Congress of the Philippines" and
"all executive and administrative orders and proclamations, except
such as have no general applicability." It is noteworthy that not all
legislative acts are required to be published in the Official Gazette but
only "important" ones "of a public nature." Moreover, the said law does
not provide that publication in the Official Gazette is essential for the
effectivity of laws. This is as it should be, for all statutes are equal and
stand on the same footing. A law, especially an earlier one of general
application such as Commonwealth Act No. 638, cannot nullify or
restrict the operation of a subsequent statute that has a provision of
its own as to when and how it will take effect. Only a higher law, which
is the Constitution, can assume that role.

In fine, I concur in the majority decision to the extent that it requires


notice before laws become effective, for no person should be bound by
a law without notice. This is elementary fairness. However, I beg to
disagree insofar as it holds that such notice shall be by publication in
the Official Gazette.
Cuevas and Alampay, JJ., concur.

GUTIERREZ, Jr., J., concurring:

I concur insofar as publication is necessary but reserve my vote as to


the necessity of such publication being in the Official Gazette.

DE LA FUENTE, J., concurring:

I concur insofar as the opinion declares the unpublished decrees and


issuances of a public nature or general applicability ineffective, until
due publication thereof.

Separate Opinions

FERNANDO, C.J., concurring (with qualification):

There is on the whole acceptance on my part of the views expressed in


the ably written opinion of Justice Escolin. I am unable, however, to
concur insofar as it would unqualifiedly impose the requirement of
publication in the Official Gazette for unpublished "presidential
issuances" to have binding force and effect.

I shall explain why.

1. It is of course true that without the requisite publication, a due


process question would arise if made to apply adversely to a party who
is not even aware of the existence of any legislative or executive act
having the force and effect of law. My point is that such publication
required need not be confined to the Official Gazette. From the
pragmatic standpoint, there is an advantage to be gained. It conduces
to certainty. That is too be admitted. It does not follow, however, that
failure to do so would in all cases and under all circumstances result in
a statute, presidential decree or any other executive act of the same
category being bereft of any binding force and effect. To so hold
would, for me, raise a constitutional question. Such a pronouncement
would lend itself to the interpretation that such a legislative or
presidential act is bereft of the attribute of effectivity unless published
in the Official Gazette. There is no such requirement in the
Constitution as Justice Plana so aptly pointed out. It is true that what
is decided now applies only to past "presidential issuances".
Nonetheless, this clarification is, to my mind, needed to avoid any
possible misconception as to what is required for any statute or
presidential act to be impressed with binding force or effectivity.

2. It is quite understandable then why I concur in the separate opinion


of Justice Plana. Its first paragraph sets forth what to me is the
constitutional doctrine applicable to this case. Thus: "The Philippine
Constitution does not require the publication of laws as a prerequisite
for their effectivity, unlike some Constitutions elsewhere. It may be
said though that the guarantee of due process requires notice of laws
to affected Parties before they can be bound thereby; but such notice
is not necessarily by publication in the Official Gazette. The due
process clause is not that precise. 1 I am likewise in agreement with its
closing paragraph: "In fine, I concur in the majority decision to the
extent that it requires notice before laws become effective, for no
person should be bound by a law without notice. This is elementary
fairness. However, I beg to disagree insofar as it holds that such notice
shall be by publication in the Official Gazette. 2

3. It suffices, as was stated by Judge Learned Hand, that law as the


command of the government "must be ascertainable in some form if it
is to be enforced at all. 3 It would indeed be to reduce it to the level of
mere futility, as pointed out by Justice Cardozo, "if it is unknown and
unknowable. 4 Publication, to repeat, is thus essential. What I am not
prepared to subscribe to is the doctrine that it must be in the Official
Gazette. To be sure once published therein there is the ascertainable
mode of determining the exact date of its effectivity. Still for me that
does not dispose of the question of what is the jural effect of past
presidential decrees or executive acts not so published. For prior
thereto, it could be that parties aware of their existence could have
conducted themselves in accordance with their provisions. If no legal
consequences could attach due to lack of publication in the Official
Gazette, then serious problems could arise. Previous transactions
based on such "Presidential Issuances" could be open to question.
Matters deemed settled could still be inquired into. I am not prepared
to hold that such an effect is contemplated by our decision. Where
such presidential decree or executive act is made the basis of a
criminal prosecution, then, of course, its ex post facto character
becomes evident. 5 In civil cases though, retroactivity as such is not
conclusive on the due process aspect. There must still be a showing of
arbitrariness. Moreover, where the challenged presidential decree or
executive act was issued under the police power, the non-impairment
clause of the Constitution may not always be successfully invoked.
There must still be that process of balancing to determine whether or
not it could in such a case be tainted by infirmity. 6 In traditional
terminology, there could arise then a question of unconstitutional
application. That is as far as it goes.

4. Let me make therefore that my qualified concurrence goes no


further than to affirm that publication is essential to the effectivity of a
legislative or executive act of a general application. I am not in
agreement with the view that such publication must be in the Official
Gazette. The Civil Code itself in its Article 2 expressly recognizes that
the rule as to laws taking effect after fifteen days following the
completion of their publication in the Official Gazette is subject to this
exception, "unless it is otherwise provided." Moreover, the Civil Code is
itself only a legislative enactment, Republic Act No. 386. It does not
and cannot have the juridical force of a constitutional command. A
later legislative or executive act which has the force and effect of law
can legally provide for a different rule.

5. Nor can I agree with the rather sweeping conclusion in the opinion
of Justice Escolin that presidential decrees and executive acts not thus
previously published in the Official Gazette would be devoid of any
legal character. That would be, in my opinion, to go too far. It may be
fraught, as earlier noted, with undesirable consequences. I find myself
therefore unable to yield assent to such a pronouncement.

I am authorized to state that Justices Makasiar, Abad Santos, Cuevas,


and Alampay concur in this separate opinion.

Makasiar, Abad Santos, Cuevas and Alampay, JJ., concur.


TEEHANKEE, J., concurring:

I concur with the main opinion of Mr. Justice Escolin and the
concurring opinion of Mme. Justice Herrera. The Rule of Law connotes
a body of norms and laws published and ascertainable and of equal
application to all similarly circumstances and not subject to arbitrary
change but only under certain set procedures. The Court has
consistently stressed that "it is an elementary rule of fair play and
justice that a reasonable opportunity to be informed must be afforded
to the people who are commanded to obey before they can be
punished for its violation, 1 citing the settled principle based on due
process enunciated in earlier cases that "before the public is bound by
its contents, especially its penal provisions, a law, regulation or
circular must first be published and the people officially and specially
informed of said contents and its penalties.

Without official publication in the Official Gazette as required by Article


2 of the Civil Code and the Revised Administrative Code, there would
be no basis nor justification for the corollary rule of Article 3 of the
Civil Code (based on constructive notice that the provisions of the law
are ascertainable from the public and official repository where they are
duly published) that "Ignorance of the law excuses no one from
compliance therewith.

Respondents' contention based on a misreading of Article 2 of the Civil


Code that "only laws which are silent as to their effectivity [date] need
be published in the Official Gazette for their effectivity" is manifestly
untenable. The plain text and meaning of the Civil Code is that "laws
shall take effect after fifteen days following the completion of their
publication in the Official Gazette, unless it is otherwise provided, "
i.e. a different effectivity date is provided by the law itself. This proviso
perforce refers to a law that has been duly published pursuant to the
basic constitutional requirements of due process. The best example of
this is the Civil Code itself: the same Article 2 provides otherwise that
it "shall take effect [only] one year [not 15 days] after such
publication. 2 To sustain respondents' misreading that "most laws or
decrees specify the date of their effectivity and for this reason,
publication in the Official Gazette is not necessary for their
effectivity 3 would be to nullify and render nugatory the Civil Code's
indispensable and essential requirement of prior publication in the
Official Gazette by the simple expedient of providing for immediate
effectivity or an earlier effectivity date in the law itself before the
completion of 15 days following its publication which is the period
generally fixed by the Civil Code for its proper dissemination.

MELENCIO-HERRERA, J., concurring:

I agree. There cannot be any question but that even if a decree


provides for a date of effectivity, it has to be published. What I would
like to state in connection with that proposition is that when a date of
effectivity is mentioned in the decree but the decree becomes effective
only fifteen (15) days after its publication in the Official Gazette, it will
not mean that the decree can have retroactive effect to the date of
effectivity mentioned in the decree itself. There should be no
retroactivity if the retroactivity will run counter to constitutional rights
or shall destroy vested rights.

PLANA, J., concurring (with qualification):

The Philippine Constitution does not require the publication of laws as


a prerequisite for their effectivity, unlike some Constitutions
elsewhere. * It may be said though that the guarantee of due process
requires notice of laws to affected parties before they can be bound
thereby; but such notice is not necessarily by publication in the Official
Gazette. The due process clause is not that precise. Neither is the
publication of laws in the Official Gazette required by any statute as a
prerequisite for their effectivity, if said laws already provide for their
effectivity date.

Article 2 of the Civil Code provides that "laws shall take effect after
fifteen days following the completion of their publication in the Official
Gazette, unless it is otherwise provided " Two things may be said of
this provision: Firstly, it obviously does not apply to a law with a built-
in provision as to when it will take effect. Secondly, it clearly
recognizes that each law may provide not only a different period for
reckoning its effectivity date but also a different mode of notice. Thus,
a law may prescribe that it shall be published elsewhere than in the
Official Gazette.

Commonwealth Act No. 638, in my opinion, does not support the


proposition that for their effectivity, laws must be published in the
Official Gazette. The said law is simply "An Act to Provide for the
Uniform Publication and Distribution of the Official Gazette."
Conformably therewith, it authorizes the publication of the Official
Gazette, determines its frequency, provides for its sale and
distribution, and defines the authority of the Director of Printing in
relation thereto. It also enumerates what shall be published in the
Official Gazette, among them, "important legislative acts and
resolutions of a public nature of the Congress of the Philippines" and
"all executive and administrative orders and proclamations, except
such as have no general applicability." It is noteworthy that not all
legislative acts are required to be published in the Official Gazette but
only "important" ones "of a public nature." Moreover, the said law does
not provide that publication in the Official Gazette is essential for the
effectivity of laws. This is as it should be, for all statutes are equal and
stand on the same footing. A law, especially an earlier one of general
application such as Commonwealth Act No. 638, cannot nullify or
restrict the operation of a subsequent statute that has a provision of
its own as to when and how it will take effect. Only a higher law, which
is the Constitution, can assume that role.

In fine, I concur in the majority decision to the extent that it requires


notice before laws become effective, for no person should be bound by
a law without notice. This is elementary fairness. However, I beg to
disagree insofar as it holds that such notice shall be by publication in
the Official Gazette.

Cuevas and Alampay, JJ., concur.

GUTIERREZ, Jr., J., concurring:

I concur insofar as publication is necessary but reserve my vote as to


the necessity of such publication being in the Official Gazette.
DE LA FUENTE, J., concurring:

I concur insofar as the opinion declares the unpublished decrees and


issuances of a public nature or general applicability ineffective, until
due publication thereof.

Republic of the Philippines


SUPREME COURT
Manila

EN BANC

G.R. No. L-15127 May 30, 1961

EMETERIO CUI, plaintiff-appellant,


vs.
ARELLANO UNIVERSITY, defendant-appellee.

G.A.S. Sipin, Jr., for plaintiff-appellant.


E. Voltaire Garcia for defendant-appellee.

CONCEPCION, J.:

Appeal by plaintiff Emeterio Cui from a decision of the Court of First


Instance of Manila, absolving defendant Arellano University from
plaintiff's complaint, with costs against the plaintiff, and dismissing
defendant's counter claim, for insufficiency of proof thereon.

In the language of the decision appealed from:

The essential facts of this case are short and undisputed. As


established by the agreement of facts Exhibits X and by the
respective oral and documentary evidence introduced by the
parties, it appears conclusive that plaintiff, before the school year
1948-1949 took up preparatory law course in the defendant
University. After finishing his preparatory law course plaintiff
enrolled in the College of Law of the defendant from the school
year 1948-1949. Plaintiff finished his law studies in the defendant
university up to and including the first semester of the fourth
year. During all the school years in which plaintiff was studying
law in defendant law college, Francisco R. Capistrano, brother of
the mother of plaintiff, was the dean of the College of Law and
legal counsel of the defendant university. Plaintiff enrolled for the
last semester of his law studies in the defendant university but
failed to pay his tuition fees because his uncle Dean Francisco R.
Capistrano having severed his connection with defendant and
having accepted the deanship and chancellorship of the College
of Law of Abad Santos University, plaintiff left the defendant's
law college and enrolled for the last semester of his fourth year
law in the college of law of the Abad Santos University
graduating from the college of law of the latter university.
Plaintiff, during all the time he was studying law in defendant
university was awarded scholarship grants, for scholastic merit,
so that his semestral tuition fees were returned to him after the
ends of semester and when his scholarship grants were awarded
to him. The whole amount of tuition fees paid by plaintiff to
defendant and refunded to him by the latter from the first
semester up to and including the first semester of his last year in
the college of law or the fourth year, is in total P1,033.87. After
graduating in law from Abad Santos University he applied to take
the bar examination. To secure permission to take the bar he
needed the transcripts of his records in defendant Arellano
University. Plaintiff petitioned the latter to issue to him the
needed transcripts. The defendant refused until after he had paid
back the P1,033 87 which defendant refunded to him as above
stated. As he could not take the bar examination without those
transcripts, plaintiff paid to defendant the said sum under
protest. This is the sum which plaintiff seeks to recover from
defendant in this case.

Before defendant awarded to plaintiff the scholarship grants as


above stated, he was made to sign the following contract
covenant and agreement:

"In consideration of the scholarship granted to me by the


University, I hereby waive my right to transfer to another school
without having refunded to the University (defendant) the
equivalent of my scholarship cash.

(Sgd.) Emeterio Cui".

It is admitted that, on August 16, 1949, the Director of Private Schools


issued Memorandum No. 38, series of 1949, on the subject of
"Scholarship," addressed to "All heads of private schools, colleges and
universities," reading:

1. School catalogs and prospectuses submitted to this, Bureau


show that some schools offer full or partial scholarships to
deserving students for excellence in scholarship or for
leadership in extra-curricular activities. Such inducements to
poor but gifted students should be encouraged. But to stipulate
the condition that such scholarships are good only if the students
concerned continue in the same school nullifies the principle of
merit in the award of these scholarships.

2. When students are given full or partial scholarships, it is


understood that such scholarships are merited and earned. The
amount in tuition and other fees corresponding to these
scholarships should not be subsequently charged to the recipient
students when they decide to quit school or to transfer to
another institution. Scholarships should not be offered merely to
attract and keep students in a school.

3. Several complaints have actually been received from students


who have enjoyed scholarships, full or partial, to the effect that
they could not transfer to other schools since their credentials
would not be released unless they would pay the fees
corresponding to the period of the scholarships. Where the
Bureau believes that the right of the student to transfer is being
denied on this ground, it reserves the right to authorize such
transfer.

that defendant herein received a copy of this memorandum; that


plaintiff asked the Bureau of Private Schools to pass upon the issue on
his right to secure the transcript of his record in defendant University,
without being required to refund the sum of P1,033.87; that the
Bureau of Private Schools upheld the position taken by the plaintiff and
so advised the defendant; and that, this notwithstanding, the latter
refused to issue said transcript of records, unless said refund were
made, and even recommended to said Bureau that it issue a written
order directing the defendant to release said transcript of record, "so
that the case may be presented to the court for judicial action." As
above stated, plaintiff was, accordingly, constrained to pay, and did
pay under protest, said sum of P1,033.87, in order that he could take
the bar examination in 1953. Subsequently, he brought this action for
the recovery of said amount, aside from P2,000 as moral damages,
P500 as exemplary damages, P2,000 as attorney's fees, and P500 as
expenses of litigation.

In its answer, defendant reiterated the stand it took, vis-a-vis the


Bureau of Private Schools, namely, that the provisions of its contract
with plaintiff are valid and binding and that the memorandum above-
referred to is null and void. It, likewise, set up a counterclaim for
P10,000.00 as damages, and P3,000 as attorney's fees.

The issue in this case is whether the above quoted provision of the
contract between plaintiff and the defendant, whereby the former
waived his right to transfer to another school without refunding to the
latter the equivalent of his scholarships in cash, is valid or not. The
lower court resolved this question in the affirmative, upon the ground
that the aforementioned memorandum of the Director of Private
Schools is not a law; that the provisions thereof are advisory, not
mandatory in nature; and that, although the contractual provision
"may be unethical, yet it was more unethical for plaintiff to quit
studying with the defendant without good reasons and simply because
he wanted to follow the example of his uncle." Moreover, defendant
maintains in its brief that the aforementioned memorandum of the
Director of Private Schools is null and void because said officer had no
authority to issue it, and because it had been neither approved by the
corresponding department head nor published in the official gazette.

We do not deem it necessary or advisable to consider as the lower


court did, the question whether plaintiff had sufficient reasons or not
to transfer from defendant University to the Abad Santos University.
The nature of the issue before us, and its far reaching effects,
transcend personal equations and demand a determination of the case
from a high impersonal plane. Neither do we deem it essential to pass
upon the validity of said Memorandum No. 38, for, regardless of the
same, we are of the opinion that the stipulation in question is contrary
to public policy and, hence, null and void. The aforesaid memorandum
merely incorporates a sound principle of public policy. As the Director
of Private Schools correctly pointed, out in his letter, Exhibit B, to the
defendant,

There is one more point that merits refutation and that is


whether or not the contract entered into between Cui and
Arellano University on September 10, 1951 was void as against
public policy. In the case of Zeigel vs. Illinois Trust and Savings
Bank, 245 Ill. 180, 19 Ann. Case 127, the court said: 'In
determining a public policy of the state, courts are limited to a
consideration of the Constitution, the judicial decisions, the
statutes, and the practice of government officers.' It might take
more than a government bureau or office to lay down or
establish a public policy, as alleged in your communication, but
courts consider the practices of government officials as one of
the four factors in determining a public policy of the state. It has
been consistently held in America that under the principles
relating to the doctrine of public policy, as applied to the law of
contracts, courts of justice will not recognize or uphold a
transaction which its object, operation, or tendency is calculated
to be prejudicial to the public welfare, to sound morality or to
civic honesty (Ritter vs. Mutual Life Ins. Co., 169 U.S. 139;
Heding vs. Gallaghere 64 L.R.A. 811; Veazy vs. Allen, 173 N.Y.
359). If Arellano University understood clearly the real essence of
scholarships and the motives which prompted this office to issue
Memorandum No. 38, s. 1949, it should have not entered into a
contract of waiver with Cui on September 10, 1951, which is a
direct violation of our Memorandum and an open challenge to the
authority of the Director of Private Schools because the contract
was repugnant to sound morality and civic honesty. And finally,
in Gabriel vs. Monte de Piedad, Off. Gazette Supp. Dec. 6, 1941,
p. 67 we read: 'In order to declare a contract void as against
public policy, a court must find that the contract as to
consideration or the thing to be done, contravenes some
established interest of society, or is inconsistent with sound
policy and good moralsor tends clearly to undermine the security
of individual rights. The policy enunciated in Memorandum No.
38, s. 1949 is sound policy. Scholarship are awarded in
recognition of merit not to keep outstanding students in school to
bolster its prestige. In the understanding of that university
scholarships award is a business scheme designed to increase the
business potential of an education institution. Thus conceived it is
not only inconsistent with sound policy but also good morals. But
what is morals? Manresa has this definition. It is good customs;
those generally accepted principles of morality which have
received some kind of social and practical confirmation. The
practice of awarding scholarships to attract students and keep
them in school is not good customs nor has it received some kind
of social and practical confirmation except in some private
institutions as in Arellano University. The University of the
Philippines which implements Section 5 of Article XIV of the
Constitution with reference to the giving of free scholarships to
gifted children, does not require scholars to reimburse the
corresponding value of the scholarships if they transfer to other
schools. So also with the leading colleges and universities of the
United States after which our educational practices or policies are
patterned. In these institutions scholarships are granted not to
attract and to keep brilliant students in school for their
propaganda mine but to reward merit or help gifted students in
whom society has an established interest or a first lien.
(Emphasis supplied.)

WHEREFORE, the decision appealed from is hereby reversed and


another one shall be entered sentencing the defendant to pay to the
plaintiff the sum of P1,033.87, with interest thereon at the legal rate
from September 1, 1954, date of the institution of this case, as well as
the costs, and dismissing defendant's counterclaim. It is so ordered.

Republic of the Philippines


SUPREME COURT
Manila

EN BANC
G.R. No. L-28040 August 18, 1972

TESTATE ESTATE OF JOSEFA TANGCO, JOSE DE BORJA,


administrator-appellee; JOSE DE BORJA, as administrator,
CAYETANO DE BORJA, MATILDE DE BORJA and CRISANTO DE
BORJA (deceased) as Children of Josefa Tangco, appellees,
vs.
TASIANA VDA. DE DE BORJA, Special Administratrix of the
Testate Estate of Francisco de Borja, appellant. .

G.R. No L-28568 August 18, 1972

TESTATE ESTATE OF THE LATE FRANCISCO DE BORJA, TASIANA


O. VDA. DE DE BORJA, special Administratrix appellee,
vs.
JOSE DE BORJA, oppositor-appellant.

G.R. No. L-28611 August 18, 1972

TASIANA 0. VDA. DE BORJA, as Administratrix of the Testate


Estate of the late Francisco de Borja, plaintiff-appellee,
vs.
JOSE DE BORJA, as Administrator of the Testate Estate of the
late Josefa Tangco, defendant-appellant.

L-28040

Pelaez, Jalandoni & Jamir for administrator-appellee.

Quiogue & Quiogue for appellee Matilde de Borja.

Andres Matias for appellee Cayetano de Borja.

Sevilla & Aquino for appellant.

L-28568

Sevilla & Aquino for special administratrix-appellee.

Pelaez, Jalandoni & Jamir for oppositor-appellant.


L-28611

Sevilla & Aquino for plaintiff-appellee.

Pelaez, Jalandoni & Jamir and David Gueverra for defendant-appellant.

REYES, J.B.L., J.:p

Of these cases, the first, numbered L-28040 is an appeal by Tasiana


Ongsingco Vda. de de Borja, special administratrix of the testate
estate of Francisco de Borja, 1 from the approval of a compromise
agreement by the Court of First Instance of Rizal, Branch I, in its
Special Proceeding No. R-7866, entitled, "Testate Estate of Josefa
Tangco, Jose de Borja, Administrator".

Case No. L-28568 is an appeal by administrator Jose Borja from the


disapproval of the same compromise agreement by the Court of First
Instance of Nueva Ecija, Branch II, in its Special Proceeding No. 832,
entitled, "Testate Estate of Francisco de Borja, Tasiana O. Vda. de de
Borja, Special Administratrix".

And Case No. L-28611 is an appeal by administrator Jose de Borja


from the decision of the Court of First Instance of Rizal, Branch X, in
its Civil Case No. 7452, declaring the Hacienda Jalajala Poblacion,
which is the main object of the aforesaid compromise agreement, as
the separate and exclusive property of the late Francisco de Borja and
not a conjugal asset of the community with his first wife, Josefa
Tangco, and that said hacienda pertains exclusively to his testate
estate, which is under administrator in Special Proceeding No. 832 of
the Court of First Instance of Nueva Ecija, Branch II.

It is uncontested that Francisco de Borja, upon the death of his wife


Josefa Tangco on 6 October 1940, filed a petition for the probate of
her will which was docketed as Special Proceeding No. R-7866 of the
Court of First Instance of Rizal, Branch I. The will was probated on 2
April 1941. In 1946, Francisco de Borja was appointed executor and
administrator: in 1952, their son, Jose de Borja, was appointed co-
administrator. When Francisco died, on 14 April 1954, Jose became
the sole administrator of the testate estate of his mother, Josefa
Tangco. While a widower Francisco de Borja allegedly took unto
himself a second wife, Tasiana Ongsingco. Upon Francisco's death,
Tasiana instituted testate proceedings in the Court of First Instance of
Nueva Ecija, where, in 1955, she was appointed special administratrix.
The validity of Tasiana's marriage to Francisco was questioned in said
proceeding.

The relationship between the children of the first marriage and Tasiana
Ongsingco has been plagued with several court suits and counter-
suits; including the three cases at bar, some eighteen (18) cases
remain pending determination in the courts. The testate estate of
Josefa Tangco alone has been unsettled for more than a quarter of a
century. In order to put an end to all these litigations, a compromise
agreement was entered into on 12 October 1963, 2 by and between
"[T]he heir and son of Francisco de Borja by his first marriage,
namely, Jose de Borja personally and as administrator of the Testate
Estate of Josefa Tangco," and "[T]he heir and surviving spouse of
Francisco de Borja by his second marriage, Tasiana Ongsingco Vda. de
Borja, assisted by her lawyer, Atty. Luis Panaguiton Jr." The terms and
conditions of the compromise agreement are as follows:

AGREEMENT

THIS AGREEMENT made and entered into by and between

The heir and son of Francisco de Borja by his first marriage,


namely, Jose de Borja personally and as administrator of
the Testate Estate of Josefa Tangco,

AND

The heir and surviving spouse of Francisco de Borja by his


second marriage, Tasiana Ongsingco Vda. de Borja,
assisted by her lawyer, Atty. Luis Panaguiton Jr.

WITNESSETH

THAT it is the mutual desire of all the parties herein


terminate and settle, with finality, the various court
litigations, controversies, claims, counterclaims, etc.,
between them in connection with the administration,
settlement, partition, adjudication and distribution of the
assets as well as liabilities of the estates of Francisco de
Borja and Josefa Tangco, first spouse of Francisco de Borja.

THAT with this end in view, the parties herein have agreed
voluntarily and without any reservations to enter into and
execute this agreement under the following terms and
conditions:

1. That the parties agree to sell the Poblacion portion of the


Jalajala properties situated in Jalajala, Rizal, presently
under administration in the Testate Estate of Josefa Tangco
(Sp. Proc. No. 7866, Rizal), more specifically described as
follows:

Linda al Norte con el Rio Puwang que la separa


de la jurisdiccion del Municipio de Pililla de la
Provincia de Rizal, y con el pico del Monte
Zambrano; al Oeste con Laguna de Bay; por el
Sur con los herederos de Marcelo de Borja; y por
el Este con los terrenos de la Familia Maronilla

with a segregated area of approximately 1,313 hectares at


the amount of P0.30 per square meter.

2. That Jose de Borja agrees and obligates himself to pay


Tasiana Ongsingco Vda. de de Borja the total amount of
Eight Hundred Thousand Pesos (P800,000) Philippine
Currency, in cash, which represent P200,000 as his share in
the payment and P600,000 as pro-rata shares of the heirs
Crisanto, Cayetano and Matilde, all surnamed de Borja and
this shall be considered as full and complete payment and
settlement of her hereditary share in the estate of the late
Francisco de Borja as well as the estate of Josefa Tangco,
Sp. Proc. No. 832-Nueva Ecija and Sp. Proc. No. 7866-
Rizal, respectively, and to any properties bequeathed or
devised in her favor by the late Francisco de Borja by Last
Will and Testament or by Donation Inter Vivos or Mortis
Causa or purportedly conveyed to her for consideration or
otherwise. The funds for this payment shall be taken from
and shall depend upon the receipt of full payment of the
proceeds of the sale of Jalajala, "Poblacion."

3. That Tasiana Ongsingco Vda. de de Borja hereby


assumes payment of that particular obligation incurred by
the late Francisco de Borja in favor of the Rehabilitation
Finance Corporation, now Development Bank of the
Philippines, amounting to approximately P30,000.00 and
also assumes payment of her 1/5 share of the Estate and
Inheritance taxes on the Estate of the late Francisco de
Borja or the sum of P3,500.00, more or less, which shall be
deducted by the buyer of Jalajala, "Poblacion" from the
payment to be made to Tasiana Ongsingco Vda. de Borja
under paragraph 2 of this Agreement and paid directly to
the Development Bank of the Philippines and the heirs-
children of Francisco de Borja.

4. Thereafter, the buyer of Jalajala "Poblacion" is hereby


authorized to pay directly to Tasiana Ongsingco Vda. de de
Borja the balance of the payment due her under paragraph
2 of this Agreement (approximately P766,500.00) and issue
in the name of Tasiana Ongsingco Vda. de de Borja,
corresponding certified checks/treasury warrants, who, in
turn, will issue the corresponding receipt to Jose de Borja.

5. In consideration of above payment to Tasiana Ongsingco


Vda. de de Borja, Jose de Borja personally and as
administrator of the Testate Estate of Josefa Tangco, and
Tasiana Ongsingco Vda. de de Borja, for themselves and for
their heirs, successors, executors, administrators, and
assigns, hereby forever mutually renounce, withdraw,
waive, remise, release and discharge any and all manner of
action or actions, cause or causes of action, suits, debts,
sum or sums of money, accounts, damages, claims and
demands whatsoever, in law or in equity, which they ever
had, or now have or may have against each other, more
specifically Sp. Proceedings Nos. 7866 and 1955, CFI-Rizal,
and Sp. Proc. No. 832-Nueva Ecija, Civil Case No. 3033, CFI
Nueva Ecija and Civil Case No. 7452-CFI, Rizal, as well as
the case filed against Manuel Quijal for perjury with the
Provincial Fiscal of Rizal, the intention being to completely,
absolutely and finally release each other, their heirs,
successors, and assigns, from any and all liability, arising
wholly or partially, directly or indirectly, from the
administration, settlement, and distribution of the assets as
well as liabilities of the estates of Francisco de Borja and
Josefa Tangco, first spouse of Francisco de Borja, and
lastly, Tasiana Ongsingco Vda. de de Borja expressly and
specifically renounce absolutely her rights as heir over any
hereditary share in the estate of Francisco de Borja.

6. That Tasiana Ongsingco Vda. de de Borja, upon receipt of


the payment under paragraph 4 hereof, shall deliver to the
heir Jose de Borja all the papers, titles and documents
belonging to Francisco de Borja which are in her possession
and said heir Jose de Borja shall issue in turn the
corresponding receive thereof.

7. That this agreement shall take effect only upon the


fulfillment of the sale of the properties mentioned under
paragraph 1 of this agreement and upon receipt of the total
and full payment of the proceeds of the sale of the Jalajala
property "Poblacion", otherwise, the non-fulfillment of the
said sale will render this instrument NULL AND VOID AND
WITHOUT EFFECT THEREAFTER.

IN WITNESS WHEREOF, the parties hereto have her unto


set their hands in the City of Manila, Philippines, the 12th of
October, 1963.

