TAX LAWS
respondents bar an action for recovery of deficiency income taxes under
REPUBLIC OF THE PHILIPPINES VS INTERMEDIATE APPELLATE
COURT and SPOUSES ANTONIO AND CLARA PASTOR
FACTS:
 April 15, 1980, the Republic through the BIR commenced an action in the
Court of First Instance (now RTC) of Manila, Branch 16 to collect from the
Spouses Antonio and Clara Pastor deficiency income taxes for the years
1955-1959 in the amount of P17,117.08 with a 5% surcharge and 1% monthly
interest and costs.
 The Pastors filed motion to dismiss the complaint but was denied
 They filed an answer admitting that there was an assessment against them
for income tax deficiency but denying liability.
 Spouses contention:
- they had availed of the tax amnesty under PD Nos 23, 213 and 370 and
had paid the corresponding amnesty taxes amounting to P10,400 or
10% of their reported untaxed income under P.D. 23, P2,951.20 or 20%
of the reported untaxed income under P.D. 213, and a final payment on
October 26, 1973 under P.D. 370 evidenced by the Government's Official
Receipt No. 1052388
- that Government is in estoppels to demand and compel further payment
of income taxes
 The Government appealed to the Intermediate Appellant Court, alleging that
the private respondents were not qualified to avail of the tax amnesty under
P.D. 213 for the benefits of that decree are available only to persons who had
no pending assessment for unpaid taxes, as provided in Revenue Regulations
Nos. 8-72 and 7-73. Since the Pastors did in fact have a pending assessment
against them, they were precluded from availing of the amnesty granted in
P.D.’s Nos. 23 and 213. The Government further argued that “tax exemptions
should be interpreted strictissimi juris against the taxpayer.
 The Intermediate Appellate Court (now Court of Appeals) rendered a
decision dismissing the Government’s appeal and holding that the payment
of deficiency income taxes by the Pastors under PD. No. 213, and the
acceptance thereof by the Government, operated to divest the latter of its
right to further recover deficiency income taxes from the private respondents
pursuant to the existing deficiency tax assessment against them.
ISSUE: Whether or not tax amnesty payments made by the private
PDs Nos. 23, 213 and 370
RULING:
YES. Petition for review is denied.
Even assuming that the deficiency tax assessment of P17,117.08 against the Pastor
spouses were correct, since the latter have already paid almost the equivalent amount
to the Government by way of amnesty taxes under P.D. No. 213, and were granted not
merely an exemption, but an amnesty, for their past tax failings, the Government is
estopped from collecting the difference between the deficiency tax
assessment and the amount already paid by them as amnesty tax.
A tax amnesty, being a general pardon or intentional
overlooking by the State of its authority to impose penalties on persons
otherwise guilty of evasion or violation of a revenue or tax law, partakes
of an absolute forgiveness or waiver by the Government of its right to
collect what otherwise would be due it, and in this sense, prejudicial
thereto, particularly to give tax evaders, who wish to relent and are
willing to reform a chance to do so and thereby become a part of the new
society with a clean slate (Commission of Internal Revenue vs. Botelho
Corp. and Shipping Co., Inc., 20 SCRA 487).
The finding of the appellate court that the deficiency income taxes were
paid by the Pastors, and accepted by the Government, under P.D. 213,
granting amnesty to persons who are required by law to file income tax
returns but who failed to do so, is entitled to the highest respect and may
not be disturbed except under exceptional circumstances which have
already become familiar (Rule 45, Sec. 4, Rules of Court; e.g., where: (1) the
conclusion is a finding grounded entirely on speculation, surmise and conjecture; (2)
the inference made is manifestly mistaken; (3) there is grave abuse of discretion; (4)
the judgment is based on misapprehension of facts; (5) the Court of Appeals went
beyond the issues of the case and its findings are contrary to the admissions of both
the appellant and the appellee; (6) the findings of fact of the Court of Appeals are
contrary to those of the trial court; (7) said findings of fact are conclusions without
citation of specific evidence in which they are based; (8) the facts set forth in the
petition as well as in the petitioner's main and reply briefs are not disputed by the
respondents; and (9) when the finding of fact of the Court of Appeals is premised on
the absense of evidence and is contradicted by the evidence on record (Thelma Fernan
vs. CA, et al., 181 SCRA 546, citing Tolentino vs. de Jesus, 56 SCRA 67; People vs.
Traya, 147 SCRA 381), none of which is present in this case.
 The rule is that in case of doubt, tax statutes are to be construed strictly
against the Government and liberally in favor of the taxpayer, for taxes, being
burdens, are not to be presumed beyond what the applicable statute (in this case P.D.
213) expressly and clearly declares
ACTING COMMISSIONER OF CUSTOMS, petitioner, vs. MANILA ELECTRIC
COMPANY and COURT OF TAX APPEALS, respondents.
G.R. No. L-23623. June 30, 1977
FACTS:
 Manila Electric Company (Meralco) imported insulating oil for its plants.
 Acting Commissioner of Customs Norberto Romualdez held that these
insulating oils are subject to a special import tax
 Meralco paid the amount of P995under protest.
 Meralco claims that it is exempt from the special import tax by virtue of:
o Sec. 6 of RA No. 1394 – exempts equipment and spare parts for use
in industries from the special import tax
o Para. 9, Part Two of its franchise – expressly exempts insulators
from taxes of whatever kind and nature in consideration for the
payment of the percentage tax on its gross earnings
 Court of Tax Appealsreversed the decision of the Commissioner of Customs
o Respondent is ordered to refund to petitioner
o There is no question that insulating oils of the type imported by
petitioner are 'used for cooling as well as for insulating,' and when
used in oil circuit breakers, they are 'required to maintain insulation
between the contacts inside the tank and the tank itself (Gregory J.
Brady’s Materials Handbook)
ISSUE:
 Whether or not insulating oil come within the meaning of the term insulator
RULING:
 YES.
 Well-settled is the principle that an exemption from taxation must be
justified by words too clear to be misread;exemption from taxation is not
favored and is never presumed, so that if granted it must be strictly
construed against the taxpayer.
 It is true that in the construction of tax statutes tax exemptions (and
deductions are of this nature) are not favored in the law, and are
construed strictissimi juris against the taxpayer. However, it is equally a
recognized principle that where the provision of the law is clear and
unambiguous, the law must be taken as it is, devoid of judicial addition or
subtraction.
 No other conclusion is possible in view of the well-settled principle that this
Court is bound by the finding of facts of the Court of Tax Appeals, only
questions of law being open to it for determination.
 Where the question is one of fact, it is no longer reviewable.This is in line
with the recognition that the CTA enjoys a wide discretion in construing tax
statutes.
It would be an affront to the sense of fairness and of justice if in the exercise of its
discretionary authority, after determining that insulating oil comes within the term
insulator, is not be upheld.
MISAMIS ORIENTAL ASSOCIATION OF COCO TRADERS, INC. v. DEPARTMENT
OF FINANCE SECRETARY, COMMISSIONER OF THE BUREAU OF INTERNAL
REVENUE (BIR), AND REVENUE DISTRICT OFFICER, BIR MISAMIS ORIENTAL,
G.R. No. 108524. November 10, 1994
FACTS:
Petitioner is engaged in the buying and selling of copra in Misamis Oriental. The
petitioner questions Revenue Memorandum Circular 47-91 issued by the respondent,
in which copra was classified as agricultural non-food product effectively removing
copra as one of the exemptions under Section 103 of the NIRC.
Section 103a of the NIRC states that the sale of agricultural non-food products in their
original state is exempt from VAT only if the sale is made by the primary producer or
owner of the land from which the same are produced and not by any other person or
entity. Section 103b states the sale of agricultural food products in their original state
is exempt from VAT at all stages of production or distribution regardless of who the
seller is - which the petitioner enjoys. The reclassification had the effect of denying to
the petitioner this exemption when copra was classified as an agricultural food
product.
Petitioner filed a motion for prohibition.
ISSUE: Whether the Circular is valid.
RULING:
Yes. The Court first stated that the CIR gave the circular a strict construction
consistent with the rule that tax exemptions must be strictly construed against the
taxpayer and liberally in favor of the state.
The Court also stated that the Circular is not discriminatory and in violation of the
equal protection clause. Petitioner likened copra farmers / producers, who are
exempted from VAT and copra traders, which the Court disagreed.
Lastly, petitioners argued that the Circular was counterproductive which the Court
answers that it is a question of wisdom or policy which should be addressed to
respondent officials and to Congress.
Resins Inc. vs Auditor General and Central Bank
Facts: .
Petitioner Resins Inc., sought for a refund from respondent Central Bank on the claim
that it was exempted from the margin fee defined under R.A No. 2609 for the
importation of urea and formaldehyde as a separate units used for the production of
synthetic glue, of which it was a manufacturer. It claimed that the specific language of
the said R.A 2609 speaks of “urea formaldehyde” (note: without the conjunction
“and”) which therefore would make his plea granted since petitioner imported urea
and formaldehyde separately, if the said law was construed to read as “urea and
formaldehyde” Petitioner contended that the approved Congress bill contained the
conjunction “and” and that Congressintended to exempt urea and formaldehyde
separately, citing the statements made on the floor by the Senate.
Issue: Whether or not the Resin Inc.’s contention is with merit
Held/Ruling: No. Petition is denied. Urea Formaldehyde is clearly a finished
product, which is patently distinct from urea and formaldehyde as separate articles.
Resins contention that Congress intended to exempt urea and formaldehyde
separately, citing statements made by the Senate, said statements do not necessarily
reflect the view of the Senate, much less of the House of Representatives. It has been
ISSUE:
the constant and uniform, holding that exemption from taxation is not favored and is
never presumed, so that if granted it must be strictly construed against the taxpayer.
Affirmatively put, the law frowns on exemption from taxation, hence an exempting
provision should be construed strictissimi juris. Certainly, whatever may be said of the
statutory language found in Republic Act 2609, it would be going too far to assert that
HELD:
there was such a clear and manifest intention of legislative will as to compel such a
refund.
G.R. No. 140230 December 15, 2005
COMMISSIONER OF INTERNAL REVENUE, Petitioner,
vs.
PHILIPPINE LONG DISTANCE TELEPHONE COMPANY, Respondent.
Ponente: Garcia, J.
FACTS:
 PLDT is a grantee of a franchise under Republic Act (R.A.) No. 7082 to
install, operate and maintain a telecom system throughout the Philippines.
 It imports various equipment, machineries and spare parts for its business
on different occasion from 1992 to 1994.
 PLDT paid the BIR the amount of P164, 510,953.00, broken down as follows:
(a) compensating tax of P126,713,037.00; advance sales tax of
P12,460,219.00 and other internal revenue taxes of P25,337,697.00.
 For similar importations made between March to May 1994, PLDT paid
P116, 041,333.00 value-added tax (VAT).
 On March 15, 1994, PLDT addressed a letter to the BIR seeking a
confirmatory ruling on its tax exemption privilege under Section 12 of R.A.
7082, with a provision that: the grantee, shall pay a franchise tax
equivalent to three percent (3%) of all gross receipts of the telephone or
other telecommunications businesses transacted under this franchise by the
grantee, its successors or assigns, and the said percentage shall be in
lieu of all taxes on this franchise or earnings thereof.
 When its claim was not acted upon by the BIR, PLDT went to the CTA.
 The CTA ruled for PLDT, but punctuated by a dissenting opinion of Associate
Judge Saga who maintained that the phrase in lieu of all taxes found in
Section 12 of R.A. No. 7082, supra, refers to exemption from direct
taxes only and does not cover indirect taxes, such as VAT,
compensating tax and advance sales tax.
 The CIR appealed to the CA. The CA affirmed the CTA’s decision. Hence, the
SC addressed the main issue tendered herein.
WON the 3% franchise tax exempts the PLDT from paying all other
taxes, including indirect taxes.
No.
 Direct taxes are those exacted from the very person who, it is intended or
desired, should pay them. They are impositions for which a taxpayer is
directly liable on the transaction or business he is engaged in.
 Indirect taxes are taxes wherein the liability for the payment of the tax falls
on one person but the burden thereof can be shifted or passed on to another
person, such as when the tax is imposed upon goods before reaching the
consumer who ultimately pays for it.
 The NIRC classifies VAT as “an indirect tax … the amount of which may
be shifted or passed on to the buyer, transferee or lessee of the goods”. The
10% VAT on importation of goods is in the nature of an excise tax levied on
the privilege of importing articles. It is imposed on all taxpayers who import
goods. It is not a tax on the franchise of a business enterprise or on its
earnings, as stated in Section 2 of RA 7082.
 Advance sales tax has the attributes of an indirect tax because the
tax-paying importer of goods for sale or of raw materials to be processed into
merchandise can shift the tax or lay the “economic burden of the tax” on the
purchaser by subsequently adding the tax to the selling price of the imported
article or finished product.
 Compensating tax also partakes of the nature of an excise tax payable
by all persons who import articles, whether in the course of business or not.
 The liability for the payment of the indirect taxes lies with the seller of the
goods or services, not in the buyer thereof. Thus, one cannot invoke one’s
exemption privilege to avoid the passing on or the shifting of the VAT to him
by the manufacturers/suppliers of the goods he purchased. Hence, it is
important to determine if the tax exemption granted to a taxpayer
specifically includes the indirect tax which is shifted to him as part of the
purchase price, otherwise it is presumed that the tax exemption embraces
only those taxes for which the buyer is directly liable. Since RA 7082 did not
specifically include indirect taxes in the exemption granted to PLDT, the
latter cannot claim exemption from VAT, advance sales tax and
compensating tax.
 The clause “in lieu of all taxes” in Section 12 of RA 7082 is
immediately followed by the qualifying clause “on this franchise or
earnings thereof”, suggesting that the exemption is limited to taxes
imposed directly on PLDT since taxes pertaining to PLDT’s franchise or
earnings are its direct liability. Accordingly, indirect taxes, not being
taxes on PLDT’s franchise or earnings, are not included in the
exemption provision.
 PLDT’s allegation that the Bureau of Customs assessed the company for
advance sales tax and compensating tax for importations entered between
October 1, 1992 and May 31, 1994 when the value-added tax system already
replaced, if not totally eliminated, advance sales and compensating taxes, is
with merit. Pursuant to Executive Order No. 273, a multi-stage value-added
tax was put into place to replace the tax on original and subsequent sales tax.
Therefore, compensating tax and advance sales tax were no longer collectible
internal revenue taxes under the NIRC when the Bureau of Customs made
the assessments in question and collected the corresponding tax. Stated a bit
differently, PLDT was no longer under legal obligation to pay compensating
tax and advance sales tax on its importation from 1992 to 1994. A refund of
the amounts paid as such taxes is thus proper.
 P87,257,031.00 of compensating tax + P7,416,391.00 advanced sales tax =
P94,673,422.00 total refund.
 Case:Maceda vs. Macaraig
 *Facts: On November 3, 1986, Commonwealth Act No. 120 created the NPC
as a public corporation to undertake the development of hydraulic power and
the production of power from other sources. On June 4, 1949, Republic Act
No. 358 granted NPC tax and duty exemption privileges - exempt from all
taxes, duties, fees, imposts, charges and restrictions of the Republic of the
Philippines, its provinces, cities and municipalities. On January 22, 1974,
Presidential Decree No. 380 amended it - the exemption of NPC from such
taxes, duties, fees, imposts and other charges imposed "directly or
indirectly," on all petroleum products used by NPC in its operation. On June
11, 1984, Presidential Decree No. 1931 withdrew all tax exemption privileges
granted in favor of government-owned or controlled corporations including
their subsidiaries. However, said law empowered the President and/or the
then Minister of Finance, upon recommendation of the FIRB to restore,
partially or totally, the exemption withdrawn, or otherwise revise the scope
and coverage of any applicable tax and duty. On January 7, 1986, the FIRB
issued resolution No. 1-86 indefinitely restoring the NPC tax and duty
exemption privileges effective July 1, 1985. However, effective March 10,
1987, Executive Order No. 93 once again withdrew all tax and duty
incentives granted to government and private entities which had been
restored under Presidential Decree Nos. 1931 and 1955 but it gave the
authority to FIRB to restore, revise the scope and prescribe the date of
effectivity of such tax and/or duty exemptions. On June 24, 1987 the FIRB
issued Resolution No. 17-87 restoring NPC's tax and duty exemption
privileges effective March 10, 1987.
 *Issues: 1.Whether petitioner have the standing to challenge the questioned
orders and resolution.
 2. Whether or not the respondent NPC has ceased to enjoy indirect tax and
duty exemption with the enactment of P.D. No. 938 on May 27, 1976 which
amended P.D. No. 380, issued on January 11, 1974.

