Republic of the Philippines SUPREME COURT Manila EN BANC G.R. No. L-63915 April 24, 1985 LORENZO M.

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

ESCOLIN, J.: Invoking the people's right to be informed on matters of public concern, a right recognized in Section 6, Article IV of the 1973 1 Philippine Constitution, as well as the principle that laws to be valid and enforceable must be published in the Official Gazette or otherwise effectively promulgated, petitioners seek a writ of mandamus to compel respondent public officials to publish, and/or cause the publication in the Official Gazette of various presidential decrees, letters of instructions, general orders, proclamations, executive orders, letter of implementation and administrative orders. Specifically, the publication of the following presidential issuances is sought: a] Presidential Decrees Nos. 12, 22, 37, 38, 59, 64, 103, 171, 179, 184, 197, 200, 234, 265, 286, 298, 303, 312, 324, 325, 326, 337, 355, 358, 359, 360, 361, 368, 404, 406, 415, 427, 429, 445, 447, 473, 486, 491, 503, 504, 521, 528, 551, 566, 573, 574, 594, 599, 644, 658, 661, 718, 731, 733, 793, 800, 802, 835, 836, 923, 935, 961, 1017-1030, 1050, 1060-1061, 1085, 1143, 1165, 1166, 1242, 1246, 1250, 1278, 1279, 1300, 1644, 1772, 1808, 1810, 1813-1817, 1819-1826, 1829-1840, 1842-1847. b] Letter of Instructions Nos.: 10, 39, 49, 72, 107, 108, 116, 130, 136, 141, 150, 153, 155, 161, 173, 180, 187, 188, 192, 193, 199, 202, 204, 205, 209, 211-213, 215-224, 226-228, 231-239, 241-245, 248, 251, 253-261, 263269, 271-273, 275-283, 285-289, 291, 293, 297-299, 301-303, 309, 312-315, 325, 327, 343, 346, 349, 357, 358, 362, 367, 370, 382, 385, 386, 396-397, 405, 438-440, 444- 445, 473, 486, 488, 498, 501, 399, 527, 561, 576, 587, 594, 599, 600, 602, 609, 610, 611, 612, 615, 641, 642, 665, 702, 712-713, 726, 837-839, 878-879, 881, 882, 939940, 964,997,1149-1178,1180-1278. c] General Orders Nos.: 14, 52, 58, 59, 60, 62, 63, 64 & 65. d] Proclamation Nos.: 1126, 1144, 1147, 1151, 1196, 1270, 1281, 1319-1526, 1529, 1532, 1535, 1538, 15401547, 1550-1558, 1561-1588, 1590-1595, 1594-1600, 1606-1609, 1612-1628, 1630-1649, 1694-1695, 16971701, 1705-1723, 1731-1734, 1737-1742, 1744, 1746-1751, 1752, 1754, 1762, 1764-1787, 1789-1795, 1797, 1800, 1802-1804, 1806-1807, 1812-1814, 1816, 1825-1826, 1829, 1831-1832, 1835-1836, 1839-1840, 18431844, 1846-1847, 1849, 1853-1858, 1860, 1866, 1868, 1870, 1876-1889, 1892, 1900, 1918, 1923, 1933, 1952, 1963, 1965-1966, 1968-1984, 1986-2028, 2030-2044, 2046-2145, 2147-2161, 2163-2244. e] Executive Orders Nos.: 411, 413, 414, 427, 429-454, 457- 471, 474-492, 494-507, 509-510, 522, 524-528, 531532, 536, 538, 543-544, 549, 551-553, 560, 563, 567-568, 570, 574, 593, 594, 598-604, 609, 611- 647, 649-677, 679-703, 705-707, 712-786, 788-852, 854-857. f] Letters of Implementation Nos.: 7, 8, 9, 10, 11-22, 25-27, 39, 50, 51, 59, 76, 80-81, 92, 94, 95, 107, 120, 122, 123. g] Administrative Orders Nos.: 347, 348, 352-354, 360- 378, 380-433, 436-439. The respondents, through the Solicitor General, would have this case dismissed outright on the ground that petitioners have no legal personality or standing to bring the instant petition. The view is submitted that in the absence of any showing that petitioners are personally and directly affected or prejudiced by the alleged non-publication of the presidential issuances in 2 question said petitioners are without the requisite legal personality to institute this mandamus proceeding, they are not being "aggrieved parties" within the meaning of Section 3, Rule 65 of the Rules of Court, which we quote: SEC. 3. Petition for Mandamus.When any tribunal, corporation, board or person unlawfully neglects the performance of an act which the law specifically enjoins as a duty resulting from an office, trust, or station, or unlawfully excludes another from the use a rd enjoyment of a right or office to which such other is entitled, and there is no other plain, speedy and adequate remedy in the ordinary course of law, the person aggrieved

thereby may file a verified petition in the proper court alleging the facts with certainty and praying that judgment be rendered commanding the defendant, immediately or at some other specified time, to do the act required to be done to Protect the rights of the petitioner, and to pay the damages sustained by the petitioner by reason of the wrongful acts of the defendant. Upon the other hand, petitioners maintain that since the subject of the petition concerns a public right and its object is to compel the performance of a public duty, they need not show any specific interest for their petition to be given due course. The issue posed is not one of first impression. As early as the 1910 case of Severino vs. Governor General, this Court held that while the general rule is that "a writ of mandamus would be granted to a private individual only in those cases where he has some private or particular interest to be subserved, or some particular right to be protected, independent of that which he holds with the public at large," and "it is for the public officers exclusively to apply for the writ when public rights are to be subserved [Mithchell vs. Boardmen, 79 M.e., 469]," nevertheless, "when the question is one of public right and the object of the mandamus is to procure the enforcement of a public duty, the people are regarded as the real party in interest and the relator at whose instigation the proceedings are instituted need not show that he has any legal or special interest in the result, it being sufficient to show that he is a citizen and as such interested in the execution of the laws [High, Extraordinary Legal Remedies, 3rd ed., sec. 431]. Thus, in said case, this Court recognized the relator Lope Severino, a private individual, as a proper party to the mandamus proceedings brought to compel the Governor General to call a special election for the position of municipal president in the town of Silay, Negros Occidental. Speaking for this Court, Mr. Justice Grant T. Trent said: We are therefore of the opinion that the weight of authority supports the proposition that the relator is a proper party to proceedings of this character when a public right is sought to be enforced. If the general rule in America were otherwise, we think that it would not be applicable to the case at bar for the reason 'that it is always dangerous to apply a general rule to a particular case without keeping in mind the reason for the rule, because, if under the particular circumstances the reason for the rule does not exist, the rule itself is not applicable and reliance upon the rule may well lead to error' No reason exists in the case at bar for applying the general rule insisted upon by counsel for the respondent. The circumstances which surround this case are different from those in the United States, inasmuch as if the relator is not a proper party to these proceedings no other person could be, as we have seen that it is not the duty of the law officer of the Government to appear and represent the people in cases of this character. The reasons given by the Court in recognizing a private citizen's legal personality in the aforementioned case apply squarely to the present petition. Clearly, the right sought to be enforced by petitioners herein is a public right recognized by no less than the fundamental law of the land. If petitioners were not allowed to institute this proceeding, it would indeed be difficult to conceive of any other person to initiate the same, considering that the Solicitor General, the government officer generally empowered to represent the people, has entered his appearance for respondents in this case. Respondents further contend that publication in the Official Gazette is not a sine qua non requirement for the effectivity of laws where the laws themselves provide for their own effectivity dates. It is thus submitted that since the presidential issuances in question contain special provisions as to the date they are to take effect, publication in the Official Gazette is not indispensable for their effectivity. The point stressed is anchored on Article 2 of the Civil Code: Art. 2. Laws shall take effect after fifteen days following the completion of their publication in the Official Gazette, unless it is otherwise provided, ... The interpretation given by respondent is in accord with this Court's construction of said article. In a long line of decisions, this Court has ruled that publication in the Official Gazette is necessary in those cases where the legislation itself does not provide for its effectivity date-for then the date of publication is material for determining its date of effectivity, which is the fifteenth day following its publication-but not when the law itself provides for the date when it goes into effect. Respondents' argument, however, is logically correct only insofar as it equates the effectivity of laws with the fact of publication. Considered in the light of other statutes applicable to the issue at hand, the conclusion is easily reached that said Article 2 does not preclude the requirement of publication in the Official Gazette, even if the law itself provides for the date of its effectivity. Thus, Section 1 of Commonwealth Act 638 provides as follows: Section 1. There shall be published in the Official Gazette [1] all important legisiative acts and resolutions of a public nature of the, Congress of the Philippines; [2] all executive and administrative orders and proclamations, except such as have no general applicability; [3] decisions or abstracts of decisions of the Supreme Court and the Court of Appeals as may be deemed by said courts of sufficient importance to be so published; [4] such documents or classes of documents as may be required so to be published by law; and [5] such documents or classes of documents as the President of the Philippines shall determine from time to time to have general applicability and legal effect, or which he may authorize so to be published. ... The clear object of the above-quoted provision is to give the general public adequate notice of the various laws which are to regulate their actions and conduct as citizens. Without such notice and publication, there would be no basis for the application of
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the maxim "ignorantia legis non excusat." It would be the height of injustice to punish or otherwise burden a citizen for the transgression of a law of which he had no notice whatsoever, not even a constructive one. Perhaps at no time since the establishment of the Philippine Republic has the publication of laws taken so vital significance that at this time when the people have bestowed upon the President a power heretofore enjoyed solely by the legislature. While the people are kept abreast by the mass media of the debates and deliberations in the Batasan Pambansa and for the diligent ones, ready access to the legislative recordsno such publicity accompanies the law-making process of the President. Thus, without publication, the people have no means of knowing what presidential decrees have actually been promulgated, much less a definite way of informing themselves of the specific contents and texts of such decrees. As the Supreme Court of Spain ruled: "Bajo la denominacion generica de leyes, se comprenden tambien los reglamentos, Reales decretos, Instrucciones, Circulares y 5 Reales ordines dictadas de conformidad con las mismas por el Gobierno en uso de su potestad. The very first clause of Section I of Commonwealth Act 638 reads: "There shall be published in the Official Gazette ... ." The word "shall" used therein imposes upon respondent officials an imperative duty. That duty must be enforced if the Constitutional right of the people to be informed on matters of public concern is to be given substance and reality. The law itself makes a list of what should be published in the Official Gazette. Such listing, to our mind, leaves respondents with no discretion whatsoever as to what must be included or excluded from such publication. The publication of all presidential issuances "of a public nature" or "of general applicability" is mandated by law. Obviously, presidential decrees that provide for fines, forfeitures or penalties for their violation or otherwise impose a burden or. the people, such as tax and revenue measures, fall within this category. Other presidential issuances which apply only to particular persons or class of persons such as administrative and executive orders need not be published on the assumption that they have 6 been circularized to all concerned. It is needless to add that the publication of presidential issuances "of a public nature" or "of general applicability" is a requirement of due process. It is a rule of law that before a person may be bound by law, he must first be officially and 7 specifically informed of its contents. As Justice Claudio Teehankee said in Peralta vs. COMELEC : In a time of proliferating decrees, orders and letters of instructions which all form part of the law of the land, the requirement of due process and the Rule of Law demand that the Official Gazette as the official government repository promulgate and publish the texts of all such decrees, orders and instructions so that the people may know where to obtain their official and specific contents. The Court therefore declares that presidential issuances of general application, which have not been published, shall have no force and effect. Some members of the Court, quite apprehensive about the possible unsettling effect this decision might have on acts done in reliance of the validity of those presidential decrees which were published only during the pendency of this petition, have put the question as to whether the Court's declaration of invalidity apply to P.D.s which had been enforced or implemented prior to their publication. The answer is all too familiar. In similar situations in the past this Court had taken the pragmatic and 8 realistic course set forth in Chicot County Drainage District vs. Baxter Bank to wit: The courts below have proceeded on the theory that the Act of Congress, having been found to be unconstitutional, was not a law; that it was inoperative, conferring no rights and imposing no duties, and hence affording no basis for the challenged decree. Norton v. Shelby County, 118 U.S. 425, 442; Chicago, 1. & L. Ry. Co. v. Hackett, 228 U.S. 559, 566. It is quite clear, however, that such broad statements as to the effect of a determination of unconstitutionality must be taken with qualifications. The actual existence of a statute, prior to such a determination, is an operative fact and may have consequences which cannot justly be ignored. The past cannot always be erased by a new judicial declaration. The effect of the subsequent ruling as to invalidity may have to be considered in various aspects-with respect to particular conduct, private and official. Questions of rights claimed to have become vested, of status, of prior determinations deemed to have finality and acted upon accordingly, of public policy in the light of the nature both of the statute and of its previous application, demand examination. These questions are among the most difficult of those which have engaged the attention of courts, state and federal and it is manifest from numerous decisions that an all-inclusive statement of a principle of absolute retroactive invalidity cannot be justified. Consistently with the above principle, this Court in Rutter vs. Esteban sustained the right of a party under the Moratorium Law, albeit said right had accrued in his favor before said law was declared unconstitutional by this Court. Similarly, the implementation/enforcement of presidential decrees prior to their publication in the Official Gazette is "an operative fact which may have consequences which cannot be justly ignored. The past cannot always be erased by a new judicial declaration ... that an all-inclusive statement of a principle of absolute retroactive invalidity cannot be justified." From the report submitted to the Court by the Clerk of Court, it appears that of the presidential decrees sought by petitioners to be published in the Official Gazette, only Presidential Decrees Nos. 1019 to 1030, inclusive, 1278, and 1937 to 1939, inclusive, 10 have not been so published. Neither the subject matters nor the texts of these PDs can be ascertained since no copies thereof are available. But whatever their subject matter may be, it is undisputed that none of these unpublished PDs has ever been 11 implemented or enforced by the government. In Pesigan vs. Angeles, the Court, through Justice Ramon Aquino, ruled that "publication is necessary to apprise the public of the contents of [penal] regulations and make the said penalties binding on the persons affected thereby. " The cogency of this holding is apparently recognized by respondent officials considering the manifestation in their comment that "the government, as a matter of policy, refrains from prosecuting violations of criminal laws
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until the same shall have been published in the Official Gazette or in some other publication, even though some criminal laws provide that they shall take effect immediately. WHEREFORE, the Court hereby orders respondents to publish in the Official Gazette all unpublished presidential issuances which are of general application, and unless so published, they shall have no binding force and effect. SO ORDERED. Relova, J., concurs. Aquino, J., took no part. Concepcion, Jr., J., is on leave.

Separate Opinions

FERNANDO, C.J., concurring (with qualification): There is on the whole acceptance on my part of the views expressed in the ably written opinion of Justice Escolin. I am unable, however, to concur insofar as it would unqualifiedly impose the requirement of publication in the Official Gazette for unpublished "presidential issuances" to have binding force and effect. I shall explain why. 1. It is of course true that without the requisite publication, a due process question would arise if made to apply adversely to a party who is not even aware of the existence of any legislative or executive act having the force and effect of law. My point is that such publication required need not be confined to the Official Gazette. From the pragmatic standpoint, there is an advantage to be gained. It conduces to certainty. That is too be admitted. It does not follow, however, that failure to do so would in all cases and under all circumstances result in a statute, presidential decree or any other executive act of the same category being bereft of any binding force and effect. To so hold would, for me, raise a constitutional question. Such a pronouncement would lend itself to the interpretation that such a legislative or presidential act is bereft of the attribute of effectivity unless published in the Official Gazette. There is no such requirement in the Constitution as Justice Plana so aptly pointed out. It is true that what is decided now applies only to past "presidential issuances". Nonetheless, this clarification is, to my mind, needed to avoid any possible misconception as to what is required for any statute or presidential act to be impressed with binding force or effectivity. 2. It is quite understandable then why I concur in the separate opinion of Justice Plana. Its first paragraph sets forth what to me is the constitutional doctrine applicable to this case. Thus: "The Philippine Constitution does not require the publication of laws as a prerequisite for their effectivity, unlike some Constitutions elsewhere. It may be said though that the guarantee of due process requires notice of laws to affected Parties before they can be bound thereby; but such notice is not necessarily by publication in 1 the Official Gazette. The due process clause is not that precise. I am likewise in agreement with its closing paragraph: "In fine, I concur in the majority decision to the extent that it requires notice before laws become effective, for no person should be bound by a law without notice. This is elementary fairness. However, I beg to disagree insofar as it holds that such notice shall be by 2 publication in the Official Gazette. 3. It suffices, as was stated by Judge Learned Hand, that law as the command of the government "must be ascertainable in some 3 form if it is to be enforced at all. It would indeed be to reduce it to the level of mere futility, as pointed out by Justice Cardozo, 4 "if it is unknown and unknowable. Publication, to repeat, is thus essential. What I am not prepared to subscribe to is the doctrine that it must be in the Official Gazette. To be sure once published therein there is the ascertainable mode of determining the exact date of its effectivity. Still for me that does not dispose of the question of what is the jural effect of past presidential decrees or executive acts not so published. For prior thereto, it could be that parties aware of their existence could have conducted themselves in accordance with their provisions. If no legal consequences could attach due to lack of publication in the Official Gazette, then serious problems could arise. Previous transactions based on such "Presidential Issuances" could be open to question. Matters deemed settled could still be inquired into. I am not prepared to hold that such an effect is contemplated by our decision. Where such presidential decree or executive act is made the basis of a criminal prosecution, then, of course, its ex 5 post facto character becomes evident. In civil cases though, retroactivity as such is not conclusive on the due process aspect. There must still be a showing of arbitrariness. Moreover, where the challenged presidential decree or executive act was issued under the police power, the non-impairment clause of the Constitution may not always be successfully invoked. There must still 6 be that process of balancing to determine whether or not it could in such a case be tainted by infirmity. In traditional terminology, there could arise then a question of unconstitutional application. That is as far as it goes. 4. Let me make therefore that my qualified concurrence goes no further than to affirm that publication is essential to the effectivity of a legislative or executive act of a general application. I am not in agreement with the view that such publication

must be in the Official Gazette. The Civil Code itself in its Article 2 expressly recognizes that the rule as to laws taking effect after fifteen days following the completion of their publication in the Official Gazette is subject to this exception, "unless it is otherwise provided." Moreover, the Civil Code is itself only a legislative enactment, Republic Act No. 386. It does not and cannot have the juridical force of a constitutional command. A later legislative or executive act which has the force and effect of law can legally provide for a different rule. 5. Nor can I agree with the rather sweeping conclusion in the opinion of Justice Escolin that presidential decrees and executive acts not thus previously published in the Official Gazette would be devoid of any legal character. That would be, in my opinion, to go too far. It may be fraught, as earlier noted, with undesirable consequences. I find myself therefore unable to yield assent to such a pronouncement. I am authorized to state that Justices Makasiar, Abad Santos, Cuevas, and Alampay concur in this separate opinion. Makasiar, Abad Santos, Cuevas and Alampay, JJ., concur.

TEEHANKEE, J., concurring: I concur with the main opinion of Mr. Justice Escolin and the concurring opinion of Mme. Justice Herrera. The Rule of Law connotes a body of norms and laws published and ascertainable and of equal application to all similarly circumstances and not subject to arbitrary change but only under certain set procedures. The Court has consistently stressed that "it is an elementary rule of fair play and justice that a reasonable opportunity to be informed must be afforded to the people who are commanded to 1 obey before they can be punished for its violation, citing the settled principle based on due process enunciated in earlier cases that "before the public is bound by its contents, especially its penal provisions, a law, regulation or circular must first be published and the people officially and specially informed of said contents and its penalties. Without official publication in the Official Gazette as required by Article 2 of the Civil Code and the Revised Administrative Code, there would be no basis nor justification for the corollary rule of Article 3 of the Civil Code (based on constructive notice that the provisions of the law are ascertainable from the public and official repository where they are duly published) that "Ignorance of the law excuses no one from compliance therewith. Respondents' contention based on a misreading of Article 2 of the Civil Code that "only laws which are silent as to their effectivity [date] need be published in the Official Gazette for their effectivity" is manifestly untenable. The plain text and meaning of the Civil Code is that "laws shall take effect after fifteen days following the completion of their publication in the Official Gazette, unless it is otherwise provided, " i.e. a different effectivity date is provided by the law itself. This proviso perforce refers to a law that has been duly published pursuant to the basic constitutional requirements of due process. The best example of this is the Civil Code itself: the same Article 2 provides otherwise that it "shall take effect [only] one year [not 15 days] after such 2 publication. To sustain respondents' misreading that "most laws or decrees specify the date of their effectivity and for this 3 reason, publication in the Official Gazette is not necessary for their effectivity would be to nullify and render nugatory the Civil Code's indispensable and essential requirement of prior publication in the Official Gazette by the simple expedient of providing for immediate effectivity or an earlier effectivity date in the law itself before the completion of 15 days following its publication which is the period generally fixed by the Civil Code for its proper dissemination.

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

PLANA, J., concurring (with qualification): The Philippine Constitution does not require the publication of laws as a prerequisite for their effectivity, unlike some Constitutions elsewhere. * It may be said though that the guarantee of due process requires notice of laws to affected parties before they can be bound thereby; but such notice is not necessarily by publication in the Official Gazette. The due process clause is not that precise. Neither is the publication of laws in the Official Gazetterequired by any statute as a prerequisite for their effectivity, if said laws already provide for their effectivity date. Article 2 of the Civil Code provides that "laws shall take effect after fifteen days following the completion of their publication in the Official Gazette, unless it is otherwise provided " Two things may be said of this provision: Firstly, it obviously does not apply to a law with a built-in provision as to when it will take effect. Secondly, it clearly recognizes that each law may provide not only a

different period for reckoning its effectivity date but also a different mode of notice. Thus, a law may prescribe that it shall be published elsewhere than in the Official Gazette. Commonwealth Act No. 638, in my opinion, does not support the proposition that for their effectivity, laws must be published in the Official Gazette. The said law is simply "An Act to Provide for the Uniform Publication and Distribution of the Official Gazette." Conformably therewith, it authorizes the publication of the Official Gazette, determines its frequency, provides for its sale and distribution, and defines the authority of the Director of Printing in relation thereto. It also enumerates what shall be published in the Official Gazette, among them, "important legislative acts and resolutions of a public nature of the Congress of the Philippines" and "all executive and administrative orders and proclamations, except such as have no general applicability." It is noteworthy that not all legislative acts are required to be published in the Official Gazette but only "important" ones "of a public nature." Moreover, the said law does not provide that publication in the Official Gazette is essential for the effectivity of laws. This is as it should be, for all statutes are equal and stand on the same footing. A law, especially an earlier one of general application such as Commonwealth Act No. 638, cannot nullify or restrict the operation of a subsequent statute that has a provision of its own as to when and how it will take effect. Only a higher law, which is the Constitution, can assume that role. In fine, I concur in the majority decision to the extent that it requires notice before laws become effective, for no person should be bound by a law without notice. This is elementary fairness. However, I beg to disagree insofar as it holds that such notice shall be by publication in the Official Gazette. Cuevas and Alampay, JJ., concur.

GUTIERREZ, Jr., J., concurring: I concur insofar as publication is necessary but reserve my vote as to the necessity of such publication being in the Official Gazette.

DE LA FUENTE, J., concurring: I concur insofar as the opinion declares the unpublished decrees and issuances of a public nature or general applicability ineffective, until due publication thereof.

Separate Opinions FERNANDO, C.J., concurring (with qualification): There is on the whole acceptance on my part of the views expressed in the ably written opinion of Justice Escolin. I am unable, however, to concur insofar as it would unqualifiedly impose the requirement of publication in the Official Gazette for unpublished "presidential issuances" to have binding force and effect. I shall explain why. 1. It is of course true that without the requisite publication, a due process question would arise if made to apply adversely to a party who is not even aware of the existence of any legislative or executive act having the force and effect of law. My point is that such publication required need not be confined to the Official Gazette. From the pragmatic standpoint, there is an advantage to be gained. It conduces to certainty. That is too be admitted. It does not follow, however, that failure to do so would in all cases and under all circumstances result in a statute, presidential decree or any other executive act of the same category being bereft of any binding force and effect. To so hold would, for me, raise a constitutional question. Such a pronouncement would lend itself to the interpretation that such a legislative or presidential act is bereft of the attribute of effectivity unless published in the Official Gazette. There is no such requirement in the Constitution as Justice Plana so aptly pointed out. It is true that what is decided now applies only to past "presidential issuances". Nonetheless, this clarification is, to my mind, needed to avoid any possible misconception as to what is required for any statute or presidential act to be impressed with binding force or effectivity. 2. It is quite understandable then why I concur in the separate opinion of Justice Plana. Its first paragraph sets forth what to me is the constitutional doctrine applicable to this case. Thus: "The Philippine Constitution does not require the publication of laws as a prerequisite for their effectivity, unlike some Constitutions elsewhere. It may be said though that the guarantee of due process requires notice of laws to affected Parties before they can be bound thereby; but such notice is not necessarily by publication in 1 the Official Gazette. The due process clause is not that precise. I am likewise in agreement with its closing paragraph: "In fine, I concur in the majority decision to the extent that it requires notice before laws become effective, for no person should be bound

by a law without notice. This is elementary fairness. However, I beg to disagree insofar as it holds that such notice shall be by 2 publication in the Official Gazette. 3. It suffices, as was stated by Judge Learned Hand, that law as the command of the government "must be ascertainable in some 3 form if it is to be enforced at all. It would indeed be to reduce it to the level of mere futility, as pointed out by Justice Cardozo, 4 "if it is unknown and unknowable. Publication, to repeat, is thus essential. What I am not prepared to subscribe to is the doctrine that it must be in the Official Gazette. To be sure once published therein there is the ascertainable mode of determining the exact date of its effectivity. Still for me that does not dispose of the question of what is the jural effect of past presidential decrees or executive acts not so published. For prior thereto, it could be that parties aware of their existence could have conducted themselves in accordance with their provisions. If no legal consequences could attach due to lack of publication in the Official Gazette, then serious problems could arise. Previous transactions based on such "Presidential Issuances" could be open to question. Matters deemed settled could still be inquired into. I am not prepared to hold that such an effect is contemplated by our decision. Where such presidential decree or executive act is made the basis of a criminal prosecution, then, of course, its ex 5 post facto character becomes evident. In civil cases though, retroactivity as such is not conclusive on the due process aspect. There must still be a showing of arbitrariness. Moreover, where the challenged presidential decree or executive act was issued under the police power, the non-impairment clause of the Constitution may not always be successfully invoked. There must still 6 be that process of balancing to determine whether or not it could in such a case be tainted by infirmity. In traditional terminology, there could arise then a question of unconstitutional application. That is as far as it goes. 4. Let me make therefore that my qualified concurrence goes no further than to affirm that publication is essential to the effectivity of a legislative or executive act of a general application. I am not in agreement with the view that such publication must be in the Official Gazette. The Civil Code itself in its Article 2 expressly recognizes that the rule as to laws taking effect after fifteen days following the completion of their publication in the Official Gazette is subject to this exception, "unless it is otherwise provided." Moreover, the Civil Code is itself only a legislative enactment, Republic Act No. 386. It does not and cannot have the juridical force of a constitutional command. A later legislative or executive act which has the force and effect of law can legally provide for a different rule. 5. Nor can I agree with the rather sweeping conclusion in the opinion of Justice Escolin that presidential decrees and executive acts not thus previously published in the Official Gazette would be devoid of any legal character. That would be, in my opinion, to go too far. It may be fraught, as earlier noted, with undesirable consequences. I find myself therefore unable to yield assent to such a pronouncement. I am authorized to state that Justices Makasiar, Abad Santos, Cuevas, and Alampay concur in this separate opinion. Makasiar, Abad Santos, Cuevas and Alampay, JJ., concur.

