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RESIDENT MARINE MAMMALS vs REYES

I concur in the result, with the following additional reasons.

In G.R. No. 180771, petitioners Resident Marine Mammals allegedly bring their case in their personal
capacity, alleging that they stand to benefit or be injured from the judgment on the issues. The human
petitioners implead themselves in a representative capacity "as legal guardians of the lesser life-forms
and as responsible stewards of God's Creations."1 They use Oposa v. Factoran, Jr.2 as basis for their
claim, asserting their right to enforce international and domestic environmental laws enacted for their
benefit under the concept of stipulation pour autrui.3 As the representatives of Resident Marine
Mammals, the human petitioners assert that they have the obligation to build awareness among the
affected residents of Tañon Strait as well as to protect the environment, especially in light of the
government's failure, as primary steward, to do its duty under the doctrine of public trust.4

Resident Marine Mammals and the human petitioners also assert that through this case, this court will
have the opportunity to lower the threshold for locus standi as an exercise of "epistolary jurisdiction."5

The zeal of the human petitioners to pursue their desire to protect the environment and to continue to
define environmental rights in the context of actual cases is commendable. However, the space for legal
creativity usually required for advocacy of issues of the public interest is not so unlimited that it should be
allowed to undermine the other values protected by current substantive and procedural laws. Even rules
of procedure as currently formulated set the balance between competing interests. We cannot abandon
these rules when the necessity is not clearly and convincingly presented.

The human petitioners, in G.R. No. 180771, want us to create substantive and procedural rights for
animals through their allegation that they can speak for them. Obviously, we are asked to accept the
premises that (a) they were chosen by the Resident Marine Mammals of Tañon Strait; (b) they were
chosen by a representative group of all the species of the Resident Marine Mammals; (c) they were able
to communicate with them; and (d) they received clear consent from their animal principals that they
would wish to use human legal institutions to pursue their interests. Alternatively, they ask us to
acknowledge through judicial notice that the interests that they, the human petitioners, assert are identical
to what the Resident Marine Mammals would assert had they been humans and the legal strategies that
they invoked are the strategies that they agree with.

In the alternative, they want us to accept through judicial notice that there is a relationship of guardianship
between them and all the resident mammals in the affected ecology.

Fundamental judicial doctrines that may significantly change substantive and procedural law cannot be
founded on feigned representation.

Instead, I agree that the human petitioners should only speak for themselves and already have legal
standing to sue with respect to the issue raised in their pleading. The rules on standing have already
been liberalized to take into consideration the difficulties in the assertion of environmental rights. When
standing becomes too liberal, this can be the occasion for abuse.

II
Rule 3, Section 1 of the 1997 Rules of Civil Procedure, in part, provides:

SECTION 1. Who may be parties; plaintiff and defendant. - Only natural or juridical persons, or entities
authorized by law may be parties in a civil action.

The Rules provide that parties may only be natural or juridical persons or entities that may be authorized
by statute to be parties in a civil action.

Basic is the concept of natural and juridical persons in our Civil Code:

ARTICLE 37. Juridical capacity, which is the fitness to be the subject of legal relations, is inherent in
every natural person and is lost only through death. Capacity to act, which is the power to do acts with
legal effect, is acquired and may be lost.

Article 40 further defines natural persons in the following manner:

ARTICLE 40. Birth determines personality; but the conceived child shall be considered born for all
purposes that are favorable to it, provided it be born later with the conditions specified 'in the following
article.

Article 44, on the other hand, enumerates the concept of a juridical person:

ARTICLE 44. The following are juridical persons:

(1) The State and its political subdivisions;

(2) Other corporations, institutions and entities for public interest or purpose, created by law; their
personality begins as soon as they have been constituted according to law;

(3) Corporations, partnerships and associations for private interest or purpose to which the law grants a
juridical personality, separate and distinct from that of each shareholder, partner or member.

Petitioners in G.R. No. 180771 implicitly suggest that we amend, rather than simply construe, the
provisions of the Rules of Court as well as substantive law to accommodate Resident Marine Mammals or
animals. This we cannot do.

Rule 3, Section 2 of the 1997 Rules of Civil Procedure further defines real party in interest:

SEC. 2. Parties in interest.-A real party in interest is the party who stands to be benefited or injured by the
judgment in the suit, or the party entitled to the avails of the suit. Unless otherwise authorized by law or
these Rules, every action must be prosecuted or defended in the name of the real party in interest. (2a)6

A litigant who stands to benefit or sustain an injury from the judgment of a case is a real party in interest.7
When a case is brought to the courts, the real party in interest must show that another party's act or
omission has caused a direct injury, making his or her interest both material and based on an enforceable
legal right.8

Representatives as parties, on the other hand, are parties acting in representation of the real party in
interest, as defined in Rule 3, Section 3 of the 1997 Rules of Civil Procedure:
SEC. 3. Representatives as parties. - Where the action is allowed to be prosecuted or defended by a
representative or someone acting in a fiduciary capacity, the beneficiary shall be included in the title of
the case and shall be deemed to be the real party in interest. A representative may be a trustee of an
express rust, a guardian, an executor or administrator, or a party authorized by law or these Rules. An
agent acting in his own name and for the benefit of an undisclosed principal may sue or be sued without
joining the principal except when the contract involves things belonging to the principal.(3a)9

The rule is two-pronged. First, it defines .a representative as a party who is not bound to directly or
actually benefit or suffer from the judgment, but instead brings a case in favor of an identified real party in
interest.10 The representative is an outsider to the cause of action. Second, the rule provides a list of who
may be considered as "representatives." It is not an exhaustive list, but the rule limits the coverage only to
those authorized by law or the Rules of Court.11

These requirements should apply even in cases involving the environment, which means that for the
Petition of the human petitioners to prosper, they must show that (a) the Resident Marine Mammals are
real parties in interest; and (b) that the human petitioners are authorized by law or the Rules to act in a
representative capacity.

The Resident Marine Mammals are comprised of "toothed whales, dolphins, porpoises, and other
cetacean species inhabiting Tañon Strait."12 While relatively new in Philippine jurisdiction, the issue of
whether animals have legal standing before courts has been the subject of academic discourse in light of
the emergence of animal and environmental rights.

In the United States, anim4l rights advocates have managed to establish a system which Hogan explains
as the "guardianship model for nonhuman animals":13

Despite Animal Lovers, there exists a well-established system by which nonhuman animals may obtain
judicial review to enforce their statutory rights and protections: guardianships. With court approval, animal
advocacy organizations may bring suit on behalf of nonhuman animals in the same way court-appointed
guardians bring suit on behalf of mentally-challenged humans who possess an enforceable right but lack
the ability to enforce it themselves.

In the controversial but pivotal Should Trees Have Standing?-Toward Legal Rights for Natural Objects,
Christopher D. Stone asserts that the environment should possess the right to seek judicial redress even
though it is incapable of representing itself. While asserting the rights of

speechless entities such as the environment or nonhuman animals certainly poses legitimate challenges -
such as identifying the proper spokesman -the American legal system is already well-equipped with a
reliable mechanism by which nonhumans may obtain standing via a judicially established guardianship.
Stone notes that other speechless - and nonhuman - entities such as corporations, states, estates, and
municipalities have standing to bring suit on their own behalf. There is little reason to fear abuses under
this regime as procedures for removal and substitution, avoiding conflicts of interest, and termination of a
guardianship are well established.

In fact, the opinion in Animal Lovers suggests that such an arrangement is indeed possible. The court
indicated that AL VA might have obtained standing in its own right if it had an established history of
dedication to the cause of the humane treatment of animals. It noted that the Fund for Animals had
standing and indicated that another more well-known advocacy organization might have had standing as
well. The court further concluded that an organization's standing is more than a derivative of its history,
but history is a relevant consideration where organizations are not well-established prior to commencing
legal action. ALVA was not the proper plaintiff because it could not identify previous activities
demonstrating its recognized activism for and commitment to the dispute independent of its desire to
pursue legal action. The court's analysis suggests that a qualified organization with a demonstrated
commitment to a cause could indeed bring suit on behalf of the speechless in the form of a court-
sanctioned guardianship.

This Comment advocates a shift in contemporary standing doctrine to empower non-profit organizations
with an established history of dedication to the cause and relevant expertise to serve as official guardians
ad !item on behalf of nonhuman animals interests. The American legal system has numerous
mechanisms for representing the rights and interests of nonhumans; any challenges inherent in extending
these pre-existing mechanisms to nonhuman animals are minimal compared to an interest in the proper
administration of justice. To adequately protect the statutory rights of nonhuman animals, the legal
system must recognize those statutory rights independent of humans and provide a viable means of
enforcement. Moreover, the idea of a guardianship for speechless plaintiffs is not new and has been
urged on behalf of the natural environment. 'Such a model is even more compelling as applied to
nonhuman animals, because they are sentient beings with the ability to feel pain and exercise rational
thought. Thus, animals are qualitatively different from other legally protected nonhumans and therefore
have interests deserving direct legal protection.

Furthermore, the difficulty of enforcing the statutory rights of nonhuman animals threatens the integrity of
the federal statutes designed to protect them, essentially rendering them meaningless. Sensing that laws
protecting nonhuman animals would be difficult to enforce, Congress provided for citizen suit provisions:
the most well-known example is found in the Endangered Species Act (ESA). Such provisions are
evidence of legislative intent to encourage civic participation on behalf of nonhuman animals. Our law of
standing should reflect this intent and its implication that humans are suitable representatives of the
natural environment, which includes nonhuman animals.14 (Emphasis supplied, citation omitted)

When a court allows guardianship as a basis of representation, animals are considered as similarly
situated as individuals who have enforceable rights but, for a legitimate reason (e.g., cognitive disability),
are unable to bring suit for themselves. They are also similar to entities that by their very nature are
incapable of speaking for themselves (e.g., corporations, states, and others).

In our jurisdiction, persons and entities are recognized both in law and the Rules of Court as having
standing to sue and, therefore, may be properly represented as real parties in interest. The same cannot
be said about animals.

Animals play an important role in households, communities, and the environment. While we, as humans,
may feel the need to nurture and protect them, we cannot go as far as saying we represent their best
interests and can, therefore, speak for them before the courts. As humans, we cannot be so arrogant as
to argue that we know the suffering of animals and that we know what remedy they need in the face of an
injury.

Even in Hogan's discussion, she points out that in a case before the United States District Court for the
Central District of California, Animal Lovers Volunteer Ass'n v. Weinberger,15 the court held that an
emotional response to what humans perceive to be an injury inflicted on an animal is not within the "zone-
of-interest" protected by law.16 Such sympathy cannot stand independent of or as a substitute for an
actual injury suffered by the claimant.17 The ability to represent animals was further limited in that case
by the need to prove "genuine dedication" to asserting and protecting animal rights:

What ultimately proved fatal to ALVA 's claim, however, was the court's assertion that standing doctrine
further required ALVA to differentiate its genuine dedication to the humane treatment of animals from the
general disdain for animal cruelty shared by the public at large. In doing so, the court found ALVA 's
asserted organizational injury to be abstract and thus relegated ALVA to the ranks of the "concerned
bystander. "

....

In fact, the opinion in Animal Lovers suggests that such an arrangement is indeed possible. The court
indicated that ALVA might have obtained standing in its own right if it had an established history of
dedication to the cause of the humane treatment of animals. It noted that the Fund for Animals had
standing and indicated that another more well-known advocacy organization might have had standing as
well. The court further concluded that an organization's standing is more than a derivative of its history,
but history is a relevant consideration where organizations are not well-established prior to commencing
legal action. ALVA was not the proper plaintiff because it could not identify previous activities
demonstrating its recognized activism for and commitment to the dispute independent of its desire to
pursue legal action. The court's analysis suggests that a qualified organization with a demonstrated
commitment to a cause could indeed bring suit on behalf of the speechless in the form of a court-
sanctioned guardianship.18 (Emphasis supplied, citation omitted)

What may be argued as being parallel to this concept of guardianship is the principle of human
stewardship over the environment in a citizen suit under the Rules of Procedure for Environmental Cases.
A citizen suit allows any Filipino to act as a representative of a party who has enforceable rights under
environmental laws before Philippine courts, and is defined in Section 5: .

SEC. 5. Citizen suit. - Any Filipino citizen in representation of others, including minors or generations yet
unborn, may file an action to enforce rights or obligations under environmental laws. Upon the filing of a
citizen suit, the court shall issue an order which shall contain a brief description of the cause of action and
the reliefs prayed for, requiring all interested parties to manifest their interest to intervene in the case
within fifteen (15) days from notice thereof. The plaintiff may publish the order once in a newspaper of a
general circulation in the Philippines or furnish all affected barangays copies of said order.

There is no valid reason in law or the practical requirements of this case to implead and feign
representation on behalf of animals. To have done so betrays a very anthropocentric view of
environmental advocacy. There is no way that we, humans, can claim to speak for animals let alone
present that they would wish to use our court system, which is designed to ensure that humans seriously
carry their responsibility including ensuring a viable ecology for themselves, which of course includes
compassion for all living things.

Our rules on standing are sufficient and need not be further relaxed.

In Arigo v. Swift,19 I posed the possibility of further reviewing the broad interpretation we have given to
the rule on standing. While representatives are not required to establish direct injury on their part, they
should only be allowed to represent after complying with the following: [I]t is imperative for them to
indicate with certainty the injured parties on whose behalf they bring the suit. Furthermore, the interest of
those they represent must be based upon concrete legal rights. It is not sufficient to draw out a perceived
interest from a general, nebulous idea of a potential "injury."20

I reiterate my position in Arigo v. Swift and in Paje v. Casiño21 regarding this rule alongside the
appreciation of legal standing in Oposa v. Factoran22 for environmental cases. In Arigo, I opined that
procedural liberality, especially in cases brought by representatives, should be used with great caution:

Perhaps it is time to revisit the ruling in Oposa v. Factoran.

That case was significant in that, at that time, there was need to call attention to environmental concerns
in light of emerging international legal principles. While "intergenerational responsibility" is a noble
principle, it should not be used to obtain judgments that would preclude future generations from making
their own assessment based on their actual concerns. The present generation must restrain itself from
assuming that it can speak best for those who will exist at a different time, under a different set of
circumstances. In essence, the unbridled resort to representative suit will inevitably result in preventing
future generations from protecting their own rights and pursuing their own interests and decisions. It
reduces the autonomy of our children and our children 's children. Even before they are born, we again
restricted their ability to make their own arguments.

It is my opinion that, at best, the use of the Oposa doctrine in environmental cases should be allowed only
when a) there is a clear legal basis for the representative suit; b) there are actual concerns based
squarely upon an existing legal right; c) there is no possibility of any countervailing interests existing
within the population represented or those that are yet to be born; and d) there is an absolute necessity
for such standing because there is a threat of catastrophe so imminent that an immediate protective
measure is necessary. Better still, in the light of its costs and risks, we abandon the precedent all
together.23 (Emphasis in the original)

Similarly, in Paje:

A person cannot invoke the court's jurisdiction if he or she has no right or interest to protect. He or she
who invokes the court's jurisdiction must be the "owner of the right sought to be enforced." In other words,
he or she must have a cause of action. An action may be dismissed on the ground of lack of cause of
action if the person who instituted it is not the real party in interest.24 The term "interest" under the Rules
of Court must refer to a material interest that is not merely a curiosity about or an "interest in the question
involved." The interest must be present and substantial. It is not a mere expectancy or a future,
contingent interest.

A person who is not a real party in interest may institute an action if he or she is suing as representative
of a .real party in interest. When an action is prosecuted or defended by a representative, that
representative is not and does not become the real party in interest. The person represented is deemed
the real party in interest. The representative remains to be a third party to the action instituted on behalf of
another.

....

To sue under this rule, two elements must be present: "(a) the suit is brought on behalf of an identified
party whose right has been violated, resulting in some form of damage, and (b) the representative
authorized by law or the Rules of Court to represent the victim."
The Rules of Procedure for Environmental Cases allows filing of a citizen's suit. A citizen's suit under this
rule allows any Filipino citizen to file an action for the enforcement of environmental law on behalf of
minors or generations yet unborn. It is essentially a representative suit that allows persons who are not
real parties in interest to institute actions on behalf of the real party in interest.

The expansion of what constitutes "real party in interest" to include minors and generations yet unborn is
a recognition of this court's ruling in Oposa v. Factoran. This court recognized the capacity of minors
(represented by their parents) to file a class suit on behalf of succeeding generations based on the
concept of intergenerational responsibility to ensure the future generation's access to and enjoyment of
[the] country's natural resources.

To allow citizen's suits to enforce environmental rights of others, including future generations, is
dangerous for three reasons:

First, they run the risk of foreclosing arguments of others who are unable to take part in the suit, putting
into. question its representativeness. Second, varying interests may potentially result in arguments that
are bordering on political issues, the resolutions of which do not fall upon this court. Third, automatically
allowing a class or citizen's suit on behalf of minors and generations yet unborn may result in the
oversimplification of what may be a complex issue, especially in light of the impossibility of determining
future generation's true interests on the matter.

In citizen's suits, persons who may have no interest in the case may file suits for others. Uninterested
persons will argue for the persons they represent, and the court will decide based on their evidence and
arguments. Any decision by the court will be binding upon the beneficiaries, which in this case are the
minors and the future generations. The court's decision will be res judicata upon them and conclusive
upon the issues presented.25

The danger in invoking Oposa v. Factoran to justify all kinds of environmental claims lies in its potential to
diminish the value of legitimate environmental rights. Extending the application of "real party in interest" to
the Resident Marine Mammals, or animals in general, through a judicial pronouncement will potentially
result in allowing petitions based on mere concern rather than an actual enforcement of a right. It is
impossible for animals to tell humans what their concerns are. At best, humans can only surmise the
extent of injury inflicted, if there be any. Petitions invoking a right and seeking legal redress before this
court cannot be a product of guesswork, and representatives have the responsibility to ensure that they
bring "reasonably cogent, rational, scientific, well-founded arguments"26 on behalf of those they
represent.

Creative approaches to fundamental problems should be welcome. However, they should be considered
carefully so that no unintended or unwarranted consequences should follow. I concur with the approach
of Madame Justice Teresita J. Leonardo-De Castro in her brilliant ponencia as it carefully narrows down
the doctrine in terms of standing. Resident Marine Mammals and the human petitioners have no legal
standing to file any kind of petition.

However, I agree that petitioners in G.R. No. 181527, namely, Central Visayas Fisherfolk Development
Center,. Engarcial, Yanong, and Labid, have standing both as real parties in interest and as
representatives of subsistence fisherfolks of the Municipalities of Aloguinsan and Pinamungahan, Cebu,
and their families, and the present and future generations of Filipinos whose rights are similarly affected.
The activities undertaken under Service Contract 46 (SC-46) directly affected their source of livelihood,
primarily felt through the significant reduction of their fish harvest.27 The actual, direct, and material
damage they suffered, which has potential long-term effects transcending generations, is a proper subject
of a legal suit.

III

In our jurisdiction, there is neither reason nor any legal basis for the concept of implied petitioners, most
especially when the implied petitioner was a sitting President of the Republic of the Philippines. In G.R.
No. 180771, apart from adjudicating unto themselves the status of "legal guardians" of whales, dolphins,
porpoises, and other cetacean species, human petitioners also impleaded Former President Gloria
Macapagal-Arroyo as "unwilling co-petitioner" for "her express declaration and undertaking in the ASEAN
Charter to protect Tañon Strait."28

No person may implead any other person as a co-plaintiff or co-petitioner without his or her consent. In
our jurisdiction, only when there is a party that should have been a necessary party but was unwilling to
join would there be an allegation as to why that party has been omitted. In Rule 3, Section 9 of the 1997
Rules of Civil Procedure:

SEC. 9. Non-joinder of necessary parties to be pleaded. -Whenever in any pleading in which a claim is
asserted a necessary party is not joined, the pleader shall set forth his name, if known, and shall state
why he is omitted. Should the court find the reason for the omission unmeritorious, it may order the
inclusion of the omitted necessary party if jurisdiction over his person may be obtained.

The failure to comply with the order for his inclusion, without justifiable cause, shall be deemed a waiver
of the claim against such party.

The non-inclusion of a necessary party does not prevent the court from proceeding in the action, and the
judgment rendered therein shall be without prejudice to the rights of such necessary party.29

A party who should have been a plaintiff or petitioner but whose consent cannot be obtained should be
impleaded as a defendant in the nature of an unwilling co-plaintiff under Rule 3, Section 10 of the 1997
Rules of Civil Procedure:

SEC. 10. Unwilling co-plaintiff. - If the consent of any party who should be joined as plaintiff can not be
obtained, he may be made a defendant and the reason therefor shall be stated in the complaint.30

The reason for this rule is plain: Indispensable party plaintiffs who should be part of the action but who do
not consent should be put within the jurisdiction of the court through summons or other court processes.
Petitioners. should not take it upon themselves to simply imp lead any party who does not consent as a
petitioner. This places the unwilling co-petitioner at the risk of being denied due process.

Besides, Former President Gloria Macapagal-Arroyo cannot be a party to this suit. As a co-equal
constitutional department, we cannot assume that the President needs to enforce policy directions by
suing his or her alter-egos. The procedural situation caused by petitioners may have gained public
attention, but its legal absurdity borders on the contemptuous. The Former President's name should be
stricken out of the title of this case.

IV

I also concur with the conclusion that SC-46 is both. illegal and unconstitutional.
SC-46 is illegal because it violates Republic Act No. ·7586 or the National Integrated Protected Areas
System Act of 1992, and Presidential Decree No. 1234,31 which declared Tañon Strait as a protected
seascape. It is unconstitutional because it violates the fourth paragraph of Article XII, Section 2 of the
Constitution.

Petitioner Central Visayas Fisherfolk Development Center asserts that SC-46 violated Article XII, Section
2, paragraph 1 of the .1987 Constitution because Japan Petroleum Exploration Co., Ltd. (JAPEX) is
100% Japanese-owned.32 It further asserts that SC-46 cannot be validly classified as a technical and
financial assistance agreement executed under Article XII, Section 2, paragraph 4 of the 1987
Constitution.33 Public respondents counter that SC-46 does not fall under the coverage of paragraph 1,
but is a validly executed contract under paragraph 4.34· Public respondents further aver that SC-46
neither granted exclusive fishing rights to JAPEX nor violated Central Visayas Fisherfolk Development
Center's right to preferential use of communal marine and fishing resources.35

VI

Article XII, Section 2 of the 1987 Constitution states:

Section 2. All lands of the public domain, waters, minerals, coal, petroleum, and other mineral oils, all
forces of potential energy, fisheries, forests or timber, wildlife, flora and fauna, and other natural
resources are owned by the State. With the exception. of agricultural lands, all other natural resources
shall not be alienated. The exploration, development, and utilization of natural resources shall be under
the full control and supervision of the State. The State may directly undertake such activities, or it may
enter into co-production, joint venture, or production-sharing agreements with Filipino citizens, or
corporations or associations at least sixty per centum of whose capital is owned by such citizens. Such
agreements may be for a period not exceeding twenty-five years, renewable for not more than twenty-five
years, and under such terms and conditions as may be provided by law. In cases of water rights for
irrigation, water supply fisheries, or industrial uses other than the development of water power, beneficial
use may be the measure and limit of the grant.

The State shall protect the nation's marine wealth in its archipelagic waters, territorial sea, and exclusive
economic zone, and reserve its use and enjoyment exclusively to Filipino citizens.

The Congress may, by law, allow small-scale utilization of natural resources by Filipino citizens, as well
as cooperative fish farming, with priority to subsistence fishermen and fish-workers in rivers, lakes, bays,
and lagoons.

The President may enter into agreements with foreign-owned corporations involving either technical or
financial assistance for large-scale exploration, development, and utilization of minerals, petroleum, and
other mineral oils according to the general terms and conditions provided by law, based on real
contributions to the economic growth and general welfare of the country. In such agreements, the State
shall promote the development and use of local scientific and technical resources.

The President shall notify the Congress of every contract entered into in accordance with this provision,
within thirty days from its execution. (Emphasis supplied)
I agree that fully foreign-owned corporations may participate in the exploration, development, and use of
natural resources, but only through either financial agreements or technical ones. This is the clear import
of the words "either financial or technical assistance agreements." This is also the clear result if we
compare the 1987 constitutional provision with the versions in the 1973 and 1935 Constitution:

1973 CONSTITUTION

ARTICLE XIV
THE NATIONAL ECONOMY AND THE PATRIMONY OF THE NATION

SEC. 9. The disposition, exploration, development, of exploitation, or utilization of any of the


natural resources of the Philippines shall be limited to citizens of the Philippines, or to corporations or
association at least sixty per centum of the capital of which is owned by such citizens. The Batasang
Pambansa, in the national interest, may allow such citizens, corporations, or associations to enter into
service contracts for financial, technical, management, or other forms of assistance with any foreign
person or entity for the exploitation, development, exploitation, or utilization of any of the natural
resources. Existing valid and binding service contracts for financial, the technical, management, or other
forms of assistance are hereby recognized as such. (Emphasis supplied)

1935 CONSTITUTION

ARTICLE XIII
CONSERVATION AND UTILIZATION OF NATURAL RESOURCES

SECTION 1. All agricultural timber, and mineral. lands of the public domain, waters, minerals,
coal, petroleum, and other mineral oils, all forces of potential energy, and other natural resources of the
Philippines belong to the State, and their disposition, exploitation, development, or utilization shall be
limited to citizens of the Philippines, or to corporations or associations at least sixty per centum of the
capital of which is owned by such citizens, subject to any existing right, grant, lease, or concession at the
time of the inauguration of the Government established under this Constitution. Natural resources, with
the exception of public agricultural land, shall not be alienated, and no license, concession, or lease for
the exploitation, development, or utilization of any of the natural resources shall be granted for a period
exceeding twenty-five years, renewable for another twenty-five years, except as to water rights for
irrigation, water supply, fisheries, or industrial uses other than the development of water power, in which
cases beneficial use may be the measure and the limit of the grant.

The clear text of the Constitution in light of its history prevails over any attempt to infer interpretation from
the Constitutional Commission deliberations. The constitutional texts are the product of a full sovereign
act: deliberations in a constituent assembly and ratification. Reliance on recorded discussion of
Constitutional Commissions, on the other hand, may result in dependence on incomplete authorship;
Besides, it opens judicial review to further subjectivity from those who spoke during the Constitutional
Commission deliberations who may not have predicted how their words will be used. It is safer that we
use the words already in the Constitution. The Constitution was their product. Its words were read by
those who ratified it. The Constitution is what society relies upon even at present.

SC-46 is neither a financial assistance nor a technical assistance agreement.

Even supposing for the sake of argument that it is, it could not be declared valid in light of the standards
set forth in La Bugal-B'laan Tribal Association, Inc. v. Ramos:36
Such service contracts may be entered into only with respect to minerals, petroleum and other mineral
oils. The grant thereof is subject to several safeguards, among which are these requirements:

(1) The service contract shall be crafted m accordance with a general law that will set standard or uniform
terms, conditions and requirements, presumably to attain a certain uniformity in provisions and avoid the
possible insertion of terms disadvantageous to the country.

(2) The President shall be the signatory for the government because, supposedly before an agreement is
presented to the President for signature, it will have been vetted several times over at different levels to
ensure that it conforms to law and can withstand public scrutiny.

(3) Within thirty days of the executed agreement, the President shall report it to Congress to give that
branch of government an opportunity to look over the agreement and interpose timely objections, if
any.37 (Emphasis in the original, citation omitted)

Based on the standards pronounced in La Bugal, SC-46' S validity must be tested against three important
points: (a) whether SC-46 was crafted in accordance with a general law that provides standards, terms,
and conditions; (b) whether SC-46 was signed by the President for and on behalf of the government; and
(c) whether it was reported by the President to Congress within 30 days of execution.

VII

The general law referred to as a possible basis for SC-46's validity is Presidential Decree No. 87 or the
Oil Exploration and Development Act of 1972.1âwphi1 It is my opinion that this law is unconstitutional in
that it allows service contracts, contrary to Article XII, Section 2 of the 1987 Constitution:

The President may enter into agreements with foreign-owned corporations involving either technical or
financial assistance for large-scale exploration, development, and utilization of minerals, petroleum, and
other mineral oils according to the general terms and conditions provided by law, based on real
contributions to the economic growth and general welfare of the country. In such agreements, the State
shall promote the development and use of local scientific and technical resources. (Emphasis supplied)

The deletion of service contracts from the enumeration of the kind of agreements the President may enter
into with foreign-owned corporations for exploration and utilization of resources means that service
contracts are no longer allowed by the Constitution. Pursuant to Article XVIII, Section 3 of the 1987
Constitution,38 this inconsistency renders the law invalid and ineffective.

SC-46 suffers from the lack of a special law allowing its activities. The Main Opinion emphasizes an
important point, which is that SC-46 did not merely involve exploratory activities, but also provided the
rights and obligations of the parties should it be discovered that there is oil in commercial quantities in the
area. The Tañon Strait being a protected seascape under Presidential Decree No. 123439 requires that
the exploitation and utilization of energy resources from that area are explicitly covered by a law passed
by Congress specifically for that purpose, pursuant to Section 14 of Republic Act No. 7586 or the National
Integrated Protected Areas System Act of 1992:

SEC. 14. Survey for Energy R6'sources. - Consistent with the policies declared in Section 2, hereof,
protected areas, except strict nature reserves and natural parks, may be subjected to exploration only for
the purpose of gathering information on energy resources and only if such activity is carried out with the
least damage to surrounding areas. Surveys shall be conducted only in accordance with a program
approved by the DENR, and the result of such surveys shall be made available to the public and
submitted to the President for recommendation to Congress. Any exploitation and utilization of energy
resources found within NIP AS areas shall be allowed only through a law passed by Congress.40
(Emphasis supplied)

No law was passed by Congress specifically providing the standards, terms, and conditions of an oil
exploration, extraction, and/or utilization for Tañon Strait and, therefore, no such activities could have
been validly undertaken under SC-46. The National Integrated Protected Areas System Act of 1992 is
clear that exploitation and utilization of energy resources in a protected seascape such as Tañon Strait
shall only be allowed through a specific law.

VIII

Former President Gloria Macapagal-Arroyo was not the signatory to SC-46, contrary to the requirement
set by paragraph 4 of Article XII, Section 2 for service contracts involving the exploration of petroleum.
SC-46 was entered into by then Department of Energy Secretary Vicente S. Perez, Jr., on behalf of the
government. I agree with the Main Opinion that in cases where the Constitution or law requires the
President to act personally on the matter, the duty cannot be delegated to another public official.41 La
Bugal highlights the importance of the President's involvement, being one of the constitutional safeguards
against abuse and corruption, as not mere formality:

At this point, we sum up the matters established, based on a careful reading of the ConCom
deliberations, as follows:

• In their deliberations on what was to become paragraph 4, the framers used the term service contracts
in referring to agreements x x x involving either technical or financial assistance. • They spoke of service
contracts as the concept was understood in the 1973 Constitution.

• It was obvious from their discussions that they were not about to ban or eradicate service contracts.

• Instead, they were plainly crafting provisions to. put in place safeguards that would eliminate or m
minimize the abuses prevalent during the marital law regime.42 (Emphasis in the original)

Public respondents failed to show that. Former President Gloria Macapagal-Arroyo was involved in the
signing or execution of SC-46. The failure to comply with this constitutional requirement renders SC-46
null and void.

IX

Public respondents also failed to show that Congress was subsequently informed of the execution and
existence of SC-46. The reporting requirement is an equally important requisite to the validity of any
service contract involving the exploration, development, and utilization of Philippine petroleum. Public
respondents' failure to report to Congress about SC-46 effectively took away any opportunity for the
legislative branch to scrutinize its terms and conditions.

In sum, SC-46 was executed and implemented absent all the requirements provided under paragraph 4
of Article XII, Section 2. It is, therefore, null and void.
X

I am of the view that SC-46, aside from not having complied with the 1987 Constitution, is also null and
void for being violative of environmental laws protecting Tañon Strait. In particular, SC-46 was
implemented despite falling short of the requirements of the National Integrated Protected Areas System
Act of 1992.

As a protected seascape under Presidential Decree No. 1234,43 Tañon Strait is covered by the National
Integrated Protected Areas System Act of 1992. This law declares as a matter of policy:

SEC. 2. Declaration of Policy. Cognizant of the profound impact of man's activities on all components of
the natural environment particularly the effect of increasing population, resource exploitation and
industrial advancement and recognizing the critical importance of protecting and maintaining the natural
biological and physical diversities of the environment notably on areas with biologically unique features to
sustain human life and development, as well as plant and animal life, it is hereby declared the policy of
the State to secure for the Filipino people of present and future generations the perpetual existence of all
native plants and animals through the establishment of a comprehensive system of integrated protected
areas within the classification of national park as provided for in the Constitution.

It is hereby recognized that these areas, although distinct in features, possess common ecological values
that may be incorporated into a holistic plan representative of our natural heritage; that effective
administration of these areas is possible only through cooperation among national government, local and
concerned private organizations; that the use and enjoyment of these protected areas must be consistent
with the principles of biological diversity and sustainable development.