On 16 May 1966, Jose de Borja submitted for Court approval the


agreement of 12 October 1963 to the Court of First Instance of Rizal,
in Special Proceeding No. R-7866; and again, on 8 August 1966, to the
Court of First Instance of Nueva Ecija, in Special Proceeding No. 832.
Tasiana Ongsingco Vda. de de Borja opposed in both instances. The
Rizal court approved the compromise agreement, but the Nueva Ecija
court declared it void and unenforceable. Special administratrix
Tasiana Ongsingco Vda. de de Borja appealed the Rizal Court's order
of approval (now Supreme Court G.R. case No. L-28040), while
administrator Jose de Borja appealed the order of disapproval (G.R.
case No. L-28568) by the Court of First Instance of Nueva Ecija.
The genuineness and due execution of the compromised agreement of
12 October 1963 is not disputed, but its validity is, nevertheless,
attacked by Tasiana Ongsingco on the ground that: (1) the heirs
cannot enter into such kind of agreement without first probating the
will of Francisco de Borja; (2) that the same involves a compromise on
the validity of the marriage between Francisco de Borja and Tasiana
Ongsingco; and (3) that even if it were valid, it has ceased to have
force and effect.

In assailing the validity of the agreement of 12 October 1963, Tasiana


Ongsingco and the Probate Court of Nueva Ecija rely on this Court's
decision in Guevara vs. Guevara. 74 Phil. 479, wherein the Court's
majority held the view that the presentation of a will for probate is
mandatory and that the settlement and distribution of an estate on the
basis of intestacy when the decedent left a will, is against the law and
public policy. It is likewise pointed out by appellant Tasiana Ongsingco
that Section 1 of Rule 74 of the Revised Rules explicitly conditions the
validity of an extrajudicial settlement of a decedent's estate by
agreement between heirs, upon the facts that "(if) the decedent left no
will and no debts, and the heirs are all of age, or the minors are
represented by their judicial and legal representatives ..." The will of
Francisco de Borja having been submitted to the Nueva Ecija Court
and still pending probate when the 1963 agreement was made, those
circumstances, it is argued, bar the validity of the agreement.

Upon the other hand, in claiming the validity of the compromise


agreement, Jose de Borja stresses that at the time it was entered into,
on 12 October 1963, the governing provision was Section 1, Rule 74 of
the original Rules of Court of 1940, which allowed the extrajudicial
settlement of the estate of a deceased person regardless of whether
he left a will or not. He also relies on the dissenting opinion of Justice
Moran, in Guevara vs. Guevara, 74 Phil. 479, wherein was expressed
the view that if the parties have already divided the estate in
accordance with a decedent's will, the probate of the will is a useless
ceremony; and if they have divided the estate in a different manner,
the probate of the will is worse than useless.

The doctrine of Guevara vs. Guevara, ante, is not applicable to the


case at bar. This is apparent from an examination of the terms of the
agreement between Jose de Borja and Tasiana Ongsingco. Paragraph 2
of said agreement specifically stipulates that the sum of P800,000
payable to Tasiana Ongsingco

shall be considered as full complete payment


settlement of her hereditary share in the estate of the late
Francisco de Borja as well as the estate of Josefa Tangco,
... and to any properties bequeathed or devised in her favor
by the late Francisco de Borja by Last Will and Testament or
by Donation Inter Vivos or Mortis Causa or purportedly
conveyed to her for consideration or otherwise.

This provision evidences beyond doubt that the ruling in the Guevara
case is not applicable to the cases at bar. There was here no attempt
to settle or distribute the estate of Francisco de Borja among the heirs
thereto before the probate of his will. The clear object of the contract
was merely the conveyance by Tasiana Ongsingco of any and all her
individual share and interest, actual or eventual in the estate of
Francisco de Borja and Josefa Tangco. There is no stipulation as to any
other claimant, creditor or legatee. And as a hereditary share in a
decedent's estate is transmitted or vested immediately from the
moment of the death of such causante or predecessor in interest (Civil
Code of the Philippines, Art. 777) 3 there is no legal bar to a successor
(with requisite contracting capacity) disposing of her or his hereditary
share immediately after such death, even if the actual extent of such
share is not determined until the subsequent liquidation of the
estate. 4 Of course, the effect of such alienation is to be deemed
limited to what is ultimately adjudicated to the vendor heir. However,
the aleatory character of the contract does not affect the validity of the
transaction; neither does the coetaneous agreement that the
numerous litigations between the parties (the approving order of the
Rizal Court enumerates fourteen of them, Rec. App. pp. 79-82) are to
be considered settled and should be dismissed, although such
stipulation, as noted by the Rizal Court, gives the contract the
character of a compromise that the law favors, for obvious reasons, if
only because it serves to avoid a multiplicity of suits.

It is likewise worthy of note in this connection that as the surviving


spouse of Francisco de Borja, Tasiana Ongsingco was his compulsory
heir under article 995 et seq. of the present Civil Code. Wherefore,
barring unworthiness or valid disinheritance, her successional interest
existed independent of Francisco de Borja's last will and testament and
would exist even if such will were not probated at all. Thus, the
prerequisite of a previous probate of the will, as established in the
Guevara and analogous cases, can not apply to the case of Tasiana
Ongsingco Vda. de de Borja.

Since the compromise contract Annex A was entered into by and


between "Jose de Borja personally and as administrator of the Testate
Estate of Josefa Tangco" on the one hand, and on the other, "the heir
and surviving spouse of Francisco de Borja by his second marriage,
Tasiana Ongsingco Vda. de de Borja", it is clear that the transaction
was binding on both in their individual capacities, upon the perfection
of the contract, even without previous authority of the Court to enter
into the same. The only difference between an extrajudicial
compromise and one that is submitted and approved by the Court, is
that the latter can be enforced by execution proceedings. Art. 2037 of
the Civil Code is explicit on the point:

8. Art. 2037. A compromise has upon the parties the effect


and authority of res judicata; but there shall be no
execution except in compliance with a judicial compromise.

It is argued by Tasiana Ongsingco that while the agreement


Annex A expressed no definite period for its performance,
the same was intended to have a resolutory period of 60
days for its effectiveness. In support of such contention, it
is averred that such a limit was expressly stipulated in an
agreement in similar terms entered into by said Ongsingco
with the brothers and sister of Jose de Borja, to wit,
Crisanto, Matilde and Cayetano, all surnamed de Borja,
except that the consideration was fixed at P600,000
(Opposition, Annex/Rec. of Appeal, L-28040, pp. 39- 46)
and which contained the following clause:

III. That this agreement shall take effect only upon the
consummation of the sale of the property mentioned herein
and upon receipt of the total and full payment of the
proceeds of the sale by the herein owner heirs-children of
Francisco de Borja, namely, Crisanto, Cayetano and
Matilde, all surnamed de Borja; Provided that if no sale of
the said property mentioned herein is consummated, or the
non-receipt of the purchase price thereof by the said
owners within the period of sixty (60) days from the date
hereof, this agreement will become null and void and of no
further effect.

Ongsingco's argument loses validity when it is considered that Jose de


Borja was not a party to this particular contract (Annex 1), and that
the same appears not to have been finalized, since it bears no date,
the day being left blank "this day of October 1963"; and while
signed by the parties, it was not notarized, although plainly intended
to be so done, since it carries a proposed notarial ratification clause.
Furthermore, the compromise contract with Jose de Borja (Annex A),
provides in its par. 2 heretofore transcribed that of the total
consideration of P800, 000 to be paid to Ongsingco, P600,000
represent the "prorata share of the heirs Crisanto, Cayetano and
Matilde all surnamed de Borja" which corresponds to the consideration
of P600,000 recited in Annex 1, and that circumstance is proof that the
duly notarized contract entered into wit Jose de Borja under date 12
October 1963 (Annex A), was designed to absorb and supersede the
separate unformalize agreement with the other three Borja heirs.
Hence, the 60 days resolutory term in the contract with the latter
(Annex 1) not being repeated in Annex A, can not apply to the formal
compromise with Jose de Borja. It is moreover manifest that the
stipulation that the sale of the Hacienda de Jalajala was to be made
within sixty days from the date of the agreement with Jose de Borja's
co-heirs (Annex 1) was plainly omitted in Annex A as improper and
ineffective, since the Hacienda de Jalajala (Poblacion) that was to be
sold to raise the P800,000 to be paid to Ongsingco for her share
formed part of the estate of Francisco de Borja and could not be sold
until authorized by the Probate Court. The Court of First Instance of
Rizal so understood it, and in approving the compromise it fixed a
term of 120 days counted from the finality of the order now under
appeal, for the carrying out by the parties for the terms of the
contract.

This brings us to the plea that the Court of First Instance of Rizal had
no jurisdiction to approve the compromise with Jose de Borja (Annex
A) because Tasiana Ongsingco was not an heir in the estate of Josefa
Tangco pending settlement in the Rizal Court, but she was an heir of
Francisco de Borja, whose estate was the object of Special Proceeding
No. 832 of the Court of First Instance of Nueva Ecija. This
circumstance is irrelevant, since what was sold by Tasiana Ongsingco
was only her eventual share in the estate of her late husband, not the
estate itself; and as already shown, that eventual share she owned
from the time of Francisco's death and the Court of Nueva Ecija could
not bar her selling it. As owner of her undivided hereditary share,
Tasiana could dispose of it in favor of whomsoever she chose. Such
alienation is expressly recognized and provided for by article 1088 of
the present Civil Code:

Art. 1088. Should any of the heirs sell his hereditary rights
to a stranger before the partition, any or all of the co-heirs
may be subrogated to the rights of the purchaser by
reimbursing him for the price of the sale, provided they do
so within the period of one month from the time they were
notified in writing of the sale of the vendor.

If a sale of a hereditary right can be made to a stranger, then a


fortiori sale thereof to a coheir could not be forbidden.

Tasiana Ongsingco further argues that her contract with Jose de Borja
(Annex "A") is void because it amounts to a compromise as to her
status and marriage with the late Francisco de Borja. The point is
without merit, for the very opening paragraph of the agreement with
Jose de Borja (Annex "A") describes her as "the heir and surviving
spouse of Francisco de Borja by his second marriage, Tasiana
Ongsingco Vda. de de Borja", which is in itself definite admission of
her civil status. There is nothing in the text of the agreement that
would show that this recognition of Ongsingco's status as the surviving
spouse of Francisco de Borja was only made in consideration of the
cession of her hereditary rights.

It is finally charged by appellant Ongsingco, as well as by the Court of


First Instance of Nueva Ecija in its order of 21 September 1964, in
Special Proceedings No. 832 (Amended Record on Appeal in L-28568,
page 157), that the compromise agreement of 13 October 1963
(Annex "A") had been abandoned, as shown by the fact that, after its
execution, the Court of First Instance of Nueva Ecija, in its order of 21
September 1964, had declared that "no amicable settlement had been
arrived at by the parties", and that Jose de Borja himself, in a motion
of 17 June 1964, had stated that the proposed amicable settlement
"had failed to materialize".
It is difficult to believe, however, that the amicable settlement referred
to in the order and motion above-mentioned was the compromise
agreement of 13 October 1963, which already had been formally
signed and executed by the parties and duly notarized. What the
record discloses is that some time after its formalization, Ongsingco
had unilaterally attempted to back out from the compromise
agreement, pleading various reasons restated in the opposition to the
Court's approval of Annex "A" (Record on Appeal, L-20840, page 23):
that the same was invalid because of the lapse of the allegedly
intended resolutory period of 60 days and because the contract was
not preceded by the probate of Francisco de Borja's will, as required
by this Court's Guevarra vs. Guevara ruling; that Annex "A" involved a
compromise affecting Ongsingco's status as wife and widow of
Francisco de Borja, etc., all of which objections have been already
discussed. It was natural that in view of the widow's attitude, Jose de
Borja should attempt to reach a new settlement or novatory
agreement before seeking judicial sanction and enforcement of Annex
"A", since the latter step might ultimately entail a longer delay in
attaining final remedy. That the attempt to reach another settlement
failed is apparent from the letter of Ongsingco's counsel to Jose de
Borja quoted in pages 35-36 of the brief for appellant Ongsingco in
G.R. No. 28040; and it is more than probable that the order of 21
September 1964 and the motion of 17 June 1964 referred to the
failure of the parties' quest for a more satisfactory compromise. But
the inability to reach a novatory accord can not invalidate the original
compromise (Annex "A") and justifies the act of Jose de Borja in finally
seeking a court order for its approval and enforcement from the Court
of First Instance of Rizal, which, as heretofore described, decreed that
the agreement be ultimately performed within 120 days from the
finality of the order, now under appeal.

We conclude that in so doing, the Rizal court acted in accordance with


law, and, therefore, its order should be upheld, while the contrary
resolution of the Court of First Instance of Nueva Ecija should be, and
is, reversed.

In her brief, Tasiana Ongsingco also pleads that the time elapsed in
the appeal has affected her unfavorably, in that while the purchasing
power of the agreed price of P800,000 has diminished, the value of the
Jalajala property has increased. But the fact is that her delay in
receiving the payment of the agreed price for her hereditary interest
was primarily due to her attempts to nullify the agreement (Annex
"A") she had formally entered into with the advice of her counsel,
Attorney Panaguiton. And as to the devaluation de facto of our
currency, what We said in Dizon Rivera vs. Dizon, L-24561, 30 June
1970, 33 SCRA 554, that "estates would never be settled if there were
to be a revaluation with every subsequent fluctuation in the values of
currency and properties of the estate", is particularly opposite in the
present case.

Coming now to Case G.R. No. L-28611, the issue is whether the
Hacienda de Jalajala (Poblacion), concededly acquired by Francisco de
Borja during his marriage to his first wife, Josefa Tangco, is the
husband's private property (as contended by his second spouse,
Tasiana Ongsingco), or whether it forms part of the conjugal
(ganancial) partnership with Josefa Tangco. The Court of First Instance
of Rizal (Judge Herminio Mariano, presiding) declared that there was
adequate evidence to overcome the presumption in favor of its
conjugal character established by Article 160 of the Civil Code.

We are of the opinion that this question as between Tasiana Ongsingco


and Jose de Borja has become moot and academic, in view of the
conclusion reached by this Court in the two preceding cases (G.R. No.
L-28568), upholding as valid the cession of Tasiana Ongsingco's
eventual share in the estate of her late husband, Francisco de Borja,
for the sum of P800,000 with the accompanying reciprocal quit-claims
between the parties. But as the question may affect the rights of
possible creditors and legatees, its resolution is still imperative.

It is undisputed that the Hacienda Jalajala, of around 4,363 hectares,


had been originally acquired jointly by Francisco de Borja, Bernardo de
Borja and Marcelo de Borja and their title thereto was duly registered
in their names as co-owners in Land Registration Case No. 528 of the
province of Rizal, G.L.R.O. Rec. No. 26403 (De Barjo vs. Jugo, 54 Phil.
465). Subsequently, in 1931, the Hacienda was partitioned among the
co-owners: the Punta section went to Marcelo de Borja; the
Bagombong section to Bernardo de Borja, and the part in Jalajala
proper (Poblacion) corresponded to Francisco de Borja (V. De Borja vs.
De Borja 101 Phil. 911, 932).

The lot allotted to Francisco was described as


Una Parcela de terreno en Poblacion, Jalajala: N. Puang
River; E. Hermogena Romero; S. Heirs of Marcelo de Borja
O. Laguna de Bay; containing an area of 13,488,870 sq. m.
more or less, assessed at P297,410. (Record on Appeal,
pages 7 and 105)

On 20 November 1962, Tasiana O. Vda. de Borja, as Administratrix of


the Testate Estate of Francisco de Borja, instituted a complaint in the
Court of First Instance of Rizal (Civil Case No. 7452) against Jose de
Borja, in his capacity as Administrator of Josefa Tangco (Francisco de
Borja's first wife), seeking to have the Hacienda above described
declared exclusive private property of Francisco, while in his answer
defendant (now appellant) Jose de Borja claimed that it was conjugal
property of his parents (Francisco de Borja and Josefa Tangco),
conformably to the presumption established by Article 160 of the
Philippine Civil Code (reproducing Article 1407 of the Civil Code of
1889), to the effect that:

Art. 160. All property of the marriage is presumed to belong


to the conjugal partnership, unless it be proved that it
pertains exclusively to the husband or to the wife.

Defendant Jose de Borja further counterclaimed for damages,


compensatory, moral and exemplary, as well as for attorney's fees.

After trial, the Court of First Instance of Rizal, per Judge Herminio
Mariano, held that the plaintiff had adduced sufficient evidence to
rebut the presumption, and declared the Hacienda de Jalajala
(Poblacion) to be the exclusive private property of the late Francisco
de Borja, and his Administratrix, Tasiana Ongsingco Vda. de Borja, to
be entitled to its possession. Defendant Jose de Borja then appealed to
this Court.

The evidence reveals, and the appealed order admits, that the
character of the Hacienda in question as owned by the conjugal
partnership De Borja-Tangco was solemnly admitted by the late
Francisco de Borja no less than two times: first, in the Reamended
Inventory that, as executor of the estate of his deceased wife Josefa
Tangco, he filed in the Special Proceedings No. 7866 of the Court of
First Instance of Rizal on 23 July 1953 (Exhibit "2"); and again, in the
Reamended Accounting of the same date, also filed in the proceedings
aforesaid (Exhibit "7"). Similarly, the plaintiff Tasiana O. Vda. de
Borja, herself, as oppositor in the Estate of Josefa Tangco, submitted
therein an inventory dated 7 September 1954 (Exhibit "3") listing the
Jalajala property among the "Conjugal Properties of the Spouses
Francisco de Borja and Josefa Tangco". And once more, Tasiana
Ongsingco, as administratrix of the Estate of Francisco de Borja, in
Special Proceedings No. 832 of the Court of First Instance of Nueva
Ecija, submitted therein in December, 1955, an inventory wherein she
listed the Jalajala Hacienda under the heading "Conjugal Property of
the Deceased Spouses Francisco de Borja and Josefa Tangco, which
are in the possession of the Administrator of the Testate Estate of the
Deceased Josefa Tangco in Special Proceedings No. 7866 of the Court
of First Instance of Rizal" (Exhibit "4").

Notwithstanding the four statements aforesaid, and the fact that they
are plain admissions against interest made by both Francisco de Borja
and the Administratrix of his estate, in the course of judicial
proceedings in the Rizal and Nueva Ecija Courts, supporting the legal
presumption in favor of the conjugal community, the Court below
declared that the Hacienda de Jalajala (Poblacion) was not conjugal
property, but the private exclusive property of the late Francisco de
Borja. It did so on the strength of the following evidences: (a) the
sworn statement by Francis de Borja on 6 August 1951 (Exhibit "F")
that

He tomado possession del pedazo de terreno ya delimitado


(equivalente a 1/4 parte, 337 hectareas) adjunto a mi
terreno personal y exclusivo (Poblacion de Jalajala, Rizal).

and (b) the testimony of Gregorio de Borja, son of Bernardo de Borja,


that the entire Hacienda had been bought at a foreclosure sale for
P40,100.00, of which amount P25,100 was contributed by Bernardo de
Borja and P15,000. by Marcelo de Borja; that upon receipt of a
subsequent demand from the provincial treasurer for realty taxes the
sum of P17,000, Marcelo told his brother Bernardo that Francisco (son
of Marcelo) wanted also to be a co-owner, and upon Bernardo's assent
to the proposal, Marcelo issue a check for P17,000.00 to pay the back
taxes and said that the amount would represent Francisco's
contribution in the purchase of the Hacienda. The witness further
testified that
Marcelo de Borja said that that money was entrusted to him
by Francisco de Borja when he was still a bachelor and
which he derived from his business transactions. (Hearing,
2 February 1965, t.s.n., pages 13-15) (Emphasis supplied)

The Court below, reasoning that not only Francisco's sworn statement
overweighed the admissions in the inventories relied upon by
defendant-appellant Jose de Borja since probate courts can not finally
determine questions of ownership of inventoried property, but that the
testimony of Gregorio de Borja showed that Francisco de Borja
acquired his share of the original Hacienda with his private funds, for
which reason that share can not be regarded as conjugal partnership
property, but as exclusive property of the buyer, pursuant to Article
1396(4) of Civil Code of 1889 and Article 148(4) of the Civil Code of
the Philippines.

The following shall be the exclusive property of each spouse:

xxx xxx xxx

(4) That which is purchased with exclusive money of the


wife or of the husband.

We find the conclusions of the lower court to be untenable. In the first


place, witness Gregorio de Borja's testimony as to the source of the
money paid by Francisco for his share was plain hearsay, hence
inadmissible and of no probative value, since he was merely repeating
what Marcelo de Borja had told him (Gregorio). There is no way of
ascertaining the truth of the statement, since both Marcelo and
Francisco de Borja were already dead when Gregorio testified. In
addition, the statement itself is improbable, since there was no need
or occasion for Marcelo de Borja to explain to Gregorio how and when
Francisco de Borja had earned the P17,000.00 entrusted to Marcelo. A
ring of artificiality is clearly discernible in this portion of Gregorio's
testimony.

As to Francisco de Borja's affidavit, Exhibit "F", the quoted portion


thereof (ante, page 14) does not clearly demonstrate that the "mi
terreno personal y exclusivo (Poblacion de Jalajala, Rizal) " refers
precisely to the Hacienda in question. The inventories (Exhibits 3 and
4) disclose that there were two real properties in Jalajala owned by
Francisco de Borja, one of 72.038 sq. m., assessed at P44,600, and a
much bigger one of 1,357.260.70 sq. m., which is evidently the
Hacienda de Jalajala (Poblacion). To which of these lands did the
affidavit of Francisco de Borja (Exhibit "F") refer to? In addition,
Francisco's characterization of the land as "mi terreno personal y
exclusivo" is plainly self-serving, and not admissible in the absence of
cross examination.

It may be true that the inventories relied upon by defendant-appellant


(Exhibits "2", "3", "4" and "7") are not conclusive on the conjugal
character of the property in question; but as already noted, they are
clear admissions against the pecuniary interest of the declarants,
Francisco de Borja and his executor-widow, Tasiana Ongsingco, and as
such of much greater probative weight than the self-serving statement
of Francisco (Exhibit "F"). Plainly, the legal presumption in favor of the
conjugal character of the Hacienda de Jalajala (Poblacion) now in
dispute has not been rebutted but actually confirmed by proof. Hence,
the appealed order should be reversed and the Hacienda de Jalajala
(Poblacion) declared property of the conjugal partnership of Francisco
de Borja and Josefa Tangco.

No error having been assigned against the ruling of the lower court
that claims for damages should be ventilated in the corresponding
special proceedings for the settlement of the estates of the deceased,
the same requires no pro announcement from this Court.

IN VIEW OF THE FOREGOING, the appealed order of the Court of First


Instance of Rizal in Case No. L-28040 is hereby affirmed; while those
involved in Cases Nos. L-28568 and L-28611 are reversed and set
aside. Costs against the appellant Tasiana Ongsingco Vda. de Borja in
all three (3) cases.

Concepcion, C.J., Makalintal, Zaldivar, Castro, Teehankee, Barredo,


Makasiar, Antonio and Esguerra, JJ., concur.

Fernando, J., took no part.

Republic of the Philippines


SUPREME COURT
Manila
EN BANC

G.R. No. L-30642 April 30, 1985

PERFECTO S. FLORESCA, in his own behalf and on behalf of the


minors ROMULO and NESTOR S. FLORESCA; and ERLINDA
FLORESCA-GABUYO, PEDRO S. FLORESCA, JR., CELSO S.
FLORESCA, MELBA S. FLORESCA, JUDITH S. FLORESCA and
CARMEN S. FLORESCA;

LYDIA CARAMAT VDA. DE MARTINEZ in her own behalf and on


behalf of her minor children LINDA, ROMEO, ANTONIO JEAN
and ELY, all surnamed Martinez; and DANIEL MARTINEZ and
TOMAS MARTINEZ;

SALUSTIANA ASPIRAS VDA. DE OBRA, in her own behalf and on


behalf of her minor children JOSE, ESTELA, JULITA SALUD and
DANILO, all surnamed OBRA;

LYDIA CULBENGAN VDA. DE VILLAR, in her own behalf and on


behalf of her minor children EDNA, GEORGE and LARRY III, all
surnamed VILLAR;

DOLORES LOLITA ADER VDA. DE LANUZA, in her own behalf


and on behalf of her minor children EDITHA, ELIZABETH,
DIVINA, RAYMUNDO, NESTOR and AURELIO, JR. all surnamed
LANUZA;

EMERENCIANA JOSE VDA. DE ISLA, in her own behalf and on


behalf of her minor children JOSE, LORENZO, JR., MARIA,
VENUS and FELIX, all surnamed ISLA, petitioners,
vs.
PHILEX MINING CORPORATION and HON. JESUS P. MORFE,
Presiding Judge of Branch XIII, Court of First Instance of
Manila, respondents.

Rodolfo C. Pacampara for petitioners.

Tito M. Villaluna for respondents.


MAKASIAR, J.:

This is a petition to review the order of the former Court of First


Instance of Manila, Branch XIII, dated December 16, 1968 dismissing
petitioners' complaint for damages on the ground of lack of
jurisdiction.

Petitioners are the heirs of the deceased employees of Philex Mining


Corporation (hereinafter referred to as Philex), who, while working at
its copper mines underground operations at Tuba, Benguet on June
28, 1967, died as a result of the cave-in that buried them in the
tunnels of the mine. Specifically, the complaint alleges that Philex, in
violation of government rules and regulations, negligently and
deliberately failed to take the required precautions for the protection of
the lives of its men working underground. Portion of the complaint
reads:

xxx xxx xxx

9. That for sometime prior and up to June 28,1967, the


defendant PHILEX, with gross and reckless negligence and
imprudence and deliberate failure to take the required
precautions for the due protection of the lives of its men
working underground at the time, and in utter violation of
the laws and the rules and regulations duly promulgated by
the Government pursuant thereto, allowed great amount of
water and mud to accumulate in an open pit area at the
mine above Block 43-S-1 which seeped through and
saturated the 600 ft. column of broken ore and rock below
it, thereby exerting tremendous pressure on the working
spaces at its 4300 level, with the result that, on the said
date, at about 4 o'clock in the afternoon, with the collapse
of all underground supports due to such enormous
pressure, approximately 500,000 cubic feet of broken ores
rocks, mud and water, accompanied by surface boulders,
blasted through the tunnels and flowed out and filled in, in
a matter of approximately five (5) minutes, the
underground workings, ripped timber supports and carried
off materials, machines and equipment which blocked all
avenues of exit, thereby trapping within its tunnels of all its
men above referred to, including those named in the next
preceding paragraph, represented by the plaintiffs herein;

10. That out of the 48 mine workers who were then working
at defendant PHILEX's mine on the said date, five (5) were
able to escape from the terrifying holocaust; 22 were
rescued within the next 7 days; and the rest, 21 in number,
including those referred to in paragraph 7 hereinabove,
were left mercilessly to their fate, notwithstanding the fact
that up to then, a great many of them were still alive,
entombed in the tunnels of the mine, but were not rescued
due to defendant PHILEX's decision to abandon rescue
operations, in utter disregard of its bounden legal and
moral duties in the premises;

xxx xxx xxx

13. That defendant PHILEX not only violated the law and
the rules and regulations duly promulgated by the duly
constituted authorities as set out by the Special Committee
above referred to, in their Report of investigation, pages 7-
13, Annex 'B' hereof, but also failed completely to provide
its men working underground the necessary security for the
protection of their lives notwithstanding the fact that it had
vast financial resources, it having made, during the year
1966 alone, a total operating income of P 38,220,254.00, or
net earnings, after taxes of P19,117,394.00, as per its llth
Annual Report for the year ended December 31, 1966, and
with aggregate assets totalling P 45,794,103.00 as of
December 31, 1966;

xxx xxx xxx

(pp. 42-44, rec.)

A motion to dismiss dated May 14, 1968 was filed by Philex alleging
that the causes of action of petitioners based on an industrial accident
are covered by the provisions of the Workmen's Compensation Act
(Act 3428, as amended by RA 772) and that the former Court of First
Instance has no jurisdiction over the case. Petitioners filed an
opposition dated May 27, 1968 to the said motion to dismiss claiming
that the causes of action are not based on the provisions of the
Workmen's Compensation Act but on the provisions of the Civil Code
allowing the award of actual, moral and exemplary damages,
particularly:

Art. 2176. Whoever by act or omission causes damage to


another, there being fault or negligence, is obliged to pay
for the damage done. Such fault or negligence, if there is
no pre- existing contractual relation between the parties, is
called a quasi-delict and is governed by the provisions of
this Chapter.

Art. 2178. The provisions of articles 1172 to 1174 are also


applicable to a quasi-delict.

(b) Art. 1173The fault or negligence of the obligor


consists in the omission of that diligence which is required
by the nature of the obligation and corresponds with the
circumstances of the persons, of the time and of the place.
When negligence shows bad faith, the provisions of Articles
1171 and 2201, paragraph 2 shall apply.

Art. 2201. x x x x x x x x x

In case of fraud, bad faith, malice or wanton attitude, the


obligor shall be responsible for all damages which may be
reasonably attributed to the non-performance of the
obligation.

Art. 2231. In quasi-delicts, exemplary damages may be


granted if the defendant acted with gross negligence.

After a reply and a rejoinder thereto were filed, respondent Judge


issued an order dated June 27, 1968 dismissing the case on the
ground that it falls within the exclusive jurisdiction of the Workmen's
Compensation Commission. On petitioners' motion for reconsideration
of the said order, respondent Judge, on September 23, 1968,
reconsidered and set aside his order of June 27, 1968 and allowed
Philex to file an answer to the complaint. Philex moved to reconsider
the aforesaid order which was opposed by petitioners.
On December 16, 1968, respondent Judge dismissed the case for lack
of jurisdiction and ruled that in accordance with the established
jurisprudence, the Workmen's Compensation Commission has
exclusive original jurisdiction over damage or compensation claims for
work-connected deaths or injuries of workmen or employees,
irrespective of whether or not the employer was negligent, adding that
if the employer's negligence results in work-connected deaths or
injuries, the employer shall, pursuant to Section 4-A of the Workmen's
Compensation Act, pay additional compensation equal to 50% of the
compensation fixed in the Act.

Petitioners thus filed the present petition.

In their brief, petitioners raised the following assignment of errors:

THE LOWER COURT ERRED IN DISMISSING THE


PLAINTIFFS- PETITIONERS' COMPLAINT FOR LACK OF
JURISDICTION.

II

THE LOWER COURT ERRED IN FAILING TO CONSIDER THE


CLEAR DISTINCTION BETWEEN CLAIMS FOR DAMAGES
UNDER THE CIVIL CODE AND CLAIMS FOR COMPENSATION
UNDER THE WORKMEN'S COMPENSATION ACT.