TEEHANKEE, J., concurring: I concur with the main opinion of Mr. Justice Escolin and the concurring opinion of Mme. Justice Herrera. The Rule of Law connotes a body of norms and laws published and ascertainable and of equal application to all similarly circumstances and not subject to arbitrary change but only under certain set procedures. The Court has consistently stressed that "it is an elementary rule of fair play and justice that a reasonable opportunity to be informed must be afforded to the people who are commanded to 1 obey before they can be punished for its violation, citing the settled principle based on due process enunciated in earlier cases that "before the public is bound by its contents, especially its penal provisions, a law, regulation or circular must first be published and the people officially and specially informed of said contents and its penalties. Without official publication in the Official Gazette as required by Article 2 of the Civil Code and the Revised Administrative Code, there would be no basis nor justification for the corollary rule of Article 3 of the Civil Code (based on constructive notice that the provisions of the law are ascertainable from the public and official repository where they are duly published) that "Ignorance of the law excuses no one from compliance therewith. Respondents' contention based on a misreading of Article 2 of the Civil Code that "only laws which are silent as to their effectivity [date] need be published in the Official Gazette for their effectivity" is manifestly untenable. The plain text and meaning of the Civil Code is that "laws shall take effect after fifteen days following the completion of their publication in the Official Gazette, unless it is otherwise provided, " i.e. a different effectivity date is provided by the law itself. This proviso perforce refers to a law that has been duly published pursuant to the basic constitutional requirements of due process. The best example of this is the Civil Code itself: the same Article 2 provides otherwise that it "shall take effect [only] one year [not 15 days] after such 2 publication. To sustain respondents' misreading that "most laws or decrees specify the date of their effectivity and for this 3 reason, publication in the Official Gazette is not necessary for their effectivity would be to nullify and render nugatory the Civil Code's indispensable and essential requirement of prior publication in the Official Gazette by the simple expedient of providing for immediate effectivity or an earlier effectivity date in the law itself before the completion of 15 days following its publication which is the period generally fixed by the Civil Code for its proper dissemination.

MELENCIO-HERRERA, J., concurring:

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

PLANA, J., concurring (with qualification): The Philippine Constitution does not require the publication of laws as a prerequisite for their effectivity, unlike some Constitutions elsewhere. * It may be said though that the guarantee of due process requires notice of laws to affected parties before they can be bound thereby; but such notice is not necessarily by publication in the Official Gazette. The due process clause is not that precise. Neither is the publication of laws in the Official Gazetterequired by any statute as a prerequisite for their effectivity, if said laws already provide for their effectivity date. Article 2 of the Civil Code provides that "laws shall take effect after fifteen days following the completion of their publication in the Official Gazette, unless it is otherwise provided " Two things may be said of this provision: Firstly, it obviously does not apply to a law with a built-in provision as to when it will take effect. Secondly, it clearly recognizes that each law may provide not only a different period for reckoning its effectivity date but also a different mode of notice. Thus, a law may prescribe that it shall be published elsewhere than in the Official Gazette. Commonwealth Act No. 638, in my opinion, does not support the proposition that for their effectivity, laws must be published in the Official Gazette. The said law is simply "An Act to Provide for the Uniform Publication and Distribution of the Official Gazette." Conformably therewith, it authorizes the publication of the Official Gazette, determines its frequency, provides for its sale and distribution, and defines the authority of the Director of Printing in relation thereto. It also enumerates what shall be published in the Official Gazette, among them, "important legislative acts and resolutions of a public nature of the Congress of the Philippines" and "all executive and administrative orders and proclamations, except such as have no general applicability." It is noteworthy that not all legislative acts are required to be published in the Official Gazette but only "important" ones "of a public nature." Moreover, the said law does not provide that publication in the Official Gazette is essential for the effectivity of laws. This is as it should be, for all statutes are equal and stand on the same footing. A law, especially an earlier one of general application such as Commonwealth Act No. 638, cannot nullify or restrict the operation of a subsequent statute that has a provision of its own as to when and how it will take effect. Only a higher law, which is the Constitution, can assume that role. In fine, I concur in the majority decision to the extent that it requires notice before laws become effective, for no person should be bound by a law without notice. This is elementary fairness. However, I beg to disagree insofar as it holds that such notice shall be by publication in the Official Gazette. Cuevas and Alampay, JJ., concur.

GUTIERREZ, Jr., J., concurring: I concur insofar as publication is necessary but reserve my vote as to the necessity of such publication being in the Official Gazette.

DE LA FUENTE, J., concurring: I concur insofar as the opinion declares the unpublished decrees and issuances of a public nature or general applicability ineffective, until due publication thereof. Footnotes 1 Section 6. The right of the people to information on matters of public concern shag be recognized, access to official records, and to documents and papers pertaining to official acts, transactions, or decisions, shag be afforded the citizens subject to such limitation as may be provided by law. 2 Anti-Chinese League vs. Felix, 77 Phil. 1012; Costas vs. Aidanese, 45 Phil. 345; Almario vs. City Mayor, 16 SCRA 151;Parting vs. San Jose Petroleum, 18 SCRA 924; Dumlao vs. Comelec, 95 SCRA 392. 3 16 Phil. 366, 378. 4 Camacho vs. Court of Industrial Relations, 80 Phil 848; Mejia vs. Balolong, 81 Phil. 486; Republic of the Philippines vs. Encamacion, 87 Phil. 843; Philippine Blooming Mills, Inc. vs. Social Security System, 17 SCRA 1077; Askay vs. Cosalan, 46 Phil. 179.

5 1 Manresa, Codigo Civil 7th Ed., p. 146. 6 People vs. Que Po Lay, 94 Phil. 640; Balbuena et al. vs. Secretary of Education, et al., 110 Phil. 150. 7 82 SCRA 30, dissenting opinion. 8 308 U.S. 371, 374. 9 93 Phil.. 68,. 10 The report was prepared by the Clerk of Court after Acting Director Florendo S. Pablo Jr. of the Government Printing Office, failed to respond to her letter-request regarding the respective dates of publication in the Official Gazette of the presidential issuances listed therein. No report has been submitted by the Clerk of Court as to the publication or non-publication of other presidential issuances. 11 129 SCRA 174. Fernando, CJ.: 1 Separate Opinion of Justice Plana, first paragraph. He mentioned in tills connection Article 7, Sec. 21 of the Wisconsin Constitution and State ex rel. White v. Grand Superior Ct., 71 ALR 1354, citing the Constitution of Indiana, U.S.A 2 Ibid, closing paragraph. 3 Learned Hand, The Spirit of Liberty 104 (1960). 4 Cardozo, The Growth of the Law, 3 (1924). 5 Cf. Nunez v. Sandiganbayan, G.R. No. 50581-50617, January 30, 1982, 111 SCRA 433. 6 Cf. Alalayan v. National Power Corporation, L-24396, July 29, 1968, 24 SCRA 172. Teehankee, J.: 1 People vs. de Dios, G.R. No. 11003, Aug. 3l, 1959, per the late Chief Justice Paras. 2 Notes in brackets supplied. 3 Respondents: comment, pp. 14-15. Plana, J.: * See e.g., Wisconsin Constitution, Art. 7, Sec. 21: "The legislature shall provide publication of all statute laws ... and no general law shall be in force until published." See also S ate ex rel. White vs. Grand Superior Ct., 71 ALR 1354, citing Constitution of Indiana, U.S.A.

The Lawphil Project - Arellano Law Foundation

Republic of the Philippines SUPREME COURT Manila EN BANC April 30, 1902 G.R. No. 428 JOSE ZULUETA, plaintiff-appellee, vs. FRANCISCA ZULUETA, defendant-appellant.

Aylett R. Cotton, for appellant. Francisco Ortigas, for appellee. LADD, J.: Don Jose Zulueta and his sister, Doa Francisca Zulueta, are sole heirs under the will of their father, Don Clemente Zulueta, who died in Iloilo in 1900. In the course of the voluntary testamentary proceedings instituted in the Court of First Instance of Iloilo by Don Jose, three auditors were appointed to make a division of the estate under article 1053 of the Ley de Enjuiciamiento Civil, of whom Don Jose and Doa Francisca each nominated one, the third or auditor umpire being chosen by common accord of the parties. The two auditors nominated by the parties respectively failed to agree, and each rendered a separate report. The auditor umpire, whose report was filed March 29, 1901, agreed with and accepted in its entirety the report of the auditor nominated by Don Jose. The procedure marked out in articles 1062 and 1067 of the Ley de Enjuiciamiento Civil was then followed, and upon the application of Doa Francisca the record was on April 13 delivered to her for examination. April 25 she filed her opposition to the report of the auditor umpire, and a meeting of the interested parties having been had, as provided in article 1069 of the Ley de Enjuiciamiento Civil, and no agreement having been reached, the court, by a providencia of May 4, directed that the procedure prescribed for declarative actions be followed, and that the record be again delivered to Doa Francisca in order that she might formulate her demand in accordance with article 1071 of the Ley de Enjuiciamiento Civil. On petition of Don Jose the court by a providencia of May 7 fixed the term of fifteen days as that within which Doa Francisca should formulate her demand, which term was subsequently enlarged seven days on petition of Doa Francisca. June 5 Doa Francisca petitioned the court, stating that the new Code of Procedure enacted by the Civil Commission was soon to become operative, and that she deemed it more advantageous to her rights that the declarative action which she had to bring should be governed by the new Code rather than that then in force, and asking that proceedings in the action should be suspended till the new Code went into effect. This petition the court denied in an autorendered June 15, declaring, furthermore, that the term fixed for the filing of the demand having expired, Doa Francisca has lost her right to institute the action. June 22 Doa Francisca petitioned for the reform of this auto. On the same day this petition was denied in an auto rendered by Don Cirilo Mapa, a justice of the peace of the city of Iloilo, who had been designated, as would appear from the record, by the judge of the then recently constituted Ninth Judicial District to preside in the Court of First Instance of the Province of Iloilo during the illness of the latter. The denial of this petition was put on the ground that the auto of June 15 was not one against which the remedy of reform was available, but that the remedy was by way of appeal under article 365 of the Ley de Enjuiciamiento Civil. On June 29 Doa Francisca interposed an appeal against the auto of June 22, which the court, now presided over by the regular judge of first instance of the district, declined to admit, on the ground that it was not presented within three days, as prescribed in article 363 of the Ley de Enjuiciamiento Civil. Thereupon, upon petition of Don Jose the partition proceedings were approved by the court by an auto of July 16 from which Doa Francisca took the present appeal. While the appeal was pending in this Court Doa Francisca presented a petition under Act No. 75 of the Civil Commission, alleging that the auto of June 22 was rendered through a mistake of the acting judge of first instance, who erroneously believed that he had jurisdiction to render the same; that Doa Francisca was prevented from entering an appeal from that auto by her mistake as to the term prescribed by the Ley de Enjuiciamiento Civil for entering appeals in such cases; and finally that theauto of July 16 approving the partition proceedings was rendered by a mistake of the judge, who erroneously believed that the auto of June 22, was valid, whereas it and all subsequent proceedings were absolutely void; and asking that the auto of June 22, the providencia denying the admission of the appeal, and the auto of July 16 be set aside and the proceedings restored to the condition in which they were previous to June 22, when the first mistake was made. Upon this petition a hearing has been had, and we have also heard arguments upon the appeal. Taking up the petition first, we do not find it necessary to decide whether the acting judge of first instance by whom the auto of June 22 was rendered had such de facto authority that legal validity will be accorded to his acts. Assuming that he was without jurisdiction to render the auto, we are of opinion that Doa Francisca can not take advantage of the error in such a proceeding as the present. Act No. 75 provides a remedy against judgments obtained in Courts of First Instance by fraud, accident, or mistake, but although the language of the law is somewhat broad, the general scope and purpose of the enactment indicate too clearly to require argument that the mistake against which relief is provided can not be a mistake into which the court may have fallen in the findings of fact or conclusions of law upon which its judgment is based. If such were the effect of the enactment, every case in which a party felt himself aggrieved by the judgment of the court below could be brought to this court for revision in this way, and the ordinary remedy by appeal or otherwise would be thus entirely superseded by the more summary proceeding therein provided. The meaning of the word mistake as used in the statute does not extend nor was it intended that it should to an error of law which may have been committed by the judge in the trial in question. Such errors may be corrected by appeal. The statute under consideration can by no means be employed as a substitute for that remedy. (Jose Emeterio Guevara vs. Tuason & Company, decided October 7, 1901, p. 27,supra.) The result is that we can not set aside the auto of June 22 on this petition, and that on July 16 stands upon precisely the same footing, the allegation being that auto also was rendered under a mistake of law on the part of the judge.

The remaining question upon the petition is whether Doa Francisca is entitled to relief against the consequences of her failure to interpose her appeal against the auto of June 22 within the period fixed by the law. The mistake in this instance was her own, but it was a mistake of law, and while we should be unwilling to say that special cases might not occur in which relief would be afforded in such a proceeding as this against a mistake of law made by a party, we are of opinion that the present is not such a case. Nothing is shown here except the bare fact that the party acted under ignorance or misconception of the provisions of the law in regard to the time within which the appeal could be taken, and there is no reason why the general principle, a principle founded no only on expediency and policy but on necessity, that ignoran ce of the law does not excuse from compliance therewith (Civil Code, art. 2), should be relaxed. The framers of Act No. 75 could not have intended to totally abrogate this principle with reference to the class of cases covered by the act. If such were the effect of this legislation the court would be involved and perplexed with questions incapable of any just solution and embarrassed by inquiries almost interminable. Act No. 75 was framed for the purpose of preventing injustice, and although the legal construction to be placed upon its provisions can not of course be affected by any considerations as to the hardships of the particular case in which it is invoked, it is proper to say that if the question determined in theauto of June 15, which is that against the consequences of which the petitioner seeks ultimately to be relieved, were to be decided upon its merits, that auto would necessarily be sustained, so that the petitioner has in fact suffered no hardship or injustice by reason of the auto having been left in effect as a result of the mistakes which she claims to have vitiated the subsequent proceedings. The petition for the suspension of the declarative action till the new Code went into effect was totally without merit. No reason was alleged in the petition itself why the suspension should be granted other than the mere convenience of the party, and none has been suggested on the argument. The petition could not in any possible view that occurs to us have been granted. With reference to the declaration in the auto that the plaintiff had lost her right to file her demand in the declarative action, it may be said that this declaration followed as a necessary consequence from the providencia of May 7, fixing the time within which the demand must be formulated, and the subsequent providenciaenlarging the period, from neither of which providencias had any appeal or other remedy been attempted by Doa Francisca. But going back to what may be called the fundamental question of the right of the court to fix a definite term within which the declarative action must be instituted, we are of opinion that such right clearly existed, and that the providencia of May 7 was in exact conformity with the procedure prescribed by article 1071 of the Ley de Enjuiciamiento Civil. It might be claimed with much reason that if the parties interested in the partition of the estate failed to agree on that made by the auditor, either should be allowed to institute a declarative action against the other for the purpose of settling the dispute within such time as he might think proper, the property remaining in the meantime undivided, were it not that the law in language of unmistakable import prescribes a different rule of procedure. Article 1071 of the Ley de Enjuiciamiento Civil is as follows: If no agreement is had, the procedure prescribed for declarative actions, according to the amount involved, shall be followed, and the delivery of the papers shall be first made to the parties who first requested delivery to them of the partition report as provided in article 1067. Article 1067 is as follows: If the interested parties, or any of them, request, within eight days, that the record of the proceedings and the report on partition be delivered to them for examination, the judge shall order said delivery for a period of fifteen days to each person making such request. The law does not treat the partition proceedings as terminated by the failure of the parties to agre e, but provides that the case shall in that event be given the procedure of the declarative action and goes on to designate the party who is to take the initiative in the pleadi ngs, a provision utterly irreconcilable with the idea that it is optional for either party to commence the proceeding at his pleasure. And it then proceeds by reference to article 1067 to fix the time within which the proceeding is to be instituted. The petitioner had the benefit of that period and was accorded besides an extension of seven days, and has consequently had all the rights to which she was strictly entitled under the law and something more. She has, we think, no just ground to complain that she has been deprived of any substantial right either by her own mistake or that of the court below, in any possible view in which the facts of the case may be regarded. What has been said with reference to the petition disposes also of the question involved in the appeal. If Doa Francisca had, as we think must be the case, lost her right to institute the declarative action, there was no other course for the court to take except to approve the partition proceedings, unless there was some defect which vitiated them, and none has been pointed out. It was suggested in the argument that the report of the auditor umpire was of prior date to that of the auditor nominated by Don Jose, and it was claimed that this rendered the proceedings defective. An examination of the record shows that the report of the auditor nominated by Don Jose was dated March 24 and filed March 29, and that of the auditor umpire was dated March 28 and filed March 29. The contention of counsel on this point is therefore not supported by the facts. The result is that the petition must be denied and the judgment appealed from affirmed, with costs to the appealing party both as to the petition and the appeal. So ordered. Arellano, C.J., Torres, Cooper, and Willard, JJ., concur. Mapa, J., did not sit in this case.

Republic of the Philippines SUPREME COURT Manila EN BANC DECISION March 31, 1923 G.R. No. L-19826 LUCIANO DELGADO, plaintiff-appellant, vs. EDUARDO ALONSO DUQUE VALGONA, defendant-appellee. Manuel Gallego and Gibbs and McDonough for appellant. Cavanna, Aboitiz and Agan for appellee. Street, J.: The parties to this action are residents of the municipality of Goa, in the Province of Camarines Sur, the plaintiff, Luciano Delgado, being a planter of local prominence, while the defendant, Eduardo Alonso Duque Valgona, is a business man and storekeeper in Goa. In November of the year 1917 Alonso purchased twelve parcels of land in the municipality of Goa from one Stickney, who was then about to leave the Philippine Islands, paying the sum of P15,000 therefor. This purchase was apparently made by Alonso as an investment; and at the time of acquiring the property he probably expects, from certain conversations that he had had with Delgado, to be able to sell the property on advantageous terms to the latter. Alonso indeed claims that the property was purchased by him at the instance and request of Delgado, under circumstances that virtually made him the agent of Delgado in the purchase. Be this as it may, the money that was used to buy the land from Stickney was certainly supplied by Alonso, and the property was conveyed by Stickney directly to him. On February 1, 1918, Alonso conveyed the same property to Luciano Delgado; and in order to secure the payment of the purchase money Delgado contemporaneously executed a mortgage in favor of the defendant upon the same land and also upon two other large parcels already owned by the plaintiff situated in the municipality of Tinambac, of the Province of Camarines Sur. The deed of conveyance by which the defendant transferred to the plaintiff the title to the twelve parcels purchased from Stickney has not been introduced in evidence, but the conveyance by way of mortgage executed by Delgado to secure the payment of the purchase price is before us; and it is this instrument which supplies the principal basis of controversy. The stipulations of this mortgage, so far as material to be here noted, are contained in clauses A to E, inclusive, of paragraph 2; and in substance they are as follows: (A) The debtor-mortgagor (Delgado) promises to pay to the creditor-mortgagee (Alonso) the sum of P15,000 in a single payment. (B) To secure this sum the debtor creates a mortgage in favor of the creditor on the fourteen parcels of land described in paragraph 1 of the same instrument. (C) So long as the indebtedness subsists the debtor obligates himself for interest in the amount of P2,250, to be paid in two semi-annual installments of P1,175 each, which, it will be observed, make an amount larger by P100 than the other quantity. (D) The creditor concedes to the debtor the period of twelve years from the date of the instrument within which the latter may make payment of the P15,000 aforesaid. Finally, in clause (E), it is stipulated that, if the debtor should not make payment within twelve years, the creditor may, at the end of that period, enter into possession of the mortgaged property. A simple calculation shows that the interest agreed to be paid in clause C upon the purchase price of the land which had thus been bought by Delgado was at a rate well above fifteen per centum per annum. This mortgage therefore offends against the provisions of the Usury Law, which limits the rate that can ordinarily be secured by mortgage upon real property to twelve per centum per annum (Act No. 2655-2). The trial judge found that, back in November, 1917, Delgado had taken over the possession of the twelve parcels directly from Stickneys overseer. Alonso therefore probably at no time exercised possession over the property; and on February 1, 1919, wh en Delgado made payment of P2,625 upon interest account, the interest was calculated from December 1, 1917, instead of February 1, 1918. (See receipt, Exhibit A.) During the year 1919 and thereafter, owing to the financial stringency resulting from the fall in the price of agricultural products, Delgado seems to have been unable to make further payment of interest, and when Alonso began to press him about the matter, recourse to legal advise was had by the former; and on February 3, 1920, this action was instituted by Delgado in the Court of First Instance of Camarines Sur.

By the amended complaint, bearing date of October 21, 1920, the plaintiff seeks to enforce the right of action given in section 6 of Act No. 2655 and thereby to recover from the defendant Alonso the sum of P2,625 paid upon February 1, 1919, by way of interest, together with a reasonable attorneys fee, alleged to be in the amount of P2,500. In the same complaint the plaintiff seeks to obtain a declaration of nullity as to the stipulations contained in clauses A, C, and E of the mortgage. To this complaint the defendant answered with a general denial; and by way of special defense he alleged that the contract in question had been entered into by him innocently and in total ignorance on his part of the existence of the Usury Law and, further, that he had been maliciously inveigled into said contract by the plaintiff, with full knowledge on the part of the latter of the illegality of the stipulation for usurious interest, and with the design of taking advantages of the Usury Law to the prejudice of the defendant. The defendant, therefore, on his part, and by way of cross-complaint, prayed the court to set the contract of mortgage aside; but instead of asking for a restoration of the twelve parcels of land, subject of the sale, he asked that the plaintiff be adjudged to pay to him the sum of P15,000, alleged to have been advanced by the defendant to the plaintiff for the purchase of said land from Stickney, after deducting the sum of P2,625, admittedly received in payment of usurious interest. Upon these pleadings, and upon consideration of the proof, both oral and documentary, the trial judge found that the mortgage in question was in fact usurious, and he therefore declared the same to be void. He further awarded to the plaintiff the sum of P2,625 to be recovered of the defendant by way of restriction of the whole interest paid, in conformity with section 6 of Act No. 2655, with interest to be calculated upon said sum at the rate of six per centum per annum from the date of the filing of the original complaint. His Honor refused, however, to award any amount to the plaintiff by way of attorneys fee, observing that the plaintiff appeared to have acted with more malice in the transaction than the defendant. Upon the cross-complaint his Honor gave judgment in favor of the defendant to recover of the plaintiff the sum of P15,000, being the price of the twelve lots transferred by the defendant to the plaintiff contemporaneously with the execution of the mortgage, together with interest on said sum to be calculated at the lawful rate of six per centum per annum from December 1, 1917. From this judgment both parties appealed, but error has been here assigned in behalf of the plaintiff only. In our opinion the trial judge did not err in holding that this mortgage is usurious, since it purports on its face to obligate the debtor to pay interest on the mortgage debt at a rate in excess of that allowed by law. The attorney for the defendant, however, takes the position that the obligation of the mortgagor in its entirely, including both his promise to pay the principal of P15,000 within twelve years and the promise to pay interest thereon at the rate of fifteen per centum per annum so long as the debt should continue to subsist, represented in the minds of the contracting parties the price which was agreed upon as the value of the property sold; and from this the conclusion is drawn that the contract does not truly represent a loan or forbearance at an unlawful rate. In support of this proposition decisions are cited from certain courts in the United States to the effect that the seller may fix one price as the cash price of the property to be sold and a higher price if sold upon credit; and the circumstance that these prices may differ by an amount exceeding the lawful rate of interest for the period over which credit extends does not make the contract usurious. Upon that proposition we have no criticism to make, and it will suffice in this connection to quote the following passage from an opinion written by Mr. Justice Grier in the Supreme Court of the United States in which he said: But it is manifest that if A purpose to sell to B a tract of land for $10,000 in cash, or for $20,000 payable in ten annual installments, and if B prefers to pay the larger sum to gain time, the contract cannot be called usurious. A vendor may prefer $100 in hand to double the sum in expectancy, and a purchaser may prefer the greater price with the longer credit; and one who will not distinguish between things that differ, may say, with apparent truth, that B prays a hundred per cent for forbearance, and may assert that such a contract is usurious; but whatever truth there may be in the premises, the conclusion is manifestly erroneous. Such a contract has none of the characteristic of usury; it is not for the loan of money, or forbearance of a debt. (Ruffner vs. Hogg, 1 Black [U. S.], 115; 17 L. ed., 38.) However, the case before us does not exhibit the features indicated in the passage quoted. Here we have a present sale at the case price of P15,000 and forbearance in respect to the collection of that sum for an indefinite period within the limits of twelve years, in consideration of an agreement to pay interest at a usurious rate so long as the indebtedness should subsist. It will be noted that credit was not extended for a definite time, and the debtor was left at liberty to pay off the whole debt at any time within the twelve-year limit that he chose. This case in our opinion more properly falls within the rule stated in 39 Cyc., page 927, to the effect that: . . . Where the sale is made on a cash basis and for a cash price and the vendor forbears to require the cash payments agreed upon in consideration of the vendees promising to pay at a future day a sum greater than such agreed cash value with lawfu l interest, in such case there is a forbearance to collect an existing debt, and the excessive charge therefor is usurious.