To this end, there is hereby established a National Integrated Protected Areas System (NIPAS), which
shall encompass outstanding remarkable areas and biologically important public lands that are habitats of
rare and endangered species of plants and animals, biogeographic zones and related ecosystems,
whether terrestrial, wetland or marine, all of which shall be designated as "protected areas."44 (Emphasis
supplied)

Pursuant to this law, any proposed activity in Tañon Strait must undergo an Environmental Impact
Assessment:

SEC. 12. Environmental Impact Assessment. - Proposals for activities which are outside the scope of the
management plan for protected areas shall be subject to an environmental impact assessment as
required by law before they are adopted, and the results thereof shall be taken into consideration in the
decision-making process.45 (Emphasis supplied)

The same provision further requires that an Environmental Compliance Certificate be secured under the
Philippine Environmental Impact Assessment System before arty project is implemented:

No actual implementation of such activities shall be allowed without the required Environmental
Compliance Certificate (ECC) under the Philippine Environment Impact Assessment (EIA) system. In
instances where such activities are allowed to be undertaken, the proponent shall plan and carry them out
in such manner as will minimize any adverse effects and take preventive and remedial action when
appropriate. The proponent shall be liable for any damage due to lack of caution or indiscretion.46
(Emphasis supplied)
In projects involving the exploration or utilization of energy resources, the National Integrated Protected
Areas System Act of 1992 additionally requires that a program be approved by the Department of
Environment and Natural Resources, which shall be publicly accessible. The program shall also be
submitted to the President, who in turn will recommend the program to Congress. Furthermore, Congress
must enact a law specifically allowing the exploitation of energy resources found within a protected area
such as Tañon Strait:

SEC. 14. Survey for Energy Resources. - Consistent with the policies declared in Section 2, hereof,
protected areas, except strict nature reserves and natural parks, may be subjected to exploration only for
the purpose of gathering information on energy resources and only if such activity is carried out with the
least damage to surrounding areas. Surveys shall be conducted only in accordance with a program
approved by the DENR, and the result of such surveys shall be made available to the public and
submitted to the President for recommendation to Congress. Any exploitation and utilization of energy
resources found within NIPAS areas shall be allowed only through a taw passed by Congress.47
(Emphasis supplied)

Public respondents argue that SC-46 complied with the procedural requirements of obtaining an
Environmental Compliance Certificate.48 At any rate, they assert that the activities covered by SC-46 fell
under Section 14 of the National Integrated Protected Areas System Act of 1992, which they interpret to
be an exception to Section 12. They argue that the Environmental Compliance Certificate is not a strict
requirement for the validity of SC-46 since (a) the Tañon Strait is not a nature' reserve or natural park; (b)
the exploration was merely for gathering information; and ( c) measures were in place to ensure that the
exploration caused the least possible damage to the area.49

Section 14 is not an exception to Section 12, but instead provides additional requirements for cases
involving Philippine energy resources. The National Integrated Protected Areas System Act of 1992 was
enacted to recognize the importance of protecting the environment in light of resource exploitation,
among others.50 Systems are put in place to secure for Filipinos local resources under the most
favorable conditions. With the status of Tañon Strait as a protected seascape, the institution of additional
legal safeguards is even more significant.

Public respondents did not validly obtain an Environmental Compliance Certificate for SC-46. Based on
the records, JAPEX commissioned an environmental impact evaluation only in the second subphase of its
project, with the Environmental Management .Bureau of Region

VII granting the project an Environmental Compliance Certificate on March 6, 2007.51

Despite its scale, the seismic surveys from May 9 to 18, 2005 were conducted without any environmental
assessment contrary to Section 12 of the National Integrated Protected Areas System Act of 1992.

XI

Finally, we honor every living creature when we take care of our environment. As sentient species, we do
not lack in the wisdom or sensitivity to realize that we only borrow the resources that we use to survive
and to thrive. We are not incapable of mitigating the greed that is slowly causing the demise of our planet.
Thus, there is no need for us to feign representation of any other species or some imagined unborn
generation in filing any action in our courts of law to claim any of our fundamental rights to a healthful
ecology. In this way and with candor and courage, we fully shoulder the responsibility deserving of the
grace and power endowed on our species.
ACCORDINGLY, I vote:

(a) to DISMISS G.R. No. 180771 for lack of standing and STRIKE OUT the name of Former President
Gloria Macapagal-Arroyo from the title of this case;

(b) to GRANT G.R. No. 181527; and

(c) to DECLARE SERVICE CONTRACT 46 NULL AND VOID for violating the 1987 Constitution, Republic
Act No. 7586, and Presidential Decree No. 1234.

DELA CRUZ vs PARAS

The crucial question posed by this certiorari proceeding is whether or not a municipal corporation,
Bocaue, Bulacan, represented by respondents, 1 can, prohibit the exercise of a lawful trade, the
operation of night clubs, and the pursuit of a lawful occupation, such clubs employing hostesses. It is
contended that the ordinance assailed as invalid is tainted with nullity, the municipality being devoid of
power to prohibit a lawful business, occupation or calling, petitioners at the same time alleging that their
rights to due process and equal protection of the laws were violated as the licenses previously given to
them was in effect withdrawn without judicial hearing. 2

The assailed ordinance 3 is worded as follows: "Section 1.— Title of Ordinance.— This Ordinance shall
be known and may be cited as the [Prohibition and Closure Ordinance] of Bocaue, Bulacan. Section 2. —
Definitions of Terms — (a) 'Night Club' shall include any place or establishment selling to the public food
or drinks where customers are allowed to dance. (b) 'Cabaret' or 'Dance Hall' shall include any place or
establishment where dancing is permitted to the public and where professional hostesses or hospitality
girls and professional dancers are employed. (c) 'Professional hostesses' or 'hospitality girls' shall include
any woman employed by any of the establishments herein defined to entertain guests and customers at
their table or to dance with them. (d) 'Professional dancer' shall include any woman who dances at any of
the establishments herein defined for a fee or remuneration paid directly or indirectly by the operator or by
the persons she dances with. (e) 'Operator' shall include the owner, manager, administrator or any person
who operates and is responsible for the operation of any night club, cabaret or dance hall. Section 3. —
Prohibition in the Issuance and Renewal of Licenses, Permits. — Being the principal cause in the
decadence of morality and because of their other adverse effects on this community as explained above,
no operator of night clubs, cabarets or dance halls shall henceforth be issued permits/licenses to operate
within the jurisdiction of the municipality and no license/permit shall be issued to any professional
hostess, hospitality girls and professional dancer for employment in any of the aforementioned
establishments. The prohibition in the issuance of licenses/permits to said persons and operators of said
establishments shall include prohibition in the renewal thereof. Section 4.— Revocation of Permits and
Licenses.— The licenses and permits issued to operators of night clubs, cabarets or dance halls which
are now in operation including permits issued to professional hostesses, hospitality girls and professional
dancers are hereby revoked upon the expiration of the thirty-day period given them as provided in Section
8 hereof and thenceforth, the operation of these establishments within the jurisdiction of the municipality
shall be illegal. Section 5.— Penalty in case of violation. — Violation of any of the provisions of this
Ordinance shall be punishable by imprisonment not exceeding three (3) months or a fine not exceeding
P200.00 or both at the discretion of the Court. If the offense is committed by a juridical entity, the person
charged with the management and/or operation thereof shall be liable for the penalty provided herein.
Section 6. — Separability Clause.— If, for any reason, any section or provision of this Ordinance is held
unconstitutional or invalid, no other section or provision hereof shall be affected thereby. Section 7.—
Repealing Clause.— All ordinance, resolutions, circulars, memoranda or parts thereof that are
inconsistent with the provisions of this Ordinance are hereby repealed. Section 8.— Effectivity.— This
Ordinance shall take effect immediately upon its approval; provided, however, that operators of night
clubs, cabarets and dance halls now in operation including professional hostesses, hospitality girls and
professional dancers are given a period of thirty days from the approval hereof within which to wind up
their businesses and comply with the provisions of this Ordinance." 4

On November 5, 1975, two cases for prohibition with preliminary injunction were filed with the Court of
First Instance of Bulacan. 5 The grounds alleged follow:

1. Ordinance No. 84 is null and void as a municipality has no authority to prohibit a lawful business,
occupation or calling.

2. Ordinance No. 84 is violative of the petitioners' right to due process and the equal protection of the law,
as the license previously given to petitioners was in effect withdrawn without judicial hearing. 3. That
under Presidential Decree No. 189, as amended, by Presidential Decree No. 259, the power to license
and regulate tourist-oriented businesses including night clubs, has been transferred to the Department of
Tourism." 6 The cases were assigned to respondent Judge, now Associate Justice Paras of the
Intermediate Appellate Court, who issued a restraining order on November 7, 1975. The answers were
thereafter filed. It was therein alleged: " 1. That the Municipal Council is authorized by law not only to
regulate but to prohibit the establishment, maintenance and operation of night clubs invoking Section
2243 of the RAC, CA 601, Republic Acts Nos. 938, 978 and 1224. 2. The Ordinance No. 84 is not
violative of petitioners' right to due process and the equal protection of the law, since property rights are
subordinate to public interests. 3. That Presidential Decree No. 189, as amended, did not deprive
Municipal Councils of their jurisdiction to regulate or prohibit night clubs." 7 There was the admission of
the following facts as having been established: "l. That petitioners Vicente de la Cruz, et al. in Civil Case
No. 4755-M had been previously issued licenses by the Municipal Mayor of Bocaue-petitioner Jose
Torres III, since 1958; petitioner Vicente de la Cruz, since 1960; petitioner Renato Alipio, since 1961 and
petitioner Leoncio Corpuz, since 1972; 2. That petitioners had invested large sums of money in their
businesses; 3. That the night clubs are well-lighted and have no partitions, the tables being near each
other; 4. That the petitioners owners/operators of these clubs do not allow the hospitality girls therein to
engage in immoral acts and to go out with customers; 5. That these hospitality girls are made to go
through periodic medical check-ups and not one of them is suffering from any venereal disease and that
those who fail to submit to a medical check-up or those who are found to be infected with venereal
disease are not allowed to work; 6. That the crime rate there is better than in other parts of Bocaue or in
other towns of Bulacan." 8 Then came on January 15, 1976 the decision upholding the constitutionality
and validity of Ordinance No. 84 and dismissing the cases. Hence this petition for certiorari by way of
appeal.

In an exhaustive as well as scholarly opinion, the lower court dismissed the petitions. Its rationale is set
forth in the opening paragraph thus: "Those who lust cannot last. This in essence is why the Municipality
of Bocaue, Province of Bulacan, stigmatized as it has been by innuendos of sexual titillation and fearful of
what the awesome future holds for it, had no alternative except to order thru its legislative machinery, and
even at the risk of partial economic dislocation, the closure of its night clubs and/or cabarets. This in
essence is also why this Court, obedient to the mandates of good government, and cognizant of the
categorical imperatives of the current legal and social revolution, hereby [upholds] in the name of police
power the validity and constitutionality of Ordinance No. 84, Series of 1975, of the Municipal Council of
Bocaue, Bulacan. The restraining orders heretofore issued in these two cases are therefore hereby rifted,
effective the first day of February, 1976, the purpose of the grace period being to enable the petitioners
herein to apply to the proper appellate tribunals for any contemplated redress."9 This Court is, however,
unable to agree with such a conclusion and for reasons herein set forth, holds that reliance on the police
power is insufficient to justify the enactment of the assailed ordinance. It must be declared null and void.

1. Police power is granted to municipal corporations in general terms as follows: "General power of
council to enact ordinances and make regulations. - The municipal council shall enact such ordinances
and make such regulations, not repugnant to law, as may be necessary to carry into effect and discharge
the powers and duties conferred upon it by law and such as shall seem necessary and proper to provide
for the health and safety, promote the prosperity, improve the morals, peace, good order, comfort, and
convenience of the municipality and the inhabitants thereof, and for the protection of property therein." 10
It is practically a reproduction of the former Section 39 of Municipal Code.11 An ordinance enacted by
virtue thereof, according to Justice Moreland, speaking for the Court in the leading case of United States
v. Abendan 12 "is valid, unless it contravenes the fundamental law of the Philippine Islands, or an Act of
the Philippine Legislature, or unless it is against public policy, or is unreasonable, oppressive, partial,
discriminating, or in derogation of common right. Where the power to legislate upon a given subject, and
the mode of its exercise and the details of such legislation are not prescribed, the ordinance passed
pursuant thereto must be a reasonable exercise of the power, or it will be pronounced invalid." 13 In
another leading case, United States v. Salaveria, 14 the ponente this time being Justice Malcolm, where
the present Administrative Code provision was applied, it was stated by this Court: "The general welfare
clause has two branches: One branch attaches itself to the main trunk of municipal authority, and relates
to such ordinances and regulations as may be necessary to carry into effect and discharge the powers
and duties conferred upon the municipal council by law. With this class we are not here directly
concerned. The second branch of the clause is much more independent of the specific functions of the
council which are enumerated by law. It authorizes such ordinances as shall seem necessary and proper
to provide for the health and safety, promote the prosperity, improve the morals, peace, good order,
comfort, and convenience of the municipality and the inhabitants thereof, and for the protection of
property therein.' It is a general rule that ordinances passed by virtue of the implied power found in the
general welfare clause must be reasonable, consonant with the general powersand purposes of the
corporation, and not inconsistent with the laws or policy of the State." 15 If night clubs were merely then
regulated and not prohibited, certainly the assailed ordinance would pass the test of validity. In the two
leading cases above set forth, this Court had stressed reasonableness, consonant with the general
powers and purposes of municipal corporations, as well as consistency with the laws or policy of the
State. It cannot be said that such a sweeping exercise of a lawmaking power by Bocaue could qualify
under the term reasonable. The objective of fostering public morals, a worthy and desirable end can be
attained by a measure that does not encompass too wide a field. Certainly the ordinance on its face is
characterized by overbreadth. The purpose sought to be achieved could have been attained by
reasonable restrictions rather than by an absolute prohibition. The admonition in Salaveria should be
heeded: "The Judiciary should not lightly set aside legislative action when there is not a clear invasion of
personal or property rights under the guise of police regulation." 16 It is clear that in the guise of a police
regulation, there was in this instance a clear invasion of personal or property rights, personal in the case
of those individuals desirous of patronizing those night clubs and property in terms of the investments
made and salaries to be earned by those therein employed.

2. The decision now under review refers to Republic Act No. 938 as amended. 17 It was originally
enacted on June 20, 1953. It is entitled: "AN ACT GRANTING MUNICIPAL OR CITY BOARDS AND
COUNCILS THE POWER TO REGULATE THE ESTABLISHMENT, MAINTENANCE AND OPERATION
OF CERTAIN PLACES OF AMUSEMENT WITHIN THEIR RESPECTIVE TERRITORIAL
JURISDICTIONS.' 18 Its first section insofar as pertinent reads: "The municipal or city board or council of
each chartered city shall have the power to regulate by ordinance the establishment, maintenance and
operation of night clubs, cabarets, dancing schools, pavilions, cockpits, bars, saloons, bowling alleys,
billiard pools, and other similar places of amusement within its territorial jurisdiction: ... " 19 Then on May
21, 1954, the first section was amended to include not merely "the power to regulate, but likewise
"Prohibit ... " 20 The title, however, remained the same. It is worded exactly as Republic Act No. 938. It is
to be admitted that as thus amended, if only the above portion of the Act were considered, a municipal
council may go as far as to prohibit the operation of night clubs. If that were all, then the appealed
decision is not devoid of support in law. That is not all, however. The title was not in any way altered. It
was not changed one whit. The exact wording was followed. The power granted remains that of
regulation, not prohibition. There is thus support for the view advanced by petitioners that to construe
Republic Act No. 938 as allowing the prohibition of the operation of night clubs would give rise to a
constitutional question. The Constitution mandates: "Every bill shall embrace only one subject which shall
be expressed in the title thereof. " 21 Since there is no dispute as the title limits the power to regulating,
not prohibiting, it would result in the statute being invalid if, as was done by the Municipality of Bocaue,
the operation of a night club was prohibited. There is a wide gap between the exercise of a regulatory
power "to provide for the health and safety, promote the prosperity, improve the morals, 22 in the
language of the Administrative Code, such competence extending to all "the great public needs, 23 to
quote from Holmes, and to interdict any calling, occupation, or enterprise. In accordance with the well-
settled principle of constitutional construction that between two possible interpretations by one of which it
will be free from constitutional infirmity and by the other tainted by such grave defect, the former is to be
preferred. A construction that would save rather than one that would affix the seal of doom certainly
commends itself. We have done so before We do so again. 24

3. There is reinforcement to the conclusion reached by virtue of a specific provision of the recently-
enacted Local Government Code. 25 The general welfare clause, a reiteration of the Administrative Code
provision, is set forth in the first paragraph of Section 149 defining the powers and duties of the
sangguniang bayan. It read as follows: "(a) Enact such ordinances and issue such regulations as may be
necessary to carry out and discharge the responsibilities conferred upon it by law, and such as shall be
necessary and proper to provide for the health, safety, comfort and convenience, maintain peace and
order, improve public morals, promote the prosperity and general welfare of the municipality and the
inhabitants thereof, and insure the protection of property therein; ..." 26 There are in addition provisions
that may have a bearing on the question now before this Court. Thus the sangguniang bayan shall "(rr)
Regulate cafes, restaurants, beer-houses, hotels, motels, inns, pension houses and lodging houses,
except travel agencies, tourist guides, tourist transports, hotels, resorts, de luxe restaurants, and tourist
inns of international standards which shall remain under the licensing and regulatory power of the Ministry
of Tourism which shall exercise such authority without infringing on the taxing or regulatory powers of the
municipality; (ss) Regulate public dancing schools, public dance halls, and sauna baths or massage
parlors; (tt) Regulate the establishment and operation of billiard pools, theatrical performances, circuses
and other forms of entertainment; ..." 27 It is clear that municipal corporations cannot prohibit the
operation of night clubs. They may be regulated, but not prevented from carrying on their business. It
would be, therefore, an exercise in futility if the decision under review were sustained. All that petitioners
would have to do is to apply once more for licenses to operate night clubs. A refusal to grant licenses,
because no such businesses could legally open, would be subject to judicial correction. That is to comply
with the legislative will to allow the operation and continued existence of night clubs subject to appropriate
regulations. In the meanwhile, to compel petitioners to close their establishments, the necessary result of
an affirmance, would amount to no more than a temporary termination of their business. During such
time, their employees would undergo a period of deprivation. Certainly, if such an undesirable outcome
can be avoided, it should be. The law should not be susceptible to the reproach that it displays less than
sympathetic concern for the plight of those who, under a mistaken appreciation of a municipal power,
were thus left without employment. Such a deplorable consequence is to be avoided. If it were not thus,
then the element of arbitrariness enters the picture. That is to pay less, very much less, than full
deference to the due process clause with its mandate of fairness and reasonableness.

4. The conclusion reached by this Court is not to be interpreted as a retreat from its resolute stand
sustaining police power legislation to promote public morals. The commitment to such an Ideal forbids
such a backward step. Legislation of that character is deserving of the fullest sympathy from the judiciary.
Accordingly, the judiciary has not been hesitant to lend the weight of its support to measures that can be
characterized as falling within that aspect of the police power. Reference is made by respondents to
Ermita-Malate Hotel and Motel Operators Association, Inc. v. City Mayor of Manila. 28 There is a
misapprehension as to what was decided by this Court. That was a regulatory measure. Necessarily,
there was no valid objection on due process or equal protection grounds. It did not prohibit motels. It
merely regulated the mode in which it may conduct business in order precisely to put an end to practices
which could encourage vice and immorality. This is an entirely different case. What was involved is a
measure not embraced within the regulatory power but an exercise of an assumed power to prohibit.
Moreover, while it was pointed out in the aforesaid Ermita-Malate Hotel and Motel Operators Association,
Inc. decision that there must be a factual foundation of invalidity, it was likewise made clear that there is
no need to satisfy such a requirement if a statute were void on its face. That it certainly is if the power to
enact such ordinance is at the most dubious and under the present Local Government Code non-existent.

WHEREFORE, the writ of certiorari is granted and the decision of the lower court dated January 15, 1976
reversed, set aside, and nullied. Ordinance No. 84, Series of 1975 of the Municipality of Bocaue is
declared void and unconstitutional. The temporary restraining order issued by this Court is hereby made
permanent. No costs.

VDA. DE URBANO vs GSIS

The petitioners in the case at bar have been fighting tooth and nail for a roof above their heads. They
have fought long and hard but still not enough, for while as a succor institution the respondent GSIS can
bend back to accommodate the needs of a member, it can only bend as far as it can also assure the
solvency of its funds for the common good of its members.

This is a petition for review on certiorari to annul and set aside the Court of Appeals' October 30, 1998
decision[1] and March 4, 1999 resolution affirming the decision of the Regional Trial Court of Quezon
City, Branch 102, dismissing petitioner's complaint for annulment of contract, reconveyance and
damages.

The facts, gathered mainly from the stipulation and admissions of the parties,[2] are as follows:

In 1971, petitioners mortgaged their 200-square meter property in Quezon City to the respondent GSIS to
secure a housing loan of P47,000.00. As petitioners failed to pay their loan when it fell due, GSIS
foreclosed the mortgage on October 28, 1983. With a bid of P154,896.00, GSIS emerged as the highest
bidder in the public auction of the property.

In a bid to redeem their property, petitioner Arnel Arrienda wrote on September 26, 1984 to the Acquired
Assets Department (AAD) of the GSIS signifying the petitioners' intention to redeem their property. Two
days after or on September 28, petitioner vda. de Urbano wrote the GSIS Board of Trustees (the "Board")
to inform them of her desire to redeem the subject property and for advice on the procedure for
redemption.[3] GSIS responded on October 16, 1984 advising her to pay the total redemption price of
P154,896.00 on or before the expiry date of redemption on November 18, 1984 in full and in cash, failing
which the property would be offered for sale through public bidding.

On October 29, 1984, petitioner vda. de Urbano requested for more time to redeem the subject property.
In a letter dated January 10, 1985, AAD Manager Marcial Secoquian informed petitioners that the Board
adopted Resolution No. 929 on November 16, 1984 approving the "sale of the subject property to
petitioner Purificacion Urbano for the sum of P174,572.62, provided that the aforesaid price shall be paid
in CASH, within sixty (60) days from notice of this resolution, failing which, the property shall be sold thru
public bidding with the fair market value of the property as the minimum bid price."

Unable to find financing to repurchase the subject property, petitioners again wrote to the Board through
AAD Manager Secoquian on January 18, 1985 requesting for re-mortgage through repurchase of the
subject property.[4] On February 27, 1985, AAD Manager Secoquian wrote to petitioners that "the
granting of real estate/housing loan to the GSIS members is not within the province and competence of
this department, hence your request for a re-mortgage of said property cannot be acted upon."[5] On
June 19, 1985, petitioner vda. de Urbano wrote to the Board requesting approval to file a loan of
P240,000.00 with the GSIS Real Estate Department to repurchase their foreclosed property.

On June 20, 1985, then Deputy Minister and Vice Governor Ismael A. Mathay, Jr. interceded for the
petitioners and wrote to the Board requesting for a more liberal arrangement to enable petitioners to
repurchase their property. In response to the letter, the Board adopted Resolution No. 593 on July 6,
1985 granting petitioner Aurelio Arrienda "60 days from notice within which to purchase the subject
property for P174,572.62 payable in CASH. Should Mr. Arrienda fail to pay the same within the time
frame mentioned, the property shall be sold at public auction without need of any further action by the
Board." Petitioners were notified of this Resolution in a letter dated August 2, 1985.[6]

On August 21, 1985, months after the expiration of the redemption period on November 18, 1984, GSIS
consolidated its title over the property, leading to the cancellation of TCT No. 167532 covering the
property and the issuance of TCT No. 33418 in favor of GSIS.[7]

On September 5, 1985, respondent Crispina dela Cruz commenced negotiations with respondent GSIS
for her purchase of the petitioners' foreclosed property for P250,000.00 spot cash.

Unable to raise the entire amount of the property but still persistent to reacquire it, petitioner Arnel
Arrienda wrote to the Board on October 4, 1985, offering a downpayment of P50,000.00 to purchase their
property, the balance of P124,572.62 to be paid within five years in equal monthly installments. He
enclosed a cashier's check in the amount of P10,000.00 as earnest money. On October 30, 1985, AAD
Manager Secoquian informed petitioners that the Board adopted Resolution No. 881 on October 10, 1985
declining their offer to purchase the subject property under their proposed terms and conditions.[8]

On November 11, 1985, petitioner Arnel Arrienda again wrote to the Board requesting reconsideration of
Resolution No. 881 and abeyance of the public sale or negotiation of the subject property.[9] Secoquian
wrote petitioner Arnel Arrienda on December 26, 1985 informing him that the Board adopted Resolution
No. 1022 dated December 12, 1985 denying his request for reconsideration of Resolution No. 881 and
returning petitioners' cashier's check of P10,000.00.[10] The Board also directed the "Operating Unit
Concerned to inform Ms. Cristina Cruz (sic) that her offer to purchase the above-mentioned property shall
only be entertained by the GSIS Board if accompanied by a Cashier's or Manager's check in the amount
equivalent to 10% of her offer, forfeitable in favor of the System in case she fails to comply with the terms
and conditions proposed by the System."[11]

With no let up on their efforts to repurchase their property, petitioner Aurelio Arrienda wrote to the Board
on January 6, 1986 requesting a restructuring or a liberal arrangement to purchase back the subject
property. This was denied by the Board in Resolution No. 36 dated January 16, 1986.

Meantime, GSIS continued negotiating with private respondent dela Cruz. On January 28, 1986,
Secoquian recommended to the Board the approval of the sale to dela Cruz.

Not having lost their resolve and pinning their hopes on the new Board of Trustees under the new
administration of then President Corazon Aquino, petitioner vda. de Urbano wrote on January 20, 1987 to
Atty. Regalado Resurreccion, Head of the Operation Pabahay of the Government Investments and Loan
Department of the GSIS, requesting reconsideration of GSIS' position with regard to the subject
property.[12] As indicated in a GSIS internal commmunication, Officer-in-Charge Rosales of the
Residential Loans Department initially handled the request, then endorsed it to Atty. Resurreccion on
January 19, 1987 and enclosed in his endorsement petitioner vda. de Urbano's June 19, 1985 letter
applying for a loan of P240,000.00 to repurchase the subject property. The matter was, in turn, endorsed
by Atty. Resurreccion to AAD Manager Secoquian on January 20, 1987 as "the Operation Pabahay Task
Force cannot undertake the processing of this kind of loan unless a certificate of award or sale is issued
in favor of the applicant." Atty. Resurreccion likewise noted in his endorsement that the applicant for the
loan was already 81 years old and no longer a member of the GSIS. AAD Manager Secoquian returned
said application to the head of the Operation Pabahay on March 3, 1987, enumerating the Board
resolutions relative to the subject property and stating that "pending action by the Board on the offer of
CRISPINA VDA. DELA CRUZ to purchase the subject property for the amount of P250,000.00, the
request of Mrs. URBANO cannot as yet be given due consideration."[13]

On August 11, 1987, GSIS approved under Resolution No. 342 the "sale of the subject property to
respondent dela Cruz for a consideration of P267,000.00 CASH." The following day, respondent AAD &
GRADE Acting Vice-President Zacarias C. Beltran, Jr. wrote to petitioners Zenaida/Aurelio Arrienda
calling their attention to the absence of a formal lease contract over the subject property where petitioners
continued to stay. He also demanded payment of rental arrears on the property for 45 months as of July
31, 1987 amounting to P58,500.00[14] and invited petitioners Zenaida and Aurelio Arrienda to the GSIS
Office to make arrangements for the payment of the rental arrears and to execute the corresponding
lease contract. The letter did not mention the negotiation with private respondent dela Cruz.

On September 1, 1987, GSIS wrote to private respondent dela Cruz that the Board, through Board
Resolution No. 342, approved the sale of the subject property payable in full and in cash for P267,000.00,
representing its current market value, within thirty days from notice of the resolution. On January 20,
1988, a Deed of Absolute Sale over the subject property was executed between GSIS and private
respondent de la Cruz. The following day, TCT No. 374292 covering the subject property was issued to
dela Cruz.

Meantime, having learned about the sale of the subject property to dela Cruz, petitioner Aurelio Arrienda
wrote to the GSIS on September 27, 1987 protesting the said sale and requesting its reconsideration and
recall. Respondent Beltran, then already the Vice President of the AAMG & GRADE Department of the
GSIS, responded on October 27, 1987 informing him of Resolution No. 430, dated October 13, 1987,
which reiterated the approval of the sale of the subject property to respondent dela Cruz as previously
approved under Board Resolution No. 342. On November 4, 1987, petitioner Aurelio Arrienda again wrote
to the GSIS protesting the sale of the property to respondent dela Cruz and requesting for a formal
investigation of the circumstances leading to the sale. The GSIS' Department of Investigation manager
wrote to petitioner Aurelio Arrienda on January 11, 1988 requesting petitioner Aurelio Arrienda to "come
for conference" with Atty. Gatpatan of the said department regarding his complaint on the subject
property.

Not satisfied with the investigation of GSIS, petitioners filed the instant case before the Regional Trial
Court of Quezon City, Branch 102. The lower court dismissed the complaint. This was affirmed by the
Court of Appeals. Hence, this petition for review with the following assignment of errors:

"The Honorable Court of Appeals (Former Eleventh Division) erred as follows:

1. In not finding that the alleged negotiated sale of petitioners' foreclosed property was consummated by
respondent GSIS in favor of respondent Crispina Dela Cruz, a non-GSIS member, in violation of its own
Board Resolution Nos. 929 and 593, existing laws and applicable jurisprudence.

2. In not finding that respondent GSIS had consummated the alleged negotiated sale in favor of
respondent Dela Cruz notwithstanding the failure of the latter to comply with the terms and conditions of
the alleged sale.

3. In not finding that respondent GSIS had committed dishonesty and/or perjury by falsely alleging in their
Answer to the Complaint that it acted on the request of petitioner Purificacion Vda. De Urbano to re-
acquire her former property through the GSIS Operation Pabahay by transmitting said request to the
Acquired Assets Department.

4. In not finding that the case of Valmonte vs. Belmonte, Jr., 170 SCRA 256 (1989), is applicable to the
case at bench.

5. In not finding that Section 35 of P.D. 1146, does not provide any prerogative to the GSIS Board of
Trustees to authorize and/or approve the alleged negotiated sale in favor of a non-GSIS member or an
outsider without complying with pertinent existing laws and established jurisprudence.

6. In not finding that the appealed Decision of the lower court did not faithfully comply with Sec. 1, Rule 36
of the Rules of Court.

7. In not finding that the case of Maharlika Publishing Corporation vs. Tagle, 142 SCRA 553 (1986), is a
precedent to the case at bench.

8. In not giving due consideration to the newly discovered evidence of the petitioners (Annexes "A" and
"B", Brief for the Appellants) which showed that respondent Crispina Dela Cruz had already withdrawn
her offer to buy subject property and the same was accepted by respondent GSIS."

The petition is devoid of merit.

The smorgasbord of issues raised by the petitioner can be reduced to three jugular issues, viz:

I. Do petitioners have a right to repurchase the subject property?

II. Does the GSIS have a duty to dispose of the subject property through public bidding?
III. Was GSIS in bad faith in dealing with petitioners?

I.

We first deal with the issue of repurchase. At the time petitioners offered to repurchase the subject
property from GSIS, the charter of the GSIS then in force was P.D. 1146 or the Revised Government
Insurance Act of 1977 (the "Act"). Sections 35 and 36 of the Act provide in relevant part as follows:

"Sec. 35. Powers and Functions of the System. The System shall have the following powers and
functions specified in this Act and the usual general corporate powers:

xxx

(d) To acquire, utilize or dispose of, in any manner recognized by law, real or personal properties in the
Philippines or elsewhere necessary to carry out the purposes of this Act." (emphasis supplied)

"Sec. 36. The Board of Trustees; Its Composition; Tenure and Compensation.- The Corporate powers
and functions of the System shall be vested in, and exercised by the Board of Trustees. . ."

P.D. 1146 was amended by P.D. 1981 dated July 19, 1985 as follows:

"WHEREAS, the GSIS Board of Trustees should be vested with powers and authority necessary or
proper to ensure a fair and profitable return of the investments of the funds administered by the GSIS,
and, for this purpose, the GSIS Board of Trustees should be given full and sole responsibility of
controlling and monitoring insurance investments operations and fixing and determining the terms and
conditions of financial accomodations to its members, including the power to compromise or release any
claim or settled liability to the GSIS;

WHEREAS, it has thus become necessary to amend Presidential Decree No. 1146 to clarify some of its
provisions to make it more responsive to the needs of the members of the GSIS and to assure the
actuarial solvency of the Fund administered by the GSIS during these times of grave economic crisis
affecting the country;

xxx

Sec. 7. There is hereby incorporated a new paragraph after the third paragraph of Section 36, which shall
read as follows:

"The Board of Trustees has the following powers and functions, among others:

(a) To formulate the policies, guidelines and programs to effectively carry out the purposes and objectives
of this Act;

xxx

(f) The provisions of any law to the contrary notwithstanding, to compromise or release, in whole or in
part, any claim or settled liability to the System, regardless of the amount involved, under such terms and
conditions as it may impose for the best interest of the System; . . ." (emphasis supplied)
The above laws grant the GSIS Board of Trustees (the "Board") the power, nay, the responsibility, to
exercise discretion in "determining the terms and conditions of financial accomodations to its members"
with the dual purpose of making the GSIS "more responsive to the needs of the members of the GSIS"
and assuring "the actuarial solvency of the Fund administered by the GSIS." As mandated by P.D. 1146,
this discretion may be exercised in acquiring, utilizing or disposing of, in any manner recognized by law,
"real or personal properties in the Philippines or elsewhere necessary to carry out the purposes of this
Act." Contrary to petitioners' position, there is no restriction or qualification that the GSIS should dispose
of its real properties in favor only of GSIS members. Based on these laws, the Board could exercise its
discretion on whether to accept or reject petitioners' offer to repurchase the subject property taking into
account the dual purpose enunciated in the "whereas clause" of P.D. 1981, i.e., making the GSIS "more
responsive to the needs of the members of the GSIS" and assuring "the actuarial solvency of the Fund
administered by the GSIS."