In the first assignment of error, petitioners argue that the lower court
has jurisdiction over the cause of action since the complaint is based
on the provisions of the Civil Code on damages, particularly Articles
2176, 2178, 1173, 2201 and 2231, and not on the provisions of the
Workmen's Compensation Act. They point out that the complaint
alleges gross and brazen negligence on the part of Philex in failing to
take the necessary security for the protection of the lives of its
employees working underground. They also assert that since Philex
opted to file a motion to dismiss in the court a quo, the allegations in
their complaint including those contained in the annexes are deemed
admitted.
In the second assignment of error, petitioners asseverate that
respondent Judge failed to see the distinction between the claims for
compensation under the Workmen's Compensation Act and the claims
for damages based on gross negligence of Philex under the Civil Code.
They point out that workmen's compensation refers to liability for
compensation for loss resulting from injury, disability or death of the
working man through industrial accident or disease, without regard to
the fault or negligence of the employer, while the claim for damages
under the Civil Code which petitioners pursued in the regular court,
refers to the employer's liability for reckless and wanton negligence
resulting in the death of the employees and for which the regular court
has jurisdiction to adjudicate the same.

On the other hand, Philex asserts that work-connected injuries are


compensable exclusively under the provisions of Sections 5 and 46 of
the Workmen's Compensation Act, which read:

SEC. 5. Exclusive right to compensation.The rights and


remedies granted by this Act to an employee by reason of a
personal injury entitling him to compensation shall exclude
all other rights and remedies accruing to the employee, his
personal representatives, dependents or nearest of kin
against the employer under the Civil Code and other laws
because of said injury ...

SEC. 46. Jurisdiction. The Workmen's Compensation


Commissioner shall have exclusive jurisdiction to hear and
decide claims for compensation under the Workmen's
Compensation Act, subject to appeal to the Supreme Court,
...

Philex cites the case of Manalo vs. Foster Wheeler (98 Phil. 855
[1956]) where it was held that "all claims of workmen against their
employer for damages due to accident suffered in the course of
employment shall be investigated and adjudicated by the Workmen's
Compensation Commission," subject to appeal to the Supreme Court.

Philex maintains that the fact that an employer was negligent, does
not remove the case from the exclusive character of recoveries under
the Workmen's Compensation Act; because Section 4-A of the Act
provides an additional compensation in case the employer fails to
comply with the requirements of safety as imposed by law to prevent
accidents. In fact, it points out that Philex voluntarily paid the
compensation due the petitioners and all the payments have been
accepted in behalf of the deceased miners, except the heirs of Nazarito
Floresca who insisted that they are entitled to a greater amount of
damages under the Civil Code.

In the hearing of this case, then Undersecretary of Labor Israel


Bocobo, then Atty. Edgardo Angara, now President of the University of
the Philippines, Justice Manuel Lazaro, as corporate counsel and
Assistant General Manager of the GSIS Legal Affairs Department, and
Commissioner on Elections, formerly UP Law Center Director Froilan
Bacungan, appeared as amici curiae and thereafter, submitted their
respective memoranda.

The issue to be resolved as WE stated in the resolution of November


26, 1976, is:

Whether the action of an injured employee or worker or


that of his heirs in case of his death under the Workmen's
Compensation Act is exclusive, selective or cumulative, that
is to say, whether his or his heirs' action is exclusively
restricted to seeking the limited compensation provided
under the Workmen's Compensation Act or whether they
have a right of selection or choice of action between
availing of the worker's right under the Workmen's
Compensation Act and suing in the regular courts under the
Civil Code for higher damages (actual, moral and/or
exemplary) from the employer by virtue of negligence (or
fault) of the employer or of his other employees or whether
they may avail cumulatively of both actions, i.e., collect the
limited compensation under the Workmen's Compensation
Act and sue in addition for damages in the regular courts.

There are divergent opinions in this case. Justice Lazaro is of the


opinion that an injured employee or worker, or the heirs in case of his
death, may initiate a complaint to recover damages (not compensation
under the Workmen's Compensation Act) with the regular court on the
basis of negligence of an employer pursuant to the Civil Code
provisions. Atty. Angara believes otherwise. He submits that the
remedy of an injured employee for work-connected injury or accident
is exclusive in accordance with Section 5 of the Workmen's
Compensation Act, while Atty. Bacungan's position is that the action is
selective. He opines that the heirs of the employee in case of his death
have a right of choice to avail themselves of the benefits provided
under the Workmen's Compensation Act or to sue in the regular court
under the Civil Code for higher damages from the employer by virtue
of negligence of the latter. Atty. Bocobo's stand is the same as that of
Atty. Bacungan and adds that once the heirs elect the remedy
provided for under the Act, they are no longer entitled to avail
themselves of the remedy provided for under the Civil Code by filing
an action for higher damages in the regular court, and vice versa.

On August 3, 1978, petitioners-heirs of deceased employee Nazarito


Floresca filed a motion to dismiss on the ground that they have
amicably settled their claim with respondent Philex. In the resolution
of September 7, 1978, WE dismissed the petition only insofar as the
aforesaid petitioners are connected, it appearing that there are other
petitioners in this case.

WE hold that the former Court of First Instance has jurisdiction to try
the case,

It should be underscored that petitioners' complaint is not for


compensation based on the Workmen's Compensation Act but a
complaint for damages (actual, exemplary and moral) in the total
amount of eight hundred twenty-five thousand (P825,000.00) pesos.
Petitioners did not invoke the provisions of the Workmen's
Compensation Act to entitle them to compensation thereunder. In fact,
no allegation appeared in the complaint that the employees died from
accident arising out of and in the course of their employments. The
complaint instead alleges gross and reckless negligence and deliberate
failure on the part of Philex to protect the lives of its workers as a
consequence of which a cave-in occurred resulting in the death of the
employees working underground. Settled is the rule that in
ascertaining whether or not the cause of action is in the nature of
workmen's compensation claim or a claim for damages pursuant to the
provisions of the Civil Code, the test is the averments or allegations in
the complaint (Belandres vs. Lopez Sugar Mill, Co., Inc., 97 Phil. 100).

In the present case, there exists between Philex and the deceased
employees a contractual relationship. The alleged gross and reckless
negligence and deliberate failure that amount to bad faith on the part
of Philex, constitute a breach of contract for which it may be held liable
for damages. The provisions of the Civil Code on cases of breach of
contract when there is fraud or bad faith, read:

Art. 2232. In contracts and quasi-contracts, the court may


award exemplary damages if the defendant acted in a
wanton, fraudulent, reckless, oppressive or malevolent
manner.

Art. 2201. In contracts and quasi-contracts, the damages


for which the obligor who acted in good faith is able shall be
those that are the natural and probable consequences of
the breach of the obligation, and which the parties have
foreseen or could have reasonably foreseen at the time the
obligation was constituted.

In cases of fraud, bad faith, malice or wanton attitude, the


obligor shall be responsible for all damages which may be
reasonably attributed to the non-performance of the
obligation.

Furthermore, Articles 2216 et seq., Civil Code, allow the payment of all
kinds of damages, as assessed by the court.

The rationale in awarding compensation under the Workmen's


Compensation Act differs from that in giving damages under the Civil
Code. The compensation acts are based on a theory of compensation
distinct from the existing theories of damages, payments under the
acts being made as compensation and not as damages (99 C.J.S. 53).
Compensation is given to mitigate the harshness and insecurity of
industrial life for the workman and his family. Hence, an employer is
liable whether negligence exists or not since liability is created by law.
Recovery under the Act is not based on any theory of actionable wrong
on the part of the employer (99 C.J.S. 36).

In other words, under the compensation acts, the employer is liable to


pay compensation benefits for loss of income, as long as the death,
sickness or injury is work-connected or work-aggravated, even if the
death or injury is not due to the fault of the employer (Murillo vs.
Mendoza, 66 Phil. 689). On the other hand, damages are awarded to
one as a vindication of the wrongful invasion of his rights. It is the
indemnity recoverable by a person who has sustained injury either in
his person, property or relative rights, through the act or default of
another (25 C.J.S. 452).

The claimant for damages under the Civil Code has the burden of
proving the causal relation between the defendant's negligence and
the resulting injury as well as the damages suffered. While under the
Workmen's Compensation Act, there is a presumption in favor of the
deceased or injured employee that the death or injury is work-
connected or work-aggravated; and the employer has the burden to
prove otherwise (De los Angeles vs. GSIS, 94 SCRA 308; Carino vs.
WCC, 93 SCRA 551; Maria Cristina Fertilizer Corp. vs. WCC, 60 SCRA
228).

The claim of petitioners that the case is not cognizable by the


Workmen's Compensation Commission then, now Employees
Compensation Commission, is strengthened by the fact that unlike in
the Civil Code, the Workmen's Compensation Act did not contain any
provision for an award of actual, moral and exemplary damages. What
the Act provided was merely the right of the heirs to claim limited
compensation for the death in the amount of six thousand (P6,000.00)
pesos plus burial expenses of two hundred (P200.00) pesos, and
medical expenses when incurred (Sections 8, 12 and 13, Workmen's
Compensation Act), and an additional compensation of only 50% if the
complaint alleges failure on the part of the employer to "install and
maintain safety appliances or to take other precautions for the
prevention of accident or occupational disease" (Section 4-A, Ibid.). In
the case at bar, the amount sought to be recovered is over and above
that which was provided under the Workmen's Compensation Act and
which cannot be granted by the Commission.

Moreover, under the Workmen's Compensation Act, compensation


benefits should be paid to an employee who suffered an accident not
due to the facilities or lack of facilities in the industry of his employer
but caused by factors outside the industrial plant of his employer.
Under the Civil Code, the liability of the employer, depends on breach
of contract or tort. The Workmen's Compensation Act was specifically
enacted to afford protection to the employees or workmen. It is a
social legislation designed to give relief to the workman who has been
the victim of an accident causing his death or ailment or injury in the
pursuit of his employment (Abong vs. WCC, 54 SCRA 379).

WE now come to the query as to whether or not the injured employee


or his heirs in case of death have a right of selection or choice of
action between availing themselves of the worker's right under the
Workmen's Compensation Act and suing in the regular courts under
the Civil Code for higher damages (actual, moral and exemplary) from
the employers by virtue of that negligence or fault of the employers or
whether they may avail themselves cumulatively of both actions, i.e.,
collect the limited compensation under the Workmen's Compensation
Act and sue in addition for damages in the regular courts.

In disposing of a similar issue, this Court in Pacana vs. Cebu Autobus


Company, 32 SCRA 442, ruled that an injured worker has a choice of
either to recover from the employer the fixed amounts set by the
Workmen's Compensation Act or to prosecute an ordinary civil action
against the tortfeasor for higher damages but he cannot pursue both
courses of action simultaneously.

In Pacaa WE said:

In the analogous case of Esguerra vs. Munoz Palma,


involving the application of Section 6 of the Workmen's
Compensation Act on the injured workers' right to sue
third- party tortfeasors in the regular courts, Mr. Justice
J.B.L. Reyes, again speaking for the Court, pointed out that
the injured worker has the choice of remedies but cannot
pursue both courses of action simultaneously and thus
balanced the relative advantage of recourse under the
Workmen's Compensation Act as against an ordinary action.

As applied to this case, petitioner Esguerra cannot maintain


his action for damages against the respondents (defendants
below), because he has elected to seek compensation under
the Workmen's Compensation Law, and his claim (case No.
44549 of the Compensation Commission) was being
processed at the time he filed this action in the Court of
First Instance. It is argued for petitioner that as the
damages recoverable under the Civil Code are much more
extensive than the amounts that may be awarded under the
Workmen's Compensation Act, they should not be deemed
incompatible. As already indicated, the injured laborer was
initially free to choose either to recover from the employer
the fixed amounts set by the Compensation Law or else, to
prosecute an ordinary civil action against the tortfeasor for
higher damages. While perhaps not as profitable, the
smaller indemnity obtainable by the first course is balanced
by the claimant's being relieved of the burden of proving
the causal connection between the defendant's negligence
and the resulting injury, and of having to establish the
extent of the damage suffered; issues that are apt to be
troublesome to establish satisfactorily. Having staked his
fortunes on a particular remedy, petitioner is precluded
from pursuing the alternate course, at least until the prior
claim is rejected by the Compensation Commission.
Anyway, under the proviso of Section 6 aforequoted, if the
employer Franklin Baker Company recovers, by derivative
action against the alleged tortfeasors, a sum greater than
the compensation he may have paid the herein petitioner,
the excess accrues to the latter.

Although the doctrine in the case of Esguerra vs. Munoz Palma (104
Phil. 582), applies to third-party tortfeasor, said rule should likewise
apply to the employer-tortfeasor.

Insofar as the heirs of Nazarito Floresca are concerned, as already


stated, the petition has been dismissed in the resolution of September
7, 1978 in view of the amicable settlement reached by Philex and the
said heirs.

With regard to the other petitioners, it was alleged by Philex in its


motion to dismiss dated May 14, 1968 before the court a quo, that the
heirs of the deceased employees, namely Emerito Obra, Larry Villar,
Jr., Aurelio Lanuza, Lorenzo Isla and Saturnino Martinez submitted
notices and claims for compensation to the Regional Office No. 1 of the
then Department of Labor and all of them have been paid in full as of
August 25, 1967, except Saturnino Martinez whose heirs decided that
they be paid in installments (pp. 106-107, rec.). Such allegation was
admitted by herein petitioners in their opposition to the motion to
dismiss dated May 27, 1968 (pp. 121-122, rec.) in the lower court, but
they set up the defense that the claims were filed under the
Workmen's Compensation Act before they learned of the official report
of the committee created to investigate the accident which established
the criminal negligence and violation of law by Philex, and which report
was forwarded by the Director of Mines to the then Executive
Secretary Rafael Salas in a letter dated October 19, 1967 only (p. 76,
rec.).

WE hold that although the other petitioners had received the benefits
under the Workmen's Compensation Act, such may not preclude them
from bringing an action before the regular court because they became
cognizant of the fact that Philex has been remiss in its contractual
obligations with the deceased miners only after receiving
compensation under the Act. Had petitioners been aware of said
violation of government rules and regulations by Philex, and of its
negligence, they would not have sought redress under the Workmen's
Compensation Commission which awarded a lesser amount for
compensation. The choice of the first remedy was based on ignorance
or a mistake of fact, which nullifies the choice as it was not an
intelligent choice. The case should therefore be remanded to the lower
court for further proceedings. However, should the petitioners be
successful in their bid before the lower court, the payments made
under the Workmen's Compensation Act should be deducted from the
damages that may be decreed in their favor.

Contrary to the perception of the dissenting opinion, the Court does


not legislate in the instant case. The Court merely applies and gives
effect to the constitutional guarantees of social justice then secured by
Section 5 of Article 11 and Section 6 of Article XIV of the 1935
Constitution, and now by Sections 6, 7, and 9 of Article 11 of the
DECLARATION OF PRINCIPLES AND STATE POLICIES of the 1973
Constitution, as amended, and as implemented by Articles 2176, 2177,
2178, 1173, 2201, 2216, 2231 and 2232 of the New Civil Code of
1950.

To emphasize, the 1935 Constitution declares that:

Sec. 5. The promotion of social justice to insure the well-


being and economic security of all the people should be the
concern of the State (Art. II).
Sec. 6. The State shall afford protection to labor, especially
to working women, and minors, and shall regulate the
relations between landowner and tenant, and between labor
and capital in industry and in agriculture. The State may
provide for compulsory arbitration (Art. XIV).

The 1973 Constitution likewise commands the State to "promote social


justice to insure the dignity, welfare, and security of all the people "...
regulate the use ... and disposition of private property and equitably
diffuse property ownership and profits "establish, maintain and ensure
adequate social services in, the field of education, health,
housing, employment, welfare and social security to guarantee the
enjoyment by the people of a decent standard of living" (Sections 6
and 7, Art. II, 1973 Constitution); "... afford protection to labor, ...
and regulate the relations between workers and employers ..., and
assure the rights of workers to ... just and humane conditions of
work" (Sec. 9, Art. II, 1973 Constitution, emphasis supplied).

The foregoing constitutional guarantees in favor of labor


institutionalized in Section 9 of Article 11 of the 1973 Constitution and
re-stated as a declaration of basic policy in Article 3 of the New Labor
Code, thus:

Art. 3. Declaration of basic policy.The State shall afford


protection to labor, promote full employment, ensure equal
work opportunities regardless of sex, race or creed,
and regulate the relations between workers and
employers. The State shall assure the rights of workers to
self-organization, collective bargaining, security of tenure,
and just and humane conditions of work. (emphasis
supplied).

The aforestated constitutional principles as implemented by the


aforementioned articles of the New Civil Code cannot be impliedly
repealed by the restrictive provisions of Article 173 of the New Labor
Code. Section 5 of the Workmen's Compensation Act (before it
was amended by R.A. No. 772 on June 20, 1952), predecessor of
Article 173 of the New Labor Code, has been superseded by the
aforestated provisions of the New Civil Code, a subsequent law, which
took effect on August 30, 1950, which obey the constitutional
mandates of social justice enhancing as they do the rights of the
workers as against their employers. Article 173 of the New Labor Code
seems to diminish the rights of the workers and therefore collides with
the social justice guarantee of the Constitution and the liberal
provisions of the New Civil Code.

The guarantees of social justice embodied in Sections 6, 7 and 9 of


Article II of the 1973 Constitution are statements of legal principles to
be applied and enforced by the courts. Mr. Justice Robert Jackson in
the case of West Virginia State Board of Education vs. Barnette, with
characteristic eloquence, enunciated:

The very purpose of a Bill of Rights was to withdraw certain


subjects from the vicissitudes of political controversy, to
place them beyond the reach of majorities and officials and
to establish them as legal principles to be applied by the
courts. One's right to life, liberty, and property, to free
speech, a free press, freedom of worship and assembly, and
other fundamental rights may not be submitted to vote;
they depend on the outcome of no elections (319 U.S. 625,
638, 87 L.ed. 1638, emphasis supplied).

In case of any doubt which may be engendered by Article 173 of the


New Labor Code, both the New Labor Code and the Civil Code direct
that the doubts should be resolved in favor of the workers and
employees.

Thus, Article 4 of the New Labor Code, otherwise known as Presidential


Decree No. 442, as amended, promulgated on May 1, 1974, but which
took effect six months thereafter, provides that "all doubts in the
implementation and interpretation of the provisions of this Code,
including its implementing rules and regulations, shall be resolved in
favor of labor" (Art. 2, Labor Code).

Article 10 of the New Civil Code states: "In case of doubt in the
interpretation or application of laws, it is presumed that the law-
making body intended right and justice to prevail. "

More specifically, Article 1702 of the New Civil Code likewise directs
that. "In case of doubt, all labor legislation and all labor contracts shall
be construed in favor of the safety and decent living of the laborer."
Before it was amended by Commonwealth Act No. 772 on June 20,
1952, Section 5 of the Workmen's Compensation Act provided:

Sec. 5. Exclusive right to compensation.- The rights and


remedies granted by this Act to an employee by reason of a
personal injury entitling him to compensation shall exclude
all other rights and remedies accruing to the employee, his
personal representatives, dependents or nearest of kin
against the employer under the Civil Code and other laws,
because of said injury (emphasis supplied).

Employers contracting laborecsrs in the Philippine Islands


for work outside the same may stipulate with such laborers
that the remedies prescribed by this Act shall apply
exclusively to injuries received outside the Islands through
accidents happening in and during the performance of the
duties of the employment; and all service contracts made in
the manner prescribed in this section shall be presumed to
include such agreement.

Only the second paragraph of Section 5 of the Workmen's


Compensation Act No. 3428, was amended by Commonwealth Act No.
772 on June 20, 1952, thus:

Sec. 5. Exclusive right to compensation.- The rights and


remedies granted by this Act to an employee by reason of a
personal injury entitling him to compensation shall exclude
all other rights and remedies accruing to the employee, his
personal representatives, dependents or nearest of kin
against the employer under the Civil Code and other laws,
because of said injury.

Employers contracting laborers in the Philippine Islands for


work outside the same shall stipulate with such laborers
that the remedies prescribed by this Act shall apply to
injuries received outside the Island through accidents
happening in and during the performance of the duties of
the employment. Such stipulation shall not prejudice the
right of the laborers to the benefits of the Workmen's
Compensation Law of the place where the accident occurs,
should such law be more favorable to them (As amended by
section 5 of Republic Act No. 772).

Article 173 of the New Labor Code does not repeal expressly nor
impliedly the applicable provisions of the New Civil Code, because said
Article 173 provides:

Art. 173. Exclusiveness of liability.- Unless otherwise


provided, the liability of the State Insurance Fund under
this Title shall be exclusive and in place of all other
liabilities of the employer to the employee, his dependents
or anyone otherwise entitled to receive damages on behalf
of the employee or his dependents. The payment of
compensation under this Title shall bar the recovery of
benefits as provided for in Section 699 of the Revised
Administrative Code, Republic Act Numbered Eleven
hundred sixty-one, as amended, Commonwealth Act
Numbered One hundred eighty- six, as amended,
Commonwealth Act Numbered Six hundred ten, as
amended, Republic Act Numbered Forty-eight hundred
Sixty-four, as amended, and other laws whose benefits are
administered by the System during the period of such
payment for the same disability or death, and conversely
(emphasis supplied).

As above-quoted, Article 173 of the New Labor Code expressly


repealed only Section 699 of the Revised Administrative Code, R.A.
No. 1161, as amended, C.A. No. 186, as amended, R.A. No. 610, as
amended, R.A. No. 4864, as amended, and all other laws whose
benefits are administered by the System (referring to the GSIS or
SSS).

Unlike Section 5 of the Workmen's Compensation Act as aforequoted,


Article 173 of the New Labor Code does not even remotely, much less
expressly, repeal the New Civil Code provisions heretofore quoted.

It is patent, therefore, that recovery under the New Civil Code for
damages arising from negligence, is not barred by Article 173 of the
New Labor Code. And the damages recoverable under the New Civil
Code are not administered by the System provided for by the New
Labor Code, which defines the "System" as referring to the
Government Service Insurance System or the Social Security System
(Art. 167 [c], [d] and [e] of the New Labor Code).

Furthermore, under Article 8 of the New Civil Code, decisions of the


Supreme Court form part of the law of the land.

Article 8 of the New Civil Code provides:

Art. 8. Judicial decisions applying or interpreting the laws or


the Constitution shall form a part of the legal system of the
Philippines.

The Court, through the late Chief Justice Fred Ruiz Castro, in People
vs. Licera ruled:

Article 8 of the Civil Code of the Philippines decrees that


judicial decisions applying or interpreting the laws or the
Constitution form part of this jurisdiction's legal system.
These decisions, although in themselves not laws,
constitute evidence of what the laws mean. The application
or interpretation placed by the Court upon a law is part of
the law as of the date of the enactment of the said law
since the Court's application or interpretation merely
establishes the contemporaneous legislative intent that the
construed law purports to carry into effect" (65 SCRA 270,
272-273 [1975]).

WE ruled that judicial decisions of the Supreme Court assume the


same authority as the statute itself (Caltex vs. Palomer, 18 SCRA 247;
124 Phil. 763).

The aforequoted provisions of Section 5 of the Workmen's


Compensation Act, before and after it was amended by Commonwealth
Act No. 772 on June 20, 1952, limited the right of recovery in favor of
the deceased, ailing or injured employee to the compensation provided
for therein. Said Section 5 was not accorded controlling application by
the Supreme Court in the 1970 case of Pacana vs. Cebu Autobus
Company (32 SCRA 442) when WE ruled that an injured worker has a
choice of either to recover from the employer the fixed amount set by
the Workmen's Compensation Act or to prosecute an ordinary civil
action against the tortfeasor for greater damages; but he cannot
pursue both courses of action simultaneously. Said Pacana case
penned by Mr. Justice Teehankee, applied Article 1711 of the Civil
Code as against the Workmen's Compensation Act, reiterating the
1969 ruling in the case of Valencia vs. Manila Yacht Club (28 SCRA
724, June 30,1969) and the 1958 case of Esguerra vs. Munoz Palma
(104 Phil. 582), both penned by Justice J.B.L. Reyes. Said Pacana case
was concurred in by Justices J.B.L. Reyes, Dizon, Makalintal, Zaldivar,
Castro, Fernando and Villamor.

Since the first sentence of Article 173 of the New Labor Code is merely
a re-statement of the first paragraph of Section 5 of the Workmen's
Compensation Act, as amended, and does not even refer, neither
expressly nor impliedly, to the Civil Code as Section 5 of the
Workmen's Compensation Act did, with greater reason said Article 173
must be subject to the same interpretation adopted in the cases of
Pacana, Valencia and Esguerra aforementioned as the doctrine in the
aforesaid three (3) cases is faithful to and advances the social justice
guarantees enshrined in both the 1935 and 1973 Constitutions.

It should be stressed likewise that there is no similar provision on


social justice in the American Federal Constitution, nor in the various
state constitutions of the American Union. Consequently, the
restrictive nature of the American decisions on the Workmen's
Compensation Act cannot limit the range and compass of OUR
interpretation of our own laws, especially Article 1711 of the New Civil
Code, vis-a-vis Article 173 of the New Labor Code, in relation to
Section 5 of Article II and Section 6 of Article XIV of the 1935
Constitution then, and now Sections 6, 7 and 9 of the Declaration of
Principles and State Policies of Article II of the 1973 Constitution.

The dissent seems to subordinate the life of the laborer to the property
rights of the employer. The right to life is guaranteed specifically by
the due process clause of the Constitution. To relieve the employer
from liability for the death of his workers arising from his gross or
wanton fault or failure to provide safety devices for the protection of
his employees or workers against the dangers which are inherent in
underground mining, is to deprive the deceased worker and his heirs
of the right to recover indemnity for the loss of the life of the worker
and the consequent loss to his family without due process of law. The
dissent in effect condones and therefore encourages such gross or
wanton neglect on the part of the employer to comply with his legal
obligation to provide safety measures for the protection of the life,
limb and health of his worker. Even from the moral viewpoint alone,
such attitude is un-Christian.

It is therefore patent that giving effect to the social justice guarantees


of the Constitution, as implemented by the provisions of the New Civil
Code, is not an exercise of the power of law-making, but is rendering
obedience to the mandates of the fundamental law and the
implementing legislation aforementioned.

The Court, to repeat, is not legislating in the instant case.

It is axiomatic that no ordinary statute can override a constitutional


provision.

The words of Section 5 of the Workmen's Compensation Act and of


Article 173 of the New Labor Code subvert the rights of the petitioners
as surviving heirs of the deceased mining employees. Section 5 of the
Workmen's Compensation Act and Article 173 of the New Labor Code
are retrogressive; because they are a throwback to the obsolete
laissez-faire doctrine of Adam Smith enunciated in 1776 in his treatise
Wealth of Nations (Collier's Encyclopedia, Vol. 21, p. 93, 1964), which
has been discarded soon after the close of the 18th century due to the
Industrial Revolution that generated the machines and other
mechanical devices (beginning with Eli Whitney's cotton gin of 1793
and Robert Fulton's steamboat of 1807) for production and
transportation which are dangerous to life, limb and health. The old
socio-political-economic philosophy of live-and-let-live is now
superdesed by the benign Christian shibboleth of live-and-help others
to live. Those who profess to be Christians should not adhere to Cain's
selfish affirmation that he is not his brother's keeper. In this our
civilization, each one of us is our brother's keeper. No man is an
island. To assert otherwise is to be as atavistic and ante-deluvian as
the 1837 case of Prisley vs. Fowler (3 MN 1,150 reprint 1030) invoked
by the dissent, The Prisley case was decided in 1837 during the era of
economic royalists and robber barons of America. Only ruthless,
unfeeling capitalistics and egoistic reactionaries continue to pay
obeisance to such un-Christian doctrine. The Prisley rule humiliates
man and debases him; because the decision derisively refers to the
lowly worker as "servant" and utilizes with aristocratic arrogance
"master" for "employer." It robs man of his inherent dignity and
dehumanizes him. To stress this affront to human dignity, WE only
have to restate the quotation from Prisley, thus: "The mere relation of
the master and the servant never can imply an obligation on the part
of the master to take more care of the servant than he may
reasonably be expected to do himself." This is the very selfish doctrine
that provoked the American Civil War which generated so much hatred
and drew so much precious blood on American plains and valleys from
1861 to 1864.

"Idolatrous reverence" for the letter of the law sacrifices the human
being. The spirit of the law insures man's survival and ennobles him.
In the words of Shakespeare, "the letter of the law killeth; its spirit
giveth life."

It is curious that the dissenting opinion clings to the myth that the
courts cannot legislate.

That myth had been exploded by Article 9 of the New Civil Code, which
provides that "No judge or court shall decline to render judgment by
reason of the silence, obscurity or insufficiency of the laws. "

Hence, even the legislator himself, through Article 9 of the New Civil
Code, recognizes that in certain instances, the court, in the language
of Justice Holmes, "do and must legislate" to fill in the gaps in the law;
because the mind of the legislator, like all human beings, is finite and
therefore cannot envisage all possible cases to which the law may
apply Nor has the human mind the infinite capacity to anticipate all
situations.

But about two centuries before Article 9 of the New Civil Code, the
founding fathers of the American Constitution foresaw and recognized
the eventuality that the courts may have to legislate to supply the
omissions or to clarify the ambiguities in the American Constitution
and the statutes.

'Thus, Alexander Hamilton pragmatically admits that judicial legislation


may be justified but denies that the power of the Judiciary to nullify
statutes may give rise to Judicial tyranny (The Federalist, Modern
Library, pp. 503-511, 1937 ed.). Thomas Jefferson went farther to
concede that the court is even independent of the Nation itself (A.F.L.
vs. American Sash Company, 1949 335 US 538).

Many of the great expounders of the American Constitution likewise


share the same view. Chief Justice Marshall pronounced: "It is
emphatically the province and duty of the Judicial department to say
what the law is (Marbury vs. Madison I Cranch 127 1803), which was
re-stated by Chief Justice Hughes when he said that "the Constitution
is what the judge says it is (Address on May 3, 1907, quoted by
President Franklin Delano Roosevelt on March 9, 1937). This was
reiterated by Justice Cardozo who pronounced that "No doubt the
limits for the judge are narrower. He legislates only between gaps. He
fills the open spaces in the law. " (The Nature of the Judicial Process,
p. 113). In the language of Chief Justice Harlan F. Stone, "The only
limit to the judicial legislation is the restraint of the judge" (U.S. vs.
Butler 297 U.S. 1 Dissenting Opinion, p. 79), which view is also
entertained by Justice Frankfurter and Justice Robert Jackson. In the
rhetoric of Justice Frankfurter, "the courts breathe life, feeble or
strong, into the inert pages of the Constitution and all statute books."