 *Ruling: 1. Petitioner, as a taxpayer, may file the instant petition following
the ruling in Lozada when it involves illegal expenditure of public money.
The petition questions the legality of the tax refund to NPC by way of tax
credit certificates and the use of said assigned tax credits by respondent oil
companies to pay for their tax and duty liabilities to the BIR and Bureau of
Customs.
 2. It is noted that in the earlier law, R.A. No. 358 the exemption was worded
in general terms, as to cover "all taxes, duties, fees, imposts, charges, etc. . . ."
However, the amendment under Republic Act No. 6395 enumerated the
details covered by the exemption. Subsequently, P.D. No. 380, made even
more specific the details of the exemption of NPC to cover, among others,
both direct and indirect taxes on all petroleum products used in its
operation. Presidential Decree No. 938 amended the tax exemption by
simplifying the same law in general terms. It succinctly exempts NPC from
 "all forms of taxes, duties, fees, imposts, as well as costs and service fees
including filing fees, appeal bonds, supersedeas bonds, in any court or
administrative proceedings."
PLDT vs. City of Davao
Facts:
 Petitioner PLDT paid a franchise tax equal to three percent (3%) of its
gross receipts. The franchise tax was paid “in lieu of all taxes on this
franchise or earnings thereof” pursuant to R.A. No. 7082
 The exemption from “all taxes on this franchise or earnings thereof”
was subsequently withdrawn by R.A. No. 7160 (Local Government Code
of 1991), which at the same time gave local government units the
power to tax businesses enjoying a franchise on the basis of income
received or earned by them within their territorial jurisdiction.
 Pursuant to these provisions, the City of Davao enacted Ordinance No.
519.
 Subsequently, Congress granted Globe and Smartfranchises which
contained “in lieu of all taxes” provisos.
 In 1995, it enacted R.A. No. 7925 (Public Telecommunications Policy of
the Philippines), Sec. 23 of which provides that “Any advantage, favor,
privilege, exemption, or immunity granted under existing franchises, or
may hereafter be granted, shall ipso facto become part of previously
granted telecommunications franchises and shall be accorded
immediately and unconditionally to the grantees of such franchises.”
 In 1999, when PLDT applied for a mayor’s permit to operate its Davao
Metro Exchange, it was required to pay the local franchise tax for the
first to the fourth quarter of 1999.
 PLDT challenged the power of the city government to collect the local
franchise tax
Issue:
 Whether or not by virtue of R.A. No. 7925, Sec. 23, PLDT is again
entitled to exemption from the payment of local franchise tax in view of
the grant of tax exemption to Globe and Smart.
Ruling
 Denied. An intent to grant tax exemption cannot even be discerned
from the said law. The records of Congress are bereft of any discussion
or even mention of tax exemption.
 The best refutation of PLDT’s claim that R.A. No. 7925grants tax
exemption is the fact that after its enactment, Congress granted several
franchises containing both an “equality clause” similar to its Sec. 23 and
an “in lieu of all taxes” clause.
 Consequently, statutes in derogation of sovereignty, such as those
containing exemption from taxation, should be strictly construed in
favor of the state. A state cannot be stripped of this most essential
power by doubtful words and of this highest attribute of sovereignty by
ambiguous language.
 The rule is that tax exemptions should be granted only by clear and
unequivocal provision of law “expressed in a language too plain to be
mistaken.” If, as PLDT contends, the word “exemption” in R.A. No.
7925 means “tax exemption” and assuming for the nonce that the
charters of Globe and of Smart grant tax exemptions, then this
runabout way of granting tax exemption to PLDT is not a direct, “clear
and unequivocal” way of communicating the legislative intent.
 The thrust of the law (R.A. No. 7925) is to promote the gradual
deregulation of entry, pricing, and operations of all public
telecommunications entities and thus to level the playing field in the
telecommunications industry.
NATURALIZATION LAWS
ONG CHIA VS REPUBLIC OF THE PHILIPPINES and COURT OF
APPEALS
FACTS:
 Ong Chia was born on January 1, 1923 in Amoy, China. In 1932, as a nine-
year old boy, he arrived at the port of Manila on board the vessel "Angking."
Since then, he has stayed in the Philippines where he found employment and
eventually started his own business, married a Filipina, with whom he had
four children. At the age of 66, he filed a verified petition to be admitted as a
Filipino citizen under C.A. No. 473, otherwise known as the Revised
Naturalization Law, as amended.
 During the hearings, Ong Chia testified as to his qualifications and presented
three witnesses to corroborate his testimony. So impressed was the
Prosecutor that the State did not wish to present any evidence to counteract
or refute the testimony of the witnesses for the petitioner as well as the
petitioner himself.
 The trial court granted the petition and admitted petitioner to Philippine
citizenship. The State, however, through the Office of the Solicitor General,
appealed, arguing that Ong Chia:
1. failed to disclose all the names by which he is or had been
known;
2. failed to state all his former places of residence in violation of
C.A. No. 473, §7;
3. failed to conduct himself in a proper and irreproachable manner
during his entire stay in the Philippines, in violation of §2;
 4. has no known lucrative trade or occupation and his previous
incomes have been insufficient or misdeclared, also in
contravention of §2; and;
5. failed to support his petition with the appropriate documentary
evidence.
 The CA reversed the decision of the trial court and denied petitioner's
application for naturalization. It ruled that due to the importance
naturalization cases, the State is not precluded from raising questions not
presented in the lower court and brought up for the first time on appeal.
 Petitioner's principal contention is that the appellate court erred in
considering the documents which had merely been annexed by the State to
its appellant's brief and, on the basis of which, justified the reversal of the
trial court's decision. Not having been presented and formally offered as
evidence, they are mere "scrap(s) of paper devoid of any evidentiary value,"
so it was argued, because under Rule 132, §34 of the Revised Rules on
Evidence, the court shall consider no evidence which has not been formally
offered.
ISSUE: WON the CA erred in admitting the documents annexed by the State to its
appellant’s brief on the ground that they were not presented and formally offered as
evidence
RULING :
NO. Petition is denied.
The rule on formal offer of evidence (Rule 132, §34) is clearly not
applicable to the present case involving a petition for naturalization. The
only instance when said rules may be applied by analogy or suppletorily
in such cases is when it is "practicable and convenient. That is not the case
here, since reliance upon the documents presented by the State for the first time on
appeal, in fact, appears to be the more practical and convenient course of action
considering that decisions in naturalization proceedings are not covered by the rule
on res judicata. Consequently, a final favorable judgment does not preclude
the State from later on moving for a revocation of the grant of
naturalization on the basis of the same documents.
The reason for the rule prohibiting the admission of evidence which has not
been formally offered is to afford the opposite party the chance to object to their
admissibility. Petitioner cannot claim that he was deprived of the right to
object to the authenticity of the documents submitted to the appellate
court by the State. He could have included his objections, as he, in fact, did, in the
brief he filed with the Court of Appeals.
Furthermore, the Court notes that these documents — namely, the
petition in SCN Case No. 031767, petitioner's marriage contract, the joint
affidavit executed by him and his wife, and petitioner's income tax
returns — are all public documents. As such, they have been executed
under oath. They are thus reliable. Since petitioner failed to make a
satisfactory showing of any flaw or irregularity that may cast doubt on the
authenticity of these documents, it is our conclusion that the appellate
court did not err in relying upon them.
One last point. petitioner's failure to include the address "J.M. Basa St.,
Iloilo" in his petition, in accordance with §7, C.A. No. 473. This address appears on
petitioner's Immigrant Certificate of Residence, a document which forms part of the
records as Annex A of his 1989 petition for naturalization.
NATURALIZATION LAWS SHOULD BE RIGIDLY ENFORCED
AND STRICTLY CONSTRUED IN FAVOR OF THE GOVERNMENT AND
AGAINST THE APPLICANT. As noted by the State, C.A. No. 473, §7 clearly
provides that the applicant for naturalization shall set forth in the petition his present
and former places of residence. This provision and the rule of strict application of the
law in naturalization cases defeat petitioner's argument of "substantial compliance"
with the requirement under the Revised Naturalization Law.
REPUBLIC OF THE PHILIPPINES, Petitioner, vs. KERRY LAO
ONG, Respondent.
G.R. No. 175430. June 18, 2012
FACTS:
 On November 26, 1996, respondent Ongfiled a Petition forNaturalization
 Respondent Ong was in Cebu City to Chinese citizens
 He has been continuously and permanently residingin the Philippines from
birth up to the present.He likewise studied and graduated in the Philippines.
 On February 1, 1981, he married Griselda S. Yap, also a Chinese citizen. They
have four childrenwho were all born and raised in the Philippines.
 Ong alleged in his petition that he has been a "businessman/business
manager" since 1989, earning an average annual income of ₱150,000.00, but
did not specify or describe the nature of his business.
o As proof of his income, Ong presented 4 tax returns for the years
1994 to 1997.
 On November 23, 2001, the trial court granted Ong’s petition
 On January 31, 2003, the Republic, through the Solicitor General, appealed
to the CA for failure to prove that he possesses a known lucrative trade,
profession or lawful occupation as required under Section 2, 4th paragraph of
the Revised Naturalization Law.
SECTION 2. Qualifications. – Subject to section four of this Act, any person having
the following qualifications may become a citizen of the Philippines by naturalization:
Fourth. He must own real estate in the Philippines worth not less than five thousand
pesos, Philippine currency, or must have some known lucrative trade, profession, or
lawful occupation;
 The appellate court dismissed the Republic’s appeal
ISSUE:
  Whether respondent Ong has proved that he has some known lucrative
trade, profession or lawful occupation in accordance with Section 2, fourth
paragraph of the Revised Naturalization Law.
RULING:
 NO.He failed to prove that he possesses the qualification of a known
lucrative trade.
 The courts must always be mindful that naturalization proceedings are
imbued with the highest public interest.Naturalization laws are strictly
construed in the government’s favor and against the applicant.The applicant
carries the burden of proving his full compliance with the requirements of
law.
 ‘some known lucrative trade, profession, or lawful occupation’ means
o gets enough for his ordinary necessities in life
o employment gives one an income such that there is an appreciable
margin of his income over his expenses as to be able to provide for
an adequate support in the event of unemployment, sickness, or
disability to work and thus avoid one’s becoming the object of
charity or a public charge
o should permit them to live with reasonable comfort, in accordance
with the prevailing standard of living, and consistently with the
demands of human dignity, at this stage of our civilization
 Guidelines in determining the existence of a lucrative income
(Jurisprudence)
o should consider only the applicant’s income; his or her spouse’s
income should not be included in the assessment.
o the petitioner should be the one to possess ‘some known lucrative
trade, profession or lawful occupation’
o applicant’s qualifications must be determined as of the time of the
filing of his petition
 The foregoing guidelines have not been observed. None have identified Ong’s
business or described its nature.
o no documentary evidence, like business permits, registration,
official receipts, or other business records to demonstrate his
proprietorship or participation in a business
o Ong relied on his general assertions (He did not even testify as to
the nature of his business except that he had been a businessman
since he graduated from college, which was in 1978)
 The average annual income from the 4 tax returns (1994-1997) is
₱106,000.00 only, not ₱150,000.00 as the trial court held.
 The Court finds the appellate court’s decision erroneous
o should not have included the spouse’s income in its assessment of
Ong’s lucrative income.
o failed to consider the following circumstances which have a bearing
on Ong’s expenses vis-à-vis his income:
a) that Ong does not own real property;
b) that his proven average gross annual income around the time
of his application, which was only ₱106,000.00, had to provide
for the education of his four minor children; and
c) that Ong’s children were all studying in exclusive private
schools
o the CA did not explain how it arrived at the conclusion that Ong’s
income had an appreciable margin over his known expenses.
 A naturalization proceeding is so infused with public interest that it has been
differently categorized and given special treatment.Unlike in ordinary
judicial contest, the granting of a petition for naturalization does not
preclude the reopening of that case and giving the government another
opportunity to present new evidence
o SC also not precluded from reviewing the factual existence of the
applicant’s qualifications
G.R. No. 200983 March 18, 2015
Republic of the Philippines vs. Huang Te Fu
FACTS:
 - Huang Te Fu alias Robert Uy, is a Chinese businessman who is married to a
Filipina, and his family’s business is zipper manufacturing. In his petition for
naturalization with the Regional Trial Court, he proved that the resided in
the Philippines continuously for 23 years, obtained primary, secondary and
tertiary education in Philippine schools, and derived a PhP15,000 monthly
income from his family’s zipper manufacturing business as an employee.
 - The RTC granted his petition but the Solicitor General appealed to the
Court of Appeals who sustained the RTC Decision. The SolGen appealed to
the Supreme Court alleging that Robert Uy does not possess a lucrative trade
or profession, is not included in the payroll of the zipper business of which
he claims to be an employee, does not have sufficient monthly income, and
falsely misrepresented himself as a Filipino in a Deed of Sale of a land in
Antipolo City, and that his 2002, 2003 and 2004 income tax returns reveal
that his monthly income differs from his monthly income as declared in his
petition for naturalization.
 - Petitioner moved for reconsideration but the appellate court stood its
ground. Thus, instant Petition was filed with SC.
 ISSUE: Whether respondent has duly complied with the rigid requisites
prescribed by Commonwealth Act No. 473 (Revised Naturalization Law) as
to entitle him to be admitted as a citizen of the Philippines.
 RULING: No. Respondent has failed to satisfy the law which renders him
completely undeserving of Filipino citizenship. Naturalization laws should be
rigidly enforced and strictly construed in favor of the government and
against the applicant. The burden of proof rests upon the applicant to show
full and complete compliance with the requirements of law.
 The Supreme Court, on review ruled that Huang indeed is not engaged in a
lucrative business or profession. His monthly income of P15,000.00 is not
 enough to support his family. As admitted by Huang, most of his family’s
daily expenses are still shouldered by his parents who own the zipper
manufacturing business which employs him. This simply means that Huang
continues to be a burden to, and a charge upon, his parents. He lives on the
charity of his parents. His non-inclusion in the payroll of the zipper business
means that it is either his intent to evade the payment of taxes or an attempt
to circumvent labor laws in employment of foreigners, or the difference in
the income tax return declarations were to avoid paying the proper tax.
 Huang’s misdeclaration as a Filipino in the deed of sale of the Antipolo land
is proof of Huang’s lack of good moral character. As a foreigner living in a
foreign land, Huang should conduct himself accordingly in this country –
with care, circumspect, and respect for the laws of the host.
 Also, Huang’s deliberate non-inclusion in the payroll of the zipper business
of which he pretends to be the manager, and his consent to be a part of such
scheme, reflects negatively on his moral character. It shows proclivity for
untruthfulness and dishonesty, and an unreserved willingness and readiness
to violate Philippine laws.
 Petition GRANTED. CA’s decision and resolution are REVERSED and SET
ASIDE. RTC’s decision is likewise ANNULLED and SET ASIDE and the
respondent’s Petition for Naturalization in said case is DISMISSED.
INSURANCE LAWS
FINMAN GENERAL ASSURANCE CORPORATION vs. THE HONORABLE
COURT OF APPEALS 213 SCRA 493, September 2, 1992 NOCON, J.:
FACTS:
On October 22, 1986, deceased, Carlie Surposa was insured with petitioner Finman
General Assurance Corporation with his parents, spouses Julia and Carlos Surposa,
and brothers Christopher, Charles, Chester and Clifton, all surnamed, Surposa, as
beneficiaries. While said insurance policy was in full force and effect, the insured,
Carlie Surposa, died on October 18, 1988 as a result of a stab wound inflicted by one of
the three (3) unidentified men. Private respondent and the other beneficiaries of said
insurance policy filed a written notice of claim with the petitioner insurance company
which denied said claim contending that murder and assault are not within the scope
of the coverage of the insurance policy. Private respondent filed a complaint with the
Insurance Commission which rendered a favorable response for the respondent. The
appellate court ruled likewise. Petitioner filed this petition alleging grave abuse of
discretion on the part of the appellate court in applying the principle of "expresso
unius exclusio alterius" in a personal accident insurance policy, since death resulting
from murder and/or assault are impliedly excluded in said insurance policy
considering that the cause of death of the insured was not accidental but rather a
deliberate and intentional act of the assailant. Therefore, said death was committed
with deliberate intent which, by the very nature of a personal accident insurance
policy, cannot be indemnified.
ISSUE: Whether or not the insurer is liable for the payment of the insurance
premiums
HELD:
Yes, the insurer is still liable. Contracts of insurance are to be construed liberally in
favor of the insured and strictly against the insurer. Thus ambiguity in the words of an
insurance contract should be interpreted in favor of its beneficiary. The terms
"accident" and "accidental" as used in insurance contracts have not acquired any
technical meaning, and are construed by the courts in their ordinary and common
acceptation. Thus, the terms have been taken to mean that which happen by chance or
fortuitously, without intention and design, and which is unexpected, unusual, and
unforeseen. Where the death or injury is not the natural or probable result of the
insured's voluntary act, or if something unforeseen occurs in the doing of the act
which produces the injury, the resulting death is within the protection of the policies
insuring against death or injury from accident. In the case at bar, it cannot be
pretended that Carlie Surposa died in the course of an assault or murder as a result of
his voluntary act considering the very nature of these crimes. Neither can it be said
that where was a capricious desire on the part of the accused to expose his life to
danger considering that he was just going home after attending a festival.
Furthermore, the personal accident insurance policy involved herein specifically
enumerated only ten (10) circumstances wherein no liability attaches to petitioner
insurance company for any injury, disability or loss suffered by the insured as a result
of any of the stimulated causes. The principle of " expresso unius exclusio alterius" —
the mention of one thing implies the exclusion of another thing — is therefore
applicable in the instant case since murder and assault, not having been expressly
included in the enumeration of the circumstances that would negate liability in said
insurance policy cannot be considered by implication to discharge the petitioner
insurance company from liability for, any injury, disability or loss suffered by the
insured. Thus, the failure of the petitioner insurance company to include death
resulting from murder or assault among the prohibited risks leads inevitably to the
conclusion that it did not intend to limit or exempt itself from liability for such death.
New Life v CA G.R. No. 94071 March 31, 1992
J. Regalado
Facts:
Julian Sy, owner of New Life, insured his building in 3 different insurance agencies for
350,000, 1,000,000, and 200,000. When his building and the goods inside burned
down, he claimed for insurance indemnities, but these were rejected by the three
companies for violation of policy conditions.
Sy filed for 3 different suits in the trial court, where he won all suits against the
insurance companies. The court of appeals reversed the decision of the trial court.
Issue: Did the petitioner violate conditions 3 and 27 of the three insurance policies,
thereby foreiting collection of indemnities?
Held: Yes.
Ratio:
Condition 3. The insured shall give notice to the Company of any insurance or
insurances already effected, or which may subsequently be effected, covering any of
the property or properties consisting of stocks in trade, goods in process and/or
inventories only hereby insured, and unless such notice be given and the
particulars of such insurance or insurances be stated therein or endorsed
on this policy pursuant to Section 50 of the Insurance Code, by or on behalf of the
Company before the occurrence of any loss or damage, all benefits under this policy
shall be deemed forfeited, provided however, that this condition shall not apply when
the total insurance or insurances in force at the time of loss or damage not more than
P200,000.00.
Sy never disclosed co-insurance in the contracts he entered into with the
three corporations. The insured is specifically required to disclose the insurance that
he had contracted with other companies. Sy also contended that the insurance agents
knew of the co-insurance. However, the theory of imputed knowledge, that the
knowledge of the agent is presumed to be known by the principal, is not enough.
When the words of the document are readily understandable by an ordinary reader,
there is no need for construction anymore.
The conformity of the insured to the terms of the policy is implied with his failure to
disagree with the terms of the contract.
Since Sy, was a businessman, it was incumbent upon him to read the contracts.
Pioneer Insurance and Surety Corporation vs. Yap- The obvious purpose of the
aforesaid requirement in the policy is to prevent over-insurance and thus avert the
perpetration of fraud. The public, as well as the insurer, is interested in preventing the
situation in which a fire would be profitable to the insured.
“Also, policy condition 15 was used. It stated: 15.. . . if any false declaration be made or
used in support thereof, . . . all benefits under this Policy shall be forfeited . . .”
As for condition number 27, the stipulation read:
27. Action or suit clause. — If a claim be made and rejected and an action or suit be
not commenced either in the Insurance Commission or any court of competent
jurisdiction of notice of such rejection, or in case of arbitration taking place as
provided herein, within twelve (12) months after due notice of the award made by
the arbitrator or arbitrators or umpire, then the claim shall for all purposes be
deemed to have been abandoned and shall not thereafter be recoverable hereunder.
This is regarding Sy’s claim for one of the companies. Recovery was filed in court by
petitioners only on January 31, 1984, or after more than one (1) year had elapsed from
petitioners' receipt of the insurers' letter of denial on November 29, 1982. This made
it void.
FORTUNE MEDICARE, INC. vs. DAVID ROBERT U. AMORIN G.R. No.
195872, 12 March 2014
FACTS:
While Amorin was on vacation in Hawaii, he underwent an emergency surgery, specifi
cally appendectomy, causing him to incur professional and hospitalization expenses of
US$7,242.35 and US$1,777.79, respectively. Being a cardholder/member of Fortune
Medicare, Inc. (Fortune Care), a corporation engaged in providing health maintenanc
e services to its members, he attempted to recover the full amount upon his return to
Manila. However, the company merely approved a reimbursement of P12,151.36, an a
mount that was based on the average cost of appendectomy, net of medicare deductio
n, if the procedure were performed in an accredited hospital in Metro Manila. Amorin
received under protest the approved amount, but asked for its adjustment to cover the
total amount of professional fees which he had paid, and eighty percent (80%) of the
 approved standard charges based on “American standard”, considering that the emerg
ency procedure occurred in the U.S.A., citing provisions of the contract.
He then filed a complaint for breach of contract with damages but this was dismissed
by the RTC. It said that the parties intended to use the Philippine standard as basis. H
owever, this was reversed by the CA. The appellate court pointed out that, first, health
care agreements such as the subject Health Care Contract, being like insurance contra
cts, must be liberally construed in favor of the subscriber. In case its provisions are do
ubtful or reasonably susceptible of two interpretations, the construction conferring co
verage is to be adopted and exclusionary clauses of doubtful import should be strictly
construed against the provider. Second, the CA explained that there was nothing unde
r the Health Care Contract which provided that the Philippine standard should be use
d even in the event of an emergency confinement in a foreign territory.
ISSUE:
 Whether or not a member of a health care provider can recover to the extent agreed in
the contract.
 Whether or not ambiguities should be taken in favor of the member.
HELD:
1.)Yes. In the case at bar, the Supreme Court said that for purposes of determining the
liability of a health care provider to its members, jurisprudence holds that a health ca
re agreement is in the nature of non-
life insurance, which is primarily a contract of indemnity. Once the member incurs ho
spital, medical or any other expense arising from sickness, injury or other stipulated c
ontingent, the health care provider must pay for the same to the extent agreed upon u
nder the contract.
2.) Yes. With regard the ambiguities in the contract, settled is the rule that they should
be interpreted against the party that caused the ambiguity. “Any ambiguity in a contr
act whose terms are susceptible of different interpretations must be read against the p
arty who drafted it.” Furthermore, it affirmed the CA’s finding that Fortune Care’s liab
ility to Amorin under the subject Health Care Contract should be based on the expens
es for hospital and professional fees which he actually incurred, and should not be lim
ited by the amount that he would have incurred had his emergency treatment been pe
rformed in an accredited hospital in the Philippines.
ALPHA INSURANCE AND SURETY CO. vs. ARSENIA SONIA CASTOR
G.R. No. 198174, September 2, 2013 (PERALTA, J.)
FACTS:
Arsenia Sonia Castor (Castor) obtained a Motor Car Policy for her Toyota Revo DLX
DSL with Alpha Insurance and Surety Co (Alpha). The contract of insurance obligates
the petitioner to pay the respondent the amount of P630,000 in case of loss or
damage to said vehicle during the period covered.
On April 16, 2007, respondent instructed her driver, Jose Joel Salazar Lanuza to bring
the vehicle to nearby auto-shop for a tune up. However, Lanuza no longer returned
the motor vehicle and despite diligent efforts to locate the same, said efforts proved
futile. Resultantly, respondent promptly reported the incident to the police and
concomitantly notified petitioner of the said loss and demanded payment of the
insurance proceeds.
Alpha, however, denied the demand of Castor claiming that they are not liable since
the culprit who stole the vehicle is employed with Castor. Under the Exceptions to
Section III of the Policy, the Company shall not be liable for (4) any malicious damage
caused by the insured, any member of his family or by “A PERSON IN THE
INSURED’S SERVICE”.
Castor filed a Complaint for Sum of Money with Damages against Alpha before the
Regional Trial Court of Quezon City. The trial court rendered its decision in favor of
Castor which decision is affirmed in toto by the Court of Appeals. Hence, this Petition
for Review on Certiorari.
ISSUE: Whether or not the loss of respondent’s vehicle is excluded under the
insurance policy
HELD:
NO. The words “loss” and “damage” mean different things in common ordinary usage.
The word “loss” refers to the act or fact of losing, or failure to keep possession, while
the word “damage” means deterioration or injury to property. Therefore, petitioner
cannot exclude the loss of Castor’s vehicle under the insurance policy under
paragraph 4 of “Exceptions to Section III”, since the same refers only to “malicious
damage”, or more specifically, “injury” to the motor vehicle caused by a person under
the insured’s service. Paragraph 4 clearly does not contemplate “loss of property”.
A contract of insurance is a contract of adhesion. So, when the terms of the insurance
contract contain limitations on liability, courts should construe them in such a way as
to preclude the insurer from non-compliance with his obligation. Thus, in Eternal
Gardens Memorial Park Corporation vs. Philippine American Life Insurance
Company, this Court ruled that it must be remembered that an insurance contract is a
contract of adhesion which must be construed liberally in favor of the insured and
strictly against the insurer in order to safeguard the latter’s interest.
LABOR LAWS AND SOCIAL LEGISLATION
HELD:
NO. Petition was denied. But under the legal milieu of the case, SC can only suggest,
not mandate, that respondents grant ex gratia some form of relief to their members
similarly situated as petitioner’s wife.
RATIO:
With the evidence presented in support of the claim, petitioner’s prayer cannot be
granted. While as a rule labor and social welfare legislation should be liberally
construed in favor of the applicant, (citation omitted), there is also the rule that such
liberal construction and interpretation of labor laws may not be applied where the
pertinent provisions of the Labor Code and P.D. No. 626, as amended, are clear and
leave no room for interpretation.
[L]iberal construction and interpretation of labor laws may not be applied where the
pertinent provisions of the Labor Code and P.D. No. 626, as amended, are clear and
leave no room for interpretation.