Jurisprudence also supports the Board's exercise of discretion in case of repurchase, viz:

"The right to redeem becomes functus officio on the date of its expiry, and its exercise after the period is
not really one of redemption but a repurchase. Distinction must be made because redemption is by force
of law; the purchaser at public auction is bound to accept redemption. Repurchase however of foreclosed
property, after redemption period, imposes no such obligation. After expiry, the purchaser may or may not
re-sell the property but no law will compel him to do so. And, he is not bound by the bid price; it is entirely
within his discretion to set a higher price, for after all, the property already belongs to him as owner."[15]
(emphasis supplied)

In response to petitioners' plea to repurchase the subject property after the redemption period had
expired, the Board approved its sale to petitioners by virtue of Resolution No. 929 dated November 16,
1984, provided that the payment of its purchase price of P174,572.62 shall be made in cash within sixty
days from notice of the resolution, otherwise the property would be sold through public bidding. After
petitioners' failure to purchase the property within the prescribed period, the Board, through Resolution
No. 593 dated July 6, 1985, granted petitioners another sixty days within which to purchase the property
for the same amount and under the same terms stated in Resolution No. 929. Counting from the expiry
date of redemption on November 18, 1984, the petitioners were given about ten months within which to
repurchase the subject property for the same price of P174,572.62. In view of petitioners' repeated failure
to repurchase coupled with their failure to pay rent on the subject property, the Board denied through
Resolution No. 1022 dated December 12, 1985 petitioners' subsequent request to repurchase the subject
property. The minutes of the Board Meeting on December 12, 1985 show the comment of the AAD
Manager, viz:

"From the aforementioned background of the Case where the family of Mr. Arrienda has repeatedly made
different and/or conflicting offers/requests, it seems that their family apparently lack(sic) the capacity to
reacquire their former property, and are obviously delaying our final disposition of the property. Moreover,
since the expiry date of the redemption period, Mr. Arrienda has not made any rental payments on the
property."[16]

The Board's denial of petitioners' request to purchase the subject property was based not on whim or
caprice, but on a factual assessment of the financial capacity of the petitioners to make good their
repeated offers to purchase the subject property. Respondent GSIS struck a balance between being
"responsive to the needs of the members of the GSIS" and assuring "the actuarial solvency of the Fund
administered by the GSIS", and tilted the scale in favor of the latter. Under the then GSIS charter or P.D.
1146, this was well within the powers of the Board.

Petitioners, in addition, fault their failure to meet the GSIS' terms for repurchase on the GSIS' inaction on
their January 20, 1987 request to re-acquire the subject property through the GSIS Operation Pabahay.
They allege that instead of acting upon this letter, what was acted upon was their letter of June 19, 1985.
The evidence on record, however, shows that Officer-in-Charge Rosales of the Residential Loans
Department endorsed the matter raised by petitioners in their January 20, 1987 letter to Atty.
Resurreccion, Head of the Operation Pabahay. While the endorsement shows that enclosed therewith
was petitioner vda. de Urbano's June 19, 1985 letter applying for a loan of P240,000.00 to repurchase the
subject property, the endorsement itself stated that the loan for reacquisition of the subject property was
being made under the "current Operations Pabahay." Thereafter, the matter was endorsed by Atty.
Resurreccion to the Manager of the AAD on January 20, 1987 as "the Operation Pabahay Task Force
cannot undertake the processing of this kind of loan unless a certificate of award or sale is issued in favor
of the applicant." AAD Manager Secoquian returned said application to the head of the Operation
Pabahay on March 3, 1987, enumerating the Board resolutions relative to the subject property and stating
that "pending action by the Board on the offer of CRISPINA VDA. DELA CRUZ to purchase the subject
property for the amount of P250,000.00, the request of Mrs. URBANO cannot as yet be given due
consideration."[17]

In sum, insofar as the petitioners' request for repurchase is concerned, they are not entitled to repurchase
as a matter of right. The Board exercised its discretion in accordance with law in denying their requests
and the GSIS cannot be faulted for petitioners' failure to repurchase as it acted upon petitioners'
application under the Operation Pabahay. The sale of the subject property to respondent dela Cruz
cannot therefore be annulled on the basis of petitioners' alleged right to repurchase.

Neither can petitioners invoke Maharlika Publishing Corporation v. Tagle,[18] as a precedent insofar as
the Board's exercise of its discretion to grant loan restructuring is concerned.[19] Petitioners point out that
in that case, the Supreme Court found that the GSIS "created an agreement of binding nature" with the
owner of the foreclosed property when the owners proposed to repurchase the property and the then
GSIS General Manager Roman Cruz, Jr. ordered that the public bidding of the property be stopped and
the repurchase be discussed with him a day before the scheduled date of the bidding. The case is not in
point. In the Maharlika case, this Court ruled that GSIS was deemed to have accepted the offer to
repurchase when it ordered the bidding to be stopped pending discussion of the repurchase with the
owner of the property. In the case at bar, however, the GSIS granted petitioners two opportunities under
Resolutions No. 929 dated November 16, 1984 and Resolution No. 593 dated July 6, 1985 to repurchase
the subject property, but petitioners failed to comply with the GSIS' terms of repurchase. Subsequently,
when petitioners offered to repurchase the subject property under their own terms of payment, the GSIS
under Resolution No. 881 dated October 10, 1985 denied the same. Unlike in the Maharlika case
therefore, it cannot be said that the GSIS "created an agreement (to repurchase) of binding nature" with
the herein petitioners.

II.

We come now to the second issue of whether the GSIS should dispose of the subject property through
public bidding.
Petitioners aver that Section 79 of P.D. 1445[20] and Commission on Audit (COA) Circular No. 86-264
mandate the GSIS to dispose of its assets, such as the subject property, primarily through public bidding
and only upon its failure, through a negotiated sale.

On the other hand, GSIS contends that Section 79 of P.D. 1445 does not apply to the case at bar as this
provision covers unserviceable government property and not acquired assets like the subject property.
Nor does the sale of the subject property come within the purview of COA Circular No. 86-264 as it is a
"sale of merchandise/inventory held for sale in the regular course of business" which is carved out as an
exception under the circular. GSIS posits that this interpretation of COA Circular No. 86-264 was made
clear by the subsequent COA Circular No. 89-296.

We uphold the position of the GSIS.

Section 79 of P.D. 1445 does not apply to the case at bar as this provision applies only to unserviceable
property, viz:

"SECTION 79. Destruction or sale of unserviceable property. - When government property has become
unserviceable for any cause, or is no longer needed, it shall, upon application of the officer accountable
therefor, be inspected by the head of the agency or his duly authorized representative in the presence of
the auditor concerned and, if found to be valueless or unsalable, it may be destroyed in their presence. If
found to be valuable, it may be sold at public auction to the highest bidder under the supervision of the
proper committee on award or similar body in the presence of the auditor concerned or other duly
authorized representative of the Commission, after advertising by printed notice in the Official Gazette, or
for not less than three consecutive days in any newspaper of general circulation, or where the value of
the property does not warrant the expense of publication, by notices posted for a like period in at least
three public places in the locality where the property is to be sold. In the event that the public auction fails,
the property may be sold at a private sale at such price as may be fixed by the same committee or body
concerned and approved by the Commission."

That the subject property is not "unserviceable" or useless is rather obvious. Petitioners are precisely
fighting tooth and nail to claim the subject property as they are still using it as their family home. It still
serves its purpose well. Neither is it "no longer needed" by the GSIS. As a financial institution extending
housing loans, the disposition of foreclosed properties - such as the subject property - at a price beneficial
to the GSIS helps maintain the actuarial solvency of the GSIS fund. It cannot therefore be said that the
subject property is "no longer needed" by the GSIS.

We turn now to the COA circulars cited by the parties. COA Circular No. 86-264 dated October 16, 1986,
the "General guidelines on the divestment or disposal of assets of government-owned and/or controlled
corporations, and their subsidiaries" provides in relevant part, viz:

"1.0 Rationale and Scope

These guidelines shall govern the general procedures on the divestment or disposal of assets of
government-owned and/or controlled corporations and their subsidiaries, which shall be supplemented by
specific procedures as may be adopted by the corporation concerned, provided they do not contravene
existing laws and the provisions of this circular.

xxx
3.0 Modes of Disposal

3.1. Public Auction

As a rule, public auction or bidding shall be the primary mode of disposal of assets.

3.2. Sale thru Negotiation

Disposal thru this mode, which is a sale without public bidding, shall be resorted to only in case of failure
of public auction.

xxx

5.0 Exceptions and Effectivity

This Circular shall not apply to sales of merchandise/inventory held for sale in the regular course of
business." (emphasis supplied)

On January 27, 1989, COA Circular No. 89-296 was issued providing also for "Audit Guidelines on the
Divestment or Disposal of Property and Other Assets of National Government Agencies and
Instrumentalities, Local Government Units and Government-Owned or Controlled Corporations and their
Subsidiaries." It provides for the disposition of government assets, viz:

"III. DEFINITION AND SCOPE:

These audit guidelines shall be observed and adhered to in the divestment or disposal of property and
other assets of all government entities/instrumentalities, whether national, local or corporate, including the
subsidiaries thereof but shall not apply to the disposal of merchandise or inventory held for sale in the
regular course of business nor to the disposal by government financial institutions of foreclosed assets or
collaterals acquired in the regular course of business and not transferred to the National Government
under Proclamation No. 50. . .

xxx

V. MODES OF DISPOSAL/DIVESTMENT:

This Commission recognizes the following modes of disposal/divestment of assets and property of
national government agencies, local government units and government-owned and controlled
corporations and their subsidiaries, aside from such modes as may be provided by law.

1. Public Auction

Conformably to existing state policy, the divestment or disposal of government property as contemplated
herein shall be undertaken primarily thru public auction. . .

2. Sale Thru Negotiation


For justifiable reasons and as demanded by the exigencies of the service, disposal thru negotiated sale
may be resorted to and undertaken by the proper committee or body in the agency or entity concerned
taking into consideration the following factors: . . ." (emphasis supplied)

When the Board approved the sale of the subject property to private respondent dela Cruz through
Resolution No. 342 in August 1987 and Resolution No. 430 in October of the same year, and when the
Deed of Sale was executed between GSIS and private respondent dela Cruz in January 1988, Circular
No. 86-264 was then in force.

The pivotal question is whether the subject property is covered by COA Circular 86-264 or falls under the
exception in its paragraph 5 above. In construing this exception, we derive insight from the exceptions
provided under the subsequent COA Circular 89-296, viz:

"III. DEFINITION AND SCOPE:

These audit guidelines shall be observed and adhered to in the divestment or disposal of property and
other assets of all government entities/instrumentalities, whether national, local or corporate, including the
subsidiaries thereof but shall not apply to the disposal of merchandise or inventory held for sale in the
regular course of business nor to the disposal by government financial institutions of foreclosed assets or
collaterals acquired in the regular course of business and not transferred to the National Government
under Proclamation No. 50. . ."

We refer to Circular No. 89-296 in interpreting Circular No. 86-264 in adherence to the rule in statutory
construction, viz:

"The correct rule of interpretation is, that if divers (sic) statutes relate to the same thing, they ought all to
be taken into consideration in construing any one of them, and it is an established rule of law, that all acts
in pari materia are to be taken together, as if they were one law. (Doug., 30; 2 Term Rep., 387, 586; 4
Maule & Selw., 210). If a thing contained in a subsequent statute, be within the reason of a former statute,
it shall be taken to be within the meaning of that statute. (Lord Raym., 1028); and if it can be gathered
from a subsequent statute in pari materia, what meaning the Legislature attached to the words of a former
statute, they will amount to a legislative declaration of its meaning, and will govern the construction of the
first statute. (Morris v. Mellin, 6 Barn. & Cress., 454; 7 Barn. & Cress. 99)"[21]

In Riggs et al. v. Palmer et al.,[22] it was also ruled:

"It is a familiar canon of construction that a thing which is within the intention of the makers of a statute is
as much within the statute as if it were within the letter; and a thing which is within the letter of the statute
is not within the statute unless it be within the intention of the makers. The writers of the laws do not
always express their intention perfectly, but either exceed it or fall short of it, so that judges are to collect
it from probable or rational conjectures only, and this is called 'rational interpretation;' and Rutherford, in
his Institutes, (page 420,) says: 'Where we make use of rational interpretation, sometimes we restrain the
meaning of the writer so as to take in less, and sometimes we extend or enlarge his meaning so as to
take in more, than his words express.' Such a construction ought to be put upon a statute as will best
answer the intention which the makers had in view, for qui haret in litera, haret in cortice. In Bac. Abr.
'Statutes,' 1.5; Puff. Law Nat. bk. 5, c. 12; Ruth. Inst. 422, 427, and in Smith's Commentaries, 814, many
cases are mentioned where it was held that matters embraced in the general words of statutes
nevertheless were not within the statutes, because it could not have been the intention of the law-makers
that they should be included. They were taken out of the statutes by an equitable construction; and it is
said in Bacon: 'By an equitable construction a case not within the letter of a statute is sometimes holden
to be within the meaning, because it is within the mischief for which the remedy is provided. The reason
for such construction is that the law-makers could not set down every case in express terms.'"[23]

In C&C Commercial Corporation v. National Waterworks and Sewerage Authority,[24] we ruled that
statutes in pari materia should be construed together to attain the purpose of an expressed national
policy, viz:

"On the presumption that whenever the legislature enacts a provision it has in mind the previous statutes
relating to the same subject matter, it is held that in the absence of any express repeal or amendment
therein, the new provision was enacted in accord with the legislative policy embodied in those prior
statutes, and they all should be construed together. Provisions in an act which are omitted in another act
relating to the same subject matter will be applied in a proceeding under the other act, when not
inconsistent with its purpose. Prior statutes relating to the same subject matter are to be compared with
the new provisions; and if possible by reasonable construction, both are to be construed that effect is
given to every provision of each. Statutes in pari materia, although in apparent conflict, are so far as
reasonably possible construed to be in harmony with each other."[25]

Agpalo writes in his book, Statutory Construction, viz:

"Statutes in pari materia should be read and construed together because enactments of the same
legislature on the same subject are supposed to form part of one uniform system; later statutes are
supplementary or complimentary (sic) to the earlier enactments and in the passage of its acts the
legislature is supposed to have in mind the existing legislations on the subject and to have enacted its
new act with reference thereto."[26]

When both COA Circular No. 86-264 and COA Circular No. 89-296 were issued, affording flexibility to
government-owned and controlled corporations (GOCC's) to allow them to generate more revenue for
national development was a declared government policy. This policy is unmistakable in laws executed
before the issuance of Circular No. 86-264 in October 1986. P.D. 2029, "Defining Government-Owned
and Controlled Corporations and Indentifying Their Role in National Development," dated February 4,
1986, provides:

"WHEREAS, there is a need to assure the flexibility of such government corporations consistent with the
need for public accountability by providing for differential treatment for government corporations;

xxx

SECTION 1. General Policy. - It is the policy of the State that the corporate form of organization, utilized
judiciously, is one of the valid forms through which the government may participate in economic and
social development.

xxx

SEC. 7. Provision of adequate operational flexiblity. -Government corporations shall be provided with
adequate operational flexibility in order to function properly and efficiently, especially under conditions of
market competition. Such flexibility shall nevertheless be consistent with the requirements of public
acountability.
xxx

SEC. 8. Differential treatment.- To implement the concept of greater flexibility, government corporations in
general shall be accorded differential treatment which is more consistent with coporate organizational
requirements as distinguished from regular government agencies, with respect to the exercise by the
various service-wide agencies, such as the Civil Service Commission, the Commission on Audit, and the
Office of Budget and Management, of their respective jurisdiction."

Letter of Instructions No. 1520, issued on the same day as P.D. 2029 on February 4, 1986, also provides
for the role of government corporations in national development, viz:

"WHEREAS, it is necessary that the limited resources of government be utilized as efficiently, as


effectively, and as economically as possible to further national development and to support the economic
recovery program, for which the judicious use of the corporate form of organization is critical;

xxx"

P.D. 2030, Providing for the Orderly Disposition of Certain Assets of Government Institutions, also issued
on February 4, 1986, made explicit the policy of the government to divest government corporations of
assets as an aid to national development, viz:

"WHEREAS, the National Government, through the agency of various financial and other government
institutions, has acquired or is otherwise the owner of a large number of assets in the industrial,
manufacturing and commercial sectors of the economy which, as part of the economic recovery program
adopted by the National Government, it has been deemed necessary and appropriate for the National
Government to divest in a planned and orderly manner;

WHEREAS, as an integral part of this economic recovery program and in order to facilitate the
reorganization of certain government financial institutions, it is necessary to relieve those institutions of
assets which adversely affect their financial viability and liquidity, and for the National Government to take
over such assets and to assume the realted liabilities of those institutions;

WHEREAS, it is the desire of the National Government to realize on such assets within the shortest
possible time and, to such end, to dispose of such assets generally on terms that would permit immediate
substantial cash returns to the National Government;

xxx"

Proclamation No. 50, "Proclaiming and Launching a Program for the Expeditious Disposition and
Privatization of Certain Government Corporations and/or the Assets Thereof, and Creating the Committee
on Privatization and the Asset Privatization Trust," issued on December 8, 1986 after the issuance of
COA Circular No. 86-264, but prior to COA Circular No. 89-296, reiterates the continuing policy of the
government to encourage divestment of assets as an aid to national development, viz:

"CONSIDERING that the government has decided to adopt, as the twin cornerstones of the program, the
following parallel imperatives for the attainment of national policy:

xxx
(b) reducing the number of government corporations which has proliferated to unmanageable proportions;
circumscribing the areas of economic activities within which the government corporations may operate;
and aiming to achieve these goals through the privatization of a good number of government
corporations, and the disposition and liquidation of the non-relevant and non-performing assets of
retained corporations as the logical first step to their rehabilitation."

The above-quoted laws on GOCC's and disposition of their assets unmistakeably show the policy of the
government to allow flexibility to GOCC's and to promote disposition of non-performing assets. This policy
undergirds both COA Circular No. 86-264 and 89-296. Thus, the exception provided in COA Circular No.
86-264 should be, to the widest extent possible, construed to accommodate this policy and allow GOCC's
wide latitude in the disposition of their assets, including foreclosed assets or collaterals acquired in the
regular course of business. COA Circular No. 89-296 provides for two exceptions to the requirement of
disposition primarily through public bidding, i.e., (1) disposal of merchandise or inventory held for sale in
the regular course of business; and (2) disposal by government financial institutions of foreclosed assets
or collaterals acquired in the regular course of business." In light of the declared policy of the government
on GOCC's and their assets, COA Circular No. 89-296 should be understood to have clarified the
coverage of the exception under COA Circular No. 86-264, i.e., sales of merchandise/inventory held for
sale in the regular course of business.

The GSIS being a financial institution extending loans to its members, the foreclosure of the subject
property as collateral to a loan was done in the regular course of business. Its sale to private respondent
dela Cruz falls within the exception provided by COA Circular No. 86-264 as clarified by COA Circular 89-
296, and thus does not offend the requirements of the said COA circulars.

Instead, the policies and procedures of the GSIS on the disposition of acquired assets govern the case at
bar. Mr. Romeo Tejedor, manager of the Acquired Assets Department of GSIS, testified that at the time
the disputed transaction took place, the GSIS still did not have clear cut policies on the sale of acquired
assets. At that time, the GSIS Board of Trustees had the prerogative to authorize the sale of acquired
assets. Petitioners aver that the GSIS "Policy and Procedural Guidelines Acquisition, Administration, and
Disposition of Acquired Assets (PPG)", a newspaper copy of which they annexed to their reply to the
GSIS' brief, provides that a negotiated sale may only be entered into after two failed public biddings on
the acquired property. Petitioners, however, omitted to state that the said newspaper copy was published
and the PPG took effect only on January 17, 1991, long after the sale of the subject property.[27] In the
absence of evidence of policies and procedures contrary to the testimony of Mr. Tejedor, we give
credence to Mr. Tejedor's testimony that at the time of the disputed sale to private respondent dela Cruz,
GSIS did not have clear cut policies on disposition of assets that required it to first sell the subject
property through public bidding before a negotiated sale. The GSIS precisely came out with a PPG in
1991 to set the policies and procedures to govern the disposition of acquired assets because these were
not clear cut prior to 1991. We therefore hold that the sale of the subject property to private respondent
dela Cruz was not contrary to law.

Neither can petitioners invoke the Maharlika case to lend support to its contention that the Board is bound
to fulfill its representations in its letters to the petitioners that upon the latter's failure to repurchase the
property under Resolution Nos. 929 and 593, the GSIS will dispose of the subject property through public
bidding. Petitioners claim that these representations constituted a contract between them and GSIS. The
Court of Appeals correctly ruled that there was no contract between GSIS and the petitioners that
obligates the GSIS to sell the subject property through public bidding, viz:
". . . the mortgage contract between the parties was not novated as to the extension of the redemption
period of appellants since this is not sanctioned by law. What GSIS did per Resolution 929 was to make a
counter proposal to appellants for the sale of the property at the price of P174,572.62 payable in cash
within 60 days from notice of resolution with a warning that non-compliance thereof (sic) will result to the
sale of the property at public auction. At this point in time, there was still no meeting of the minds between
the parties since the request of appellants thru Purificacion Urbano is to extend the redemption period to
enable them to redeem the property while Resolution No. 929 is for outright sale for the price of
P174,572.62. These are two (2) separate and distinct legal transactions. Under Article 1319 of the Civil
Code, the offer must be certain. The offer of Ms. Urbano is certain and explicit as to the extension of time
to redeem their property. The acceptance of GSIS to this proposal must also be absolute and clear in
granting said extension. However, GSIS did not agree to the extension due to legal constraints and
instead a qualified acceptance was given in the sense that GSIS made a counter-offer for appellants to
buy the property under certain terms.

Was there an acceptance of the counter-offer of GSIS on the part of appellants? Definitely none. On
January 10, 1985, when appellants thru Purificacion Urbano was notified by GSIS Manager M.M.
Secoquian of the Acquired Assets Department of the approval of the sale under Board Resolution No.
929, appellant Urbano replied on January 18, 1985 that they cannot pay the price of P174,572.62 as it
may be difficult for a financial institution to accommodate said obligation within the grace period of 60
days. (Exhibit "E", Records). In turn, Ms. Urbano made another counter-proposal "to have the said
property be RE-MORTGAGE (sic) through the process of repurchase with the GSIS". (Exhibit "F",
Records). . . A similar request was sent by appellant Aurelio Arrienda on May 20, 1985 but the same was
denied in a Board Resolution No. 516 dated June 6, 1985. (Exhibit "H", Records).

From the foregoing, this Court rules that there was no meeting of the minds between the parties as the
counter-offer of GSIS for the appellants to buy the property based on terms and conditions laid down
under Board Resolution No. 929 was NOT accepted by appellants. Under Article 1319 of the Civil Code,
there was no valid and perfected contract. Hence, appellants cannot claim any right under Board
Resolution No. 929, more particularly on the sale at public auction since they did not agree to the counter-
offer of GSIS as contained in Board Resolution 929.

. . . In response to the request of the First Lady Imelda Marcos, the GSIS Board of Trustees approved
Board Resolution No. 593 which granted to "Mr. Aurelio Arrienda sixty (60) days from notice within which
to purchase the property for P174,572.62 payable in cash. Should Mr. Arrienda fail to pay the same within
the time frame mentioned, the property shall be sold at public auction, without need of any further action
from the Board." (Exhibit "3", p. 232 Records). Mr. Arrienda was notified of the Board Resolution 593 by
Manager M.M. Secoquian on August 2, 1985, asking him to remit the amount within 60 days from receipt
of said letter (Exhibit "K", Records). However, on October 4, 1985, appellants thru Atty. Ariel Arrienda
sent a letter to GSIS making a counter-offer to purchase said property. . . On October 10, 1985, the GSIS
Board passed Board Resolution 818 declining the offer of Mr. Arnel Arrienda to purchase the property for
P147,572,62 under the terms and conditions he proposed. . .

From the foregoing, We likewise conclude that there was no perfected contract between the parties. The
proposal of appellants thru Mr. Aurelio Arrienda is for the extension of the redemption period or to
restructure their loan with GSIS. (Exhibit "J", Records). The approval of GSIS is for appellants to
purchase the property at the price of P174,572.62 within 60 days from receipt of notice. (Exhibit "3", Res.
No. 592, Records). This was NOT approved by appellants and instead they made another counter-
proposal to pay said amount with a down payment of P50,000.00 and the balance to be paid in 60
monthly installments. (Exhibit "1", Records). This counter offer was denied in Resolution 1022. . . It is
clear from the above-described events that the offer of appellants to redeem the property or restructure
the loan was met with a qualified acceptance from GSIS which is for them to pay the prescribed price
within 60 days. Said qualified acceptance constitutes a counter-offer under Article 1319 of the Civil Code
and the appellants did not accept the same by making another counter-offer to pay on staggered basis.
This counter offer was denied twice by GSIS and therefore there was clearly no meeting of the minds and
no perfected contract.

If there is completely no acceptance or if the offer is expressly rejected, there is no meeting of the minds.
(Leoquingco vs. Postal Savings Bank, 47 Phil. 772 and in Gamboa vs. Gonzales, 17 Phil. 381)

If the acceptance be qualified or not absolute, there is no concurrence of minds. There merely is counter-
offer. (Batangan vs. Cojuangco, 78 Phil. 481)

A counter-offer as a matter of fact extinguishes the offer. It may or may not be accepted by the original
offerer. (Trillana vs. Quezon Colleges, L-5003, June 27, 1953)" (emphasis supplied)[28]

III.

Finally, on the issue of whether or not GSIS was in bad faith in dealing with the petitioners, we rule in the
negative. As earlier discussed, respondent GSIS' denial of petitioners' further requests for repurchase of
the subject property was based on a factual determination of petitioners' financial incapacity and the then
GSIS charter, P.D. 1146. It is also worth noting that GSIS sold the subject property to respondent dela
Cruz only after giving petitioners an almost one year opportunity to repurchase the property and only after
ascertaining that the purchase price proposed by private respondent dela Cruz in payment of the subject
property would benefit the GSIS. Nor can petitioners, on the strength of Valmonte v. Belmonte, Jr.,[29]
impute bad faith on the part of GSIS when the latter did not disclose to petitioners that it was negotiating
with private respondent dela Cruz for the sale of the subject property as soon as it started the
negotiations. The Court ruled in the Valmonte case that the constitutional right to information is limited to
"matters of public concern," to "transactions involving public interest." The negotiation and subsequent
sale of the subject property by the GSIS to private respondent dela Cruz was by no stretch of the
imagination imbued with public interest as it was a purely private transaction. Petitioners cannot therefore
demand that it be informed of such negotiation and sale moreso since they no longer had any interest on
the subject property upon failure to comply with GSIS' terms for repurchase and upon GSIS' denial of
petitioners' offer to repurchase under their proposed terms and conditions. In the absence of proof of bad
faith on the part of the respondents, we deny petitioners' prayer for moral damages and attorney's fees.

WHEREFORE, the petition is DENIED and the impugned decision and resolution of the Court of Appeals
are AFFIRMED. No costs. SO ORDERED.

CABADA vs ALUNAN

This is a special civil action for certiorari under Rule 65 of the Rules of Court[1] to set aside the decision
(in the form of a letter) of 24 March 1995[2] of public respondent National Police Commission
(NAPOLCOM), which denied due course for lack of jurisdiction the appeal and the petition for review filed
by petitioners SPO3 Noel Cabada and SPO3 Rodolfo G. de Guzman, respectively. Challenged in the said
appeal and petition for review were the decision of 15 August 1994[3] and resolution of 25 October
1994[4] of the Regional Appellate Board of the Eighth Regional Command (RAB 8), which affirmed their
dismissal from the service.

The pleadings and annexes filed by the parties disclose the following factual and procedural backdrop of
this case:

On 29 October 1993, a complaint against the petitioners for Grave Misconduct, Arbitrary Detention, and
Dishonesty was filed with the Office of the Commission on Human Rights in Tacloban City by private
respondent Mario Valdez.[5] The complaint was referred to the Philippine National Police Eighth Regional
Command (PNP-RECOM 8) which, after conducting its own investigation, filed an administrative charge
of Grave Misconduct against the petitioners and instituted summary dismissal proceedings.

On 7 April 1994, the Regional Director of PNP-RECOM 8 handed down a decision[6] finding the
petitioners guilty of grave misconduct and ordering their dismissal from the police service. Pursuant to this
decision, Special Order No. 174, dated 23 April 1994,[7] was issued ordering, among other things, the
dismissal of the petitioners from the service.

The petitioners claimed that they were not formally furnished with a copy of the decision and that they
were able to secure a copy thereof thru their own effort and initiative only on 13 June 1994.[8] However,
they received a copy of Special Order No. 174 on 26 April 1994.

Although they insist that the basis of the appeal before RAB 8 was Special Order No. 174,[9] petitioner
Cabada stated under oath in his Appeal[10] filed with the Department of Interior and Local Government
(DILG) that he in fact seasonably filed a motion for reconsideration of the decision of the Regional
Director of PNP-RECOM 8, who, however, failed or refused to act on the said motion, and that he asked
that the said motion be treated as an appeal to the RAB.

In its decision of 15 August 1994,[11] the RAB 8 affirmed the decision of the Regional Director. In its
resolution of 25 October 1994,[12] it denied the petitioners motion for reconsideration of its decision. The
petitioners received a copy of this resolution on 26 January 1995.

Petitioners Cabada and De Guzman then filed with the Honorable Secretary of the DILG and Chairman of
the NAPOLCOM their Appeal[13] dated 5 February 1995 and Petition for Review[14] dated 4 February
1995, respectively.

In its decision of 24 March 1995, the NAPOLCOM, through Commissioner Alexis Canonizado, denied due
course to the petitioners appeal and petition for review for lack of jurisdiction it appearing x x x that both
the Decision and the Resolution of the Regional Appellate Board had long become final and executory
and there being no showing that the RAB failed to decide respondents appeal within the reglementary
period of sixty (60) days.[15] In support thereof, the NAPOLCOM cited Section 23, Rule IV of
NAPOLCOM Memorandum Circular No. 91-002 and Section 5, Rule III of NAPOLCOM Memorandum
Circular No. 91-006, which provide as follows:

Section 23. Effect of Failure to Decide Appeal. Failure of the Regional Appellate Board to decide the
appeal within the reglementary period shall render the decision final and executory without prejudice,
however, to the filing of an appeal by either party with the Secretary of the Department of the Interior and
Local Government.
xxx xxx xxx

Section 5. Finality of Decision/Resolution. The decision of the Regional Appellate Board on an appealed
case shall become final and executory after ten (10) days from receipt of a copy thereof by the appellant,
if no Motion for Reconsideration is filed within said period.

A motion for Reconsideration may be filed by either party from a Decision rendered by the Regional
Appellate Board on an appealed case, provided that the same is filed within ten (10) days from receipt of
a copy of the decision in question. However, only one (1) Motion for Reconsideration may be allowed.

Hence, the instant petition.

The Office of the Solicitor General seeks to dismiss this petition on the ground of prematurity because the
petitioners failed to exhaust administrative remedies; they should have instead appealed to the Civil
Service Commission (CSC) pursuant to Section 47, Chapter 6, Subtitle A, Title I, Book V of the
Administrative Code of 1987 (E.O. No. 292), which vests upon the CSC appellate jurisdiction over
disciplinary cases of government personnel where the penalty imposed is, inter alia, dismissal from office.
The said provision reads:

Section 47. Disciplinary Jurisdiction. (1) The Commission shall decide upon appeal all administrative
disciplinary cases involving the imposition of a penalty of suspension for more than thirty days, or fine in
an amount exceeding thirty days salary, demotion in rank or salary or transfer, or removal or dismissal
from office. x x x

(2) The Secretaries x x x shall have jurisdiction to investigate and decide matters involving disciplinary
action against officers and employees under their jurisdiction. x x x In case the decision rendered by a
bureau or office head is appealable to the Commission, the same may be initially appealed to the
Department and finally to the Commission and pending appeal, the same shall be executory except when
the penalty is removal, in which case, the same shall be executory only after confirmation by the
Secretary concerned.

The Office of the Solicitor General opines that this provision covers PNP personnel, like the petitioners;
consequently, they should have appealed to the CSC. It also advances the view that the instant petition
should have been filed with the proper forum, the Regional Trial Court.