It should be stressed that the liability of the employer under Section 5


of the Workmen's Compensation Act or Article 173 of the New Labor
Code is limited to death, ailment or injury caused by the nature of the
work, without any fault on the part of the employers. It is correctly
termed no fault liability. Section 5 of the Workmen's Compensation
Act, as amended, or Article 173 of the New Labor Code, does not cover
the tortious liability of the employer occasioned by his fault or culpable
negligence in failing to provide the safety devices required by the law
for the protection of the life, limb and health of the workers. Under
either Section 5 or Article 173, the employer remains liable to pay
compensation benefits to the employee whose death, ailment or injury
is work-connected, even if the employer has faithfully and diligently
furnished all the safety measures and contrivances decreed by the law
to protect the employee.

The written word is no longer the "sovereign talisman." In the


epigrammatic language of Mr. Justice Cardozo, "the law has outgrown
its primitive stage of formalism when the precise word was the
sovereign talisman, and every slip was fatal" (Wood vs. Duff Gordon
222 NW 88; Cardozo, The Nature of the Judicial Process 100). Justice
Cardozo warned that: "Sometimes the conservatism of judges has
threatened for an interval to rob the legislation of its efficacy. ...
Precedents established in those items exert an unhappy influence even
now" (citing Pound, Common Law and Legislation 21 Harvard Law
Review 383, 387).

Finally, Justice Holmes delivered the coup de grace when he


pragmatically admitted, although with a cautionary undertone: "that
judges do and must legislate, but they can do so only interstitially they
are confined from molar to molecular motions" (Southern Pacific
Company vs. Jensen, 244 US 204 1917). And in the subsequent case
of Springer vs. Government (277 US 188, 210-212, 72 L.ed. 845, 852-
853), Justice Holmes pronounced:

The great ordinances of the Constitution do not establish


and divide fields of black and white. Even the more specific
of them are found to terminate in a penumbra shading
gradually from one extreme to the other. x x x. When we
come to the fundamental distinctions it is still more obvious
that they must be received with a certain latitude or our
government could not go on.

To make a rule of conduct applicable to an individual who


but for such action would be free from it is to legislate yet it
is what the judges do whenever they determine which of
two competing principles of policy shall prevail.

xxx xxx xxx

It does not seem to need argument to show that however


we may disguise it by veiling words we do not and cannot
carry out the distinction between legislative and executive
action with mathematical precision and divide the branches
into waterlight compartments, were it ever so desirable to
do so, which I am far from believing that it is, or that the
Constitution requires.

True, there are jurists and legal writers who affirm that judges should
not legislate, but grudgingly concede that in certain cases judges do
legislate. They criticize the assumption by the courts of such law-
making power as dangerous for it may degenerate into Judicial
tyranny. They include Blackstone, Jeremy Bentham, Justice Black,
Justice Harlan, Justice Roberts, Justice David Brewer, Ronald Dworkin,
Rolf Sartorious, Macklin Fleming and Beryl Harold Levy. But said
Justices, jurists or legal commentators, who either deny the power of
the courts to legislate in-between gaps of the law, or decry the
exercise of such power, have not pointed to examples of the exercise
by the courts of such law-making authority in the interpretation and
application of the laws in specific cases that gave rise to judicial
tyranny or oppression or that such judicial legislation has not protected
public interest or individual welfare, particularly the lowly workers or
the underprivileged.

On the other hand, there are numerous decisions interpreting the Bill
of Rights and statutory enactments expanding the scope of such
provisions to protect human rights. Foremost among them is the
doctrine in the cases of Miranda vs. Arizona (384 US 436 1964),
Gideon vs. Wainright (372 US 335), Escubedo vs. Illinois (378 US
478), which guaranteed the accused under custodial investigation his
rights to remain silent and to counsel and to be informed of such rights
as even as it protects him against the use of force or intimidation to
extort confession from him. These rights are not found in the American
Bill of Rights. These rights are now institutionalized in Section 20,
Article IV of the 1973 Constitution. Only the peace-and-order
adherents were critical of the activism of the American Supreme Court
led by Chief Justice Earl Warren.

Even the definition of Identical offenses for purposes of the double


jeopardy provision was developed by American judicial decisions, not
by amendment to the Bill of Rights on double jeopardy (see Justice
Laurel in People vs. Tarok, 73 Phil. 260, 261-268). And these judicial
decisions have been re-stated in Section 7 of Rule 117 of the 1985
Rules on Criminal Procedure, as well as in Section 9 of Rule 117 of the
1964 Revised Rules of Court. In both provisions, the second offense is
the same as the first offense if the second offense is an attempt to
commit the first or frustration thereof or necessarily includes or is
necessarily included in the first offense.

The requisites of double jeopardy are not spelled out in the Bill of
Rights. They were also developed by judicial decisions in the United
States and in the Philippines even before people vs. Ylagan (58 Phil.
851-853).
Again, the equal protection clause was interpreted in the case of Plessy
vs. Ferguson (163 US 537) as securing to the Negroes equal but
separate facilities, which doctrine was revoked in the case of Brown vs.
Maryland Board of Education (349 US 294), holding that the equal
protection clause means that the Negroes are entitled to attend the
same schools attended by the whites-equal facilities in the same
school-which was extended to public parks and public buses.

De-segregation, not segregation, is now the governing principle.

Among other examples, the due process clause was interpreted in the
case of People vs. Pomar (46 Phil. 440) by a conservative, capitalistic
court to invalidate a law granting maternity leave to working women-
according primacy to property rights over human rights. The case of
People vs. Pomar is no longer the rule.

As early as 1904, in the case of Lochner vs. New York (198 US 45, 76,
49 L. ed. 937, 949), Justice Holmes had been railing against the
conservatism of Judges perverting the guarantee of due process to
protect property rights as against human rights or social justice for the
working man. The law fixing maximum hours of labor was invalidated.
Justice Holmes was vindicated finally in 1936 in the case of West Coast
Hotel vs. Parish (300 US 377-79; 81 L. ed. 703) where the American
Supreme Court upheld the rights of workers to social justice in the
form of guaranteed minimum wage for women and minors, working
hours not exceeding eight (8) daily, and maternity leave for women
employees.

The power of judicial review and the principle of separation of powers


as well as the rule on political questions have been evolved and
grafted into the American Constitution by judicial decisions (Marbury
vs. Madison, supra Coleman vs. Miller, 307 US 433, 83 L. ed. 1385;
Springer vs. Government, 277 US 210-212, 72 L. ed. 852, 853).

It is noteworthy that Justice Black, who seems to be against judicial


legislation, penned a separate concurring opinion in the case of
Coleman vs. Miller, supra, affirming the doctrine of political question
as beyond the ambit of judicial review. There is nothing in both the
American and Philippine Constitutions expressly providing that the
power of the courts is limited by the principle of separation of powers
and the doctrine on political questions. There are numerous cases in
Philippine jurisprudence applying the doctrines of separation of powers
and political questions and invoking American precedents.

Unlike the American Constitution, both the 1935 and 1973 Philippine
Constitutions expressly vest in the Supreme Court the power to review
the validity or constitutionality of any legislative enactment or
executive act.

WHEREFORE, THE TRIAL COURT'S ORDER OF DISMISSAL IS HEREBY


REVERSED AND SET ASIDE AND THE CASE IS REMANDED TO IT FOR
FURTHER PROCEEDINGS. SHOULD A GREATER AMOUNT OF DAMAGES
BE DECREED IN FAVOR OF HEREIN PETITIONERS, THE PAYMENTS
ALREADY MADE TO THEM PURSUANT TO THE WORKMEN'S
COMPENSATION ACT SHALL BE DEDUCTED. NO COSTS.

SO ORDERED.

Fernando, C.J., Teehankee, Plana, Escolin, De la Fuente, Cuevas and


Alampay JJ., concur.

Concepcion, Jr., J., is on leave.

Abad Santos and Relova, JJ., took no part.

Separate Opinions

MELENCIO-HERRERA, J., dissenting:

This case involves a complaint for damages for the death of five
employees of PHILEX Mining Corporation under the general provisions
of the Civil Code. The Civil Code itself, however, provides for its non-
applicability to the complaint. It is specifically provided in Article 2196
of the Code, found in Title XVIII-Damages that:
COMPENSATION FOR WORKMEN AND OTHER EMPLOYEES
IN CASE OF DEATH, INJURY OR ILLNESS IS REGULATED BY
SPECIAL LAWS.

Compensation and damages are synonymous. In Esguerra vs. Muoz


Palma, etc., et al., 104 Phil. 582, 586, Justice J.B.L. Reyes had said:

Petitioner also avers that compensation is not damages.


This argument is but a play on words. The term
compensation' is used in the law (Act 3812 and Republic Act
772) in the sense of indemnity for damages suffered, being
awarded for a personal injury caused or aggravated by or in
the course of employment. ...

By the very provisions of the Civil Code, it is a "special law", not the
Code itself, which has to apply to the complaint involved in the instant
case. That "special law", in reference to the complaint, can be no other
than the Workmen's Compensation

Even assuming, without conceding, that an employee is entitled to an


election of remedies, as the majority rules, both options cannot be
exercised simultaneously, and the exercise of one will preclude the
exercise of the other. The petitioners had already exercised their
option to come under the Workmen's Compensation Act, and they
have already received compensation payable to them under that Act.
Stated differently, the remedy under the Workmen's Compensation Act
had already become a "finished transaction".

There are two considerations why it is believed petitioners should no


longer be allowed to exercise the option to sue under the Civil Code. In
the first place, the proceedings under the Workmen's Compensation
Act have already become the law in regards to" the "election of
remedies", because those proceedings had become a "finished
transaction".

In the second place, it should be plainly equitable that, if a person


entitled to an "election of remedies" makes a first election and accepts
the benefits thereof, he should no longer be allowed to avail himself of
the second option. At the very least, if he wants to make a second
election, in disregard of the first election he has made, when he makes
the second election he should surrender the benefits he had obtained
under the first election, This was not done in the case before the
Court.

B.

'There is full concurrence on my part with the dissenting opinion of Mr.


Justice Gutierrez upholding "the exclusory provision of the Workmen's
Compensation Act." I may further add:

1. The Workmen's Compensation Act (Act No. 3428) was approved on


December 10, 1927 and took effect on June 10, 1928. It was
patterned from Minnesota and Hawaii statutes.

Act No. 3428 was adopted by the Philippine legislature, in


Spanish and some sections of the law were taken from the
statutes of Minnesota and Hawaii, (Chapter 209 of the
Revised Laws of Hawaii, 1925). [Morabe & Inton,
Workmen's Compensation Act, p. 2]

Under the Workmen's Compensation Act of Hawaii, when the Act is


applicable, the remedy under the Act is exclusive The following is
stated in 1 Schneider Workmen's Compensation Text, pp. 266, 267.

Sec. 112. Hawaii

Statutory Synopsis. The act is compulsory as to employees


in 'all industrial employment' and employees of the territory
and its political subdivisions. (Sections 7480-7481, S.S.,
Vol. 1, p. 713.)

Compensation is not payable when injury is due to


employee's willful intention to injure himself or another or
to his intoxication. (Sec. 7482, S.S., p. 713.)

When the act is applicable the remedy thereunder is


exclusive (Sec. 7483, S.S., p. 714.)

2. In providing for exclusiveness of the remedy under our Workmen's


Compensation Act, the Philippine Legislature worded the first
paragraph of Section 5 of the Act as follows:
SEC. 5. Exclusive right to compensation.-The rights and
remedies granted by this Act to an employee

by reason of a personal injury entitling him to


compensation

shall exclude all other rights and remedies accruing to the


employee, his personal representatives, dependents or
nearest of kin against the employer

under the Civil Code and other laws, because of said injury
(Paragraphing and emphasis supplied)

In regards to the intent of the Legislature under the foregoing


provision:

A cardinal rule in the interpretation of statutes is that the


meaning and intention of the law-making body must be
sought, first of all in the words of the statute itself, read
and considered in their natural, ordinary, commonly-
accepted and most obvious significations, according to good
and approved usage and without resorting to forced or
subtle construction Courts, therefore, as a rule, cannot
presume that the law-making body does not know the
meaning of words and the rules of grammar. Consequently,
the grammatical reading of a statute must be presumed to
yield its correct sense. (Espino vs. Cleofe 52 SCRA 92, 98)
[Italics supplied]

3. The original second paragraph of Section 5 provided:

Employers contracting laborers in the Philippine Islands for


work outside the same shall stipulate with such laborers
that the remedies prescribed by this Act shall apply
exclusively to injuries received outside the Islands through
accidents happening in and during the performance of the
duties of the employment. (Italics supplied)

The use of the word "exclusively is a further confirmation of the


exclusory provision of the Act, subject only to exceptions which may
be provided in the Act itself.
4. It might be mentioned that, within the Act itself, provision is made
for remedies other than within the Act itself. Thus, Section 6, in part,
provides:

SEC. 6. Liability of third parties.-In case an employee


suffers an injury for which compensation is due under this
Act by any other person besides his employer, it shall be
optional with such injured employee either to claim
compensation from his employer, under this Act, or sue
such other person for damages, in accordance with law; ...
(Emphasis supplied)

If the legislative intent under the first paragraph of Section 5 were to


allow the injured employee to sue his employer under the Civil Code,
the legislator could very easily have formulated the said first
paragraph of Section 5 according to the pattern of Section 6. That that
was not done shows the legislative intent not to allow any option to an
employee to sue the employer under the Civil Code for injuries
compensable under the Act.

5. There should be no question but that the original first paragraph of


Section 5 of the Workmen's Compensation Act, formulated in 1927,
provided that an injured worker or employee, or his heirs, if entitled to
compensation under the Act, cannot have independent recourse
neither to the Civil Code nor to any other law relative to the liability of
the employer. After 1927, there were occasions when the legislator
had the opportunity to amend the first paragraph of Section 5 such
that the remedies under the Act would not be exclusive; yet, the
legislator refrained from doing so. That shows the legislatives
continuing intent to maintain the exclusory provision of the first
paragraph of Section 5 unless otherwise provided in the Act itself.

(a) The original second paragraph of Section 5 provided:

Employers contracting laborers in the Philippine Islands for


work outside the same shall stipulate with such laborers
that the remedies prescribed by this Act shall apply
(exclusively) to injuries received outside the Islands
through accidents happening in and during the performance
of the duties of the employment (and all service contracts
made in the manner prescribed in this section be presumed
to include such agreement).

On June 20, 1952, through RA 772, the foregoing second paragraph


was amended with the elimination of the underlined words in
parentheses, and the addition of this sentence at the end of the
paragraph:

Such stipulation shall not prejudice the right of the laborers


to the benefits of the Workmen's Compensation Law of the
place where the accident occurs, should such law be more
favorable to them. (Emphasis supplied)

It will be seen that, within the Act itself, the exclusory character of the
Act was amended. At that time, if he had so desired, the legislator
could have amended the first paragraph of Section 5 so that the
employee would have the option to sue the employer under the Act, or
under the Civil Code, should the latter be more favorable to him.

(b) The Workmen's Compensation Act, which took effect in 1927,


grants compensation to an injured employee without regard to the
presence or absence of negligence on the part of the employer. The
compensation is deemed an expense chargeable to the industry
(Murillo vs. Mendoza, 66 Phil. 689 [1938]).

In time, it must have been thought that it was inequitable to have the
amount of compensation, caused by negligence on the part of the
employer, to be the same amount payable when the employer was not
negligent. Based on that thinking, Section 4-A 1 was included into the
Act, on June 20, 1952, through RA 772. Said Section 4-A increased the
compensation payable by 50% in case there was negligence on the
part of the employer. That additional section evidenced the intent of
the legislator not to give an option to an employee, injured with
negligence on the part of the employer, to sue the latter under the
provisions of the Civil Code.

On June 20, 1964, Section 4-A was amended (insubstantially) by RA


4119. The legislator was again given the opportunity to provide, but
he did not, the option to an employee to sue under the Act or under
the Civil Code.
When a Court gives effect to a statute not in accordance with the
intent of the law-maker, the Court is unjustifiably legislating.

It is in view of the foregoing that I vote for affirmation of the trial


Court's dismissal of the Complaint.

GUTIERREZ, JR., J., dissenting:

To grant the petition and allow the victims of industrial accidents to file
damages suits based on torts would be a radical innovation not only
contrary to the express provisions of the Workmen's Compensation Act
but a departure from the principles evolved in the long history of
workmen's compensation. At the very least, it should be the legislature
and not this Court which should remove the exclusory provision of the
Workmen's Compensation Act, a provision reiterated in the present
Labor Code on employees' compensation.

Workmen's compensation evolved to remedy the evils associated with


the situation in the early years of the industrial revolution when
injured workingmen had to rely on damage suits to get recompense.

Before workmen's compensation, an injured worker seeking damages


would have to prove in a tort suit that his employer was either
negligent or in bad faith, that his injury was caused by the employer
and not a fellow worker, and that he was not guilty of contributory
negligence. The employer could employ not only his wealth in
defeating the claim for damages but a host of common law defenses
available to him as well. The worker was supposed to know what he
entered into when he accepted employment. As stated in the leading
case of Priestley u. Fowler (3 M. & W. 1, 150 Reprint 1030) decided in
1837 "the mere relation of the master and the servant never can imply
an obligation on the part of the master to take more care of the
servant than he may reasonably be expected to do of himself." By
entering into a contract of employment, the worker was deemed to
accept the risks of employment that he should discover and guard
against himself.

The problems associated with the application of the fellow servant rule,
the assumption of risk doctrine, the principle of contributory
negligence, and the many other defenses so easily raised in protracted
damage suits illustrated the need for a system whereby workers had
only to prove the fact of covered employment and the fact of injury
arising from employment in order to be compensated.

The need for a compensation scheme where liability is created solely


by statute and made compulsory and where the element of fault-either
the fault of the employer or the fault of the employee-disregarded
became obvious. Another objective was to have simplified,
expeditious, inexpensive, and non-litigious procedures so that victims
of industrial accidents could more readily, if not automatically, receive
compensation for work-related injuries.

Inspite of common law defenses to defeat a claim being recognized,


employers' liability acts were a major step in the desired direction.
However, employers liability legislation proved inadequate. Legislative
reform led to the workmen's compensation.

I cite the above familiar background because workmen's compensation


represents a compromise. In return for the near certainty of receiving
a sum of money fixed by law, the injured worker gives up the right to
subject the employer to a tort suit for huge amounts of damages.
Thus, liability not only disregards the element of fault but it is also a
pre- determined amount based on the wages of the injured worker and
in certain cases, the actual cost of rehabilitation. The worker does not
receive the total damages for his pain and suffering which he could
otherwise claim in a civil suit. The employer is required to act swiftly
on compensation claims. An administrative agency supervises the
program. And because the overwhelming mass of workingmen are
benefited by the compensation system, individual workers who may
want to sue for big amounts of damages must yield to the interests of
their entire working class.

The nature of the compensation principle is explained as follows:

An appreciation of the nature of the compensation principle


is essential to an understanding of the acts and the cases
interpreting them.

By the turn of the century it was apparent that the toll of


industrial accidents of both the avoidable and unavoidable
variety had become enormous, and government was faced
with the problem of who was to pay for the human
wreckage wrought by the dangers of modern industry. If
the accident was avoidable and could be attributed to the
carelessness of the employer, existing tort principles
offered some measure of redress. Even here, however, the
woeful inadequacy of the fault principle was manifest. The
uncertainty of the outcome of torts litigation in court placed
the employee at a substantial disadvantage. So long as
liability depended on fault there could be no recovery until
the finger of blame had been pointed officially at the
employer or his agents. In most cases both the facts and
the law were uncertain. The witnesses, who were usually
fellow workers of the victim, were torn between friendship
or loyalty to their class, on the one hand, and fear of
reprisal by the employer, on the other. The expense and
delay of litigation often prompted the injured employee to
accept a compromise settlement for a fraction of the full
value of his claim. Even if suit were successfully prosecuted,
a large share of the proceeds of the judgment were exacted
as contingent fees by counsel. Thus the employer against
whom judgment was cast often paid a substantial damage
bill, while only a part of this enured to the benefit of the
injured employee or his dependents. The employee's
judgment was nearly always too little and too late.

xxx xxx xxx

Workmen's Compensation rests upon the economic principle


that those persons who enjoy the product of a business-
whether it be in the form of goods or services- should
ultimately bear the cost of the injuries or deaths that are
incident to the manufacture, preparation and distribution of
the product. ...

xxx xxx xxx

Under this approach the element of personal fault either


disappears entirely or is subordinated to broader economic
considerations. The employer absorbs the cost of accident
loss only initially; it is expected that this cost will eventually
pass down the stream of commerce in the form of increase
price until it is spread in dilution among the ultimate
consumers. So long as each competing unit in a given
industry is uniformly affected, no producer can gain any
substantial competitive advantage or suffer any appreciable
loss by reason of the general adoption of the compensation
principle.

In order that the compensation principle may operate


properly and with fairness to all parties it is essential that
the anticipated accident cost be predictable and that it be
fixed at a figure that will not disrupt too violently the traffic
in the product of the industry affected. Thus predictability
and moderateness of cost are necessary from the broad
economic viewpoint. ....

Compensation, then, differs from the conventional damage


suit in two important respects: Fault on the part of either
employer or employee is eliminated; and compensation
payable according to a definitely limited schedule is
substituted for damages. All compensation acts alike work
these two major changes, irrespective of how they may
differ in other particulars.

Compensation, when regarded from the viewpoint of


employer and employee represents a compromise in which
each party surrenders certain advantages in order to gain
others which are of more importance both to him and to
society. The employer gives up the immunity he otherwise
would enjoy in cases where he is not at fault, and the
employee surrenders his former right to full damages and
accepts instead a more modest claim for bare essentials,
represented by compensation.

The importance of the compromise character of


compensation cannot be overemphasized. The statutes vary
a great deal with reference to the proper point of balance.
The amount of weekly compensation payments and the
length of the period during which compensation is to be
paid are matters concerning which the acts differ
considerably. The interpretation of any compensation
statute will be influenced greatly by the court's reaction to
the basic point of compromise established in the Act. If the
court feels that the basic compromise unduly favors the
employer, it will be tempted to restore what it regards as a
proper balance by adopting an interpretation that favors the
worker. In this way, a compensation act drawn in a spirit of
extreme conservatism may be transformed by a
sympathetic court into a fairly liberal instrument; and
conversely, an act that greatly favors the laborer may be so
interpreted by the courts that employers can have little
reason to complain. Much of the unevenness and apparent
conflict in compensation decisions throughout the various
jurisdictions must be attributed to this." (Malone & Plant,
Workmen's Compensation American Casebook Series, pp.
63-65).

The schedule of compensation, the rates of payments, the


compensable injuries and diseases, the premiums paid by employers
to the present system, the actuarial stability of the trust fund and
many other interrelated parts have all been carefully studied before
the integrated scheme was enacted in to law. We have a system
whose parts must mesh harmonious with one another if it is to
succeed. The basic theory has to be followed.

If this Court disregards this totality of the scheme and in a spirit of


generosity recasts some parts of the system without touching the
related others, the entire structure is endangered. For instance, I am
personally against stretching the law and allowing payment of
compensation for contingencies never envisioned to be compensable
when the law was formulated. Certainly, only harmful results to the
principle of workmen's compensation can arise if workmen, whom the
law allows to receive employment compensation, can still elect to file
damage suits for industrial accidents. It was precisely for this reason
that Section 5 of the Workmen's Compensation Act, which reads:

SEC. 5. Exclusive right to compensation.-The rights and


remedies granted by this Act to an employee by reason of a
personal injury entitling him to compensation shall exclude
all other rights and remedies accruing to the employee, his
personal representatives, dependents or nearest of kin
against the employer under the Civil Code and other laws
because of said injury. ...
Article 173 of the labor Code also provides:

ART. 173. Exclusivenesss of liability.Unless otherwise


provided, the liability of the State Insurance Fund under
this Title shall be exclusive and in place of all other
liabilities of the employer to the employee his dependents
or anyone otherwise entitled to receive damages on behalf
of the employee or his dependents.

I am against the Court assuming the role of legislator in a matter


calling for actuarial studies and public hearings. If employers already
required to contribute to the State Insurance Fund will still have to
bear the cost of damage suits or get insurance for that purpose, a
major study will be necessary. The issue before us is more far reaching
than the interests of the poor victims and their families. All workers
covered by workmen's compensation and all employers who employ
covered employees are affected. Even as I have deepest sympathies
for the victims, I regret that I am constrained to dissent from the
majority opinion.

Separate Opinions

MELENCIO-HERRERA, J., dissenting:

This case involves a complaint for damages for the death of five
employees of PHILEX Mining Corporation under the general provisions
of the Civil Code. The Civil Code itself, however, provides for its non-
applicability to the complaint. It is specifically provided in Article 2196
of the Code, found in Title XVIII-Damages that:

COMPENSATION FOR WORKMEN AND OTHER EMPLOYEES


IN CASE OF DEATH, INJURY OR ILLNESS IS REGULATED BY
SPECIAL LAWS.
Compensation and damages are synonymous. In Esguerra vs. Muoz
Palma, etc., et al., 104 Phil. 582, 586, Justice J.B.L. Reyes had said:

Petitioner also avers that compensation is not damages.


This argument is but a play on words. The term
compensation' is used in the law (Act 3812 and Republic Act
772) in the sense of indemnity for damages suffered, being
awarded for a personal injury caused or aggravated by or in
the course of employment. ...

By the very provisions of the Civil Code, it is a "special law", not the
Code itself, which has to apply to the complaint involved in the instant
case. That "special law", in reference to the complaint, can be no other
than the Workmen's Compensation

Even assuming, without conceding, that an employee is entitled to an


election of remedies, as the majority rules, both options cannot be
exercised simultaneously, and the exercise of one will preclude the
exercise of the other. The petitioners had already exercised their
option to come under the Workmen's Compensation Act, and they
have already received compensation payable to them under that Act.
Stated differently, the remedy under the Workmen's Compensation Act
had already become a "finished transaction".

There are two considerations why it is believed petitioners should no


longer be allowed to exercise the option to sue under the Civil Code. In
the first place, the proceedings under the Workmen's Compensation
Act have already become the law in regards to" the "election of
remedies", because those proceedings had become a "finished
transaction".

In the second place, it should be plainly equitable that, if a person


entitled to an "election of remedies" makes a first election and accepts
the benefits thereof, he should no longer be allowed to avail himself of
the second option. At the very least, if he wants to make a second
election, in disregard of the first election he has made, when he makes
the second election he should surrender the benefits he had obtained
under the first election, This was not done in the case before the
Court.

B.
'There is full concurrence on my part with the dissenting opinion of Mr.
Justice Gutierrez upholding "the exclusory provision of the Workmen's
Compensation Act." I may further add:

1. The Workmen's Compensation Act (Act No. 3428) was approved on


December 10, 1927 and took effect on June 10, 1928. It was
patterned from Minnesota and Hawaii statutes.

Act No. 3428 was adopted by the Philippine legislature, in


Spanish and some sections of the law were taken from the
statutes of Minnesota and Hawaii, (Chapter 209 of the
Revised Laws of Hawaii, 1925). [Morabe & Inton,
Workmen's Compensation Act, p. 2]

Under the Workmen's Compensation Act of Hawaii, when the Act is


applicable, the remedy under the Act is exclusive The following is
stated in 1 Schneider Workmen's Compensation Text, pp. 266, 267.

Sec. 112. Hawaii

Statutory Synopsis. The act is compulsory as to employees


in 'all industrial employment' and employees of the territory
and its political subdivisions. (Sections 7480-7481, S.S.,
Vol. 1, p. 713.)

Compensation is not payable when injury is due to


employee's willful intention to injure himself or another or
to his intoxication. (Sec. 7482, S.S., p. 713.)

When the act is applicable the remedy thereunder is


exclusive (Sec. 7483, S.S., p. 714.)

2. In providing for exclusiveness of the remedy under our Workmen's


Compensation Act, the Philippine Legislature worded the first
paragraph of Section 5 of the Act as follows:

SEC. 5. Exclusive right to compensation.-The rights and


remedies granted by this Act to an employee

by reason of a personal injury entitling him to


compensation
shall exclude all other rights and remedies accruing to the
employee, his personal representatives, dependents or
nearest of kin against the employer

under the Civil Code and other laws, because of said injury
(Paragraphing and emphasis supplied)

In regards to the intent of the Legislature under the foregoing


provision:

A cardinal rule in the interpretation of statutes is that the


meaning and intention of the law-making body must be
sought, first of all in the words of the statute itself, read
and considered in their natural, ordinary, commonly-
accepted and most obvious significations, according to good
and approved usage and without resorting to forced or
subtle construction Courts, therefore, as a rule, cannot
presume that the law-making body does not know the
meaning of words and the rules of grammar. Consequently,
the grammatical reading of a statute must be presumed to
yield its correct sense. (Espino vs. Cleofe 52 SCRA 92, 98)
[Italics supplied]

3. The original second paragraph of Section 5 provided:

Employers contracting laborers in the Philippine Islands for


work outside the same shall stipulate with such laborers
that the remedies prescribed by this Act shall apply
exclusively to injuries received outside the Islands through
accidents happening in and during the performance of the
duties of the employment. (Italics supplied)

The use of the word "exclusively is a further confirmation of the


exclusory provision of the Act, subject only to exceptions which may
be provided in the Act itself.

4. It might be mentioned that, within the Act itself, provision is made


for remedies other than within the Act itself. Thus, Section 6, in part,
provides:
SEC. 6. Liability of third parties.-In case an employee
suffers an injury for which compensation is due under this
Act by any other person besides his employer, it shall be
optional with such injured employee either to claim
compensation from his employer, under this Act, or sue
such other person for damages, in accordance with law; ...
(Emphasis supplied)

If the legislative intent under the first paragraph of Section 5 were to


allow the injured employee to sue his employer under the Civil Code,
the legislator could very easily have formulated the said first
paragraph of Section 5 according to the pattern of Section 6. That that
was not done shows the legislative intent not to allow any option to an
employee to sue the employer under the Civil Code for injuries
compensable under the Act.

5. There should be no question but that the original first paragraph of


Section 5 of the Workmen's Compensation Act, formulated in 1927,
provided that an injured worker or employee, or his heirs, if entitled to
compensation under the Act, cannot have independent recourse
neither to the Civil Code nor to any other law relative to the liability of
the employer. After 1927, there were occasions when the legislator
had the opportunity to amend the first paragraph of Section 5 such
that the remedies under the Act would not be exclusive; yet, the
legislator refrained from doing so. That shows the legislatives
continuing intent to maintain the exclusory provision of the first
paragraph of Section 5 unless otherwise provided in the Act itself.

(a) The original second paragraph of Section 5 provided:

Employers contracting laborers in the Philippine Islands for


work outside the same shall stipulate with such laborers
that the remedies prescribed by this Act shall apply
(exclusively) to injuries received outside the Islands
through accidents happening in and during the performance
of the duties of the employment (and all service contracts
made in the manner prescribed in this section be presumed
to include such agreement).