RAMON CORPORAL, petitioner, Manahan vs Employees Compensation Commission (1981)

vs. G.R. No. L-44899 | 1981-04-22
EMPLOYEES’ COMPENSATION COMMISSION and GOVERNMENT
SERVICE INSURANCE SYSTEM,respondents.
Public Attorney’s Office for petitioner.
Ponente: QUIASON
Facts:
FACTS:
Petitioner Maria Manahan is the widow of Nazario Manahan, Jr. who died of "Enteric
Petitioner’s wife was employed as a public school teacher. She gave birth to a baby boy
Fever" while employed as classroom teacher in Las Piñas Municipal High School.
with the help of a “hilot.” An hour later, she was rushed to the hospital due to profuse
vaginal bleeding. She underwent a hysterectomy but unfortunately, she died on the She filed a claim with the Government Service Insurance System (GSIS) for death
same day due to “shock, severe hemorrhage” resulting from a “prolapse(d) uterus post benefit under Presidential Decree 626.

partum.” She was 40 years old when she died. Petitioner herein, filed a claim for
The GSIS denied the claim on a finding that the ailment (typhoid fever) is not an
compensation benefit with the Government Service Insurance System (GSIS). The occupational disease. It claimed that enteric fever or paratyphoid is similar in effect to
GSIS denied petitioner’s claim. Petitioner filed several motions for the typhoid fever, in the sense that both are produced by Salmonella organisms.
reconsideration of the denial of his claim to no avail.
The Employees' Compensation Commission (ECC) affirmed the decision of the GSIS.
ISSUE:
Whether or not petitioner’s claim for death benefits of her wife under Presidential
Decree No. 626 is valid.
The factual findings show that the deceased was in perfect health when he entered
government service on July 20, 1969, and that in the course of his employment in
1974, he was treated for epigastric pain (ulcer). He succumbed to enteric fever on May
8, 1975.

Held:

1. Enteric fever is referred to in medical books as typhoid or paratyphoid fever.

According to the medical books, this type of illness has lingering effects. This points
out the possibility that the illness which afflicted the deceased in 1974 was the same
as, or at least, related to, his 1975 illness.

2. The records also show that Nazario Manahan was treated for ulcer on December 10,
1974. Ulcer is a common complication of typhoid fever

3. Because of these circumstances, the illness that claimed the life of the deceased
could have had its onset months before December 10, 1974. Such being the case, his
cause of action accrued before December 10, 1974.

4. Under the Labor Code. workmen's compensation claims accruing prior to the
effectivity of the Code and during the period from November 1, 1974 up to December
31, 1974 shall be processed and adjudicated in accordance with the laws and rules at
the time their causes of action accrued.

5. Applying the provisions of the Workmen's Compensation Act in this case,

the presumption of compensability subsists in favor of the claimant

6. Social legislations - like the Workmen's Compensation Act and the Labor Code -
should be liberally construed to attain their laudable objective, i.e., to give relief to the
workman and/or his dependents in the event that the former should die or sustain an
injury.