The core issues that present themselves for our determination are whether

(1) the NAPOLCOM committed grave abuse of discretion in denying due course, for lack of jurisdiction,
the petitioners appeal from and petition for review of the decision and resolution of the RAB 8; and

(2) this special civil action was prematurely filed for failure of the petitioners to exhaust administrative
remedies.

Section 45 of the DILG Act of 1990[16] provides for the finality of disciplinary actions against members of
the PNP as follows:
SEC. 45. Finality of Disciplinary Action. The disciplinary action imposed upon a member of the PNP shall
be final and executory: Provided, That a disciplinary action imposed by the regional director or by the
PLEB involving demotion or dismissal from the service may be appealed to the regional appellate board
within ten (10) days from receipt of the copy of the notice of decision: Provided, further, That the
disciplinary action imposed by the Chief of the PNP involving demotion or dismissal may be appealed to
the National Appellate Board within ten (10) days from receipt thereof: Provided furthermore, That, the
regional or National Appellate Board, as the case may be, shall decide the appeal within sixty (60) days
from receipt of the notice of appeal: Provided, finally, That failure of the regional appellate board to act on
the appeal within said period shall render the decision final and executory without prejudice, however, to
the filing of an appeal by either party with the Secretary. (Italics supplied)

The last proviso of this section is restated in Section 23, Rule IV of NAPOLCOM Memorandum Circular
No. 91-002. And Section 3, Rule III of NAPOLCOM Memorandum Circular No. 92-006 provides:

Section 3. Period Within Which to Decide Appealed Cases; Finality of RAB/NAB Decisions. The
NAPOLCOM appellate board concerned shall decide the appealed cases within sixty (60) days from
receipt of the entire records of the case from the PNP summary dismissal authority. However, failure of
the NAPOLCOM Regional Appellate Board (RAB) to act on the appeal within said period renders the
decision final and executory without prejudice to the filing of an appeal by the respondent-appellant with
the Secretary of the Department of the Interior and Local Government. The decision rendered by the
NAPOLCOM National Appellate Board (NAB) disposing an appealed case shall be final and executory
unless a timely Motion for Reconsideration is filed within ten (10) days from receipt thereof, in which case,
it shall become final and executory upon receipt by the respondent-appellant of the resolution of the
aforesaid board denying, modifying or affirming the decision.

Section 45 of the DILG Act of 1990 specifically provides that if a RAB fails to decide an appeal within the
reglementary period of sixty days, the appealed decision becomes final and executory without, however,
prejudice to the right of the aggrieved party to appeal to the Secretary of the DILG. The said provision is,
however, silent as regards the availability of an appeal from a decision rendered by a RAB within the
reglementary period.

This gap in Section 45 cannot be construed to prohibit appeals from decisions of the RAB rendered within
the reglementary period, for while the epigraph of the section is worded Finality of Disciplinary Action,
there is nothing therein that explicitly bars any further appeal. Complementary laws on discipline of
government officials and employees must then be inquired into considering that in conformity with the
mandate of the Constitution that the PNP must be national in scope and civilian in character,[17] it is now
a part, as a bureau, of the reorganized DILG.[18] As such, it falls within the definition of the civil service in
Section 2(1), Article IX-B of the Constitution.[19] For this reason, Section 91 of the DILG Act of 1990
provides:

SEC. 91. Application of Civil Service Laws. The Civil Service Law and its implementing rules and
regulations shall apply to all personnel of the Department.

The Civil Service Law referred to in Section 91 of the DILG Act of 1990 is Subtitle A, Title I, Book V of the
Administrative Code of 1987 (E.O. No. 292). Section 47 of Chapter 6 thereof provides, inter alia, that in
cases where the decision rendered by a bureau or office is appealable to the Commission, the same may
initially be appealed to the department and finally to the Commission.
The rules and regulations implementing the Civil Service Law referred to in Section 91 of the DILG Act of
1990 is the Omnibus Rules Implementing Book V of Executive Order No. 292 known as the
Administrative Code of 1987 promulgated by the CSC. Sections 31 and 32, Rule XIV of the said Rules
provide as follows:

SEC. 31. Except as otherwise provided by the Constitution or by law, the Commission shall have the final
authority to pass upon the removal, separation and suspension of all officers and employees in the civil
service and upon all matters relating to the conduct, discipline and efficiency of such officers and
employees.

SEC. 32. The Secretaries and heads of agencies and instrumentalities, provinces, cities and
municipalities shall have jurisdiction to investigate and decide matters involving disciplinary action against
officers and employees under their jurisdiction. Their decisions shall be final in case the penalty imposed
is suspension for not more than thirty (30) days or fine in an amount not exceeding thirty (30) days salary.
In case the decision rendered by a bureau or office head is appealable to the Commission, the same may
be initially appealed to the department, then to the Merit Systems Protection Board, and finally to the
Commission and pending appeal, the same shall be executory except when the penalty is removal, in
which case the same shall be executory only after confirmation by the Secretary concerned.

Under Section 7 of E.O. No. 262,[20] the Secretary of the DILG has the power of supervision and control
of his Department. His powers and functions thereunder are recognized and affirmed in Section 10 of the
DILG Act of 1990.[21]

In view then of the aforementioned gap in Section 45 of the DILG Act of 1990, the provisions of the Civil
Service Law and the rules and regulations implementing it must be taken into account in light of the
maxim interpretare concordare legibus est optimus interpretandi or every statute must be so construed
and harmonized with other statutes as to form a uniform system of jurisprudence.[22]

As thus construed and harmonized, it follows that if a RAB fails to decide an appealed case within sixty
days from receipt of the notice of appeal, the appealed decision is deemed final and executory, and the
aggrieved party may forthwith appeal therefrom to the Secretary of the DILG. Likewise, if the RAB has
decided the appeal within the sixty-day period, its decision may still be appealed to the Secretary of the
DILG.

In the instant case, Cabadas appeal was addressed to the Honorable Secretary of the Department of the
Interior and Local Government x x x as Chairman and Presiding Officer of the National Police
Commission,[23] while De Guzmans petition for review was addressed to the Honorable Secretary,
Department of the Interior and Local Government and Chairman, National Police Commission, Makati
City, Metro Manila.[24]

We consider the appeal and the petition for review as appeals to the Secretary of the DILG under Section
45 of the DILG Act of 1990.

Only the Secretary of the DILG can act thereon, one way or the other. The NAPOLCOM did not have
authority over the appeal and the petition for review, and just because both mentioned the Secretary of
the DILG as Chairman or Presiding Officer of the NAPOLCOM did not bring them within the jurisdiction of
the NAPOLCOM. The latter does not have such jurisdiction because Section 14 of the DILG Act of 1990
pertinently provides as follows:
SEC. 14. Powers and Functions of the Commission. x x x

xxx xxx xxx

(j) Affirm, reverse or modify, through the National Appellate Board, personnel disciplinary action involving
demotion or dismissal from the service imposed upon members of the Philippine National Police by the
Chief of the Philippine National Police;

(k) Exercise appellate jurisdiction through the regional appellate boards over administrative cases against
policemen and over decisions on claims for police benefits. x x x

This section clearly shows that the NAPOLCOM exercises appellate jurisdiction only on the following
cases and THROUGH (a) the NAB in personnel disciplinary actions involving demotion or dismissal from
the service imposed by the Chief of the PNP, and (b) the RAB in administrative cases against policemen
and over decisions on claims for police benefits. It has no appellate jurisdiction over decisions rendered
by the NAB and the RAB.

Consequently, the NAPOLCOM did not have the power or authority to issue, through Commissioner
Alexis Canonizado, the 24 March 1995 decision denying due course to the appeal and petition for review
filed by petitioners Cabada and De Guzman, respectively, for lack of jurisdiction because of Section 5,
Rule III of NAPOLCOM Memorandum Circular No. 91-006 and Section 23, Rule IV of NAPOLCOM
Memorandum Circular No. 91-002. The reference to these rules suggest that the NAPOLCOM believes it
has jurisdiction over appeals from decisions of the RAB if the latter has not decided the appeal within the
reglementary period of sixty days. Such a suggestion is flawed because it would allow a ridiculous
situation where the NAPOLCOM vests upon itself an appellate jurisdiction from a decision rendered by it
in the exercise of its appellate jurisdiction through the RAB, per Section 14(k) of the DILG Act of 1990.
Moreover, Commissioner Canonizado cannot, singly, act for the NAPOLCOM because it is a collegial
body composed of a Chairman and four Commissioners, pursuant to Section 13 of the DILG Act of 1990.

In light of the foregoing, the petitioners could properly invoke our original jurisdiction to issue the
extraordinary writ of certiorari under Rule 65 of the Rules of Court to annual and set aside the
NAPOLCOMs decision of 24 March 1995. It being a patent nullity, the filing of a motion for its
reconsideration before the institution of this special civil action may be dispensed with.[25]

II

The plea of the Office of the Solicitor General that the instant action is premature for non-exhaustion of
administrative remedies is thus untenable. We would have sustained it if the Secretary of the DILG was
the one who denied due course to or dismissed the appeal of petitioner Cabada and the petition for
review of petitioner De Guzman. By then, pursuant to Section 91 of the DILG Act of 1990; Section 47,
Chapter 6, Subtitle A, Title I, Book V of the Administrative Code of 1987; and Sections 31 and 32 of the
Omnibus Rules Implementing Book V of Executive Order No. 292, the appeal would have to be filed with
the CSC. And futile would be the petitioners claim in their Reply to the Comment of the OSG that their
case falls within the exceptions to the rule on exhaustion of administrative remedies.

In view of all the foregoing, a discussion on the other issues raised by the petitioners relating to the merits
of the case and on the issue of due process is unnecessary.
WHEREFORE, premises considered, the instant petition is GRANTED. The decision (in the form of a
letter) of the National Police Commission of 24 March 1995 is ANNULLED and SET ASIDE. The
Secretary of the Department of Interior and Local Government is DIRECTED to RESOLVE with
reasonable dispatch the appeal and petition for review of petitioners SPO3 NOEL CABADA and SPO3
RODOLFO G. DE GUZMAN, respectively, from the decision of 15 August 1994 and resolution of 25
October 1994 of the Regional Appellate Board, Eighth Regional Command, if the same were filed on
time.

No pronouncement as to costs. SO ORDERED.

DECLARADOR vs GUBATON

This is a Petition for Certiorari seeking to nullify the portion of the Decision 1 of the Regional Trial Court
(RTC), Roxas City, Branch 14, in Criminal Case No. C-1419-10-2002, suspending the sentence of
respondent Frank Bansales and ordering his commitment to the Regional Rehabilitation Center for Youth
at Concordia, Nueva Valencia, Guimaras.

Frank Bansales was born on June 3, 1985. He was a student at the Cabug-Cabug National High School
in President Roxas, Capiz. At around 9:45 a.m. on July 25, 2002, Yvonne Declarador was stabbed to
death. After conducting the autopsy on the cadaver, Rural Health Physician Pilar Posadas prepared a
Post-Mortem Certificate indicating that the victim sustained 15 stab wounds on different parts of the body.
2

On October 10, 2002, an Information charging Frank Bansales with murder was filed by the Assistant
Provincial Prosecutor with the Family Court. The accusatory portion reads:

That on or about 9:45 o’clock in the morning of July 25, 2002, inside a classroom in Cabug-Cabug
National High School in President Roxas, Capiz, Philippines, and within the jurisdiction of this Honorable
Court, the accused armed with a knife and with intent to kill, did then and there, willfully, unlawfully and
feloniously attack, assault and stab with the said knife [his] teacher, one YVONNE DECLARADOR,
thereby hitting and inflicting upon the latter multiple fatal stab wounds in the different parts of the body
which caused the immediate death of the said Yvonne Declarador.

The crime was committed with the attendance of the qualifying aggravating circumstances of evident
premeditation and abuse of superior strength considering that the attack was made by the accused using
a long knife which the latter carried along with him from his house to the school against his lady teacher
who was unarmed and defenseless at that time and by inflicting upon the latter about fifteen (15) fatal
knife wounds resulting to her death. 3

In view of the plea of the accused and the evidence presented, the RTC rendered judgment on May 20,
2003 finding Bansales guilty of murder. However, the court suspended the sentence of the accused and
ordered his commitment to the Regional Rehabilitation for Youth at Concordia, Nueva Valencia,
Guimaras. The dispositive portion of the decision reads:

In view of the Plea of Guilty by the accused and the evidence presented by the prosecution, the court
finds CICL Frank Bansales GUILTY beyond reasonable doubt of the crime of Murder being charged.
Being a minor, 17 years of age at the time of the commission of the offense charged, he is entitled to a
special mitigating circumstance of minority, and is sentenced to suffer an indeterminate imprisonment of
twelve (12) years and one (1) day to seventeen (17) years and four (4) month of reclusion temporal and
to pay the heirs of Yvonne Declarador, a civil indemnity of Seventy-Five Thousand Pesos (P75,000.00),
Fifty Thousand Pesos (P50,000.00) for moral damages, Forty-Three Thousand Pesos (P43,000.00) for
funeral expenses, attorney’s fee of One Hundred Thousand Pesos (P100,000.00) and unearned income
of One Million Three Hundred Seventy Thousand Pesos and Seventy Centavos (P1,370,000.70).

The parents (father and mother of juvenile Frank Bansales) and his teacher-in-charge at the Cabug-
Cabug National High School of President Roxas, Capiz, are jointly subsidiarily liable in case of
insolvency, as the crime was established to have been committed inside the classroom of Cabug-Cabug
National High School and during school hours.

Pursuant to the provision of P.D. 603, as amended, the sentence is suspended and the Child in conflict
with the law (CICL), Frank Bansales is ordered committed to the Regional Rehabilitation Center for Youth
at Concordia, Nueva Valencia, Guimaras.

Furnish copies of this decision the Office of the Provincial Prosecutor, the Private Prosecutors, the DSWD
Capiz Provincial Office, Roxas City, the Regional Rehabilitation for Youth, Concordia, Guimaras, the
accused and his counsel, Atty. Ramcez John Honrado.

SO ORDERED. 4

On June 2, 2003, the RTC set a preliminary conference for 10:00 a.m. of June 10, 2003 with the Public
Prosecutor, the Social Welfare Officer of the court, and the Officer-in-Charge of the Regional
Rehabilitation Center for Youth, considering that the accused would turn 18 on June 3, 2003. 5

Rennie Declarador, the surviving spouse of the deceased, filed a petition for certiorari under Rule 65 of
the Rules of Court assailing that portion of the decision of the trial court’s decision suspending the
sentence of the accused and committing him to the rehabilitation center.

Petitioner claimed that under Article 192 of Presidential Decree (P.D.) No. 603, as well as A.M. No. 02-1-
18-SC (otherwise known as the Rule on Juveniles in Conflict with the Law), the benefit of a suspended
sentence does not apply to a juvenile who is convicted of an offense punishable by death, 6 reclusion
perpetua or life imprisonment. Citing the ruling of this Court in People v. Ondo, 7 petitioner avers that
since Bansales was charged with murder punishable by reclusion perpetua to death, he is disqualified
from availing the benefits of a suspended sentence.

In his Comment, Bansales avers that petitioner has no standing to file the petition, considering that the
offense charged is a public crime brought in the name of the People of the Philippines; only the Office of
the Solicitor General (OSG) is authorized to file a petition in court assailing the order of the RTC which
suspended the service of his sentence. He further avers that Section 32 of A.M. No. 02-1-18-SC entitles
the accused to an automatic suspension of sentence and allows the court to commit the juvenile to the
youth center; hence, the court did not abuse its discretion in suspending the sentence of the accused.

In reply, petitioner maintains that he has sufficient personality to file the petition.

The OSG, for its part, posits that respondent’s sentence cannot be suspended since he was charged with
a capital offense punishable by reclusion perpetua to death. It insists that the entitlement of a juvenile to a
suspended sentence does not depend upon the sentence actually imposed by the trial court but upon the
imposable penalty for the crime charged as provided for by law.
The issues for resolution are the following: (1) whether petitioner has standing to file the petition; (2)
whether petitioner violated the doctrine of hierarchy of courts in filing his petition with this Court; and (3)
whether respondent court committed grave abuse of discretion amounting to excess or lack of jurisdiction
in ordering the suspension of the sentence of respondent Bansales and his commitment to the Regional
Rehabilitation Center for the Youth.

The petition is granted.

On the first issue, we rule for the petitioner. Being the surviving spouse of the deceased and the offended
party, he has sufficient personality to file the instant special civil action for certiorari. 8 This is in line with
the underlying spirit of the liberal construction of the Rules of Court in order to promote their object. 9
Moreover, the OSG has filed its comment on the petition and has joined the petitioner in his plea for the
nullification of the assailed portion of the RTC decision.

On the second issue, the rule is that a petition for review on certiorari which seeks to nullify an order of
the RTC should be filed in the Court of Appeals in aid of its appellate jurisdiction. 10 A direct invocation of
the original jurisdiction of the Court to issue writs of certiorari may be allowed only when there are special
and important reasons therefor clearly and specifically set out in the petition. 11 This is an established
policy necessary to prevent inordinate demands upon this Court’s time and attention which are better
devoted to those matters within its exclusive jurisdiction, and to prevent further overcrowding of the
Court’s docket. 12

However, in Fortich v. Corona, 13 the Court held that considering the nature and importance of the issues
raised and in the interest of speedy justice, and to avoid future litigations, the Court may take cognizance
of a petition for certiorari directly filed before it. 14 Moreover, this Court has suspended its own rules and
excepted a particular case from their operation whenever the interests of justice so require.

In this case, we resolve to take cognizance of the case, involving as it does a juvenile and the application
of the Rule on Juveniles in Conflict with the Law.

The charge against respondent Bansales was murder with the qualifying circumstance of either evident
premeditation or abuse of superior strength. Under Article 248 of the Revised Penal Code, as amended
by Republic Act (Rep. Act) No. 7659, the imposable penalty for the crime is reclusion perpetua to death.
The trial court found him guilty of murder.

Article 192 of P.D. No. 603, as amended, provides:

Art. 192. Suspension of Sentence and Commitment of Youthful Offender. – If after hearing the evidence
in the proper proceedings, the court should find that the youthful offender has committed the acts charged
against him, the court, shall determine the imposable penalty, including any civil liability chargeable
against him. However, instead of pronouncing judgment of conviction, the court, upon application of the
youthful offender and if it finds that the best interest of the public, as well as that of the offender will be
served thereby, may suspend all further proceedings and commit such minor to the custody or care of the
Department of Social Welfare and Development or to any training institution operated by the government
or any other responsible person until he shall have reached twenty-one years of age, or for a shorter
period as the court may deem proper, after considering the reports and recommendations of the
Department of Social Welfare and Development or the government training institution or responsible
person under whose care he has been committed.
Upon receipt of the application of the youthful offender for suspension of his sentence, the court may
require the Department of Social Welfare and Development to prepare and submit to the court a social
case study report over the offender and his family.

The youthful offender shall be subject to visitation and supervision by the representative of the
Department of Social Welfare and Development or government training institution as the court may
designate subject to such conditions as it may prescribe.

The benefits of this article shall not apply to a youthful offender who has once enjoyed suspension of
sentence under its provisions or to one who is convicted for an offense punishable by death or life
imprisonment or to one who is convicted for an offense by the Military Tribunals.

The law was reproduced in A.M. No. 02-1-18-SC where, except for those under paragraph 3, Section 32
of the law, the sentence of the accused is automatically suspended:

Sec. 32. Automatic Suspension of Sentence and Disposition Orders. – The sentence shall be suspended
without need of application by the juvenile in conflict with the law. The court shall set the case for
disposition conference within fifteen (15) days from the promulgation of sentence which shall be attended
by the social worker of the Family Court, the juvenile, and his parents or guardian ad litem. It shall
proceed to issue any or a combination of the following disposition measures best suited to the
rehabilitation and welfare of the juvenile: care, guidance, and supervision orders; Drug and alcohol
treatment; Participation in group counseling and similar activities; Commitment to the Youth Rehabilitation
Center of the DSWD or other centers for juvenile in conflict with the law authorized by the Secretary of
DSWD.

The Social Services and Counseling Division (SSCD) of the DSWD shall monitor the compliance by the
juvenile in conflict with the law with the disposition measure and shall submit regularly to the Family Court
a status and progress report on the matter. The Family Court may set a conference for the evaluation of
such report in the presence, if practicable, of the juvenile, his parents or guardian, and other persons
whose presence may be deemed necessary.

The benefits of suspended sentence shall not apply to a juvenile in conflict with the law who has once
enjoyed suspension of sentence, or to one who is convicted of an offense punishable by death, reclusion
perpetua or life imprisonment, or when at the time of promulgation of judgment the juvenile is already
eighteen (18) years of age or over.

Thus, it is clear that a person who is convicted of an offense punishable by death, life imprisonment, or
reclusion perpetua is disqualified from availing the benefits of a suspended sentence. "Punishable" is
defined as "deserving of, or capable, or liable to punishment; liable to be punished; may be punished;
liable to punishment." 15 The word "punishable" does not mean "must be punished," but "liable to be
punished" as specified. 16 In U.S. v. Villalon, 17 the Court defined punishable as "deserving of, or liable
for, punishment." Thus, the term refers to the possible, not to the actual sentence. It is concerned with the
penalty which may be, and not which is imposed.

The disqualification is based on the nature of the crime charged and the imposable penalty therefor, and
not on the penalty imposed by the court after trial. It is not the actual penalty imposed but the possible
one which determines the disqualification of a juvenile. 18 Despite the disqualification of Bansales,
respondent Judge, nevertheless, ordered the suspension of the sentence meted against him. By this act,
respondent Judge committed grave abuse of discretion amounting to excess of jurisdiction.

We note that, in the meantime, Rep. Act No. 9344 took effect on May 20, 2006. Section 38 of the law
reads:

SEC. 38. Automatic Suspension of Sentence. – Once the child who is under eighteen (18) years of age at
the time of the commission of the offense is found guilty of the offense charged, the court shall determine
and ascertain any civil liability which may have resulted from the offense committed. However, instead of
pronouncing the judgment of conviction, the court shall place the child in conflict with the law under
suspended sentence, without need of application: Provided, however, That suspension of sentence shall
still be applied even if the juvenile is already eighteen (18) years of age or more at the time of the
pronouncement of his/her guilt.

Upon suspension of sentence and after considering the various circumstances of the child, the court shall
impose the appropriate disposition measures as provided in the Supreme Court on Juveniles in Conflict
with the Law.

The law merely amended Article 192 of P.D. No. 603, as amended by A.M. No. 02-1-18-SC, in that the
suspension of sentence shall be enjoyed by the juvenile even if he is already 18 years of age or more at
the time of the pronouncement of his/her guilt. The other disqualifications in Article 192 of P.D. No. 603,
as amended, and Section 32 of A.M. No. 02-1-18-SC have not been deleted from Section 38 of Rep. Act
No. 9344. Evidently, the intention of Congress was to maintain the other disqualifications as provided in
Article 192 of P.D. No. 603, as amended, and Section 32 of A.M. No. 02-1-18-SC. Hence, juveniles who
have been convicted of a crime the imposable penalty for which is reclusion perpetua, life imprisonment
or reclusion perpetua to death or death, are disqualified from having their sentences suspended.

Case law has it that statutes in pari materia should be read and construed together because enactments
of the same legislature on the same subject are supposed to form part of one uniform system; later
statutes are supplementary or complimentary to the earlier enactments and in the passage of its acts the
legislature is supposed to have in mind the existing legislations on the subject and to have enacted the
new act with reference thereto. 19 Statutes in pari materia should be construed together to attain the
purpose of an expressed national policy. 20

IN LIGHT OF ALL THE FOREGOING, the petition is GRANTED. The Order of the respondent Judge
suspending the sentence of respondent Frank Bansales is NULLIFIED. SO ORDERED.

NAGA CITY vs AGNA

Petition for review on certiorari, which We treat as special civil action, of the decision of the Court of First
Instance of Camarines Sur in Civil Case No. 7084, entitled Agna, et al. versus City of Naga, et al.,
declaring Ordinance No. 360 of the City of Naga enforceable in 1971 the year following its approval and
requiring petitioners to pay to private respondents the amounts sought for in their complaint plus
attorney's fees and costs. Included in the present controversy as proper parties are Vicente P. Sibulo and
Joaquin C. Cleope, the City Mayor and City Treasurer of the City of Naga, respectively.

On June 15, 1970, the City of Naga enacted Ordinance No. 360 changing and amending the graduated
tax on quarterly gross sales of merchants prescribed in Section 3 of Ordinance No. 4 of the City of Naga
to percentage tax on gross sales provided for in Section 2 thereof. Pursuant to said ordinance, private
respondents paid to the City of Naga the following taxes on their gross sales for the quarter from July 1,
1970 to September 30, 1970, as follows:

Catalino Agna paid P1,805.17 as per Official Receipt No. 1826591;

Felipe Agna paid P625.00 as per Official Receipt No. 1826594; and

Salud Velasco paid P129.81 as per Official Receipt No. 1820339.

On February 13, 1971, private respondents filed with the City Treasurer of the City of Naga a claim for
refund of the following amounts, together with interests thereon from the date of payments: To Catalino
Agna, P1,555.17; to Felipe Agna, P560.00; and to Salud Velasco, P127.81, representing the difference
between the amounts they paid under Section 3, Ordinance No. 4 of the City of Naga, i.e., P250.00;
P65.00 and P12.00 respectively. They alleged that under existing law, Ordinance No. 360, which
amended Section 3, Ordinance No. 4 of the City of Naga, did not take effect in 1970, the year it was
approved but in the next succeeding year after the year of its approval, or in 1971, and that therefore, the
taxes they paid in 1970 on their gross sales for the quarter from July 1, 1970 to September 30, 1970 were
illegal and should be refunded to them by the petitioners.

The City Treasurer denied the claim for refund of the amounts in question. So private respondents filed a
complaint with the Court of First Instance of Naga (Civil Case No. 7084), seeking to have Ordinance No.
360 declared effective only in the year following the year of its approval, that is, in 1971; to have Sections
4, 6 and 8 of Ordinance No. 360 declared unjust, oppressive and arbitrary, and therefore, null and void;
and to require petitioners to refund the sums being claimed with interests thereon from the date the taxes
complained of were paid and to pay all legal costs and attorney's fees in the sum of P1,000.00. Private
respondents further prayed that the petitioners be enjoined from enforcing Ordinance No. 360.

In their answer, the petitioners among other things, claimed that private respondents were not
"compelled" but voluntarily made the payments of their taxes under Ordinance No. 360; that the said
ordinance was published in accordance with law; that in accordance with Republic Act No. 305 (Charter
of the City of Naga) an ordinance takes effect after the tenth day following its passage unless otherwise
stated in said ordinance; that under existing law the City of Naga is authorized to impose certain
conditions to secure and accomplish the collection of sales taxes in the most effective manner. As special
and affirmative defenses, the petitioners allege that the private respondents have no cause of action
against them; that granting that the collection of taxes can be enjoined. the complaint does not allege
facts sufficient to justify the issuance of a writ of preliminary injunction; that the refund prayed for by the
private respondents is untenable; that petitioners Vicente P. Sibulo and Joaquin C. Cleope, the City
Mayor and Treasurer of the City of Naga, respectively are not proper parties in interest; that the private
respondents are estopped from questioning the validity and/or constitutionality of the provisions of
Ordinance No. 360. Petitioners counterclaimed for P20,000.00 as exemplary damages, for the alleged
unlawful and malicious filing of the claim against them, in such amount as the court may determine.

During the hearing of the petition for the issuance of a writ of preliminary injunction and at the pre-trial
conference as well as at the trial on the merits of the case, the parties agreed on the following stipulation
of facts: That on June 15, 1970, the City Board of the City of Naga enacted Ordinance No. 360 entitled
"An ordinance repealing Ordinance No. 4, as amended, imposing a sales tax on the quarterly sales or
receipts on all businesses in the City of Naga," which ordinance was transmitted to the City Mayor for
approval or veto on June 25, 1970; that the ordinance was duly posted in the designated places by the
Secretary of the Municipal Board; that private respondents voluntarily paid the gross sales tax, pursuant
to Ordinance No. 360, but that on February 15, 1971, they filed a claim for refund with the City Treasurer
who denied the same.

On October 9, 1971, the respondent Judge rendered judgment holding that Ordinance No. 360, series of
1970 of the City of Naga was enforceable in the year following the date of its approval, that is, in 1971
and required the petitioners to reimburse the following sums, from the date they paid their taxes to the
City of Naga: to Catalino Agna, the sum of P1,555.17; to Felipe Agna, P560.00; and to Salud Velasco,
P127.81 and the corresponding interests from the filing of the complaint up to the reimbursement of the
amounts plus the sum of P500.00 as attorney's fees and the costs of the proceedings.

Petitioners' submit that Ordinance No. 360, series of 1970 of the City of Naga, took effect in the quarter of
the year of its approval, that is in July 1970, invoking Section 14 of Republic Act No. 305, 1 as amended,
otherwise known as the Charter of the City of Naga, which, among others, provides that "Each approved
ordinance ... shall take effect and be enforced on and after the 10th day following its passage unless
otherwise stated in said ordinance ... ". They contend that Ordinance No. 360 was enacted by the
Municipal Board of the City of Naga on June 15, 1970 2 and was transmitted to the City Mayor for his
approval or veto on June 25, 1970 3 but it was not acted upon by the City Mayor until August 4, 1970.
Ordinarily, pursuant to Section 14 of Republic Act No. 305, said ordinance should have taken effect after
the 10th day following its passage on June 15, 1970, or on June 25, 1970. But because the ordinance
itself provides that it shall take effect upon its approval, it becomes necessary to determine when
Ordinance No. 360 was deemed approved. According to the same Section 14 of Republic Act No. 305, "if
within 10 days after receipt of the ordinance the Mayor does not return it with his veto or approval 4 the
ordinance is deemed approved." Since the ordinance in question was not returned by the City Mayor with
his veto or approval within 10 days after he received it on June 25, 1970, the same was deemed
approved after the lapse of ten (10) days from June 25, 1970 or on July 6, 1970. On this date, the
petitioners claim that Ordinance No. 360 became effective. They further contend that even under Section
2, of Republic Act No. 2264 (Local Autonomy Acts) 5 which expressly provides: "A tax ordinance shall go
into effect on the fifteenth day after its passage unless the ordinance shall provide otherwise', Ordinance
No. 360 could have taken effect on June 30, 1970, which is the fifteenth day after its passage by the
Municipal Board of the City of Naga on June 15, 1970, or as earlier explained, it could have taken effect
on July 6, 1970, the date the ordinance was deemed approved because the ordinance itself provides that
it shall take effect upon its approval. Of the two provisions invoked by petitioners to support their stand
that the ordinance in question took effect in the year of its approval, it is Section 2 of Republic Act No.
2264 (Local Autonomy Act) that is more relevant because it is the provision that specifically refers to
effectivity of a tax ordinance and being a provision of much later law it is deemed to have superseded
Section 14 of Republic Act No. 305 (Charter of the City of Naga) in so far as effectivity of a tax ordinance
is concerned.

On the other hand, private respondents contend that Ordinance No. 360 became effective and
enforceable in 1971, the year following the year of its approval, invoking Section 2309 of the Revised
Administrative Code which provides:

Section 2309. Imposition of tax and duration of license.—A municipal license tax already in existence
shall be subject to change only by ordinance enacted prior to the 15th day of December of any year after
the next succeeding year, but an entirely new tax may be created by any ordinance enacted during the
quarter year effective at the beginning of any subsequent quarter.
They submit that since Ordinance No. 360, series of 1970 of the City of Naga, is one which changes the
existing graduated sales tax on gross sales or receipts of dealers of merchandise and sari-sari merchants
provided for in Ordinance No. 4 of the City of Naga to a percentage tax on their gross sales prescribed in
the questioned ordinance, the same should take effect in the next succeeding year after the year of its
approval or in 1971.

Evidently, the divergence of opinion as to when Ordinance No. 360 took effect and became enforceable is
mainly due to the seemingly apparent conflict between Section 2309 of the Revised Administrative Code
and Section 2 of Republic Act No. 2264 (Local Autonomy Act). Is there really such a conflict in the above-
mentioned provisions? It will be easily noted that Section 2309 of the Revised Administrative Code
contemplates of two types of municipal ordinances, namely: (1) a municipal ordinance which changes a
municipal license tax already in existence and (2) an ordinance which creates an entirely new tax. Under
the first type, a municipal license tax already in existence shall be subject to change only by an ordinance
enacted prior to the 15th day of December of any year after the next succeeding year. This means that
the ordinance enacted prior to the 15th day of December changing or repealing a municipal license tax
already in existence will have to take effect in next succeeding year. The evident purpose of the provision
is to enable the taxpayers to adjust themselves to the new charge or burden brought about by the new
ordinance. This is different from the second type of a municipal ordinance where an entirely new tax may
be created by any ordinance enacted during the quarter year to be effective at the beginning of any
subsequent quarter. We do not find any such distinction between an ordinance which changes a
municipal license tax already in existence and an ordinance creating an entirely new tax in Section 2 of
Republic Act No. 2264 (Local Autonomy Act) which merely refers to a "tax ordinance" without any
qualification whatsoever.