The mortgage in question being clearly usurious, the trial judge committed no error in declaring that instrument void; and this, notwithstanding the fact that the plaintiff limited his prayer for relief to those features of the mortgage which were unfavorable to himself, without asking that the whole contract be annulled. It was not erroneous for the court, upon being appealed to for relief against the unlawful contract, to eradicate the evil root and branch, and more particularly as the defendant had also asked that the mortgage be annulled. Under the conditions above stated it was also inevitable that the plaintiff should be permitted to recover the interest paid by him to the extent of P2,625 upon this usurious contract, this right of action being expressly recognized in section 6 of the Usury Law. Whether the plaintiff was entitled to have something awarded to him in the character o f attorneys fee in connection with this recovery is a point which requires some consideration. As to this statute in effect says that any person who has paid upon any usurious contract a higher rate than is allowed by law may recover the whole interest pa id with costs and attorneys fees in such sum as may be allowed by the court. This language undoubtedly recognizes a discretion in the court in respect to fixing the amount of the fees, but it is not so clear that the court has a discretion to deny the allowance altogether. On the contrary, we incline to the view that when the right of action to recover interest paid upon a usurious contract is established, a reasonable attorneys fee should be allowed as a matter of course, the same as costs are awarded. The purpose of the law is to encourage persons who have suffered from contracts of this character to come into court and vindicate their rights, and the imposition upon the userer of the obligation to pay the attorneys fee will serve at once as an encour agement to the oppressed and as a wholesome deterrent to the taking of usurious interest. In the case before us the trial judge considered that he was justified in disallowing the attorneys fee on the ground that t he plaintiff had acted with more malice than the defendant in respect to the making of the contract in question. Upon examining the proof bearing on this point, we are of the opinion that this imputation is not altogether warranted. We are quite prepared to believe the defendant when he says that the entered into the contract in total ignorance of the law against usury and it is not improbable that the plaintiff, stimulated by the desire to purchase the property, had suggested the terms upon which he was willing to take it; but it is not proved that he had the Usury Law in mind at the time or maliciously intended to entrap the defendant into the making of this contract and then to take advantage of the law. Both parties were, in our opinion, victims, at once of their own ignorance and of economic practices inherited from the past; and ignorance of the provisions of the Usuary Law does not relieve either from the legal consequences of the contract into which they voluntarily entered. Upon due consideration of the amount involved and the character and extent of the litigation that has resulted, we are of the opinion that the plaintiff should be allowed the sum of P1,000 as his reasonable attorneys fees in this court and the court of origin in connection with the cause of action founded on section 6 of Act No. 2655. Upon the second branch of the case, arising upon the defendants cross -complaint, we are of the opinion that the trial judge erred in giving judgment in favor of the defendant against the plaintiffs for the sum of P15,000, the agreed price of the property purchased by the latter. It is obvious that he transfer of the land to the plaintiff and the contemporaneous act of mortgaging it (with two additional parcels) to the defendant should be viewed in equity as a single transaction. The true consideration for the mortgage was therefore the land, not its price. It follows that if the restitution was to be ordered at all, the thing to be restored was the land. The appealed judgment must, therefore, be reversed in so far as it requires the plaintiff to pay the sum of P15,000 to the defendant. The question whether it is now proper for this court, upon the state of facts before it, to order the restriction of the land must be answered in the affirmative, upon the ground that the plaintiff, having seen fit to appeal to the court for relief from a usurious contract, will be required to do equity by placing his adversary so far as practicable in his former condition. The law upon this point has been lately considered by the Supreme Court of Rhode Islands, under a statute in all material respects like that now in force in this country. It there appeared that a bill in equity had been filed, praying that a note made by the plaintiff to the defendant for money loaned should be declared usurious and void and be surrendered to the plaintiff, and that a mortgage executed by the plaintiff as security for the payment of said note should be canceled and that the defendant should be restrained from alienating said note and from foreclosing the mortgage. Upon demurrer it was held that relief would not be granted upon the facts stated in the bill without repayment, or a tender of repayment of the capital. In discussing the law pertinent to the case, the court, among other things, said: The provisions of the Rhode Island statute with reference to usury are drastic. Chapter 434, Public Laws 1909, amended by chapter 838, Public Laws 1912. The violation of the act is punishable as a misdemeanor, every contract made in violation of it is not, and the borrower may be recover in an action at law, not only the interest, but any portion of the principal paid by him upon such usurious contract. The complainants solicitor has presented to us a very comprehensive and able argument in support of his

contention that equity should recognize the view of public policy emphatically expressed in the legislative act, and should cancel the usurious and void contract. This argument would have more persuasive force if the question were a new one. The settled and nearly universal practice of courts of equity is opposed to the complainants contention. The statutes of different states have various provisions directed towards the prevention of the extortion and oppression of usury. Whatever may be the method adopted by the legislature, however, although the legislative provision may go to the limit of our state and declare the contract void and unenforceable, nevertheless courts of equity, in the absence of statute specifically constraining them to act differently, have insisted upon the equitable principle that he who seeks equity must do equity, and have required the borrower, before he can be given the relief of cancellation of the contract, to perform the moral obligation resting upon him, and pay or offer to pay the principal of the loan with legal interest. (Moncrief vs. Palmer, 114 Atl., 181; 17 A. L. R., 119.) The doctrine of that case we consider applicable here; and without expressing any opinion upon the broader question whether capital lent upon a usurious contract can be recovered in an aggressive action by the creditor, we are content to hold that when the debtor in a usurious contract sees fit, or finds it necessary to apply to the court for equitable relief, he will, as a condition to the granting of such relief, be required to restore what he received from the other party. In the present case both parties are before the court in the attitude of suppliants, each asking for relief from the contract in question; and in order to avoid the possibility of further litigation, as well as to secure complete justice, an order will be entered requiring the plaintiff, as a condition of the satisfaction of the judgment in his favor, to reconvey to the defendant the same twelve parcels acquired by the plaintiff from the defendant. In his answer to the defendants cross-complaint, the plaintiff stated a claim based on a receipt for P1,937.10, given by the defendant for a sum of money lent to him by the plaintiff on October 1, 1918. At the trial his Honor refused to admit proof tending to establish this claim, on the ground that it had not been stated in the complaint, and he intimated that it might be made the subject of an independent action. We do not think that this ruling constitutes reversible error, if erred in any sense; and the plaintiff must, as suggested by the trial judge, be content with his remedy by separate action, if recourse to judicial measures should be necessary. If desirous of incorporating this claim into the present litigation, the plaintiff should have amended his complaint (sec, 104, Code of Civ. Proc.) and though the trial judge might perhaps in a liberal spirit have treated the plaintiffs answer to the cross -complaint as an amendment to the original complaint on this point, his attention does not appear to have been called to this aspect of the matter, and he should not be put in error in having excluded the evidence relative to said claim. In the light of what has been said, it becomes necessary to affirm the judgment in so far as it decrees the nullity of the mortgage (Exhibit B) and in so far as it awards to the plaintiff the sum of P2,625, to be recovered of the defendant, with interest at six per centum per annum from February 3, 1920, until paid. In addition to the foregoing the plaintiff will recover of the defendant the sum of P1,000, in the character of attorneys fees, as already explained. The judgment will be reversed in so far as it award s to the defendant the sum of P15,000 to be recovered from the plaintiff with interest at six per centum per annum from December 1, 1917, until paid. The plaintiff will, however, be required, upon satisfaction of the judgment for the sums awarded to him, to reconvey to the defendant the twelve parcels which were the subject of the sale. No special pronouncement will be made as to costs. So ordered. Araullo, C.J., Malcolm, Avancea, Ostrand, Johns, and Romualdez, JJ., concur.

Republic of the Philippines SUPREME COURT Baguio City FIRST DIVISION G.R. No. 137873 April 20, 2001

D. M. CONSUNJI, INC., petitioner, vs. COURT OF APPEALS and MARIA J. JUEGO, respondents. KAPUNAN, J.:

At around 1:30 p.m., November 2, 1990, Jose Juego, a construction worker of D. M. Consunji, Inc., fell 14 floors from the Renaissance Tower, Pasig City to his death. PO3 Rogelio Villanueva of the Eastern Police District investigated the tragedy and filed a report dated November 25, 1990, stating that: x x x. [The] [v]ictim was rushed to [the] Rizal Medical Center in Pasig, Metro Manila where he was pronounced dead on arrival (DOA) by the attending physician, Dr. Errol de Yzo[,] at around 2:15 p.m. of the same date. Investigation disclosed that at the given time, date and place, while victim Jose A. Juego together with Jessie Jaluag and th Delso Destajo [were] performing their work as carpenter[s] at the elevator core of the 14 floor of the Tower D, Renaissance Tower Building on board a [p]latform made of channel beam (steel) measuring 4.8 meters by 2 meters wide with pinulid plywood flooring and cable wires attached to its four corners and hooked at the 5 ton chain block, when suddenly, the bolt or pin which was merely inserted to connect the chain block with the [p]latform, got loose xxx causing the whole [p]latform assembly and the victim to fall down to the basement of the elevator core, Tower D of the building under construction thereby crushing the victim of death, save his two (2) companions who luckily jumped out for safety. It is thus manifest that Jose A. Juego was crushed to death when the [p]latform he was then on board and performing work, fell. And the falling of the [p]latform was due to the removal or getting loose of the pin which was merely inserted 1 to the connecting points of the chain block and [p]latform but without a safety lock. On May 9, 1991, Jose Juegos widow, Maria, filed in the Regio nal Trial Court (RTC) of Pasig a complaint for damages against the deceaseds employer, D.M. Consunji, Inc. The employer raised, among other defenses, the widows prior availment of the benefits from the State Insurance Fund. After trial, the RTC rendered a decision in favor of the widow Maria Juego. The dispositive portion of the RTC decision reads: WHEREFORE, judgment is hereby rendered ordering defendant to pay plaintiff, as follows: 1. P50,000.00 for the death of Jose A. Juego. 2. P10,000.00 as actual and compensatory damages. 3. P464,000.00 for the loss of Jose A. Juegos earning capacity. 4. P100,000.00 as moral damages. 5. P20,000.00 as attorneys fees, plus the costs of suit. SO ORDERED.
2

On appeal by D. M. Consunji, the Court of Appeals (CA) affirmed the decision of the RTC in toto. D. M. Consunji now seeks the reversal of the CA decision on the following grounds: THE APPELLATE COURT ERRED IN HOLDING THAT THE POLICE REPORT WAS ADMISSIBLE EVIDENCE OF THE ALLEGED NEGLIGENCE OF PETITIONER. THE APPELLATE COURT ERRED IN HOLDING THAT THE DOCTRINE OF RES IPSA LOQUITOR [sic] IS APPLICABLE TO PROVE NEGLIGENCE ON THE PART OF PETITIONER. THE APPELLATE COURT ERRED IN HOLDING THAT PETITIONER IS PRESUMED NEGLIGENT UNDER ARTICLE 2180 OF THE CIVIL CODE, AND THE APPELLATE COURT ERRED IN HOLDING THAT RESPONDENT IS NOT PRECLUDED FROM RECOVERING 3 DAMAGES UNDER THE CIVIL CODE.

Petitioner maintains that the police report reproduced above is hearsay and, therefore, inadmissible. The CA ruled otherwise. It held that said report, being an entry in official records, is an exception to the hearsay rule. The Rules of Court provide that a witness can testify only to those facts which he knows of his personal knowledge, that is, which 4 are derived from his perception. A witness, therefore, may not testify as what he merely learned from others either because he was told or read or heard the same. Such testimony is considered hearsay and may not be received as proof of the truth of what 5 he has learned. This is known as the hearsay rule. Hearsay is not limited to oral testimony or statements; the general rule that excludes hearsay as evidence applies to written, as 6 well as oral statements.

The theory of the hearsay rule is that the many possible deficiencies, suppressions, sources of error and untrustworthiness, which lie underneath the bare untested assertion of a witness, may be best brought to light and exposed by the test of cross7 8 examiantion. The hearsay rule, therefore, excludes evidence that cannot be tested by cross-examination. The Rules of Court allow several exceptions to the rule, among which are entries in official records. Section 44, Rule 130 provides: Entries in official records made in the performance of his duty made in the performance of his duty by a public officer of the Philippines, or by a person in the performance of a duty specially enjoined by law are prima facie evidence of the facts therein stated. In Africa, et al. vs. Caltex (Phil.), Inc., et al., this Court, citing the work of Chief Justice Moran, enumerated the requisites for admissibility under the above rule: (a) that the entry was made by a public officer or by another person specially enjoined by law to do so; (b) that it was made by the public officer in the performance of his duties, or by such other person in the performance of a duty specially enjoined by law; and (c) that the public officer or other person had sufficient knowledge of the facts by him stated, which must have been acquired by him personally or through official information. The CA held that the police report meets all these requisites. Petitioner contends that the last requisite is not present. The Court notes that PO3 Villanueva, who signed the report in question, also testified before the trial court. In Rodriguez vs. Court 11 of Appeals, which involved a Fire Investigation Report, the officer who signed the fire report also testified before the trial court. This Court held that the report was inadmissible for the purpose of proving the truth of the statements contained in the report but admissible insofar as it constitutes part of the testimony of the officer who executed the report. x x x. Since Major Enriquez himself took the witness stand and was available for cross-examination, the portions of the report which were of his personal knowledge or which consisted of his perceptions and conclusions were not hearsay. The rest of the report, such as the summary of the statements of the parties based on their sworn statements (which were annexed to the Report) as well as the latter, having been included in the first purpose of the offer [as part of the testimony of Major Enriquez], may then be considered as independently relevant statements which were gathered in the course of the investigation and may thus be admitted as such, but not necessarily to prove the truth thereof. It has been said that: "Where regardless of the truth or falsity of a statement, the fact that it has been made is relevant, the hearsay rule does not apply, but the statement may be shown. Evidence as to the making of such statement is not secondary but primary, for the statement itself may constitute a fact in issue, or be circumstantially relevant as to the existence of such a fact." When Major Enriquez took the witness stand, testified for petitioners on his Report and made himself available for cross-examination by the adverse party, the Report, insofar as it proved that certain utterances were made (but not their truth), was effectively removed from the ambit of the aforementioned Section 44 of Rule 130. Properly understood, this section does away with the testimony in open court of the officer who made the official record, considers the matter as an exception to the hearsay rule and makes the entries in said official record admissible in evidence as prima facie evidence of the facts therein stated. The underlying reasons for this exceptionary rule are necessity and trustworthiness, as explained in Antillon v. Barcelon. The litigation is unlimited in which testimony by officials is daily needed; the occasions in which the officials would be summoned from his ordinary duties to declare as a witness are numberless. The public officers are few in whose daily work something is not done in which testimony is not needed from official sources. Were there no exception for official statements, hosts of officials would be found devoting the greater part of their time to attending as witnesses in court or delivering deposition before an officer. The work of administration of government and the interest of the public having business with officials would alike suffer in consequence. For these reasons, and for many others, a certain verity is accorded such documents, which is not extended to private documents. (3 Wigmore on Evidence, Sec. 1631). The law reposes a particular confidence in public officers that it presumes they will discharge their several trusts with accuracy and fidelity; and, therefore, whatever acts they do in discharge of their duty may be given in evidence and shall be taken to be true under such a degree of caution as to the nature and circumstances of each case may appear to require. It would have been an entirely different matter if Major Enriquez was not presented to testify on his report. In that case the applicability of Section 44 of Rule 143 would have been ripe for determination, and this Court would have agreed with the Court of Appeals that said report was inadmissible since the aforementioned third requisite was not satisfied.
10 9

The statements given by the sources of information of Major Enriquez failed to qualify as "official information," there being no showing that, at the very least, they were under a duty to give the statements for record. Similarly, the police report in this case is inadmissible for the purpose of proving the truth of the statements contained therein but is admissible insofar as it constitutes part of the testimony of PO3 Villanueva. In any case, the Court holds that portions of PO3 Villanuevas testimony which were of his personal knowledge suffice to prov e 12 that Jose Juego indeed died as a result of the elevator crash. PO3 Villanueva had seen Juegos remains at the morgue, making the latters death beyond dispute. PO3 Villanueva also conducted an ocular inspection of the premises of the building the day 13 14 15 after the incident and saw the platform for himself. He observed that the platform was crushed and that it was totally 16 damaged. PO3 Villanueva also required Garcia and Fabro to bring the chain block to the police headquarters. Upon inspection, 17 he noticed that the chain was detached from the lifting machine, without any pin or bolt. What petitioner takes particular exception to is PO3 Villanuevas testimony that the cause of the fall of the platform was th e loosening of the bolt from the chain block. It is claimed that such portion of the testimony is mere opinion. Subject to certain 18 19 exceptions, the opinion of a witness is generally not admissible. Petitioners contention, however, loses relevance in the face of the application of res ipsa loquitur by the CA. The effect of the doctrine is to warrant a presumption or inference that the mere fall of the elevator was a result of the person having charge of the instrumentality was negligent. As a rule of evidence, the doctrine of res ipsa loquituris peculiar to the law of negligence which recognizes that prima facie negligence may be established without direct proof and furnishes a substitute for specific proof of 20 negligence. The concept of res ipsa loquitur has been explained in this wise: While negligence is not ordinarily inferred or presumed, and while the mere happening of an accident or injury will not generally give rise to an inference or presumption that it was due to neglige nce on defendants part, under the doctrine of res ipsa loquitur, which means, literally, the thing or transaction speaks for itself, or in one jurisdiction, that the thing or instrumentality speaks for itself, the facts or circumstances accompanying an injury may be such as to raise a presumption, or at least permit an inference of negligence on the part of the defendant, or some other person who is charged with negligence. x x x where it is shown that the thing or instrumentality which caused the injury complained of was under the control or management of the defendant, and that the occurrence resulting in the injury was such as in the ordinary course of things would not happen if those who had its control or management used proper care, there is sufficient evidence, or, as sometimes stated, reasonable evidence, in the absence of explanation by the defendant, that the injury arose from or 21 was caused by the defendants want of care. One of the theoretical based for the doctrine is its necessity, i.e., that necessary evidence is absent or not available.
22

The res ipsa loquitur doctrine is based in part upon the theory that the defendant in charge of the instrumentality which causes the injury either knows the cause of the accident or has the best opportunity of ascertaining it and that the plaintiff has no such knowledge, and therefore is compelled to allege negligence in general terms and to rely upon the proof of the happening of the accident in order to establish negligence. The inference which the doctrine permits is grounded upon the fact that the chief evidence of the true cause, whether culpable or innocent, is practically accessible to the defendant but inaccessible to the injured person. It has been said that the doctrine of res ipsa loquitur furnishes a bridge by which a plaintiff, without knowledge of the cause, reaches over to defendant who knows or should know the cause, for any explanation of care exercised by the defendant in respect of the matter of which the plaintiff complains. The res ipsa loquitur doctrine, another court has said, is a rule of necessity, in that it proceeds on the theory that under the peculiar circumstances in which the doctrine is applicable, it is within the power of the defendant to show that there was no negligence on his part, and direct proof of defendants negligence is beyond plaintiffs power. Accordingly, some court add to the three prerequisites for the application of the res ipsa loquitur doctrine the further requirement that for the res ipsa loquitur doctrine to apply, it must appear that the injured party had no knowledge or means of knowledge as to the cause of the accident, or that the 23 party to be charged with negligence has superior knowledge or opportunity for explanation of the accident. The CA held that all the requisites of res ipsa loquitur are present in the case at bar: There is no dispute that appellees husband fell down from the 14 floor of a building to the basement while he was working with appellants construction project, resulting to his deat h. The construction site is within the exclusive control and management of appellant. It has a safety engineer, a project superintendent, a carpenter leadman and others who are in complete control of the situation therein. The circumstances of any accident that would occur therein are peculiarly within the knowledge of the appellant or its employees. On the other hand, the appellee is not in a position to know what caused the accident. Res ipsa loquitur is a rule of necessity and it applies where evidence is absent or not readily available, provided the following requisites are present: (1) the accident was of a kind which does not ordinarily occur unless someone is negligent; (2) the instrumentality or agency which caused the injury was under the exclusive control of the person charged with negligence; and (3) the injury suffered must not have been due to any voluntary action or contribution on the part of the person injured. x x x.
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No worker is going to fall from the 14 floor of a building to the basement while performing work in a construction site unless someone is negligent[;] thus, the first requisite for the application of the rule of res ipsa loquitur is present. As explained earlier, the construction site with all its paraphernalia and human resources that likely caused the injury is under the exclusive control and management of appellant[;] thus[,] the second requisite is also present. No contributory negligence was attributed to the appellees deceased husband*;+ thus*,+ the last requisite is also present. All the requisites for the application of the rule of res ipsa loquitur are present, thus a reasonable presumption or inference of 24 appellants negligence arises. x x x. Petitioner does not dispute the existence of the requisites for the application of res ipsa loquitur, but argues that the presumption or inference that it was negligent did not arise since it "proved that it exercised due care to avoid the accident which befell respondents husband." Petitioner apparently misapprehends the procedural effect of the doctrine. As stated earlier, the defendants negligence is 25 presumed or inferred when the plaintiff establishes the requisites for the application of res ipsa loquitur. Once the plaintiff 26 makes out a prima facie case of all the elements, the burden then shifts to defendant to explain. The presumption or inference may be rebutted or overcome by other evidence and, under appropriate circumstances disputable presumption, such as that of 27 due care or innocence, may outweigh the inference. It is not for the defendant to explain or prove its defense to prevent the presumption or inference from arising. Evidence by the defendant of say, due care, comes into play only after the circumstances for the application of the doctrine has been established.1wphi1.nt In any case, petitioner cites the sworn statement of its leadman Ferdinand Fabro executed before the police investigator as evidence of its due care. According to Fabros sworn statement, the company enacted rules and regulations for the safety and security of its workers. Moreover, the leadman and the bodegero inspect the chain block before allowing its use. It is ironic that petitioner relies on Fabros sworn statement as proof of its due care but, in arguin g that private respondent failed to prove negligence on the part of petitioners employees, also assails the same statement for being hearsay. Petitioner is correct. Fabros sworn statement is hearsay and inadmissible. Affidavits are inadmissible as eviden ce under the 28 hearsay rule, unless the affiant is placed on the witness stand to testify thereon. The inadmissibility of this sort of evidence is based not only on the lack of opportunity on the part of the adverse party to cross-examine the affiant, but also on the commonly known fact that, generally, an affidavit is not prepared by the affiant himself but by another who uses his own language in writing 29 the affiants statements which may either be omitted or misunderstood by the one writing them. Petitioner, therefore, cannot use said statement as proof of its due care any more than private respondent can use it to prove the cause of her husbands death. Regrettably, petitioner does not cite any other evidence to rebut the inference or presumption of negligence arising from the application of res ipsa loquitur, or to establish any defense relating to the incident. Next, petitioner argues that private respondent had previously availed of the death benefits provided under the Labor Code and is, therefore, precluded from claiming from the deceaseds employer damages under the Civil Code. Article 173 of the Labor Code states: Article 173. Extent of liability. Unless otherwise provided, the liability of the State Insurance Fund under this Title shall be exclusive and in place of all other liabilities of the employer to the employee, his dependents or anyone otherwise entitled to receive damages on behalf of the employee or his dependents. The payment of compensation under this Title shall not bar the recovery of benefits as provided for in Section 699 of the Revised Administrative Code, Republic Act Numbered Eleven hundred sixty-one, as amended, Republic Act Numbered Six hundred ten, as amended, Republic Act Numbered Forty-eight hundred sixty-four as amended, and other laws whose benefits are administered by the System or by other agencies of the government. The precursor of Article 173 of the Labor Code, Section 5 of the Workmens Compensation Act, provided that: Section 5. Exclusive right to compensation. The rights and remedies granted by this Act to an employee by reason of a personal injury entitling him to compensation shall exclude all other rights and remedies accruing to the employee, his personal representatives, dependents or nearest of kin against the employer under the Civil Code and other laws because of said injury x x x. Whether Section 5 of the Workmens Compensation Act allowed recovery under said Act as well as under the Civil Code used to 30 be the subject of conflicting decisions. The Court finally settled the matter in Floresca vs.Philex Mining Corporation, which involved a cave-in resulting in the death of the employees of the Philex Mining Corporation. Alleging that the mining corporation, in violation of government rules and regulations, failed to take the required precautions for the protection of the employees, the heirs of the deceased employees filed a complaint against Philex Mining in the Court of First Instance (CFI). Upon motion of Philex Mining, the CFI dismissed the complaint for lack of jurisdiction. The heirs sought relief from this Court. Addressing the issue of whether the heirs had a choice of remedies, majority of the Court En Banc, following the rule in Pacaa vs. Cebu Autobus Company, held in the affirmative. WE now come to the query as to whether or not the injured employee or his heirs in case of death have a right of selection or choice of action between availing themselves of the workers right under the Workmens Compensation Act
31