7. As a teacher, the deceased used to eat his meals at the school canteen and also used
the toilet and other facilities of the school. It is not improbable that the deceased
might have contracted the illness during those instances since it is medically accepted
that enteric fever is caused by 'salmonella' organisms which are acquired by ingestion
of contaminated food or drinks.The risk of contracting the fatal illness was increased
by the decedent's working condition.
SALVADOR LAZO vs. EMPLOYEES' COMPENSATION COMMISSION &
GOVERNMENT SERVICE INSURANCE SYSTEM
G.R. No. 78617 June 18, 1990
PADILLA, J.:
FACTS: Salvador Lazo, is a security guard of the Central Bank of the Philippines
assigned to its main office in Malate, Manila. His regular tour of duty is from 2:00
o'clock in the afternoon to 10:00 o'clock in the evening. On 18 June 1986, the
petitioner rendered duty from 2:00 o'clock in the afternoon to 10:00 o'clock in the
evening. But, as the security guard who was to relieve him failed to arrive, the
petitioner rendered overtime duty up to 5:00 o'clock in the morning of 19 June 1986,
when he asked permission from his superior to leave early in order to take home to
Binangonan, Rizal, his sack of rice.
On his way home, at about 6:00 o'clock in the morning of 19 June 1986, the passenger
jeepney the petitioner was riding on turned turtle due to slippery road. As a result, he
sustained injuries and was taken to the Angono Emergency Hospital for treatment. He
was later transferred to the National Orthopedic Hospital where he was confined until
25 July 1986.
For the injuries he sustained, petitioner filed a claim for disability benefits under PD
626, as amended. His claim, however, was denied by the GSIS for the reason that —
It appears that after performing your regular duties as Security Guard from 2:00 P.M.
to 10:00 P.M. on June 18, 1986, you rendered overtime duty from 10:00 P.M. to 5:06
A.M. of the following day; that at about 5:06 A.M. after asking permission from your
superior you were allowed to leave the Office to do certain personal matter — that of
bringing home a sack of rice and that, while on your way home, you met a vehicular
accident that resulted to (sic) your injuries. From the foregoing informations, it is
evident that you were not at your work place performing your duties when the
incident occurred. 1
It was held that the condition for compensability had not been satisfied.
Upon review of the case, the respondent Employees Compensation Commission
affirmed the decision since the accident which involved the petitioner occurred far
from his work place and while he was attending to a personal matter.
Hence, the present recourse.
ISSUE: Whether petitioner's injury comes within the meaning of and intendment of
the phrase 'arising out of and in the course of employment?
HELD: We held that 'where an employee, after working hours, attempted to ride on
the platform of a service truck of the company near his place of work, and, while thus
attempting, slipped and fell to the ground and was run over by the truck, resulting in
his death, the accident may be said to have arisen out of or in the course of
employment, for which reason his death is compensable. The fact standing alone, that
the truck was in motion when the employee boarded, is insufficient to justify the
conclusion that he had been notoriously negligent, where it does not appear that the
truck was running at a great speed.'And, in a later case, Iloilo Dock & Engineering Co.
vs. Workmen's Compensation Commission, 26 SCRA 102, 103, We ruled that
'(e)mployment includes not only the actual doing of the work, but a reasonable
margin of time and space necessary to be used in passing to and from the place where
the work is to be done. If the employee be injured while passing, with the express or
implied consent of the employer, to or from his work by a way over the employer's
premises, or over those of another in such proximity and relation as to be in practical
effect a part of the employer's premises, the injury is one arising out of and in the
course of the employment as much as though it had happened while the employee was
engaged in his work at the place of its performance. (Emphasis supplied)
In the case at bar, it can be seen that petitioner left his station at the Central Bank
several hours after his regular time off, because the reliever did not arrive, and so
petitioner was asked to go on overtime. After permission to leave was given, he went
home. There is no evidence on record that petitioner deviated from his usual, regular
homeward route or that interruptions occurred in the journey.
There is no reason, in principle, why employees should not be protected for a
reasonable period of time prior to or after working hours and for a reasonable
distance before reaching or after leaving the employer's premises.
WHEREFORE, the decision appealed from is REVERSED and SET ASIDE. Let the
case be remanded to the ECC and the GSIS for disposition in accordance with this
decision.
 Vicente vs Employees Compensation Commission
G.R. No. 85024
SARMIENTO, J.:p
Facts:
Petitioner was formerly employed. At the age of forty-five, he applied for an optional
retirement giving as reason his inability to continue working is due to his physical
disability. Upon his medical examination with Veterans Medical Center, he was
diagnosed as having permanent total disability. He claimed for income benefits from
GSIS. His request was granted but only for permanent partial disability. Upon further
requests of petitioner, extensions were given but no grant was made as to his
permanent total disability claims.
Issue:
Whether or not petitioner was suffering from permanent total disability.
Held:
Petitioner was suffering from permanent total disability.
Ratio Decidendi:
Petitioner availed of optional retirement which requires the proof that one is
physically incapacitated to render sound and efficient service. Permanent total
disability does not mean a state of absolute helplessness, but means the disablement
of the employee to earn wages in the same kind of work, or a work of similar nature,
that he was trained for, or accustomed to perform, or any kind of work which a person
of his mentality and attainment could do. Considering that the petitioner has already
availed of benefits for already twenty-three months shows that he was unable to
perform any gainful occupation for more than 120 days.
G.R. No. 125340 September 17, 1998
EMELITA NICARIO, petitioner,
vs.
NATIONAL LABOR RELATIONS COMMISSION, MANCAO
SUPERMARKET, INC. AND/OR MANAGER, ANTONIO
MANCAO, respondents.
ROMERO, J.:
For resolution before this Court is a special civil action for certiorari under Rule 65 of
the Rules of Court which seeks to set aside the resolution of the National Labor
Relations Commission (Fifth Division, Cagayan de Oro City) dated December 21, 1995
in NLRC CA No. M-002047-94 entitled "Emelita Nicario v. Mancao Supermarket Inc.
and/or Manager" which ruled that petitioner, Emelita Nicario, is not entitled to
overtime pay. Nor is private respondent, Antonio Mancao jointly and severally liable
with the respondent company for thirteenth month pay, service incentive leave pay,
and rest day pay. 1
Petitioner, Emelita Nicario, was employed with respondent company, Mancao
Supermarket, on June 6, 1986 as a salesgirl and was later on promoted as sales
supervisor. However, private respondent terminated her services on February 7, 1989.
A complaint for illegal dismissal with prayer for backwages, wage differential, service
incentive leave gay, overtime pay, 13th month pay and unpaid wages was filed by
petitioner before the National Labor Relations Commission, Sub-Regional Arbitration
Branch X in Butuan City.
On July 25, 1989, Labor Arbiter Amado M. Solamo dismissed the complaint for lack of
merit. Petitioner appealed to the National Labor Relations Commission (NLRC), Fifth
Division, Cagayan de Oro City. In a resolution dated July 25, 1989, the NLRC set aside
the labor arbiter's decision for lack of due process. It ruled that since petitioner
assailed her supposed signatures appearing on the payrolls presented by the company
as a forgery, the labor arbiter should not have merely depended on the xerox copies of
the payrolls, as submitted in evidence by the private respondent but ordered a formal
hearing on the issue. Thus, the Commission ordered the case remanded to the
arbitration branch for appropriate proceedings. The case was assigned to Labor
Arbiter Marissa Macaraig-Guillen. 2
In a decision dated May 23, 1994, Labor Arbiter Macaraig-Guillen awarded
petitioner's claims for unpaid service incentive leave pay, 13th month pay, overtime
pay and rest day pay for the entire period of her-employment, but dismissed her
claims for holiday premium pay and unpaid salaries from February 3 to 5, 1989. The
dispositive portion of the decision read as follows:
WHEREFORE, in view of the foregoing, judgment is rendered
directing respondent Mancao Supermarket Inc., and/or Mr.
Antonio Mancao to pay complainant Emelita Nicario the sum of
forty thousand three hundred ninety three pesos and fifteen
centavos (P40,393.15) representing unpaid service incentive leave
pay, thirteenth month pay, overtime pay, and rest day for the entire
period of employment.
All other claims are dismissed for lack of merit.
SO ORDERED. 3
Not satisfied with the decision, private respondent appealed to the NLRC, and in a
resolution dated August 16, 1995, 4 the Commission affirmed in toto Labor Arbiter
Macaraig-Guillen's decision. Private respondent then filed a motion for
reconsideration. In a resolution dated December 21, 1995, public respondent NLRC
modified its earlier resolution by deleting the award for overtime pay and ruling that
private respondent Antonio Mancao is not jointly and severally liable with Mancao
Supermarket to pay petitioner the monetary award adjudged.
Petitioner now comes before this Court alleging grave abuse of discretion on the part
of the public respondent NLRC in ruling that (a) she is not entitled to overtime pay
and (b) private respondent, Antonio Mancao cannot be held jointly and severally
liable with respondent supermarket as to the monetary award.
The Solicitor General, in a manifestation and motion in lieu of comment 5 stated that
public respondent NLRC acted with grave abuse of discretion in modifying its earlier
resolution (dated August 16, 1995) and thus recommends that the December 21, 1995
resolution be set aside, and its August 16, 1995 resolution be reinstated.
Public respondent NLRC, on the other hand, filed its own comment6 praying for the
dismissal of the petition and for the December 21, 1995 resolution to be affirmed with
finality.
The petition is partly impressed with merit.
In her claim for payment of overtime pay, petitioner alleged that during her period of
employment, she worked twelve (12) hours a day from 7:30 a.m. to 7:30 p.m., thus
rendering overtime work for four hours each day. Labor Arbiter Macaraig-Guillen, in
her decision dated May 23, 1994, awarded overtime pay to petitioner by taking
judicial notice of the fact that all Mancao establishments open at 8:00 a.m. and close
at 8:00 p.m. Upon appeal, this particular finding was affirmed by the Commission.
However, when private respondent filed a motion for reconsideration from the
resolution dated August 16, 1995, the NLRC modified its earlier ruling and deleted the
award for overtime pay. Public respondent NLRC instead gave credence to the daily
time records (DTRs) presented by respondent corporation showing that petitioner,
throughout her employment from June 6, 1986 to February 1989, worked for only
eight hours a day from 9:00 a.m. to 12:00 p.m. and 2:00 p.m. to 7:00 p.m., and did
not render work on her rest days.
Public respondent's reliance on the daily time records submitted by private
respondent is misplaced. As aptly stated by the Solicitor General in his manifestation
in lieu of comment, the DTR's presented by respondent company are unreliable based
on the following observations:
a) the originals thereof were not presented in evidence; petitioner's
allegation of forgery should have prompted respondent to submit
the same for inspection; evidence wilfully suppressed would be
adverse if produced (Sec. 3(e), Rule 131, Rules of Court)
xxx xxx xxx
e) they would make it appear that petitioner has a two-hour rest
period from 12:00 to 2:00 p.m., this is highly unusual for a store
establishment because employees should attend to customers
almost every minute as well as contrary to the judicial notice that no
noon break is observed.
f) petitioner never reported earlier or later than 9:00 a.m., likewise,
she never went home earlier or later than 8:00 p.m.; all entries are
suspiciously consistent. 7
Labor Arbiter Macaraig-Guillen, in taking judicial cognizance of the fact that private
respondent company opens twelve (12) hours a day, the same number of hours
worked by petitioner everyday, applied Rule 129, Section 2 of the Rules of Court which
provides that "a court may take judicial notice of matters which are of public
knowledge, or are capable of unquestionable demonstration, or ought to be known
because of their judicial functions." In awarding overtime pay to petitioner, the labor
arbiter ruled:
However, it is of judicial notice that all Mancao establishments
open at eight a.m. and close at eight p.m. with no noon break, so it
is believable that employees rendered 4-1/2 hours of overtime
everyday, 7 days a week.8
Generally, findings of facts of quasi-judicial agencies like the NLRC are accorded great
respect and at times even finality if supported by substantial evidence. 9 "Substantial
evidence" is such amount of relevant evidence which a reasonable mind might accept
as adequate to justify a conclusion. However in cases where there is a conflict between
the factual findings of the NLRC and the labor arbiter, a review of such factual
findings is necessitated. 10
While private respondent company submitted the daily time records of the petitioner
to show that she rendered work for only eight (8) hours a day, it did not refute nor
seek to disprove the judicial notice taken by Labor Arbiter Macaraig-Guillen that
Mancao establishments, including the establishment where petitioner worked, opens
twelve hours a day, opening at 8:00 a.m. and closing at 8:00 p.m.
This Court, in previously evaluating the evidentiary value of daily time records,
especially those which show uniform entries with regard to the hours of work
rendered by an employee, has ruled that "such unvarying recording of a daily time
record is improbable and contrary to human experience. It is impossible for an
employee to arrive at the workplace and leave at exactly the same time, day in day out.
The uniformity and regularity of the entries are 'badges of untruthfulness and as such
indices of dubiety.' 11 The observations made by the Solicitor General regarding the
unreliability of the daily time records would therefore seem more convincing. On the
other hand, respondent company failed to present substantial evidence, other than
the disputed DTRs, to prove that petitioner indeed worked for only eight hours a day.
It is a well-settled doctrine, that if doubts exist between the evidence presented by the
employer and the employee, the scales of justice must be tilted in favor of the latter. It
is a time-honored rule that in controversies between a laborer and his master, doubts
reasonably arising from the evidence, or in the interpretation of agreements and
writing should be resolved in the former's
favor. 12 The policy is to extend the doctrine to a greater number of employees who
can avail of the benefits under the law, which is in consonance with the avowed policy
FACTS:
of the State to give maximum aid and protection of labor. 13 This rule should be
applied in the case at bar, especially since the evidence presented by private Petitioner applied for clearance from all money, property and other accountabilities in
respondent company is not convincing. Accordingly, we uphold the finding that preparation for his retirement. He obtained the clearance applied for. The clearance
petitioner rendered overtime work, entitling her to overtime pay.
had all the required signatures and bore a certification that petitioner was “cleared
As to the liability of private respondent Antonio Mancao, petitioner contends that as from money, property and/or other accountabilities by this Commission”. Petitioner
manager of Mancao establishment, he should be jointly and severally liable with argues that notwithstanding the clearances previously issued (by COA), and
respondent corporation as to the monetary award adjudged.
respondent Chairman’s certification that petitioner had been cleared of money and
The general rule is that officers of a corporation are not personally liable for their property accountability, respondent Chairman still refuses to release the remaining
official acts unless it is shown that they have exceeded their authority. However, the
half of his retirement benefits — a purely ministerial act.
legal fiction that a corporation has a personality separate and distinct from
stockholders and members may be disregarded if it is used as a means to perpetuate
fraud or an illegal act or as a vehicle for the evasion of an existing obligation, the ISSUE:
circumvention of statutes, or to confuse legitimate issues. 14
Whether or not the withholding of one-half of petitioner’s retirement benefits is valid.
In this case, there is no showing that Antonio Mancao, as manager of respondent
company, deliberately and maliciously evaded the respondent's company financial HELD:
obligation to the petitioner. Hence, there appearing to be no evidence on record that
Antonio Mancao acted maliciously or deliberately in the non-payment of benefits to NO. Petition was granted insofar as it seeks to compel respondent Chairman of the
petitioner he cannot he held jointly and severally liable with Mancao supermarket. COA to pay petitioner’s retirement benefits in full and his monthly pensions.