Now to the meat of the problem in this petition. Is not Section 2309 of the Revised Administrative Code
deemed repealed or abrogated by Section 2 of Republic Act No. 2264 (Local Autonomy Act) in so far as
effectivity of a tax ordinance is concerned? An examination of Republic Act No. 2264 (Local Autonomy
Act) fails to show any provision expressly repealing Section 2309 of the Revised Administrative Code. All
that is mentioned therein is Section 9 which reads:

Section 9 — All acts, executive orders, administrative orders, proclamations or parts thereof, inconsistent
with any of the provisions of this Act are hereby repealed and modified accordingly.

The foregoing provision does not amount to an express repeal of Section 2309 of the Revised
Administrative Code. It is a well established principle in statutory construction that a statute will not be
construed as repealing prior acts on the same subject in the absence of words to that effect unless there
is an irreconcilable repugnancy between them, or unless the new law is evidently intended to supersede
all prior acts on the matter in hand and to comprise itself the sole and complete system of legislation on
that subject. Every new statute should be construed in connection with those already existing in relation
to the same subject matter and all should be made to harmonize and stand together, if they can be done
by any fair and reasonable interpretation ... . 6 It will also be noted that Section 2309 of the Revised
Administrative Code and Section 2 of Republic Act No. 2264 (Local Autonomy Act) refer to the same
subject matter-enactment and effectivity of a tax ordinance. In this respect they can be considered in pari
materia. Statutes are said to be in pari materia when they relate to the same person or thing, or to the
same class of persons or things, or have the same purpose or object. 7 When statutes are in pari materia,
the rule of statutory construction dictates that they should be construed together. This is because
enactments of the same legislature on the same subject matter are supposed to form part of one uniform
system; that later statutes are supplementary or complimentary to the earlier enactments and in the
passage of its acts the legislature is supposed to have in mind the existing legislation on the same subject
and to have enacted its new act with reference thereto. 8 Having thus in mind the previous statutes
relating to the same subject matter, whenever the legislature enacts a new law, it is deemed to have
enacted the new provision in accordance with the legislative policy embodied in those prior statutes
unless there is an express repeal of the old and they all should be construed together. 9 In construing
them the old statutes relating to the same subject matter should be compared with the new provisions
and if possible by reasonable construction, both should be so construed that effect may be given to every
provision of each. However, when the new provision and the old relating to the same subject cannot be
reconciled the former shall prevail as it is the latter expression of the legislative will. 10 Actually we do not
see any conflict between Section 2309 of the Revised Administrative Code and Section 2 of the Republic
Act No. 2264 (Local Autonomy Act). The conflict, if any, is more apparent than real. It is one that is not
incapable of reconciliation. And the two provisions can be reconciled by applying the first clause of
Section 2309 of the Revised Administrative Code when the problem refers to the effectivity of an
ordinance changing or repealing a municipal license tax already in existence. But where the problem
refers to effectivity of an ordinance creating an entirely new tax, let Section 2 of Republic Act No. 2264
(Local Autonomy Act) govern.

In the case before Us, the ordinance in question is one which changes the graduated sales tax on gross
sales or receipts of dealers of merchandise and sari-sari merchants prescribed in Section 3 of Ordinance
No. 4 of the City of Naga to percentage tax on their gross sale-an ordinance which definitely falls within
the clause of Section 2309 of the Revised Administrative Code. Accordingly it should be effective and
enforceable in the next succeeding year after the year of its approval or in 1971 and private respondents
should be refunded of the taxes they have paid to the petitioners on their gross sales for the quarter from
July 1, 1970 to September 30, 1970 plus the corresponding interests from the filing of the complaint until
reimbursement of the amount.

IN VIEW OF THE FOREGOING, the instant petition is hereby dismissed. SO ORDERED.

RAMIREZ vs CA

A civil case damages was filed by petitioner Socorro D. Ramirez in the Regional Trial Court of Quezon
City alleging that the private respondent, Ester S. Garcia, in a confrontation in the latter's office, allegedly
vexed, insulted and humiliated her in a "hostile and furious mood" and in a manner offensive to
petitioner's dignity and personality," contrary to morals, good customs and public policy."1

In support of her claim, petitioner produced a verbatim transcript of the event and sought moral damages,
attorney's fees and other expenses of litigation in the amount of P610,000.00, in addition to costs,
interests and other reliefs awardable at the trial court's discretion. The transcript on which the civil case
was based was culled from a tape recording of the confrontation made by petitioner.2 The transcript
reads as follows:

Plaintiff Soccoro D. Ramirez (Chuchi) — Good Afternoon M'am.

Defendant Ester S. Garcia (ESG) — Ano ba ang nangyari sa 'yo, nakalimot ka na kung paano ka napunta
rito, porke member ka na, magsumbong ka kung ano ang gagawin ko sa 'yo.

CHUCHI — Kasi, naka duty ako noon.

ESG — Tapos iniwan no. (Sic)


CHUCHI — Hindi m'am, pero ilan beses na nila akong binalikan, sabing ganoon —

ESG — Ito and (sic) masasabi ko sa 'yo, ayaw kung (sic) mag explain ka, kasi hanggang 10:00 p.m.,
kinabukasan hindi ka na pumasok. Ngayon ako ang babalik sa 'yo, nag-aaply ka sa States, nag-aaply ka
sa review mo, kung kakailanganin ang certification mo, kalimutan mo na kasi hindi ka sa akin
makakahingi.

CHUCHI — Hindi M'am. Kasi ang ano ko talaga noon i-cocontinue ko up to 10:00 p.m.

ESG — Bastos ka, nakalimutan mo na kung paano ka pumasok dito sa hotel. Magsumbong ka sa
Union kung gusto mo. Nakalimutan mo na kung paano ka nakapasok dito "Do you think that on your own
makakapasok ka kung hindi ako. Panunumbyoyan na kita (Sinusumbatan na kita).

CHUCHI — Itutuloy ko na M'am sana ang duty ko.

ESG — Kaso ilang beses na akong binabalikan doon ng mga no (sic) ko.

ESG — Nakalimutan mo na ba kung paano ka pumasok sa hotel, kung on your own merit alam ko naman
kung gaano ka "ka bobo" mo. Marami ang nag-aaply alam kong hindi ka papasa.

CHUCHI — Kumuha kami ng exam noon.

ESG — Oo, pero hindi ka papasa.

CHUCHI — Eh, bakit ako ang nakuha ni Dr. Tamayo

ESG — Kukunin ka kasi ako.

CHUCHI — Eh, di sana —

ESG — Huwag mong ipagmalaki na may utak ka kasi wala kang utak. Akala mo ba makukuha ka dito
kung hindi ako.

CHUCHI — Mag-eexplain ako.

ESG — Huwag na, hindi ako mag-papa-explain sa 'yo, makaalala ka kung paano ka puma-rito. "Putang-
ina" sasabi-sabihin mo kamag-anak ng nanay at tatay mo ang mga magulang ko.

ESG — Wala na akong pakialam, dahil nandito ka sa loob, nasa labas ka puwede ka ng hindi pumasok,
okey yan nasaloob ka umalis ka doon.

CHUCHI — Kasi M'am, binbalikan ako ng mga taga Union.

ESG — Nandiyan na rin ako, pero huwag mong kalimutan na hindi ka makakapasok kung hindi ako.
Kung hindi mo kinikilala yan okey lang sa akin, dahil tapos ka na.

CHUCHI — Ina-ano ko m'am na utang na loob.


ESG — Huwag na lang, hindi mo utang na loob, kasi kung baga sa no, nilapastangan mo ako.

CHUCHI — Paano kita nilapastanganan?

ESG — Mabuti pa lumabas ka na. Hindi na ako makikipagusap sa 'yo. Lumabas ka na. Magsumbong
ka.3

As a result of petitioner's recording of the event and alleging that the said act of secretly taping the
confrontation was illegal, private respondent filed a criminal case before the Regional Trial Court of Pasay
City for violation of Republic Act 4200, entitled "An Act to prohibit and penalize wire tapping and other
related violations of private communication, and other purposes." An information charging petitioner of
violation of the said Act, dated October 6, 1988 is quoted herewith:

INFORMATION

The Undersigned Assistant City Fiscal Accusses Socorro D. Ramirez of Violation of Republic Act No.
4200, committed as follows:

That on or about the 22nd day of February, 1988, in Pasay City Metro Manila, Philippines, and within the
jurisdiction of this honorable court, the above-named accused, Socorro D. Ramirez not being authorized
by Ester S. Garcia to record the latter's conversation with said accused, did then and there willfully,
unlawfully and feloniously, with the use of a tape recorder secretly record the said conversation and
thereafter communicate in writing the contents of the said recording to other person.

Contrary to law.

Pasay City, Metro Manila, September 16, 1988.

MARIANO M. CUNETA
Asst. City Fiscal

Upon arraignment, in lieu of a plea, petitioner filed a Motion to Quash the Information on the ground that
the facts charged do not constitute an offense, particularly a violation of R.A. 4200. In an order May 3,
1989, the trial court granted the Motion to Quash, agreeing with petitioner that 1) the facts charged do not
constitute an offense under R.A. 4200; and that 2) the violation punished by R.A. 4200 refers to a the
taping of a communication by a person other than a participant to the communication.4

From the trial court's Order, the private respondent filed a Petition for Review on Certiorari with this Court,
which forthwith referred the case to the Court of Appeals in a Resolution (by the First Division) of June 19,
1989.

On February 9, 1990, respondent Court of Appeals promulgated its assailed Decision declaring the trial
court's order of May 3, 1989 null and void, and holding that:

[T]he allegations sufficiently constitute an offense punishable under Section 1 of R.A. 4200. In thus
quashing the information based on the ground that the facts alleged do not constitute an offense, the
respondent judge acted in grave abuse of discretion correctible by certiorari.5
Consequently, on February 21, 1990, petitioner filed a Motion for Reconsideration which respondent
Court of Appeals denied in its Resolution6 dated June 19, 1990. Hence, the instant petition.

Petitioner vigorously argues, as her "main and principal issue"7 that the applicable provision of Republic
Act 4200 does not apply to the taping of a private conversation by one of the parties to the conversation.
She contends that the provision merely refers to the unauthorized taping of a private conversation by a
party other than those involved in the communication.8 In relation to this, petitioner avers that the
substance or content of the conversation must be alleged in the Information, otherwise the facts charged
would not constitute a violation of R.A. 4200.9 Finally, petitioner agues that R.A. 4200 penalizes the
taping of a "private communication," not a "private conversation" and that consequently, her act of
secretly taping her conversation with private respondent was not illegal under the said act. 10

We disagree.

First, legislative intent is determined principally from the language of a statute. Where the language of a
statute is clear and unambiguous, the law is applied according to its express terms, and interpretation
would be resorted to only where a literal interpretation would be either impossible 11 or absurb or would
lead to an injustice. 12

Section 1 of R.A. 4200 entitled, " An Act to Prohibit and Penalized Wire Tapping and Other Related
Violations of Private Communication and Other Purposes," provides:

Sec. 1. It shall be unlawfull for any person, not being authorized by all the parties to any private
communication or spoken word, to tap any wire or cable, or by using any other device or arrangement, to
secretly overhear, intercept, or record such communication or spoken word by using a device commonly
known as a dictaphone or dictagraph or detectaphone or walkie-talkie or tape recorder, or however
otherwise described.

The aforestated provision clearly and unequivocally makes it illegal for any person, not authorized by all
the parties to any private communication to secretly record such communication by means of a tape
recorder. The law makes no distinction as to whether the party sought to be penalized by the statute
ought to be a party other than or different from those involved in the private communication. The statute's
intent to penalize all persons unauthorized to make such recording is underscored by the use of the
qualifier "any". Consequently, as respondent Court of Appeals correctly concluded, "even a (person) privy
to a communication who records his private conversation with another without the knowledge of the latter
(will) qualify as a violator" 13 under this provision of R.A. 4200.

A perusal of the Senate Congressional Records, moreover, supports the respondent court's conclusion
that in enacting R.A. 4200 our lawmakers indeed contemplated to make illegal, unauthorized tape
recording of private conversations or communications taken either by the parties themselves or by third
persons. Thus:

xxx xxx xxx

Senator Tañada: That qualified only "overhear".

Senator Padilla: So that when it is intercepted or recorded, the element of secrecy would not appear to be
material. Now, suppose, Your Honor, the recording is not made by all the parties but by some parties and
involved not criminal cases that would be mentioned under section 3 but would cover, for example civil
cases or special proceedings whereby a recording is made not necessarily by all the parties but perhaps
by some in an effort to show the intent of the parties because the actuation of the parties prior,
simultaneous even subsequent to the contract or the act may be indicative of their intention. Suppose
there is such a recording, would you say, Your Honor, that the intention is to cover it within the purview of
this bill or outside?

Senator Tañada: That is covered by the purview of this bill, Your Honor.

Senator Padilla: Even if the record should be used not in the prosecution of offense but as evidence to be
used in Civil Cases or special proceedings?

Senator Tañada: That is right. This is a complete ban on tape recorded conversations taken without the
authorization of all the parties.

Senator Padilla: Now, would that be reasonable, your Honor?

Senator Tañada: I believe it is reasonable because it is not sporting to record the observation of one
without his knowing it and then using it against him. It is not fair, it is not sportsmanlike. If the purpose;
Your honor, is to record the intention of the parties. I believe that all the parties should know that the
observations are being recorded.

Senator Padilla: This might reduce the utility of recorders.

Senator Tañada: Well no. For example, I was to say that in meetings of the board of directors where a
tape recording is taken, there is no objection to this if all the parties know. It is but fair that the people
whose remarks and observations are being made should know that the observations are being recorded.

Senator Padilla: Now, I can understand.

Senator Tañada: That is why when we take statements of persons, we say: "Please be informed that
whatever you say here may be used against you." That is fairness and that is what we demand. Now, in
spite of that warning, he makes damaging statements against his own interest, well, he cannot complain
any more. But if you are going to take a recording of the observations and remarks of a person without
him knowing that it is being taped or recorded, without him knowing that what is being recorded may be
used against him, I think it is unfair.

xxx xxx xxx

(Congression Record, Vol. III, No. 31, p. 584, March 12, 1964)

Senator Diokno: Do you understand, Mr. Senator, that under Section 1 of the bill as now worded, if a
party secretly records a public speech, he would be penalized under Section 1? Because the speech is
public, but the recording is done secretly.

Senator Tañada: Well, that particular aspect is not contemplated by the bill. It is the communication
between one person and another person — not between a speaker and a public.

xxx xxx xxx


(Congressional Record, Vol. III, No. 33, p. 626, March 12, 1964)

xxx xxx xxx

The unambiguity of the express words of the provision, taken together with the above-quoted
deliberations from the Congressional Record, therefore plainly supports the view held by the respondent
court that the provision seeks to penalize even those privy to the private communications. Where the law
makes no distinctions, one does not distinguish.

Second, the nature of the conversations is immaterial to a violation of the statute. The substance of the
same need not be specifically alleged in the information. What R.A. 4200 penalizes are the acts of
secretly overhearing, intercepting or recording private communications by means of the devices
enumerated therein. The mere allegation that an individual made a secret recording of a private
communication by means of a tape recorder would suffice to constitute an offense under Section 1 of
R.A. 4200. As the Solicitor General pointed out in his COMMENT before the respondent court: "Nowhere
(in the said law) is it required that before one can be regarded as a violator, the nature of the
conversation, as well as its communication to a third person should be professed." 14

Finally, petitioner's contention that the phrase "private communication" in Section 1 of R.A. 4200 does not
include "private conversations" narrows the ordinary meaning of the word "communication" to a point of
absurdity. The word communicate comes from the latin word communicare, meaning "to share or to
impart." In its ordinary signification, communication connotes the act of sharing or imparting signification,
communication connotes the act of sharing or imparting, as in a conversation, 15 or signifies the "process
by which meanings or thoughts are shared between individuals through a common system of symbols (as
language signs or gestures)" 16 These definitions are broad enough to include verbal or non-verbal,
written or expressive communications of "meanings or thoughts" which are likely to include the
emotionally-charged exchange, on February 22, 1988, between petitioner and private respondent, in the
privacy of the latter's office. Any doubts about the legislative body's meaning of the phrase "private
communication" are, furthermore, put to rest by the fact that the terms "conversation" and
"communication" were interchangeably used by Senator Tañada in his Explanatory Note to the bill quoted
below:

It has been said that innocent people have nothing to fear from their conversations being overheard. But
this statement ignores the usual nature of conversations as well the undeniable fact that most, if not all,
civilized people have some aspects of their lives they do not wish to expose. Free conversations are often
characterized by exaggerations, obscenity, agreeable falsehoods, and the expression of anti-social
desires of views not intended to be taken seriously. The right to the privacy of communication, among
others, has expressly been assured by our Constitution. Needless to state here, the framers of our
Constitution must have recognized the nature of conversations between individuals and the significance
of man's spiritual nature, of his feelings and of his intellect. They must have known that part of the
pleasures and satisfactions of life are to be found in the unaudited, and free exchange of communication
between individuals — free from every unjustifiable intrusion by whatever means.17

In Gaanan vs. Intermediate Appellate Court, 18 a case which dealt with the issue of telephone
wiretapping, we held that the use of a telephone extension for the purpose of overhearing a private
conversation without authorization did not violate R.A. 4200 because a telephone extension devise was
neither among those "device(s) or arrangement(s)" enumerated therein, 19 following the principle that
"penal statutes must be construed strictly in favor of the accused."20 The instant case turns on a different
note, because the applicable facts and circumstances pointing to a violation of R.A. 4200 suffer from no
ambiguity, and the statute itself explicitly mentions the unauthorized "recording" of private
communications with the use of tape-recorders as among the acts punishable.

WHEREFORE, because the law, as applied to the case at bench is clear and unambiguous and leaves
us with no discretion, the instant petition is hereby DENIED. The decision appealed from is AFFIRMED.
Costs against petitioner. SO ORDERED.

GARVIDA vs SALES

Petitioner Lynette G. Garvida seeks to annul and set aside the order dated May 2, 1996 of respondent
Commission on Elections (COMELEC) en banc suspending her proclamation as the duly elected
Chairman of the Sangguniang Kabataan of Barangay San Lorenzo, Municipality of Bangui, Ilocos Norte.

The facts are undisputed. The Sangguniang Kabataan (SK) elections nationwide was scheduled to be
held on May 6, 1996. On March 16, 1996, petitioner applied for registration as member and voter of the
Katipunan ng Kabataan of Barangay San Lorenzo, Bangui, Ilocos Norte. The Board of Election Tellers,
however, denied her application on the ground that petitioner, who was then twenty-one years and ten
(10) months old, exceeded the age limit for membership in the Katipunan ng Kabataan as laid down in
Section 3 [b] of COMELEC Resolution No. 2824.

On April 2, 1996, petitioner filed a "Petition for Inclusion as Registered Kabataang Member and Voter"
with the Municipal Circuit Trial Court, Bangui-Pagudpud-Adams-Damalneg, Ilocos Norte. In a decision
dated April 18, 1996, the said court found petitioner qualified and ordered her registration as member and
voter in the Katipunan ng Kabataan.[1] The Board of Election Tellers appealed to the Regional Trial
Court, Bangui, Ilocos Norte.[2] The presiding judge of the Regional Trial Court, however, inhibited himself
from acting on the appeal due to his close association with petitioner.[3]

On April 23, 1996, petitioner filed her certificate of candidacy for the position of Chairman, Sangguniang
Kabataan, Barangay San Lorenzo, Municipality of Bangui, Province of Ilocos Norte. In a letter dated April
23, 1996, respondent Election Officer Dionisio F. Rios, per advice of Provincial Election Supervisor Noli
Pipo,[4] disapproved petitioner's certificate of candidacy again due to her age.[5] Petitioner, however,
appealed to COMELEC Regional Director Filemon A. Asperin who set aside the order of respondents and
allowed petitioner to run.[6]

On May 2, 1996, respondent Rios issued a memorandum to petitioner informing her of her ineligibility and
giving her 24 hours to explain why her certificate of candidacy should not be disapproved.[7] Earlier and
without the knowledge of the COMELEC officials, private respondent Florencio G. Sales, Jr., a rival
candidate for Chairman of the Sangguniang Kabataan, filed with the COMELEC en banc a "Petition of
Denial and/or Cancellation of Certificate of Candidacy" against petitioner Garvida for falsely representing
her age qualification in her certificate of candidacy. The petition was sent by facsimile[8] and registered
mail on April 29, 1996 to the Commission on Elections National Office, Manila.

On May 2, 1996, the same day respondent Rios issued the memorandum to petitioner, the COMELEC en
banc issued an order directing the Board of Election Tellers and Board of Canvassers of Barangay San
Lorenzo to suspend the proclamation of petitioner in the event she won in the election. The order reads
as follows:
"Acting on the Fax "Petition for Denial And/Or Cancellation of Certificate of Candidacy" by petitioner
Florencio G. Sales, Jr. against Lynette G. Garvida, received on April 29, 1996, the pertinent allegations of
which reads:

xxx

5. That the said respondent is disqualified to become a voter and a candidate for the SK for the reason
that she will be more than twenty-one (21) years of age on May 6, 1996; that she was born on June 11,
1974 as can be gleaned from her birth certificate, a copy of which is hereto attached and marked as
Annex "A";

6. That in filing her certificate of candidacy as candidate for SK of Bgy. San Lorenzo, Bangui, Ilocos
Norte, she made material representation which is false and as such, she is disqualified; that her certificate
of candidacy should not be given due course and that said candidacy must be cancelled;

x x x."

the Commission, it appearing that the petition is meritorious, hereby DIRECTS the Board of Election
Tellers/Board of Canvassers of Barangay San Lorenzo, Bangui, Ilocos Norte, to suspend the
proclamation of Lynette G. Garvida in the event she garners the highest number of votes for the position
of Sangguniang Kabataan [sic].

Meantime, petitioner is hereby required to submit immediately ten (10) copies of his petition and to pay
the filing and legal research fees in the amount of P510.00.

SO ORDERED."[9]

On May 6, 1996, election day, petitioner garnered 78 votes as against private respondent's votes of
76.[10] In accordance with the May 2, 1996 order of the COMELEC en banc, the Board of Election Tellers
did not proclaim petitioner as the winner. Hence, the instant petition for certiorari was filed on May 27,
1996.

On June 2, 1996, however, the Board of Election Tellers proclaimed petitioner the winner for the position
of SK chairman, Barangay San Lorenzo, Bangui, Ilocos Norte.[11] The proclamation was "without
prejudice to any further action by the Commission on Elections or any other interested party."[12] On July
5, 1996, petitioner ran in the Pambayang Pederasyon ng mga Sangguniang Kabataan for the municipality
of Bangui, Ilocos Norte. She won as Auditor and was proclaimed one of the elected officials of the
Pederasyon.[13]

Petitioner raises two (2) significant issues: the first concerns the jurisdiction of the COMELEC en banc to
act on the petition to deny or cancel her certificate of candidacy; the second, the cancellation of her
certificate of candidacy on the ground that she has exceeded the age requirement to run as an elective
official of the SK.

Section 532 (a) of the Local Government Code of 1991 provides that the conduct of the SK elections is
under the supervision of the COMELEC and shall be governed by the Omnibus Election Code.[14] The
Omnibus Election Code, in Section 78, Article IX, governs the procedure to deny due course to or cancel
a certificate of candidacy, viz:

"Sec. 78. Petition to deny due course to or cancel a certificate of candidacy. -- A verified petition seeking
to deny due course or to cancel a certificate of candidacy may be filed by any person exclusively on the
ground that any material representation contained therein as required under Section 74 hereof is false.
The petition may be filed at any time not later than twenty-five days from the time of filing of the certificate
of candidacy and shall be decided, after due notice and hearing, not later than fifteen days before
election."

In relation thereto, Rule 23 of the COMELEC Rules of Procedure provides that a petition to deny due
course to or cancel a certificate of candidacy for an elective office may be filed with the Law Department
of the COMELEC on the ground that the candidate has made a false material representation in his
certificate. The petition may be heard and evidence received by any official designated by the COMELEC
after which the case shall be decided by the COMELEC itself.[15]

Under the same Rules of Procedure, jurisdiction over a petition to cancel a certificate of candidacy lies
with the COMELEC sitting in Division, not en banc. Cases before a Division may only be entertained by
the COMELEC en banc when the required number of votes to reach a decision, resolution, order or ruling
is not obtained in the Division. Moreover, only motions to reconsider decisions, resolutions, orders or
rulings of the COMELEC in Division are resolved by the COMELEC en banc.[16] It is therefore the
COMELEC sitting in Divisions that can hear and decide election cases. This is clear from Section 3 of the
said Rules thus:

"Sec. 3. The Commission Sitting in Divisions. -- The Commission shall sit in two (2) Divisions to hear and
decide protests or petitions in ordinary actions, special actions, special cases, provisional remedies,
contempt and special proceedings except in accreditation of citizens' arms of the Commission."[17]

In the instant case, the COMELEC en banc did not refer the case to any of its Divisions upon receipt of
the petition. It therefore acted without jurisdiction or with grave abuse of discretion when it entertained the
petition and issued the order of May 2, 1996.[18]

II

The COMELEC en banc also erred when it failed to note that the petition itself did not comply with the
formal requirements of pleadings under the COMELEC Rules of Procedure. These requirements are:

"Sec. 1. Filing of Pleadings. -- Every pleading, motion and other papers must be filed in ten (10) legible
copies. However, when there is more than one respondent or protestee, the petitioner or protestant must
file additional number of copies of the petition or protest as there are additional respondents or
protestees.

Sec. 2. How Filed. -- The documents referred to in the immediately preceding section must be filed
directly with the proper Clerk of Court of the Commission personally, or, unless otherwise provided in
these Rules, by registered mail. In the latter case, the date of mailing is the date of filing and the
requirement as to the number of copies must be complied with.

Sec. 3. Form of Pleadings, etc. -- (a) All pleadings allowed by these Rules shall be printed,
mimeographed or typewritten on legal size bond paper and shall be in English or Filipino.
x x x."

Every pleading before the COMELEC must be printed, mimeographed or typewritten in legal size bond
paper and filed in at least ten (10) legible copies. Pleadings must be filed directly with the proper Clerk of
Court of the COMELEC personally, or, by registered mail.

In the instant case, the subject petition was not in proper form. Only two (2) copies of the petition were
filed with the COMELEC.[19] Also, the COMELEC en banc issued its Resolution on the basis of the
petition transmitted by facsimile, not by registered mail.

A facsimile or fax transmission is a process involving the transmission and reproduction of printed and
graphic matter by scanning an original copy, one elemental area at a time, and representing the shade or
tone of each area by a specified amount of electric current.[20] The current is transmitted as a signal over
regular telephone lines or via microwave relay and is used by the receiver to reproduce an image of the
elemental area in the proper position and the correct shade.[21] The receiver is equipped with a stylus or
other device that produces a printed record on paper referred to as a facsimile.[22]

Filing a pleading by facsimile transmission is not sanctioned by the COMELEC Rules of Procedure, much
less by the Rules of Court. A facsimile is not a genuine and authentic pleading. It is, at best, an exact
copy preserving all the marks of an original.[23]

Without the original, there is no way of determining on its face whether the facsimile pleading is genuine
and authentic and was originally signed by the party and his counsel. It may, in fact, be a sham pleading.
The uncertainty of the authenticity of a facsimile pleading should have restrained the COMELEC en banc
from acting on the petition and issuing the questioned order. The COMELEC en banc should have waited
until it received the petition filed by registered mail.

III

To write finis to the case at bar, we shall now resolve the issue of petitioner's age.

The Katipunan ng Kabataan was originally created by Presidential Decree No. 684 in 1975 as the
Kabataang Barangay, a barangay youth organization composed of all residents of the barangay who
were at least 15 years but less than 18 years of age.[24]

The Kabataang Barangay sought to provide its members a medium to express their views and opinions
and participate in issues of transcendental importance.[25] Its affairs were administered by a barangay
youth chairman together with six barangay youth leaders who were actual residents of the barangay and
were at least 15 years but less than 18 years of age.[26] In 1983, Batas Pambansa Blg. 337, then the
Local Government Code, raised the maximum age of the Kabataang Barangay members from "less than
18 years of age" to "not more than 21 years of age."

The Local Government Code of 1991 changed the Kabataang Barangay into the Katipunan ng Kabataan.
It, however, retained the age limit of the members laid down in B.P. 337 at 15 but not more than 21 years
old.[27] The affairs of the Katipunan ng Kabataan are administered by the Sangguniang Kabataan (SK)
composed of a chairman and seven (7) members who are elected by the Katipunan ng Kabataan.[28]
The chairman automatically becomes ex-officio member of the Sangguniang Barangay.[29] A member of
the SK holds office for a term of three (3) years, unless sooner removed for cause, or becomes
permanently incapacitated, dies or resigns from office.[30]

Membership in the Katipunan ng Kabataan is subject to specific qualifications laid down by the Local
Government Code of 1991, viz:

"Sec. 424. Katipunan ng Kabataan. -- The katipunan ng kabataan shall be composed of all citizens of the
Philippines actually residing in the barangay for at least six (6) months, who are fifteen (15) but not more
than twenty-one (21) years of age, and who are duly registered in the list of the sangguniang kabataan or
in the official barangay list in the custody of the barangay secretary."

A member of the Katipunan ng Kabataan may become a candidate for the Sangguniang Kabataan if he
possesses the following qualifications:

"Sec. 428. Qualifications. -- An elective official of the sangguniang kabataan must be a citizen of the
Philippines, a qualified voter of the katipunan ng kabataan, a resident of the barangay for at least one (1)
year immediately prior to election, at least fifteen (15) years but not more than twenty-one (21) years of
age on the day of his election, able to read and write Filipino, English, or the local dialect, and must not
have been convicted of any crime involving moral turpitude."

Under Section 424 of the Local Government Code, a member of the Katipunan ng Kabataan must be: (a)
a Filipino citizen; (b) an actual resident of the barangay for at least six months; (c) 15 but not more than
21 years of age; and (d) duly registered in the list of the Sangguniang Kabataan or in the official barangay
list. Section 428 of the Code requires that an elective official of the Sangguniang Kabataan must be: (a) a
Filipino citizen; (b) a qualified voter in the Katipunan ng Kabataan; (c) a resident of the barangay at least
one (1) year immediately preceding the election; (d) at least 15 years but not more than 21 years of age
on the day of his election; (e) able to read and write; and (f) must not have been convicted of any crime
involving moral turpitude.

For the May 6, 1996 SK elections, the COMELEC interpreted Sections 424 and 428 of the Local
Government Code of 1991 in Resolution No. 2824 and defined how a member of the Katipunan ng
Kabataan becomes a qualified voter and an elective official. Thus:

"Sec. 3. Qualifications of a voter. -- To be qualified to register as a voter in the SK elections, a person


must be:

a) a citizen of the Philippines;

b) fifteen (15) but not more than twenty-one (21) years of age on election day, that is, he must have been
born between May 6, 1975 and May 6, 1981, inclusive; and

c) a resident of the Philippines for at least one (1) year and actually residing in the barangay wherein he
proposes to vote for at least six (6) months immediately preceding the elections."

xxx

"Sec. 6. Qualifications of elective members. -- An elective official of the SK must be:


a) a qualified voter;

b) a resident in the barangay for at least one (1) year immediately prior to the elections; and

c) able to read and write Filipino or any Philippine language or dialect or English.

Cases involving the eligibility or qualification of candidates shall be decided by the city/municipal Election
Officer (EO) whose decision shall be final."

A member of the Katipunan ng Kabataan may be a qualified voter in the May 6, 1996 SK elections if he
is: (a) a Filipino citizen; (b) 15 but not more than 21 years of age on election day, i.e., the voter must be
born between May 6, 1975 and May 6, 1981, inclusive; and (c) a resident of the Philippines for at least
one (1) year and an actual resident of the barangay at least six (6) months immediately preceding the
elections. A candidate for the SK must: (a) possess the foregoing qualifications of a voter; (b) be a
resident in the barangay at least one (1) year immediately preceding the elections; and (c) able to read
and write.

Except for the question of age, petitioner has all the qualifications of a member and voter in the Katipunan
ng Kabataan and a candidate for the Sangguniang Kabataan. Petitioner's age is admittedly beyond the
limit set in Section 3 [b] of COMELEC Resolution No. 2824. Petitioner, however, argues that Section 3 [b]
of Resolution No. 2824 is unlawful, ultra vires and beyond the scope of Sections 424 and 428 of the Local
Government Code of 1991. She contends that the Code itself does not provide that the voter must be
exactly 21 years of age on election day. She urges that so long as she did not turn twenty-two (22) years
old, she was still twenty-one years of age on election day and therefore qualified as a member and voter
in the Katipunan ng Kabataan and as candidate for the SK elections.

A closer look at the Local Government Code will reveal a distinction between the maximum age of a
member in the Katipunan ng Kabataan and the maximum age of an elective SK official. Section 424 of
the Code sets a member's maximum age at 21 years only. There is no further provision as to when the
member shall have turned 21 years of age. On the other hand, Section 428 provides that the maximum
age of an elective SK official is 21 years old "on the day of his election." The addition of the phrase "on
the day of his election" is an additional qualification. The member may be more than 21 years of age on
election day or on the day he registers as member of the Katipunan ng Kabataan. The elective official,
however, must not be more than 21 years old on the day of election. The distinction is understandable
considering that the Code itself provides more qualifications for an elective SK official than for a member
of the Katipunan ng Kabataan. Dissimilum dissimilis est ratio.[31] The courts may distinguish when there
are facts and circumstances showing that the legislature intended a distinction or qualification.[32]

The qualification that a voter in the SK elections must not be more than 21 years of age on the day of the
election is not provided in Section 424 of the Local Government Code of 1991. In fact the term "qualified
voter" appears only in COMELEC Resolution No. 2824.[33] Since a "qualified voter" is not necessarily an
elective official, then it may be assumed that a "qualified voter" is a "member of the Katipunan ng
Kabataan." Section 424 of the Code does not provide that the maximum age of a member of the
Katipunan ng Kabataan is determined on the day of the election. Section 3 [b] of COMELEC Resolution
No. 2824 is therefore ultra vires insofar as it sets the age limit of a voter for the SK elections at exactly 21
years on the day of the election.