On June 20, 1952, through RA 772, the foregoing second paragraph


was amended with the elimination of the underlined words in
parentheses, and the addition of this sentence at the end of the
paragraph:

Such stipulation shall not prejudice the right of the laborers


to the benefits of the Workmen's Compensation Law of the
place where the accident occurs, should such law be more
favorable to them. (Emphasis supplied)

It will be seen that, within the Act itself, the exclusory character of the
Act was amended. At that time, if he had so desired, the legislator
could have amended the first paragraph of Section 5 so that the
employee would have the option to sue the employer under the Act, or
under the Civil Code, should the latter be more favorable to him.

(b) The Workmen's Compensation Act, which took effect in 1927,


grants compensation to an injured employee without regard to the
presence or absence of negligence on the part of the employer. The
compensation is deemed an expense chargeable to the industry
(Murillo vs. Mendoza, 66 Phil. 689 [1938]).

In time, it must have been thought that it was inequitable to have the
amount of compensation, caused by negligence on the part of the
employer, to be the same amount payable when the employer was not
negligent. Based on that thinking, Section 4-A 1 was included into the
Act, on June 20, 1952, through RA 772. Said Section 4-A increased the
compensation payable by 50% in case there was negligence on the
part of the employer. That additional section evidenced the intent of
the legislator not to give an option to an employee, injured with
negligence on the part of the employer, to sue the latter under the
provisions of the Civil Code.

On June 20, 1964, Section 4-A was amended (insubstantially) by RA


4119. The legislator was again given the opportunity to provide, but
he did not, the option to an employee to sue under the Act or under
the Civil Code.

When a Court gives effect to a statute not in accordance with the


intent of the law-maker, the Court is unjustifiably legislating.

It is in view of the foregoing that I vote for affirmation of the trial


Court's dismissal of the Complaint.
GUTIERREZ, JR., J., dissenting:

To grant the petition and allow the victims of industrial accidents to file
damages suits based on torts would be a radical innovation not only
contrary to the express provisions of the Workmen's Compensation Act
but a departure from the principles evolved in the long history of
workmen's compensation. At the very least, it should be the legislature
and not this Court which should remove the exclusory provision of the
Workmen's Compensation Act, a provision reiterated in the present
Labor Code on employees' compensation.

Workmen's compensation evolved to remedy the evils associated with


the situation in the early years of the industrial revolution when
injured workingmen had to rely on damage suits to get recompense.

Before workmen's compensation, an injured worker seeking damages


would have to prove in a tort suit that his employer was either
negligent or in bad faith, that his injury was caused by the employer
and not a fellow worker, and that he was not guilty of contributory
negligence. The employer could employ not only his wealth in
defeating the claim for damages but a host of common law defenses
available to him as well. The worker was supposed to know what he
entered into when he accepted employment. As stated in the leading
case of Priestley u. Fowler (3 M. & W. 1, 150 Reprint 1030) decided in
1837 "the mere relation of the master and the servant never can imply
an obligation on the part of the master to take more care of the
servant than he may reasonably be expected to do of himself." By
entering into a contract of employment, the worker was deemed to
accept the risks of employment that he should discover and guard
against himself.

The problems associated with the application of the fellow servant rule,
the assumption of risk doctrine, the principle of contributory
negligence, and the many other defenses so easily raised in protracted
damage suits illustrated the need for a system whereby workers had
only to prove the fact of covered employment and the fact of injury
arising from employment in order to be compensated.

The need for a compensation scheme where liability is created solely


by statute and made compulsory and where the element of fault-either
the fault of the employer or the fault of the employee-disregarded
became obvious. Another objective was to have simplified,
expeditious, inexpensive, and non-litigious procedures so that victims
of industrial accidents could more readily, if not automatically, receive
compensation for work-related injuries.

Inspite of common law defenses to defeat a claim being recognized,


employers' liability acts were a major step in the desired direction.
However, employers liability legislation proved inadequate. Legislative
reform led to the workmen's compensation.

I cite the above familiar background because workmen's compensation


represents a compromise. In return for the near certainty of receiving
a sum of money fixed by law, the injured worker gives up the right to
subject the employer to a tort suit for huge amounts of damages.
Thus, liability not only disregards the element of fault but it is also a
pre- determined amount based on the wages of the injured worker and
in certain cases, the actual cost of rehabilitation. The worker does not
receive the total damages for his pain and suffering which he could
otherwise claim in a civil suit. The employer is required to act swiftly
on compensation claims. An administrative agency supervises the
program. And because the overwhelming mass of workingmen are
benefited by the compensation system, individual workers who may
want to sue for big amounts of damages must yield to the interests of
their entire working class.

The nature of the compensation principle is explained as follows:

An appreciation of the nature of the compensation principle


is essential to an understanding of the acts and the cases
interpreting them.

By the turn of the century it was apparent that the toll of


industrial accidents of both the avoidable and unavoidable
variety had become enormous, and government was faced
with the problem of who was to pay for the human
wreckage wrought by the dangers of modern industry. If
the accident was avoidable and could be attributed to the
carelessness of the employer, existing tort principles
offered some measure of redress. Even here, however, the
woeful inadequacy of the fault principle was manifest. The
uncertainty of the outcome of torts litigation in court placed
the employee at a substantial disadvantage. So long as
liability depended on fault there could be no recovery until
the finger of blame had been pointed officially at the
employer or his agents. In most cases both the facts and
the law were uncertain. The witnesses, who were usually
fellow workers of the victim, were torn between friendship
or loyalty to their class, on the one hand, and fear of
reprisal by the employer, on the other. The expense and
delay of litigation often prompted the injured employee to
accept a compromise settlement for a fraction of the full
value of his claim. Even if suit were successfully prosecuted,
a large share of the proceeds of the judgment were exacted
as contingent fees by counsel. Thus the employer against
whom judgment was cast often paid a substantial damage
bill, while only a part of this enured to the benefit of the
injured employee or his dependents. The employee's
judgment was nearly always too little and too late.

xxx xxx xxx

Workmen's Compensation rests upon the economic principle


that those persons who enjoy the product of a business-
whether it be in the form of goods or services- should
ultimately bear the cost of the injuries or deaths that are
incident to the manufacture, preparation and distribution of
the product. ...

xxx xxx xxx

Under this approach the element of personal fault either


disappears entirely or is subordinated to broader economic
considerations. The employer absorbs the cost of accident
loss only initially; it is expected that this cost will eventually
pass down the stream of commerce in the form of increase
price until it is spread in dilution among the ultimate
consumers. So long as each competing unit in a given
industry is uniformly affected, no producer can gain any
substantial competitive advantage or suffer any appreciable
loss by reason of the general adoption of the compensation
principle.
In order that the compensation principle may operate
properly and with fairness to all parties it is essential that
the anticipated accident cost be predictable and that it be
fixed at a figure that will not disrupt too violently the traffic
in the product of the industry affected. Thus predictability
and moderateness of cost are necessary from the broad
economic viewpoint. ....

Compensation, then, differs from the conventional damage


suit in two important respects: Fault on the part of either
employer or employee is eliminated; and compensation
payable according to a definitely limited schedule is
substituted for damages. All compensation acts alike work
these two major changes, irrespective of how they may
differ in other particulars.

Compensation, when regarded from the viewpoint of


employer and employee represents a compromise in which
each party surrenders certain advantages in order to gain
others which are of more importance both to him and to
society. The employer gives up the immunity he otherwise
would enjoy in cases where he is not at fault, and the
employee surrenders his former right to full damages and
accepts instead a more modest claim for bare essentials,
represented by compensation.

The importance of the compromise character of


compensation cannot be overemphasized. The statutes vary
a great deal with reference to the proper point of balance.
The amount of weekly compensation payments and the
length of the period during which compensation is to be
paid are matters concerning which the acts differ
considerably. The interpretation of any compensation
statute will be influenced greatly by the court's reaction to
the basic point of compromise established in the Act. If the
court feels that the basic compromise unduly favors the
employer, it will be tempted to restore what it regards as a
proper balance by adopting an interpretation that favors the
worker. In this way, a compensation act drawn in a spirit of
extreme conservatism may be transformed by a
sympathetic court into a fairly liberal instrument; and
conversely, an act that greatly favors the laborer may be so
interpreted by the courts that employers can have little
reason to complain. Much of the unevenness and apparent
conflict in compensation decisions throughout the various
jurisdictions must be attributed to this." (Malone & Plant,
Workmen's Compensation American Casebook Series, pp.
63-65).

The schedule of compensation, the rates of payments, the


compensable injuries and diseases, the premiums paid by employers
to the present system, the actuarial stability of the trust fund and
many other interrelated parts have all been carefully studied before
the integrated scheme was enacted in to law. We have a system
whose parts must mesh harmonious with one another if it is to
succeed. The basic theory has to be followed.

If this Court disregards this totality of the scheme and in a spirit of


generosity recasts some parts of the system without touching the
related others, the entire structure is endangered. For instance, I am
personally against stretching the law and allowing payment of
compensation for contingencies never envisioned to be compensable
when the law was formulated. Certainly, only harmful results to the
principle of workmen's compensation can arise if workmen, whom the
law allows to receive employment compensation, can still elect to file
damage suits for industrial accidents. It was precisely for this reason
that Section 5 of the Workmen's Compensation Act, which reads:

SEC. 5. Exclusive right to compensation.-The rights and


remedies granted by this Act to an employee by reason of a
personal injury entitling him to compensation shall exclude
all other rights and remedies accruing to the employee, his
personal representatives, dependents or nearest of kin
against the employer under the Civil Code and other laws
because of said injury. ...

Article 173 of the labor Code also provides:

ART. 173. Exclusivenesss of liability.Unless otherwise


provided, the liability of the State Insurance Fund under
this Title shall be exclusive and in place of all other
liabilities of the employer to the employee his dependents
or anyone otherwise entitled to receive damages on behalf
of the employee or his dependents.

I am against the Court assuming the role of legislator in a matter


calling for actuarial studies and public hearings. If employers already
required to contribute to the State Insurance Fund will still have to
bear the cost of damage suits or get insurance for that purpose, a
major study will be necessary. The issue before us is more far reaching
than the interests of the poor victims and their families. All workers
covered by workmen's compensation and all employers who employ
covered employees are affected. Even as I have deepest sympathies
for the victims, I regret that I am constrained to dissent from the
majority opinion.

Republic of the Philippines


SUPREME COURT
Manila

EN BANC

G.R. No. L-28089 October 25, 1967

BARA LIDASAN, petitioner,


vs.
COMMISSION ON ELECTIONS, respondent.

Suntay for petitioner.


Barrios and Fule for respondent.

SANCHEZ, J.:

The question initially presented to the Commission on Elections,1 is


this: Is Republic Act 4790, which is entitled "An Act Creating the
Municipality of Dianaton in the Province of Lanao del Sur", but which
includes barrios located in another province Cotabato to be
spared from attack planted upon the constitutional mandate that "No
bill which may be enacted into law shall embrace more than one
subject which shall be expressed in the title of the bill"? Comelec's
answer is in the affirmative. Offshoot is the present original petition
for certiorari and prohibition.

On June 18, 1966, the Chief Executive signed into law House Bill 1247,
known as Republic Act 4790, now in dispute. The body of the statute,
reproduced in haec verba, reads:

Sec. 1. Barrios Togaig, Madalum, Bayanga, Langkong, Sarakan,


Kat-bo, Digakapan, Magabo, Tabangao, Tiongko, Colodan,
Kabamakawan, Kapatagan, Bongabong, Aipang, Dagowan,
Bakikis, Bungabung, Losain, Matimos and Magolatung, in the
Municipalities of Butig and Balabagan, Province of Lanao del Sur,
are separated from said municipalities and constituted into a
distinct and independent municipality of the same province to be
known as the Municipality of Dianaton, Province of Lanao del Sur.
The seat of government of the municipality shall be in Togaig.

Sec. 2. The first mayor, vice-mayor and councilors of the new


municipality shall be elected in the nineteen hundred sixty-seven
general elections for local officials.

Sec. 3. This Act shall take effect upon its approval.

It came to light later that barrios Togaig and Madalum just mentioned
are within the municipality of Buldon, Province of Cotabato, and that
Bayanga, Langkong, Sarakan, Kat-bo, Digakapan, Magabo, Tabangao,
Tiongko, Colodan and Kabamakawan are parts and parcel of another
municipality, the municipality of Parang, also in the Province of
Cotabato and not of Lanao del Sur.

Prompted by the coming elections, Comelec adopted its resolution of


August 15, 1967, the pertinent portions of which are:

For purposes of establishment of precincts, registration of voters


and for other election purposes, the Commission RESOLVED that
pursuant to RA 4790, the new municipality of Dianaton, Lanao
del Sur shall comprise the barrios of Kapatagan, Bongabong,
Aipang, Dagowan, Bakikis, Bungabung, Losain, Matimos, and
Magolatung situated in the municipality of Balabagan, Lanao del
Sur, the barrios of Togaig and Madalum situated in the
municipality of Buldon, Cotabato, the barrios of Bayanga,
Langkong, Sarakan, Kat-bo, Digakapan, Magabo, Tabangao,
Tiongko, Colodan and Kabamakawan situated in the municipality
of Parang, also of Cotabato.

Doubtless, as the statute stands, twelve barrios in two


municipalities in the province of Cotabato are transferred to the
province of Lanao del Sur. This brought about a change in the
boundaries of the two provinces.

Apprised of this development, on September 7, 1967, the Office of the


President, through the Assistant Executive Secretary, recommended to
Comelec that the operation of the statute be suspended until "clarified
by correcting legislation."

Comelec, by resolution of September 20, 1967, stood by its own


interpretation, declared that the statute "should be implemented
unless declared unconstitutional by the Supreme Court."

This triggered the present original action for certiorari and prohibition
by Bara Lidasan, a resident and taxpayer of the detached portion of
Parang, Cotabato, and a qualified voter for the 1967 elections. He
prays that Republic Act 4790 be declared unconstitutional; and that
Comelec's resolutions of August 15, 1967 and September 20, 1967
implementing the same for electoral purposes, be nullified.

1. Petitioner relies upon the constitutional requirement aforestated,


that "[n]o bill which may be enacted into law shall embrace more than
one subject which shall be expressed in the title of the bill."2

It may be well to state, right at the outset, that the constitutional


provision contains dual limitations upon legislative power. First.
Congress is to refrain from conglomeration, under one statute, of
heterogeneous subjects. Second. The title of the bill is to be couched
in a language sufficient to notify the legislators and the public and
those concerned of the import of the single subject thereof.

Of relevance here is the second directive. The subject of the statute


must be "expressed in the title" of the bill. This constitutional
requirement "breathes the spirit of command."3 Compliance is
imperative, given the fact that the Constitution does not exact of
Congress the obligation to read during its deliberations the entire text
of the bill. In fact, in the case of House Bill 1247, which became
Republic Act 4790, only its title was read from its introduction to its
final approval in the House of Representatives4 where the bill, being of
local application, originated.5

Of course, the Constitution does not require Congress to employ in the


title of an enactment, language of such precision as to mirror, fully
index or catalogue all the contents and the minute details therein. It
suffices if the title should serve the purpose of the constitutional
demand that it inform the legislators, the persons interested in the
subject of the bill, and the public, of the nature, scope and
consequences of the proposed law and its operation. And this, to lead
them to inquire into the body of the bill, study and discuss the same,
take appropriate action thereon, and, thus, prevent surprise or fraud
upon the legislators.6

In our task of ascertaining whether or not the title of a statute


conforms with the constitutional requirement, the following, we
believe, may be taken as guidelines:

The test of the sufficiency of a title is whether or not it is


misleading; and, which technical accuracy is not essential, and
the subject need not be stated in express terms where it is
clearly inferable from the details set forth, a title which is so
uncertain that the average person reading it would not be
informed of the purpose of the enactment or put on inquiry as to
its contents, or which is misleading, either in referring to or
indicating one subject where another or different one is really
embraced in the act, or in omitting any expression or indication
of the real subject or scope of the act, is bad.

xxx xxx xxx

In determining sufficiency of particular title its substance rather


than its form should be considered, and the purpose of the
constitutional requirement, of giving notice to all persons
interested, should be kept in mind by the court.7

With the foregoing principles at hand, we take a hard look at the


disputed statute. The title "An Act Creating the Municipality of
Dianaton, in the Province of Lanao del Sur"8 projects the impression
that solely the province of Lanao del Sur is affected by the creation of
Dianaton. Not the slightest intimation is there that communities in the
adjacent province of Cotabato are incorporated in this new Lanao del
Sur town. The phrase "in the Province of Lanao del Sur," read without
subtlety or contortion, makes the title misleading, deceptive. For, the
known fact is that the legislation has a two-pronged purpose combined
in one statute: (1) it creates the municipality of Dianaton purportedly
from twenty-one barrios in the towns of Butig and Balabagan, both in
the province of Lanao del Sur; and (2) it also dismembers two
municipalities in Cotabato, a province different from Lanao del Sur.

The baneful effect of the defective title here presented is not so


difficult to perceive. Such title did not inform the members of Congress
as to the full impact of the law; it did not apprise the people in the
towns of Buldon and Parang in Cotabato and in the province of
Cotabato itself that part of their territory is being taken away from
their towns and province and added to the adjacent Province of Lanao
del Sur; it kept the public in the dark as to what towns and provinces
were actually affected by the bill. These are the pressures which
heavily weigh against the constitutionality of Republic Act 4790.

Respondent's stance is that the change in boundaries of the two


provinces resulting in "the substantial diminution of territorial limits" of
Cotabato province is "merely the incidental legal results of the
definition of the boundary" of the municipality of Dianaton and that,
therefore, reference to the fact that portions in Cotabato are taken
away "need not be expressed in the title of the law." This posture
we must say but emphasizes the error of constitutional dimensions
in writing down the title of the bill. Transfer of a sizeable portion of
territory from one province to another of necessity involves reduction
of area, population and income of the first and the corresponding
increase of those of the other. This is as important as the creation of a
municipality. And yet, the title did not reflect this fact.

Respondent asks us to read Felwa vs. Salas, L-16511, October 29,


1966, as controlling here. The Felwa case is not in focus. For there,
the title of the Act (Republic Act 4695) reads: "An Act Creating the
Provinces of Benguet, Mountain Province, Ifugao, and Kalinga-
Apayao." That title was assailed as unconstitutional upon the averment
that the provisions of the law (Section, 8 thereof) in reference to the
elective officials of the provinces thus created, were not set forth in
the title of the bill. We there ruled that this pretense is devoid of merit
"for, surely, an Act creating said provinces must be expected to
provide for the officers who shall run the affairs thereof" which is
"manifestly germane to the subject" of the legislation, as set forth in
its title. The statute now before us stands altogether on a different
footing. The lumping together of barrios in adjacent but separate
provinces under one statute is neither a natural nor logical
consequence of the creation of the new municipality of Dianaton. A
change of boundaries of the two provinces may be made without
necessarily creating a new municipality and vice versa.

As we canvass the authorities on this point, our attention is drawn


to Hume vs. Village of Fruitport, 219 NW 648, 649. There, the statute
in controversy bears the title "An Act to Incorporate the Village of
Fruitport, in the County of Muskegon." The statute, however, in its
section 1 reads: "The people of the state of Michigan enact, that the
following described territory in the counties of Muskegon and Ottawa
Michigan, to wit: . . . be, and the same is hereby constituted a village
corporate, by the name of the Village of Fruitport." This statute was
challenged as void by plaintiff, a resident of Ottawa county, in an
action to restraint the Village from exercising jurisdiction and control,
including taxing his lands. Plaintiff based his claim on Section 20,
Article IV of the Michigan State Constitution, which reads: "No law
shall embrace more than one object, which shall be expressed in its
title." The Circuit Court decree voided the statute and defendant
appealed. The Supreme Court of Michigan voted to uphold the decree
of nullity. The following, said in Hume, may well apply to this case:

It may be that words, "An act to incorporate the village of


Fruitport," would have been a sufficient title, and that the words,
"in the county of Muskegon" were unnecessary; but we do not
agree with appellant that the words last quoted may, for that
reason, be disregarded as surplusage.

. . . Under the guise of discarding surplusage, a court cannot


reject a part of the title of an act for the purpose of saving the
act. Schmalz vs. Woody, 56 N.J. Eq. 649, 39 A. 539.

A purpose of the provision of the Constitution is to "challenge the


attention of those affected by the act to its provisions." Savings
Bank vs. State of Michigan, 228 Mich. 316, 200 NW 262.
The title here is restrictive. It restricts the operation of the act of
Muskegon county. The act goes beyond the restriction. As was
said in Schmalz vs. Wooly, supra: "The title is erroneous in the
worst degree, for it is misleading."9

Similar statutes aimed at changing boundaries of political subdivisions,


which legislative purpose is not expressed in the title, were likewise
declared unconstitutional."10

We rule that Republic Act 4790 is null and void.

2. Suggestion was made that Republic Act 4790 may still be salvaged
with reference to the nine barrios in the municipalities of Butig and
Balabagan in Lanao del Sur, with the mere nullification of the portion
thereof which took away the twelve barrios in the municipalities of
Buldon and Parang in the other province of Cotabato. The reasoning
advocated is that the limited title of the Act still covers those barrios
actually in the province of Lanao del Sur.

We are not unmindful of the rule, buttressed on reason and of long


standing, that where a portion of a statute is rendered unconstitutional
and the remainder valid, the parts will be separated, and the
constitutional portion upheld. Black, however, gives the exception to
this rule, thus:

. . . But when the parts of the statute are so mutually dependent


and connected, as conditions, considerations, inducements, or
compensations for each other, as to warrant a belief that the
legislature intended them as a whole, and that if all could not be
carried into effect, the legislature would not pass the residue
independently, then, if some parts are unconstitutional, all the
provisions which are thus dependent, conditional, or connected,
must fall with them,11

In substantially similar language, the same exception is recognized in


the jurisprudence of this Court, thus:

The general rule is that where part of a statute is void, as


repugnant to the Organic Law, while another part is valid, the
valid portion if separable from the invalid, may stand and be
enforced. But in order to do this, the valid portion must be so far
independent of the invalid portion that it is fair to presume that
the Legislature would have enacted it by itself if they had
supposed that they could not constitutionally enact the other. . .
Enough must remain to make a complete, intelligible, and valid
statute, which carries out the legislative intent. . . . The language
used in the invalid part of the statute can have no legal force or
efficacy for any purpose whatever, and what remains must
express the legislative will independently of the void part, since
the court has no power to legislate, . . . .12

Could we indulge in the assumption that Congress still intended, by


the Act, to create the restricted area of nine barrios in the towns of
Butig and Balabagan in Lanao del Sur into the town of Dianaton, if
the twelve barrios in the towns of Buldon and Parang, Cotabato were
to be excluded therefrom? The answer must be in the negative.

Municipal corporations perform twin functions. Firstly. They serve as


an instrumentality of the State in carrying out the functions of
government. Secondly. They act as an agency of the community in the
administration of local affairs. It is in the latter character that they are
a separate entity acting for their own purposes and not a subdivision
of the State.13

Consequently, several factors come to the fore in the consideration of


whether a group of barrios is capable of maintaining itself as an
independent municipality. Amongst these are population, territory, and
income. It was apparently these same factors which induced the
writing out of House Bill 1247 creating the town of Dianaton. Speaking
of the original twenty-one barrios which comprise the new
municipality, the explanatory note to House Bill 1247, now Republic
Act 4790, reads:

The territory is now a progressive community; the aggregate


population is large; and the collective income is sufficient to
maintain an independent municipality.

This bill, if enacted into law, will enable the inhabitants


concerned to govern themselves and enjoy the blessings of
municipal autonomy.
When the foregoing bill was presented in Congress, unquestionably,
the totality of the twenty-one barrios not nine barrios was in the
mind of the proponent thereof. That this is so, is plainly evident by the
fact that the bill itself, thereafter enacted into law, states that the seat
of the government is in Togaig, which is a barrio in the municipality of
Buldon in Cotabato. And then the reduced area poses a number of
questions, thus: Could the observations as to progressive community,
large aggregate population, collective income sufficient to maintain an
independent municipality, still apply to a motley group of only nine
barrios out of the twenty-one? Is it fair to assume that the inhabitants
of the said remaining barrios would have agreed that they be formed
into a municipality, what with the consequent duties and liabilities of
an independent municipal corporation? Could they stand on their own
feet with the income to be derived in their community? How about the
peace and order, sanitation, and other corporate obligations? This
Court may not supply the answer to any of these disturbing questions.
And yet, to remain deaf to these problems, or to answer them in the
negative and still cling to the rule on separability, we are afraid, is to
impute to Congress an undeclared will. With the known premise that
Dianaton was created upon the basic considerations of progressive
community, large aggregate population and sufficient income, we may
not now say that Congress intended to create Dianaton with only nine
of the original twenty-one barrios, with a seat of government still
left to be conjectured. For, this unduly stretches judicial interpretation
of congressional intent beyond credibility point. To do so, indeed, is to
pass the line which circumscribes the judiciary and tread on legislative
premises. Paying due respect to the traditional separation of powers,
we may not now melt and recast Republic Act 4790 to read a Dianaton
town of nine instead of the originally intended twenty-one barrios.
Really, if these nine barrios are to constitute a town at all, it is the
function of Congress, not of this Court, to spell out that congressional
will.

Republic Act 4790 is thus indivisible, and it is accordingly null and void
in its totality.14

3. There remains for consideration the issue raised by respondent,


namely, that petitioner has no substantial legal interest adversely
affected by the implementation of Republic Act 4790. Stated
differently, respondent's pose is that petitioner is not the real party in
interest.
Here the validity of a statute is challenged on the ground that it
violates the constitutional requirement that the subject of the bill be
expressed in its title. Capacity to sue, therefore, hinges on whether
petitioner's substantial rights or interests are impaired by lack of
notification in the title that the barrio in Parang, Cotabato, where he is
residing has been transferred to a different provincial hegemony.

The right of every citizen, taxpayer and voter of a community affected


by legislation creating a town to ascertain that the law so created is
not dismembering his place of residence "in accordance with the
Constitution" is recognized in this jurisdiction.15

Petitioner is a qualified voter. He expects to vote in the 1967 elections.


His right to vote in his own barrio before it was annexed to a new town
is affected. He may not want, as is the case here, to vote in a town
different from his actual residence. He may not desire to be considered
a part of hitherto different communities which are fanned into the new
town; he may prefer to remain in the place where he is and as it was
constituted, and continue to enjoy the rights and benefits he acquired
therein. He may not even know the candidates of the new town; he
may express a lack of desire to vote for anyone of them; he may feel
that his vote should be cast for the officials in the town before
dismemberment. Since by constitutional direction the purpose of a bill
must be shown in its title for the benefit, amongst others, of the
community affected thereby,16 it stands to reason to say that when the
constitutional right to vote on the part of any citizen of that
community is affected, he may become a suitor to challenge the
constitutionality of the Act as passed by Congress.

For the reasons given, we vote to declare Republic Act 4790 null and
void, and to prohibit respondent Commission from implementing the
same for electoral purposes.

No costs allowed. So ordered.

Concepcion, C.J., Reyes, J.B.L., Dizon, Makalintal, Bengzon, J.P.,


Zaldivar, Castro and Angeles, JJ., concur.
Separate Opinions

FERNANDO, J., dissenting:

With regret and with due recognition of the merit of the opinion of the
Court, I find myself unable to give my assent. Hence these few words
to express my stand.

Republic Act No. 4790 deals with one subject matter, the creation of
the municipality of Dianaton in the province of Lanao del Sur. The title
makes evident what is the subject matter of such an enactment. The
mere fact that in the body of such statute barrios found in two other
municipalities of another province were included does not of itself
suffice for a finding of nullity by virtue of the constitutional provision
invoked. At the most, the statute to be free from the insubstantial
doubts about its validity must be construed as not including the
barrios, located not in the municipalities of Butig and Balabagan,
Lanao del Sur, but in Parang and Baldon, Cotabato.

The constitutional requirement is that no bill which may be enacted


into law shall embrace more than one subject which shall be expressed
in the title of the bill.1 This provision is similar to those found in the
Constitution of many American States. It is aimed against the evils, of
the so-called omnibus bills, and log-rolling legislation, and against
surreptitious or unconsidered enactments.2 Where the subject of a bill
is limited to a particular matter, the members of the legislature as well
as the people should be informed of the subject of proposed legislative
measures. This constitutional provision thus precludes the insertion of
riders in legislation, a rider being a provision not germane to the
subject matter of the bill.

It is not to be narrowly construed though as to cripple or impede


proper legislation. The construction must be reasonable and not
technical. It is sufficient if the title be comprehensive enough
reasonably to include the general object which the statute seeks to
effect without expressing each and every end and means necessary for
the accomplishment of that object. Mere details need not be set forth.
The legislature is not required to make the title of the act a complete
index of its contents. The constitutional provision is satisfied if all parts
of an act which relates to its subject find expression in its title.3
The first decision of this Court, after the establishment of the
Commonwealth of the Philippines, in 1938, construing a provision of
this nature, Government v. Hongkong & Shanghai Bank,4 held that the
inclusion of Section 11 of Act No. 4007, the Reorganization Law,
providing for the mode in which the total annual expenses of the
Bureau of Banking may be reimbursed through assessment levied
upon all banking institutions subject to inspection by the Bank
Commissioner was not violative of such a requirement in the Jones
Law, the previous organic act. Justice Laurel, however, vigorously
dissented, his view being that while the main subject of the act was
reorganization, the provision assailed did not deal with reorganization
but with taxation. While the case of Government vs. Hongkong &
Shanghai Bank was decided by a bare majority of four justices against
three, the present trend seems to be that the constitutional
requirement is to be given the liberal test as indicated in the majority
opinion penned by Justice Abad Santos, and not the strict test as
desired by the majority headed by Justice Laurel.

Such a trend has been reflected in subsequent decisions beginning


with Sumulong v. Commission on Elections,5 up to and including Felwa
vs. Salas, a 1966 decision,6 the opinion coming from Justice
Concepcion.

It is true of course that in Philconsa v. Gimenez,7 one of the grounds


on which the invalidity of Republic Act No. 3836 was predicated was
the violation of the above constitutional provision. This Retirement Act
for senators and representatives was entitled "AN ACT AMENDING
SUB-SECTION (c), SECTION TWELVE OF COMMONWEALTH ACT
NUMBERED ONE HUNDRED EIGHTY-SIX, AS AMENDED BY REPUBLIC
ACT NUMBERED THIRTY HUNDRED NINETY-SIX." As we noted, the
paragraph in Republic Act No. 3836 deemed objectionable "refers to
members of Congress and to elective officers thereof who are not
members of the Government Service Insurance System. To provide
retirement benefits, therefore, for these officials, would relate to a
subject matter which is not germane to Commonwealth Act No. 186.
In other words, this portion of the amendment ( re retirement benefits
for Members of Congress and appointive officers, such as the
Secretary and Sergeants-at-arms for each house) is not related in any
manner to the subject of Commonwealth Act No. 186 establishing the
Government Service Insurance System and which provides for both
retirement and insurance benefits to its members." Nonetheless our
opinion was careful to note that there was no abandonment of the
principle of liberality. Thus: "we are not unmindful of the fact that
there has been a general disposition in all courts to construe the
constitutional provision with reference to the subject and title of the
Act, liberally."