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and suing in the regular courts under the Civil Code for higher damages (actual, moral and exemplary) from the employers by virtue of the negligence or fault of the employers or whether they may avail themselves cumulatively of both actions, i.e., collect the limited compensation under the Workmens Compensation Act and sue in addition for damages in the regular courts. In disposing of a similar issue, this Court in Pacaa vs. Cebu Autobus Company, 32 SCRA 442, ruled thatan injured worker has a choice of either to recover from the employer the fixed amounts set by the Workmens Compensation Act or to prosecute an ordinary civil action against the tortfeasor for higher damages but he cannot pursue both courses of action simultaneously. [Underscoring supplied.] Nevertheless, the Court allowed some of the petitioners in said case to proceed with their suit under the Civil Code despite having availed of the benefits provided under the Workmens Compensation Act. The Court reasoned: With regard to the other petitioners, it was alleged by Philex in its motion to dismiss dated May 14, 1968 before the court a quo, that the heirs of the deceased employees, namely Emerito Obra, Larry Villar, Jr., Aurelio Lanuza, Lorenzo Isla and Saturnino submitted notices and claims for compensation to the Regional Office No. 1 of the then Department of Labor and all of them have been paid in full as of August 25, 1967, except Saturnino Martinez whose heirs decided that they be paid in installments x x x. Such allegation was admitted by herein petitioners in their opposition to the motion to dismiss dated may 27, 1968 x x x in the lower court, but they set up the defense that the claims were filed under the Workmens Compensation Act before they learned of the official report of the committee created to investigate the accident which established the criminal negligence and violation of law by Philex, and which report was forwarded by the Director of Mines to then Executive Secretary Rafael Salas in a letter dated October 19, 1967 only x x x. WE hold that although the other petitioners had received the benefits under the Workmens Compensat ion Act, such my not preclude them from bringing an action before the regular court because they became cognizant of the fact that Philex has been remiss in its contractual obligations with the deceased miners only after receiving compensation under the Act. Had petitioners been aware of said violation of government rules and regulations by Philex, and of its negligence, they would not have sought redress under the Workmens Compensation Commission which awarded a lesser amount for compensation. The choice of the first remedy was based on ignorance or a mistake of fact, which nullifies the choice as it was not an intelligent choice. The case should therefore be remanded to the lower court for further proceedings. However, should the petitioners be successful in their bid before the lower court, the payments made under the Workmens Compensation Act should be deducted from the damages that may be decreed in their favor. [Underscoring supplied.] The ruling in Floresca providing the claimant a choice of remedies was reiterated in Ysmael Maritime Corporation vs. 32 33 34 Avelino, Vda. De Severo vs. Feliciano-Go, and Marcopper Mining Corp. vs. Abeleda. In the last case, the Court again recognized that a claimant who had been paid under the Act could still sue under the Civil Code. The Court said: In the Robles case, it was held that claims for damages sustained by workers in the course of their employment could be filed only under the Workmens Compensation Law, to the exclusion of all f urther claims under other laws. In Floresca, this doctrine was abrogated in favor of the new rule that the claimants may invoke either the Workmens Compensation Act or the provisions of the Civil Code, subject to the consequence that the choice of one remedy will exclude the other and that the acceptance of compensation under the remedy chosen will preclude a claim for additional benefits under the other remedy. The exception is where a claimant who has already been paid under the Workmens Compensation Act may still sue for damages under the Civil Code on the basis of supervening facts or developments occurring after he opted for the first remedy. (Underscoring supplied.) Here, the CA held that private respondents case came under the exception because pri vate respondent was unaware of petitioners negligence when she filed her claim for death benefits from the State Insurance Fund. Private respondent filed t he civil complaint for damages after she received a copy of the police investigation report and the Prosecutors Memorandum dismissing the criminal complaint against petitioners personnel. While stating that there was no negligence attributable to the respondents in the complaint, the prosecutor nevertheless noted in the Memorandum that, "if at all," the "case is civil in nature." The CA thus applied the exception in Floresca: x x x We do not agree that appellee has knowledge of the alleged negligence of appellant as early as November 25, 1990, the date of the police investigators report. The appellee m erely executed her sworn statement before the police investigator concerning her personal circumstances, her relation to the victim, and her knowledge of the accident. She did not file the complaint for "Simple Negligence Resulting to Homicide" against app ellants employees. It was the investigator who recommended the filing of said case and his supervisor referred the same to the prosecutors office. This is a standard operating procedure for police investigators which appellee may not have even known. This may explain why no complainant is mentioned in the preliminary statement of the public prosecutor in her memorandum dated February 6, 1991, to wit: "Respondent Ferdinand Fabro x x x are being charged by complainant of "Simple Negligence Resulting to Homicide." It is also possible that the appellee did not have a chance to appear before the public prosecutor as can be inferred from the following statement in said memorandum: "Respondents who were notified pursuant to Law waived their rights to present controverting evidence," thus there was no reason for the public prosecutor to summon the appellee. Hence, notice of appellants negligence cannot be imputed on appellee before she applied for death benefits under ECC or before she received the first payment therefrom. Her using the police investigation report to support her complaint filed on May 9, 1991 may just be an afterthought after receiving a copy of the February 6, 1991 Memorandum of the Prosecutors Office dismissing the criminal complaint for insuffi ciency of

evidence, stating therein that: "The death of the victim is not attributable to any negligence on the part of the respondents. If at all and as shown by the records this case is civil in nature." (Underscoring supplied.) Considering the foregoing, We are more inclined to believe appellees allegation that she learned about appellants negligence only after she applied for and received the benefits under ECC. This is a mistake of fact that will make this case fall under the 35 exception held in the Floresca ruling. The CA further held that not only was private respondent ignorant of the facts, but of her rights as well: x x x. Appellee [Maria Juego] testified that she has reached only elementary school for her educational attainment; that she did not know what damages could be recovered from the death of her husband; and that she did not know that she 36 may also recover more from the Civil Code than from the ECC. x x x. Petitioner impugns the foregoing rulings. It contends that private respondent "failed to allege in her complaint that her application and receipt of benefits from the ECC were attended by ignorance or mistake of fact. Not being an issue submitted during the trial, the trial court had no authority to hear or adjudicate that issue." Petitioner also claims that private respondent could not have been ignorant of the facts because as early as November 28, 1990, private respondent was the complainant in a criminal complaint for "Simple Negligence Resulting to Homicide" against petitioners employees. On February 6, 1991, two months before the filing of the action in the lower court, Prosecutor Lorna Lee issued a resolution finding that, although there was insufficient evidence against petitioners employees, the case was "civil in nature." These purportedly show that prior to her receipt of death benefits from the ECC on January 2, 1991 and every month thereafter, private respondent also knew of the two choices of remedies available to her and yet she chose to claim and receive the benefits from the ECC. When a party having knowledge of the facts makes an election between inconsistent remedies, the election is final and bars any action, suit, or proceeding inconsistent with the elected remedy, in the absence of fraud by the other party. The first act of 37 election acts as a bar. Equitable in nature, the doctrine of election of remedies is designed to mitigate possible unfairness to both parties. It rests on the moral premise that it is fair to hold people responsible for their choices. The purpose of the doctrine 38 is not to prevent any recourse to any remedy, but to prevent a double redress for a single wrong. The choice of a party between inconsistent remedies results in a waiver by election. Hence, the rule in Florescathat a claimant cannot simultaneously pursue recovery under the Labor Code and prosecute an ordinary course of action under the Civil Code. The claimant, by his choice of one remedy, is deemed to have waived the other. Waiver is the intentional relinquishment of a known right.
39

[It] is an act of understanding that presupposes that a party has knowledge of its rights, but chooses not to assert them. It must be generally shown by the party claiming a waiver that the person against whom the waiver is asserted had at the time knowledge, actual or constructive, of the existence of the partys rights or of all material facts upon which they depended. Where one lacks knowledge of a right, there is no basis upon which waiver of it can rest. Ignorance of a material fact negates waiver, and waiver cannot be established by a consent given under a mistake or misapprehension of fact. A person makes a knowing and intelligent waiver when that person knows that a right exists and has adequate knowledge upon which to make an intelligent decision. Waiver requires a knowledge of the facts basic to the exercise of the right waived, with an awareness of its 40 consequences. That a waiver is made knowingly and intelligently must be illustrated on the record or by the evidence. That lack of knowledge of a fact that nullifies the election of a remedy is the basis for the exception in Floresca. It is in light of the foregoing principles that we address petitioners contentions. Waiver is a defense, and it was not incumbent upon private respondent, as plaintiff, to allege in her complaint that she had availed of benefits from the ECC. It is, thus, erroneous for petitioner to burden private respondent with raising waiver as an issue. 41 On the contrary, it is the defendant who ought to plead waiver, as petitioner did in pages 2-3 of its Answer; otherwise, the defense is waived. It is, therefore, perplexing for petitioner to now contend that the trial court had no jurisdiction over the issue when petitioner itself pleaded waiver in the proceedings before the trial court. Does the evidence show that private respondent knew of the facts that led to her husbands death and the rights pertaining to a choice of remedies? It bears stressing that what negates waiver is lack of knowledge or a mistake of fact. In this case, the "fact" that served as a basis for nullifying the waiver is the negligence of petitioners employees, of which private respondent purportedly learned only after the prosecutor issued a resolution stating that there may be civil liability. InFloresca, it was the negligence of the mining corporation and its violation of government rules and regulations. Negligence, or violation of government rules and regulations, for that matter, however, is not a fact, but aconclusion of law, over which only the courts have the final say. Such a conclusion

binds no one until the courts have decreed so. It appears, therefore, that the principle that ignorance or mistake of fact nullifies a waiver has been misapplied in Floresca and in the case at bar. In any event, there is no proof that private respondent knew that her husband died in the elevator crash when on November 15, 1990 she accomplished her application for benefits from the ECC. The police investigation report is dated November 25, 1990, 10 days after the accomplishment of the form. Petitioner filed the application in her behalf on November 27, 1990. There is also no showing that private respondent knew of the remedies available to her when the claim before the ECC was filed. On the contrary, private respondent testified that she was not aware of her rights. Petitioner, though, argues that under Article 3 of the Civil Code, ignorance of the law excuses no one from compliance therewith. As judicial decisions applying or interpreting the laws or the Constitution form part of the Philippine legal system (Article 8, Civil Code), private respondent cannot claim ignorance of this Courts ruling in Floresca allowing a choice of remedies. The argument has no merit. The application of Article 3 is limited to mandatory and prohibitory laws. This may be deduced from the language of the provision, which, notwithstanding a persons ignorance, does not e xcuse his or her compliance with the laws. The rule in Floresca allowing private respondent a choice of remedies is neither mandatory nor prohibitory. Accordingly, her ignorance thereof cannot be held against her. Finally, the Court modifies the affirmance of the award of damages. The records do not indicate the total amount private 43 respondent ought to receive from the ECC, although it appears from Exhibit "K" that she received P3,581.85 as initial payment representing the accrued pension from November 1990 to March 1991. Her initial monthly pension, according to the same Exhibit "K," was P596.97 and present total monthly pension was P716.40. Whether the total amount she will eventually receive from the ECC is less than the sum of P644,000.00 in total damages awarded by the trial court is subject to speculation, and the case is remanded to the trial court for such determination. Should the trial court find that its award is greater than that of the ECC, payments already received by private respondent under the Labor Code shall be deducted from the trial court' award of damages. Consistent with our ruling in Floresca, this adjudication aims to prevent double compensation. WHEREFORE, the case is REMANDED to the Regional Trial Court of Pasig City to determine whether the award decreed in its decision is more than that of the ECC. Should the award decreed by the trial court be greater than that awarded by the ECC, payments already made to private respondent pursuant to the Labor Code shall be deducted therefrom. In all other respects, the Decision of the Court of Appeals is AFFIRMED. SO ORDERED. Davide, Jr., Puno, Pardo, and Ynares-Santiago, JJ., concur. Footnote
1 42

Exhibit "A," Records, pp. 60-61. Rollo, pp. 79-80. Id., at 19. Sec. 36, Rule 130. People vs. Ramos, 122 SCRA 312 (1983). 31A C.J.S. Evidence 194. See also Philippine Home Assurance Corp. vs. Court of Appeals , 257 SCRA 479 (1996). 5 J. H. Wigmore, A Treatise on the Anglo-American System of Evidence in Trials at Common Law 3 (3 Ed.). San Sebastian College vs. Court of Appeals, 197 SCRA 138 (1991). See Rules of Court, Rule 130, Sections 37-47. 16 SCRA 448 (1966). See also People vs. San Gabriel, 253 SCRA 84 (1996). 273 SCRA 607 (1997). TSN, December 20, 1991, p. 9. Id., at 28; TSN, January 6, 1992, p. 29. Id., at 29; Ibid.
rd

10

11

12

13

14

15

Id., at 33. Id., at 34. Id., at 24 and 28. Rules of Court, Rule 130, Sections 49-50. Id., Sec. 48.

16

17

18

19

20

Layugan vs. Intermediate Appellate Court, 167 SCRA 363 (1988). See also Batiquin vs. Court of Appeals, 258 SCRA 334 (1996); Radio Communications of the Philippines, Inc. vs. Court of Appeals , 143 SCRA 657 (1986).
21

57B Am Jur 2d, Negligence 1819. Id., at 1824. Id., at 1914. Rollo, pp. 87-88.

22

23

24

25

Whether the doctrine raises a presumption or merely an inference is subject to debate. See 57B Am Jur 2d, Negligence 1925-1928.
26

Id., at 1920. Id., at 1947. People vs. Villeza, 127 SCRA 349 (1984); People vs. Quidato, 297 SCRA 1 (1998). People vs. Ramos, supra. 136 SCRA 141 (1985). Justices Aquino, Melencio-Herrera, and Gutierrez dissented. 151 SCRA 333 (1987). 157 SCRA 446 (1988). 164 SCRA 317 (1988). Rollo, pp. 90-91. Underscoring by the Court of Appeals. Id., at 90. Underscoring by the Court of Appeals. Id., at 5. Id., at 2. Castro vs. Del Rosario, et al., 19 SCRA 196 (1967). 28 Am Jur 2d, Estoppel and Waiver 202. Records, pp. 17-18. I Tolentino, A.M. Commentaries and Jurisprudence on the Civil Code of the Philippines 19 (1995). Records, p. 100.

27

28

29

30

31

32

33

34

35

36

37

38

39

40

41

42

43

The Lawphil Project - Arellano Law Foundation

Republic of the Philippines SUPREME COURT Manila EN BANC G.R. No. L-14406 June 30, 1961

MARCELINO BUYCO, petitioner-appellee, vs. PHILIPPINE NATIONAL BANK, ILOILO BRANCH, Iloilo City, respondent-appellant. Efrain B. Treas for petitioner-appellee. Ramon B. de los Reyes and Nemesio C. Vargas for respondent-appellant. PAREDES, J.: Mandamus case filed by petitioner Marcelino Buyco praying that the respondent Philippine National Bank be compelled to accept his Backpay Acknowledgment Certificate No. 4801, as payment of his obligation with said respondent. The case was submitted on an agreed stipulation of facts, with the pertinent documents as annexes. On April 24, 1956, petitioner Marcelino Buyco was indebted to respondent in the amount of P5,102.90 plus interest thereon, which represented petitioner's deficit on his 1952-53 crop loan with respondent bank. The said loan was secured by a mortgage of real property. Petitioner is a holder of Backpay Acknowledgment Certificate No. 4801, dated July 9, 1955, under Rep. Act No. 897 in the amount of P22,227.69 payable in thirty (30) years. On April 24, 1956, petitioner offered to pay respondent bank the deficit of his crop loan for the abovementioned crop year 1952-53 with his said backpay acknowledgment certificate, but on July 18, 1956, respondent answered petitioner that since respondent's motion for reconsideration in the case of Marcelino B. Florentino v. Philippine National Bank, L-8782, (52 O.G. 2522) was still under consideration by this Court (S.C.) respondent "cannot yet grant" petitioner's request (Annex A, amended petition). On February 15, 1957, and after this Court had denied respondent's motion for reconsideration in said case No. L-8782, petitioner, again wrote respondent, reiterating his request to pay the obligation with said certificate (Annex B). On February 19, 1957, respondent answered petitioner that in view of the amendment of its charter on June 16, 1956 by R.A. No. 1576, it could not accept petitioner's certificate (Annex C). Petitioner requested respondent to reconsider its decision, in a letter dated March 26, 1957 (Annex D), which was referred to the respondent's Legal Department. In an opinion rendered on April 23, 1957, said department expressed the view that notwithstanding the decision of this Court, the respondent could not accept the certificate because of the amendment of its Charter heretofore mentioned. The Court of First Instance of Iloilo, on July 24, 1958, granted the petition and ordered the respondent bank "to give due course on the vested right of the petitioner acquired previous to the enactment of Republic Act No. 1576 by accepting his backpay acknowledgment certificate as payment of the obligation of the petitioner with respondent Bank with costs of the proceedings against respondent." Hence, this appeal by the respondent Bank. In spousing the cause of the petitioner-appellee, the trial court made the following findings and conclusions: (1) That in the letter Annex A, dated July 18, 1956, the respondent has impliedly admitted the right of petitioner to apply or offer his certificate in payment of his obligation to respondent. (2) That the pendency of the motion for reconsideration of the Florentino case filed by respondent-appellant, did not affect the petitioner's vested right already created and acquired at the time he offered to pay his obligation with his certificate on April 24, 1956, and before the passage of Rep. Act No. 1576. (3) That Rep. Act No. 1576 does not nullify the right of the petitioner to pay his obligation with his backpay certificate. (4) That the writ of mandamus would lie against the appellant. The above findings and conclusions are assigned as errors, alleged to have been committed by the trial court. In the light of the Supreme Court's decision in the Florentino case, the respondent Philippine National Bank therein was declared authorized to accept backpay acknowledgment certificate as payment of the obligation of any holder thereof. Although the Florentino case was promulgated on April 28, 1956, four (4) days after April 24, 1956, the date the appellee offered to pay with his backpay acknowledgment certificate, it is nevertheless obvious that on or before said April 24, 1956, the right to have his certificate applied for the payment of his obligation with the appellant already existed by virtue of Republic Act No. 897, which was merely construed and clarified by this Court in the said Florentino case. So that when the appellant in its letter of July 18, 1956. replied that "in the meantime that our motion for reconsideration of the said decision is still pending the resolution of the Supreme Court, we regret to advise that we cannot yet grant your request", the said appellant already knew or should have known that a right was vested, only that its enforcement had to wait the resolution of this Court which it handed on February 15, 1957, by maintaining its decision. A vested right or a vested interest may be held to mean some right or interest in property that

has become fixed or established, and is no longer open to doubt or controversy (Graham v. Great Falls Water Power & Town Site Co. [Mont] 76 Pac. 808, 810, citing Evans-Snider-Buel Co. v. McFadden, 10 Fed. 293, 44 CCA 464 L.R.A. 900). Considering the facts and circumstances obtaining in the case, we agree with the lower court that the appellant herein had impliedly admitted the right of the petitioner to apply his backpay certificate in payment of his obligation. This notwithstanding, whether implied or expressed the admission by the appellant of appellee's right, has already lost momentum or importance because the law on the matter on April 25, 1956, when the offer to pay the obligation with the certificate was made, or the law before the amendatory Act of June 16, 1956, was that the PNB was compelled to receive petitioner's backpay certificate.. Section 9-A of Republic Act No. 1576, passed on June 17, 1956, amending the Charter of the respondent-appellant bank, provides: The Board of Directors shall have the power and authority:. . . . (d) In its discretion, to accept assignment of payments certificate of indebtedness of the government or other such similar securities: Provided, however, that the authority herein granted shall not be used as regards backpay certificates . What would be the effect of this law upon the case at bar? "Laws shall have no retroactive effect, unless the contrary is provided" (Art. 4, New Civil Code). It is said that the law looks to the future only and has no retroactive effect unless the legislator may have formally given that effect to some legal provisions (Lopez, et al. v. Crow, 40 Phil. 997, 1007); that all statutes are to be construed as having only prospective operation, unless the purpose and intention of the Legislature to give them a retrospective effect is expressly declared or is necessarily implied from the language used; and that every case of doubt must be resolved against retrospective effect (Montilla v. Agustinian Corp., 24 Phil. 220). These principles also apply to amendments of statutes. Republic Act No. 1576 does not contain any provision regarding its retroactivity, nor such may be implied from its language. It simply states its effectivity upon approval. The amendment, therefore, has no retroactive effect, and the present case should be governed by the law at the time the offer in question was made. The rule is familiar that after an act is amended, the original act continues to be in force with regard to all rights that had accrued prior to such amendment (Fairchild v. U.S., 91 Fed. 297; Hathaway v. Mutual Life Ins. Co. of N.Y., 99 F. 534). It is true that "acts executed against the provisions of mandatory or prohibitory laws shall be void, except when the law itself authorizes their validity" (Art. 5, New Civil Code). It should be recalled, however, that since the prohibitive amendment of the appellant's charter should not be given retroactive effect; and that the law, at the time appellee made his offer, allowed, in fact compelled, the respondent bank to accept the appellee's certificate, the above provision finds no application herein. IN VIEW HEREOF, mandamus is the proper remedy (Florentino case, supra), and the judgment appealed from is hereby affirmed with costs against the respondent-appellant. Bengzon, C.J., Labrador, Reyes, J.B.L., Dizon, De Leon and Natividad, JJ., concur. Padilla, Bautista Angelo, Concepcion and Barrera, JJ., took no part.

The Lawphil Project - Arellano Law Foundation Republic of the Philippines SUPREME COURT Manila EN BANC G.R. No. L-22512 & G.R. No. L-22514 December 22, 1967

ANDRES E. LAZARO, petitioner, vs. THE COMMISSIONER OF CUSTOMS, respondent. ----------------------------------------------G.R. No. L-22514 December 22, 1967

ANDRES E. LAZARO, petitioner, vs. THE COMMISSIONER OF CUSTOMS, respondent. G.R. No. L-22512 De Leon and De Leon and N. V. Benedicto for petitioner. Office of the Solicitor General for respondent.

G.R. No. L-22514 Juan T. David for petitioner. Office of the Solicitor General for respondent. CONCEPCION, C.J.: This is a petition for review of a decision of the Court of Tax Appeals. On August 31, 1954, the SS "Templar" arrived at the port of Manila with a shipment, among others, of candies, dried shrimps, and celluloid combs, consigned to petitioner, Andres E. Lazaro, under customs entry No. 69463. For lack of the Central Bank release certificate required in Central Bank Circulars Nos. 44 and 45, in relation to Section 1363 (f) of the Revised Administrative Code, the goods were subjected to seizure proceedings; but, on September 4, 1954, they were released to the petitioner upon a surety bond of the Pioneer Insurance and Surety Corporation filed by him in the sum of P4,822.00, based on the value of the goods, as appraised by the Bureau of Customs, including an estimated profit of 30% of the landed cost. After appropriate proceedings, the Collector of Customs rendered a decision decreeing the forfeiture of the goods, and, as the same had already been released to the petitioner, ordering him to pay in cash the sum of P4,820.00 as the value thereof. This decision was, on appeal taken by petitioner, affirmed by the Commissioner of Customs, who directed the confiscation of said bond and ordered petitioner and his surety to pay, jointly and severally, in cash, said sum of P4,822.00, within thirty (30) days from notice.itc-alf A reconsideration of the decision of the Commissioner of Customs having been denied, petitioner filed a second motion for reconsideration, with the same result. Petitioner appealed to the Court of Tax Appeals, which affirmed the decision of the Commissioner of Customs. Said Court having subsequently refused to reconsider its decision, two (2) petitions for review thereof by the Supreme Court have been filed for petitioner herein, one (L-22512) by Attys. De Leon and De Leon and Nicolas V. Benedicto, Jr., and another (L-22514) by Atty. Juan T. David. Although petitioner's counsel in these two (2) cases have filed separate briefs, with their respective assignments of error, the issues raised in both are substantially the same. Petitioner maintains that Section 1363 (f) of the Revised Administrative Code, which was applied by the Court of Tax Appeals, to sustain the decision of the Commissioner of Customs, is inapplicable to this case because said section refers to articles of "prohibited importation," to which category the goods in question do not, he 1 claims, belong; that Circulars Nos. 44 and 45 do not authorize the forfeiture of goods imported in violation thereof; that said circulars have been repealed by Circular No. 133, issued by the Central Bank on January 21, 1962, and abolishing control over foreign exchange and dispensing with the requirement, under Circular No. 44, of import licenses, and by Republic Act No. 1410, approved on September 10, 1955; that said repeals had abated any and all liabilities incurred in consequence of the violation of Circulars Nos. 44 and 45; and that, in any event, such liability should be limited to the value of the imported goods at the place of origin, as provided in Section 13(a) of the Philippine Tariff Act of 1909, as amended, in relation to Section 1280 of the Revised Administrative Code, and should not include estimated profits. These questions have already been decided by this Court adversely to petitioner's pretense. Indeed, in Lazaro vs. Commissioner 2 of Customs involving the same petitioner we held that: 1. Despite the issuance of Central Bank Circular. No. 133, importations made without the corresponding Central Bank release certificate violated said Circular Nos. 44 and 45, in relation to Section 1363(f) of the Revised administrative Code, for Central Bank Circular 133 did not repeal Circular 44 and 45 with respect to the necessity of a release certificate. As matter of fact, paragraph 6 of Circular 133 required imports to be released only upon presentation of a release certificate issued by the Central Bank. Not only that, section 14 which states: "14. No item of import shall be released by the Bureau of Customs without the presentation of a release certificate issued by the Central Bank or any authorized Agent Bank in a form prescribed by the Monetary Board." was deemed incorporated to Circular 133 by virtue of paragraph 8 thereof which we quote hereunder: "8. All existing circulars, rules and regulations and, conditions governing transactions in foreign exchange not inconsistent with the provision a of this Circular, are deemed incorporated hereto and made integral parts hereof by reference." 2. The passage of Republic Act No. 1410 did not abate any liability incurred for violation of Central Bank Circular No. 45, because Section 3 of said Act provides: . . . That goods and commodities in transit or previously imported on a no-dollar remittance basis at the time of the approval of this Act shall not be affected by the operation of this Act. 3. For purposes of seizure proceedings, the appraised value of the imported merchandise should not be the market value in the country of origin, as provided in Section 13 (a) of the Philippine Tariff Act of 1909, as amended, in relation to Section 1280 of the Revised Administrative Code, because:

Rule 13(a) of the Philippine Tariff Act of 1909, as amended, relates to the appraisal of importations for purposes of determining the customs duties.itc-alf (See Lim Quim v. collector of Customs, 23 Phil. 509). For appraisal of importations in connection with seizure proceedings, the value of the importation in the localmarket should prevail, following section 1377 of the Revised Administrative Code which provides: "Sec. 1377. Description and appraisement of seized property . The collector shall also cause a list and particular description of the property seized to be prepared and appraisement of the same at itsvalue in the local market to be made by at least two appraising officers under the revenue laws, if there are such officers at or near the place of seizure, but if there are not, then by two competent and disinterested citizens of the Philippines, to be selected by him for the purpose residing at or near the place of seizure which list and appraisement shall be properly attested by such collector and the persons making the appraisal," and 4. As regards the inclusion of the 30% estimated profit, as part of the appraised value of the goods involved in the present case, . . . the inclusion of the 30% estimated profits as part of the value of the importations in question was made, with the acquiescence and approval of the appellant. As a matter of fact, the amount of bonds posted by him upon release of the goods carried the 30% estimated profits. The payment of such estimated profits as part of the value of the importations in the surety bonds therefore constitutes his contractual obligation in case of forfeiture. In fact, the applicability of the aforementioned Circulars Nos. 44 and 45 to importations involving no-dollar remittances is well 3 settled and the foregoing views have been upheld in a long line of decisions. Lastly petitioner had submitted the issues herein for decision, by the Court of Tax Appeals, "on the basis of the final ruling of the Supreme Court in the aforementioned cases" of Andres Lazaro v. Commissioner of Customs, L-21790 and L-21794, which accordingly, are controlling in the present appeals. WHEREFORE, the decision appealed from should be, as it is hereby, affirmed, with cost against the petitioner. It is so ordered. Reyes, J.B.L., Dizon, Makalintal, Bengzon, J.P., Zaldivar, Sanchez, Castro, Angeles and Fernando, JJ., concur.