The provision that an elective official of the SK should not be more than 21 years of age on the day of his
election is very clear. The Local Government Code speaks of years, not months nor days. When the law
speaks of years, it is understood that years are of 365 days each.[34] One born on the first day of the
year is consequently deemed to be one year old on the 365th day after his birth -- the last day of the
year.[35] In computing years, the first year is reached after completing the first 365 days. After the first
365th day, the first day of the second 365-day cycle begins. On the 365th day of the second cycle, the
person turns two years old. This cycle goes on and on in a lifetime. A person turns 21 years old on the
365th day of his 21st 365-day cycle. This means on his 21st birthday, he has completed the entire span
of 21 365-day cycles. After this birthday, the 365-day cycle for his 22nd year begins. The day after the
365th day is the first day of the next 365-day cycle and he turns 22 years old on the 365th day.

The phrase "not more than 21 years of age" means not over 21 years, not beyond 21 years. It means 21
365-day cycles. It does not mean 21 years and one or some days or a fraction of a year because that
would be more than 21 365-day cycles. "Not more than 21 years old" is not equivalent to "less than 22
years old," contrary to petitioner's claims. The law does not state that the candidate be less than 22 years
on election day.

In P.D. 684, the law that created the Kabataang Barangay, the age qualification of a barangay youth
official was expressly stated as "x x x at least fifteen years of age or over but less than eighteen x x x."[36]
This provision clearly states that the youth official must be at least 15 years old and may be 17 years and
a fraction of a year but should not reach the age of eighteen years. When the Local Government Code
increased the age limit of members of the youth organization to 21 years, it did not reenact the provision
in such a way as to make the youth "at least 15 but less than 22 years old." If the intention of the Code's
framers was to include citizens less than 22 years old, they should have stated so expressly instead of
leaving the matter open to confusion and doubt.[37]

Former Senator Aquilino Q. Pimentel, the sponsor and principal author of the Local Government Code of
1991 declared that one of the reasons why the Katipunan ng Kabataan was created and the Kabataang
Barangay discontinued was because most, if not all, Kabataang Barangay leaders were already over 21
years of age by the time President Aquino assumed power.[38] They were not the "youth" anymore. The
Local Government Code of 1991 fixed the maximum age limit at not more than 21 years[39] and the only
exception is in the second paragraph of Section 423 which reads:

"Sec. 423. Creation and Election. -- a) x x x;

b) A sangguniang kabataan official who, during his term of office, shall have passed the age of twenty-
one (21) years shall be allowed to serve the remaining portion of the term for which he was elected."

The general rule is that an elective official of the Sangguniang Kabataan must not be more than 21 years
of age on the day of his election. The only exception is when the official reaches the age of 21 years
during his incumbency. Section 423 [b] of the Code allows him to serve the remaining portion of the term
for which he was elected. According to Senator Pimentel, the youth leader must have "been elected prior
to his 21st birthday."[40] Conversely, the SK official must not have turned 21 years old before his election.
Reading Section 423 [b] together with Section 428 of the Code, the latest date at which an SK elective
official turns 21 years old is on the day of his election. The maximum age of a youth official must therefore
be exactly 21 years on election day. Section 3 [b] in relation to Section 6 [a] of COMELEC Resolution No.
2824 is not ultra vires insofar as it fixes the maximum age of an elective SK official on the day of his
election.

In the case at bar, petitioner was born on June 11, 1974. On March 16, 1996, the day she registered as
voter for the May 6, 1996 SK elections, petitioner was twenty-one (21) years and nine (9) months old. On
the day of the elections, she was 21 years, 11 months and 5 days old. When she assumed office on June
1, 1996, she was 21 years, 11 months and 20 days old and was merely ten (10) days away from turning
22 years old. Petitioner may have qualified as a member of the Katipunan ng Kabataan but definitely,
petitioner was over the age limit for elective SK officials set by Section 428 of the Local Government
Code and Sections 3 [b] and 6 of Comelec Resolution No. 2824. She was ineligible to run as candidate
for the May 6, 1996 Sangguniang Kabataan elections.

The requirement that a candidate possess the age qualification is founded on public policy and if he lacks
the age on the day of the election, he can be declared ineligible.[41]

In the same vein, if the candidate is over the maximum age limit on the day of the election, he is ineligible.
The fact that the candidate was elected will not make the age requirement directory, nor will it validate his
election.[42] The will of the people as expressed through the ballot cannot cure the vice of ineligibility.[43]

The ineligibility of petitioner does not entitle private respondent, the candidate who obtained the highest
number of votes in the May 6, 1996 elections, to be declared elected.[44] A defeated candidate cannot be
deemed elected to the office.[45] Moreover, despite his claims,[46] private respondent has failed to prove
that the electorate themselves actually knew of petitioner's ineligibility and that they maliciously voted for
her with the intention of misapplying their franchises and throwing away their votes for the benefit of her
rival candidate.[47]

Neither can this Court order that pursuant to Section 435 of the Local Government Code petitioner should
be succeeded by the Sangguniang Kabataan member who obtained the next highest number of votes in
the May 6, 1996 elections.[48] Section 435 applies when a Sangguniang Kabataan Chairman "refuses to
assume office, fails to qualify,[49] is convicted of a felony, voluntarily resigns, dies, is permanently
incapacitated, is removed from office, or has been absent without leave for more than three (3)
consecutive months."

The question of the age qualification is a question of eligibility.[50]

Being "eligible" means being "legally qualified; capable of being legally chosen."[51]

Ineligibility, on the other hand, refers to the lack of the qualifications prescribed in the Constitution or the
statutes for holding public office.[52] Ineligibility is not one of the grounds enumerated in Section 435 for
succession of the SK Chairman.

To avoid a hiatus in the office of SK Chairman, the Court deems it necessary to order that the vacancy be
filled by the SK member chosen by the incumbent SK members of Barangay San Lorenzo, Bangui, Ilocos
Norte by simple majority from among themselves. The member chosen shall assume the office of SK
Chairman for the unexpired portion of the term, and shall discharge the powers and duties, and enjoy the
rights and privileges appurtenant to said office.

IN VIEW WHEREOF, the petition is dismissed and petitioner Lynette G. Garvida is declared ineligible for
being over the age qualification for candidacy in the May 6, 1996 elections of the Sangguniang Kabataan,
and is ordered to vacate her position as Chairman of the Sangguniang Kabataan of Barangay San
Lorenzo, Bangui, Ilocos Norte. The Sangguniang Kabataan member voted by simple majority by and from
among the incumbent Sangguniang Kabataan members of Barangay San Lorenzo, Bangui, Ilocos Norte
shall assume the office of Sangguniang Kabataan Chairman of Barangay San Lorenzo, Bangui, Ilocos
Norte for the unexpired portion of the term. SO ORDERED.
VICTORIAS MILLING vs SOCIAL SECURITY COMM

On October 15, 1958, the Social Security Commission issued its Circular No. 22 of the following tenor: .

Effective November 1, 1958, all Employers in computing the premiums due the System, will take into
consideration and include in the Employee's remuneration all bonuses and overtime pay, as well as the
cash value of other media of remuneration. All these will comprise the Employee's remuneration or
earnings, upon which the 3-1/2% and 2-1/2% contributions will be based, up to a maximum of P500 for
any one month.

Upon receipt of a copy thereof, petitioner Victorias Milling Company, Inc., through counsel, wrote the
Social Security Commission in effect protesting against the circular as contradictory to a previous Circular
No. 7, dated October 7, 1957 expressly excluding overtime pay and bonus in the computation of the
employers' and employees' respective monthly premium contributions, and submitting, "In order to assist
your System in arriving at a proper interpretation of the term 'compensation' for the purposes of" such
computation, their observations on Republic Act 1161 and its amendment and on the general
interpretation of the words "compensation", "remuneration" and "wages". Counsel further questioned the
validity of the circular for lack of authority on the part of the Social Security Commission to promulgate it
without the approval of the President and for lack of publication in the Official Gazette.

Overruling these objections, the Social Security Commission ruled that Circular No. 22 is not a rule or
regulation that needed the approval of the President and publication in the Official Gazette to be effective,
but a mere administrative interpretation of the statute, a mere statement of general policy or opinion as to
how the law should be construed.

Not satisfied with this ruling, petitioner comes to this Court on appeal.

The single issue involved in this appeal is whether or not Circular No. 22 is a rule or regulation, as
contemplated in Section 4(a) of Republic Act 1161 empowering the Social Security Commission "to
adopt, amend and repeal subject to the approval of the President such rules and regulations as may be
necessary to carry out the provisions and purposes of this Act."

There can be no doubt that there is a distinction between an administrative rule or regulation and an
administrative interpretation of a law whose enforcement is entrusted to an administrative body. When an
administrative agency promulgates rules and regulations, it "makes" a new law with the force and effect of
a valid law, while when it renders an opinion or gives a statement of policy, it merely interprets a pre-
existing law (Parker, Administrative Law, p. 197; Davis, Administrative Law, p. 194). Rules and
regulations when promulgated in pursuance of the procedure or authority conferred upon the
administrative agency by law, partake of the nature of a statute, and compliance therewith may be
enforced by a penal sanction provided in the law. This is so because statutes are usually couched in
general terms, after expressing the policy, purposes, objectives, remedies and sanctions intended by the
legislature. The details and the manner of carrying out the law are often times left to the administrative
agency entrusted with its enforcement. In this sense, it has been said that rules and regulations are the
product of a delegated power to create new or additional legal provisions that have the effect of law.
(Davis, op. cit., p. 194.) .
A rule is binding on the courts so long as the procedure fixed for its promulgation is followed and its scope
is within the statutory authority granted by the legislature, even if the courts are not in agreement with the
policy stated therein or its innate wisdom (Davis, op. cit., 195-197). On the other hand, administrative
interpretation of the law is at best merely advisory, for it is the courts that finally determine what the law
means.

Circular No. 22 in question was issued by the Social Security Commission, in view of the amendment of
the provisions of the Social Security Law defining the term "compensation" contained in Section 8 (f) of
Republic Act No. 1161 which, before its amendment, reads as follows: .

(f) Compensation — All remuneration for employment include the cash value of any remuneration paid in
any medium other than cash except (1) that part of the remuneration in excess of P500 received during
the month; (2) bonuses, allowances or overtime pay; and (3) dismissal and all other payments which the
employer may make, although not legally required to do so.

Republic Act No. 1792 changed the definition of "compensation" to:

(f) Compensation — All remuneration for employment include the cash value of any remuneration paid in
any medium other than cash except that part of the remuneration in excess of P500.00 received during
the month.

It will thus be seen that whereas prior to the amendment, bonuses, allowances, and overtime pay given in
addition to the regular or base pay were expressly excluded, or exempted from the definition of the term
"compensation", such exemption or exclusion was deleted by the amendatory law. It thus became
necessary for the Social Security Commission to interpret the effect of such deletion or elimination.
Circular No. 22 was, therefore, issued to apprise those concerned of the interpretation or understanding
of the Commission, of the law as amended, which it was its duty to enforce. It did not add any duty or
detail that was not already in the law as amended. It merely stated and circularized the opinion of the
Commission as to how the law should be construed. 1äwphï1.ñët

The case of People v. Jolliffe (G.R. No. L-9553, promulgated on May 30, 1959) cited by appellant, does
not support its contention that the circular in question is a rule or regulation. What was there said was
merely that a regulation may be incorporated in the form of a circular. Such statement simply meant that
the substance and not the form of a regulation is decisive in determining its nature. It does not lay down a
general proposition of law that any circular, regardless of its substance and even if it is only interpretative,
constitutes a rule or regulation which must be published in the Official Gazette before it could take effect.

The case of People v. Que Po Lay (50 O.G. 2850) also cited by appellant is not applicable to the present
case, because the penalty that may be incurred by employers and employees if they refuse to pay the
corresponding premiums on bonus, overtime pay, etc. which the employer pays to his employees, is not
by reason of non-compliance with Circular No. 22, but for violation of the specific legal provisions
contained in Section 27(c) and (f) of Republic Act No. 1161.

We find, therefore, that Circular No. 22 purports merely to advise employers-members of the System of
what, in the light of the amendment of the law, they should include in determining the monthly
compensation of their employees upon which the social security contributions should be based, and that
such circular did not require presidential approval and publication in the Official Gazette for its effectivity.
It hardly need be said that the Commission's interpretation of the amendment embodied in its Circular No.
22, is correct. The express elimination among the exemptions excluded in the old law, of all bonuses,
allowances and overtime pay in the determination of the "compensation" paid to employees makes it
imperative that such bonuses and overtime pay must now be included in the employee's remuneration in
pursuance of the amendatory law. It is true that in previous cases, this Court has held that bonus is not
demandable because it is not part of the wage, salary, or compensation of the employee. But the
question in the instant case is not whether bonus is demandable or not as part of compensation, but
whether, after the employer does, in fact, give or pay bonus to his employees, such bonuses shall be
considered compensation under the Social Security Act after they have been received by the employees.
While it is true that terms or words are to be interpreted in accordance with their well-accepted meaning in
law, nevertheless, when such term or word is specifically defined in a particular law, such interpretation
must be adopted in enforcing that particular law, for it can not be gainsaid that a particular phrase or term
may have one meaning for one purpose and another meaning for some other purpose. Such is the case
that is now before us. Republic Act 1161 specifically defined what "compensation" should mean "For the
purposes of this Act". Republic Act 1792 amended such definition by deleting same exemptions
authorized in the original Act. By virtue of this express substantial change in the phraseology of the law,
whatever prior executive or judicial construction may have been given to the phrase in question should
give way to the clear mandate of the new law.

IN VIEW OF THE FOREGOING, the Resolution appealed from is hereby affirmed, with costs against
appellant. So ordered.

MATUGUINA INTEGRATED WOOD vs CA

Matuguina Integrated Wood Products Inc. (MIWPI, for brevity) filed this action for prohibition, Damages
and Injunction, in order to prevent the respondent Minister (now Secretary) of Natural Resources from
enforcing its Order of Execution against it, for liability arising from an alleged encroachment of the
petitioner over the timber concession of respondent DAVENCOR located in Mati, Davao Oriental.

The Regional Trial Court, Branch 17, Davao City, ruled in favor of the petitioner, but on appeal, was
reversed by the respondent Court of Appeals in its decision dated February 25, 1991, which found
MIWPI, as an alter ego of Milagros Matuguina and/or Matuguina Logging enterprises (MLE, to be liable to
DAVENCOR for illegal encroachment.

The following are the antecedent facts:

On June 28, 1973, the Acting Director of the Bureau of Forest Development issued Provisional Timber
License (PTL) No. 30, covering an area of 5,400 hectares to Ms. Milagros Matuguina who was then doing
business under the name of MLE, a sole proprietorship venture. A portion, covering 1,900 hectares, of the
said area was located within the territorial boundary of Gov. Generoso in Mati, Davao Oriental, and
adjoined the timber concession of Davao Enterprises Corporation (DAVENCOR), the private respondent
in this case.

On July 10, 1974, petitioner Matuguina Integrated Wood Products, Inc. (MIWPI), was incorporated,
having an authorized capital stock of Ten Million Pesos (P10,000,000.00).[1] The
incorporators/stockholders of MIWPI, and their stock subscriptions were as follows:

Name No. Of Shares Subscribed Amount of Capital


Stock Subscribed

1. Henry Wee 1,160,000 1,160,000.00

2. Ma. Milagros Matuguina 400,000 400,000.00

3. Alejandro Chua Chun 200,000 200,000.00

4. Bernadita Chua 120,000 120,000.00

5. Domingo Herrera 40,000 40,000.00

6. Manuel Hernaez 40,000 40,000.00

7. Luis Valderama 40,000 40,000.00

----------------- ------------------

2,000,000 2,000,000.00

=========== ===========

Milagros Matuguina became the majority stockholder of MIWPI on September 24, 1974, when the latters
Board of Directors approved by Resolution the transfer of 1,000,000 shares from Henry Wee to Milagros
Matuguina, thus giving her seventy percent (70%) stock ownership of MIWPI.

In an undated letter[2] to the Director of Forest Development (BFD) on November 26, 1974, Milagros
Matuguina requested the Director for a change of name and transfer of management of PTL No. 30, from
a single proprietorship under her name, to that of MIWPI.

This request was favorably endorsed on December 2, 1974[3] by the BFDs Acting Director, Jose Viado to
respondent Secretary of Natural Resources, who approved the same on September 5, 1975.[4]

On July 17, 1975, Milagros Matuguina and petitioner MIWPI executed a Deed of Transfer[5] transferring
all of the formers rights, interests, ownership and participation in Provincial Timber License No. 30 to the
latter for and in consideration of 148,000 shares of stocks in MIWPI.

A copy of said deed was submitted to the Director of Forest Development and Petitioner MIWPI had since
been acting as holder and licensee of PTL No. 30.

On July 28, 1975, pending approval of the request to transfer the PTL to MIWPI, DAVENCOR, through its
Assistant General Manager, complained to the District Forester at Mati, Davao Oriental that Milagros
Matuguina/MLE had encroached into and was conducting logging operations in DAVENCORs timber
concession.

After investigation of DAVENCORs complaint, the Investigating Committee which looked into
DAVENCORs complaint submitted its report to the Director, finding that MLE had encroached on the
concession area of DAVENCOR. In line with this, the Director of Forest Development issued an Order[6]
on July 15, 1981, finding and declaring MLE to have encroached upon, and conducted illegal logging
operations within the licensed or concession area of DAVENCOR.

MLE appealed the Order to the Ministry of Natural Resources, which appeal was docketed as MNR CASE
No. 6450. During the pendency of the appealed case with the Minister of Natural Resources, Ma.
Milagros Matuguina disposed of her shares in petitioner MIWPI, thereby ceasing to be a stockholder of
the petitioner of March 16, 1986.[7]

On October 1, 1986, The Minister of Natural Resources, Hon. Ernesto M. Maceda rendered his
Decision,[8] affirming the aforesaid order of the Director of Forest Development, stating thus:

DECISION

For our Resolution is the appeal by MATUGUINA LOGGING ENTERPRISES (MLR, for short) of the
Order dated 15 July 1991 of the Director of Forest Development finding and declaring MLE to have
encroached upon, and conducted illegal logging operations within the license or concession area of
DAVAO ENTERPRISES CORPORATION. The aforesaid Order dispositively states:

WHEREFORE, there being a clear and convincing proof that Matuguina Conducted illegal operation
within the licensed area of DAVENCOR, above named respondent is hereby ordered to pay to the
complainant the equivalent value in pesos of 2,352.04 cubic meters of timber based on the market price
obtaining, at the logpond of the respondent at the time of cutting, minus the cost of production, or to
restitute to the complainant equal volume of 2,352.04 cubic meters of logs owned by respondent to be
taken at respondents logpond. The respondent is hereby directed to comply with this Order within a
period of ninety (90) days from receipt of this Order and after the lapse of the said period, no compliance
has been made by the respondent, its logging operations shall ipso facto become automatically
suspended until respondent shall have complied as directed.

The Regional Director of Region II, Davao City is hereby instructed to implement this Order and to submit
his compliance report within ten (10) days after the lapse of the ninety (90) days period within which the
respondent is directed to comply with this order.

And that the dispositive portion of the said decision states;

WHEREFORE, the Order dated 15 July 1981 of the Director of Forest Development is hereby
AFFIRMED.

When the Decision of the Minister of Natural Resources became final and executory, Philip Co and
DAVENCOR requested the respondent Minister on October 30, 1986 to issue immediately a writ of
execution against MLE and/or MIWPI.[9] The Order of Execution[10] was issued on January 6, 1987 by
the Minister through the latters Assistant on Legal Affairs. The said Order directed the issuance of a writ
of execution, not only against MLE, but likewise against MIWPI. The dispositive portion of the order
provides:

WHEREFORE, let a Writ of Execution be issued against Matuguina Logging Enterprises and/or
Matuguina Integrated Wood Products, Inc. For the satisfaction of the Decision of the Bureau of Forest
Development dated 15 July 1981, and the Order of this office dated 1 October 1986.

SO ORDERED.
Subsequently, a writ of execution[11] dated January 8, 1987 was issued in favor of the respondent
DAVENCOR, which states:

The City/Provincial Sheriff

Davao City

GREETINGS:

You are hereby directed to enforce, implement and execute the Order of Execution dated 06 June 1987
of this Office in the above-entitled case against Matuguina Logging Enterprises and/or Matuguina
Integrated Wood Products, Inc. its officers or any person or corporation in its behalf and conformably with
the Order dated 15 July 1981 of the Director of Forest Development, stating dispositively.

xxx

You are hereby requested to submit your return to this Office within the period of sixty (60) days from your
receipt hereof as to action taken hereon.

SO ORDERED."

On February 11, 1987, MIWPI filed the instant complaint[12] for prohibition, damages and injunction, with
prayer for restraining order, which case was docketed as Civil Case No. 18,457-87 in the Regional Trial
Court Davao City, Branch 17. MIWPI stated its primary cause of action, the relevant portion of which
reads, viz.:

5. That plaintiff which has a distinct and separate personality of its own under the law, and was never a
party to the case between DAVENCOR and MLE, suddenly became a party to the case after the decision
became final and executory with the issuance of Annex B hereof for reasons known to the defendants
alone:

6. That the issuance of Annex B hereof (the order of execution) by the defendant Minister has been made
not only without or in excess of his authority but that the same was issued patently without any factual or
legal basis, hence, a gross violation of plaintiffs constitutional rights under the due process clause;

7. That plaintiff, in the face of the order (Annex B) complained of, there being no appeal or any plain,
speedy, and adequate remedy in the ordinary course of law, does not have any alternative but to ventilate
the present recourse;

8. That defendant Minister is doing, threatens or is about to do, or is procuring or suffering to be done,
some act which definitely is in violation of the plaintiffs rights respecting the subject matter of the action,
and unless said act or acts are restrained or prohibited at least during the pendency of this case, said act
or acts would probably work not only injustice to plaintiff but world tend to render the judgment of this
Honorable court ineffectual;

9. That the commission or continuance of the acts complained of during the present litigation would not
only cause great and irreparable injury, but will also work injustice to the plaintiff, and would complicate,
aggravate and multiply the issues in this case;
10. That the plaintiff is entitled to the relief demanded, and the whole or part of such relief consist in
restraining the commission or continuance of the acts complained of, or in the performance of acts, either
for a limited period or perpetually;

11. That great and irreparable injury would inevitably result to the plaintiff before the matter can be heard
on notice, hence, immediate issuance of a restraining order is necessary and proper;

12. That the plaintiff is willing and able to file the necessary bond executed to the defendants, in an
amount to be fixed by the Court, to the effect that the plaintiff will pay to the defendants all damages
which they may sustain by reason of the injunction if the court should finally decide that the plaintiff was
not entitled thereto.

MIWPI, likewise alleges that in wantonly and imprudently procuring the Writ of Execution against it, which
DAVENCOR and Philip Co seek to enforce a 2.5 Million Peso liability of plaintiff, the latter has been
constrained to bring the present action, thereby incurring damages in the sum of P500,000.00 in concept
of actual and compensatory damages, and P250,000.00 in attorneys fees, which amount petitioner now
seeks to recover.

The trial court issued a temporary restraining order the next day, February 12, 1987, restraining and/or
enjoining the private respondents and the Hon. Secretary of Natural Resources from enforcing,
implementing and/or carrying into effect, the decision of the respondent Secretary dated October 1, 1986,
as well as the order of execution dated January 6, 1987.

On February 17, 1987, private respondent filed a Motion to Dismiss[13] alleging that the trial court had no
jurisdiction over the case under Presidential Decree No. 705, to which Motion to Dismiss, petitioner filed
an Opposition[14] dated February 1987. On March 9, 1987, the trial court issued an order[15] denying
private respondents Motion to Dismiss. Hence, private respondents filed their Answer[16] dated March
13, 1987 and an Amended Answer[17]

In the latter pleading, private respondents raised the following special and affirmative defenses:

7. That neither Milagros Matuguina nor Matuguina Integrated Wood Products, Inc. advised defendant
Davencor of the change of name, and transfer of management of PTL No. 30. From Milagros Matuguina
to Matuguina Integrated Wood Products, Inc., during the pendency of MNR Case No. 6540 before the
Bureau of Forest Develoment and the Ministry of Natural Resources, notwithstanding that the lawyer of
matuguina Integrated Wood Products, Inc., who was also a stockholder thereof, had appeared for
Milagros Matuguina in said administrative case.

8. That plaintiff has acted in bad faith and is now in estoppel from questioning the Writ of Execution
issued against Milagros Matuguina (now Matuguina Integrated Wood Products, Inc.) to satisfy the
judgment in MNR Case No. 6540.

9. This Honorable Court has no jurisdiction over the nature and subject matter of this action, especially
because:

(a) The plaintiff has not exhausted administrative remedies available to it before initiating this action;
(b) In the guise of entertaining an action for damages, this Court is being misled by the plaintiff into
deciding questions properly for the Department of Natural Resources to decide exclusively in the lawful
exercise of its regulatory jurisdiction;

(c) The plaintiff is now precluded and estopped from filing this action.

10. The plaintiff has no cause of action against the defendants and has not stated any in its complaint,
especially because:

(a) Having failed to exhaust administrative remedies, plaintiff is without a ripe cause of action that can be
pleaded before this Honorable Court;

(b) In substance, there is no justifiable question raised under the facts and circumstances of this case.

Meanwhile, on June 2, 1987, the trial court issued an order[18] granting the petitioners prayer for the
issuance of a writ of preliminary injunction against the private respondents and the Secretary of Natural
Resources, ordering them to desist, refrain and prevent from enforcing respondent Secretarys Decision
dated October 1, 1986 as well as the writ of execution dated January 8, 1987.

On May 10, 1989, the trial court rendered its Decison[19] in favor of the petitioner, disposing of the action
as follows:

WHEREFORE, in view of the foregoing, finding the evidence of plaintiff, Matuguina Integrated Wood
Products, Inc. sufficient to sustain a preponderance of evidence, showing that the order of execution
dated January 6, 1987, issued by the Minister of Natural Resources, through Alexander C. Castro,
Assistant Minister for Legal Affairs, included therein, plaintiff Matuguina Integrated Wood Products, Inc.,
despite non-inclusion of plaintiff in the decision of the then Minister of Natural Resources, dated October
1, 1986, already final and executory before the issuance of the order and execution, said order or
execution is hereby declared null and void and without any legal effect.

As a consequence thereof, the writ of preliminary injunction issued by this court, dated June 2, 1987 is
hereby made permanent.

Moreover, as a result of the filing of this case, defendant Philip Co and Davencor Corporation, are
ordered to jointly and severally pay the amount of P100,000.00 as actual and compensatory damages,
along with another amount of P20,000.00 as attorneys fees and costs of this action, in favor of plaintiff
Matuguina Integrated Wood Products, Inc.

SO ORDERED.

Private respondents appealed the trial courts decision on May 19, 1989. Their notice of appeal was
approved by the trial court. The appealed case was docketed with respondent Honorable Court of
Appeals as CA-G.R. SP No. 19887.

On February 25, 1991, the respondent Court rendered its Decision,[20] reversing the lower courts
pronouncement. The dispositive portion of the decision reads:
WHEREFORE, premises considered, the decision appealed from is reversed and set aside and the Order
of Execution issued by the Minister of Natural Resources dated January 6, 1987 is affirmed. Without
pronouncement as to costs.

SO ORDERED.

In due time, petitioner filed a motion for reconsideration.[21] Private respondents filed their opposition[22]
to the same on April 2, 1991. In a Resolution[23] dated April 12, 1991, the motion was denied by the
respondent Court.

Not content with the courts pronouncement, petitioner is now before us on a Petition for Review on
Certiorari,[24] alleging that the respondent court acted with grave abuse of discretion in rendering the
questioned decision and its companion resolution, denying the motion for reconsideration.

The reasons relied upon by the Petitioner in filing its petition are hereby restated:

PETITIONER WAS DENIED DUE PROCESS OF LAW WHEN IT WAS MADE LIABLE BY
RESPONDENT SECRETARY OF NATURAL RESOURCES IN HIS ORDER OF EXECUTION DATED 06
JANUARY 1987 (EXHIBIT B OF ATTACHMENT O) ISSUED IN MNR CASE NO. 6540 DESPITE THE
FACT THAT PETITIONER WAS NEVER A PARTY NOR A PARTICIPANT IN THE SAID CASE: IN
FACT, PETITIONER NEVER HAD NOTICE OF THE PROCEEDINGS IN MNR CASE NO. 6540.

II

THE FAILURE TO AFFORD PETITIONER THE OPPORTUNITY TO BE HEARD IN THE


ADMINISTRATIVE LEVEL (MNR CASE NO. 6540) COULD NOT HAVE BEEN CURED BY THE
INSTITUTION OF THE ACTION FOR PROHIBITION IN THE TRIAL COURT BECAUSE SAID COURT
HAD NO JURISDICTION TO DETERMINE WHETHER PETITIONER WAS GUILTY OF
ENCROACHMENT ON PRIVATE RESPONDENT DAVENCORS TIMBER CONCESSION;
FURTHERMORE, THE QUESTION ON WHETHER PETITIONER WAS GUILTY OF ENCROACHMENT
WAS NEVER PUT IN ISSUE IN THE CASE BEFORE THE TRIAL COURT.

III

THE LIABILITY OF MILAGROS/MLE AS FOUND BY RESPONDENT SECRETARY IN ITS DECISION


DATED 01 OCTOBER 1986 (EXHIBIT A OF THE ATTACHMENT 0) CANNOT BE IMPUTED AGAINST
PETITIONER SINCE THE LATTER IS A CORPORATION HAVING A PERSONALITY SEPARATE AND
DISTINCT FROM MILAGROS/MLE.

IV

PETITIONER CANNOT BE MADE LIABLE TO PRIVATE RESPONDENTS UNDER THE DEED OF


TRANSFER DATED 18 JULY 1975 (EXHIBIT 3 OF ATTACHMENT P) AND SECTION 61 OF THE
REVISED FORESTRY CODE OF THE PHILIPPINES (P.D. 705, AS AMENDED):

A. THE ALLEGED TRANSFER OF PTL NO. 30 FROM MILAGROS/MLE TO PETITIONER NEVER


BECAME BINDING AND EFFECTIVE SINCE PTL NO. 30 REMAINED IN THE NAME OF
MILAGROS/MLE UNTIL ITS EXPIRATION ON 30 JUNE 1977: THIS IS DUE TO THE FACT THAT SAID
TRANSFER WAS NEVER APPROVED BY THE SECRETARY OF NATURAL RESOURCES.

B. GRANTING ARGUENDO THAT THERE WAS AN EFFECTIVE TRANSFER OF PTL NO. 30 FROM
MILAGROS/MLE TO PETITIONER, THE TRANSFER COULD NOT MAKE PETITIONER LIABLE FOR
THE ALLEGED ENCROACHMENT OF PRIVATE RESPONDENT DAVENCORS TIMBER
CONCESSION, SINCE:

1. SAID TRANSFER WAS EXECUTED PRIOR TO THE COMMISSION OF THE ALLEGED


ENCROACHMENT AND THE FILING OF THE ADMINISTRATIVE COMPLAINT FOR ENCROACHMENT
DATED 28 JULY 1975; THUS, PETITIONER CANNOT BE MADE LIABLE FOR OBLIGATONS OF
MILAGROS/MLE WHICH WERE INCURRED AFTER DATE OF THE SAID TRANSFER.

2. SAID TRANSFER COVERED ONLY FORESTRY CHARGES AND OTHER GOVERNMENT FEES,
AND DID NOT INCLUDE THE PERSONAL LIABILITY OF MILAGROS/MLE THAT AROSE FROM THE
ENCROACHMENT OF THE TIMBER CONCESSION OF RESPONDENT DAVENCOR.[25]

Private Respondent DAVENCOR and the public respondent Hon. Minister (now Secretary) of Natural
Resources filed separate Comments[26] on September 5, 1991 and June 8, 1992 respectively.

The essential issues of the present controversy boil down to the following:

Was the Petitioner denied due process when it was adjudged liable with MLE for encroaching upon the
timber concession of DAVENCOR in the respondent Minister's order of Execution?

Is the petitioner a transferee of MLE's interest, as to make it liable for the latters illegal logging operations
in DAVENCORs timber concession, or more specifically, is it possible to pierce the veil of MIWPIs
corporate existence, making it a mere conduit or successor of MLE?