It would follow therefore that the challenged legislation Republic Act


No. 4790 is not susceptible to the indictment that the constitutional
requirement as to legislation having only one subject which should be
expressed in his title was not met. The subject was the creation of the
municipality of Dianaton. That was embodied in the title.

It is in the light of the aforementioned judicial decisions of this Court,


some of the opinions coming from jurists illustrious for their mastery
of constitutional law and their acknowledged erudition, that, with all
due respect, I find the citation from Corpus Juris Secundum,
unnecessary and far from persuasive. The State decisions cited, I do
not deem controlling, as the freedom of this Court to accept or reject
doctrines therein announced cannot be doubted.

Wherein does the weakness of the statute lie then? To repeat, several
barrios of two municipalities outside Lanao del Sur were included in
the municipality of Dianaton of that province. That itself would not
have given rise to a constitutional question considering the broad,
well-high plenary powers possessed by Congress to alter provincial
and municipal boundaries. What justified resort to this Court was the
congressional failure to make explicit that such barrios in two
municipalities located in Cotabato would thereafter form part of the
newly created municipality of Dianaton, Lanao del Sur.

To avoid any doubt as to the validity of such statute, it must be


construed as to exclude from Dianaton all of such barrios mentioned in
Republic Act No. 4790 found in municipalities outside Lanao del Sur.
As thus interpreted, the statute can meet the test of the most rigid
scrutiny. Nor is this to do violence to the legislative intent. What was
created was a new municipality from barrios named as found in Lanao
del Sur. This construction assures precisely that.

This mode of interpreting Republic Act No. 4790 finds support in basic
principles underlying precedents, which if not precisely controlling,
have a persuasive ring. In Radiowealth v. Agregado,8 certain
provisions of the Administrative Code were interpreted and given a
"construction which would be more in harmony with the tenets of the
fundamental law." In Sanchez v. Lyon Construction,9 this Court had a
similar ruling: "Article 302 of the Code of Commerce must be applied
in consonance with [the relevant] provisions of our Constitution." The
above principle gained acceptance at a much earlier period in our
constitutional history. Thus in a 1913 decision, In re Guaria:10"In
construing a statute enacted by the Philippine Commission we deem it
our duty not to give it a construction which would be repugnant to an
Act of Congress, if the language of the statute is fairly susceptible of
another construction not in conflict with the higher law. In doing so,
we think we should not hesitate to disregard contentions touching the
apparent intention of the legislator which would lead to the conclusion
that the Commission intended to enact a law in violation of the Act of
Congress. However specious the argument may be in favor of one of
two possible constructions, it must be disregarded if on examination it
is found to rest on the contention that the legislator designed an
attempt to transcend the rightful limits of his authority, and that his
apparent intention was to enact an invalid law."

American Supreme Court decisions are equally explicit. The then


Justice, later Chief Justice, Stone, construed statutes "with an eye to
possible constitutional limitations so as to avoid doubts as to [their]
validity."11 From the pen of the articulate jurist,
Frankfurter:12 "Accordingly, the phrase "lobbying activities" in the
resolution must be given the meaning that may fairly be attributed to
it, having special regard for the principle of constitutional adjudication
which makes it decisive in the choice of fair alternatives that one
construction may raise serious constitutional questions avoided by
another." His opinion in the Rumely case continues with the above
pronouncement of Stone and two other former Chief Justices: "In the
words of Mr. Chief Justice Taft, '(i)t is our duty in the interpretation of
federal statutes to reach conclusion which will avoid serious doubt of
their constitutionality', Richmond Screw Anchor Co. v. United States,
275 US 331, 346, 48 S. Ct. 194, 198, 72 L. ed. 303. . . . As phrased
by Mr. Chief Justice Hughes, "if a serious doubt of constitutionality is
raised, it is a cardinal principle that this Court will first ascertain
whether a construction of the statute is fairly possible by which the
question may be avoided.' Crowell v. Benson, 285, 296, 76 L. ed. 598,
and cases cited." The prevailing doctrine then as set forth by Justice
Clark in a 1963 decision,13 is that courts "have consistently sought an
interpretation which supports the constitutionality of legislation."
Phrased differently by Justice Douglas, the judiciary favors "that
interpretation of legislation which gives it the greater change of
surviving the test of constitutionality."14

It would follow then that both Philippine and American decisions unite
in the view that a legislative measure, in the language of Van Devanter
"should not be given a construction which will imperil its validity where
it is reasonably open to construction free from such peril."15 Republic
Act No. 4790 as above construed incurs no such risk and is free from
the peril of nullity.

So I would view the matter, with all due acknowledgment of the


practical considerations clearly brought to light in the opinion of the
Court.

Footnotes
1
Hereinafter referred to as Comelec.
2
Article VI, Sec. 21(1), Philippine Constitution.
3
Stiglitz vs. Schiardien, 40 SW 2d 315, 317, 320.
4
Congressional Record, Vol. I, No. 40, p. 8; Vol. I, No. 50, pp.
40-41.
5
Section 18, Article VI of the Constitution, provides:

"Sec. 18. All appropriation, revenue or tariff bills, bills


authorizing increase of the public debt, bills of local
application, and private bills, shall originate exclusively in
the House of Representatives, but the Senate may propose
or concur with amendments."
6
Vidal de Roces vs. Posadas, 58 Phil. 108, 111-112; Ichong vs.
Hernandez, 101 Phil. 1155, 1188-1190.
7
82 C.J.S. pp. 365, 370; emphasis supplied.
8
Emphasis ours.
9
Emphasis supplied.
10
Examples: Wilcox vs. Paddock, 31 NW 609, where the statute
entitled "An act making an appropriation of state swamp lands to
aid the county of Gratiot in improving the channel of Maple river .
. ." but the body of the act affected another county other than
Gratiot.

State vs. Burr, 238 P 585, the statute entitled "An act to
amend Secs. 4318 and 4327 of the Codes of Montana
relating to changing the boundaries of Fergus and Judith
Basin countries" was rendered void because the body of the
act included the boundaries of Petroleum county.

Atchison vs. Kearney County, 48 P 583, where the title of


the act purported to attach Kearney county to Finney
county the body of the act attached it to Hamilton county.

State vs. Nelson, 98 So. 715, the title of the act purporting
to alter or rearrange the boundaries of Decatur city and the
body of the act which actually diminished the boundary
lines of the city were considered by the court as dealing
with incongruous matters. The reading of the former would
give no clear suggestion that the latter would follow and be
made the subject of the act. Jackson, Clerk vs. Sherrod, 92
So. 481; City of Ensley vs. Simpson, 52 So. 61, cited.

Fairview vs. City of Detroit, 113 NW 368, where the title


gave notice that the entire village of Fairview is annexed to
Detroit when the body affected only a portion.
11
Black, Interpretation of Laws, 2d. ed., p. 116.
12
Barrameda vs. Moir, 25 Phil. 44, 47-48, quoted in Government
vs. Springer (50 Phil. 259, 292; emphasis supplied).
13
McQuillin, Municipal Corporations, 3d ed., pp. 456-464.
14
In the case of Fuqua vs. City of Mobile, 121 So. 696, it was
asserted that the portion of the statute excluding a territory from
Mobile which was not express in the title "An act to alter and
rearrange the boundary lines of the city of Mobile in the state of
Alabama" should be the only portion invalidated. The court, using
the test whether or not after the objectionable feature is stricken
off there would still remain an act complete in itself, sensible,
capable of being executed, ruled that there can be no
segregation of that portion dealing with the excluded territory
from that dealing with additional territory because these two
matters are all embraced and intermingled in one section dealing
with the corporate limits of the city.

In the case of Engle vs. Bonnie, 204 SW 2d 963, the statute


involved was entitled "An Act relating to cities". Section 4
thereof "requires the creation of a municipality on petition
of a majority of voters or 500 voters." But some of the
provisions were germane to the title of the law. This statute
was declared void in toto. The Court of Appeals of Kentucky
ruled as follows:

"The judgment declared only Section 4 [relative to the


creation of a municipality on petition of the voters] to be
void and the remainder valid. While some of the provisions
of the act are germane to the title, since they deal with the
classification of cities to be created, they seem merely to
harmonize other sections of the statute which they amend
with a new creation of cities other than sixth class towns.
To remove only Section 4 would be like taking the motor of
an automobile which leaves the machine of no use. We are
quite sure that these provisions would not have been
enacted without Section 4; hence, they too must fall."

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 all-expenses-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, second-prize 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. L-3062, 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 non-mailable
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 non-mailable, 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

SECOND DIVISION

G.R. No. L-30061 February 27, 1974

THE PEOPLE OF THE PHILIPPINES, plaintiff-appellees,


vs.
JOSE JABINAL Y CARMEN, defendant-appellant.

Office of the Solicitor General Felix V. Makasiar and Solicitor Antonio


M. Martinez for plaintiff-appellee.

Pedro Panganiban y Tolentino for defendant-appellant.

ANTONIO, J.:p

Appeal from the judgment of the Municipal Court of Batangas


(provincial capital), Batangas, in Criminal Case No. 889, finding the
accused guilty of the crime of Illegal Possession of Firearm and
Ammunition and sentencing him to suffer an indeterminate penalty
ranging from one (1) year and one (1) day to two (2) years
imprisonment, with the accessories provided by law, which raises in
issue the validity of his conviction based on a retroactive application of
Our ruling in People v. Mapa. 1

The complaint filed against the accused reads:

That on or about 9:00 o'clock, p.m., the 5th day of


September, 1964, in the poblacion, Municipality of
Batangas, Province of Batangas, Philippines, and within the
jurisdiction of this Honorable Court, the above-named
accused, a person not authorized by law, did then and there
wilfully, unlawfully and feloniously keep in his possession,
custody and direct control a revolver Cal. .22, RG8 German
Made with one (1) live ammunition and four (4) empty
shells without first securing the necessary permit or license
to possess the same.

At the arraignment on September 11, 1964, the accused entered a


plea of not guilty, after which trial was accordingly held.

The accused admitted that on September 5, 1964, he was in


possession of the revolver and the ammunition described in the
complaint, without the requisite license or permit. He, however,
claimed to be entitled to exoneration because, although he had no
license or permit, he had an appointment as Secret Agent from the
Provincial Governor of Batangas and an appointment as Confidential
Agent from the PC Provincial Commander, and the said appointments
expressly carried with them the authority to possess and carry the
firearm in question.

Indeed, the accused had appointments from the above-mentioned


officials as claimed by him. His appointment from Governor Feliciano
Leviste, dated December 10, 1962, reads:

Reposing special trust and confidence in your civic spirit,


and trusting that you will be an effective agent in the
detection of crimes and in the preservation of peace and
order in the province of Batangas, especially with respect to
the suppression of trafficking in explosives, jueteng, illegal
cockfighting, cattle rustling, robbery and the detection of
unlicensed firearms, you are hereby appointed a SECRET
AGENT of the undersigned, the appointment to take effect
immediately, or as soon as you have qualified for the
position. As such Secret Agent, your duties shall be those
generally of a peace officer and particularly to help in the
preservation of peace and order in this province and to
make reports thereon to me once or twice a month. It
should be clearly understood that any abuse of authority on
your part shall be considered sufficient ground for the
automatic cancellation of your appointment and immediate
separation from the service. In accordance with the decision
of the Supreme Court in G.R. No. L-12088 dated December
23, 1959, you will have the right to bear a firearm,
particularly described below, for use in connection with the
performance of your duties.
By virtue hereof, you may qualify and enter upon the
performance of your duties by taking your oath of office
and filing the original thereof with us.

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o
r

FIREARM AUTHORIZED TO CARRY:

Kind: ROHM-Revolver

Make: German

SN: 64

Cal: .22

On March 15, 1964, the accused was also appointed by the PC


Provincial Commander of Batangas as Confidential Agent with duties to
furnish information regarding smuggling activities, wanted persons,
loose firearms, subversives and other similar subjects that might affect
the peace and order condition in Batangas province, and in connection
with these duties he was temporarily authorized to possess a ROHM
revolver, Cal. .22 RG-8 SN-64, for his personal protection while in the
performance of his duties.

The accused contended before the court a quo that in view of his
above-mentioned appointments as Secret Agent and Confidential
Agent, with authority to possess the firearm subject matter of the
prosecution, he was entitled to acquittal on the basis of the Supreme
Court's decision in People vs. Macarandang 2 and People vs.
Lucero. 3 The trial court, while conceding on the basis of the evidence
of record the accused had really been appointed Secret Agent and
Confidential Agent by the Provincial Governor and the PC Provincial
Commander of Batangas, respectively, with authority to possess and
carry the firearm described in the complaint, nevertheless held the
accused in its decision dated December 27, 1968, criminally liable for
illegal possession of a firearm and ammunition on the ground that the
rulings of the Supreme Court in the cases
of Macarandang and Lucero were reversed and abandoned in People
vs. Mapa, supra. The court considered as mitigating circumstances the
appointments of the accused as Secret Agent and Confidential Agent.

Let us advert to Our decisions in People v. Macarandang, supra, People


v. Lucero, supra, and People v. Mapa, supra. In Macarandang, We
reversed the trial court's judgment of conviction against the accused
because it was shown that at the time he was found to possess a
certain firearm and ammunition without license or permit, he had an
appointment from the Provincial Governor as Secret Agent to assist in
the maintenance of peace and order and in the detection of crimes,
with authority to hold and carry the said firearm and ammunition. We
therefore held that while it is true that the Governor has no authority
to issue any firearm license or permit, nevertheless, section 879 of the
Revised Administrative Code provides that "peace officers" are
exempted from the requirements relating to the issuance of license to
possess firearms; and Macarandang's appointment as Secret Agent to
assist in the maintenance of peace and order and detection of crimes,
sufficiently placed him in the category of a "peace officer" equivalent
even to a member of the municipal police who under section 879 of
the Revised Administrative Code are exempted from the requirements
relating to the issuance of license to possess firearms. In Lucero, We
held that under the circumstances of the case, the granting of the
temporary use of the firearm to the accused was a necessary means to
carry out the lawful purpose of the batallion commander to effect the
capture of a Huk leader. In Mapa, expressly abandoning the doctrine
in Macarandang, and by implication, that in Lucero, We sustained the
judgment of conviction on the following ground:

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." (Sec. 878, as amended by
Republic Act No. 4, Revised Administrative Code.) 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." (Sec. 879, Revised
Administrative Code.)

The law cannot be any clearer. No provision is made for a


secret agent. As such he is not exempt. ... .

It will be noted that when appellant was appointed Secret Agent by the
Provincial Government in 1962, and Confidential Agent by the
Provincial Commander in 1964, the prevailing doctrine on the matter
was that laid down by Us in People v. Macarandang (1959) and People
v. Lucero (1958). Our decision in People v. Mapa reversing the
aforesaid doctrine came only in 1967. The sole question in this appeal
is: Should appellant be acquitted on the basis of Our rulings
in Macarandang and Lucero, or should his conviction stand in view of
the complete reversal of the Macarandang and Lucero doctrine
in Mapa? The Solicitor General is of the first view, and he accordingly
recommends reversal of the appealed judgment.

Decisions of this Court, although in themselves not laws, are


nevertheless evidence of what the laws mean, and this is the reason
why under Article 8 of the New Civil Code "Judicial decisions applying
or interpreting the laws or the Constitution shall form a part of the
legal system ... ." The interpretation upon a law by this Court
constitutes, in a way, a part of the law as of the date that law
originally passed, since this Court's construction merely establishes the
contemporaneous legislative intent that law thus construed intends to
effectuate. The settled rule supported by numerous authorities is a
restatement of legal maxim "legis interpretatio legis vim obtinet"
the interpretation placed upon the written law by a competent court
has the force of law. The doctrine laid down
in Lucero and Macarandang was part of the jurisprudence, hence of
the law, of the land, at the time appellant was found in possession of
the firearm in question and when he arraigned by the trial court. It is
true that the doctrine was overruled in the Mapa case in 1967, but
when a doctrine of this Court is overruled and a different view is
adopted, the new doctrine should be applied prospectively, and should
not apply to parties who had relied on the old doctrine and acted on
the faith thereof. This is especially true in the construction and
application of criminal laws, where it is necessary that the punishability
of an act be reasonably foreseen for the guidance of society.

It follows, therefore, that considering that appellant conferred his


appointments as Secret Agent and Confidential Agent and authorized
to possess a firearm pursuant to the prevailing doctrine enunciated
in Macarandang and Lucero, under which no criminal liability would
attach to his possession of said firearm in spite of the absence of a
license and permit therefor, appellant must be absolved. Certainly,
appellant may not be punished for an act which at the time it was
done was held not to be punishable.

WHEREFORE, the judgment appealed from is hereby reversed, and


appellant is acquitted, with costs de oficio.

Zaldivar (Chairman), Barredo, Fernandez and Aquino, JJ., concur.

Fernando, J., took no part.


Republic of the Philippines
SUPREME COURT
Manila

EN BANC

G.R. No. L-23678 June 6, 1967

TESTATE ESTATE OF AMOS G. BELLIS, deceased.


PEOPLE'S BANK and TRUST COMPANY, executor.
MARIA CRISTINA BELLIS and MIRIAM PALMA
BELLIS, oppositors-appellants,
vs.
EDWARD A. BELLIS, ET AL., heirs-appellees.

Vicente R. Macasaet and Jose D. Villena for oppositors appellants.


Paredes, Poblador, Cruz and Nazareno for heirs-appellees E. A. Bellis,
et al.
Quijano and Arroyo for heirs-appellees W. S. Bellis, et al.
J. R. Balonkita for appellee People's Bank & Trust Company.
Ozaeta, Gibbs and Ozaeta for appellee A. B. Allsman.

BENGZON, J.P., J.:

This is a direct appeal to Us, upon a question purely of law, from an


order of the Court of First Instance of Manila dated April 30, 1964,
approving the project of partition filed by the executor in Civil Case
No. 37089 therein.1wph1.t

The facts of the case are as follows:

Amos G. Bellis, born in Texas, was "a citizen of the State of Texas and
of the United States." By his first wife, Mary E. Mallen, whom he
divorced, he had five legitimate children: Edward A. Bellis, George
Bellis (who pre-deceased him in infancy), Henry A. Bellis, Alexander
Bellis and Anna Bellis Allsman; by his second wife, Violet Kennedy,
who survived him, he had three legitimate children: Edwin G. Bellis,
Walter S. Bellis and Dorothy Bellis; and finally, he had three
illegitimate children: Amos Bellis, Jr., Maria Cristina Bellis and Miriam
Palma Bellis.
On August 5, 1952, Amos G. Bellis executed a will in the Philippines, in
which he directed that after all taxes, obligations, and expenses of
administration are paid for, his distributable estate should be divided,
in trust, in the following order and manner: (a) $240,000.00 to his
first wife, Mary E. Mallen; (b) P120,000.00 to his three illegitimate
children, Amos Bellis, Jr., Maria Cristina Bellis, Miriam Palma Bellis, or
P40,000.00 each and (c) after the foregoing two items have been
satisfied, the remainder shall go to his seven surviving children by his
first and second wives, namely: Edward A. Bellis, Henry A. Bellis,
Alexander Bellis and Anna Bellis Allsman, Edwin G. Bellis, Walter S.
Bellis, and Dorothy E. Bellis, in equal shares.1wph1.t

Subsequently, or on July 8, 1958, Amos G. Bellis died a resident of


San Antonio, Texas, U.S.A. His will was admitted to probate in the
Court of First Instance of Manila on September 15, 1958.

The People's Bank and Trust Company, as executor of the will, paid all
the bequests therein including the amount of $240,000.00 in the form
of shares of stock to Mary E. Mallen and to the three (3) illegitimate
children, Amos Bellis, Jr., Maria Cristina Bellis and Miriam Palma Bellis,
various amounts totalling P40,000.00 each in satisfaction of their
respective legacies, or a total of P120,000.00, which it released from
time to time according as the lower court approved and allowed the
various motions or petitions filed by the latter three requesting partial
advances on account of their respective legacies.

On January 8, 1964, preparatory to closing its administration, the


executor submitted and filed its "Executor's Final Account, Report of
Administration and Project of Partition" wherein it reported, inter alia,
the satisfaction of the legacy of Mary E. Mallen by the delivery to her
of shares of stock amounting to $240,000.00, and the legacies of
Amos Bellis, Jr., Maria Cristina Bellis and Miriam Palma Bellis in the
amount of P40,000.00 each or a total of P120,000.00. In the project of
partition, the executor pursuant to the "Twelfth" clause of the
testator's Last Will and Testament divided the residuary estate into
seven equal portions for the benefit of the testator's seven legitimate
children by his first and second marriages.

On January 17, 1964, Maria Cristina Bellis and Miriam Palma Bellis
filed their respective oppositions to the project of partition on the
ground that they were deprived of their legitimes as illegitimate
children and, therefore, compulsory heirs of the deceased.

Amos Bellis, Jr. interposed no opposition despite notice to him, proof


of service of which is evidenced by the registry receipt submitted on
April 27, 1964 by the executor.1

After the parties filed their respective memoranda and other pertinent
pleadings, the lower court, on April 30, 1964, issued an order
overruling the oppositions and approving the executor's final account,
report and administration and project of partition. Relying upon Art. 16
of the Civil Code, it applied the national law of the decedent, which in
this case is Texas law, which did not provide for legitimes.

Their respective motions for reconsideration having been denied by the


lower court on June 11, 1964, oppositors-appellants appealed to this
Court to raise the issue of which law must apply Texas law or
Philippine law.

In this regard, the parties do not submit the case on, nor even discuss,
the doctrine of renvoi, applied by this Court in Aznar v. Christensen
Garcia, L-16749, January 31, 1963. Said doctrine is usually pertinent
where the decedent is a national of one country, and a domicile of
another. In the present case, it is not disputed that the decedent was
both a national of Texas and a domicile thereof at the time of his
death.2 So that even assuming Texas has a conflict of law rule
providing that the domiciliary system (law of the domicile) should
govern, the same would not result in a reference back (renvoi) to
Philippine law, but would still refer to Texas law. Nonetheless, if Texas
has a conflicts rule adopting the situs theory (lex rei sitae) calling for
the application of the law of the place where the properties are
situated, renvoi would arise, since the properties here involved are
found in the Philippines. In the absence, however, of proof as to the
conflict of law rule of Texas, it should not be presumed different from
ours.3 Appellants' position is therefore not rested on the doctrine of
renvoi. As stated, they never invoked nor even mentioned it in their
arguments. Rather, they argue that their case falls under the
circumstances mentioned in the third paragraph of Article 17 in
relation to Article 16 of the Civil Code.
Article 16, par. 2, and Art. 1039 of the Civil Code, render applicable
the national law of the decedent, in intestate or testamentary
successions, with regard to four items: (a) the order of succession; (b)
the amount of successional rights; (e) the intrinsic validity of the
provisions of the will; and (d) the capacity to succeed. They provide
that

ART. 16. Real property as well as personal property is subject to


the law of the country where it is situated.

However, intestate and testamentary successions, both with


respect to the order of succession and to the amount of
successional rights and to the intrinsic validity of testamentary
provisions, shall be regulated by the national law of the person
whose succession is under consideration, whatever may he the
nature of the property and regardless of the country wherein said
property may be found.

ART. 1039. Capacity to succeed is governed by the law of the


nation of the decedent.

Appellants would however counter that Art. 17, paragraph three, of


the Civil Code, stating that

Prohibitive laws concerning persons, their acts or property, and


those which have for their object public order, public policy and
good customs shall not be rendered ineffective by laws or
judgments promulgated, or by determinations or conventions
agreed upon in a foreign country.

prevails as the exception to Art. 16, par. 2 of the Civil Code afore-
quoted. This is not correct. Precisely, Congress deleted the phrase,
"notwithstanding the provisions of this and the next preceding article"
when they incorporated Art. 11 of the old Civil Code as Art. 17 of the
new Civil Code, while reproducing without substantial change the
second paragraph of Art. 10 of the old Civil Code as Art. 16 in the new.
It must have been their purpose to make the second paragraph of Art.
16 a specific provision in itself which must be applied in testate and
intestate succession. As further indication of this legislative intent,
Congress added a new provision, under Art. 1039, which decrees that
capacity to succeed is to be governed by the national law of the
decedent.

It is therefore evident that whatever public policy or good customs


may be involved in our System of legitimes, Congress has not
intended to extend the same to the succession of foreign nationals. For
it has specifically chosen to leave, inter alia, the amount of
successional rights, to the decedent's national law. Specific provisions
must prevail over general ones.

Appellants would also point out that the decedent executed two wills
one to govern his Texas estate and the other his Philippine estate
arguing from this that he intended Philippine law to govern his
Philippine estate. Assuming that such was the decedent's intention in
executing a separate Philippine will, it would not alter the law, for as
this Court ruled in Miciano v. Brimo, 50 Phil. 867, 870, a provision in a
foreigner's will to the effect that his properties shall be distributed in
accordance with Philippine law and not with his national law, is illegal
and void, for his national law cannot be ignored in regard to those
matters that Article 10 now Article 16 of the Civil Code states
said national law should govern.

The parties admit that the decedent, Amos G. Bellis, was a citizen of
the State of Texas, U.S.A., and that under the laws of Texas, there are
no forced heirs or legitimes. Accordingly, since the intrinsic validity of
the provision of the will and the amount of successional rights are to
be determined under Texas law, the Philippine law on legitimes cannot
be applied to the testacy of Amos G. Bellis.

Wherefore, the order of the probate court is hereby affirmed in toto,


with costs against appellants. So ordered.

Concepcion, C.J., Reyes, J.B.L., Dizon, Regala, Makalintal, Zaldivar,


Sanchez and Castro, JJ., concur.

UNITED AIRLINES, INC., petitioner, vs. COURT OF APPEALS,


ANICETO FONTANILLA, in his personal capacity and in
behalf of his minor son MYCHAL ANDREW
FONTANILLA respondents.

DECISION
KAPUNAN, J.:

On March 1, 1989, private respondent Aniceto Fontanilla purchased


from petitioner United Airlines, through the Philippine Travel Bureau in
Manila, three (3) Visit the U.S.A. tickets for himself, his wife and his
minor son Mychal for the following routes:

(a) San Francisco to Washington (15 April 1989);

(b) Washington to Chicago (25 April 1989);

(c) Chicago to Los Angeles (29 April 1989);

(d) Los Angeles to San Francisco (01 May 1989 for petitioners wife and
05 May 1989 for petitioner and his son).[1]

All flights had been confirmed previously by United Airlines.[2]

The Fontanillas proceeded to the United States as planned, where


they used the first coupon from San Francisco to Washington. On April
24, 1989, Aniceto Fontanilla bought two (2) additional coupons each
for himself, his wife and his son from petitioner at its office in
Washington Dulles Airport. After paying the penalty for rewriting their
tickets, the Fontanillas were issued tickets with corresponding
boarding passes with the words CHECK-IN REQUIRED, for United
Airlines Flight No. 1108, set to leave from Los Angeles to San
Francisco at 10:30 a.m. on May 5, 1989.[3]
The cause of the non-boarding of the Fontanillas on United Airlines
Flight No. 1108 makes up the bone of contention of this controversy.
Private respondents' version is as follows:
Aniceto Fontanilla and his son Mychal claim that on May 5, 1989,
upon their arrival at the Los Angeles Airport for their flight, they
proceeded to United Airlines counter where they were attended by an
employee wearing a nameplate bearing the name LINDA. Linda
examined their tickets, punched something into her computer and then
told them that boarding would be in fifteen minutes.[4]
When the flight was called, the Fontanillas proceeded to the
plane. To their surprise, the stewardess at the gate did not allow them
to board the plane, as they had no assigned seat numbers. They were
then directed to go back to the check-in counter where Linda
subsequently informed them that the flight had been overbooked and
asked them to wait.[5]
The Fontanillas tried to explain to Linda the special circumstances
of their visit. However, Linda told them in arrogant manner, So what, I
can not do anything about it.[6]
Subsequently, three other passengers with Caucasian features
were graciously allowed to board, after the Fontanillas were told that
the flight had been overbooked.[7]
The plane then took off with the Fontanillas baggage in tow, leaving
them behind.[8]
The Fontanillas then complained to Linda, who in turn gave them
an ugly stare and rudely uttered, Its not my fault. Its the fault of the
company. Just sit down and wait.[9] When Mr. Fontanilla reminded
Linda of the inconvenience being caused to them, she bluntly
retorted, Who do you think you are? You lousy Flips are good for
nothing beggars. You always ask for American aid. After which she
remarked Dont worry about your baggage. Anyway there is nothing in
there. What are you doing here anyway? I will report you to
immigration. You Filipinos should go home.[10] Such rude statements
were made in front of other people in the airport causing the
Fontanillas to suffer shame, humiliation and embarrassment. The
chastening situation even caused the younger Fontanilla to break into
tears.[11]
After some time, Linda, without any explanation, offered the
Fontanillas $50.00 each. She simply said Take it or leave it. This, the
Fontanillas declined.[12]
The Fontanillas then proceeded to the United Airlines customer
service counter to plead their case. The male employee at the counter
reacted by shouting that he was ready for it and left without saying
anything.[13]
The Fontanillas were not booked on the next flight, which departed
for San Francisco at 11:00 a.m. It was only at 12:00 noon that they
were able to leave Los Angeles on United Airlines Flight No. 803.
Petitioner United Airlines has a different version of what occurred at
the Los Angeles Airport on May 5, 1989.
According to United Airlines, the Fontanillas did not initially go to
the check-in counter to get their seat assignments for UA Flight
1108. They instead proceeded to join the queue boarding the aircraft
without first securing their seat assignments as required in their ticket
and boarding passes. Having no seat assignments, the stewardess at
the door of the plane instructed them to go to the check-in counter.
When the Fontanillas proceeded to the check-in counter, Linda Allen,
the United Airlines Customer Representative at the counter informed
them that the flight was overbooked. She booked them on the next
available flight and offered them denied boarding compensation. Allen
vehemently denies uttering the derogatory and racist words attributed
to her by the Fontanillas.[14]
The incident prompted the Fontanillas to file Civil Case No. 89-4268
for damages before the Regional Trial Court of Makati. After trial on
the merits, the trial court rendered a decision, the dispositive portion
of which reads as follows:

WHEREFORE, judgment is rendered dismissing the complaint. The


counterclaim is likewise dismissed as it appears that plaintiffs were not
actuated by legal malice when they filed the instant complaint.[15]

On appeal, the Court of Appeals ruled in favor of the


Fontanillas. The appellate court found that there was an admission on
the part of United Airlines that the Fontanillas did in fact observe the
check-in requirement. It ruled further that even assuming there was a
failure to observe the check-in requirement, United Airlines failed to
comply with the procedure laid down in cases where a passenger is
denied boarding. The appellate court likewise gave credence to the
claim of Aniceto Fontanilla that the employees of United Airlines were
discourteous and arbitrary and, worse, discriminatory. In light of such
treatment, the Fontanillas were entitled to moral damages. The
dispositive portion of the decision of the respondent Court of Appeals
dated 29 September 1995, states as follows:

WHEREFORE, in view of the foregoing, judgment appealed herefrom is


hereby REVERSED and SET ASIDE, and a new judgment is entered
ordering defendant-appellee to pay plaintiff-appellant the following:

a) P200,000.00 as moral damages;

b) P200,000.00 as exemplary damages;


c) P50, 000.00 as attorneys fees.