Footnotes
1

Pursuant to par. 14 of Circular No. 44:

".....No item of import shall be released by the Bureau of Customs without the presentation of a release certificate issued by the Central Bank or any Authorized Agent Bank in a form prescribed by the Monetary Board." Circular No. 45 provides, inter alia, that: . "WHEREAS, practically all imports represent an immediate demand for foreign exchange or a potential demand for foreign exchange; xxx xxx xxx

".....The Monetary Board, in pursuance of Central Bank Circular No. 20 and other circulars and notifications issued in pursuance thereto, hereby requires any person or entity who intends to import or receive goods from any foreign country for which no foreign exchange is required or will be required of the banks to apply for a license from the Monetary Board to authorize such import."
2

G.R. Nos. L-21790 and L-21794, December 24, 1965. .

Pascual v. Comm. of Customs, L-10979, June 30, 1961; Actg. Comm. of Customs v. Leuterio, L-19142, Oct. 17, 1951; Tong Teck v. Comm. of Customs, L-11947, June 30, 1959; Comm. of Customs v. Eastern Sea Trading, L-14279, Oct. 31, 1961; Comm. of Customs v. Santos, L-11911, Mar. 30, 1962; Comm. of Customs v. Nepomuceno, L-11126, Mar. 31, 1962; Seree Investment Co. v. Comm. of Customs, L-19564, Nov. 28, 1964; Seree Investment Co. v. Comm. of Customs, L20847-49, June 22, 1965; Bombay Department Store v. Comm. of Customs, L-20460, Sept. 30, 1965; Seree Investment Co. v. Comm. of Customs, L-21217, Nov. 29 1965; Yupangco & Sons, Inc. v. Comm. of Customs, L-22259, Jan. 19, 1966; Chan Kian v. Collector of Customs, L-20803, Jan. 31, 1966 and Phil. International Surety v. Comm. of Customs, L-22209, December 17, 1966.

The Lawphil Project - Arellano Law Foundation

Republic of the Philippines SUPREME COURT Manila SECOND DIVISION

G.R. No. 110053 October 16, 1995 DEVELOPMENT BANK OF THE PHILIPPINES, petitioner, vs. COURT OF APPEALS, CELEBRADA MANGUBAT and ABNER MANGUBAT, respondents.

REGALADO, J.: This appeal by certiorari sprouted from the judgment of respondent Court of Appeals promulgated on September 9, 1992 in CA1 G.R. CV No. 28311, and its resolution dated April 7, 1993 denying petitioner's motion for reconsideration. Said adjudgments, in turn, were rooted in the factual groundwork of this case which is laid out hereunder. On July 20, 1981, herein petitioner Development Bank of the Philippines (DBP) executed a "Deed of Absolute Sale" in favor of respondent spouses Celebrada and Abner Mangubat over a parcel of unregistered land identified as Lot 1, PSU-142380, situated in the Barrio of Toytoy, Municipality of Garchitorena, Province of Camarines Sur, containing an area of 55.5057 hectares, more or less. The land, covered only by a tax declaration, is known to have been originally owned by one Presentacion Cordovez, who, on February 4, 1937, donated it to Luciano Sarmiento. On June 8, 1964, Luciano Sarmiento sold the land to Pacifico Chica. On April 27, 1965, Pacifico Chica mortgaged the land to DBP to secure a loan of P6,000.00. However, he defaulted in the payment of the loan, hence DBP caused the extrajudicial foreclosure of the mortgage. In the auction sale held on September 9, 1970, DBP acquired the property as the highest bidder and was issued a certificate of sale on September 17, 1970 by the sheriff. The certificate of sale was entered in the Book of Unregistered Property on September 23, 1970. Pacifico Chica failed to redeem the property, and DBP consolidated its ownership over the same. On October 14, 1980, respondent spouses offered to buy the property for P18,599.99. DBP made a counter-offer of P25,500.00 which was accepted by respondent spouses. The parties further agreed that payment was to be made within six months thereafter for it to be considered as cash payment. On July 20, 1981, the deed of absolute sale, which is now being assailed herein, was executed by DBP in favor of respondent spouses. Said document contained a waiver of the seller's warranty against 2 eviction. Thereafter, respondent spouses applied for an industrial tree planting loan with DBP. The latter required the former to submit a certification from the Bureau of Forest Development that the land is alienable and disposable. However, on October 29, 1981, said office issued a certificate attesting to the fact that the said property was classified as timberland, hence not subject to 3 disposition. The loan application of respondent spouses was nevertheless eventually approved by DBP in the sum of P140,000.00, despite the aforesaid certification of the bureau, on the understanding of the parties that DBP would work for the release of the land by the former Ministry of Natural Resources. To secure payment of the loan, respondent spouses executed a real estate mortgage over the land on March 17, 1982, which document was registered in the Registry of Deeds pursuant to Act No. 3344. The loan was then released to respondent spouses on a staggered basis. After a substantial sum of P118,540.00 had been received by private respondents, they asked for the release of the remaining amount of the loan. It does not appear that their request was acted upon by DBP, ostensibly because the release of the land from the then Ministry of Natural Resources had not been obtained. On July 7, 1983, respondent spouses, as plaintiffs, filed a complaint against DBP in the trial court seeking the annulment of the subject deed of absolute sale on the ground that the object thereof was verified to be timberland and, therefore, is in law an inalienable part of the public domain. They also alleged that petitioner, as defendant therein, acted fraudulently and in bad faith by misrepresenting itself as the absolute owner of the land and in incorporating the waiver of warranty against eviction in the 5 deed of sale. In its answer, DBP contended that it was actually the absolute owner of the land, having purchased it for value at an auction sale pursuant to an extrajudicial foreclosure of mortgage; that there was neither malice nor fraud in the sale of the land under the terms mutually agreed upon by the parties; that assuming arguendo that there was a flaw in its title, DBP can not be held liable for anything inasmuch as respondent spouses had full knowledge of the extent and nature of DBP's rights, title and interest over the land.
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It further averred that the annulment of the sale and the return of the purchase price to respondent spouses would redound to their benefit but would result in petitioner's prejudice, since it had already released P118,540.00 to the former while it would be left without any security for the P140,000.00 loan; and that in the remote possibility that the land is reverted to the public domain, respondent spouses should be made to immediately pay, jointly and severally, the total amount of P118,540.00 with 6 interest at 15% per annum, plus charges and other expenses. On May 25, 1990, the trial court rendered judgment annulling the subject deed of absolute sale and ordering DBP to return the P25,500.00 purchase price, plus interest; to reimburse to respondent spouses the taxes paid by them, the cost of the relocation survey, incidental expenses and other damages in the amount of P50,000.00; and to further pay them attorney's fees and 7 litigation expenses in the amount of P10,000.00, and the costs of suit. In its recourse to the Court of Appeals, DBP raised the following assignment of errors: 1. The trial court erred in declaring the deed of absolute sale executed between the parties canceled and annulled on the ground that therein defendant-appellant had no title over the property subject of the sale. 2. The trial court erred in finding that defendant-appellant DBP acted fraudulently and in bad faith or that it had misrepresented facts since it had prior knowledge that subject property was part of the public domain at the time of sale to therein plaintiffs-appellees. 3. The trial court erred in finding said plaintiffs-appellees' waiver of warranty against eviction void. 4. The trial court erred awarding to therein plaintiffs-appellees damages arising from an alleged breach of contract. 5. The trial court erred in not ordering said plaintiffs-appellees to pay their loan obligation to defendant8 appellant DBP in the amount of P118,540. As substantially stated at the outset, respondent Court of Appeals rendered judgment modifying the disposition of the court below by deleting the award for damages, attorney's fees, litigation expenses and the costs, but affirming the same in all its other 9 10 aspects. On April 7, 1993, said appellate court also denied petitioner's motion for reconsideration. Not satisfied therewith, DBP interposed the instant petition for review on certiorari, raising the following issues: 1. Whether or not private respondent spouses Celebrada and Abner Mangubat should be ordered to pay petitioner DBP their loan obligation due under the mortgage contract executed between them and DBP; and 2. Whether or not petitioner should reimburse respondent spouses the purchase price of the property and the 11 amount of P11,980.00 for taxes and expenses for the relocation Survey. Considering that neither party questioned the legality and correctness of the judgment of the court a quo, as affirmed by respondent court, ordering the annulment of the deed of absolute sale, such decreed nullification of the document has already achieved finality. We only need The Court of Appeals, after an extensive discussion, found that there had been no bad faith on the part of either party, and this r, therefore, to dwell on the effects of that declaration of nullity.emains uncontroverted as a fact in the case at bar. Correspondingly, respondent court correctly applied the rule that if both parties have no fault or are not guilty, the restoration of 12 what was given by each of them to the other is consequently in order. This is because the declaration of nullity of a contract which is void ab initio operates to restore things to the state and condition in which they were found before the execution 13 thereof. We also find ample support for said propositions in American jurisprudence. The effect of an application of the aforequoted rule with respect to the right of a party to recover the amount given as consideration has been passed upon in the case of Leather 14 Manufacturers National Bank vs. Merchants National Bank where it was held that: "Whenever money is paid upon the representation of the receiver that he has either a certain title in property transferred in consideration of the payment or a certain authority to receive the money paid, when in fact he has no such title or authority, then, although there be no fraud or intentional misrepresentation on his part, yet there is no consideration for the payment, the money remains, in equity and good conscience, the property of the payer and may be recovered back by him." Therefore, the purchaser is entitled to recover the money paid by him where the contract is set aside by reason of the mutual 15 material mistake of the parties as to the identity or quantity of the land sold. And where a purchaser recovers the purchase money from a vendor who fails or refuses to deliver the title, he is entitled as a general rule to interest on the money paid from 16 the time of payment. A contract which the law denounces as void is necessarily no contract whatever, and the acts of the parties in an effort to create one can in no wise bring about a change of their legal status. The parties and the subject matter of the contract remain in all 17 particulars just as they did before any act was performed in relation thereto.

An action for money had and received lies to recover back money paid on a contract, the consideration of which has failed. As a general rule, if one buys the land of another, to which the latter is supposed to have a good title, and, in consequence of facts unknown alike to both parties, he has no title at all, equity will cancel the transaction and cause the purchase money to be 19 restored to the buyer, putting both parties in status quo. Thus, on both local and foreign legal principles, the return by DBP to respondent spouses of the purchase price, plus corresponding interest thereon, is ineluctably called for. Petitioner likewise contends that the trial court and respondent Court of Appeals erred in ordering the reimbursement of taxes and the cost of the relocation survey, there being no factual or legal basis therefor. It argues that private respondents merely submitted a "list of damages" allegedly incurred by them, and not official receipts of expenses for taxes and said survey. Furthermore, the same list has allegedly not been identified or even presented at any stage of the proceedings, since it was vigorously objected to by DBP. Contrary to the claim of petitioner, the list of damages was presented in the trial court and was correspondingly marked as 20 "Exhibit P." The said exhibit was, thereafter, admitted by the trial court but only as part of the testimonial evidence for private 21 respondents, as stated in its Order dated August 16, 1988. However, despite that admission of the said list of damages as evidence, we agree with petitioner that the same cannot constitute sufficient legal basis for an award of P4,000.00 and P7,980.00 as reimbursement for land taxes and expenses for the relocation survey, respectively. The list of damages was prepared extrajudicially by respondent spouses by themselves without any supporting receipts as bases thereof or to substantiate the same. That list, per se, is necessarily self-serving and, on that account, should have been declared inadmissible in evidence as the factum probans. In order that damages may be recovered, the best evidence obtainable by the injured party must be presented. Actual or compensatory damages cannot be presumed, but must be duly proved, and so proved with a reasonable degree of certainty. A court cannot rely on speculation, conjecture or guesswork as to the fact and amount of damages, but must depend upon competent proof that they have been suffered and on evidence of the actual amount thereof. If the proof is flimsy and 22 unsubstantial, no damages will be awarded. Turning now to the issue of whether or not private respondents should be made to pay petitioner their loan obligation amounting to P118,540.00, we answer in the affirmative. In its legal context, the contract of loan executed between the parties is entirely different and discrete from the deed of sale they entered into. The annulment of the sale will not have an effect on the existence and demandability of the loan. One who has 23 received money as a loan is bound to pay to the creditor an equal amount of the same kind and quality. The fact that the annulment of the sale will also result in the invalidity of the mortgage does not have an effect on the validity and efficacy of the principal obligation, for even an obligation that is unsupported by any security of the debtor may also be enforced by means of an ordinary action. Where a mortgage is not valid, as where it is executed by one who is not the owner of the 24 25 26 property, or the consideration of the contract is simulated or false, the principal obligation which it guarantees is not thereby rendered null and void. That obligation matures and becomes demandable in accordance with the stipulations pertaining to it. Under the foregoing circumstances, what is lost is only the right to foreclose the mortgage as a special remedy for satisfying or settling the indebtedness which is the principal obligation. In case of nullity, the mortgage deed remains as evidence or proof of a 27 personal obligation of the debtor, and the amount due to the creditor may be enforced in an ordinary personal action. It was likewise incorrect for the Court of Appeals to deny the claim of petitioner for payment of the loan on the ground that it failed to present the promissory note therefor. While respondent court also made the concession that its judgment was accordingly without prejudice to the filing by petitioner of a separate action for the collection of that amount, this does not detract from the adverse effects of that erroneous ruling on the proper course of action in this case. The fact is that a reading of the mortgage contract executed by respondent spouses in favor of petitioner, dated March 17, 1982, will readily show that it embodies not only the mortgage but the complete terms and conditions of the loan agreement as well. The provisions of said contract, specifically paragraphs 16 and 28 thereof, are so precise and clear as to thereby render unnecessary the introduction of the promissory note which would merely serve the same purpose. Furthermore, respondent Celebrada Mangubat expressly acknowledged in her testimony that she and her husband are indebted 29 to petitioner in the amount of P118,000.00, more or less. Admissions made by the parties in the pleadings or in the course of the trial or other proceedings do not require proof and can not be contradicted unless previously shown to have been made 30 through palpable mistake. Thus, the mortgage contract which embodies the terms and conditions of the loan obligation of respondent spouses, as well as respondent Celebrada Mangubat's admission in open court, are more than adequate evidence to sustain petitioner's claim for payment of private respondents' aforestated indebtedness and for the adjudication of DBP's claim therefor in the very same action now before us.
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It is also worth noting that the adjustment and allowance of petitioner's demand by counterclaim or set-off in the present action, rather than by another independent action, is favored or encouraged by law. Such a practice serves to avoid circuitry of action, multiplicity of suits, inconvenience, expense, and unwarranted consumption of the time of the court. The trend of judicial 31 decisions is toward a liberal extension of the right to avail of counterclaims or set-offs. The rules on counterclaim are designed to achieve the disposition of a whole controversy of the conflicting claims of interested parties at one time and in one action, provided all parties can be brought before the court and the matter decided without 32 prejudicing the rights of any party. WHEREFORE, the judgment appealed from is hereby MODIFIED, by deleting the award of P11,980.00 as reimbursement for taxes and expenses for the relocation survey, and ordering respondent spouses Celebrada and Abner Mangubat to pay petitioner Development Bank of the Philippines the amount of P118,540.00, representing the total amount of the loan released to them, with interest of 15% per annum plus charges and other expenses in accordance with their mortgage contract. In all other respects, the said judgment of respondent Court of Appeals is AFFIRMED. SO ORDERED. Narvasa, C.J., Puno, Mendoza and Francisco, JJ., concur. Footnotes 1 Justice Cezar D. Francisco, ponente, with Justices Pedro A. Ramirez and Pacita Caizares-Nye, concurring. 2 Original Record, 6. 3 Ibid., 90. 4 Civil Case No. RTC 83-152, Regional Trial Court, Branch 22, Naga City; Judge Angel S. Malaya, presiding. 5 Ibid., 1-5. 6 Ibid., 9-17. These are alleged as defenses, incorporated by reference in the counterclaims, and sought as reliefs by DBP in its answer (Original Record, 9-16). 7 Ibid., 156-164. 8 Rollo, CA-G.R. CV No. 28311, 35-C. 9 Rollo, 26-40. 10 Ibid., 41. 11 Ibid., 17. 12 Tolentino, A.M., Commentaries and Jurisprudence on the Civil Code of the Philippines, Vol. IV, [1973], 594, citing Perez, Gonzales & Alguer: 1-11 Enneccerus, Kipp & Wolff 364-366; 3 Von Tuhr 311; 3 Fabres 231. 13 Labrador, et al. vs. De los Santos, et al., 66 Phil. 579 (1938); Castro, et al. vs. Orpiano, et al., 90 Phil. 491 (1951). 14 128 US 26, 9 S Ct, 5, 32 L ed 342. 15 Wolfinger vs. Thomas, et al., 22 SD 57, 115 NW 100. 16 Robinson, et al. vs. Bressler, et al., 122 Neb 461, 240 NW 564, 90 ALR 600; Davis vs. Lee, et al., 52 Wash 330, 100 P 752. 17 Tate vs. Gaines, 25 Okla 141, 105 P 193. 18 17 Am. Jur. 2d, Contracts, 845. 19 Lee vs. Laprade, 106 Va 594, 56 SE 719; 77 Am. Jur. 2d, Mistakes as to Facts, 241. 20 Original Record, 93. 21 Ibid., 97.

22 Ching Sui Yong vs. Intermediate Appellate Court, et al., G.R. No. 64398, November 6, 1990, 191 SCRA 187. 23 Article 1953, Civil Code. 24 Article 2085, [2], id. 25 Articles 1345 and 1352, id. 26 Article 1353, id. 27 Compaia General de Tabacos de Filipinas vs. Jeanjaquet, 12 Phil. 195 (1908)l; Lozano vs. Tan Suico, 23 Phil. 16 (1912); Lim Julian vs. Lutero, et al., 49 Phil. 703 (1926). 28 Exhibit 2; Rollo, 104-108. 29 T.S.N., August 27, 1985, 36-37; December 16, 1985, 35. 30 Section 2, Rule 129, Rules of Court. 31 Am. Jur. 2d, Counterclaim, 237-238, citing Parmelee vs. Chicago Eye Shield Co. (CA8Mo) 157 F2d 582,168 ALR 1130; Merchants National Bank of Los Angeles vs. Clark-Parker Co., et al., 215 Cal. 296, 9 P2d 826, 81 ALR 778. 32 Kuenzel vs. Universal Carloading and Distributing Co., Inc. (1939) 29 F. Supp. 407.

The Lawphil Project - Arellano Law Foundation

Republic of the Philippines SUPREME COURT Manila EN BANC G.R. No. L-15645 January 31, 1964

PAZ P. ARRIETA and VITALIADO ARRIETA, plaintiffs-appellees, vs. NATIONAL RICE AND CORN CORPORATION, defendant-appellant, MANILA UNDERWRITERS INSURANCE CO., INC., defendant-appellee. Teehankee and Carreon for plaintiffs-appellees. The Government Corporate Counsel for defendant-appellant. Isidro A. Vera for defendant-appellee. REGALA, J.: This is an appeal of the defendant-appellant NARIC from the decision of the trial court dated February 20, 1958, awarding to the plaintiffs-appellees the amount of $286,000.00 as damages for breach of contract and dismissing the counterclaim and third party complaint of the defendant-appellant NARIC. In accordance with Section 13 of Republic Act No. 3452, "the National Rice and Corn Administration (NARIC) is hereby abolished and all its assets, liabilities, functions, powers which are not inconsistent with the provisions of this Act, and all personnel are transferred "to the Rice and Corn Administration (RCA). All references, therefore, to the NARIC in this decision must accordingly be adjusted and read as RCA pursuant to the aforementioned law. On May 19, 1952, plaintiff-appellee participated in the public bidding called by the NARIC for the supply of 20,000 metric tons of Burmese rice. As her bid of $203.00 per metric ton was the lowest, she was awarded the contract for the same. Accordingly, on July 1, 1952, plaintiff-appellee Paz P. Arrieta and the appellant corporation entered into a Contract of Sale of Rice, under the terms of which the former obligated herself to deliver to the latter 20,000 metric tons of Burmess Rice at $203.00 per metric ton, CIF Manila. In turn, the defendant corporation committed itself to pay for the imported rice "by means of an irrevocable, confirmed and assignable letter of credit in U.S. currency in favor of the plaintiff-appellee and/or supplier in Burma, immediately." Despite the commitment to pay immediately "by means of an irrevocable, confirmed and assignable Letter of Credit," however, it was only on July 30, 1952, or a full month from the execution of the contract, that the defendant corporation,

thru its general manager, took the first to open a letter of credit by forwarding to the Philippine National Bank its Application for Commercial Letter Credit. The application was accompanied by a transmittal letter, the relevant paragraphs of which read: In view of the fact that we do not have sufficient deposit with your institution with which to cover the amount required to be deposited as a condition for the opening of letters of credit, we will appreciate it if this application could be considered special case. We understand that our supplier, Mrs. Paz P. Arrieta, has a deadline to meet which is August 4, 1952, and in order to comply therewith, it is imperative that the L/C be opened prior to that date. We would therefore request your full cooperation on this matter. On the same day, July 30, 1952, Mrs. Paz P. Arrieta thru counsel, advised the appellant corporation of the extreme necessity for the immediate opening of the letter credit since she had by then made a tender to her supplier in Rangoon, Burma, "equivalent to 5% of the F.O.B. price of 20,000 tons at $180.70 and in compliance with the regulations in Rangoon this 5% will be confiscated if the required letter of credit is not received by them before August 4, 1952." On August 4, 1952, the Philippine National Bank informed the appellant corporation that its application, "for a letter of credit for $3,614,000.00 in favor of Thiri Setkya has been approved by the Board of Directors with the condition that marginal cash deposit be paid and that drafts are to be paid upon presentment." (Exh. J-pl.; Exh. 10-def., p. 19, Folder of Exhibits). Furthermore, the Bank represented that it "will hold your application in abeyance pending compliance with the above stated requirement." As it turned out, however, the appellant corporation not in any financial position to meet the condition. As matter of fact, in a letter dated August 2, 1952, the NARIC bluntly confessed to the appellee its dilemma: "In this connection, please be advised that our application for opening of the letter of credit has been presented to the bank since July 30th but the latter requires that we first deposit 50% of the value of the letter amounting to aproximately $3,614,000.00 which we are not in a position to meet." (Emphasis supplied. Exh. 9-Def.; Exh. 1-Pe., p. 18, Folder of Exhibits) Consequently, the credit instrument applied for was opened only on September 8, 1952 "in favor of Thiri Setkya, Rangoon, Burma, and/or assignee for $3,614,000.00," (which is more than two months from the execution of the contract) the party named by the appellee as beneficiary of the letter of credit.1wph1.t As a result of the delay, the allocation of appellee's supplier in Rangoon was cancelled and the 5% deposit, amounting to 524,000 kyats or approximately P200,000.00 was forfeited. In this connection, it must be made of record that although the Burmese authorities had set August 4, 1952, as the deadline for the remittance of the required letter of credit, the cancellation of the allocation and the confiscation of the 5% deposit were not effected until August 20, 1952, or, a full half month after the expiration of the deadline. And yet, even with the 15-day grace, appellant corporation was unable to make good its commitment to open the disputed letter of credit. The appellee endeavored, but failed, to restore the cancelled Burmese rice allocation. When the futility of reinstating the same became apparent, she offered to substitute Thailand rice instead to the defendant NARIC, communicating at the same time that the offer was "a solution which should be beneficial to the NARIC and to us at the same time." (Exh. X-Pe., Exh. 25Def., p. 38, Folder of Exhibits). This offer for substitution, however, was rejected by the appellant in a resolution dated November 15, 1952. On the foregoing, the appellee sent a letter to the appellant, demanding compensation for the damages caused her in the sum of $286,000.00, U.S. currency, representing unrealized profit. The demand having been rejected she instituted this case now on appeal. At the instance of the NARIC, a counterclaim was filed and the Manila Underwriters Insurance Company was brought to the suit as a third party defendant to hold it liable on the performance bond it executed in favor of the plaintiff-appellee. We find for the appellee. It is clear upon the records that the sole and principal reason for the cancellation of the allocation contracted by the appellee herein in Rangoon, Burma, was the failure of the letter of credit to be opened with the contemplated period. This failure must, therefore, be taken as the immediate cause for the consequent damage which resulted. As it is then, the disposition of this case depends on a determination of who was responsible for such failure. Stated differently, the issue is whether appellant's failure to open immediately the letter of credit in dispute amounted to a breach of the contract of July 1, 1952 for which it may be held liable in damages. Appellant corporation disclaims responsibility for the delay in the opening of the letter of credit. On the contrary, it insists that the fault lies with the appellee. Appellant contends that the disputed negotiable instrument was not promptly secured because the appellee , failed to seasonably furnish data necessary and required for opening the same, namely, "(1) the amount of the letter of credit, (2) the person, company or corporation in whose favor it is to be opened, and (3) the place and bank where it may be negotiated." Appellant would have this Court believe, therefore, that had these informations been forthwith furnished it, there would have been no delay in securing the instrument. Appellant's explanation has neither force nor merit. In the first place, the explanation reaches into an area of the proceedings into which We are not at liberty to encroach. The explanation refers to a question of fact. Nothing in the record suggests any