Generally accepted is the principle that no man shall be affected by any proceeding to which he is a
stranger, and strangers to a case are not bound by judgment rendered by the court. In the same manner
an execution can be issued only against a party and not against one who did not have his day in court. In
Lorenzo vs. Cayetano, 78 SCRA 485 [1987], this Court held that only real parties in interest in an action
are bound by judgment therein and by writs of execution and demolition issued pursuant thereto.[27]

Indeed a judgment cannot bind persons who are not parties to the action.[28] It is elementary that
strangers to a case are not bound by the judgment rendered by the court and such judgment is not
available as an adjudication either against or in favor of such other person. A decision of a court will not
operate to divest the rights of a person who has not and has never been a party to a litigation, either as
plaintiff or as defendant. Execution of a judgment can only be issued against one who is a party to the
action, and not against one who, not being a party in the action has not yet had his day in court.[29]

The writ of execution must conform to the judgment which is to be executed, as it may not vary the terms
of the judgment it seeks to enforce.[30] Nor may it go beyond the terms of the judgment which sought to
be executed. Where the execution is not in harmony with the judgment which gives it life and exceeds it, it
has pro tanto no validity. To maintain otherwise would be to ignore the constitutional provision against
depriving a person of his property without due process of law.[31]
The writ of execution issued by the Secretary of Natural Resources on January 8, 1987 clearly varies the
term of his Decision of October 1, 1986, inasmuch as the Writ includes the MIWPI as party liable whereas
the Decision only mentions Milagros Matuguina/MLE.

There is no basis for the issuance of the Order of Execution against the petitioner. The same was issued
without giving the petitioner an opportunity to defend itself and oppose the request of DAVENCOR for the
issuance of a writ of execution against it. In fact, it does not appear that petitioner was at all furnished with
a copy of DAVENCORs letter requesting for the Execution of the Honorable Secretarys decision against
it. Petitioner was suddenly made liable upon the order of execution by the respondent Secretarys
expedient conclusions that MLE and MIWPI are one and the same, apparently on the basis merely of
DAVENCORs letter requesting for the Order, and without hearing or impleading MIWPI. Until the
issuance of the Order of execution, petitioner was not included or mentioned in the proceedings as having
any participation in the encroachment in DAVENCORs timber concession. This action of the respondent
Secretary disregards the most basic tenets of due process and elementary fairness.

The liberal atmosphere which pervades the procedure in administrative proceedings does not empower
the presiding officer to make conclusions of fact before hearing all the parties concerned.[32] In Police
Commission vs. Hon Judge Lood,[33] we held that the formalities usually attendant in court hearings
need not be present in an administrative investigation, provided that the parties are heard and given the
opportunity to adduce their evidence. The right to notice and hearing is essential to due process and its
non-observance will, as a rule, invalidate the administrative proceedings.

As observed by the appellate court, to wit:

the appellant should have filed a Motion with the Minister with Notice to the appellee to include the latter
as party liable for the judgment in order to afford the appellee an opportunity to be heard on its liability for
the judgment rendered against Ma. Milagros Matuguina doing business under the name Matuguina
Logging Enterprises.[34]

Continuing, the said court stated further that:

Nevertheless, the failure to comply with the procedure in order to satisfy the requirements of due process
was cured by the present action for prohibition where the liability of appellee has been ventilated.

We do not agree. Essentially, Prohibition is a remedy to prevent inferior courts, corporations, boards or
persons from usurping or exercising a jurisdiction or power with which they have not been vested by
law[35] As we held in Mafinco Trading Corporation vs. Ople, et al,[36] in a certiorari or prohibition case,
only issues affecting the jurisdiction of the tribunal, board and offices involved may be resolved on the
basis of undisputed facts.

The issue of whether or not petitioner is an alter ego of Milagros Matuguina/MLE, is one of fact, and
which should have been threshed out in the administrative proceedings, and not in the prohibition
proceedings in the trial court, where it is precisely the failure of the respondent Minister of Natural
Resources to proceed as mandated by law in the execution of its order which is under scrutiny.

Assuming, arguendo, that prohibition is the proper remedy for determining the propriety of piercing the
separate personality of petitioner with its stockholders, the evidence presented at said trial does not
warrant such action.
It is settled that a corporation is clothed with a personality separate and distinct from that of persons
composing it. It may not generally be held liable for that of the persons composing it. It may not be held
liable for the personal indebtedness of its stockholders or those of the entities connected with it.
Conversely, a stockholder cannot be made to answer for any of its financial obligations even if he should
be its president.[37] But when the juridical personality of the corporation is used to defeat public
convenience, justify wrong, protect fraud or defend crime, the corporation shall be considered as a mere
association of persons (Koppel, Inc. vs. Yatco, 77 Phil 496, Palay, Inc. vs. Clave, G.R. No. 56076,
September 21, 1983, 124 SCRA 638), and its responsible officers and/or stockholders shall be
individually liable (Namarco vs. Associated Finance Co., Inc., G.R. No. L- 20886, April 27, 1967, 19
SCRA 962). For the same reasons, a corporation shall be liable for the obligations of a stockholder
(Palacio vs. Fely Transportation Co., G.R. No. L-15121, August 31, 1963, 5 SCRA 1011), or a corporation
and its successor-in-interest shall be considered as one and the liability of the former attach to the
latter.[38]

But for the separate juridical personality of a corporation to be disregarded, the wrongdoing must be
clearly and convincingly established. It cannot be presumed.[39]

In the case at bar, there is, insufficient basis for the appellate courts ruling that MIWPI is the same as
Matuguina. The trial courts observation is enlightening.

Despite apparently opposing evidence of both parties, the Court gathered and finds, that defendants
attempt to pierce the veil of corporate personality of plaintiff corporation, as to consider plaintiff
corporations merely an adjunct or alter ego of Maria Milagros Matuguina Logging Enterprises, to justify
defendants claim against plaintiff corporation, suffers heavily from insufficiency of evidence.

It is the vehement contention of defendants, to bolster its claim, that plaintiff corporation is the alter ego of
Maria Milagros Matuguina Logging Enterprises, because when Milagros Matuguina became the
Chairman of the Board of Directors of plaintiff corporation, she requested for the change of name and
transfer of management of PTL No. 30, from her single proprietorship, to plaintiff corporation.

Secondly, when Milagros Matuguina executed the deed of transfer, transferring her forest concession
under PTL No, 30, together with all the structures and improvements therein, to plaintiff corporation, for a
consideration of P14,800.00 representing 148,000 shares of stocks of plaintiff corporation actually all
existing shares of stocks of Milagros Matuguina, in plaintiff corporation represents 77.4% therein; suffice
to say that plaintiff corporation practically became an alter ego of Milagros Matuguina.

Defendants arguments on this peripheral aspect of corporate existence, do not at all indicate that such a
legal fiction, was granted.

In the first place the alleged control of plaintiff corporation was not evident in any particular corporate acts
of plaintiff corporation, wherein Maria Milagros Matuguina Logging Enterprises using plaintiff corporation,
executed acts or powers directly involving plaintiff corporation.

Neither was there any evidence of defendants, that Maria Milagros Matuguina Logging Enterprises, using
the facilities and resources of plaintiff corporation, involved itself in transaction using both single
proprietorship and plaintiff corporation in such particular line of business undertakings.

As stated by this court in resolving plaintiffs prayer for issuance of a writ of preliminary injunction, said:
There is actually, no evidence presented by defendant, showing that sometime on March 15, 1986, to
January 1987, during which period, the subject decision of Hon. Secretary of Natural Resources and
corresponding writ of execution, Maria Milagros Matuguina was a stockholder of plaintiff corporation in
such amount or was she an officer of plaintiff corporation in whatever capacity.

The above circumstances is relevant and significant to assume any such justification of including plaintiff
corporation in the subject writ of execution, otherwise as maintained by defendants, what matters most
was the control of Milagros Matuguina Logging Enterprises of plaintiff corporation in 1974 and 1975,
when the administrative case was pending, this circumstance alone without formally including plaintiff
corporation in said case, will not create any valid and sufficient justification for plaintiff corporation, to
have been supposedly included in the suit against defendants and Maria Milagros Matuguina Logging
Enterprises, in the administrative case.

Yet, granting as claimed by defendants, that in 1974 or in 1975, Maria Milagros Matuguina became the
controlling stockholder of plaintiff corporation, on account of the change of name and transfer of
management of PTL No. 30, this circumstance, we repeat, does not of itself prove that plaintiff
corporation was the alter ego of Maria Milagros Matuguina Logging Enterprise, as enunciated in various
decisions of this Court, to wit:

It is important to bear in mind that mere ownership by a single stockholder or by another corporation of all
or nearly all of the capital stocks of the corporation, is not itself a sufficient warrant for disregarding the
fiction of separate personality. (Liddel and Co. vs. Collector of Internal revenue, G.R. No. 9687, June 30,
1961).

It is recognized as lawful to obtain a corporation charter, even with a single substantial stockholder, to
engage in specific activity and such activity may co-exist with other private activities of the stockholders.

If the corporation is substantial one, conducted lawfully; without fraud on another, its separate identity is
to be respected.[40]

In this jurisdiction, it is a settled rule that conclusions and findings of fact by trial court are entitled to great
weight on appeal and should not be disturbed unless for strong and cogent reasons because the trial
court is in a better position to examine real evidence, as well as to observe the demeanor of the
witnesses while testifying in the case.[41]

It is likewise improper to state that the MIWPI is the privy or the successor-in-interest of MLE, as the
liability for the encroachment over DAVENCORs timber concession is concerned, by reason of the
transfer of interest in PTL No. 30 from MLE to MIWPI.

First at all, it does not appear indubitable that the said transfer ever became effective, since PTL No. 30
remained in the name of Milagros Matuguina/MLE until it expired on June 30, 1977.[42]

More importantly, even if it is deemed that there was a valid change of name and transfer of interest in
the PTL No. 30, this only signifies a transfer of authority, from MLE to MIWPI, to conduct logging
operations in the area covered by PTL No. 30. It does not show indubitable proof that MIWPI was a mere
conduit or successor of Milagros Matuguina/MLE, as far the latters liability for the encroachment upon
DAVENCORs concession is concerned. This is the only conclusion which we can discern from the
language of Section 61 of P.D. 705,[43] and the letters of the Acting Minister of Natural Resources to
Milagros Matuguina/MLE and to MIWPI, on September 16, 1975.[44] In Soriano vs. Court of Appeals, this
Court stated in clear language, that-

It is the general rule that the protective mantle of a corporations separate and distinct personality could
only be pierced and liability attached directly to its officers and/or members stockholders, when the same
is used for fraudulent, unfair, or illegal purpose. In the case at bar, there is no showing that the
Association entered into the transaction with the private respondent for the purpose of defrauding the
latter of his goods or the payment thereof. xxx. Therefore, the general rule on corporate liability, not the
exception, should be applied in resolving this case. (G.R. No. 49834, June 22, 1989)

The respondents cite Section 61 of P.D. 705 to establish MIWPIs succession to the liability of Milagros
Matuguina/MLE:

SEC. 61. Transfer. Unless authorized by the Department Head, no licensee, lessee, or permittee may
transfer, exchange, sell, or convey his license agreement, license, lease or permit, or any of his rights or
interest therein, or any of his assets used in connection therewith.

The licensee, lessee, or permittee shall be allowed to transfer or convey his license agreement, license,
lease, or permit only if he has not violated any forestry law, rule or regulation; has been faithfully
complying with the terms and conditions of the license agreement, license, lease or permit; the transferee
has all the qualifications and none of the disqualifications to hold a license agreement, license, lease or
permit; there is no evidence that such transfer or conveyance is being made for purposes of speculation;
and the transferee shall assume all the obligations of the transferor.

The transferor shall forever be barred from acquiring another license agreement, license, lease or permit.

Even if it is mandated in the abovestated provision that the transferee shall assume all the obligations of
the transferor this does not mean that all obligations are assumed, indiscriminately.

Invariably, it is not the letter, but the spirit of the law and intent of the legislature that is important. When
the interpretation of a statute according to the exact and literal import of its words would lead to absurdity,
it should be construed according to the spirit and reason, disregarding if necessary the letter of the
law.[45]

In construing statutes, the terms used therein are generally to be given their ordinary meaning, that is,
such meaning which is ascribed to them when they are commonly used, to the end that absurdity in the
law must be avoided.[46] The term obligations as used in the final clause of the second paragraph of
Section 61 of P.D. 705 is construed to mean those obligations incurred by the transferor in the ordinary
course of business. It cannot be construed to mean those obligations or liabilities incurred by the
transferor as a result of transgressions of the law, as these are personal obligations of the transferor, and
could not have been included in the term obligations absent any modifying provision to that effect.

In the September 16, 1975 letters of Acting Director of the Bureau of Forest Development to Milagros
Matuguina and MIWPI informing them of the approval of Matuguina's request for the change of name and
transfer of management of PTL No. 30, the following statements were made by the Acting Director:

"In view hereof, (Matuguina Integrated Wood Products, Inc.) shall assume the responsibility of paying
whatever pending liabilities and/or accounts remaining unsettled, if any, by the former licensee, Milagros
Matuguina, with the government." (Emphasis ours)[47]
Accordingly, the letter's language implies that the obligations which MIWPI are to assume as transferee of
Milagros Matuguina/MLE are those obligations in favor of the government only, and not to any other
entity. Thus this would include Forestry Charges, Taxes, Fees, and similar accountabilities.

In sum, the Court makes the following pronouncements:

(a) The respondent Honorable Minister of Natural Resources gravely abuse its discretion when it issued
its Order of Execution on January 6, 1987, including therein as one of the parties liable the petitioner
Matuguina Integrated Wood Products, Inc., which was never a party to the assailed proceeding resulting
in the issuance of such Order and, without affording the same an opportunity to be heard before it was
adjudged liable.

(b) The petitioner is a corporate entity separate and distinct from Milagros Matuguina/Matuguina Logging
Enterprises, there being no clear basis for considering it as a mere conduit or alter ego of
Matuguina/MLE, and therefore, cannot be made liable for the obligations of the same for encroachment
over the timber concession of private respondent DAVENCOR.

IN VIEW OF THE FOREGOING, the petition is hereby GRANTED, and the Decision dated February 25,
1991 is SET ASIDE. The decision of the Regional Trial Court is hereby REINSTATED, and
correspondingly, Order of Execution of the respondent Secretary of Natural Resources is declared Null
and Void and without effect. No pronouncement as to cost. SO ORDERED.

MUSTANG LUMBER vs CA

The first and third cases, G.R. No. 104988 and G.R. No. 123784, were originally assigned to the Second
and Third Divisions of the Court, respectively. They were subsequently consolidated with the second, a
case of the Court en banc.

Petitioner, a domestic corporation with principal office at Nos. 1350-1352 Juan Luna Street, Tondo,
Manila, and with a lumberyard at Fortune Street, Fortune Village, Paseo de Blas, Valenzuela, Metro
Manila, was duly registered as a lumber dealer with the Bureau of Forest Development (BFD) under
Certificate of Registration No. NRD-4-092590-0469. Its permit as such was to expire on 25 September
1990.

Respondent Secretary Fulgencio S. Factoran, Jr., and respondent Atty. Vincent A. Robles were, during all
the time material to these cases, the Secretary of the Department of Environment and Natural Resources
(DENR) and the Chief of the Special Actions and Investigation Division (SAID) of the DENR, respectively.

The material operative facts are as follows:

On 1 April 1990, acting on an information that a huge stockpile of narra flitches, shorts, and slabs were
seen inside the lumberyard of the petitioner in Valenzuela, Metro Manila, the SAID organized a team of
foresters and policemen and sent it to conduct surveillance at the said lumberyard. In the course thereof,
the team members saw coming out from the lumberyard the petitioner's truck, with Plate No. CCK-322,
loaded with lauan and almaciga lumber of assorted sizes and dimensions. Since the driver could not
produce the required invoices and transport documents, the team seized the truck together with its cargo
and impounded them at the DENR compound at Visayas Avenue, Quezon City.[1] The team was not able
to gain entry into the premises because of the refusal of the owner.[2]

On 3 April 1990, the team was able to secure a search warrant from Executive Judge Adriano R. Osorio
of the Regional Trial Court (RTC) of Valenzuela, Metro Manila. By virtue thereof, the team seized on that
date from the petitioners lumberyard four truckloads of narra shorts, trimmings, and slabs; a negligible
number of narra lumber; and approximately 200,000 board feet of lumber and shorts of various species
including almaciga and supa.[3]

On 4 April 1990, the team returned to the premises of the petitioner 's lumberyard in Valenzuela and
placed under administrative seizure the remaining stockpile of almaciga, supa, and lauan lumber with a
total volume of 311,000 board feet because the petitioner failed to produce upon demand the
corresponding certificate of lumber origin, auxiliary invoices, tally sheets, and delivery receipts from the
source of the invoices covering the lumber to prove the legitimacy of their source and origin.[4]

Parenthetically, it may be stated that under an administrative seizure the owner retains the physical
possession of the seized articles. Only an inventory of the articles is taken and signed by the owner or his
representative. The owner is prohibited from disposing them until further orders.[5]

On 10 April 1990, counsel for the petitioner sent a letter to Robles requesting an extension of fifteen days
from 14 April 1990 to produce the required documents covering the seized articles because some of
them, particularly the certificate of lumber origin, were allegedly in the Province of Quirino. Robles denied
the motion on the ground that the documents being required from the petitioner must accompany the
lumber or forest products placed under seizure.[6]

On 11 April 1990, Robles submitted his memorandum-report recommending to Secretary Factoran the
following:

1. Suspension and subsequent cancellation of the lumber Dealer's Permit of Mustang Lumber, Inc. for
operating an unregistered lumberyard and resaw mill and possession of Almaciga Lumber (a banned
specie) without the required documents;

2. Confiscation of the lumber seized at the Mustang Lumberyard including the truck with Plate No. CCK-
322 and the lumber loaded herein [sic] now at the DENR compound in the event its owner fails to submit
documents showing legitimacy of the source of said lumber within ten days from date of seizure;

3. Filing of criminal charges against Mr. Ri Chuy Po, owner of Mustang Lumber Inc. and Mr. Ruiz, or if the
circumstances warrant for illegal possession of narra and almaciga lumber and shorts if and when
recommendation no. 2 pushes through;

4. Confiscation of Trucks with Plate No. CCS-639 and CDV-458 as well as the lumber loaded therein for
transport lumber using recycled documents.[7]

On 23 April 1990, Secretary Factoran issued an order suspending immediately the petitioner's lumber-
dealer's permit No. NRD-4-092590-0469 and directing the petitioner to explain in writing within fifteen
days why its lumber-dealer's permit should not be cancelled.
On the same date, counsel for the petitioner sent another letter to Robles informing the latter that the
petitioner had already secured the required documents and was ready to submit them. None, however,
was submitted.[8]

On 3 May 1990, Secretary Factoran issued another order wherein, after reciting the events which took
place on 1 April and 3 April 1990, he ordered CONFISCATED in favor of the government to be disposed
of in accordance with law the approximately 311,000 board feet of lauan, supa, and almaciga lumber,
shorts, and sticks found inside the petitioner's lumberyard.[9]

On 11 July 1990, the petitioner filed with the RTC of Manila a petition for certiorari and prohibition with a
prayer for a restraining order or preliminary injunction against Secretary Fulgencio S. Factoran, Jr., and
Atty. Vincent A. Robles. The case (hereinafter, the FIRST CIVIL CASE) was docketed as Civil Case No.
90-53648 and assigned to Branch 35 o the said court. The petitioner questioned therein (a) the seizure on
1 April 1990, without any search and seizure order issued by a judge, of its truck with Plate No. CCK-322
and its cargo of assorted lumber consisting of apitong, tanguile, and lauan of different sizes and
dimensions with a total value of P38,000.00; and (b) the orders of Secretary Factoran of 23 April 1990 for
lack of prior notice and hearing and of 3 May 1990 for violation of Section 2, Article III of the Constitution.

On 17 September 1990, in response to reports that violations of P.D. No. 705 (The Revised Forestry
Code of the Philippines), as amended, were committed and acting upon instruction of Robles and under
Special Order No. 897, series of 1990, a team of DENR agents went to the business premises of the
petitioner located at No. 1352 Juan Luna Street, Tondo, Manila. The team caught the petitioner operating
as a lumber dealer although its lumber-dealer's permit had already been suspended on 23 April 1990.
Since the gate of the petitioner's lumberyard was open, the team went inside and saw an owner-type jeep
with a trailer loaded with lumber. Upon investigation, the team was informed that the lumber loaded on
the trailer was to be delivered to the petitioner's customer. It also came upon the sales invoice covering
the transaction. The members of the team then introduced themselves to the caretaker, one Ms. Chua,
who turned out to be the wife of the petitioner's president and general manager, Mr. Ri Chuy Po, who was
then out of town. The team's photographer was able to take photographs of the stockpiles of lumber
including newly cut ones, fresh dust around sawing or cutting machineries and equipment, and the
transport vehicles loaded with lumber. The team thereupon effected a constructive seizure of
approximately 20,000 board feet of lauan lumber in assorted sizes stockpiled in the premises by issuing a
receipt therefor.[10]

As a consequence of this 17 September 1990 incident, the petitioner filed with the RTC of Manila a
petition for certiorari and prohibition. The case (hereinafter, the SECOND CIVIL CASE) was docketed as
Civil Case No. 90-54610 and assigned to Branch 24 of the said court.

In the meantime, Robles filed with the Department of Justice (DOJ) a complaint against the petitioner's
president and general manager, Ri Chuy Po, for violation of Section 68 of P.D. No. 705, as amended by
E.O. No. 277. After appropriate preliminary investigation, the investigating prosecutor, Claro Arellano,
handed down a resolution[11] whose dispositive portion reads:

WHEREFORE, premises considered, it is hereby recommended that an information be filed against


respondent Ri Chuy Po for illegal possession of approximately 200,000 bd. ft. of lumber consisting of
almaciga and supa and for illegal shipment of almaciga and lauan in violation of Sec. 68 of PD 705 as
amended by E.O. 277, series of 1987.
It is further recommended that the 30,000 bd. ft. of narra shorts, trimmings and slabs covered by legal
documents be released to the rightful owner, Malupa.[12]

This resolution was approved by Undersecretary of Justice Silvestre H. Bello, III, who served as
Chairman of the Task Force on Illegal Logging.[13]

On the basis of that resolution, an information was filed on 5 June 1991 by the DOJ with Branch 172 of
the RTC of Valenzuela, charging Ri Chuy Po with the violation of Section 68 of P.D. No. 705, as
amended, which was docketed as Criminal Case No. 324-V-91 (hereinafter, the CRIMINAL CASE). The
accusatory portion of the information reads as follows:

That on or about the 3rd day of April 1990, or prior to or subsequent thereto, within the premises and
vicinity of Mustang Lumber, Inc. in Fortune Village, Valenzuela, Metro Manila, and within the jurisdiction
of this Honorable Court, the above-named accused, did then and there wilfully, feloniously and unlawfully,
have in his possession truckloads of almaciga and lauan and approximately 200,000 bd. ft. of lumber and
shorts of various species including almaciga and supa, without the legal documents as required under
existing forest laws and regulations.[14]

On 7 June 1991, Branch 35 of the RTC of Manila rendered its decision[15] in the FIRST CIVIL CASE, the
dispositive portion of which reads:

WHEREFORE, judgment in this case is rendered as follows:

1. The Order of Respondent Secretary of the DENR, the Honorable Fulgencio S. Factoran, Jr., dated 3
May 1990 ordering the confiscation in favor of the Government the approximately 311,000 board feet of
lauan, supa, and almaciga lumber, shorts and sticks, found inside and seized from the lumberyard of the
petitioner at Fortune Drive, Fortune Village, Paseo de Blas, Valenzuela, Metro Manila, on April 4, 1990
(Exhibit 10), is hereby set aside and vacated, and instead the respondents are required to report and
bring to the Hon. Adriano Osorio, Executive Judge, Regional Trial Court, NCJR, Valenzuela, Metro
Manila, the said 311,000 board feet of Lauan, supa and almaciga Lumber, shorts and sticks, to be dealt
with as directed by law;

2. The respondents are required to initiate and prosecute the appropriate action before the proper court
regarding the lauan and almaciga lumber of assorted sizes and dimensions loaded in petitioner's truck
bearing Plate No. CCK-322 which were seized on April 1, 1990;

3. The Writ of Preliminary Injunction issued by the Court on August 2, 1990 shall be rendered functus
oficio upon compliance by the respondents with paragraphs 1 and 2 of this judgment;

4. Action on the prayer of the petitioner that the lauan, supa and almaciga lumber, shorts and sticks
mentioned above in paragraphs 1 and 2 of this judgment be returned to said petitioner, is withheld in this
case until after the proper court has taken cognizance and determined how those lumber, shorts and
sticks should be disposed of; and

5. The petitioner is ordered to pay the costs.

SO ORDERED.
In resolving the said case, the trial court held that the warrantless search and seizure on 1 April 1990 of
the petitioner's truck, which was moving out from the petitioner's lumberyard in Valenzuela, Metro Manila,
loaded with large volumes of lumber without covering document showing the legitimacy of its source or
origin did not offend the constitutional mandate that search and seizure must be supported by a valid
warrant. The situation fell under one of the settled and accepted exceptions where warrantless search
and seizure is justified, viz., a search of a moving vehicle.[16] As to the seizure of a large volume of
almaciga, supa, and lauan lumber and shorts effected on 4 April 1990, the trial court ruled that the said
seizure was a continuation of that made the previous day and was still pursuant to or by virtue of the
search warrant issued by Executive Judge Osorio whose validity the petitioner did not even question.[17]
And, although the search warrant did not specifically mention almaciga, supa, and lauan lumber and
shorts, their seizure was valid because it is settled that the executing officer is not required to ignore
contrabands observed during the conduct of the search.[18]

The trial court, however, set aside Secretary Factoran's order of 3 May 1990 ordering the confiscation of
the seized articles in favor of the Government for the reason that since the articles were seized pursuant
to the search warrant issued by Executive Judge Osorio they should have been returned to him in
compliance with the directive in the warrant.

As to the propriety of the 23 April 1990 order of Secretary Factoran, the trial court ruled that the same had
been rendered moot and academic by the expiration of the petitioner's lumber-dealer's permit on 25
September 1990, a fact the petitioner admitted in its memorandum.

The petitioner forthwith appealed from the decision in the FIRST CIVIL CASE to the Court of Appeals,
which docketed the appeal as CA-G.R. SP No. 25510.

On 7 July 1991, accused Ri Chuy Po filed in the CRIMINAL CASE a Motion to Quash and/or to Suspend
Proceedings based on the following grounds: (a) the information does not charge an offense, for
possession of lumber, as opposed to timber, is not penalized in Section 68 of P.D. No. 705, as amended,
and even granting arguendo that lumber falls within the purview of the said section, the same may not be
used in evidence against him for they were taken by virtue of an illegal seizure; and (b) Civil Case No. 90-
53648 of Branch 35 of the RTC of Manila, the FIRST CIVIL CASE, then pending before the Court of
Appeals, which involves the legality of the seizure, raises a prejudicial question.[19]

The prosecution opposed the motion alleging that lumber is included in Section 68 of P.D. No. 705, as
amended, and possession thereof without the required legal documents is penalized therein. It referred to
Section 3.2 of DENR Administrative Order No. 19, series of 1989, for the definitions of timber and lumber,
and then argued that exclusion of lumber from Section 68 would defeat the very purpose of the law, i.e.,
to minimize, if not halt, illegal logging that has resulted in the rapid denudation of our forest resources.[20]

In her order of 16 August 1991 in the CRIMINAL CASE,[21] respondent Judge Teresita Dizon-Capulong
granted the motion to quash and dismissed the case on the ground that "possession of lumber without the
legal documents required by forest laws and regulations is not a crime."[22]

Its motion for reconsideration having been denied in the order of 18 October 1991,[23] the People filed a
petition for certiorari with this Court in G.R. No. 106424, wherein it contends that the respondent Judge
acted with grave abuse of discretion in granting the motion to quash and in dismissing the case.

On 29 November 1991, the Court of Appeals rendered a decision[24] in CA-G.R. SP No. 25510
dismissing for lack of merit the petitioner's appeal from the decision in the FIRST CIVIL CASE and
affirming the trial court's rulings on the issues raised. As to the claim that the truck was not carrying
contraband articles since there is no law punishing the possession of lumber, and that lumber is not
timber whose possession without the required legal documents is unlawful under P.D. No. 705, as
amended, the Court of Appeals held:

This undue emphasis on lumber or the commercial nature of the forest product involved has always been
foisted by those who claim to be engaged in the legitimate business of lumber dealership. But what is
important to consider is that when appellant was required to present the valid documents showing its
acquisition and lawful possession of the lumber in question, it failed to present any despite the period of
extension granted to it.[25]

The petitioner's motion to reconsider the said decision was denied by the Court of Appeals in its
resolution of 3 March 1992.[26] Hence, the petitioner came to this Court by way of a petition for review on
certiorari in G.R. No. 104988, which was filed on 2 May 1992.[27]

On 24 September 1992, Branch 24 of the RTC of Manila handed down a decision in the SECOND CIVIL
CASE dismissing the petition for certiorari and prohibition because (a) the petitioner did not exhaust
administrative remedies; (b) when the seizure was made on 17 September 1990 the petitioner could not
lawfully sell lumber, as its license was still under suspension; (c) the seizure was valid under Section 68-A
of P.D. No. 705, as amended; and (d) the seizure was justified as a warrantless search and seizure under
Section 80 of P.D. No. 705, as amended.

The petitioner appealed from the decision to the Court of Appeals, which docketed the appeal as CA-G.R.
SP No. 33778.

In its decision[28] of 31 July 1995, the Court of Appeals dismissed the petitioner's appeal in CA-G.R. SP
No. 33778 for lack of merit and sustained the grounds relied upon by the trial court in dismissing the
SECOND CIVIL CASE. Relying on the definition of "lumber" by Webster, viz., "timber or logs, especially
after being prepared for the market," and by the Random House Dictionary of the English Language, viz.,
"wood, esp. when suitable or adapted for various building purposes," the respondent Court held that since
wood is included in the definition of forest product in Section 3(q) of P.D. No. 705, as amended, lumber is
necessarily included in Section 68 under the term forest product.

The Court of Appeals further emphasized that a forest officer or employee can seize the forest product
involved in a violation of Section 68 of P.D. No. 705 pursuant to Section 80 thereof, as amended by P.D.
No. 1775, which provides in part as follows:

SEC. 80. Arrest, Institution of Criminal Actions. A forest officer or employee of the Bureau or any
personnel of the Philippine Constabulary/Integrated National Police shall arrest even without warrant any
person who has committed or is committing in his presence any of the offenses defined in this chapter.
He shall also seize and confiscate, in favor of the Government, the tools and equipment used in
committing the offense, or the forest products cut, gathered or taken by the offender in the process of
committing the offense.

Among the offenses punished in the chapter referred to in said Section 80 are the cutting, gathering,
collection, or removal of timber or other forest products or possession of timber or other forest products
without the required legal documents.
Its motion to reconsider the decision having been denied by the Court of Appeals in the resolution of 6
February 1996, the petitioner filed with this Court on 27 February 1996 a petition for review on certiorari in
G.R. No. 123784.

We shall now resolve these three cases starting with G.R. 106424 with which the other two were
consolidated.

G.R. No. 106424

The petitioner had moved to quash the information in Criminal Case No. 324-V-91 on the ground that it
does not charge an offense. Respondent Judge Dizon-Capulong granted the motion reasoning that the
subject matter of the information in the CRIMINAL CASE is LUMBER, which is neither "timber" nor "other
forest product" under Section 68 of P.D. No. 705, as amended, and hence, possession thereof without the
required legal documents is not prohibited and penalized under the said section.

Under paragraph (a), Section 3, Rule 117 of the Rules of Court, an information may be quashed on the
ground that the facts alleged therein do not constitute an offense. It has been said that "the test for the
correctness of this ground is the sufficiency of the averments in the information, that is, whether the facts
alleged, if hypothetically admitted, constitute the elements of the offense,[29] and matters aliunde will not
be considered." Anent the sufficiency of the information, Section 6, Rule 110 of the Rules of Court
requires, inter alia, that the information state the acts or omissions complained of as constituting the
offense.

Respondent Ri Chuy Po is charged with the violation of Section 68 of P.D. No. 705, as amended by E.O.
No. 277, which provides:

SEC. 68. Cutting, Gathering and/or collecting Timber, or Other Forest Products Without License. Any
person who shall cut, gather, collect, remove timber or other forest products from any forest land, or
timber from alienable or disposable public land, or from private land, without any authority, or possess
timber or other forest products without the legal documents as required under existing forest laws and
regulations, shall be punished with the penalties imposed under Articles 309 and 310 of the Revised
Penal Code: Provided, That in the case of partnerships, associations, or corporations, the officers who
ordered the cutting, gathering, collection or possession shall be liable, and if such officers are aliens, they
shall, in addition to the penalty, be deported without further proceedings on the part of the Commission on
Immigration and Deportation.

The Court shall further order the confiscation in favor of the government of the timber or any forest
products cut, gathered, collected, removed, or possessed, as well as the machinery, equipment,
implements and tools illegally used in the area where the timber or forest products are found.

Punished then in this section are (1) the cutting, gathering, collection, or removal of timber or other forest
products from the places therein mentioned without any authority; and (b) possession of timber or other
forest products without the legal documents as required under existing forest laws and regulations.