No pronouncement as to costs.

SO ORDERED.[16]

Petitioner United Airlines now comes to this Court raising the


following assignment of errors:
I

RESPONDENT COURT OF APPEALS GRAVELY ERRED IN RULING


THAT THE TRIAL COURT WAS WRONG IN FAILING TO CONSIDER
THE ALLEGED ADMISSION THAT PRIVATE RESPONDENT OBSERVED
THE CHECK-IN REQUIREMENT.

II

RESPONDENT COURT OF APPEALS GRAVELY ERRED IN RULING


THAT PRIVATE RESPONDENTS FAILURE TO CHECK-IN WILL NOT
DEFEAT HIS CLAIMS BECAUSE THE DENIED BOARDING RULES
WERE NOT COMPLIED WITH.

III

RESPONDENT COURT OF APPEALS GRAVELY ERRED IN RULING


THAT PRIVATE RESPONDENT IS ENTITLED TO MORAL DAMAGES OF
P200, 000.

IV

RESPONDENT COURT OF APPEALS GRAVELY ERRED IN RULING


THAT PRIVATE RESPONDENT IS ENTITLED TO EXEMPLARY
DAMAGES OF P200,000.

RESPONDENT COURT OF APPEALS GRAVELY ERRED IN RULING


THAT PRIVATE RESPONDENT IS ENTITLED TO ATTORNEYS FEES OF
P50, 000.[17]

On the first issue raised by the petitioner, the respondent Court of


Appeals ruled that when Rule 9, Section 1 of the Rules of
Court,[18] there was an implied admission in petitioner's answer in the
allegations in the complaint that private respondent and his son
observed the check-in requirement at the Los Angeles Airport. Thus:
A perusal of the above pleadings filed before the trial court
disclosed that there exists a blatant admission on the part of the
defendant-appellee that the plaintiffs-appellants indeed observed the
check-in requirement at the Los Angeles Airport on May 5, 1989. In
view of defendant-appellees admission of plaintiffs-appellants material
averment in the complaint, We find no reason why the trial court
should rule against such admission.[19]
We disagree with the above conclusion reached by respondent
Court of Appeals. Paragraph 7 of private respondents' complaint
states:

7. On May 5, 1989 at 9:45 a.m., plaintiff and his son checked in at


defendants designated counter at the airport in Los Angeles for their
scheduled flight to San Francisco on defendants Flight No. 1108.[20]

Responding to the above allegations, petitioner averred in


paragraph 4 of its answer, thus:

4. Admits the allegation set forth in paragraph 7 of the complaint


except to deny that plaintiff and his son checked in at 9:45 a.m., for
lack of knowledge or information at this point in time as to the truth
thereof.[21]

The rule authorizing an answer that the defendant has no


knowledge or information sufficient to form a belief as to the truth of
an averment and giving such answer the effect of a denial, does not
apply where the fact as to which want of knowledge is asserted is so
plainly and necessarily within the defendant's knowledge that his
averment of ignorance must be palpably untrue.[22] Whether or not
private respondents checked in at petitioner's designated counter at
the airport at 9:45 a.m. on May 5, 1989 must necessarily be within
petitioner's knowledge.
While there was no specific denial as to the fact of compliance with
the check-in requirement by private respondents, petitioner presented
evidence to support its contention that there indeed was no
compliance.
Private respondents then are said to have waived the rule on
admission. It not only presented evidence to support its contention
that there was compliance with the check-in requirement, it even
allowed petitioner to present rebuttal evidence. In the case of Yu
Chuck vs. "Kong Li Po," we ruled that:

The object of the rule is to relieve a party of the trouble and expense
in proving in the first instance an alleged fact, the existence or non-
existence of which is necessarily within the knowledge of the adverse
party, and of the necessity (to his opponents case) of establishing
which such adverse party is notified by his opponents pleadings.

The plaintiff may, of course, waive the rule and that is what must be
considered to have done (sic) by introducing evidence as to the
execution of the document and failing to object to the defendants
evidence in refutation; all this evidence is now competent and the case
must be decided thereupon.[23]

The determination of the other issues raised is dependent on


whether or not there was a breach of contract in bad faith on the part
of the petitioner in not allowing the Fontanillas to board United Airlines
Flight 1108.
It must be remembered that the general rule in civil cases is that
the party having the burden of proof of an essential fact must produce
a preponderance of evidence thereon.[24] Although the evidence
adduced by the plaintiff is stronger than that presented by the
defendant, a judgment cannot be entered in favor of the former, if his
evidence is not sufficient to sustain his cause of action. The plaintiff
must rely on the strength of his own evidence and not upon the
weakness of the defendants.[25] Proceeding from this, and considering
the contradictory findings of facts by the Regional Trial Court and the
Court of Appeals, the question before this Court is whether or not
private respondents were able to prove with adequate evidence his
allegations of breach of contract in bad faith.
We rule in the negative.
Time and again, the Court has pronounced that appellate courts
should not, unless for strong and cogent reasons, reverse the findings
of facts of trial courts. This is so because trial judges are in a better
position to examine real evidence and at a vantage point to observe
the actuation and the demeanor of the witnesses.[26] While not the sole
indicator of the credibility of a witness, it is of such weight that it has
been said to be the touchstone of credibility.[27]
Aniceto Fontanillas assertion that upon arrival at the airport at 9:45
a.m., he immediately proceeded to the check-in counter, and that
Linda Allen punched in something into the computer is specious and
not supported by the evidence on record. In support of their
allegations, private respondents submitted a copy of the boarding
pass. Explicitly printed on the boarding pass are the words Check-In
Required. Curiously, the said pass did not indicate any seat number. If
indeed the Fontanillas checked in at the designated time as they
claimed, why then were they not assigned seat numbers? Absent any
showing that Linda was so motivated, we do not buy into private
respondents' claim that Linda intentionally deceived him, and made
him the laughing stock among the passengers.[28] Hence, as correctly
observed by the trial court:

Plaintiffs fail to realize that their failure to check in, as expressly


required in their boarding passes, is the very reason why they were
not given their respective seat numbers, which resulted in their being
denied boarding.[29]

Neither do we agree with the conclusion reached by the appellate


court that private respondents' failure to comply with the check-in
requirement will not defeat his claim as the denied boarding rules were
not complied with. Notably, the appellate court relied on the Code of
Federal Regulation Part on Oversales, which states:

250.6 Exceptions to eligibility for denied boarding compensation.

A passenger denied board involuntarily from an oversold flight shall


not be eligible for denied board compensation if:

(a) The passenger does not comply with the carriers contract of
carriage or tariff provisions regarding ticketing, reconfirmation, check-
in, and acceptability for transformation.

The appellate court, however, erred in applying the laws of the


United States as, in the case at bar, Philippine law is the applicable
law. Although, the contract of carriage was to be performed in the
United States, the tickets were purchased through petitioners agent in
Manila. It is true that the tickets were rewritten in Washington,
D.C. However, such fact did not change the nature of the original
contract of carriage entered into by the parties in Manila.
In the case of Zalamea vs. Court of Appeals,[30] this Court applied
the doctrine of lex loci contractus. According to the doctrine, as a
general rule, the law of the place where a contract is made or entered
into governs with respect to its nature and validity, obligation and
interpretation. This has been said to be the rule even though the place
where the contract was made is different from the place where it is to
be performed, and particularly so, if the place of the making and the
place of performance are the same. Hence, the court should apply the
law of the place where the airline ticket was issued, when the
passengers are residents and nationals of the forum and the ticket is
issued in such State by the defendant airline.
The law of the forum on the subject matter is Economic Regulations
No. 7 as amended by Boarding Priority and Denied Boarding
Compensation of the Civil Aeronautics Board, which provides that the
check-in requirement be complied with before a passenger may claim
against a carrier for being denied boarding:

SEC. 5. Amount of Denied Boarding Compensation Subject to the


exceptions provided hereinafter under Section 6, carriers shall pay to
passengers holding confirmed reserved space and who
have presented themselves at the proper place and time and
fully complied with the carriers check-in and reconfirmation
procedures and who are acceptable for carriage under the Carriers
tariffs but who have been denied boarding for lack of space, a
compensation at the rate of: xx

Private respondents' narration that they were subjected to harsh


and derogatory remarks seems incredulous. However, this Court will
not attempt to surmise what really happened. Suffice to say, private
respondent was not able to prove his cause of action, for as the trial
court correctly observed:

xxx plaintiffs claim to have been discriminated against and insulted in


the presence of several people. Unfortunately, plaintiffs limited their
evidence to the testimony [of] Aniceto Fontanilla, without any
corroboration by the people who saw or heard the discriminatory
remarks and insults; while such limited testimony could possibly be
true, it does not enable the Court to reach the conclusion that plaintiffs
have, by a preponderance of evidence, proven that they are entitled to
P1,650,000.00 damages from defendant.[31]

As to the award of moral and exemplary damages, we find error in


the award of such by the Court of Appeals. For the plaintiff to be
entitled to an award of moral damages arising from a breach of
contract of carriage, the carrier must have acted with fraud or bad
faith. The appellate court predicated its award on our pronouncement
in the case of Zalamea vs. Court of Appeals, supra, where we stated:

Existing jurisprudence explicitly states that overbooking amounts to


bad faith, entitling passengers concerned to an award of moral
damages. In Alitalia Airways v. Court of Appeals, where passengers
with confirmed booking were refused carriage on the last minute, this
Court held that when an airline issues a ticket to a passenger
confirmed on a particular flight, on a certain date, a contract of
carriage arises, and the passenger has every right to expect that he
would fly on that flight and on that date. If he does not, then the
carrier opens itself to a suit for breach of contract of carriage. Where
an airline had deliberately overbooked, it took the risk of having to
deprive some passengers of their seats in case all of them would show
up for check in. For the indignity and inconvenience of being refused a
confirmed seat on the last minute, said passenger is entitled to moral
damages. (Emphasis supplied.)

However, the Courts ruling in said case should be read in


consonance with existing laws, particularly, Economic Regulations No.
7, as amended, of the Civil Aeronautics Board:

Sec 3. Scope. This regulation shall apply to every Philippine and


foreign air carrier with respect to its operation of flights or portions of
flights originating from or terminating at, or serving a point within the
territory of the Republic of the Philippines insofar as it denies boarding
to a passenger on a flight, or portion of a flight inside or outside the
Philippines, for which he holds confirmed reserved space.Furthermore,
this Regulation is designed to cover only honest mistakes on the part
of the carriers and excludes deliberate and willful acts of non-
accommodation. Provided, however, that overbooking not
exceeding 10% of the seating capacity of the aircraft shall not
be considered as a deliberate and willful act of non-
accommodation.

What this Court considers as bad faith is the willful and deliberate
overbooking on the part of the airline carrier. The above-mentioned
law clearly states that when the overbooking does not exceed ten
percent (10%), it is not considered as deliberate and therefore does
not amount to bad faith. While there may have been overbooking in
this case, private respondents were not able to prove that the
overbooking on United Airlines Flight 1108 exceeded ten percent.
As earlier stated, the Court is of the opinion that the private
respondents were not able to prove that they were subjected to coarse
and harsh treatment by the ground crew of United Airlines. Neither
were they able to show that there was bad faith on part of the carrier
airline. Hence, the award of moral and exemplary damages by the
Court of Appeals is improper. Corollarily, the award of attorney's fees
is, likewise, denied for lack of any legal and factual basis.
WHEREFORE, the petition is GRANTED. The decision of the Court
of Appeals in CA-G.R. CV No. 37044 is hereby REVERSED and
SET ASIDE. The decision of the Regional Trial Court of Makati City in
Civil Case No. 89-4268 dated April 8, 1991 is hereby REINSTATED.
SO ORDERED.
Davide, Jr., C.J. (Chairman), Puno, and Ynares-Santiago,
JJ., concur.
Pardo, J., on sick leave.

Republic of the Philippines


SUPREME COURT
Manila

THIRD DIVISION

G.R. No. 88694 January 11, 1993


ALBENSON ENTERPRISES CORP., JESSE YAP, AND BENJAMIN
MENDIONA, petitioners,
vs.
THE COURT OF APPEALS AND EUGENIO S. BALTAO, respondents.

Puruganan, Chato, Chato & Tan for petitioners.

Lino M. Patajo, Francisco Ma. Chanco, Ananiano Desierto and Segundo


Mangohig for private respondent.

BIDIN, J.:

This petition assails the decision of respondent Court of Appeals in


CA-GR CV No. 14948 entitled "Eugenio S. Baltao, plaintiff-appellee vs.
Albenson Enterprises Corporation, et al, defendants-appellants", which
modified the judgment of the Regional Trial Court of Quezon City,
Branch XCVIII in Civil Case No. Q-40920 and ordered petitioner to pay
private respondent, among others, the sum of P500,000.00 as moral
damages and attorney's fees in the amount of P50,000.00.

The facts are not disputed.

In September, October, and November 1980, petitioner Albenson


Enterprises Corporation (Albenson for short) delivered to Guaranteed
Industries, Inc. (Guaranteed for short) located at 3267 V. Mapa Street,
Sta. Mesa, Manila, the mild steel plates which the latter ordered. As
part payment thereof, Albenson was given Pacific Banking Corporation
Check No. 136361 in the amount of P2,575.00 and drawn against the
account of E.L. Woodworks (Rollo, p. 148).

When presented for payment, the check was dishonored for the reason
"Account Closed." Thereafter, petitioner Albenson, through counsel,
traced the origin of the dishonored check. From the records of the
Securities and Exchange Commission (SEC), Albenson discovered that
the president of Guaranteed, the recipient of the unpaid mild steel
plates, was one "Eugenio S. Baltao." Upon further inquiry, Albenson
was informed by the Ministry of Trade and Industry that E.L.
Woodworks, a single proprietorship business, was registered in the
name of one "Eugenio Baltao". In addition, upon verification with the
drawee bank, Pacific Banking Corporation, Albenson was advised that
the signature appearing on the subject check belonged to one
"Eugenio Baltao."

After obtaining the foregoing information, Albenson, through counsel,


made an extrajudicial demand upon private respondent Eugenio S.
Baltao, president of Guaranteed, to replace and/or make good the
dishonored check.

Respondent Baltao, through counsel, denied that he issued the check,


or that the signature appearing thereon is his. He further alleged that
Guaranteed was a defunct entity and hence, could not have transacted
business with Albenson.

On February 14, 1983, Albenson filed with the Office of the Provincial
Fiscal of Rizal a complaint against Eugenio S. Baltao for violation of
Batas Pambansa Bilang 22. Submitted to support said charges was an
affidavit of petitioner Benjamin Mendiona, an employee of Albenson. In
said affidavit, the above-mentioned circumstances were stated.

It appears, however, that private respondent has a namesake, his son


Eugenio Baltao III, who manages a business establishment, E.L.
Woodworks, on the ground floor of the Baltao Building, 3267 V. Mapa
Street, Sta. Mesa, Manila, the very same business address of
Guaranteed.

On September 5, 1983, Assistant Fiscal Ricardo Sumaway filed an


information against Eugenio S. Baltao for Violation of Batas Pambansa
Bilang 22. In filing said information, Fiscal Sumaway claimed that he
had given Eugenio S. Baltao opportunity to submit controverting
evidence, but the latter failed to do so and therefore, was deemed to
have waived his right.

Respondent Baltao, claiming ignorance of the complaint against him,


immediately filed with the Provincial Fiscal of Rizal a motion for
reinvestigation, alleging that it was not true that he had been given an
opportunity to be heard in the preliminary investigation conducted by
Fiscal Sumaway, and that he never had any dealings with Albenson or
Benjamin Mendiona, consequently, the check for which he has been
accused of having issued without funds was not issued by him and the
signature in said check was not his.
On January 30, 1984, Provincial Fiscal Mauro M. Castro of Rizal
reversed the finding of Fiscal Sumaway and exonerated respondent
Baltao. He also instructed the Trial Fiscal to move for dismissal of the
information filed against Eugenio S. Baltao. Fiscal Castro found that
the signature in PBC Check No. 136361 is not the signature of Eugenio
S. Baltao. He also found that there is no showing in the records of the
preliminary investigation that Eugenio S. Baltao actually received
notice of the said investigation. Fiscal Castro then castigated Fiscal
Sumaway for failing to exercise care and prudence in the performance
of his duties, thereby causing injustice to respondent who was not
properly notified of the complaint against him and of the requirement
to submit his counter evidence.

Because of the alleged unjust filing of a criminal case against him for
allegedly issuing a check which bounced in violation of Batas
Pambansa Bilang 22 for a measly amount of P2,575.00, respondent
Baltao filed before the Regional Trial Court of Quezon City a complaint
for damages against herein petitioners Albenson Enterprises, Jesse
Yap, its owner, and Benjamin Mendiona, its employee.

In its decision, the lower court observed that "the check is drawn
against the account of "E.L. Woodworks," not of Guaranteed Industries
of which plaintiff used to be President. Guaranteed Industries had been
inactive and had ceased to exist as a corporation since 1975. . . . . The
possibility is that it was with Gene Baltao or Eugenio Baltao III, a son
of plaintiff who had a business on the ground floor of Baltao Building
located on V. Mapa Street, that the defendants may have been dealing
with . . . ." (Rollo, pp. 41-42).

The dispositive portion of the trial court 's decision reads:

WHEREFORE, judgment is hereby rendered in favor of


plaintiff and against defendants ordering the latter to pay
plaintiff jointly and severally:

1. actual or compensatory damages of P133,350.00;

2. moral damages of P1,000,000.00 (1 million pesos);

3. exemplary damages of P200,000.00;


4. attorney's fees of P100,000.00;

5 costs.

Defendants' counterclaim against plaintiff and claim for


damages against Mercantile Insurance Co. on the bond for
the issuance of the writ of attachment at the instance of
plaintiff are hereby dismissed for lack of merit. (Rollo, pp.
38-39).

On appeal, respondent court modified the trial court's decision as


follows:

WHEREFORE, the decision appealed from is MODIFIED by


reducing the moral damages awarded therein from
P1,000,000.00 to P500,000.00 and the attorney's fees from
P100,000.00 to P50,000.00, said decision being hereby
affirmed in all its other aspects. With costs against
appellants. (Rollo, pp. 50-51)

Dissatisfied with the above ruling, petitioners Albenson Enterprises


Corp., Jesse Yap, and Benjamin Mendiona filed the instant Petition,
alleging that the appellate court erred in:

1. Concluding that private respondent's cause of action is


not one based on malicious prosecution but one for abuse
of rights under Article 21 of the Civil Code notwithstanding
the fact that the basis of a civil action for malicious
prosecution is Article 2219 in relation to Article 21 or Article
2176 of the Civil Code . . . .

2. Concluding that "hitting at and in effect maligning


(private respondent) with an unjust criminal case was,
without more, a plain case of abuse of rights by
misdirection" and "was therefore, actionable by itself," and
which "became inordinately blatant and grossly aggravated
when . . . (private respondent) was deprived of his basic
right to notice and a fair hearing in the so-called
preliminary investigation . . . . "
3. Concluding that petitioner's "actuations in this case were
coldly deliberate and calculated", no evidence having been
adduced to support such a sweeping statement.

4. Holding the petitioner corporation, petitioner Yap and


petitioner Mendiona jointly and severally liable without
sufficient basis in law and in fact.

5. Awarding respondents

5.1. P133,350.00 as actual or compensatory


damages, even in the absence of sufficient
evidence to show that such was actually
suffered.

5.2. P500,000.00 as moral damages considering


that the evidence in this connection merely
involved private respondent's alleged celebrated
status as a businessman, there being no showing
that the act complained of adversely affected
private respondent's reputation or that it
resulted to material loss.

5.3. P200,000.00 as exemplary damages despite


the fact that petitioners were duly advised by
counsel of their legal recourse.

5.4. P50,000.00 as attorney's fees, no evidence


having been adduced to justify such an award
(Rollo, pp. 4-6).

Petitioners contend that the civil case filed in the lower court was one
for malicious prosecution. Citing the case of Madera vs. Lopez (102
SCRA 700 [1981]), they assert that the absence of malice on their part
absolves them from any liability for malicious prosecution. Private
respondent, on the other hand, anchored his complaint for Damages
on Articles 19, 20, and 21 ** of the Civil Code.

Article 19, known to contain what is commonly referred to as the


principle of abuse of rights, sets certain standards which may be
observed not only in the exercise of one's rights but also in the
performance of one's duties. These standards are the following: to act
with justice; to give everyone his due; and to observe honesty and
good faith. The law, therefore, recognizes the primordial limitation on
all rights: that in their exercise, the norms of human conduct set forth
in Article 19 must be observed. A right, though by itself legal because
recognized or granted by law as such, may nevertheless become the
source of some illegality. When a right is exercised in a manner which
does not conform with the norms enshrined in Article 19 and results in
damage to another, a legal wrong is thereby committed for which the
wrongdoer must be held responsible. Although the requirements of
each provision is different, these three (3) articles are all related to
each other. As the eminent Civilist Senator Arturo Tolentino puts it:
"With this article (Article 21), combined with articles 19 and 20, the
scope of our law on civil wrongs has been very greatly broadened; it
has become much more supple and adaptable than the Anglo-
American law on torts. It is now difficult to conceive of any malevolent
exercise of a right which could not be checked by the application of
these articles" (Tolentino, 1 Civil Code of the Philippines 72).

There is however, no hard and fast rule which can be applied to


determine whether or not the principle of abuse of rights may be
invoked. The question of whether or not the principle of abuse of rights
has been violated, resulting in damages under Articles 20 and 21 or
other applicable provision of law, depends on the circumstances of
each case. (Globe Mackay Cable and Radio Corporation vs. Court of
Appeals, 176 SCRA 778 [1989]).

The elements of an abuse of right under Article 19 are the following:


(1) There is a legal right or duty; (2) which is exercised in bad faith;
(3) for the sole intent of prejudicing or injuring another. Article 20
speaks of the general sanction for all other provisions of law which do
not especially provide for their own sanction (Tolentino, supra, p. 71).
Thus, anyone who, whether willfully or negligently, in the exercise of
his legal right or duty, causes damage to another, shall indemnify his
victim for injuries suffered thereby. Article 21 deals with acts contra
bonus mores, and has the following elements: 1) There is an act which
is legal; 2) but which is contrary to morals, good custom, public order,
or public policy; 3) and it is done with intent to injure.
Thus, under any of these three (3) provisions of law, an act which
causes injury to another may be made the basis for an award of
damages.

There is a common element under Articles 19 and 21, and that is, the
act must be intentional. However, Article 20 does not distinguish: the
act may be done either "willfully", or "negligently". The trial court as
well as the respondent appellate court mistakenly lumped these three
(3) articles together, and cited the same as the bases for the award of
damages in the civil complaint filed against petitioners, thus:

With the foregoing legal provisions (Articles 19, 20, and 21)
in focus, there is not much difficulty in ascertaining the
means by which appellants' first assigned error should be
resolved, given the admitted fact that when there was an
attempt to collect the amount of P2,575.00, the defendants
were explicitly warned that plaintiff Eugenio S. Baltao is not
the Eugenio Baltao defendants had been dealing with
(supra, p. 5). When the defendants nevertheless insisted
and persisted in filing a case a criminal case no less
against plaintiff, said defendants ran afoul of the legal
provisions (Articles 19, 20, and 21 of the Civil Code) cited
by the lower court and heretofore quoted (supra).

Defendants, not having been paid the amount of P2,575.00,


certainly had the right to complain. But that right is limited
by certain constraints. Beyond that limit is the area of
excess, of abuse of rights. (Rollo, pp.
44-45).

Assuming, arguendo, that all the three (3) articles, together and not
independently of each one, could be validly made the bases for an
award of damages based on the principle of "abuse of right", under the
circumstances, We see no cogent reason for such an award of
damages to be made in favor of private respondent.

Certainly, petitioners could not be said to have violated the aforestated


principle of abuse of right. What prompted petitioners to file the case
for violation of Batas Pambansa Bilang 22 against private respondent
was their failure to collect the amount of P2,575.00 due on a bounced
check which they honestly believed was issued to them by private
respondent. Petitioners had conducted inquiries regarding the origin of
the check, and yielded the following results: from the records of the
Securities and Exchange Commission, it was discovered that the
President of Guaranteed (the recipient of the unpaid mild steel plates),
was one "Eugenio S. Baltao"; an inquiry with the Ministry of Trade and
Industry revealed that E.L. Woodworks, against whose account the
check was drawn, was registered in the name of one "Eugenio Baltao";
verification with the drawee bank, the Pacific Banking Corporation,
revealed that the signature appearing on the check belonged to one
"Eugenio Baltao".

In a letter dated December 16, 1983, counsel for petitioners wrote


private respondent demanding that he make good the amount of the
check. Counsel for private respondent wrote back and denied, among
others, that private respondent ever transacted business with
Albenson Enterprises Corporation; that he ever issued the check in
question. Private respondent's counsel even went further: he made a
warning to defendants to check the veracity of their claim. It is pivotal
to note at this juncture that in this same letter, if indeed private
respondent wanted to clear himself from the baseless accusation made
against his person, he should have made mention of the fact that
there are three (3) persons with the same name, i.e.: Eugenio Baltao,
Sr., Eugenio S. Baltao, Jr. (private respondent), and Eugenio Baltao III
(private respondent's son, who as it turned out later, was the issuer of
the check). He, however, failed to do this. The last two Baltaos were
doing business in the same building Baltao Building located at
3267 V. Mapa Street, Sta. Mesa, Manila. The mild steel plates were
ordered in the name of Guaranteed of which respondent Eugenio S.
Baltao is the president and delivered to Guaranteed at Baltao building.
Thus, petitioners had every reason to believe that the Eugenio Baltao
who issued the bouncing check is respondent Eugenio S. Baltao when
their counsel wrote respondent to make good the amount of the check
and upon refusal, filed the complaint for violation of BP Blg. 22.

Private respondent, however, did nothing to clarify the case of


mistaken identity at first hand. Instead, private respondent waited in
ambush and thereafter pounced on the hapless petitioners at a time he
thought was propitious by filing an action for damages. The Court will
not countenance this devious scheme.
The criminal complaint filed against private respondent after the latter
refused to make good the amount of the bouncing check despite
demand was a sincere attempt on the part of petitioners to find the
best possible means by which they could collect the sum of money due
them. A person who has not been paid an obligation owed to him will
naturally seek ways to compel the debtor to pay him. It was normal
for petitioners to find means to make the issuer of the check pay the
amount thereof. In the absence of a wrongful act or omission or of
fraud or bad faith, moral damages cannot be awarded and that the
adverse result of an action does not per se make the action wrongful
and subject the actor to the payment of damages, for the law could
not have meant to impose a penalty on the right to litigate (Rubio vs.
Court of Appeals, 141 SCRA 488 [1986]).

In the case at bar, private respondent does not deny that the mild
steel plates were ordered by and delivered to Guaranteed at Baltao
building and as part payment thereof, the bouncing check was issued
by one Eugenio Baltao. Neither had private respondent conveyed to
petitioner that there are two Eugenio Baltaos conducting business in
the same building he and his son Eugenio Baltao III. Considering
that Guaranteed, which received the goods in payment of which the
bouncing check was issued is owned by respondent, petitioner acted in
good faith and probable cause in filing the complaint before the
provincial fiscal.

To constitute malicious prosecution, there must be proof that the


prosecution was prompted by a sinister design to vex and humiliate a
person, and that it was initiated deliberately by the defendant knowing
that his charges were false and groundless. Concededly, the mere act
of submitting a case to the authorities for prosecution does not make
one liable for malicious prosecution. (Manila Gas Corporation vs. Court
of Appeals, 100 SCRA 602 [1980]). Still, private respondent argues
that liability under Articles 19, 20, and 21 of the Civil Code is so
encompassing that it likewise includes liability for damages for
malicious prosecution under Article 2219 (8). True, a civil action for
damages for malicious prosecution is allowed under the New Civil
Code, more specifically Articles 19, 20, 26, 29, 32, 33, 35, and 2219
(8) thereof. In order that such a case can prosper, however, the
following three (3) elements must be present, to wit: (1) The fact of
the prosecution and the further fact that the defendant was himself
the prosecutor, and that the action was finally terminated with an
acquittal; (2) That in bringing the action, the prosecutor acted without
probable cause; (3) The prosecutor was actuated or impelled by legal
malice (Lao vs. Court of Appeals, 199 SCRA 58, [1991]).

Thus, a party injured by the filing of a court case against him, even if
he is later on absolved, may file a case for damages grounded either
on the principle of abuse of rights, or on malicious prosecution. As
earlier stated, a complaint for damages based on malicious prosecution
will prosper only if the three (3) elements aforecited are shown to
exist. In the case at bar, the second and third elements were not
shown to exist. It is well-settled that one cannot be held liable for
maliciously instituting a prosecution where one has acted with
probable cause. "Probable cause is the existence of such facts and
circumstances as would excite the belief, in a reasonable mind, acting
on the facts within the knowledge of the prosecutor, that the person
charged was guilty of the crime for which he was prosecuted. In other
words, a suit will lie only in cases where a legal prosecution has been
carried on without probable cause. The reason for this rule is that it
would be a very great discouragement to public justice, if prosecutors,
who had tolerable ground of suspicion, were liable to be sued at law
when their indictment miscarried" (Que vs. Intermediate Appellate
Court, 169 SCRA 137 [1989]).

The presence of probable cause signifies, as a legal consequence, the


absence of malice. In the instant case, it is evident that petitioners
were not motivated by malicious intent or by sinister design to unduly
harass private respondent, but only by a well-founded anxiety to
protect their rights when they filed the criminal complaint against
private respondent.