arbitrary or abusive conduct on the part of the trial judge in the formulation of the ruling. His conclusion on the matter is sufficiently borne out by the evidence presented. We are denied, therefore, the prerogative to disturb that finding, consonant to the time-honored tradition of this Tribunal to hold trial judges better situated to make conclusions on questions of fact. For the record, We quote hereunder the lower court's ruling on the point: The defense that the delay, if any in opening the letter of credit was due to the failure of plaintiff to name the supplier, the amount and the bank is not tenable. Plaintiff stated in Court that these facts were known to defendant even before the contract was executed because these facts were necessarily revealed to the defendant before she could qualify as a bidder. She stated too that she had given the necessary data immediately after the execution of Exh. "A" (the contract of July 1, 1952) to Mr. GABRIEL BELMONTE, General Manager of the NARIC, both orally and in writing and that she also pressed for the opening of the letter of credit on these occasions. These statements have not been controverted and defendant NARIC, notwithstanding its previous intention to do so, failed to present Mr. Belmonte to testify or refute this. ... Secondly, from the correspondence and communications which form part of the record of this case, it is clear that what singularly delayed the opening of the stipulated letter of credit and which, in turn, caused the cancellation of the allocation in Burma, was the inability of the appellant corporation to meet the condition importation by the Bank for granting the same. We do not think the appellant corporation can refute the fact that had it been able to put up the 50% marginal cash deposit demanded by the bank, then the letter of credit would have been approved, opened and released as early as August 4, 1952. The letter of the Philippine National Bank to the NARIC was plain and explicit that as of the said date, appellant's "application for a letter of credit ... has been approved by the Board of Directors with the condition that 50% marginal cash deposit be paid and that drafts are to be paid upon presentment." (Emphasis supplied) The liability of the appellant, however, stems not alone from this failure or inability to satisfy the requirements of the bank. Its culpability arises from its willful and deliberate assumption of contractual obligations even as it was well aware of its financial incapacity to undertake the prestation. We base this judgment upon the letter which accompanied the application filed by the appellant with the bank, a part of which letter was quoted earlier in this decision. In the said accompanying correspondence, appellant admitted and owned that it did "not have sufficient deposit with your institution (the PNB) with which to cover the amount required to be deposited as a condition for the opening of letters of credit. ... . A number of logical inferences may be drawn from the aforementioned admission. First, that the appellant knew the bank requirements for opening letters of credit; second, that appellant also knew it could not meet those requirement. When, therefore, despite this awareness that was financially incompetent to open a letter of credit immediately, appellant agreed in paragraph 8 of the contract to pay immediately "by means of an irrevocable, confirm and assignable letter of credit," it must be similarly held to have bound itself to answer for all and every consequences that would result from the representation. aptly observed by the trial court: ... Having called for bids for the importation of rice involving millions, $4,260,000.00 to be exact, it should have a certained its ability and capacity to comply with the inevitably requirements in cash to pay for such importation. Having announced the bid, it must be deemed to have impliedly assured suppliers of its capacity and facility to finance the importation within the required period, especially since it had imposed the supplier the 90-day period within which the shipment of the rice must be brought into the Philippines. Having entered in the contract, it should have taken steps immediately to arrange for the letter of credit for the large amount involved and inquired into the possibility of its issuance. In relation to the aforequoted observation of the trial court, We would like to make reference also to Article 11 of the Civil Code which provides: Those who in the performance of their obligation are guilty of fraud, negligence, or delay, and those who in any manner contravene the tenor thereof, are liable in damages. Under this provision, not only debtors guilty of fraud, negligence or default in the performance of obligations a decreed liable; in general, every debtor who fails in performance of his obligations is bound to indemnify for the losses and damages caused thereby (De la Cruz Seminary of Manila, 18 Phil. 330; Municipality of Moncada v. Cajuigan, 21 Phil. 184; De la Cavada v. Diaz, 37 Phil. 982; Maluenda & Co. v. Enriquez, 46 Phil. 916; Pasumil v. Chong, 49 Phil. 1003; Pando v. Gimenez, 54 Phil. 459; Acme Films v. Theaters Supply, 63 Phil. 657). The phrase "any manner contravene the tenor" of the obligation includes any illicit act which impairs the strict and faithful fulfillment of the obligation or every kind or defective performance. (IV Tolentino, Civil Code of the Philippines, citing authorities, p. 103.) The NARIC would also have this Court hold that the subsequent offer to substitute Thailand rice for the originally contracted Burmese rice amounted to a waiver by the appellee of whatever rights she might have derived from the breach of the contract. We disagree. Waivers are not presumed, but must be clearly and convincingly shown, either by express stipulation or acts admitting no other reasonable explanation. (Ramirez v. Court of Appeals, 52 O.G. 779.) In the case at bar, no such intent to waive has been established. We have carefully examined and studied the oral and documentary evidence presented in this case and upon which the lower court based its award. Under the contract, the NARIC bound itself to buy 20,000 metric tons of Burmese rice at "$203.00 U.S. Dollars per metric ton, all net shipped weight, and all in U.S. currency, C.I.F. Manila ..." On the other hand, documentary and other evidence establish with equal certainty that the plaintiff-appellee was able to secure the contracted commodity at the cost

price of $180.70 per metric ton from her supplier in Burma. Considering freights, insurance and charges incident to its shipment here and the forfeiture of the 5% deposit, the award granted by the lower court is fair and equitable. For a clearer view of the equity of the damages awarded, We reproduce below the testimony of the appellee, adequately supported by the evidence and record: Q. Will you please tell the court, how much is the damage you suffered? A. Because the selling price of my rice is $203.00 per metric ton, and the cost price of my rice is $180.00 We had to pay also $6.25 for shipping and about $164 for insurance. So adding the cost of the rice, the freight, the insurance, the total would be about $187.99 that would be $15.01 gross profit per metric ton, multiply by 20,000 equals $300,200, that is my supposed profit if I went through the contract. The above testimony of the plaintiff was a general approximation of the actual figures involved in the transaction. A precise and more exact demonstration of the equity of the award herein is provided by Exhibit HH of the plaintiff and Exhibit 34 of the defendant, hereunder quoted so far as germane. It is equally of record now that as shown in her request dated July 29, 1959, and other communications subsequent thereto for the opening by your corporation of the required letter of credit, Mrs. Arrieta was supposed to pay her supplier in Burma at the rate of One Hundred Eighty Dollars and Seventy Cents ($180.70) in U.S. Currency, per ton plus Eight Dollars ($8.00) in the same currency per ton for shipping and other handling expenses, so that she is already assured of a net profit of Fourteen Dollars and Thirty Cents ($14.30), U.S., Currency, per ton or a total of Two Hundred and Eighty Six Thousand Dollars ($286,000.00), U.S. Currency, in the aforesaid transaction. ... Lastly, herein appellant filed a counterclaim asserting that it has suffered, likewise by way of unrealized profit damages in the total sum of $406,000.00 from the failure of the projected contract to materialize. This counterclaim was supported by a cost study made and submitted by the appellant itself and wherein it was illustrated how indeed had the importation pushed thru, NARIC would have realized in profit the amount asserted in the counterclaim. And yet, the said amount of P406,000.00 was realizable by appellant despite a number of expenses which the appellee under the contract, did not have to incur. Thus, under the cost study submitted by the appellant, banking and unloading charges were to be shouldered by it, including an Import License Fee of 2% and superintendence fee of $0.25 per metric ton. If the NARIC stood to profit over P400 000.00 from the disputed transaction inspite of the extra expenditures from which the herein appellee was exempt, we are convicted of the fairness of the judgment presently under appeal. In the premises, however, a minor modification must be effected in the dispositive portion of the decision appeal from insofar as it expresses the amount of damages in U.S. currency and not in Philippine Peso. Republic Act 529 specifically requires the discharge of obligations only "in any coin or currency which at the time of payment is legal tender for public and private debts." In view of that law, therefore, the award should be converted into and expressed in Philippine Peso. This brings us to a consideration of what rate of exchange should apply in the conversion here decreed. Should it be at the time of the breach, at the time the obligation was incurred or at the rate of exchange prevailing on the promulgation of this decision. In the case of Engel v. Velasco & Co., 47 Phil. 115, We ruled that in an action for recovery of damages for breach of contract, even if the obligation assumed by the defendant was to pay the plaintiff a sum of money expressed in American currency, the indemnity to be allowed should be expressed in Philippine currency at the rate of exchange at the time of the judgment rather than at the rate of exchange prevailing on the date of defendant's breach. This ruling, however, can neither be applied nor extended to the case at bar for the same was laid down when there was no law against stipulating foreign currencies in Philippine contracts. But now we have Republic Act No. 529 which expressly declares such stipulations as contrary to public policy, void and of no effect. And, as We already pronounced in the case of Eastboard Navigation, Ltd. v. Juan Ysmael & Co., Inc ., G.R. No. L-9090, September 10, 1957, if there is any agreement to pay an obligation in a currency other than Philippine legal tender, the same is null and void as contrary to public policy (Republic Act 529), and the most that could be demanded is to pay said obligation in Philippine currency "to be measured in the prevailing rate of exchange at the time the obligation was incurred (Sec. 1, idem)." UPON ALL THE FOREGOING, the decision appealed from is hereby affirmed, with the sole modification that the award should be converted into the Philippine peso at the rate of exchange prevailing at the time the obligation was incurred or on July 1, 1952 when the contract was executed. The appellee insurance company, in the light of this judgment, is relieved of any liability under this suit. No pronouncement as to costs. Bengzon, C.J., Padilla, Concepcion, Paredes, Dizon and Makalintal, JJ., concur. Barrera, J., took no part. Reyes, J.B.L., J., reserves his vote.

The Lawphil Project - Arellano Law Foundation

Republic of the Philippines SUPREME COURT Manila

EN BANC G.R. No. L-25245 December 11, 1967

FRANKLIN BAKER COMPANY OF THE PHILIPPINES, petitioner, vs. MAURICIO ALILLANA and WORKMEN'S COMPENSATION COMMISSION, respondents. Paulino Manongdo for petitioner. Paciano C. Villavieja and M.E. Lanzona, Jr. for respondents. BENGZON, J.P., J.: Franklin Baker Co. of the Philippines, a domestic corporation engaged in producing copra, on July 19, 1947 took Mauricio Alillana into employment, as truck loader. In 1956 he was assigned as washer. Four months later, he became shell collector therein, performing duties of this nature: To pick up unshelled coconuts from a moving conveyor; place them in a "caritilla" and hand them to the shellers; four times during the 8-hour work, he and some assistants had to personally rotate the pulley to keep the conveyor running when it gets stuck up by coconut shells. On April 21, 1958, Alillana suffered from pains at the ribs he was found with bronchitis and went on leave. On May 9, 1958, however, he was allowed by the company to resume his work. Starting May 31, 1958, he from time to time complained of cough, with chest and back pains, for which he was treated. Referred for physical and X-ray examinations, on July 6, 1958, his condition was found to be as follows: "Far advanced pulmonary tuberculosis at the left lung, associated with bronchitis." The next day, on July 7, 1958, he retired from the company. Franklin Baker Co. paid him P188.16 under its non-occupational sickness and disability benefit plan for the period from July 7, 1958 to October 29, 1958; and P669.12 as retirements benefits. Alillana subsequently filed a claim for disability compensation under the Workmen's Compensation Act. On February 28, 1963, the Regional Office hearing officer awarded disability benefits. Franklin Baker Co. elevated the case to the Workmen's Compensation Commission. The Workmen's Compensation Commissioner, on October 11, 1963, affirmed the award, slightly reducing the amount to P3,015.06. Section 14 was applied, on temporary total disability, i.e., 60% of his average weekly wage of P27.01, times the maximum of 208 weeks less a brief period when he had "odd-lot" or sporadic employment. On July 25, 1964, Franklin Baker Co. paid said award of P3,015.06. Satisfaction thereof was acknowledge by Alillana in writing (Annex "C" to Petition). Thereafter, on August 10, 1964, alleging continuing disability from his ailment, Alillana filed a motion in the same case for additional compensation. The Workmen's Compensation Commission, on September 16, 1964, ordered a physical examination of Alillana. And on September 7, 1965, after said physical examination by one of the Commission's doctors, finding Alillana still suffering from temporary total disability due to his ailment, the Workmen's Compensation Commission issued an order for additional compensation of P984.94, thus raising the total award to the then statutory maximum of P4,000. Franklin Baker Co. moved for reconsideration. On October 13, 1965, the Workmen's Compensation Commission en banc denied the motion, stating that the period of disability can be extended beyond 208 weeks under Sec. 18 of the Act. Hence, this petition was filed by the Franklin Baker Co., to raise on appeal from the Workmen's Compensation Commission's orders the issue: Does the Workmen's Compensation Commission have power under Sec. 18 to extend the period of disability under Sec. 14 of the Act? Section 14 provides: Sec. 14. Total disability. In case the injury or sickness causes total disability for labor, the employer, during such disability but exclusive of the first three days shall pay to the injured employee a weekly compensation equivalent to sixty per centum of his average weekly wages; but not more than thirty-five pesos nor less than ten pesos per week, except in the case provided for in the next following paragraph. Such weekly payments shall in no case continue after disability has ceased, nor shall they extend over more than two hundred and eight weeks, nor shall the aggregate sum paid as compensation exceed in any case four thousand pesos. But no award of permanent disability shall take effect until after two weeks have elapsed from the date of injury. In Avecilla Building Corporation vs. Workmen's Compensation Commission , L-10668, September 26, 1957, this Court already ruled that said maximum period of 208 weeks can be extended under Section 18, as amended by Republic Act 772: Speaking of this right of the Workmen's Compensation Commissioner to reopen a case already decided by him, it is an innovation introduced by Rep. Act 772, particularly, Sec. 13 thereof, amending Section 18 (last par.) of the original Workmen's Compensation Law, namely, Act 3428. Before amendment, the last paragraph of Section 18 read thus:

"The total compensation prescribed in this and the next preceding section and the total compensation prescribed in sections fourteen and fifteen of this Act shall, together, not exceed the sum of three thousand pesos." As amended, the said last paragraph now reads as follows: "The total compensation prescribed in this and the next preceding section and the total compensation prescribed in sections fourteen and fifteen of this Act, shall, together, not exceed the sum of four thousand pesos: Provided, however, that after the payment has been made for the period specified by the Act in each case, the Workmen's Compensation Commissioner may from time to time cause the examination of the condition of the disabled laborer, with a view to extending, if necessary, the period of compensation which shall not, however, exceed the said amount of four thousand pesos." One change introduced is the increase from P3,000 to P4,000 of the total compensation provided in the original provision. The more important change, however, is that contained in the proviso, which is the last part of the paragraph. This legal provision empowering Workmen's Compensation Boards or Commissioners to reopen a case is contained in the Workmen's Compensation Acts of many of the States of the American union, including the Territory of Hawaii.1awphil.net The reason for this legal provision is explained by Arthur Larson in his authoritative work entitled. The Law of Workmen's Compensation, Vol. 2, as page 330, as follows: "In almost all states, some kind of provision is made for reopening and modifying awards. This provision is a recognition of the obvious fact that, no matter how competent a commission's diagnosis of claimant's condition and earning prospects at the time of hearing may be, that condition may later change markedly for the worse, or may improve, or may even clear up altogether. Under the typical award in the form of periodic payments during a specified maximum period or during disability, the objectives of the legislation are best accomplished if the commission can increase, decrease, revive or terminate payments to correspond to claimant's changed condition. Theoretically, then, commissions ought to exercise perpetual and unlimited jurisdiction to reopen cases as often as necessary to make benefits meet current conditions. But the administrative problem lies in the necessity of preserving the full case records of all claimants that have ever received any kind of award, against the possibility of a future reopening.1awphil.net Moreover, any attempt to reopen a case based on an injury ten or fifteen years old must necessarily encounter awkward problems of proof, because of the long delay and the difficulty of determining the relationship between some ancient injury and a present aggravated disability. Another argument is that insurance carriers would never know that kind of future liabilities they might incur, and would have difficulty in computing appropriate reserves." It will be noticed, however, that while in the several states of the union, the reopening is intended for the benefit of both employer and employee in the sense that, in case of aggravation or deterioration of the disability of the employee, the period of compensation should be extended up to a certain limit, or in case the condition of the employee improves or the disability disappears altogether, the period of compensation is shortened or compensation stopped, our law, under Section 18, is a little one-sided and is all for the benefit of the employee, for the reason that as may be gathered from the proviso, the Commissioner may from time to time cause examination of the condition of the disabled laborer, with a view to extending, if necessary, the period of compensation. In this respect there is room for improvement of the law as to make it more equitable to both parties, labor and management. Furthermore, while in the several states of the American Union, the time within which the Commissioner or Board may reopen a case is limited anywhere from one year to several years, our law contained in the proviso in question, sets no time limit. The disadvantage of making this period within which the case may be reopened, too long, or as in our law, with no limit at all, is touched upon by Larson in the latter part of his commentary, as above-reproduced, namely, that in case such a period is too long, there may be difficulty in completing and preserving the record of the injury, or determining the relationship, if any, between the aggravation or deterioration of the employee's disability and some ancient injury, to say nothing of the fact that insurance companies which are interested in similar cases, by having insured employees of companies against injuries, may find difficulty in adjusting their finances, such as putting up reserve funds to take care of future liabilities. But there is no question that under Section 18 of the Workmen's Compensation Act, as amended, the Commissioner was authorized to reopen the case of Carpeso and to direct that the compensation to him by petitioner be increased or continued. The claim of petitioner that it had not been given an opportunity to traverse the claim that Carpeso's condition had deteriorated, is not supported by the record. 1awphil.net Clearly, therefore, the Workmen's Compensation Commission did not incur in any error in extending to cover beyond 208 weeks the period of Alillana's disability compensation, up to a total of not more than P4,000. Alillana's having signed a satisfaction receipt can not result in waiver; the law does not consider as valid any agreement to receive less compensation than what the worker is entitled to recover under the Act (Sec. 29). WHEREFORE, the appealed order of the Workmen's Compensation Commission are hereby affirmed. No costs. So ordered. Concepcion, C.J., Reyes, J.B.L., Makalintal, Zaldivar, Sanchez, Castro, Angeles and Fernando, JJ., concur.

The Lawphil Project - Arellano Law Foundation Republic of the Philippines SUPREME COURT Manila EN BANC G.R. No. L-14683 May 30, 1961

JOAQUIN QUIMSING, petitioner-appellant, vs. CAPT. ALFREDO LACHICA, Officer-in-Charge of the PC Controlled-Police Dept., Iloilo City; LT. NARCISO ALIO, JR., Actg. Chief of Police of the City of Iloilo; and MAJ. CESAR LUCERO, PC Provincial Commander of the Province of Iloilo, respondents-appellees. Ramon A. Gonzales for petitioner-appellant. The City Fiscal of Iloilo City for respondents-appellees. CONCEPCION, J.: Appeal from a decision of the Court of First Instance of Iloilo dismissing the petition in this case, as well as the counterclaim of respondents herein, without costs. Petitioner Joaquin Quimsing is the owner and manager of a duly licensed cockpit, located in the District of Molo, City of Iloilo. On February 13, 1958, the cockpit was raided by members of the city police force and the Constabulary under the command of Capt. Alfredo Lachica and Lt. Narciso Alio Jr., upon the ground that it was being illegally operated on that day, which was Thursday, not a legal holiday. Quimsing claimed that the cockpit was authorized to operate on Thursday by an ordinance of the City Council of Iloilo, approved on October 31, 1956. This notwithstanding, Capt. Lachica allegedly threatened to raid the cockpit should cockfighting be held therein, thereafter, on Thursdays. Moreover, Quimsing and nine (9) other persons were arrested and then charged in the Municipal Court of Iloilo with a violation of Article 199 of the Revised Penal Code, in relation to sections 2285 and 2286 of the Revised Administrative Code. Quimsing, in turn, commenced the present action, in the Court of First Instance of Iloilo, against Major Cesar Lucero, as the then provincial commander of the Constabulary, and Capt. Alfredo Lachica and Lt. Narciso Alio, Jr., as incumbent PC officer in charge and acting chief of police, respectively, of the Iloilo City Police. In his petition, Quimsing set up two (2) causes of action: one for the recovery from respondents, in their private capacity, of compensatory damages, as well as moral and exemplary damages allegedly sustained in consequence of the raid and arrest effected on February 13, 1958, upon the ground that the same were made illegally and in bad faith, because cockfighting on Thursdays was, it is claimed, authorized by Ordinances Nos. 5 and 58 of the City of Iloilo, in relation to Republic Act No. 938, and because Quimsing was at odds with the city mayor of Iloilo; and another for a writ of preliminary injunction, and, after trial, a permanent injunction, restraining respondents, in their official, capacity, and/or their agents, from stopping the operation of said cockpit on Thursdays and making any arrest in connection therewith. In their answer, respondents alleged that the raid and arrest aforementioned were made in good faith, without malice and in the faithful discharge of their official duties as law enforcing agents, and that, pursuant to the aforementioned provisions of the Revised Penal Code and the Revised Administrative Code, petitioner cannot legally hold cockfighting on Thursdays, despite said ordinances of the City of Iloilo. Respondents, likewise, set up a P150,000 counterclaim for moral and exemplary damages. After due hearing, the Court of First Instance of Iloilo rendered judgment dismissing the petition, as well as respondents' counterclaim. Hence this appeal by petitioner herein, who maintains that: 1. The lower court erred in not disqualifying the city fiscal from representing the respondents-appellees in the first cause of action of the petition where they are sued in their personal capacity; 2. The lower court erred in not disqualifying the city fiscal from asking the invalidity of an ordinance of the City of Iloilo; 3. The lower court erred in declaring Ordinance No. 51 series of 1954, as amended by Ordinance No. 58, series of 1956, of the City of Iloilo as illegal; 4. The lower court erred in not awarding damages to the petitioner. The first three assignments of error are related to petitioner's second cause of action, whereas the fourth assignment of error refers to the first cause of action. Hence, we will begin by considering the last assignment of error. At the outset, we note that the bad faith imputed to respondents herein has not been duly established. In fact, there is no evidence that Major Lucero had previous knowledge of the raid and arrest that his co-respondents intended to make. What is more, petitioner would appear to have included him as respondent merely upon the theory of command responsibility, as

provincial commander of the constabulary in the province and city of Iloilo. However, there is neither allegation nor proof that he had been in any way guilty of fault or negligence in connection with said raid and arrest. As regards Capt. Lachica and Lt. Alio Jr., the records indicate that they were unaware of the city ordinances relieved upon by petitioner herein. Indeed, they appeared to have been surprised when petitioner invoked said ordinances. Moreover, there is every reason to believe that they were earnestly of the opinion, as His Honor the Trial judge was, that cockfighting on Thursdays is, despite the aforementioned ordinances, illegal under Article 199 of the Revised Penal Code, in relation to sections 2285 and 2286 of the Revised Administrative Code. Although petitioner maintains that such opinion is erroneous, the facts of record sufficiently warrant the conclusion that Capt. Lachica and Lt. Alio Jr. had acted in good faith and under the firm conviction that they were faithfully discharging their duty as law enforcing agents. In the light of the foregoing and of the other circumstances surrounding the case, and inasmuch as the assessment of moral and exemplary damages "is left to the discretion of the court, according to the circumstances of each case" (Art. 2216, Civil Code of the Philippines), it is our considered view that respondents herein should not be held liable for said damages. Neither should they be sentenced to pay compensatory damages, the same not having been proven satisfactorily. Hence, the fourth assignment of error is untenable. The first assignment of error is based upon section 64 of the Charter of the City of Iloilo (Commonwealth Act No. 158), pursuant to which the City Fiscal thereof "shall represent the city in all civil cases wherein the city or any officers thereof in his official capacity is a party." Although this section imposes upon the city fiscal the duty to appear in the eases specified, it does not prohibit him from representing city officers sued as private individuals on account of acts performed by them in their official capacity, specially when, as in the case at bar, they claim to have acted in good faith and in accordance with a legal provision, which they earnestly believed, as the lower court believed, should be construed in the manner set forth in their answer. Again, under petitioner's second cause of action, respondents are sued in their official capacity. This fact and the circumstances under which respondents performed the acts involved in the first cause of action sufficiently justified the appearance of the City Fiscal of Iloilo on their behalf. We need not pass upon the merits of the second assignment of error, the same not being essential to the determination of this case, for, regardless of whether or not it is proper for the City Fiscal of Iloilo, as such, to assail the validity of an ordinance thereof, it cannot be denied that respondents herein may do so in their defense. Referring now to the third assignment of error, Article 199 of the Revised Penal Code provides: The penalty of arresto menor or a fine not exceeding 200 pesos, or both, in the discretion of the court, shall be imposed upon: 1. Any person who directly or indirectly participates in cockfights, by betting money or other valuable things, or who organizes cockfights at which bets are made, on a day other than those permitted by law. 2. Any person who directly or indirectly participates in cockfights, by betting money or other valuable things, or organizes such cockfights at a place other than a licensed cockpit. Respondents maintain that this legal provision should construed be in relation to sections 2285 and 2286 of the Revised Administrative Code, reading: SEC. 2285. Restriction upon cockfighting. Cockfighting shall take place only in licensed cockpits and, except as provided n the next succeeding section hereof, only upon legal holidays and for a period of not exceeding three days during the celebration of the local fiesta. No card game or games of chance of any kind shall be permitted on the premises of the cockpit. SEC. 2286. Cockfighting at fairs and carnivals. In provinces where the provincial board resolves that a fair or exposition of agricultural and industrial products of the province, carnival, or any other act which may redound to the promotion of the general interests thereof, shall be held on a suitable date or dates, the council of the municipality in which such fair, exposition or carnival is held may, by resolution of a majority of the council, authorize the cockfighting permitted at a local fiesta to take place for not to exceed three days during said exposition fair, or carnival, if these fall on a date other than that of the local fiesta. Where this action is taken, cockfighting shall not be permitted during the local fiesta unless a legal holiday occurs at such period in which case cockfighting may be permitted upon the holiday. Petitioner assails, however, the applicability of these two (2) provisions to the case at bar, upon the ground that said provisions form part of Chapter 57 of the Revised Administrative Code which chapter is entitled "Municipal Law" governing regular municipalities, not chartered cities, like the City of Iloilo, for, "except as otherwise specially provided", the term "municipality", as used in that Code and in said section 2286, "does not include chartered city, municipal district or other political division" (Section 2, Revised Administrative Code). Petitioner's contention is well-taken but it does not follow therefrom that he was entitled to hold cockfightings on Thursdays. Pursuant to section 21 of Commonwealth Act No. 158, otherwise known as the Charter of the City of Iloilo:

Except as otherwise provided by law, the Municipal Board shall have the following legislative powers . . . to tax, fix the license fee for, and regulate, among others, theatrical performances . . . and places of amusements (par. j) . . . . Moreover, under section 1 of Republic Act No. 938, as amended by Republic Act No. 1224: The municipal or city board or council of each chartered city and the municipal council of each municipality and municipal district shall have the power to regulate or prohibit by ordinance the establishment, maintenance and operation of nightclubs, cabarets, dancing schools, pavilions, cockpits, bars, saloons, bowling alleys, billiard pools, and other similar places of amusements within its territorial jurisdiction:Provided, however, That no such places of amusement mentioned herein shall be established, maintained and/or operated within a radius of two hundred lineal meters in the case of night clubs, cabarets, pavilions, or other similar places, and fifty lineal meters in the case of dancing schools, bars, saloons, billiard pools, bowling alleys, or other similar places, except cockpits, the distance of which shall be left to the discretion of the municipal or city board or council, from any public building, schools, hospitals and churches: Provided, further, That no municipal or city ordinance fixing distances at which such places of amusement may be established or operated shall apply to those already licensed and operating at the time of the enactment of such municipal or city ordinance, nor will the subsequent opening of any public building or other premises from which distances shall be measured prejudice any place of amusement already then licensed and operating, but any such place of amusement established within fifty lineal meters from any school, hospital or church shall be so constructed that the noise coming therefrom shall not disturb those in the school, hospital or church, and, if such noise causes such disturbance then such place of amusement shall not operate during school hours when near a school, or at night when near a hospital, or when there are religious services when near a church: Provided, furthermore, That no minor shall be admitted in any bar, saloon, cabaret, or night club employing hostesses: And provided, finally, That this Act shall not apply to establishments operating by virtue of Commonwealth Act Numbered Four hundred eighty-five nor to any establishment already in operation when Republic Act Numbered Nine hundred seventy-nine took effect. The question for determination is whether the power of the Municipal Board of Iloilo, under section 21 of its charter to "regulate . . . places of amusement", as broadened by Republic Act No. 938, as amended, to include "the power to regulate . . . by ordinance the establishment, maintenance, and operation of . . . cockpits," carries with it the authority to fix the dates on which "cockfighting" may be held. In this connection, it should be noted that said Republic Act No. 938, as amended, applies, not only to "the municipal or city board or council of each chartered city", but, also, to "the municipal council of each municipality or municipal district." Consequently, an affirmative answer to the question adverted to above would necessarily imply, not merely an amendment of sections 2285 and 2286 of the Revised Administrative Code, but, even, a virtual repeal thereof, for then local boards or councils could authorize the holding of cockfighting, not only on legal holidays, but on any day and as often as said boards or councils may deem fit to permit, whether it be during a fair, carnival, or exposition of agricultural and industrial products of the province, or not. Thus, the issue boils down to whether Republic Act No. 938, as amended, gives local governments a blanket authority to permit cockfighting at any time and for as long as said governments may wish it. Upon mature deliberation, we hold that the answer must be in the negative. To begin with, repeals and even amendments by implication are not favored, whereas an affirmative answer would entail a vital amendment, amounting, for all practical purposes, to a repeal, of sections 2285 and 2286 of the Revised Administrative Code. Secondly, grants of power to local governments are to be construed strictly, and doubts in the interpretation thereof should be resolved in favor of the national government and against the political subdivisions concerned. Thirdly, it is a matter of common knowledge that cockfighting is one of the most widespread vices of our population, and that the government has always shown a grave concern over the need of effectively curbing its evil effects. The theory of petitioner herein presupposes that the Republic of the Philippines has completely reversed its position and chosen, instead, to place the matter entirely at the discretion of local governments. We should not, and can not adopt, such premise except upon a clear and unequivocal expression of the will of Congress, which, insofar as said premise is concerned, is not manifest from the language used in Republic Act No. 938, as amended. Lastly, "cockpits" and "cockfighting" are regulated separately by our laws. Thus, section 2243 (i) of the Revised Administrative Code empowers municipal councils "to regulate cockpits". Yet, the authority of said council over "cockfighting" is found in sections 2285 and 2286 of said Code, not in said section 2243 (i). Similarly, Article 199 of the Revised Penal Code punishes, not illegal "cockpits", but "illegal cockfighting". What is more, participation in cockfights "on a day other than those permitted by law", in dealt with in said article separately from participation in cockfights "at a place other than a licensed cockpit." . So, too, the authority of local governments, under Republic Act No. 938, as amended, to "regulate . . . the establishment, maintenance and operation of . . . cockpits", does not necessarily connote the power to regulate "cockfighting", except insofar as the same must take place in a duly licensed "cockpit". Again, the first and second proviso in section 1 of said Act, regulating the distance of cockpits and places of amusement therein mentioned from "any public building, schools, hospitals and churches" and the third proviso of the same section, prohibiting the admission of minors to some of those places of amusement, suggest that the authority conferred in said provision may include the power to determine the location of cockpits, the type or nature of construction used therefor, the conditions to persons therein, the number of cockpits that may be established in each municipality and/or by each operator, the minimum age of the individuals who may be admitted therein, and other matters of similar nature as distinguished from the days on which cockfighting shall be held and the frequency thereof. In short, we are of the opinion that the city ordinances relied upon by petitioner herein, authorizing cockfighting on Thursdays, are invalid. WHEREFORE, the decision appealed from is hereby affirmed, without special pronouncement as to costs. It is so ordered.

Padilla, Bautista Angelo, Labrador, Reyes, J.B.L., Paredes Dizon, De Leon and Natividad, JJ., concur. Bengzon, C.J. and Barrera, J., took no part.

The Lawphil Project - Arellano Law Foundation Republic of the Philippines SUPREME COURT Manila EN BANC G.R. No. L-24022 March 3, 1965

ILOILO PALAY AND CORN PLANTERS ASSOCIATION, INC., ET AL., petitioners, vs. HON. JOSE, Y. FELICIANO, ET AL., respondents. Jose C. Zulueta and Ramon A. Gonzales for petitioners. Office of the Solicitor General for respondents. BAUTISTA ANGELO, J.: On December 26, 1964, Jose Y. Feliciano, Chairman and General Manager of the Rice and Corn Administration, wrote the President of the Philippines urging the immediate importation of 595,400 metric tons of rice, thru a government agency which the President may designate, pursuant to the recommendation of the National Economic Council as embodied in its Resolution No. 70, series of 1964. On December 27, 1964, the President submitted said letter to his cabinet for consideration and on December 28, 1964, the cabinet approved the needed importation. On January 4, 1965, the President designated the Rice and Corn Administration as the government agency authorized to undertake the importation pursuant to which Chairman Jose Y. Feliciano announced an invitation to bid for said importation and set the bidding for February 1, 1965. Considering that said importation is contrary to Republic Act 3452 which prohibits the government from importing rice and that there is no law appropriating funds to finance the same, the Iloilo Palay and Corn Planters Association, Inc., together with Ramon A. Gonzales, in his capacity as taxpayer, filed the instant petition before this Court seeking to restrain Jose Y. Feliciano, in his capacity as Chairman and General Manager of the Rice and Corn Administration, from conducting the bid scheduled on the date abovementioned, and from doing any other act that may result in the contemplated importation until further orders of this Court. For reasons that do not clearly appear, the Secretary of Foreign Affairs and the Auditor General were made corespondents. Pending decision on the merits, petitioners prayed for the issuance of a writ of preliminary injunction, which, in due course, this Court granted upon petitioners' filing a bond in the amount of P50,000.00. This bond having been filed, the writ was issued on February 10, 1965. Respondents, in their answer do not dispute the essential allegations of the petition though they adduced reasons which justify the importation sought to be made. They anchor the validity of the importation on the provisions of Republic Act 2207 which, in their opinion, still stand. It is petitioners' contention that the importation in question being undertaken by the government even if there is a certification by the National Economic Council that there is a shortage in the local supply of rice of such gravity as to constitute a national emergency, is illegal because the same is prohibited by Republic Act 3452 which, in its Section 10, provides that the importation of rice and corn is only left to private parties upon payment of the corresponding taxes. They claim that the Rice and Corn Administration, or any other government agency, is prohibited from doing so. It is true that the section above adverted to leaves the importation of rice and corn exclusively to private parties thereby prohibiting from doing so the Rice and Corn Administration or any other government agency, but from this it does not follow that at present there is no law which permits the government to undertake the importation of rice into the Philippines. And this we say because, in our opinion, the provision of Republic Act 2207 on the matter still stands. We refer to Section 2 of said Act wherein, among other things, it provides that should there be an existing or imminent shortage in the local supply of rice of such gravity as to constitute a national emergency, and this is certified by the National Economic Council, the President of the Philippines may authorize such importation thru any government agency that he may designate. Here there is no dispute that the National Economic Council has certified that there is such shortage present which, because of its gravity, constitutes a national emergency, and acting in pursuance thereof the President lost no time in authorizing, after consulting his cabinet, the General Manager of the Rice and Corn Administration to immediately undertake the needed importation in order to stave off the impending emergency. We find, therefore, no plausible reason why the disputed importation should be prevented as petitioners now desire.

The contention that Republic Act 2207 has already been repealed by Republic Act 3452 is untenable in the light of the divergent provisions obtaining in said two laws. Admittedly, Section 16 of Republic Act 3452 contains a repealing clause which provides: "All laws or parts thereof inconsistent with the provisions of this Act are hereby repealed or modified accordingly." The question may now be asked: what is the nature of this repealing clause ? It is certainly not an express repealing clause because it fails to identify or designate the Act or Acts that are intended to be repealed [ Sutherland, Statutory Construction, (1943) Vol. 1, p. 467]. Rather, it is a clause which predicates the intended repeal upon the condition that a substantial conflict must be found in existing and prior Acts. Such being the case, the presumption against implied repeals and the rule against strict construction regarding implied repeals apply ex proprio vigore. Indeed, the legislature is presumed to know the existing laws so that, if a repeal is intended, the proper step is to so express it [Continental Insurance Co. v. Simpson, 8 F (2d) 439; Weber v. Bailey, 151 Ore. 2188, 51 P (2d) 832; State v. Jackson, 120 W. Va. 521, 199 S.E. 876]. The failure to add a specific repealing clause indicates that the intent was not to repeal any existing law (Crawford, Construction of Statute, 1940 ed., p. 631), unless an irreconcilable inconsistency and repugnancy exist in the terms of the new and old laws. Here there is no such inconsistency. To begin with, the two laws, although with a common objective, refer to different methods applicable to different circumstances. Thus, the total banning of importation under normal conditions as provided for in Republic Act 2207 is one step to achieve the rice and corn sufficiency program of the Administration. The philosophy behind the banning is that any importation of rice during a period of sufficiency or even of a minor shortage will unduly compete with the local producers and depress the local price which may discourage them from raising said crop. On the other hand, a price support program and a partial ban of rice importation as embodied in Republic Act 3452 is another step adopted to attend the sufficiency program. While the two laws are geared towards the same ultimate objective, their methods of approach are different; one is by a total ban of rice importation and the other by a partial ban, the same being applicable only to the government during normal period. There is another area where the two laws find a common point of reconciliation: the normalcy of the time underlying both laws. Thus, with respect to the matter of importation Republic Act 2207 covers three different situations: (1) when the local produce of rice is sufficient to supply local consumption; (2) when the local produce falls short of the supply but the shortage is not enough to constitute a national emergency; and (3) when the shortage, on the local supply of rice is of such gravity as to constitute a national emergency. Under the first two situations, no importation is allowed whether by the government or by the private sector. However, in the case of the third situation, the law authorizes importation, by the government. Republic Act 3452, on the other hand, deals only with situations 1 and 2, but not with. Nowhere in said law can we discern that it covers importation where the shortage in the local supply is of such gravity as to constitute a national emergency. In short, Republic Act 3452 only authorizes importation during normal times, but when there is a shortage in the local supply of such gravity as to constitute a national emergency, we have to turn to Republic Act 2207. These two laws therefore, are not inconsistent and so implied repeal does not ensue. Our view that Republic Act 3452 merely contemplates importation during normal times is bolstered by a consideration of the discussion that took place in Congress of House Bill No. 11511 which was presented in answer to the request of the Chief Executive that he be given a standby power to import rice in the Philippines. On this matter, we quote the following views of Senators Padilla and Almendras: SENATOR PADILLA: But under Republic Act No. 3452 them is a proviso in Sec. 10 thereof "that the Rice and Corn Administration or any government agency is hereby prohibited from importing rice and corn." SENATOR ALMENDRAS: That is under normal conditions. SENATOR PADILLA: "Provided further", it says, "that the importation of rice, and corn is left to private parties upon payment of the corresponding tax." So therefore, the position of the Committee as expressed by the distinguished sponsor, is that Sec. 10 of Republic Act No. 3452 is applicable under normal conditions. SENATOR ALMENDRAS: "Yes". (Senate Debate, June 16, 1964). Much stress is laid on the content of Section 12 of Republic Act 3452 which gives to the President authority to declare a rice and corn emergency any time he deems necessary in the public interest and, during the emergency, to conduct raids, seizure and confiscation of rice and corn hoarded in any private warehouse or bodega subject to constitutional limitations, to support the claim that said Act also bans importation on the part of the government even in case of an emergency. The contention is predicated on a misinterpretation of the import and meaning of said provision. Note that the section refers to an emergency where there is an artificial shortagebecause of the apparent hoarding undertaken by certain unscrupulous dealers or businessmen, and not to an actual serious shortage of the commodity because, if the latter exists, there is really nothing to raid, seize or confiscate, because the situation creates a real national emergency. Congress by no means could have intended under such a situation to deprive the government of its right to import to stave off hunger and starvation. Congress knows that such remedy is worthless as there is no rice to be found in the Philippines. Seizure of rice is only of value in fighting hoarding and profiteering, but such remedy cannot produce the rice needed to solve the emergency. If there is really insufficient rice stocked in the private warehouses and bodegas such confiscatory step cannot remedy an actual emergency, in which case we have to turn to Republic Act 2207. The two laws can therefore be construed as harmonious parts of the legislative expression of its policy to promote a rice and corn program. And if this can be done, as we have shown, it is the duty of this Court to adopt such interpretation that would give effect to both laws. Conversely, in order to effect a repeal by implication, the litter statute must be irreconcilably inconsistent and repugnant to the prior existing law [United States v. Greathouse,. 166 U.S. 601, 41 L. Ed., 1130; In re Phoenix Hotel Co., 13 F.

Supp. 229; Hammond v. McDonald, 32 Cal. App. 187, 89 P (2d) 407; Sutherland, Statutory Construction, supra, p. 462]. The old and the new laws must be absolutely incompatible (Compaia General de Tabacos v. Collector of Customs, 46 Phil. 8). A mere difference in the terms and provisions of the statutes is not sufficient to create a repugnancy between them. There must be such a positive repugnancy between the provisions of the old and the new statutes that they cannot be made to reconcile and stand together (Crawford, Construction of Statute, supra, p. 631). The clearest case possible must first be made before the inference of implied repeal may be drawn [Nagano v. McGrath, 187 F (2d) 759]. Inconsistency is never presumed. Republic Act 3848 entitled "An Act Providing for the Importation of Rice During the Calendar Year Nineteen Hundred Sixty-Four in the Event of Shortage in Local Supply" cannot be given any nullifying value, as it is pretended, simply because Section 6 thereof provides that "except as provided in this Act, no other agency or instrumentality of the Government shall be allowed to purchase rice from abroad." The reason is that it is a mere temporary law effective only for a specific year. As its title reads, it is merely an authority to import rice during the year 1964. The same, therefore, is now functus officio at least on the matter of importation. Neither can petitioners successfully pretend that as Section 4 thereof provides that pending prosecutions for any violation of Republic Acts 2207 and 3452 shall in no way be affected by said Act 3848 the implication is that the aforesaid Acts have already been repealed. That provision is merely a safeguard placed therein in order that the prosecutions already undertaken may not be defeated with the enactment of Republic Act 3848 because the latter provides for penal provisions which call for lesser penalty. The intention is to except them from the rule that penal statutes can be given retroactive effect if favorable to the accused. To further bolster our view that Republic Act 2207 has not been impliedly repealed by Republic Act 3452, we wish to briefly quote hereunder the views expressed by some senators during the discussion of House Bill 11511 already mentioned above. It should be here repeated that said bill was presented to accede to the request of the President for a stand-by power to import in case of emergency in view of the uncertainty of the law, but that during the discussion thereof it was strongly asserted and apparently upheld that such request for authority was not necessary because Republic Act 2207 was still in force. It is probably for this reason that said bill, after having been approved by the Senate, was killed in the conference committee that considered it. These views, while not binding, are of persuasive authority and throw light on the issue relative to the effectivity of Republic Act 2207. SENATOR LIWAG: ... Now Mr. Chairman, is it the sense of the Committee that in the case of emergency, in case of an impending shortage, we can import rice under the provisions of R.A. No. 2207? SENATOR ALMENDRAS: Yes, that is what we mean, your Honor, in this paragraph (c), Section 2, page 2, that when we say "under the provisions of existing law," we are referring to R.A. No. 2207. xxx xxx xxx

SENATOR PADILLA: I notice, Mr. Senator, that Section 2 paragraph (c) of the amendment by substitution reads: Importation of rice and/or corn should be resorted to only in cases of extreme and under the provisions of existing law. I suppose that the existing laws referred to are Republic Act No. 2207 and Republic Act No. 3452. Does this section in the proposed bill by substitution recognize the continued existence of the pertinent provisions of Republic Act No. 2207 and Republic Act No. 3452 on rice importation ? SENATOR ALMENDRAS: Yes, that is the reason, Your Honor, why we struck out the stand-by power on the part of the President to import rice. xxx xxx xxx

SENATOR ALMENDRAS: The position of your Committee, Your Honor, because of the existing law that is, Republic Act No. 3452 and Republic Act No. 2207 that is the reason your Committee eliminated that stand-by power of the President to import rice. Because you know, Your Honor, what is the use of that stand-by power, inasmuch as under Republic Act No. 3452 and Republic Act No. 2207 the President can designate any government agency to import rice? SENATOR PADILLA: Well, it is good to make that clear because in the decision of the Supreme Court, as I said, there was no clear-cut holding as to the possible co-existence or implied repeal between these two Acts. SENATOR ALMENDRAS: Yes, Your Honor, but the gentleman from Nueva Ecija, Senator Liwag, informed me that Republic Act No. 2207 has never been repealed. SENATOR PADILLA: Well, I also concur with that view, but we want to make that clear ... . SENATOR PADILLA: "Provided, further," it says, "That the importation of rice and corn is left to private parties upon payment of the corresponding taxes." So, therefore, the position of the Committee, as expressed by the distinguished sponsor is that Sec. 10 of Republic Act No. 3452 is applicable under normal conditions. SENATOR ALMENDRAS: Yes. SENATOR PADILLA: So, both provisions of law are in existence.

SENATOR ALMENDRAS: Yes. SENATOR PADILLA: One is not repealed by the other. xxx xxx xxx

SENATOR TOLENTINO: Mr. President, there are two views already expressed on whether Republic Act No. 2207 has been repealed by Republic Act No. 3452. One view sustains the theory that there has been a repeal of Republic Act No. 2207 by Republic Act No. 3452 insofar as rice importation is concerned. The other view is that there is no repeal. The Supreme Court does not state clearly which side prevails. I take the view that the two laws can be reconciled ... . Now, Mr. President, reading those two provisions together, I maintain that they are not totally repugnant to each other, that it is possible for them to stand together except on certain points: First, is importation in case of a national emergency certified by the National Economic Council permissible? By reading the two provisos together I would say yes because there is nothing in the proviso contained in Republic Act No. 3452 which would be inconsistent with importation during a shortage amounting to a national emergency. Another circumstance that strengthens our view is that when said House Bill No. 11511 was finally approved by the Senate, it carried a clause which expressly repeals, among others, Republic Act No. 2207 (Section 14), but which bill, as already said, was later killed in the conference committee. This attitude clearly reveals that Congress preferred to fall back on Republic Act 2207 with regard to future importations. Anent the point raised relative to the lack of necessary appropriation to finance the importation in question, suffice it to state that under Republic Act 663 the National Rice and Corn Corporation is authorized to borrow, raise and secure the money that may be necessary to carry out its objectives. We refer to Section 3 (e) of said Act which empowers said corporation to secure money and to encumber any property it has as a guaranty, and Republic Act No. 3452, which creates the Rice and Corn Administration, transferred its functions and powers to the latter, including the power to borrow money under Section 3(e). This provision gives the RCA enough power with which to finance the importation in question. WHEREFORE, petition is dismissed. The writ of preliminary injunction issued by this Court is hereby dissolved. Costs against petitioners. Paredes, Regala, Makalintal, Bengzon, J.P., and Zaldivar, JJ., concur.

Separate Opinions REYES, J.B.L., J., dissenting: It is regrettable that in their effort to uphold the Government's power to import rice, under Section 2 of Republic Act 2207, the majority opinion seems to have overlooked that the repeal of statutes is primarily a matter of legislative intention; and that on its face, Republic Act No. 3452 was plainly intended to supersede the prior law, Republic Act No. 2207. The specific issue, in brief, is whether the extraordinary emergency power to import rice and corn, granted to the President by Section 2 of Republic Act 2207, may still be considered as subsisting at present, notwithstanding the terms of Section 10 of the subsequent Republic Act No. 3452. For convenience, we present in parallel columns the specific provisions of the respective acts:

REP. ACT NO. 2207 (1959) SEC. 2. Prohibition. It shall be unlawful for any person, association, corporation or government agency to import rice and corn into any point in the Philippines: Provided, however, That should there be an existing or imminent shortage in the local supply of the abovementioned commodities of such gravity as to constitute a national emergency, upon certification to this effect by the National Economic Council, based on the studies of the Office of

REP. ACT NO. 3452 (1962) SEC. 10. ... Provided, that the Rice and Corn Administration or any other government agency is hereby prohibited from importing rice and corn: Provided, further, That the importation of rice and corn is left to private parties upon payment of the corresponding taxes. (Emphasis Supplied)

Statistical Coordination of said body, the President of the Philippines may authorize the importation of the commodities,through any government agencythat he may designate in such quantities as the National Economic Council may determine necessary to cover the shortage, subject to the taxes, duties and/or special charges as now provided by law:Provided, further, That contracts for such importation shall be only on straightsales basis, and awarded only after a public bidding, with sealed bids. (Emphasis supplied)

It is apparent at first sight that the two provisions contradict each other. First, in policy; because under Republic Act No. 2207, the general rule is that no person or entity, public or private, shall import rice and corn; while under the later Act, Republic Act No. 3452, the importation of rice and corn is left to private parties, with no restriction other than the payment of tax. Second, in procedure; under Republic Act 2207, the President, in case of emergency, may import rice and corn in quantities certified by the National Economic Council as necessary,through any government agency that he may designate; while by Act 3452 any government agency is prohibited from importing rice and corn, said prohibition being express, absolute, total, and unconditional. Not only this, but violation of the prohibition is sanctioned by a P10,000 fine and imprisonment for not more than 5 years (sec. 15, Act 3452). We cannot see how the majority opinion can contend that the presidential power to make importations of rice and corn still subsists, in view of the unqualified terms of Republic Act 3452. If any government agency is prohibited from importing rice and corn by the later law, and the violation of the prohibition is penalized by fine and imprisonment, in what manner can the President make the importation? He cannot do so directly, since Act 2207 specifically requires that it be done "through any government agency". How, then, may he import? It is unnecessary to resort to legal gymnastics in order to realize why this must be so. Suffice it to note that the Administration's power to import rice in certified emergencies under Act 2207 was but a mere corollary to the total ban on rice and corn imports under that Act, and the existence of such exceptional import power necessarily depended on the continuation of that total prohibition.1wph1.t Section 2 of Republic Act No. 2207 clearly shows how intimate was this dependence between the emergency importing authority granted to the government and the maintenance of the normal non-import policy. SEC. 2. Prohibition: It shall be unlawful for any person, association, corporation or government agency to import rice and corn into any point in the Philippines, provided, however, that should there be an existing or imminent shortage in the local supply of the above-mentioned commodities, of such gravity as to constitute a national emergency, upon certification to this effect by the National Economic Council , based on the studies of the Office of Statistical Coordination of said body, the President of the Philippines may authorize the importation of these commodities, through any government agency that he may designate, in such quantities as the National Economic Council may determine necessary to cover the shortage, subject to taxes, duties and/or special charges as now provided by law; provided, further, that contracts for such importation shall be only on straight sales basis, and awarded only after a public bidding, with sealed bids. (Emphasis supplied) So closely linked were the policy and the emergency import power that the latter was not even set apart in a section. Therefore, repeal of the absolute ban on imports, prescribed in the opening portion of the section quoted, necessarily entails the disappearance of the emergency power to import rice and corn established by the later part of the same legal provision. Where the basic rule disappears, the exception thereto must necessarily cease to operate, since the exception becomes automatically functus officio for lack of basis. The total banning of cereal imports logically, under Act 2207, meant that whenever the domestic crop became insufficient to satisfy the demand for rice and corn, the latter had to be brought from outside to fill the gap; and the legislature decided (in Act 2207) that it should be done through governmental agencies. But under Republic Act 3452, the total prohibition to import disappeared, and private parties were authorized to bring in the cereals at any time; hence, the exceptional importing power of the Government lost all reason for its existence, because the private imports allowed by Act 3452 were contemplated and intended to make up for the difference between demand and supply, without necessity of government intervention. In truth, the expression in Section 10 of Act 3452 SEC. 10. ... Provided, That the Rice and Corn Administration or any other government agency is hereby prohibited from importing rice and corn; Provided, further, That the importation of rice and corn is left to private parties upon payment of the corresponding taxes. (Emphasis supplied) can only mean that the Administration must desist from importing, and leave to private parties the task of bringing such cereals from without in order to make up for whatever shortages in production should occur.