Indeed, the word lumber does not appear in Section 68. But conceding ex gratia that this omission
amounts to an exclusion of lumber from the section's coverage, do the facts averred in the information in
the CRIMINAL CASE validly charge a violation of the said section?
A cursory reading of the information readily leads us to an infallible conclusion that lumber is not solely its
subject matter. It is evident therefrom that what are alleged to be in the possession of the private
respondent, without the required legal documents, are truckloads of

(1) almaciga and lauan; and

(2) approximately 200,000 bd. ft. of lumber and shorts of various species including almaciga and supa.

The almaciga and lauan specifically mentioned in no. (1) are not described as lumber. They cannot refer
to the lumber in no. (2) because they are separated by the words approximately 200,000 bd. ft. with the
conjunction and, and not with the preposition of. They must then be raw forest products or, more
specifically, timbers under Section 3(q) of P.D. No. 705, as amended, which reads:

SEC. 3. Definitions.

xxx xxx xxx

(q) Forest product means timber, pulpwood, firewood, bark, tree top, resin, gum, wood, oil, honey,
beeswax, nipa, rattan, or other forest growth such as grass, shrub, and flowering plant, the associated
water, fish, game, scenic, historical, recreational and geological resources in forest lands.

It follows then that lumber is only one of the items covered by the information. The public and the private
respondents obviously miscomprehended the averments in the information. Accordingly, even if lumber is
not included in Section 68, the other items therein as noted above fall within the ambit of the said section,
and as to them, the information validly charges an offense.

Our respected brother, Mr. Justice Jose C. Vitug, suggests in his dissenting opinion that this Court go
beyond the four corners of the information for enlightenment as to whether the information exclusively
refers to lumber. With the aid of the pleadings and the annexes thereto, he arrives at the conclusion that
only lumber has been envisioned in the indictment.

The majority is unable to subscribe to his view. First, his proposition violates the rule that only the facts
alleged in the information vis-a-vis the law violated must be considered in determining whether an
information charges an offense.

Second, the pleadings and annexes he resorted to are insufficient to justify his conclusion. On the
contrary, the Joint Affidavit of Melencio Jalova, Jr., and Araman Belleng, which is one of the annexes he
referred to,[30] cannot lead one to infer that what the team seized was all lumber. Paragraph 8 thereof
expressly states:

8. That when inside the compound, the team found approximately four (4) truckloads of narra shorts,
trimmings and slabs and a negligible amount of narra lumber, and approximately 200,000 bd. ft. of lumber
and shorts of various species including almaciga and supa which are classified as prohibited wood
species. (Italics supplied)

In the same vein, the dispositive portion of the resolution[31] of the investigating prosecutor, which served
as the basis for the filing of the information, does not limit itself to lumber; thus:
WHEREFORE, premises considered, it is hereby recommended that an information be filed against
respondent Ri Chuy Po for illegal possession of 200,000 bd. ft. of lumber consisting of almaciga and supa
and for illegal shipment of almaciga and lauan in violation of Sec. 63 of PD 705 as amended by E.O. 277,
series of 1987. (Italics supplied)

The foregoing disquisitions should not, in any manner, be construed as an affirmance of the respondent
Judge's conclusion that lumber is excluded from the coverage of Section 68 of P.D. No. 705, as
amended, and thus possession thereof without the required legal documents is not a crime. On the
contrary, this Court rules that such possession is penalized in the said section because lumber is included
in the term timber.

The Revised Forestry Code contains no definition of either timber or lumber. While the former is included
in forest products as defined in paragraph (q) of Section 3, the latter is found in paragraph (aa) of the
same section in the definition of Processing plant; which reads:

(aa) Processing plant is any mechanical set-up, machine or combination of machine used for the
processing of logs and other forest raw materials into lumber, veneer, plywood, wallboard, block-board,
paper board, pulp, paper or other finished wood products.

This simply means that lumber is a processed log or processed forest raw material. Clearly, the Code
uses the term lumber in its ordinary or common usage. In the 1993 copyright edition of Webster's Third
New International Dictionary, lumber is defined, inter alia, as timber or logs after being prepared for the
market.[32] Simply put, lumber is a processed log or timber.

It is settled that in the absence of legislative intent to the contrary, words and phrases used in a statute
should be given their plain, ordinary, and common usage meaning.[33] And insofar as possession of
timber without the required legal documents is concerned, Section 68 of P.D. No. 705, as amended,
makes no distinction between raw or processed timber. Neither should we. Ubi lex non distanguit nec nos
distinguere debemus.

Indisputably, respondent Judge Teresita Dizon-Capulong of Branch 172 of the RTC of Valenzuela, Metro
Manila, committed grave abuse of discretion in granting the motion to quash the information in the
CRIMINAL CASE and in dismissing the said case.

G.R. No. 104988

We find this petition to be without merit. The petitioner has miserably failed to show that the Court of
Appeals committed any reversible error in its assailed decision of 29 November 1991.

It was duly established that on 1 April 1990, the petitioner's truck with Plate No. CCK-322 was coming out
from the petitioner's lumberyard loaded with lauan and almaciga lumber of different sizes and dimensions
which were not accompanied with the required invoices and transport documents. The seizure of such
truck and its cargo was a valid exercise of the power vested upon a forest officer or employee by Section
80 of P.D. No. 705, as amended by P.D. No. 1775. Then, too, as correctly held by the trial court and the
Court of Appeals in the FIRST CIVIL CASE, the search was conducted on a moving vehicle. Such a
search could be lawfully conducted without a search warrant.

Search of a moving vehicle is one of the five doctrinally accepted exceptions to the constitutional
mandate[34] that no search or seizure shall be made except by virtue of a warrant issued by a judge after
personally determining the existence of probable cause. The other exceptions are (1) search as an
incident to a lawful arrest, (2) seizure of evidence in plain view, (3) customs searches, and (4) consented
warrantless search.[35]

We also affirm the rulings of both the trial court and the Court of Appeals that the search on 4 April 1990
was a continuation of the search on 3 April 1990 done under and by virtue of the search warrant issued
on 3 April 1990 by Executive Judge Osorio. Under Section 9, Rule 126 of the Rules of Court, a search
warrant has a lifetime of ten days. Hence, it could be served at any time within the said period, and if its
object or purpose cannot be accomplished in one day, the same may be continued the following day or
days until completed. Thus, when the search under a warrant on one day was interrupted, it may be
continued under the same warrant the following day, provided it is still within the ten-day period.[36]

As to the final plea of the petitioner that the search was illegal because possession of lumber without the
required legal documents is not illegal under Section 68 of P.D. No. 705, as amended, since lumber is
neither specified therein nor included in the term forest product, the same hardly merits further discussion
in view of our ruling in G.R. No. 106424.

G.R. No. 123784

The allegations and arguments set forth in the petition in this case palpably fail to show prima facie that a
reversible error has been committed by the Court of Appeals in its challenged decision of 31 July 1995
and resolution of 6 February 1996 in CA-G.R. SP No. 33778. We must, forthwith, deny it for utter want of
merit. There is no need to require the respondents to comment on the petition.

The Court of Appeals correctly dismissed the petitioner's appeal from the judgment of the trial court in the
SECOND CIVIL CASE. The petitioner never disputed the fact that its lumber-dealer's license or permit
had been suspended by Secretary Factoran on 23 April 1990. The suspension was never lifted, and since
the license had only a lifetime of up to 25 September 1990, the petitioner has absolutely no right to
possess, sell, or otherwise dispose of lumber. Accordingly, Secretary Factoran or his authorized
representative had the authority to seize the lumber pursuant to Section 68-A of P.D. No. 705, as
amended, which provides as follows:

Section 68-A. Administrative Authority of the Department Head or his Duly Authorized Representative to
Order Confiscation. In all cases of violations of this Code or other forest laws, rules and regulations, the
Department Head or his duly authorized representative may order the confiscation of any forest products
illegally cut, gathered, removed, or possessed or abandoned. . . .

The petitioner's insistence that possession or sale of lumber is not penalized must also fail in view of our
disquisition and ruling on the same issue in G.R. No. 106424. Besides, the issue is totally irrelevant in the
SECOND CIVIL CASE which involves administrative seizure as a consequence of the violation of the
suspension of the petitioner's license as lumber dealer.

All told then, G.R. No. 104988 and G.R. No. 123784 are nothing more than rituals to cover up blatant
violations of the Revised Forestry Code of the Philippines (P.D. No. 705), as amended. They are
presumably trifling attempts to block the serious efforts of the DENR to enforce the decree, efforts which
deserve the commendation of the public in light of the urgent need to take firm and decisive action
against despoilers of our forests whose continuous destruction only ensures to the generations to come, if
not the present, an inheritance of parched earth incapable of sustaining life. The Government must not
tire in its vigilance to protect the environment by prosecuting without fear or favor any person who dares
to violate our laws for the utilization and protection of our forests.

WHEREFORE, judgment is hereby rendered

1. (a) GRANTING the petition in G.R. No. 106424; (b) SETTING ASIDE and ANNULLING, for having
been rendered with grave abuse of discretion, the challenged orders of 16 August 1991 and 18 October
1991 of respondent Judge Teresita Dizon-Capulong, Branch 172, Regional Trial Court of Valenzuela,
Metro Manila, in Criminal Case No. 324-V-91, entitled People of the Philippines vs. Ri Chuy Po; (c)
REINSTATING the information in the said criminal case; and (d) DIRECTING the respondent Judge on
her successor to hear and decide the case with purposeful dispatch; and

2. DENYING the petitions in G.R. No. 104988 and in G. R. No. 123784 for utter failure of the petitioner to
show that the respondent Court of Appeals committed any reversible error in the challenged decisions of
29 November 1991 in CA-G.R. SP No. 25510 in the FIRST CIVIL CASE and of 31 July 1995 in CA-G.R.
SP No. 33778 in the SECOND CIVIL CASE.

Costs against the petitioner in each of these three cases. SO ORDERED.

GREGO vs COMELEC

The instant special civil action for certiorari and prohibition impugns the resolution of the Commission on
Elections (COMELEC) en banc in SPA No. 95-212 dated July 31, 1996, dismissing petitioners motion for
reconsideration of an earlier resolution rendered by the COMELECs First Division on October 6, 1995,
which also dismissed the petition for disqualification[1] filed by petitioner Wilmer Grego against private
respondent Humberto Basco.

The essential and undisputed factual antecedents of the case are as follows:

On October 31, 1981, Basco was removed from his position as Deputy Sheriff by no less than this Court
upon a finding of serious misconduct in an administrative complaint lodged by a certain Nena Tordesillas.
The Court held:

WHEREFORE, FINDING THE RESPONDENT DEPUTY SHERIFF HUMBERTO BASCO OF THE CITY
COURT OF MANILA GUILTY OF SERIOUS MISCONDUCT IN OFFICE FOR THE SECOND TIME, HE
IS HEREBY DISMISSED FROM THE SERVICE WITH FORFEITURE OF ALL RETIREMENT BENEFITS
AND WITH PREJUDICE TO REINSTATEMENT TO ANY POSITION IN THE NATIONAL OR LOCAL
GOVERNMENT, INCLUDING ITS AGENCIES AND INSTRUMENTALITIES, OR GOVERNMENT-
OWNED OR CONTROLLED CORPORATIONS.

x x x x x x x x x[2]

Subsequently, Basco ran as a candidate for Councilor in the Second District of the City of Manila during
the January 18, 1988, local elections. He won and, accordingly, assumed office.

After his term, Basco sought re-election in the May 11, 1992 synchronized national elections. Again, he
succeeded in his bid and he was elected as one of the six (6) City Councilors. However, his victory this
time did not remain unchallenged. In the midst of his successful re-election, he found himself besieged by
lawsuits of his opponents in the polls who wanted to dislodge him from his position.

One such case was a petition for quo warranto[3] filed before the COMELEC by Cenon Ronquillo,
another candidate for councilor in the same district, who alleged Bascos ineligibility to be elected
councilor on the basis of the Tordesillas ruling. At about the same time, two more cases were also
commenced by Honorio Lopez II in the Office of the Ombudsman and in the Department of Interior and
Local Government.[4] All these challenges were, however, dismissed, thus, paving the way for Bascos
continued stay in office.

Despite the odds previously encountered, Basco remained undaunted and ran again for councilor in the
May 8, 1995, local elections seeking a third and final term. Once again, he beat the odds by emerging
sixth in a battle for six councilor seats. As in the past, however, his right to office was again contested. On
May 13, 1995, petitioner Grego, claiming to be a registered voter of Precinct No. 966, District II, City of
Manila, filed with the COMELEC a petition for disqualification, praying for Bascos disqualification, for the
suspension of his proclamation, and for the declaration of Romualdo S. Maranan as the sixth duly elected
Councilor of Manilas Second District.

On the same day, the Chairman of the Manila City Board of Canvassers (BOC) was duly furnished with a
copy of the petition. The other members of the BOC learned about this petition only two days later.

The COMELEC conducted a hearing of the case on May 14, 1995, where it ordered the parties to submit
simultaneously their respective memoranda.

Before the parties could comply with this directive, however, the Manila City BOC proclaimed Basco on
May 17, 1995, as a duly elected councilor for the Second District of Manila, placing sixth among several
candidates who vied for the seats.[5] Basco immediately took his oath of office before the Honorable Ma.
Ruby Bithao-Camarista, Presiding Judge, Metropolitan Trial Court, Branch I, Manila.

In view of such proclamation, petitioner lost no time in filing an Urgent Motion seeking to annul what he
considered to be an illegal and hasty proclamation made on May 17, 1995, by the Manila City BOC. He
reiterated Bascos disqualification and prayed anew that candidate Romualdo S. Maranan be declared the
winner. As expected, Basco countered said motion by filing his Urgent Opposition to: Urgent Motion (with
Reservation to Submit Answer and/or Motion to Dismiss Against Instant Petition for Disqualification with
Temporary Restraining Order).

On June 5, 1995, Basco filed his Motion to Dismiss Serving As Answer pursuant to the reservation he
made earlier, summarizing his contentions and praying as follows:

Respondent thus now submits that the petitioner is not entitled to relief for the following reasons:

1. The respondent cannot be disqualified on the ground of Section 40 paragraph b of the Local
Government Code because the Tordesillas decision is barred by laches, prescription, res judicata, lis
pendens, bar by prior judgment, law of the case and stare decisis;

2. Section 4[0] par. B of the Local Government Code may not be validly applied to persons who were
dismissed prior to its effectivity. To do so would make it ex post facto, bill of attainder, and retroactive
legislation which impairs vested rights. It is also a class legislation and unconstitutional on the account.
3. Respondent had already been proclaimed. And the petition being a preproclamation contest under the
Marquez v. Comelec Ruling, supra, it should be dismissed by virtue of said pronouncement.

4. Respondents three-time election as candidate for councilor constitutes implied pardon by the people of
previous misconduct (Aguinaldo v. Comelec G.R. 105128; Rice v. State 161 SCRA 401; Montgomery v.
Newell 40 SW 2d 4181; People v. Bashaw 130 P. 2nd 237, etc.).

5. As petition to nullify certificate of candidacy, the instant case has prescribed; it was premature as an
election protest and it was not brought by a proper party in interest as such protest.:

PRAYER

WHEREFORE it is respectfully prayed that the instant case be dismissed on instant motion to dismiss the
prayer for restraining order denied (sic). If this Honorable Office is not minded to dismiss, it is respectfully
prayed that instant motion be considered as respondents answer. All other reliefs and remedies just and
proper in the premises are likewise hereby prayed for.

After the parties respective memoranda had been filed, the COMELECs First Division resolved to dismiss
the petition for disqualification on October 6, 1995, ruling that the administrative penalty imposed by the
Supreme Court on respondent Basco on October 31, 1981 was wiped away and condoned by the
electorate which elected him and that on account of Bascos proclamation on May 17, 1965, as the sixth
duly elected councilor of the Second District of Manila, the petition would no longer be viable.[6]

Petitioners motion for reconsideration of said resolution was later denied by the COMELEC en banc in its
assailed resolution promulgated on July 31, 1996.[7] Hence, this petition.

Petitioner argues that Basco should be disqualified from running for any elective position since he had
been removed from office as a result of an administrative case pursuant to Section 40 (b) of Republic Act
No. 7160, otherwise known as the Local Government Code (the Code), which took effect on January 1,
1992.[8]

Petitioner wants the Court to likewise resolve the following issues, namely:

1. Whether or not Section 40 (b) of Republic Act No. 7160 applies retroactively to those removed from
office before it took effect on January 1, 1992;

2. Whether or not private respondents election in 1988, 1992 and in 1995 as City Councilor of Manila
wiped away and condoned the administrative penalty against him;

3. Whether or not private respondents proclamation as sixth winning candidate on May 17, 1995, while
the disqualification case was still pending consideration by COMELEC, is void ab initio; and

4. Whether or not Romualdo S. Maranan, who placed seventh among the candidates for City Councilor of
Manila, may be declared a winner pursuant to Section 6 of Republic Act No. 6646.

While we do not necessarily agree with the conclusions and reasons of the COMELEC in the assailed
resolution, nonetheless, we find no grave abuse of discretion on its part in dismissing the petition for
disqualification. The instant petition must, therefore, fail.
We shall discuss the issues raised by petitioner in seriatim.

I. Does Section 40 (b) of Republic Act No. 7160 apply retroactively to those removed from office before it
took effect on January 1, 1992?

Section 40 (b) of the Local Government Code under which petitioner anchors Bascos alleged
disqualification to run as City Councilor states:

SEC. 40. Disqualifications. - The following persons are disqualified from running for any elective local
position:

xxxxxxxxx

(b) Those removed from office as a result of an administrative case;

x x x x x x x x x.

In this regard, petitioner submits that although the Code took effect only on January 1, 1992, Section 40
(b) must nonetheless be given retroactive effect and applied to Bascos dismissal from office which took
place in 1981. It is stressed that the provision of the law as worded does not mention or even qualify the
date of removal from office of the candidate in order for disqualification thereunder to attach. Hence,
petitioner impresses upon the Court that as long as a candidate was once removed from office due to an
administrative case, regardless of whether it took place during or prior to the effectivity of the Code, the
disqualification applies.[9] To him, this interpretation is made more evident by the manner in which the
provisions of Section 40 are couched. Since the past tense is used in enumerating the grounds for
disqualification, petitioner strongly contends that the provision must have also referred to removal from
office occurring prior to the effectivity of the Code.[10]

We do not, however, subscribe to petitioners view. Our refusal to give retroactive application to the
provision of Section 40 (b) is already a settled issue and there exist no compelling reasons for us to
depart therefrom. Thus, in Aguinaldo vs. COMELEC,[11] reiterated in the more recent cases of Reyes vs.
COMELEC[12] and Salalima vs. Guingona, Jr.,[13] we ruled, thus:

The COMELEC applied Section 40 (b) of the Local Government Code (Republic Act 7160) which
provides:

Sec. 40. The following persons are disqualified from running for any elective local positions:

xxxxxxxxx

(b) Those removed from office as a result of an administrative case.

Republic Act 7160 took effect only on January 1, 1992.

The rule is:

xxxxxxxxx
x x x Well-settled is the principle that while the Legislature has the power to pass retroactive laws which
do not impair the obligation of contracts, or affect injuriously vested rights, it is equally true that statutes
are not to be construed as intended to have a retroactive effect so as to affect pending proceedings,
unless such intent is expressly declared or clearly and necessarily implied from the language of the
enactment. x x x (Jones vs. Summers, 105 Cal. App. 51, 286 Pac. 1093; U.S. vs. Whyel 28 (2d) 30;
Espiritu v. Cipriano, 55 SCRA 533 [1974], cited in Nilo vs. Court of Appeals, 128 SCRA 519 [1974]. See
also Puzon v. Abellera, 169 SCRA 789 [1989]; Al-Amanah Islamic Investment Bank of the Philippines v.
Civil Service Commission, et al., G.R. No. 100599, April 8, 1992).

There is no provision in the statute which would clearly indicate that the same operates retroactively.

It, therefore, follows that [Section] 40 (b) of the Local Government Code is not applicable to the present
case. (Underscoring supplied).

That the provision of the Code in question does not qualify the date of a candidates removal from office
and that it is couched in the past tense should not deter us from the applying the law prospectively. The
basic tenet in legal hermeneutics that laws operate only prospectively and not retroactively provides the
qualification sought by petitioner. A statute, despite the generality in its language, must not be so
construed as to overreach acts, events or matters which transpired before its passage. Lex prospicit, non
respicit. The law looks forward, not backward.[14]

II. Did private respondents election to office as City Councilor of Manila in the 1988, 1992 and 1995
elections wipe away and condone the administrative penalty against him, thus restoring his eligibility for
public office?

Petitioner maintains the negative. He quotes the earlier ruling of the Court in Frivaldo v. COMELEC[15] to
the effect that a candidates disqualification cannot be erased by the electorate alone through the
instrumentality of the ballot. Thus:

x x x (T)he qualifications prescribed for elective office cannot be erased by the electorate alone. The will
of the people as expressed through the ballot cannot cure the vice of ineligibility, especially if they
mistakenly believed, as in this case, that the candidate was qualified. x x x

At first glance, there seems to be a prima facie semblance of merit to petitioners argument. However, the
issue of whether or not Bascos triple election to office cured his alleged ineligibility is actually beside the
point because the argument proceeds on the assumption that he was in the first place disqualified when
he ran in the three previous elections. This assumption, of course, is untenable considering that Basco
was NOT subject to any disqualification at all under Section 40 (b) of the Local Government Code which,
as we said earlier, applies only to those removed from office on or after January 1, 1992. In view of the
irrelevance of the issue posed by petitioner, there is no more reason for the Court to still dwell on the
matter at length.

Anent Bascos alleged circumvention of the prohibition in Tordesillas against reinstatement to any position
in the national or local government, including its agencies and instrumentalities, as well as government-
owned or controlled corporations, we are of the view that petitioners contention is baseless. Neither does
petitioners argument that the term any position is broad enough to cover without distinction both
appointive and local positions merit any consideration.
Contrary to petitioners assertion, the Tordesillas decision did not bar Basco from running for any elective
position. As can be gleaned from the decretal portion of the said decision, the Court couched the
prohibition in this wise:

x x x AND WITH PREJUDICE TO REINSTATEMENT TO ANY POSITION IN THE NATIONAL OR


LOCAL GOVERNMENT, INCLUDING ITS AGENCIES AND INSTRUMENTALITIES, OR
GOVERNMENT-OWNED OR CONTROLLED CORPORATIONS.

In this regard, particular attention is directed to the use of the term reinstatement. Under the former Civil
Service Decree,[16] the law applicable at the time Basco, a public officer, was administratively dismissed
from office, the term reinstatement had a technical meaning, referring only to an appointive position.
Thus:

ARTICLE VIII. PERSONNEL POLICIES AND STANDARDS.

SEC. 24. Personnel Actions. -

xxxxxxxxx

(d) Reinstatement. - Any person who has been permanently APPOINTED to a position in the career
service and who has, through no delinquency or misconduct, been separated therefrom, may be
reinstated to a position in the same level for which he is qualified.

x x x x x x x x x.

(Emphasis and underscoring supplied).

The Rules on Personnel Actions and Policies issued by the Civil Service Commission on November 10,
1975,[17] provides a clearer definition. It reads:

RULE VI. OTHER PERSONNEL ACTIONS.

SEC. 7. Reinstatement is the REAPPOINMENT of a person who was previously separated from the
service through no delinquency or misconduct on his part from a position in the career service to which he
was permanently appointed, to a position for which he is qualified. (Emphasis and underscoring supplied).

In light of these definitions, there is, therefore, no basis for holding that Basco is likewise barred from
running for an elective position inasmuch as what is contemplated by the prohibition in Tordesillas is
reinstatement to an appointive position.

III. Is private respondents proclamation as sixth winning candidate on May 17, 1995, while the
disqualification case was still pending consideration by COMELEC, void ab initio?

To support its position, petitioner argues that Basco violated the provisions of Section 20, paragraph (i) of
Republic Act No. 7166, Section 6 of Republic Act No. 6646, as well as our ruling in the cases of
Duremdes v. COMELEC,[18] Benito v. COMELEC[19] and Aguam v. COMELEC.[20]

We are not convinced. The provisions and cases cited are all misplaced and quoted out of context. For
the sake of clarity, let us tackle each one by one.
Section 20, paragraph (i) of Rep. Act 7166 reads:

SEC. 20. Procedure in Disposition of Contested Election Returns.-

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(i) The board of canvassers shall not proclaim any candidate as winner unless authorized by the
Commission after the latter has ruled on the objections brought to it on appeal by the losing party. Any
proclamation made in violation hereof shall be void ab initio, unless the contested returns will not
adversely affect the results of the election.

x x x x x x x x x.

The inapplicability of the abovementioned provision to the present case is very much patent on its face
considering that the same refers only to a void proclamation in relation to contested returns and NOT to
contested qualifications of a candidate.

Next, petitioner cites Section 6 of Rep. Act 6646 which states:

SEC. 6. Effect of Disqualification Case. - Any candidate who has been declared by final judgment to be
disqualified shall not be voted for, and the votes cast for him shall not be counted. If for any reason, a
candidate is not declared by final judgment before an election to be disqualified and he is voted for and
receives the winning number of votes in such election, the Court or Commission shall continue with the
trial and hearing of the action, inquiry or protest and, upon motion of the complainant or any intervenor,
may during the pendency thereof order the suspension of the proclamation of such candidate whenever
the evidence of his guilt is strong. (Underscoring supplied).

This provision, however, does not support petitioners contention that the COMELEC, or more properly
speaking, the Manila City BOC, should have suspended the proclamation. The use of the word may
indicates that the suspension of a proclamation is merely directory and permissive in nature and operates
to confer discretion.[21] What is merely made mandatory, according to the provision itself, is the
continuation of the trial and hearing of the action, inquiry or protest. Thus, in view of this discretion
granted to the COMELEC, the question of whether or not evidence of guilt is so strong as to warrant
suspension of proclamation must be left for its own determination and the Court cannot interfere therewith
and substitute its own judgment unless such discretion has been exercised whimsically and
capriciously.[22] The COMELEC, as an administrative agency and a specialized constitutional body
charged with the enforcement and administration of all laws and regulations relative to the conduct of an
election, plebiscite, initiative, referendum, and recall,[23] has more than enough expertise in its field that
its findings or conclusions are generally respected and even given finality.[24] The COMELEC has not
found any ground to suspend the proclamation and the records likewise fail to show any so as to warrant
a different conclusion from this Court. Hence, there is no ample justification to hold that the COMELEC
gravely abused its discretion.

It is to be noted that Section 5, Rule 25 of the COMELEC Rules of Procedure[25] states that:

SEC. 5. Effect of petition if unresolved before completion of canvass. - x x x (H)is proclamation shall be
suspended notwithstanding the fact that he received the winning number of votes in such election.
However, being merely an implementing rule, the same must not override, but instead remain consistent
with and in harmony with the law it seeks to apply and implement. Administrative rules and regulations
are intended to carry out, neither to supplant nor to modify, the law.[26] Thus, in Miners Association of the
Philippines, Inc. v. Factoran, Jr.,[27] the Court ruled that:

We reiterate the principle that the power of administrative officials to promulgate rules and regulations in
the implementation of a statute is necessarily limited only to carrying into effect what is provided in the
legislative enactment. The principle was enunciated as early as 1908 in the case of United States v.
Barrias. The scope of the exercise of such rule-making power was clearly expressed in the case of United
States v. Tupasi Molina, decided in 1914, thus: Of course, the regulations adopted under legislative
authority by a particular department must be in harmony with the provisions of the law, and for the sole
purpose of carrying into effect its general provisions. By such regulations, of course, the law itself can not
be extended. So long, however, as the regulations relate solely to carrying into effect the provision of the
law, they are valid.

Recently, the case of People v. Maceren gave a brief delineation of the scope of said power of
administrative officials:

Administrative regulations adopted under legislative authority by a particular department must be in


harmony with the provisions of the law, and should be for the sole purpose of carrying into effect its
general provisions. By such regulations, of course, the law itself cannot be extended (U.S. v. Tupasi
Molina, supra). An administrative agency cannot amend an act of Congress (Santos v. Estenzo, 109 Phil.
419, 422; Teoxon vs. Members of the Board of Administrators, L-25619, June 30, 1970, 33 SCRA 585;
Manuel vs. General Auditing Office, L-28952, December 29, 1971, 42 SCRA 660; Deluao vs. Casteel, L-
21906, August 29, 1969, 29 SCRA 350).

The rule-making power must be confined to details for regulating the mode or proceeding to carry into
effect the law as it has been enacted. The power cannot be extended to amending or expanding the
statutory requirements or to embrace matters not covered by the statute. Rules that subvert the statute
cannot be sanctioned (University of Santo Tomas v. Board of Tax Appeals, 93 Phil. 376, 382, citing 12
C.J. 845-46. As to invalid regulations, see Collector of Internal Revenue v. Villaflor, 69 Phil. 319; Wise &
Co. v. Meer, 78 Phil. 655, 676; Del Mar v. Phil. Veterans Administration, L-27299, June 27, 1973, 51
SCRA 340, 349).

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x x x The rule or regulations should be within the scope of the statutory authority granted by the
legislature to the administrative agency (Davis, Administrative Law, p. 194, 197, cited in Victorias Milling
Co., Inc. v. Social Security Commission, 114 Phil. 555, 558).

In case of discrepancy between the basic law and a rule or regulation issued to implement said law, the
basic law prevails because said rule or regulations cannot go beyond the terms and provisions of the
basic law (People v. Lim, 108 Phil. 1091).

Since Section 6 of Rep. Act 6646, the law which Section 5 of Rule 25 of the COMELEC Rules of
Procedure seeks to implement, employed the word may, it is, therefore, improper and highly irregular for
the COMELEC to have used instead the word shall in its rules.
Moreover, there is no reason why the Manila City BOC should not have proclaimed Basco as the sixth
winning City Councilor. Absent any determination of irregularity in the election returns, as well as an order
enjoining the canvassing and proclamation of the winner, it is a mandatory and ministerial duty of the
Board of Canvassers concerned to count the votes based on such returns and declare the result. This
has been the rule as early as in the case of Dizon v. Provincial Board of Canvassers of Laguna[28] where
we clarified the nature of the functions of the Board of Canvassers, viz.:

The simple purpose and duty of the canvassing board is to ascertain and declare the apparent result of
the voting. All other questions are to be tried before the court or other tribunal for contesting elections or
in quo warranto proceedings. (9 R.C.L., p. 1110)

To the same effect is the following quotation:

x x x Where there is no question as to the genuineness of the returns or that all the returns are before
them, the powers and duties of canvassers are limited to the mechanical or mathematical function of
ascertaining and declaring the apparent result of the election by adding or compiling the votes cast for
each candidate as shown on the face of the returns before them, and then declaring or certifying the
result so ascertained. (20 C.J., 200-201) [Underscoring supplied]

Finally, the cases of Duremdes, Benito and Aguam, supra, cited by petitioner are all irrelevant and
inapplicable to the factual circumstances at bar and serve no other purpose than to muddle the real issue.
These three cases do not in any manner refer to void proclamations resulting from the mere pendency of
a disqualification case.

In Duremdes, the proclamation was deemed void ab initio because the same was made contrary to the
provisions of the Omnibus Election Code regarding the suspension of proclamation in cases of contested
election returns.

In Benito, the proclamation of petitioner Benito was rendered ineffective due to the Board of Canvassers
violation of its ministerial duty to proclaim the candidate receiving the highest number of votes and pave
the way to succession in office. In said case, the candidate receiving the highest number of votes for the
mayoralty position died but the Board of Canvassers, instead of proclaiming the deceased candidate
winner, declared Benito, a mere second-placer, the mayor.

Lastly, in Aguam, the nullification of the proclamation proceeded from the fact that it was based only on
advanced copies of election returns which, under the law then prevailing, could not have been a proper
and legal basis for proclamation.

With no precedent clearly in point, petitioners arguments must, therefore, be rejected.

IV. May Romualdo S. Maranan, a seventh placer, be legally declared a winning candidate?

Obviously, he may not be declared a winner. In the first place, Basco was a duly qualified candidate
pursuant to our disquisition above. Furthermore, he clearly received the winning number of votes which
put him in sixth place. Thus, petitioners emphatic reference to Labo v. COMELEC,[29] where we laid
down a possible exception to the rule that a second placer may be declared the winning candidate, finds
no application in this case. The exception is predicated on the concurrence of two assumptions, namely:
(1) the one who obtained the highest number of votes is disqualified; and (2) the electorate is fully aware
in fact and in law of a candidates disqualification so as to bring such awareness within the realm of
notoriety but would nonetheless cast their votes in favor of the ineligible candidate. Both assumptions,
however, are absent in this case. Petitioners allegation that Basco was well-known to have been
disqualified in the small community where he ran as a candidate is purely speculative and conjectural,
unsupported as it is by any convincing facts of record to show notoriety of his alleged disqualification.[30]

In sum, we see the dismissal of the petition for disqualification as not having been attended by grave
abuse of discretion. There is then no more legal impediment for private respondents continuance in office
as City Councilor for the Second District of Manila.

WHEREFORE, the instant petition for certiorari and prohibition is hereby DISMISSED for lack of merit.
The assailed resolution of respondent Commission on Elections (COMELEC) is SPA 95-212 dated July
31, 1996 is hereby AFFIRMED. Costs against petitioner. SO ORDERED.