WHEREFORE, in view of the foregoing, the instant petition is hereby PARTIALLY

GRANTED. Accordingly, the resolution of the NLRC dated December 21, 1995 in RATIO:
NLRC NCR CA No. M-002047-94 is hereby MODIFIED by awarding petitioner, Under Section 4 of R.A. No. 1568 (An Act to Provide Life Pension to the Auditor
Emelita Nicario her overtime pay and relieving private respondent, Antonio Mancao,
of any liability as manager of Mancao Supermarket and further holding Mancao General and the Chairman or Any Member of the Commission of Elections), the
Supermarket solely liable. No costs. benefits granted by said law to the Auditor General and the Chairman and Members
of the Commission on Elections shall not be subject to garnishment, levy or execution.
SO ORDERED.
Likewise, under Section 33 of P.D. No. 1146, as amended, the benefits granted
RETIREMENT LAWS thereunder “shall not be subject, among others, to attachment, garnishment, levy or
other processes.”
FRANCISCO S. TANTUICO, JR., petitioner,
vs. Well settled is the rule that retirement laws are liberally interpreted in
HON. EUFEMIO DOMINGO, in his capacity as Chairman of the favor of the retiree because the intention is to provide for the retiree’s
Commission on Audit, ESTELITO SALVADOR, MARGARITO SILOT, sustenance and comfort, when he is no longer capable of earning his
VALENTINA EUSTAQUIO, ANICIA CHICO and GERMINIA livelihood.
PASCO,respondents.
Kenny H. Tantuico for petitioner.
The Solicitor General for respondents.
Ponente: QUIASON
A.M. No. 90-9-019-SC October 4, 1990
IN RE: AMOUNT OF THE MONTHLY PENSION OF JUDGES AND
JUSTICES STARTING FROM THE SIXTH YEAR OF THEIR RETIREMENT
AND AFTER THE EXPIRATION OF THE INITIAL FIVE-YEAR PERIOD OF
RETIREMENT.
RESOLUTION
REGALADO, J.:
The matter of the financial components of the monthly pension to be paid retired
judges and justices was brought before the Court en banc by the Office of the Court
Administrator in a memorandum filed by Court Administrator Meynardo A. Tiro on
February 14, 1990 and in an urgent memorandum filed on August 16, 1990.
Republic Act No. 910, otherwise known as the Special Retirement Law of Judges and
Justices and which took effect in 1935, granted a monthly pension for life to a judge or
justice qualified to retire from the service. Under Section 3 thereof, upon retirement
the retiree shall receive a five-year lump sum and upon survival of the five-year
period, the retiree shall receive a monthly pension during the rest of his natural life.
Under Republic Act No. 5095, which amended Republic Act No. 910 and took effect
on June 17, 1967, the amount of the monthly pension was fixed at the value of the
monthly salary of the retiree at the time of retirement.
On June 10, 1978, Republic Act No. 910 was again amended by Presidential Decree
No. 1438. However, it appears that two versions of said decree were published in the
Official Gazette, although both were dated June 10, 1978 and bore exactly the same
number.
In Volume 74 of the Official Gazette, No. 30, Section 1 of Presidential Decree No. 1438
reads in part as follows:
Sec. 1. Section 2 and 3 of R.A. 910 as amended by R.A. 5095 are
hereby amended further to read as follows:
xxx xxx xxx
Sec. 3. Upon retirement, a justice of the Supreme Court or of the
Court of Appeals, of a judge of the Court of First Instance, Circuit
Criminal Court, Agrarian Relations, Tax Appeals, Juvenile and
Domestic Relations, city or municipal court, or any other court
hereafter established shall be automatically entitled to a lump sum
of five years' gratuity computed on the basis of the highest monthly
salary plus the highest monthly aggregate of transportation, living
and representation allowances he was receiving on the date of his
retirement; Provided, however, That if the reason for the retirement
be any permanent disability contracted during his incumbency in
office and prior to the date of retirement he shall receive only a
gratuity equivalent to ten years' salary and allowances
aforementioned with no further annuity payable monthly during
the rest of the retiree's natural life.
The above-quoted provision appears exactly as worded in the Vital Documents on the
Declaration of Martial Law published by the Malacañang Records Office.
However, in Volume 74 of the Official Gazette, No. 41, Section 3 of Republic Act No.
910, as amended by Presidential Decree No. 1438, provides:
Sec. 3. Upon retirement, a justice of the Supreme Court or of the
Court of Appeals, or a judge of the Court of First Instance, Circuit
Criminal Court, Agrarian Relations, Tax Appeals, Juvenile and
Domestic Relations, city and municipal court or any other court
hereafter established shall be automatically entitled to a lump sum
of five years' gratuity computed on the basis of the highest monthly
salary plus the highest monthly aggregate of transportation, living
and representation allowances he was receiving on the date of his
retirement; and thereafter upon survival after expiration of this
period of five years, to further annuity payable monthly during the
residue of his natural life equivalent to the amount of the monthly
salary he was receiving on the date of his retirement. Provided,
however, that if the reason for the retirement be any permanent
disability contracted during incumbency in office and prior to the
date of retirement he shall receive only a gratuity equivalent to ten
years' salary and allowances aforementioned with no further
annuity payable monthly during the rest of the retiree's natural life
(Emphasis supplied).
It will be noted that the version of Presidential Decree No. 1438 appealing in the
earlier publication of the Official Gazette (74 O.G. No. 30) is silent as to the
components of the monthly pension payable starting with the sixth year of retirement.
It is significant, however, that based on the copy of Presidential Decree No. 1438 as
published in 74 O.G. No. 30 and in the aforesaid publication of Vital Documents on
the Declaration of Martial Law, since 1978 the Government Service Insurance
System (GSIS) had always computed the first five-year lump sum retirement as
follows: (1) highest salary, plus (2) highest representation and transportation
allowances (RATA) and longevity pay at the rate of five percent (5%) additional for
every five (5) years of continuous service as a judge or justice. After the five-year lump
sum period, that is, on the sixth year of retirement, the GSIS computed the monthly
pension for the rest of the retiree's natural life as follows: (1) highest salary, plus (2)
highest RATA, plus (3) longevity pay. Parenthetically, longevity pay was granted by
Section 42, Batas Pambansa Blg. 129 starting in 1983 and, by the Court's resolution, is
considered part of the salary.
The present question arose when the Commission on Audit (COA), thru its corporate
auditor assigned to the GSIS, issued a memorandum dated December 6, 1989,
addressed to Mrs. Lourdes Patag, Vice-President, Social Insurance Group II, of the
GSIS, informing the latter that, pursuant to Presidential Decree No. 1438 amending
Section 3 of Republic Act No. 910, after the expiration of the initial five-year period of
retirement, that is, at the beginning of the sixth year of retirement, the monthly
pension of judges and justices shall consist only of the monthly salary which the
retiree was receiving on the date of his retirement. In other words, the representation
and transportation allowances shall not form part of the monthly pension of a retiree.
Obviously, the COA was relying on the version of Presidential Decree No. 1438 as
published in 74 O.G. No. 41.
In his aforesaid memorandum, Court Administrator Tiro recommends that the GSIS
be allowed to continue paying the monthly pension consisting of the highest salary,
highest longevity pay, and highest representation and transportation allowances
(RATA) which, as aforesaid, had always been the bases and components of the
pension payments it had been making since 1978 when the amendatory decree took
effect. He invokes the liberal interpretation of the law adopted by the court and the
reasons given therefor in "In Re: Application for Life Pension Under Rep. Act 910,
RUPERTO G. MARTIN, Applicant," (A.M. No. 747-Ret., July 13, 1990), the decision
wherein entitled former Justice Ruperto G. Martin "to receive a monthly pension for
the rest of his natural life, as provided by law, based on his highest monthly
salary plus the highest monthly aggregate of transportation, living and
representation allowances he was receiving on the date of his retirement" (Emphasis
ours). It will be recalled that Justice Martin was granted a ten-year lump sum gratuity
by reason of permanent disability under the aforequoted provisions of Section 3 of
Republic Act No. 910, as amended by Presidential Decree No. 1438, which even
provides for "no further annuity payable monthly during the rest of the retiree's life."
The most that can be said for the hereinbefore quoted provisions of the second version
of Presidential Decree No. 1438 subsequently published in 74 O.G. No. 41 and cited by
the COA is that it gives the seeming impression of having impliedly repealed in part or
amended the first version of the same decree published in 74 O.G. No. 30. Aside from
the well-known rule which disfavors implied repeals, the indisputable fact that both of
said decree were singularly dated June 10, 1978 and versions were identified by the
very same number would necessarily reject such a construction. Had the issuing
authority intended such a repeal or modification, an express statement to that effect
or a different number for the supposed repealing decree or even a subsequent date of
effectivity therefor could have been resorted to with facility.
Furthermore, it is both unknown and unclear as to why one version was published
ahead of the other, and not the other way around. Hence, to draw any conclusion from
what appears as a mechanically adopted sequential printing would necessarily be an
unwarranted inference drawn from an obvious uncertainty. When we pause and
consider the purpose and the intended beneficiaries of said pension scheme, we
cannot in conscience thereby subject their rights to such a tenuous thread of
circumstance.
We find it more logical, just and equitable, under the circumstances, to hold that the
monthly pension for retired judges and justices starting on the sixth year of their
retirement should include the highest monthly aggregate of transportation, living and
representation allowances the retiree was receiving on the date of his retirement. This
is definitely more in keeping with and gives substance to the elementary rule of
statutory construction that, being remedial in character, retirement laws should be
liberally construed and administered in favor of the persons intended to be benefited
and all doubts as to the intent of the law should be resolved in favor of the retiree to
achieve its humanitarian purposes (Bautista vs. Auditor General, etc., et al., 104 Phil.
428 [1958]; Ortiz vs. Commission on Elections, et al., 162 SCRA, 812 [1988]).
Retirement laws are intended to entice competent men and women to enter the
government service and to permit them to retire therefrom with relative security, not
only for those who have retained their vigor but, more so, for those who have been
incapacitated by illness or accident (See Abad Santos vs. Auditor General, et al., 79
Phil. 176 [1947]).
We are, therefore, firmly convinced and so rule that the present computation
heretofore adopted by the GSIS and followed for around twelve (12) years now,
without any objection or reprobation by the then lawmaking authority and any other
functionary or entity, is correct and consonant with the avowed policy of the law on
retirement, especially when it is considered that a pension is a form of deferred
compensation for services performed.
WHEREFORE, the Government Service Insurance System is hereby directed to
continue implementing Republic Act No. 910, as amended by Presidential Decree No.
1438, in the same manner and on the game bases of computation as it has done since
1978, so that on the sixth year of retirement the monthly pension to be paid to the
retiree shall consist of the highest salary, the highest longevity pay, and the highest
representation and transportation allowances (RATA) the retiree was receiving on the
date of retirement.
Let copies of this resolution be furnished to both the Commission on Audit and the
Department of Budget and Management.
SO ORDERED.
ELECTION LAWS
ROLETO A. PAHILAN, petitioner,
vs.
RUDY A. TABALBA, COMMISSION ON ELECTIONS, and HONORABLE
JUDGE SINFOROSO V. TABAMO, JR., BRANCH 28, MAMBAJAO,
CAMIGUIN, respondents.
Pimentel, Apostol, Layosa & Sibayan Law Office for petitioner.
Marciano Ll. Aparte, Jr. for Rudy A. Tabalba.
Ponente: REGALADO
FACTS:
Petitioner Pahilan and private respondent Tabalba were candidates for Mayor during
the local elections. The Municipal Board of Canvassers proclaimed Tabalba as the duly
elected Mayor. Petitioner filed an election protest which he sent by registered mail,
addressed to the Clerk of Court of the Regional Trial Court , attaching thereto
P200.00 in cash as payment for docket fees. In a letter dated May 28, 1992, the OIC-
Clerk of Court informed Pahilan that the correct fees that where supposed to be paid
amounted to P620.00, and that, accordingly, the petition would not be entered in the
court docket and summons would not be issued pending payment of the balance of
P420.00. On June 16, 1992, petitioner paid the required balance in the total amount
P470.00 after learning.
ISSUE:
Whether or not the notice of appeal can be validly substituted by an appeal brief.
HELD:
YES. Order of the Commission on Elections and the Order of the RTC in Election Case
No. 3(92) are hereby reversed and set aside.
RATIO:
The rules which apply to ordinary civil actions may not necessarily serve the purpose
of election cases, especially if we consider the fact that election laws are to be accorded
utmost liberality in their interpretation and application, bearing in mind always that
the will of the people must be upheld. Ordinary civil actions would generally involve
private interests while all elections cases are, at all times, invested with public interest
which cannot be defeated by mere procedural or technical infirmities.
[I]n the present case, the docket fee was paid (P200.00) except that the amount given
was not correct. Considering the fact that there was an honest effort on the part of
herein petitioner to pay the full amount of docket fees, we are not inclined to insist on
a stringent application of the rules.
TORAYNO VS COMELEC
Facts: Vicente Emano was provincial governor of Misamis Oriental for three terms
until 1995 election and his certificate of candidacy showed that his residence was in
Tagoloan, Misamis Oriental. On 14 June 1997, while still governor he executed a voter
registration record in Cagayan de Oro City which is geographically located in Misamis
Oriental, claiming 20 years of residence. He filed candidacy for mayor in the said city
and stated that his residence for the preceding two years and five months was in the
same city. Rogelio Torayno Sr filed petition for disqualification of Emano fo failing to
meet the residency requirement. Emano won the mayoral post and proclaimed
winner. Torayno filed for annulment of election of Emano. COMELEC upheld its
decision.
Issue: Whether or not Emano failed the constitutional residency requirement?
Decision: Petition dismissed, COMELEC resolution affirmed. Emano was the
overwhelming choice of the people of Cagayan de Oro. The court find it apt to
reiterate the principle that the manifest will of the people as expressed through the
ballot be given the fullest effect. Emano was actually and physically residing in CDO
while discharging his duties as governor and even paid his community tax certificate
in the same. The residency requirement intends to prevent the possibility of a
“stranger unacquainted with the conditions and needs of the community from seeing
an elective office to serve that community.”
SULIGUIN vs. COMELEC
FACTS:
MargaritoSuliguin was one of the candidates for Sangguniang Bayan of Nagcarlan,
Laguna during 10 May 2004 elections.
Around 6pm, same date: Municipal Board of Canvassers convened to canvass the
votes for all candidates. Suliguin received 6,605 votes while EcelsonSumague received
6,647. However in Statement of Votes covering Precincts 1A-19A, Sumague appears to
have received 644 votes only when he actually received 844. MBOC failed to notice
discrepancy &Suliguin was proclaimed as 8th SB member.
Sumague requested for recomputation of votes, pointing out that he officially
garnered 6,647 votes. MBOC summongSumague&Suliguin to a conference. MBOC
discovered that it had failed to credit Sumague his 200 votes & that he should have
been proclaimed instead of Suliguin.
26 May ’04: MBOC filed before COMELEC a “Petition to Correct Entries in SOV”
for Councilor.
In meantime, 9 Jun: Suliguin took his oath.
 21 July: COMELEC 1stDiv granted MBOC’s petition & nullified the proclamation of
Suliguin, ordered proclamation of Sumague.
ISSUE: WON COMELEC erred in granting petition of MBOC to nullify Suliguin’s
proclamation because petition should have been filed not later than 5 days following
date of proclamation
HELD:
Negative. In an election case, the Comelec is mandated to ascertain by all means
within its command who the real candidate elected by the electorate is. The Court
frowns upon any interpretation of the law or the rules that would hinder in any way
not only the free and intelligent casting of the votes in an election but also the correct
ascertainment of the results.
Simple mathematical procedure of adding the total number of votes garnered by
Sumague as appearing in SOVs would readily reveal the result that he has 42 votes
more than Suliguin. Such result would, in effect, dislodge Suliguin from said post &
entitle Sumague to occupy 8th seat of SB of Nagcarlan, Laguna. Suliguin himself never
disputed the discrepancy in the total number of votes garnered by Sumague, and
instead questioned the personality of the MBOC to file the petition and insisted that
such petition was not filed on time.
Sec. 3&4 of Rule 1 of Comelec ROP provide that such rules may be “liberally
construed” in the interest of justice. Comelec has the discretion to liberally construe
its rules & at the same time, suspend the rules or any portion thereof in the interest of
justice. Disputes in the outcome of elections involve public interest; as such,
technicalities and procedural barriers should not be allowed to stand if they constitute
an obstacle to the determination of the true will of the electorate in the choice of their
elective officials. Laws governing such disputes must be liberally construed to the end
that the will of the people in the choice of public officials may not be defeated by mere
technical objections.
What is involved in the present petition is the correction of a manifest error in
reflecting the actual total number of votes for a particular candidate. A manifest
clerical error is "one that is visible to the eye or obvious to the understanding and is
apparent from the papers to the eye of the appraiser and collector, and does not
include an error which may, by evidence dehorns the record be shown to have been
committed."
MBOC is merely doing its function that is mandated by law – to canvass votes in
the election returns submitted to it in due form, adding or compiling the votes cast for
each candidate as shown in the face of such returns and eventually proclaim the
winning candidates.
A subsequent annulment of the proclamation of the respondent does not
constitute a clear violation of his right. In the first place, there is no valid
proclamation to speak of. He was not elected by a majority or plurality of voters. His
alleged right was based on an erroneous proclamation. By any mathematical
formulation, the respondent cannot be construed to have obtained such plurality of
votes; otherwise, it would be sheer absurdity to proclaim a repudiated candidate as
the choice of the voters. "Where a proclamation is null and void, the proclamation is
no proclamation at all and the proclaimed candidate’s assumption of office cannot
deprive the COMELEC of the power to make such declaration a nullity."
Technicalities of the legal rules enunciated in the election laws should not frustrate
the determination of the popular will.
Lastly, correction sought by Sumague& MBOC is correction of manifest mistakes
in mathematical addition.It does not involve the opening of ballot boxes; neither does
it involve the examination and/or appreciation of ballots. This only calls for a mere
clerical act of reflecting the true and correct votes received by the candidates by the
MBCs involved.
Records indicate that Suliguin’s assumption of office was effected by a clerical
error or simple mathematical mistake in the addition of votes and not through the
legitimate will of the electorate. Thus, his proclamation was flawed right from the very
beginning. Having been based on a faulty tabulation, there can be no valid
proclamation to speak of insofar as Suliguinis concerned.
RULES OF COURT
DSM CONSTRUCTION AND DEVELOPMENT CORPORATION, petitioner,
vs.
COURT OF APPEALS and MEGAWORLD GLOBUS ASIA, INC., respondents.
Ponente: PUNO
FACTS:
[P]etitioner and respondent entered into agreements for the construction of a
condominium project owned by respondent called “The Salcedo Park”, with petitioner
as contractor. In the course of the project’s construction, differences with respect to
billings arose between the parties. Petitioner thus filed a complaint for compulsory
arbitration before the CIAC claiming payment for approximately P97 Million as the
outstanding balance due from respondent pursuant to the agreements. The CIAC
rendered a decision partially granting both petitioner’s and respondent’s claims in
favor of petitioner. This award was affirmed by the Court of Appeals. Thereafter, the
Supreme Court promulgated its Decision affirming the judgment of the Court of
Appeals and lifting the TRO that was then still in effect.It became final and
executory. Petitioner centers on attempts, regrettably entertained by respondent
Court of Appeals, to thwart the execution of a final and executory decision of the
Supreme Court.
ISSUE:
Whether or not the Court of Appeals gravely abused its discretion when it issued a
Resolution enjoining the enforcement of Alias Writ of Execution.
HELD:
YES. Petition was granted. The CIAC is ordered to proceed with the execution of its
Decision.
RATIO:
Rule 1, Section 6 of the Rules of Court provides that the Rules shall be liberally
construed in order to promote their objective of securing a just, speedy and
inexpensive disposition of every action and proceeding. We have at times relaxed
procedural rules in the interest of substantial justice.
But from the outset, it bears stressing that the subject of petitioner and respondent’s
petitions is the execution of a final judgment was affirmed by no less than this Court.
This being so, the appellate court should have been doubly careful about entertaining
an obviously dilatory petition intended merely to delay the satisfaction of the
judgment. Any lower court or tribunal that trifles with the execution of a final and
executory judgment of the Supreme Court flirts with insulting the highest court of the
land. While we do not diminish the availability of judicial remedies to the execution of
final judgments of this Court, as may be sanctioned under the Rules of Court, such
actions could only prosper if they have basis in fact and in law. Any court or tribunal
that entertains such baseless actions designed to thwart the execution of final
judgments acts with grave abuse of discretion tantamount to lack of jurisdiction. It is
the positive duty of every court of the land to give full recognition and effect to final
and executory decisions, much less those rendered by the Supreme Court.
The abuse of discretion amounting to lack or excess of jurisdiction in this case was
made manifest by the fact that the appellate court not only took cognizance of the case
and issued the assailed restraining order. It eventually decided the case in petitioner’s
(respondent herein) favor as well notwithstanding the dearth of any basis for doing so.
CONFLICTING PROVISIONS WITHIN A STATUTE
JMM Promotions and Management Inc. vs. NLRC and Delos Santos [G.R. No.
109835. November 22, 1993]
Ponente: CRUZ, J.
FACTS:
Petitioner’s appeal was dismissed by the respondent National Labor Relations
Commission citing the second paragraph of Article 223 of the Labor Code as amended
and Rule VI, Section 6 of the new Rules of Procedure of the NLRC, as amended. The
petitioner contends that the NLRC committed grave abuse of discretion in applying
these rules to decisions rendered by the POEA. It insists that the appeal bond is not
necessary in the case of licensed recruiters for overseas employment because they are
already required under Section 4, Rule II, Book II of the POEA Rules not only to pay a
license fee of P30,000 but also to post a cash bond of P100,000 and a surety bond of
P50,000. In addition, the petitioner claims it has placed in escrow the sum of
P200,000 with the Philippine National Bank in compliance with Section 17, Rule II,
Book II of the same Rule, “to primarily answer for valid and legal claims of recruited
workers as a result of recruitment violations or money claims.” The Solicitor General
sustained the appeal bond and commented that appeals from decisions of the POEA
were governed by Section 5 and 6, Rule V, Book VII of the POEA Rules.
ISSUE:
Whether or not the petitioner is still required to post an appeal bond to perfect its
appeal from a decision of the POEA to the NLRC?
HELD:
YES. Petitioner’s contention has no merit.