To constitute malicious prosecution, there must be proof


that the prosecution was prompted by a sinister design to
vex and humiliate a person, that it was initiated deliberately
by the defendant knowing that his charges were false and
groundless. Concededly, the mere act of submitting a case
to the authorities for prosecution does not make one liable
for malicious prosecution. Proof and motive that the
institution of the action was prompted by a sinister design
to vex and humiliate a person must be clearly and
preponderantly established to entitle the victims to
damages (Ibid.).
In the case at bar, there is no proof of a sinister design on the part of
petitioners to vex or humiliate private respondent by instituting the
criminal case against him. While petitioners may have been negligent
to some extent in determining the liability of private respondent for
the dishonored check, the same is not so gross or reckless as to
amount to bad faith warranting an award of damages.

The root of the controversy in this case is founded on a case of


mistaken identity. It is possible that with a more assiduous
investigation, petitioners would have eventually discovered that
private respondent Eugenio S. Baltao is not the "Eugenio Baltao"
responsible for the dishonored check. However, the record shows that
petitioners did exert considerable effort in order to determine the
liability of private respondent. Their investigation pointed to private
respondent as the "Eugenio Baltao" who issued and signed the
dishonored check as the president of the debtor-corporation
Guaranteed Enterprises. Their error in proceeding against the wrong
individual was obviously in the nature of an innocent mistake, and
cannot be characterized as having been committed in bad faith. This
error could have been discovered if respondent had submitted his
counter-affidavit before investigating fiscal Sumaway and was
immediately rectified by Provincial Fiscal Mauro Castro upon discovery
thereof, i.e., during the reinvestigation resulting in the dismissal of the
complaint.

Furthermore, the adverse result of an action does not per se make the
act wrongful and subject the actor to the payment of moral damages.
The law could not have meant to impose a penalty on the right to
litigate, such right is so precious that moral damages may not be
charged on those who may even exercise it erroneously. And an
adverse decision does not ipso facto justify the award of attorney's
fees to the winning party (Garcia vs. Gonzales, 183 SCRA 72 [1990]).

Thus, an award of damages and attorney's fees is unwarranted where


the action was filed in good faith. If damage results from a person's
exercising his legal rights, it is damnum absque injuria (Ilocos Norte
Electric Company vs. Court of Appeals, 179 SCRA 5 [1989]).

Coming now to the claim of private respondent for actual or


compensatory damages, the records show that the same was based
solely on his allegations without proof to substantiate the same. He did
not present proof of the cost of the medical treatment which he
claimed to have undergone as a result of the nervous breakdown he
suffered, nor did he present proof of the actual loss to his business
caused by the unjust litigation against him. In determining actual
damages, the court cannot rely on speculation, conjectures or
guesswork as to the amount. Without the actual proof of loss, the
award of actual damages becomes erroneous (Guilatco vs. City of
Dagupan, 171 SCRA 382 [1989]).

Actual and compensatory damages are those recoverable because of


pecuniary loss in business, trade, property, profession, job or
occupation and the same must be proved, otherwise, if the proof is
flimsy and unsubstantiated, no damages will be given (Rubio vs. Court
of Appeals, 141 SCRA 488 [1986]). For these reasons, it was gravely
erroneous for respondent court to have affirmed the award of actual
damages in favor of private respondent in the absence of proof
thereof.

Where there is no evidence of the other party having acted in wanton,


fraudulent or reckless, or oppressive manner, neither may exemplary
damages be awarded (Dee Hua Liong Electrical Equipment Corporation
vs. Reyes, 145 SCRA 488 [1986]).

As to the award of attorney's fees, it is well-settled that the same is


the exception rather than the general rule. Needless to say, the award
of attorney's fees must be disallowed where the award of exemplary
damages is eliminated (Article 2208, Civil Code; Agustin vs. Court of
Appeals, 186 SCRA 375 [1990]). Moreover, in view of the fact that
there was no malicious prosecution against private respondent,
attorney's fees cannot be awarded him on that ground.

In the final analysis, there is no proof or showing that petitioners acted


maliciously or in bad faith in the filing of the case against private
respondent. Consequently, in the absence of proof of fraud and bad
faith committed by petitioners, they cannot be held liable for damages
(Escritor, Jr. vs. Intermediate Appellate Court, 155 SCRA 577 [1987]).
No damages can be awarded in the instant case, whether based on the
principle of abuse of rights, or for malicious prosecution. The
questioned judgment in the instant case attests to the propensity of
trial judges to award damages without basis. Lower courts are hereby
cautioned anew against awarding unconscionable sums as damages
without bases therefor.

WHEREFORE, the petition is GRANTED and the decision of the Court of


Appeals in C.A. G.R. C.V. No. 14948 dated May 13, 1989, is hereby
REVERSED and SET ASIDE. Costs against respondent Baltao.

SO ORDERED.

Gutierrez, Jr., Davide, Jr., Romero and Melo, JJ., concur.

Republic of the Philippines


SUPREME COURT
Manila

EN BANC

G.R. No. L-1299 November 16, 1903

VICENTE PEREZ, plaintiff-appellee,


vs.
EUGENIO POMAR, Agent of the Compaia General de
Tabacos, defendant-appellant.

Francisco Dominguez for appellant.


Ledesma, Sumulong and Quintos for appellee.

TORRES, J.:

In a decision dated February 9, 1903, the judge of the Sixth Judicial


District, deciding a case brought by the plaintiff against the defendant
for the recovery of wages due and unpaid, gave judgment against the
latter for the sum of $600 and the costs of suit, less the sum of $50,
Mexican.

On August 27, 1902, Don Vicente Perez filed in the Court of First
Instance of Laguna a complaint, which was amended on the 17th of
January of this year, asking that the court determine the amount due
the plaintiff, at the customary rate of compensation for interpreting in
these Islands, for services rendered in the Tabacalera Company, and
that, in view of the circumstances of the case, judgment be rendered
in his favor for such sum. The complaint also asked that the defendant
be condemned to the payment of damages in the sum of $3,200, gold,
together with the costs of suit. In this complaint it was alleged that
Don Eugenio Pomar, as general agent of the Compaia General de
Tabacos in the said province, verbally requested the plaintiff on the
8th of December, 1901, to act as interpreter between himself and the
military authorities; that after the date mentioned the plaintiff
continued to render such services up to and including May 31, 1902;
that he had accompanied the defendant, Pomar, during that time at
conferences between the latter and the colonel commanding the local
garrison, and with various officers and doctors residing in the capital,
and at conferences with Captain Lemen in the town of Pilar, and with
the major in command at the town of Pagsanjan, concerning the
shipment of goods from Manila, and with respect to Pagsanjan to this
city; that the plaintiff during this period held himself in readiness to
render services whenever required; that on this account his private
business, and especially a soap factory established in the capital, was
entirely abandoned; that to the end that such services might be
punctually rendered, the agent, Pomar, assured him that the
Tabacalera Company always generously repaid services rendered it,
and that he therefore did not trouble himself about his inability to
devote the necessary amount of time to his business, the defendant
going so far as to make him flattering promises of employment with
the company, which he did not accept; that these statements were
made in the absence of witnesses and that therefore his only proof as
to the same was Mr. Pomar's word as a gentleman; that the
employees of the company did not understand English, and by reason
of the plaintiff's mediation between the agent, and the military
authorities large profits were obtained, as would appear from the
account and letterpress books of the agency corresponding to those
dates. In the amended complaint it was added that the defendant, on
behalf of the company, offered to renumerate the plaintiff for the
services rendered in the most advantageous manner in which such
services are compensated, in view of the circumstances under which
they were requested; and that the plaintiff, by rendering the company
such services, was obliged to abandon his own business, the
manufacture of soap, and thereby suffered damages in the sum of
$3,200, United States currency.

The defendant, on the 25th of September, 1902, filed an answer


asking for the dismissal of the complaint, with costs to the plaintiff. In
his answer the defendant denied the allegation in the first paragraph
of the complaint, stating that it was wholly untrue that the company,
and the defendant as its agent, had solicited the services of the
plaintiff as interpreter before the military authorities for the period
stated, or for any other period, or that the plaintiff had accompanied
Pomar at the conferences mentioned, concerning shipments from
Manila and exports from some of the towns of the province to this
capital. He stated that he especially denied paragraphs 2 of the
complaint, as it was absolutely untrue that the plaintiff had been at the
disposal of the defendant for the purpose of rendering such services;
that he therefore had not been obliged to abandon his occupation or
his soap factory, and that the statement that an offer of employment
with the company had been made to him was false. The defendant
also denied that through the mediation of the plaintiff the company
and himself had obtained large profits. The statements in paragraphs
6, 7, 8, and 9 of the complaint were also denied. The defendant stated
that, on account of the friendly relations which sprang up between the
plaintiff and himself, the former borrowed from him from time to time
money amounting to $175 for the purposes of his business, and that
he had also delivered to the plaintiff 36 arrobas of oil worth $106, and
three packages of resin for use in coloring his soap; that the plaintiff
accompanied the defendant to Pagsanjan, Pilar, and other towns when
the latter made business trips to them for the purpose of extending his
business and mercantile relations therein; that on these excursions, as
well as on private and official visits which he had to make, the plaintiff
occasionally accompanied him through motives of friendship, and
especially because of the free transportation given him, and not on
behalf of the company of which he was never interpreter and for which
he rendered no services; that the plaintiff in these conferences acted
as interpreter of his own free will, without being requested to do so by
the defendant and without any offer of payment or compensation; that
therefore there existed no legal relation whatever between the
company and the plaintiff, and that the defendant, when accepting the
spontaneous, voluntary and officious services of the plaintiff, did so in
his private capacity and not as agent of the company, and that it was
for this reason that he refused to enter into negotiations with the
plaintiff, he being in no way indebted to the latter. The defendant
concluded by saying that he answered in his individual capacity.

A complaint having been filed against the Compaia General de


Tabacos and Don Eugenio Pomar, its agent in the Province of Laguna,
the latter, having been duly summoned, replied to the complaint,
which was subsequently amended, and stated that he made such reply
in his individual capacity and not as agent of the company, with which
the plaintiff had had no legal relations. The suit was instituted between
the plaintiff and Pomar, who, as such, accepted the issue and entered
into the controversy without objection, opposed the claim of the
plaintiff, and concluded by asking that the complaint be dismissed,
with the costs to the plaintiff. Under these circumstances and
construing the statutes liberally, we think it proper to decide the case
pending between both parties in accordance with law and the strict
principles of justice.

From the oral testimony introduced at the trial, it appears that the
plaintiff, Perez, did on various occasions render Don Eugenio Pomar
services as interpreter of English; and that he obtained passes and
accompanied the defendant upon his journeys to some of the towns in
the Province of Laguna. It does not appear from the evidence,
however, that the plaintiff was constantly at the disposal of the
defendant during the period of six months, or that he rendered
services as such interpreter continuously and daily during that period
of time.

It does not appear that any written contract was entered into between
the parties for the employment of the plaintiff as interpreter, or that
any other innominate contract was entered into; but whether the
plaintiff's services were solicited or whether they were offered to the
defendant for his assistance, inasmuch as these services were
accepted and made use of by the latter, we must consider that there
was a tacit and mutual consent as to the rendition of the services. This
gives rise to the obligation upon the person benefited by the services
to make compensation therefor, since the bilateral obligation to render
services as interpreter, on the one hand, and on the other to pay for
the services rendered, is thereby incurred. (Arts. 1088, 1089, and
1262 of the Civil Code). The supreme court of Spain in its decision of
February 12, 1889, holds, among other things, "that not only is there
an express and tacit consent which produces real contract but there is
also a presumptive consent which is the basis of quasi contracts, this
giving rise to the multiple juridical relations which result in obligations
for the delivery of a thing or the rendition of a service."

Notwithstanding the denial of that defendant, it is unquestionable that


it was with his consent that the plaintiff rendered him services as
interpreter, thus aiding him at a time when, owing to the existence of
an insurrection in the province, the most disturbed conditions
prevailed. It follows, hence, that there was consent on the part of both
in the rendition of such services as interpreter. Such service not being
contrary to law or to good custom, it was a perfectly licit object of
contract, and such a contract must necessarily have existed between
the parties, as alleged by the plaintiff. (Art. 1271, Civil Code.)

The consideration for the contract is also evident, it being clear that a
mutual benefit was derived in consequence of the service rendered. It
is to be supposed that the defendant accepted these services and that
the plaintiff in turn rendered them with the expectation that the
benefit would be reciprocal. This shows the concurrence of the three
elements necessary under article 1261 of the Civil Code to constitute a
contract of lease of service, or other innominate contract, from which
an obligation has arisen and whose fulfillment is now demanded.

Article 1254 of the Civil Code provides that a contract exists the
moment that one or more persons consent to be bound, with respect
to another or others, to deliver some thing or to render some service.
Article 1255 provides that the contracting parties may establish such
covenants, terms, and conditions as they deem convenient, provided
they are not contrary to law, morals or public policy. Whether the
service was solicited or offered, the fact remains that Perez rendered
to Pomar services as interpreter. As it does not appear that he did this
gratuitously, the duty is imposed upon the defendant, having accepted
the benefit of the service, to pay a just compensation therefor, by
virtue of the innominate contract of facio ut des implicitly established.

The obligations arising from this contract are reciprocal, and, apart
from the general provisions with respect to contracts and obligations,
the special provisions concerning contracts for lease of services are
applicable by analogy.

In this special contract, as determined by article 1544 of the Civil


Code, one of the parties undertakes to render the other a service for a
price certain. The tacit agreement and consent of both parties with
respect to the service rendered by the plaintiff, and the reciprocal
benefits accruing to each, are the best evidence of the fact that there
was an implied contract sufficient to create a legal bond, from which
arose enforceable rights and obligations of a bilateral
character.lawphi1.net

In contracts the will of the contracting parties is law, this being a legal
doctrine based upon the provisions of articles 1254, 1258, 1262, 1278,
1281, 1282, and 1289 of the Civil Code. If it is a fact sufficiently
proven that the defendant, Pomar, on various occasions consented to
accept an interpreter's services, rendered in his behalf and not
gratuitously, it is but just that he should pay a reasonable
remuneration therefor, because it is a well-known principle of law that
no one should be permitted to enrich himself to the damage of
another.

With respect to the value of the services rendered on different


occasions, the most important of which was the first, as it does not
appear that any salary was fixed upon by the parties at the time the
services were accepted, it devolves upon the court to determine, upon
the evidence presented, the value of such services, taking into
consideration the few occasions on which they were rendered. The fact
that no fixed or determined consideration for the rendition of the
services was agreed upon does not necessarily involve a violation of
the provisions of article 1544 of the Civil Code, because at the time of
the agreement this consideration was capable of being made certain.
The discretionary power of the court, conferred upon it by the law, is
also supported by the decisions of the supreme court of Spain, among
which may be cited that of October 18, 1899, which holds as follows:
"That as stated in the article of the Code cited, which follows the
provisions of law 1, title 8, of the fifth partida, the contract for lease of
services is one in which one of the parties undertakes to make some
thing or to render some service to the other for a certain price, the
existence of such a price being understood, as this court has held not
only when the price has been expressly agreed upon but also when it
may be determined by the custom and frequent use of the place in
which such services were rendered."

No exception was taken to the judgment below by the plaintiff on


account of the rejection of his claim for damages. The decision upon
this point is, furthermore, correct.

Upon the supposition that the recovery of the plaintiff should not
exceed 200 Mexican pesos, owing to the inconsiderable number of
times he acted as interpreter, it is evident that the contract thus
implicitly entered into was not required to be in writing and that
therefore it does not fall within article 1280 of the Civil Code; nor is it
included within the provisions of section 335 of the Code of Civil
Procedure, as this innominate contract is not covered by that section.
The contract of lease of services is not included in any of the cases
expressly designated by that section of the procedural law, as affirmed
by the appellant. The interpretation of the other articles of the Code
alleged to have been infringed has also been stated fully in this
opinion.

For the reasons stated, we are of the opinion that judgment should be
rendered against Don Eugenio Pomar for the payment to the plaintiff
of the sum of 200 Mexican pesos, from which will be deducted the sum
of 50 pesos is made as to the costs of this instance. The judgment
below is accordingly affirmed in so far as it agrees with this opinion,
and reversed in so far as it may be in conflict therewith. Judgment will
be entered accordingly twenty days after this decision is filed.

Arellano, C.J., Willard, and Mapa, JJ., concur.

Republic of the Philippines


SUPREME COURT
Manila

THIRD dIVISION

G.R. No. L-54598 April 15, 1988

JOSE B. LEDESMA, petitioner,


vs.
HON. COURT OF APPEALS, Spouses PACIFICO DELMO and
SANCHA DELMO (as private respondents), respondents.

The Solicitor General for petitioner.

Luzel D. Demasu-ay for respondent.

GUTIERREZ, JR., J.:

This petition seeks to reverse the decision of the respondent Court of


Appeals which afirmed the decision of the Court of First Instance of
Iloilo, adjudging the petitioner, who was then the President of the
West Visayas College liable for damages under Article 27 of the Civil
Code of the Philippines for failure to graduate a student with honors.

The facts are not disputed.

An organization named Student Leadership Club was formed by some


students of the West Visayas College. They elected the late Violets
Delmo as the treasurer. In that capacity, Delmo extended loans from
the funds of the club to some of the students of the school. "the
petitioner claims that the said act of extending loans was against
school rules and regulations. Thus, the petitioner, as President of the
School, sent a letter to Delmo informing her that she was being
dropped from the membership of the club and that she would not be a
candidate for any award or citation from the school.

Delmo asked for a reconsideration of the decision but the petitioner


denied it. Delmo, thus, appealed to the Office of the Director of the
Bureau of Public Schools.

The Director after due investigation, rendered a decison on April 13,


1966 which provided:

Records of the preliminary investigation conducted by one


of the legal officers of this Office disclosed the following:
That Violeta Delmo was the treasurer of the Student
Leadership Club, an exclusive student organization; that
pursuant to Article IX of the of the Constitution and By-
Laws of the club, it passed Resolution No. 2, authorizing the
treasurer to disburse funds of the Club to student for
financial aid and other humanitarian purposes; that in
compliance with said resolution and as treasurer of the
Club, Violeta Delmo extended loans to some officers and
members of the Club upon proper application duly approved
by the majority of the members of the Executive Board;
and that upon receiving the report from Mr. Jesse Dagoon,
adviser of the funds of the Club, that Office conducted an
investigation on the matter and having been convinced of
the guilt of Violets Delmo and the other officers and
members of the Club, that Office rendered the order or
decision in question. In justifying that Office's order or
decision, it is contended that approval by that Office of the
Constitution and By-Laws of the Club is necessary for its
effectivity and validity and since it was never submitted to
that Office, the Club had no valid constitution and By-Laws
and that as a consequence, Resolution No. 2 which was
passed based on the Constitution and By-Laws- is without
any force and effect and the treasurer, Violeta Delmo, who
extended loans to some officers and members of the Club
pursuant thereto are illegal (sic), hence, she and the other
students involved are deemed guilty of misappropriating
the funds of the Club. On the other hand, Raclito
Castaneda, Nestor Golez and Violeta Delmo, President,
Secretary and Treasurer of the Club, respectively, testified
that the Club had adopted its Constitution and By-Laws in a
meeting held last October 3, 1965, and that pursuant to
Article I of said Constitution and By-Laws, the majority of
the members of the Executive Board passed Resolution No.
2, which resolution became the basis for the extension on
of loans to some officers and members of the Club, that the
Club honestly believed that its Constitution and By-Laws
has been approved by the superintendent because the
adviser of the Club, Mr. Jesse Dagoon, assured the
President of the Club that he will cause the approval of the
Constitution and By-Laws by the Superintendent; the
officers of the Club have been inducted to office on October
9,1965 by the Superintendent and that the Club had been
likewise allowed to cosponsor the Education Week
Celebration.
After a careful study of the records, this Office sustains the
action taken by the Superintendent in penalizing the adviser
of the Club as well as the officers and members thereof by
dropping them from membership therein. However, this
Office is convinced that Violets M. Delmo had acted in good
faith, in her capacity as Club Treasurer, in extending loans
to the officers and members of the Student partnership
Club. Resolution No. 2 authorizing the Club treasurer to
discharge finds to students in need of financial assistance
and other humanitarian purposes had been approved by the
Club adviser, Mr. Jesse Dagoon, with the notation that
approval was given in his capacity as adviser of the Club
and extension of the Superintendent's personality. Aside
from misleading the officers and members of the Club, Mr.
Dagoon, had unsatisfactorily explained why he failed to give
the Constitution and By-Laws of the Club to the
Superintendent for approval despite his assurance to the
Club president that he would do so. With this finding of
negligence on the part of the Club adviser, not to mention
laxity in the performance of his duties as such, this Office
considers as too severe and unwarranted that portion of the
questioned order stating that Violeta Delmo "shall not be a
candidate for any award or citation from this school or any
organization in this school." Violeta Delmo, it is noted, has
been a consistent full scholar of the school and she alone
has maintained her scholarship. The decision in question
would, therefore, set at naught all her sacrifice and
frustrate her dreams of graduating with honors in this
year's commencement exercises.

In view of all the foregoing, this Office believes and so holds


and hereby directs that appellant Violeta. M. Delmo, and for
that matter all other Club members or officers involved in
this case, be not deprived of any award, citation or honor
from the school, if they are otherwise entitled thereto.
(Rollo, pp. 28-30)

On April 27, 1966, the petitioner received by mail the decision of the
Director and all the records of the case. On the same day, petitioner
received a telegram stating the following:
"AIRMAIL RECORDS DELMO CASE MISSENT THAT OFFICE"

The Director asked for the return only of the records but the petitioner
allegedly mistook the telegram as ordering him to also send the
decision back. On the same day, he returned by mail all the records
plus the decision of the Director to the Bureau of Public Schools.

The next day, the petitioner received another telegram from the
Director order him to furnish Delmo with a copy of the decision. The
petitioner, in turn, sent a night letter to the Director informing the
latter that he had sent the decision back and that he had not retained
a copy thereof..

On May 3, 1966, the day of the graduation, the petitioner received


another telegram from the Director ordering him not to deprive Delmo
of any honors due her. As it was impossible by this time to include
Delmo's name in the program as one of the honor students, the
petitioner let her graduate as a plain student instead of being awarded
the Latin honor of Magna Cum Laude.

To delay the matter further, the petitioner on May 5, 1966, wrote the
Director for a reconsideration of the latters" decision because he
believed that Delmo should not be allowed to graduate with honors.
The Director denied the petitioner's request.

On July 12, 1966, the petitioner finally instructed the Registrar of the
school to enter into the scholastic records of Delmo the honor, "Magna
Cum Laude."

On July 30, 1966, Delmo, then a minor, was joined by her parents in
flag action for damages against the petitioner. During the pendency of
the action, however, Delmo passed away, and thus, an Amended and
Supplemental Complaint was filed by her parents as her sole and only
heirs.

The trial court after hearing rendered judgment against the petitioner
and in favor of the spouses Delmo. The court said:

Let us go to specific badges of the defendants (now


petitioners) bad faith. Per investigation of Violeta Delmo's
appeal to Director Vitaliano Bernardino of the Bureau of
Public Schools (Exhibit L it was the defendant who inducted
the officers of the Student Leadership Club on October 9,
1965. In fact the Club was allowed to cosponsor the
Education Week Celebration. (Exh. "L"). If the defendant he
not approve of the constitution and by-laws of the Club,
why did he induct the officers into office and allow the Club
to sponsor the Education Week Celebration"? It was
through his own act that the students were misled to do as
they did. Coupled with the defendants tacit recognition of
the Club was the assurance of Mr. Jemm Dagoon, Club
Adviser, who made the students believe that he was acting
as an extension of Mr. Ledesma's personality. (Exhibit "L").

Another badge of the defendan'ts want of good faith is the


fact that, although, he kaew as early as April 27,1966 that
per on of r Bernardino, Exhibit "L," he was directed to give
honors to Miss Delmo, he kept Id information to . He told
the Court that he knew that the letter of Director
Bernardino directed him not to deprive Miss Delmo the
honors due her, but she (sic) says that he has not finished
reading the letter-decision, Exhibit "L," of Director
Bernardino 0, him to give honors to Miss Delmo. (Tsn, Feb.
5, 1974, testimony of Mr. Ledesma, pp. .33-35). It could
not be true that he has not finished reading the letter-
decision, Exh. "L," because said letter consisted of only
three pages, and the portion which directed that Miss
Delmo "be not deprived of any award, citation or honor
from the school, if otherwise entitled thereto is found at the
last paragraph of the same. How did he know the last
paragraph if he did not read the letter.

Defendants actuations regarding Miss Delmo's cam had


been one of bias and prejudice. When his action would
favor him, he was deliberate and aspect to the utter
prejudice and detriment of Miss Delmo. Thus, although, as
early as April 27, 1966, he knew of the exoneration of Miss
Delino by Director Bernardino, he withheld the information
from Miss Delmo. This is eloquently dramatized by Exh.
"11" and Exh. "13" On April 29,1966, Director Bernardino
cabled him to furnish Violeta Delmo copy of the Decision,
Exh. "L," but instead of informing Miss Delmo about the
decision, since he said he mailed back the decision on April
28,1966, he sent a night letter on April 29,1966, to Director
Bernardino, informing the latter that he had returned the
decision (Exh. "l3"), together with the record. Why a night
letter when the matter was of utmost urgency to the parties
in the case, because graduation day was only four days
ahead? An examination of the telegrams sent by the
defendant shows that he had been sending ordinary
telegram and not night letters. (Exh. "5", Exhibit "7"). At
least, if the defendant could not furnish a copy of the
decision, (Exh. "L"), to Miss Delmo, he should have told her
about it or that Miss Delmo's honors and citation in the
commencement be announced or indicated. But Mr.
Ledesma is one who cannot admit a mistake. Very
ungentlemanly this is home out by his own testimony
despite his knowledge that his decision to deprive Miss
Delmo of honors due to her was overturned by Director
Bernardino, he on his wrong belief. To quote the
defendant,1 believed that she did not deserve those
honors(Tsn Feb. 5, 1974, p. 43,Empasized supplied).
Despite the telegram of Director Bernardino which the
defendant received hours before the commencement
executory on May 3-4,1966, he did not obey Director
Bernardino because he said in his testimony that he would
be embarrassment . Tan Feb 5,1974, P. 46). Evidently, he
knew only his embarrassment and not that of r Bernardino
whose order was being flagrantly and wantonly disregarded
by bim And certainly, not the least of Miss Delmo's
embarrassment. His acts speak eloquently of ho bad faith
and unjust of mindwarped by his delicate sensitivity for
having been challenged by Miss Delmo, a mere student.

xxx xxx xxx

Finally the defendant's behaviour relative to Miss s case


smacks of contemptuous arrogance, oppression and abuse
of power. Come to think of it. He refused to obey the
directive of Be o and instead, chose to feign ignorance of
it." (Reward on Appeal, p. 72-76).
The trial court awarded P20,000.00 to the estate of Violeta Delmo and
P10,000.00 to her parents for moral damages; P5,000.00 for nominal
damages to Violeta's estate; exemplary damages of P10,000.00 and
P2,000.00 attorney's fees.

On appeal, the Court of Appeals affirmed the decision. Hence, this


petition.

The issues raised in this petition can be reduced to the sole question of
whether or not the respondent Court of Appeals erred in affirming the
trial court's finding that petitioner is liable for damages under Article
27 of the New Civil Code.

We find no reason why the findings of the trial and appellate courts
should be reversed. It cannot be disputed that Violeta Delmo went
through a painful ordeal which was brought about by the petitioner's
neglect of duty and callousness. Thus, moral damages are but proper.
As we have affirmed in the case of (Prudenciado v. Alliance Transport
System, Inc., 148 SCRA 440, 448):

There is no argument that moral damages include physical


suffering, mental anguish, fright, serious anxiety,
besmirched reputation, wounded feelings, moral shock,
social humiliation, and similar injury. Though incapable of
pecuniary computation, moral damages may be recovered if
they are the proximate result of defendant's wrongly act or
omission." (People v. Baylon, 129 SCRA 62 (1984).

The Solicitor-General tries to cover-up the petitioner's deliberate


omission to inform Miss Delmo by stating that it was not the duty of
the petitioner to furnish her a copy of the Director's decision. Granting
this to be true, it was nevertheless the petitioner's duty to enforce the
said decision. He could have done so considering that he received the
decision on April 27, 1966 and even though he sent it back with the
records of the case, he undoubtedly read the whole of it which
consisted of only three pages. Moreover, the petitioner should have
had the decency to meet with Mr. Delmo, the girl's father, and inform
the latter, at the very least of the decision. This, the petitioner likewise
failed to do, and not without the attendant bad faith which the
appellate court correctly pointed out in its decision, to wit:
Third, assuming that defendant could not furnish Miss
Delmo of a copy of the decision, he could have used his
discretion and plain common sense by informing her about
it or he could have directed the inclusion of Miss Delmo's
honor in the printed commencement program or announced
it during the commencement exercises.

Fourth, defendant despite receipt of the telegram of


Director Benardino hours before the commencement
exercises on May 3-4, 1966, disobeyed his superior by
refusing to give the honors due Miss Delmo with a lame
excuse that he would be embarrassed if he did so, to the
prejudice of and in complete disregard of Miss Delmo's
rights.

Fifth, defendant did not even extend the courtesy of


meeting Mr. Pacifico Delmo, father of Miss Delmo, who tried
several times to see defendant in his office thus Mr. Delmo
suffered extreme disappointment and humiliation.

xxx xxx xxx

Defendant, being a public officer should have acted with


circumspection and due regard to the rights of Miss Delmo.
Inasmuch as he exceeded the scope of his authority by
defiantly disobeying the lawful directive of his superior,
Director Bernardino, defendant is liable for damages in his
personal capacity. . . . (Rollo, pp- 57-58)

Based on the undisputed facts, exemplary damages are also in order.


In the same case of Prudenciado v. Alliance Transport System,
Inc., supra., at p. 450, we ruled:

The rationale behind exemplary or corrective damages is,


as the name implies, to provide an example or correction
for the public good (Lopez, et al. v. Pan American World
Airways, 16 SCRA 431).

However, we do not deem it appropriate to award the


spouses Delmo damages in the amount of P10,000.00 in
their individual capacity, separately from and in addition to
what they are already entitled to as sole heirs of the
deceased Violeta Delmo. Thus, the decision is modified
insofar as moral damages are awarded to the spouses in
their own behalf.

WHEREFORE, the petition is DISMISSED for lack of merit. The decision


of the Court of Appeals is AFFIRMED with the slight modification as
stated in the preceding paragraph. This decision is immediately
executory.

SO ORDERED.

Fernan (Chairman), Feliciano, Bidin and Cortes, JJ., concur.