RATIO:
Statutes should be read as a whole. Ut res magis valeat quam pereat – that the
thing may rather have effect than be destroyed.
It is a principle of legal hermeneutics that in interpreting a statute (or a set of rules as
in this case), care should be taken that every part thereof be given effect, on the theory
that it was enacted as an integrated measure and not as a hodge-podge of conflicting
provisions. Under the petitioner’s interpretation, the appeal bond required by Section
6 of the POEA Rule should be disregarded because of the earlier bonds and escrow
money it has posted. The petitioner would in effect nullify Section 6 as a superfluity
but there is no such redundancy. On the contrary, Section 6 complements Section 4
and Section 17. The rule is that a construction that would render a provision
inoperative should be avoided. Instead, apparently inconsistent provisions should be
reconciled whenever possible as parts of a coordinated and harmonious whole.
G.R. No. 163988 November 17, 2005
VALENTINA A. NUNEZ, et. al.,petitioners, vs. GSIS FAMILY BANK, and
CA, respondents
Doctrine:An action to foreclose a real estate mortgage prescribes in ten years,
according to Art. 1142.
Facts:
1. Petitioners are heirs of Leonilo Nunez. Leonilo, during his lifetime, obtained
three loans from GSIS Family Bank (GSIS). All three loans were maturing at
June 30, 1978, and were secured by a real estate mortgage over 4 different
properties.
2. On June 30, 1978, when the loans were maturing, Leonilo obtained a “fourth
loan” of Php 1, 539, 135.00, for which was secured by a real estate mortgage
over 6 different properties. He then executed a Promissory Note in the same
amount and payable on December 27, 1978 to pay off the three previous
loans.
3. On December 11, 1997, or MORE THAN 11 YEARS AFTER LEONILO’S
PROMISSORY NOTE MATURED, GSIS under took to extrajudicially
foreclose the properties that secured the first two out of the three loans. GSIS
alleged that Leonilo failed to pay the loans despite repeated demands.
4. The Ex-Officio Sheriff of Gapan issued a Notice of Extra-Judicial Sale of the
properties. The auction took place and GSIS was the highest and only bidder.
5. Again, on September 1, 1999, upon GSIS’ petition, 2/6 properties that
secured the alleged “fourth loan” was extrajudicially foreclosed, and GSIS
was the highest and only bidder.
6. On June 20, 2000, Leonilo filed before RTC Gapan a complaint against GSIS
for the Annulment of the Extrajudicial Foreclosure Sale, Reconveyance, and
Cancellation of Encumbrances. Leonilo denied securing a “fourth loan”.
Leonilo also invoked prescription, citing Art. 11421 and 11442.
Leonilo stated that the first three loans matured on June 30, 1978
and the “fourth loan” matured on December 27, 1978; hence, they
had prescribed in 1988. GSIS only filed their petitions on 1997 and
1999.
7. Leonilo also questions the truth of the alleged “fourth loan” as although 6
properties secured the “fourth loan”, only two were subjected to the
foreclosure sale, and the titles of the other four properties had no mortgage
annotation on them.
8. RTC Ruling: in favor of Leonilo, who died during the pendency of the case
and was substituted by his heirs.
9. GSIS filed a motion to reconsideration, but did not comply with the
requirement of notice of hearing. It argued that it was due to the inadvertent
deletion of the file of the handling counsel. RTC denied the MR. GSIS filed a
Notice of Appeal, but was dismissed for being filed late. Hence, GSIS filed a
petition for certiorari before the CA, arguing that the rules of procedure be
liberally applied to avoid injustice and irreparable damage.
10. CA: found in favor of GSIS, stating that the right of appeal was a natural
right, and that the Notice of Appeal would better serve the ends, and prevent
the miscarriage of justice.
11. Hence, this petition for certiorari under R65.
Issue: W/N the action for foreclosure of the REM has already prescribed
Held: YES!
The Action for Foreclosure of REM has already prescribed
1. An action to foreclose a real estate mortgage prescribes in ten years,
according to Art. 1142. The running of such period can be, however,
interrupted. But in this case, there was no letter of demand, court action or
foreclosure proceeding that was undertaken prior to Dec. 11, 1997, and
September 1, 1999.
2. While GSIS alleged that it repeatedly demanded for payment, allegations are
not proofs. Unless a demand is proven, one cannot be held in default.
1
Art. 1142. A mortgage actionprescribes after ten years.
2
Art. 1144. The following actions must be brought within ten years from the time the right of
action accrues: (1) upon a written contract; xxx
 3. GSIS contended that such demand would amount to a waiver of its right to
foreclose. However, it could have initiated foreclosure proceedings early on,
and not wait for more than 19 years to do so.
4. GSIS argues that what applies if Art. 11413, and not Art. 1142 as the latter
speaks of real actions over immovable. However, the location of Art. 1142,
immediately right after Art. 1141, indicates it is an exception to the previous
article.
5. In sum, an action for foreclosure of mortgage of real property prescribes in
ten years. This has been in fact settled by previous jurisprudence.
[not relevant to topic, but ruling of the case] The Notice of Appeal was Filed Out of
Time
1. According to Rule 41, the period to appeal is fifteen days from notice of
judgment, and shall only be interrupted by a timely motion for new trial or
reconsideration. Also, according to Rule 22, should an act be done which
effectively interrupts the running of the period, the allowable period after
such interruption shall start to run on the day after the notice of the
cessation of the cause thereof.
2. The requirement of notice of hearing of Sec. 4 and 5 of Rule 15, in connection
with Sec. 2 of Rule 37 is mandatory. When GSIS filed its MR on the last day
of the 15-day period, it only had one day from the time it received a copy of
the order denying the MR (or until Dec. 10) within which to perfect its
appeal. However, it filed its Notice of Appeal on Dec. 11, one day out of time.
3. GSIS also failed to adequately explain his reasons to relax the application of
the Rules. Also, failure to perfect an appeal within the reglementary period is
not a mere technicality as it raises a jurisdictional problem as it deprives the
appellate court of jurisdiction over the appeal.
Other Matters (in case he asks)
1. Petitioner filed their petition as “Petition for Review under R45 with a
Petition for Certiorari under R65”. However, they manifest that it is filed
“pursuant to Rule 65 in relation to Rule 45”. This Court, in accordance with
the liberal spirit and in the interest of justice, will treat the petition as a
petition for certiorari under R65 since it was filed on time for both R45 or
R65.
WHEREFORE, the petition is GRANTED. The assailed Court of Appeals decision
dated February 23, 2004 and Resolution dated May 25, 2004 are REVERSED and
3
Art. 1141. Real actions over immovables prescribe after thirty years.This provision is without
prejudice to what is established for the acquisition of ownership and other real rights by
prescription.
SET ASIDE. The Decision dated August 9, 2002 of the Regional Trial Court of
Gapan, Nueva Ecija, Branch 34, which had become final and executory, stands.
Arenas v City of San Carlos (G.R. No. L-34024, 5 April 1978) Petitioner(s): Isidro
Arenas Respondent(s): City of San Carlos, et al.
ANTECEDENT FACTS
Petitioner Arenas is the incumbent city judge of San Carlos. Respondent City of San
Carlos has been classified as a third-class city from the time of its creation in 1966 up
to the present. R.A. No. 5967, which became effective on June 21, 1969, provides that
the basic salary of city judges of second-class and third-class cities shall be
P18,000.00 per annum o Arenas was then actually receiving P12,000.00 annually o
Arenas asserts that under the said Act, the difference between the salary actually
being received by a city judge and the basic salary established in the said Act shall be
paid by the city government Respondent, however, alleged the following: o R.A. No.
5967 also provides that the salary of the city judge shall at least be P100 per month
less than that of a city mayor o Assuming the existence of a salary difference, the
payment of such is discretionary on the part of the city government as to whether or
not it would implement the payment The CFI of San Carlos dismissed the petition.
ISSUE(S) Whether or not it is mandatory to follow the prescribed basic salaries
provided in R.A. No. 5967
OPINION(S) OF THE COURT and RULING
The reason for the city judge’s monthly salary being P100.00 less than that of a city
mayor is because, as stated during the deliberations, “it would be unfair for the
purposes of public administration that a city department head should receive a salary
higher than that of the chief executive of the city.” Similarly, during the deliberations,
Sen. Laurel also noted that “this will not require the council to pay at P100.00 exactly
less than the salary of the mayor. It is just a limit—the maximum—but they may fix it
at much less than that.” Inasmuch as the city mayor of San Carlos was receiving an
annual salary of P13,200.00, the Respondents cannot be compelled to provide for an
annual salary of P18,000.00 for Arenas, because it does not follow what the framers of
the law intended.
STATUES IN PARI MATERIA
G.R. No. L-36049 May 31, 1976
CITY OF NAGA, VICENTE P. SIBULO, as Mayor, and JOAQUIN C.
CLEOPE, as Treasurer of the City of Naga, petitioners,
vs.
CATALINO AGNA, FELIPE AGNA and SALUD VELASCO, respondents.
Ernesto A. Miguel for petitioners.
Bonot, Cledera & Associates for respondents.
MARTIN, J.:
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.
Teehankee (Chairman), Makasiar, Esguerra and Muñoz Palma, JJ., concur.
Footnotes
1 Section 14, RA 305, as amended, otherwise known as the Charter
of Naga City, provides:
Each approved ordinance, resolution or motion shall be sealed with
the seal of the Board, signed by the presiding officer and the
secretary of the Board and recorded in a book for the purpose and
shall, on the day following its passage, be posted by the secretary at
the main entrance to the City Hall, and shall take effect and be in
force on and after the tenth day following its passage, unless
otherwise stated in said ordinance, resolution or motion or vetoed
by the Mayor as hereinafter provided. (Emphasis ours)
2 Stipulation of Facts.
3 Stipulation of Facts.
4 See. 14 (RA 305) — Method of transacting business by the Board-
Veto-Authentication and publication of ordinance —
... Within ten days after the receipt of the ordinance, resolution, or
motion, the Mayor shall return it with his approval or veto. If he
does not return it within that time it shall be to be approved, if he
returns it with his veto, his reasons therefor in writing shall
accompany it. It may then be again enacted by the affirmative
vetoes of six member of the Board and again forwarded to the
Mayor for his approval, and if within ten days after his receipt he
does not again return it with his veto, it shall be deemed to be
approved. If within said time he again returns it with his veto, it
shall be forwarded forthwith to the Secretary of the Interior for his
approval or disapproval, which shall be final." (Emphasis ours.)
5 Sec. 2, Republic Act 2264, otherwise known as the Local
Autonomy Act, provides:
Section 2. (Republic Act No. 2264) Taxation—Any provision of law
to the contrary notwithstanding, all chartered cities, municipalities
and municipal districts shall have authority to impose municipal
license taxes or fees upon persons engaged in any occupation or
business ...
A tax ordinance shall go into effect on the fifteenth day after its p ,
unless the ordinance shall provide otherwise: Provided, however,
that the Secretary of Finance shall have authority to suspend the
effectivity of any ordinance within one hundred and twenty days
after its passage, if, in his opinion the tax or fees therein levied, or
imposed is unjust, excessive, oppressive, or confiscatory, and when
the said secretary exercises this authority the effectivity or such
ordinance shall be suspended. (emphasis ours)
6 Black on Interpretation of Laws, p. 351.
7 Sutherland Statutory Construction, Vol. 11, pp. 535- 536.
8 Black on Interpretation of Laws, See. 106.
9 Ibid
10 Sutherland Statutory Construction, Vol. 11, p. 529.

PHILIPPINE NATIONAL BANK, Petitioner, Vs. TERESITA CRUZ, JOSE
AGRIPINO, BERNARDO BAUZON, LUCRECIA BILBAO, MA. LUISA
CABRERA, FRANCIS BAACLO, GUADALUPE CAMACHO, LUZ DE LEON,
MIKE VILLAVERDE, NEPOMUCENO MEDINA, EDGARDO MENDOZA,
JENNIFER VELEZ, AMELIA MEDINA, EDUARDO ESPEJO And RICARDO
BATTO, Respondents.
G.R. No. 80593 | 1989-12-18
DECISION
GANCAYCO, J.:
The focus of the instant petition for certiorari is the application of Article 110 of the
Labor Code. The said article provides that workers shall enjoy first preference with
regard to wages due them in cases of bankruptcy or liquidation of an employer's
business.
The antecedent facts of the case are as follows:
Sometime in 1980 Aggregate Mining Exponents (AMEX) laid-off about seventy
percent (70%) of its employees because it was experiencing business reverses. The
retained employees constituting thirty percent (30%) of the work force however, were
not paid their wages. This non-payment of salaries went on until July 1982 when
AMEX completely ceased operations and instead entered into an operating agreement
with T.M. San Andres Development Corporation whereby the latter would be leasing
the equipment and machineries of AMEX.
The unpaid employees sought redress from the Labor Arbiter 1 who, on August 27,
1986 rendered a decision finding their claim valid and meritorious. The dispositive
part of the said decision, reads:
WHEREFORE, finding the claims of complainants for payment of unpaid wages and
separation pay to be valid and meritorious, respondents Aggregate Mining Exponent
and its president Luis Tirso Revilla should, as they are hereby ordered to pay the same
to said complainants in the following amounts:
Yrs. of Separation
Employees Service Rate Pay Backwages
1. Jose Agripino 8 P1,300.00 P 5,200.00 P6,174.96
2. Bernardo Bauzon 9 1,900.00 8,550.00 11,712.85
3. Lucresia Bilbao 7 2,300.00 8,050.00 19,247.00
4. Teresita S. Cruz 12 2,700.00 16,200.00 23,485.70
5. Ma. Luisa Cabrera 3 1,800.00 2,700.00 5,004.35
6. Francis Baaclo 7 3,500.00 12,550.00 32,986.90
7. Guadalupe Camacho 6 1,300.00 3,900.00 3,227.15
8. Luz de Leon 5 1,300.00 3,250.00 3,110.85
9. Mike Villaverde 6 1,500.00 4,500.00 4,793.80
10. Nepomuceno Medina 5 1,200.00 3,000.00 4,287.10
11. Edgardo Mendoza 4 920.00 1,840.00 832.10
12. Jenifer Velez 2 740.00 740.00 4,287.66
13. Amelia Medina 2 740.00 740.00 6,822.81
14. Eduardo Espejo 4 970.00 1,940.00 234.10
15. Ricardo Batto 7 3,000.00 10,500.00 9,874.70
------------------- ----------------
TOTAL P83,360.00 P136,092.03
========= =========
in the total amount of P219,452.03. To properly effectuate the payment of the same,
the necessary arrangement should be made between respondents Annex and T.M. San
Andres Development Corp. and Philippine National Bank (PNB) on their respective
role and participation herein. For should the principal respondent be unable to satisfy
these Awards, the same can be satisfied from the proceeds or fruits of its machineries
and equipment being operated by respondent T.M. San Andres Dev. Corp. either by
operating agreement with respondent Amex or thru lease of the same from PNB.
To obviate any further differences between complainants and their counsel to the
latter's attorney's fees which seems to be the cause of their earlier misunderstanding,
as can be gleaned from the Charging Lien filed by said counsel, respondents are,
moreover, ordered to segregate and pay the same directly to said counsel, the amount
of which is to be computed pursuant to their agreement on July 14, 1983 (Annex A of
Position to Enter Attorney's Charging Lien in the Record of the Case)." 2
AMEX and its President, Tirso Revilla did not appeal from this decision. But PNB, in
its capacity as mortgagee-creditor of AMEX interposed an appeal with the respondent
Commission, not being satisfied with the outcome of the case. The appeal was
primarily based or the allegation that the workers' lien covers unpaid wages only and
not the termination or severance pay which the workers likewise claimed they were
entitled to.
In a resolution 3 dated October 27, 1987, the National Labor Relations Commission
affirmed the decision appealed from. Hence the instant petition filed by the petitioner
bank based on the following grounds:
"I ARTICLE 110 OF THE LABOR CODE MUST BE READ IN RELATION TO
ARTICLES 2241, 2242, 2243, 2244 AND 2245 OF THE CIVIL CODE CONCERNING
THE CLASSIFICATION, CONCURRENCE AND PREFERENCE OF CREDITS.
"II. ARTICLE 110 OF THE LABOR CODE DOES NOT PURPORT TO CREATE A LIEN
IN FAVOR OF WORKERS OR EMPLOYEES FOR UNPAID WAGES EITHER UPON
ALL OF THE PROPERTIES OR UPON ANY PARTICULAR PROPERTY OWNED BY
THEIR EMPLOYER." 4
The petition is devoid of merit.
At the outset, petitioner PNB did not question the validity of the workers' claim for
unpaid wages with respect to the mortgaged properties of AMEX, provided that the
same be limited to the unpaid wages, and to the exclusion of termination pay. In the
instant petition however, PNB starts off with the question of whether or not the
workers' lien take precedence over any other claim considering that this Court has
ruled otherwise in Republic vs. Peralta. 5
This Court cannot allow the petitioner to alter its stance at this stage inasmuch as it is
deemed to have acquiesced in the decision of the labor arbiter concerning payment of
unpaid wages. The records reveal that the petitioner failed to question the same on
appeal. Hence, it is now barred from claiming that the workers' lien applies only to the
products of their labor and not to other properties of the employer which are
encumbered by mortgage contracts or otherwise.
Notwithstanding the foregoing, an attempt on the part of the petitioner to seek relief
from that portion of the decision would still be in vain.
Article 110 of the Labor Code provides that:
"Art. 110. Worker preference in case of bankcruptcy. In the event of bankcruptcy or
liquidation of an employer's business, his workers shall enjoy first preference as
regarding their unpaid wages and other monetary claims, any provision of law to the
contrary notwithstanding. Such unpaid wages and monetary claims, shall be paid in
full before claims of the government and other creditors may be paid." 6
This Court must uphold the preference accorded to the private respondents in view of
the provisions of Article 110 of the Labor Code which are clear and which admit of no
other interpretation. The phrase "any provision of law to the contrary
notwithstanding" indicates that such preference shall prevail despite the order set
forth in Articles 2241 to 2245 of the Civil Code. 6a No exceptions were provided under
the said article, henceforth, none shall be considered. Furthermore, the Labor Code
was signed into Law decades after the Civil Code took effect.
In Herman vs. Radio Corporation of the Philippines, 7 this Court declared that
whenever two statutes of different dates and of contrary tenor are of equal theoretical
application to a particular case, the statute of later date must prevail being a later
expression of legislative will. Applying the aforecited case in the instant petition, the
Civil Code provisions cited by the petitioner must yield to Article 110 of the Labor
Code.
Moreover, Our pronouncement in A.C. Ransom Labor Union-CCLU vs. NLRC, 8
reinforces the above-mentioned interpretation where this Court, speaking through
Associate Justice Melencio-Herrera, explicitly stated that "(t)he worker preference
applies even if the employer's properties are encumbered by means of a mortgage
contract . . . . So that, when (the) machinery and equipment of RANSOM were sold to
Revelations Manufacturing Corporation for P2 M in 1975, the right of the 22 laborers
to be paid from the proceeds should have been recognized . . .." 9
Reliance by the petitioners on Republic vs. Peralta is without basis. The said case
involved a question of workers' preference as against the tax claims of the State. In the
said case the Court held that the State must prevail in that instance since "it has been
frequently said that taxes are the very lifeblood of government. The effective collection
of taxes is a task of highest importance for the sovereign. It is critical indeed for its
own survival." 10
Nevertheless, under Article 110 of the Labor Code as amended, the unpaid wages and
other monetary claims of workers should be paid in full before the claims of the
Government and other creditors. Thus not even tax claims could have preference over
the workers' claim.
Consistent with the ruling of this Court in Volkschel Labor Union vs. Bureau of Labor
Relations, 11 this court adopts the doctrine that "(i)n the implementation and
interpretation of the provisions of the Labor Code and its implementing regulations,
the workingman's welfare should be the primordial and paramount consideration." 12
Bearing this in mind, this Court must reiterate the dictum laid down in A.C. Ransom
that the conflict between Article 110 of the Labor Code and Article 2241 to 2245 of the
Civil Code must be resolved in favor of the former. A contrary ruling would defeat the
purpose for which Article 110 was intended; that is, for the protection of the working
class, pursuant to the never-ending quest for social justice.
Petitioner next advances the theory that "even if the worker's lien applies in the
instant case, the same should cover only unpaid wages excluding termination or
severance pay." 13 To support this contention, petitioner cites Section 7, Rule I, Book
VI of the Rules and Regulations implementing the Labor Code which provides that:
"The just causes for terminating the services of an employee shall be those provided
under Article 283 of the Code. The separation from work of an employee for a just
cause does not entitle him to termination pay provided in the Code, . . .."
Based on that premise, petitioner contends that the claim for termination pay should
not be enforced against AMEX properties mortgaged to petitioner PNB because
Article 110 of the Labor Code refers only to "wages due them for services rendered
during the period prior to bankcruptcy or liquidation." 14 Citing serious financial
losses as the basis for the termination of the private respondents, petitioner alleges
that the employees are not entitled to the termination pay which they claim.

This contention is, again, bereft of merit.
The respondent Commission noted that "AMEX failed to adduce convincing evidence
to prove that the financial reverses were indeed serious." 15 After a careful study of
the records of the case, this Court finds no reason to alter the findings of the
respondent Commission.
In Garcia vs. National Labor Relations Commission, 16 it was held that "it is
essentially required that the alleged losses in business operations must be proved." 17
This policy was adopted to obviate the possibility of an employer fabricating business
reverses in order to ease out employees for no apparent reason. Hence, no departure
shall be made by this Court from the ruling in Philippine Commercial and Industrial
Bank vs. National Mines and Allied Workers Union (NAMAWU-MIF) 18 where it was
categorically stated that the term "wages" includes not only remunerations or
earnings payable by an employer for services rendered or to be rendered, but also
covers all benefits of the employees under a Collective Bargaining Agreement like
severance pay, educational allowance, accrued vacation leave earned but not enjoyed,
as well as workmen's compensation awards and unpaid salaries for services rendered.
All of these benefits fall under the term "wages" which enjoy first preference over all
other claims against the employer. 19
Furthermore, in Peralta, this Court held that for purposes of the application of Article
110, "termination pay is reasonably regarded as forming part of the remuneration or
other money benefits accruing to employees or workers by reason of their having
previously rendered services . . .." 20 Hence, separation pay must be considered as
part of remuneration for services rendered or to be rendered.
Indeed Article 110 of the Labor Code, as amended, aforecited, now provides that the
workers' preference covers not only unpaid wages but also other monetary claims.
The respondent Commission was, therefore, not in error when it awarded the
termination pay claimed by the private respondents. As far as the latter are
concerned, the termination pay which they so rightfully claim is an additional
remuneration for having rendered services to their employer for a certain period of
time. Noteworthy also is the relationship between termination pay and services
rendered by an employee, that in computing the amount to be given to an employee as
termination pay, the length of service of such employee is taken into consideration
such that the former must be considered as part and parcel of wages. Under these
circumstances then, this Court holds that the termination or severance pay awarded
by the respondent Commission to the private respondents is proper and should be
sustained.
Lastly, it must be noted that the amount claimed by petitioner PNB for the
satisfaction of the obligations of AMEX is relatively insubstantial and is not significant
enough as to drain its coffers. By contrast, that same amount could mean subsistence
or starvation for the workingman. Quoting further from Philippine Commercial and
Industrial Bank, this Court supports the equitable principle that "it is but humane and
partakes of the divine that labor, as human beings, must be treated over and above
chattels, machineries and other kinds of properties and the interests of the employer
who can afford and survive the hardships of life better than their workers. Universal
sense of human justice, not to speak of our specific social justice and protection to
labor constitutional injunctions dictate the preferential lien that the above provision
accord to labor." 21 In line with this policy, measures must be undertaken to ensure
that such constitutional mandate on protection to labor is not rendered meaningless
by an erroneous interpretation of the applicable laws.
WHEREFORE, premises considered, the petition is hereby DISMISSED for lack of
merit. No costs.
SO ORDERED.
Narvasa, Griño-Aquino and Medialdea, JJ, concur.
Separate Opinions
CRUZ, J., concurring:
I can perhaps be allowed a little immodesty in taking this occasion to point out that in
Republic of the Philippines v. Peralta, cited in the ponencia, I was the only one who
held the view that the claims of the laborers should take precedence over those of even
the Government under Article 110 of the Labor Code.
Interpreting the said provision, I submitted that it should be read according to its
literal import and obvious philosophy, to favor and protect the laborer pursuant to the
social justice policy. None of my thirteen colleagues then agreed with me.
With the amendment of the article, evidently to correct the meaning given to it in
Peralta, all doubt has been removed as to its original intention (which I feel was quite
clear even before). There is no question now that under Article 110 of the Labor Code
as reworded the claims of the laborer prevail over those of all others, including the
Government itself, in the interest of social justice. It is for me a cause for deep elation.
[G.R. No. 26802. July 15, 1927.]
HENRY HERMAN, Plaintiff-Appellee, v. THE RADIO CORPORATION OF
THE PHILIPPINES (REORGANIZED), INC., Defendant-Appellant.
Paredes, Buencamino & Yulo for Appellant.
J. W. Ferrier for Appellee.
SYLLABUS
 1. ESTOPPEL; EQUITABLE ESTOPPEL. — Whenever a party has, by his own
declaration, act, or omission, intentionally and deliberately led another to believe a
particular thing true, and to act upon such belief, he cannot, in any litigation arising
out of such declaration, act, or omission, be permitted to falsify it.
2. ID.; ID.; CASE AT BAR. — In the course of negotiations for the sale to the
defendant of plaintiffs interest in the stock of a corporation, with other items, the
plaintiff attempted to secure the recognition and payment of salary alleged to be due
to him for services rendered to the corporation. The officer representing the
defendant absolutely refused to recognize this claim and informed the plaintiff’s agent
that he would not proceed with the negotiations unless the plaintiff would take off the
salary. Upon being informed of this, the plaintiff drew up another offer from which all
reference to the salary was omitted, after which the parties proceeded to enter into a
contract settling all existing differences except as to the salary. Held: That the plaintiff
having led the defendant to believe that the claim for salary had been waived and to
contract on that basis, the plaintiff is now estopped from asserting the claim.
3. STATUTES; CONFLICT; DATE OF ENACTMENT; WHEN LATER STATUTE
PREVAILS. — Where two statutes of different dates and of contrary tenor are of equal
theoretical application to a particular case, the statute of later date prevails.
DECISION
STREET, J.:
This action was instituted in the Court of First Instance of the City of Manila by Henry
Herman for the purpose of recovering from the defendant, The Radio Corporation of
the Philippines (reorganized), Inc., the sum of P2,050, with interest, alleged to be
owing to the plaintiff from the defendant for salary earned by the plaintiff from
August 1 to October 22, 1925, while serving the defendant as manager of
communications. Upon hearing the cause the trial judge found that the services
referred to had been rendered and that the salary claimed was due and unpaid. He
therefore gave judgment in favor of the plaintiff to recover of the defendant the
amount sued for, with interest from November 24, 1925, and with costs. From this
judgment the defendant appealed.
It appears that prior to July 31, 1925, there were two Philippine corporations
attempting to develop the commercial radio business and other radio activities in the
Islands. One was the Far Eastern Radio, Inc., and the other, The Radio Corporation of
the Philippines. About the date stated, the persons in charge of the two corporations,
having found that the two entities had repeatedly come into conflict with each other,
to the detriment of both, agreed to merge the two concerns; and this was effected by
the contract Exhibit A. The plaintiff herein Henry Herman, had been largely
interested in The Radio Corporation of the Philippines; and, in consideration of the
cancellation of his contract for services with that concern, it was agreed in the contract
of merger that he should be offered the post of manager of the traffic department of
the reorganized concern for a period of one year beginning August 1, 1925, and for
such further term as might thereafter be agreed upon, and at such compensation as
the board of directors of the reorganized concern would offer. The salary for the
services thus to be rendered was subsequently fixed by said directors at P750 per
month, and services were apparently rendered by the plaintiff to the reorganized
company until October 22, 1925.
The defense, while not expressly controverting the fact that the plaintiff may have
rendered service for the time and at the rate claimed, is based on the facts now to be
stated. It appears that trouble had arisen between the plaintiff and the officials of the
reorganized corporation during the period with respect to which salary is now
claimed. As a result of this disagreement the officials in charge of the defendant
company decided to buy out the interest of the plaintiff in the original Radio
Corporation and at the same time to settle all existing controversies with him.
As a preliminary to the negotiations that ensued, the plaintiff employed one Julio
Danon as his broker, since he himself was not on speaking terms with the officials of
the defendant company. On the forenoon of October 19, 1925, the plaintiff sent Danon
to the office of Andres Soriano, then vice-president of the defendant company, with a
memorandum, drawn up by Herman, stating the terms upon which the latter was
willing to sell out. This memorandum stated, among other things, that, "Rather (than)
to continue the pending lawsuit, I will accept P36,050 cash for personal shares in
RCP, amounting to P72,100, provided all bills and accounts as now appear in the
balance sheet as of July 31, 1925, submitted by the old RCP are paid, namely: Balance
of ESCO (meaning Electric Supply Co.) note, ESCO acceptance and current accounts
still unpaid whether contracted in the name of RCP or ESCO, salary due Mr. Henry
Herman, rents for current month, current purchase account."cralaw virtua1aw library
The memorandum furthermore stated that Herman would agree not to engage in
commercial transmission of radio or in commercial broadcasting.
When this communication was presented to Soriano, he stated to Danon that the
defendant company would not pay more than P30,000 for Herman’s shares in RCP,
that the item for salary would not be recognized, and that insistence upon it by
Herman would defeat the deal. In connection with this conversation Soriano wrote a
memorandum showing P30,000 as the maximum amount that would be paid for the
shares and after the item "Salary due Mr. Henry Herman" he wrote the word "no."
Then, in order to make clear what the new corporation would do in the matter of
buying out Herman’s interest, a memorandum was drawn up and signed by the
defendant’s secretary. This memorandum is in evidence as Exhibit F and is in
substance as follows:jgc:chanrobles.com.ph
"In connection with the offer you presented this morning, I am authorized by the
President and some members of the Board of Directors of the Radio Corporation of
the Philippines, to make the following offer:jgc:chanrobles.com.ph
"1. We will pay P30,000 for Mr. Henry Herman’s personal shares in R. C. P.
amounting to P72,100, as follows:jgc:chanrobles.com.ph
"(a) P15,000 cash at the time the transaction is completed, and
"(b) P15,000 in a promissory note properly guaranteed payable in three months, with
interest at the rate of 9 per cent per annum.
"2. We will also agree to pay the following items:jgc:chanrobles.com.ph
"(a) 50 per cent of Electric Supply Company’s promissory note, with the Philippine
National Bank at time of maturity, the other 50 per cent to be paid after three months.
It is to be understood that the extension for this payment will be negotiated by us;
"(b) Acceptances on Radio material, not yet withdrawn from the Bank, provided the
goods have not been kept in store for a period longer than six months;
"(c) Rents for current month;
"(d) Current purchases, if any balance is due to the Electrical Supply Co., after
deducting purchases of this Company from the Radio Corporation of the Philippines.
"3. Mr. Herman shall agree not to engage directly or indirectly in commercial
transmissions and reception of radio-telegraphy nor in commercial or amateur
broadcasting, such agreement to be made on public document fixing the amount of
P25,000 as damages which should be by him in case of violations of this agreement.
"4. Consequently, the Federal Radio Corporation shall be immediately dissolved.
"This offer is firm up to 3 p. m., October 20, 1925.
"5. We will also agree to pay the bills pending to-day from the balance of July 31, of
the R. C. P. old."cralaw virtua1aw library
With this memorandum in hand Danon returned to his principal and reported
Soriano as saying that he would not proceed in the matter unless Herman would take
off the salary. Danon says that Herman thereupon agreed to do this. While Herman
denies that he said he would withdraw the claim for salary, the fact nevertheless
remains that Herman immediately proceeded to draw up a counter offer (Exhibit 3) in
which all reference to the matter of salary was omitted. This memorandum is as
follows:jgc:chanrobles.com.ph
"Transfer of stock to be made under the following conditions:jgc:chanrobles.com.ph
"1. Henry Herman will deliver stock in the sum of P73,100 endorsed by respective
owners.
"2. Will deliver a petition to the Court signed by all plaintiffs for dismissal of case now
pending.
"3. Will deliver a resolution of the stockholders of Federal Radio, Inc., dissolving
company.
"4. Will sign pledge not to engage in commercial transmission and commercial
broadcasting for a period of five years.
"5. Will agree, if so desired, to manage the commercial station for the balance of this
week.
"6. Radio Corporation of the Philippines will deliver check in the sum of P16,000 in
favor of Henry Herman.
"7. Will deliver 90-day note for like amount, executed jointly and severally with Mr.
Soriano, also in favor of Henry Herman.
"8. Will cause the present Electrical Supply Company note to be guaranteed by Mr.
Soriano or any other party satisfactory to the bank.
"9. Will deliver check in the sum of P1,443.54 in favor of Electrical Supply Company
balance of old account as of July 31st.
"10. Will deliver check in favor of Manila Trading & Supply Co., in the sum of P1,125
(said company is about to file legal action and only by special request are holding this
matter over).
"11. Current account of Electrical Supply Company to be adjusted in ordinary course
of business.
"12. All other accounts appearing on statement of July 31st, except acceptances, to be
taken care of by the Radio Corporation of the Philippines."cralaw virtua1aw library
Herman delivered this memorandum to Danon and told him to return to Soriano and
try his best to get Soriano to raise his bid for the shares from P30,000 to P32,000.
Armed with this document Danon returned to Soriano and informed him in substance
that Herman agreed to drop the claim for salary, but would insist on P32,000 as the
purchase price of Herman’s shares. Both Danon and Soriano concur in the statement
that Danon so reported to Soriano, and we have no doubt that he did so. We are also
of the opinion that Danon was justified in believing, as a result of his communication
with Herman, that the latter was willing to cancel that claim. At any rate negotiations
proceeded without further reference by anybody to the salary matter, and after
Soriano had finally refused to raise the bid for Herman’s shares to P32,000, an
agreement was reached between Danon and Soriano which was accepted by Herman
and the contract of sale was then drawn up. No question has subsequently arisen
between the parties with respect to said contract or the performance thereof by either
party; but about a month after the making of the contract had been concluded,
Herman put in a claim with the defendant for the salary in question. Said demand
having been refused, this action resulted.
The trial judge appears to have been of the opinion that, inasmuch as the claim for
salary had not been expressly waived in the final agreement, the claim therefor was
not affected by such agreement. For the defendant it is contended that, by failing to
insist on the claim for salary, under the circumstances above revealed, the plaintiff
has in effect waived his right to rely upon the claim and is estopped from asserting it
in this action.
We are of the opinion that the contention of the defendant is well founded. In
subsection 1 of section 333 of the Code of Civil Procedure it is declared that whenever
a party has, by his own declaration, act, or omission, intentionally and deliberately led
another to believe a particular thing true, and to act upon such belief, he cannot, in
any litigation arising out of such declaration, act, or omission, be permitted to falsify
it. This provision is in our opinion of true and exact application to the case in hand,
because, during the negotiations (which originally included this claim for salary), the
plaintiff was informed that insistence upon this demand would make the sale of the
stock impossible and, through his agent Danon, he led Soriano, as representative of some unequivocal manner. The intention to waive must be proven and found as a fact.
the defendant, to believe that the claim for salary had been waived. As a legal (40 Cyc., pp. 261 et seq.) Again if the civil law be given effect, then it is undeniable
proposition there can be no doubt that Danon, as agent of the plaintiff in this that "A compromise shall include only matters specifically determined therein or
particular deal, had legal authority to bind the plaintiff by representing to Soriano that which by necessary inference from its wording must be deemed included. A general
the claim for salary was waived; and the omission of the plaintiff to include the claim waiver of rights shall be understood as including only those relating to the question
for salary in the Exhibit 3 accredits the proposition that the claim for salary was with respect to which the compromise has been made." (Civil Code, art. 1815.) A
withdrawn for the purpose of enabling the negotiations to proceed. There can be no compromise agreement, as was held by this court in the case of Ferrer v. Ignacio
reasonable doubt that the final contract was consummated with full knowledge on the ([1918], 39 Phil., 446) speaking through the present Chief Justice, must be strictly
part of the plaintiff that the defendant’s officers believed that the claim for salary had interpreted and must be understood as including only matters specifically determined
been waived. Under these circumstances good faith requires that the plaintiff should therein or which, by necessary inference from its wording, must be deemed included.
not be allowed to put forward the claim for salary again, and he must be considered
estopped from asserting it. Since, therefore, the compromise agreement fails to include the salary matter, since
the plaintiff has never expressly waived his right to a salary, since the findings of the
But attention is directed to section 1815 of the Civil Code which declares that a trial court having particularly to do with the credibility of the witnesses should not be
compromise shall include only matters specifically determined therein or which by lightly disregarded, and since the law is plain, there should be no other result than to
necessary inference from its wording must be deemed included. It is not certain that do what is right, which is to affirm the judgment. Such is my vote.
the section referred to could properly be considered applicable to the situation before
us, as the transaction now under consideration was more than a compromise. The two
parties were engaged in negotiations the purpose of which was to enable the plaintiff
to sell to the defendant all the plaintiff’s rights and interest in the radio concern, and
the principal feature of the transaction was the transfer of the shares owned by the
plaintiff in the corporation. But even if it be supposed that the language used in the
article cited covers the case, nevertheless the salutary rule of good faith prescribed in
subsection 1 of article 333 of the Code of Civil Procedure must prevail, not only
because of its greater moral cogency but because it is a later expression of the
legislative will than article 1815 of the Civil Code.

The judgment appealed from must be reversed, and the defendant will be absolved
from the complaint, without express pronouncement as to costs. So ordered.

Avanceña, C.J., Villamor, and Villa-Real, JJ., concur.

Ostrand, J., voted for the reversal of this case, but owing to his departure on leave, his
signature does not appear on the decision.

Separate Opinions

MALCOLM, J., dissenting:chanrob1es virtual 1aw library

There can exist no measure of doubt as to the true facts in this case which are as found
by Judge Harvey in the Court of First Instance. Nor can there be any hesitancy in
recognizing the provision of law which governs the facts. From the settled facts and
law, a decision flows which indubitably indicates that the plaintiff has a good cause of
action and that the judgment appealed from should be affirmed.

The final written contract in the nature of a compromise, arrived at after long
negotiations between the parties, is admittedly silent as to plaintiff’s claim for salary.
The original offer of the plaintiff contained an item for salary but was categorically
rejected by the defendant. The defendant in its counter-offer made no mention of
salary due the plaintiff. If predicated on these facts the common law doctrine of
waiver be applicable, then it must be admitted that waiver must be manifested in