That only private parties, and not the government, can import the cereals finds confirmation in the legislative journals. In the Congressional Record, No. 48, March 30, 1962, page 1360, containing the transcript of the Senate debates on the bill that later became Republic Act No. 3452, the following appears: CUENCO AMENDMENT Mr. CUENCO. Mr. Speaker, on page 3, line 16, change the period (.) to colon and add the following: PROVIDED, THAT THE RICE AND CORN ADMINISTRATION OR ANY OTHER GOVERNMENT AGENCY IS HEREBY PROHIBITED FROM IMPORTING RICE AND CORN: PROVIDED, FURTHER, THAT THE IMPORTATION OF RICE AND CORN IS LEFT TO PRIVATE PARTIES UPON PAYMENT OF THE CORRESPONDING TAXES. Mr. OCAMPO. Suppose there is a calamity, Mr. Speaker. Mr. CUENCO. Leave that to private parties. Mr. OCAMPO. Accepted, Mr. Speaker. The SPEAKER. Is there any objection? (After a pause). The chair does not hear any. The amendment is approved. (Congressional Record, No. 48, March 30, 1962, p. 1360) The Senate Journal, No. 59, May 8, 1962, also contains the following illuminating remarks: SENATOR LEDESMA: So it is on the understanding then, Your Honor, that we could proceed with the discussion. Your Honor, House Bill No. 339, as I have already stated, specifically provides that appointment of personnel should be in accordance with the Civil Service Law as well as with the WAPCO. It seems to me that this provision is very laudable and very, very reasonable. The second important feature in this proposed measure is that it prohibits importation by the government. I think this should be clarified in the sense that, at the same time, it allows importation by private parties but with the payment of the corresponding duties. Or rather, under House Bill No. 339, the general policy which is being set in the proposed measure is that the government should not resort to importation but that importation of the cereal is open at all times to any citizen of this country so long as he pays the corresponding duties and other taxes which are imposed by our government. (Senate Journal, No. 59, May 8, 1962) It is thus clear that if section 16 of Republic Act 3452 providing that All laws or parts thereof inconsistent with the provisions of this Act are hereby repealed or modified accordingly",. intended to refer to any preceding statute at all, it must have referred to Republic Act No. 2207. Hence, the Presidential power to import no longer exists. In arguing in favor of the Government's power to import even now, the majority opinion avers that Republic Act No. 3452 is designed to apply only to normal times and conditions. This is plainly absurd, for in normal times, when production equals consumption, no importation need be authorized, for none will be required. The majority opinion stresses that Republic Act 3452 does not repeal Act 2207 in express terms. Granting arguendo that this were true, despite the express prohibition of government imports in section 10 of the later Act, yet it does not elucidate why the legislature found it necessary, or expedient, to enact an entirely different law, instead of merely providing for the amendment of the prior statute (R.A. 2207). If both laws were designed to attain the same end, rice and corn sufficiency for our country, and only a change of method was intended, why enact two statutes not only unconnected with each other, but actually contradictory? That the two laws are inconsistent with each other cannot be gainsaid. Under Act 2207, no person or entity, public or private, could import rice or corn, since under Section 2 thereof "it shall be unlawful for any person, association, corporation or government entity to import rice and corn"; while under Act 3452, on the contrary, "importation of rice and corn is left to private parties" (sec. 10) at any time, with no other restriction than the payment of taxes. How can it be said that the two laws, with so diametrically opposite philosophies, were intended to co-exist? Because the two laws covering the same field are plainly incompatible with each other (since private importation of rice and corn cannot, at the same time, be unlawful under Act 2207 and lawful under Act 3452), it is inescapable to conclude that the later statute (3452) is, and must have been, intended to revise, supersede, and replace the former law (Act 2207).The established rule in this jurisdiction in such a case is that While as a general rule, implied repeal of a former statute by a later one is not favored, yet if the later act covers the whole subject of the earlier one and is clearly intended as a substitute it will operate similarly as a repeal of the earlier act (Posadas vs. National City Bank of New York, 296 U.S. 497, 80 Law Ed. 351) (quoted and applied in In re Guzman, 73 Phil. 52).

pines adopted the American doctrine that in such a revision of the law, whatever is excluded is discarded and repealed (In re 1 Guzman supra, at pp. 52-53). It has been held that "where the legislature frames a new statute upon a certain subject-matter, and the legislative intention appears from the latter statute to be to frame a new scheme in relation to such subject-matter and make a revision of the whole subject, that whatever is embraced in the new statute shall prevail, and that whatever is excluded is discarded". (People v. Thornton, 186 Ill. 162, 173, 75 N.E. 841.) And an author says: "So where there are two statutes on the same subject, passed at different dates, and it is plain from the frame-work and substance of the last that it was intended to cover the whole subject, and to be a complete and perfect system or provision in itself, the last must be held to be a legislative declaration that whatever is embraced in it shall prevail and whatever is excluded is discarded and repealed." Or, as more tersely put in Madison vs. Southern Wisconsin R. Co., 10 A. L. R. 910, at page 915: 6. A subsequent statute, evidently intended as a substitute for one revised, operates as a repeal of the latter without any express words to that effect; and so any distinct provision of the old law, not incorporated into the later one, is to be, deemed to have been intentionally annulled. Smith, Stat. Constr. sec. 784; Bartlett v. King, 12 Mass. 537, 7 Am. Dec. 99: This rule, expressly adopted by this very Supreme Court, utterly destroys the contention of the majority opinion that because the Government's power under Republic Act 2207, to make imports of rice and corn in case of certified emergency, is nowhere expressly repealed by Republic Act 3452, such power must be still deemed to exist. No such power can now exist for the reason that the Act conferring it was totally and unconditionally superseded and repealed by Act 3452. The contradictory philosophies of both Acts testify to that effect. The majority also avers that Republic Act No. 3452 does not contemplate situations where the shortage in local supply is of such gravity as to constitute a national emergency. It also asserts that Act 3452 refers only to artificialshortages through hoarding, and does not cover natural shortages where the rice and corn crops do not suffice to meet the demands of consumption. Unfortunately, the opposite of these assertions is precisely true. Thus, Section 1 of Act 3452 provides: The Government shall engage in the purchase of these basic foods from tenants, farmers, growers, producers and landowners in the Philippines ... and whenever circumstances brought about by any cause, natural or artificial, should so require, (the Government) shall sell and dispose of these commodities to the consumers ... . Section 3 of Act 3452 With a view to regulating the level of supply of rice and corn throughout the country, the Administration is authorized to accumulate stocks as a national reserve in such quantities as it may deem proper and necessary to meet any contingencies. ... Section 12, Act 3452 "The President of the Philippines is hereby authorized to declare a rice and corn emergency any time he deems necessary in the public interest. During the emergency period, the Rice and Corn Administration, upon the direction of the President, shall, subject to constitutional limitation, conduct raids, seizures, and confiscation of rice and con hoarded in any private warehouse or bodega: Provided, That the Rice and Corn Administration shall pay such confiscated rice and corn at the prevailing consumer's price of the Rice and Corn Administration. (Emphasis supplied) Certainly the words used by the statute, "any cause, natural or artificial", "any contingencies", "rice and cornemergency" are broad enough to cover all contingencies, natural deficiency due to insufficient production, as well as artificial shortages due to hoarding. The terms employed exempt the legislature from the accusation that it still has left some emergency unprovided for. What it did deny the Government was the power to import rice and corn whenever it so chooses; instead, the law expressly prescribed "that the Rice and Corp. Administration or any government agency is hereby prohibited from importing rice and corn" (sec. 10, R.A. 3452), a command that, as previously observed, squarely contradicts and vacates that permission to import previously granted under Republic Act 2207. The Government, therefore, may not now bring in rice and corn from abroad, unless special legislative authorization is first obtained, as was done for 1964 by Republic Act No. 3848. The very fact that the Administration went to and obtained from the Legislature permission to import 300,000 metric tons of rice during the calendar year 1964 (Rep. Act No. 3848), and made use of that permission, is the best proof that the Executive felt that its former power under Republic Act No. 2207 no longer existed after the passage of Republic Act No. 3452. Such action places the Administration in estoppel to assert the contrary. Why should it seek authority to make importation during 1964 if it still possessed that granted by Republic Act 2207? Note that, in consenting the Government's importing 300,000 tons of rice in 1964, the Legislature once more re-affirmed the prohibition of further government imports in section 6 of the enabling law, Republic Act No. 3848: SEC. 6 Except as provided in this Act, no other agency or instrumentality of the Government shall be allowed to purchase rice from abroad." (Emphasis supplied)

which is a virtual repetition of the restraint imposed by Republic Act 3452. In addition, the law imposed the further condition that the importation be made only upon two-thirds vote of the National Economic Council, where Republic Act 2207 specified no particular majority. The main opinion seeks to minimize the effect of these reiterated prohibitions by claiming that said section 6 was intended to operate only for 1964. If that had been the intention, then section 6 was absolutely unnecessary because the authority given by Act 3848 was a limitation in itself, as it only permitted the importation of 300,000 metric tons for the calendar year 1964. Under such a grant, any excess beyond the quantity fixed, and any import after 1964, were automatically forbidden. The enactment of section 6 of Act 3848, therefore, was an actual reassertion of the policy of outlawing Government imports, as declared in Republic Act 3452. If anything, it meant that to import rice now, the Executive must first obtain an enabling law. Moreover, the financing by the Government of its foreign purchase of rice would violate the Constitutional restraint against paying money out of the Treasury, "except in pursuance of an appropriation made by law" (Art. VI, sec. 23, par. 3), and no law making such appropriation has been enacted. Under the Revised Administrative Code, sections 606 and 607, no contract involving the expenditure of public funds can be made without previous appropriation therefor, duly certified by the Auditor General. Nor can these inhibitions be evaded by the ruse of causing a Government agency to borrow the funds required for the purpose, considering that any and all government agencies are flatly forbidden to import rice (Republic Act 3452, sec. 10), and the borrowing of funds to finance importation is essential for the execution thereof. Finally, we see no point in the quotations from statements made in the Senate during the deliberations on House Bill No. 11511. That bill never became law, and is not before the Court. The statements quoted are not binding, this Court having the exclusive prerogative of construing the legislative enactments. The effect in the majority decision is, after the Legislature had expressly prohibited government agencies to import rice and corn, and after the lawmaking body refused to pass the bill (House Bill No. 11511) granting the Executive a stand-by authority to import, a decision of this Court now reverses this clear policy of the Legislature, and hands the Executive a blanket power to do what the laws have expressly forbidden. Bengzon, C.J., Concepcion, Barrera and Dizon, JJ., concur. Footnotes REYES, J.B.L., dissenting:
1

Rule reiterated in Joaquin vs. Navarro, 81 Phil. 373; In re Resaba, 95 Phil. 247; Beysa vs. Court of First Instance, 52 Off. Gaz., No. 7, p. 3572.

The Lawphil Project - Arellano Law Foundation

Republic of the Philippines SUPREME COURT Manila EN BANC G.R. No. L-28089 October 25, 1967

BARA LIDASAN, petitioner, vs. COMMISSION ON ELECTIONS, respondent. Suntay for petitioner. Barrios and Fule for respondent. SANCHEZ, J.: The question initially presented to the Commission on Elections, is this: Is Republic Act 4790, which is entitled "An Act Creating the Municipality of Dianaton in the Province of Lanao del Sur", but which includes barrios located in another province Cotabato to be spared from attack planted upon the constitutional mandate that "No bill which may be enacted into law shall embrace more than one subject which shall be expressed in the title of the bill"? Comelec's answer is in the affirmative. Offshoot is the present original petition for certiorari and prohibition. On June 18, 1966, the Chief Executive signed into law House Bill 1247, known as Republic Act 4790, now in dispute. The body of the statute, reproduced in haec verba, reads:
1

Sec. 1. Barrios Togaig, Madalum, Bayanga, Langkong, Sarakan, Kat-bo, Digakapan, Magabo, Tabangao, Tiongko, Colodan, Kabamakawan, Kapatagan, Bongabong, Aipang, Dagowan, Bakikis, Bungabung, Losain, Matimos and Magolatung, in the Municipalities of Butig and Balabagan, Province of Lanao del Sur, are separated from said municipalities and constituted into a distinct and independent municipality of the same province to be known as the Municipality of Dianaton, Province of Lanao del Sur. The seat of government of the municipality shall be in Togaig. Sec. 2. The first mayor, vice-mayor and councilors of the new municipality shall be elected in the nineteen hundred sixtyseven general elections for local officials. Sec. 3. This Act shall take effect upon its approval. It came to light later that barrios Togaig and Madalum just mentioned are within the municipality of Buldon,Province of Cotabato, and that Bayanga, Langkong, Sarakan, Kat-bo, Digakapan, Magabo, Tabangao, Tiongko, Colodan and Kabamakawan are parts and parcel of another municipality, the municipality of Parang, also in theProvince of Cotabato and not of Lanao del Sur. Prompted by the coming elections, Comelec adopted its resolution of August 15, 1967, the pertinent portions of which are: For purposes of establishment of precincts, registration of voters and for other election purposes, the Commission RESOLVED that pursuant to RA 4790, the new municipality of Dianaton, Lanao del Sur shall comprise the barrios of Kapatagan, Bongabong, Aipang, Dagowan, Bakikis, Bungabung, Losain, Matimos, and Magolatung situated in the municipality of Balabagan, Lanao del Sur, the barrios of Togaig and Madalum situated in the municipality of Buldon, Cotabato, the barrios of Bayanga, Langkong, Sarakan, Kat-bo, Digakapan, Magabo, Tabangao, Tiongko, Colodan and Kabamakawan situated in the municipality of Parang, also of Cotabato. Doubtless, as the statute stands, twelve barrios in two municipalities in the province of Cotabato are transferred to the province of Lanao del Sur. This brought about a change in the boundaries of the two provinces. Apprised of this development, on September 7, 1967, the Office of the President, through the Assistant Executive Secretary, recommended to Comelec that the operation of the statute be suspended until "clarified by correcting legislation." Comelec, by resolution of September 20, 1967, stood by its own interpretation, declared that the statute "should be implemented unless declared unconstitutional by the Supreme Court." This triggered the present original action for certiorari and prohibition by Bara Lidasan, a resident and taxpayer of the detached portion of Parang, Cotabato, and a qualified voter for the 1967 elections. He prays that Republic Act 4790 be declared unconstitutional; and that Comelec's resolutions of August 15, 1967 and September 20, 1967 implementing the same for electoral purposes, be nullified. 1. Petitioner relies upon the constitutional requirement aforestated, that "[n]o bill which may be enacted into law shall embrace 2 more than one subject which shall be expressed in the title of the bill." It may be well to state, right at the outset, that the constitutional provision contains dual limitations upon legislative power. First. Congress is to refrain from conglomeration, under one statute, of heterogeneous subjects. Second. The title of the bill is to be couched in a language sufficient to notify the legislators and the public and those concerned of the import of the single subject thereof. Of relevance here is the second directive. The subject of the statute must be "expressed in the title" of the bill. This constitutional 3 requirement "breathes the spirit of command." Compliance is imperative, given the fact that the Constitution does not exact of Congress the obligation to read during its deliberations the entire text of the bill. In fact, in the case of House Bill 1247, which became Republic Act 4790, only its title was read from its introduction to its final approval in the House of 4 5 Representatives where the bill, being of local application, originated. Of course, the Constitution does not require Congress to employ in the title of an enactment, language of such precision as to mirror, fully index or catalogue all the contents and the minute details therein. It suffices if the title should serve the purpose of the constitutional demand that it inform the legislators, the persons interested in the subject of the bill, and the public, of the nature, scope and consequences of the proposed law and its operation. And this, to lead them to inquire into the body of the bill, 6 study and discuss the same, take appropriate action thereon, and, thus, prevent surprise or fraud upon the legislators. In our task of ascertaining whether or not the title of a statute conforms with the constitutional requirement, the following, we believe, may be taken as guidelines: The test of the sufficiency of a title is whether or not it is misleading; and, which technical accuracy is not essential, and the subject need not be stated in express terms where it is clearly inferable from the details set forth, a title which is so uncertain that the average person reading it would not be informed of the purpose of the enactment or put on inquiry as to its contents, or which is misleading, either in referring to or indicating one subject where another or different one is really embraced in the act, or in omitting any expression or indication of the real subject or scope of the act, is bad . xxx xxx xxx

In determining sufficiency of particular title its substance rather than its form should be considered, and the purpose of 7 the constitutional requirement, of giving notice to all persons interested, should be kept in mind by the court . With the foregoing principles at hand, we take a hard look at the disputed statute. The title "An Act Creating the Municipality 8 of Dianaton, in the Province of Lanao del Sur" projects the impression that solely the province of Lanao del Sur is affected by the creation of Dianaton. Not the slightest intimation is there that communities in the adjacent province of Cotabato are incorporated in this new Lanao del Sur town. The phrase "in the Province of Lanao del Sur," read without subtlety or contortion, makes the title misleading, deceptive. For, the known fact is that the legislation has a two-pronged purpose combined in one statute: (1) it creates the municipality of Dianaton purportedly from twenty-one barrios in the towns of Butig and Balabagan, both in the province of Lanao del Sur; and (2) it also dismembers two municipalities in Cotabato, a province different from Lanao del Sur. The baneful effect of the defective title here presented is not so difficult to perceive. Such title did not inform the members of Congress as to the full impact of the law; it did not apprise the people in the towns of Buldon and Parang in Cotabato and in the province of Cotabato itself that part of their territory is being taken away from their towns and province and added to the adjacent Province of Lanao del Sur; it kept the public in the dark as to what towns and provinces were actually affected by the bill. These are the pressures which heavily weigh against the constitutionality of Republic Act 4790. Respondent's stance is that the change in boundaries of the two provinces resulting in "the substantial diminution of territorial limits" of Cotabato province is "merely the incidental legal results of the definition of the boundary" of the municipality of Dianaton and that, therefore, reference to the fact that portions in Cotabato are taken away "need not be expressed in the title of the law." This posture we must say but emphasizes the error of constitutional dimensions in writing down the title of the bill. Transfer of a sizeable portion of territory from one province to another of necessity involves reduction of area, population and income of the first and the corresponding increase of those of the other. This is as important as the creation of a municipality. And yet, the title did not reflect this fact. Respondent asks us to read Felwa vs. Salas, L-16511, October 29, 1966, as controlling here. The Felwa case is not in focus. For there, the title of the Act (Republic Act 4695) reads: "An Act Creating the Provinces of Benguet, Mountain Province, Ifugao, and Kalinga-Apayao." That title was assailed as unconstitutional upon the averment that the provisions of the law (Section, 8 thereof) in reference to the elective officials of the provinces thus created, were not set forth in the title of the bill. We there ruled that this pretense is devoid of merit "for, surely, an Act creating said provinces must be expected to provide for the officers who shall run the affairs thereof" which is "manifestly germane to the subject" of the legislation, as set forth in its title. The statute now before us stands altogether on a different footing. The lumping together of barrios in adjacent but separate provinces under one statute is neither a natural nor logical consequence of the creation of the new municipality of Dianaton. A change of boundaries of the two provinces may be made without necessarily creating a new municipality and vice versa. As we canvass the authorities on this point, our attention is drawn to Hume vs. Village of Fruitport, 219 NW 648, 649. There, the statute in controversy bears the title "An Act to Incorporate the Village of Fruitport, in the County of Muskegon." The statute, however, in its section 1 reads: "The people of the state of Michigan enact, that the following described territory in the counties of Muskegon and Ottawa Michigan, to wit: . . . be, and the same is hereby constituted a village corporate, by the name of the Village of Fruitport." This statute was challenged as void by plaintiff, a resident of Ottawa county, in an action to restraint the Village from exercising jurisdiction and control, including taxing his lands. Plaintiff based his claim on Section 20, Article IV of the Michigan State Constitution, which reads: "No law shall embrace more than one object, which shall be expressed in its title." The Circuit Court decree voided the statute and defendant appealed. The Supreme Court of Michigan voted to uphold the decree of nullity. The following, said in Hume, may well apply to this case: It may be that words, "An act to incorporate the village of Fruitport," would have been a sufficient title, and that the words, "in the county of Muskegon" were unnecessary; but we do not agree with appellant that the words last quoted may, for that reason, be disregarded as surplusage. . . . Under the guise of discarding surplusage, a court cannot reject a part of the title of an act for the purpose of saving the act. Schmalz vs. Woody, 56 N.J. Eq. 649, 39 A. 539. A purpose of the provision of the Constitution is to "challenge the attention of those affected by the act to its provisions." Savings Bank vs. State of Michigan, 228 Mich. 316, 200 NW 262. The title here is restrictive. It restricts the operation of the act of Muskegon county. The act goes beyond the restriction. 9 As was said in Schmalz vs. Wooly, supra: "The title is erroneous in the worst degree, for it is misleading." Similar statutes aimed at changing boundaries of political subdivisions, which legislative purpose is not expressed in the title, 10 were likewise declared unconstitutional." We rule that Republic Act 4790 is null and void. 2. Suggestion was made that Republic Act 4790 may still be salvaged with reference to the nine barrios in the municipalities of Butig and Balabagan in Lanao del Sur, with the mere nullification of the portion thereof which took away the twelve barrios in the municipalities of Buldon and Parang in the other province of Cotabato. The reasoning advocated is that the limited title of the Act still covers those barrios actually in the province of Lanao del Sur.

We are not unmindful of the rule, buttressed on reason and of long standing, that where a portion of a statute is rendered unconstitutional and the remainder valid, the parts will be separated, and the constitutional portion upheld. Black, however, gives the exception to this rule, thus: . . . But when the parts of the statute are so mutually dependent and connected, as conditions, considerations, inducements, or compensations for each other, as to warrant a belief that the legislature intended them as a whole, and that if all could not be carried into effect, the legislature would not pass the residue independently, then, if some parts 11 are unconstitutional, all the provisions which are thus dependent, conditional, or connected, must fall with them, In substantially similar language, the same exception is recognized in the jurisprudence of this Court, thus: The general rule is that where part of a statute is void, as repugnant to the Organic Law, while another part is valid, the valid portion if separable from the invalid, may stand and be enforced. But in order to do this, the valid portion must be so far independent of the invalid portion that it is fair to presume that the Legislature would have enacted it by itself if they had supposed that they could not constitutionally enact the other . . . Enough must remain to make a complete, intelligible, and valid statute, which carries out the legislative intent. . . . The language used in the invalid part of the statute can have no legal force or efficacy for any purpose whatever, and what remains must express the legislative will 12 independently of the void part, since the court has no power to legislate , . . . . Could we indulge in the assumption that Congress still intended, by the Act, to create the restricted area of nine barrios in the towns of Butig and Balabagan in Lanao del Sur into the town of Dianaton, if the twelve barrios in the towns of Buldon and Parang, Cotabato were to be excluded therefrom? The answer must be in the negative. Municipal corporations perform twin functions. Firstly. They serve as an instrumentality of the State in carrying out the functions of government. Secondly. They act as an agency of the community in the administration of local affairs. It is in the latter character 13 that they are a separate entity acting for their own purposes and not a subdivision of the State. Consequently, several factors come to the fore in the consideration of whether a group of barrios is capable of maintaining itself as an independent municipality. Amongst these are population, territory, and income. It was apparently these same factors which induced the writing out of House Bill 1247 creating the town of Dianaton. Speaking of the original twenty-one barrios which comprise the new municipality, the explanatory note to House Bill 1247, now Republic Act 4790, reads: The territory is now a progressive community; the aggregate population is large; and the collective income is sufficient to maintain an independent municipality. This bill, if enacted into law, will enable the inhabitants concerned to govern themselves and enjoy the blessings of municipal autonomy. When the foregoing bill was presented in Congress, unquestionably, the totality of the twenty-one barrios not nine barrios was in the mind of the proponent thereof. That this is so, is plainly evident by the fact that the bill itself, thereafter enacted into law, states that the seat of the government is in Togaig, which is a barrio in the municipality of Buldon in Cotabato. And then the reduced area poses a number of questions, thus: Could the observations as to progressive community, large aggregate population, collective income sufficient to maintain an independent municipality, still apply to a motley group of only nine barrios out of the twenty-one? Is it fair to assume that the inhabitants of the said remaining barrios would have agreed that they be formed into a municipality, what with the consequent duties and liabilities of an independent municipal corporation? Could they stand on their own feet with the income to be derived in their community? How about the peace and order, sanitation, and other corporate obligations? This Court may not supply the answer to any of these disturbing questions. And yet, to remain deaf to these problems, or to answer them in the negative and still cling to the rule on separability, we are afraid, is to impute to Congress an undeclared will. With the known premise that Dianaton was created upon the basic considerations of progressive community, large aggregate population and sufficient income, we may not now say that Congress intended to create Dianaton with only nine of the original twenty-one barrios, with a seat of government still left to be conjectured. For, this unduly stretches judicial interpretation of congressional intent beyond credibility point. To do so, indeed, is to pass the line which circumscribes the judiciary and tread on legislative premises. Paying due respect to the traditional separation of powers, we may not now melt and recast Republic Act 4790 to read a Dianaton town of nine instead of the originally intended twenty-one barrios. Really, if these nine barrios are to constitute a town at all, it is the function of Congress, not of this Court, to spell out that congressional will. Republic Act 4790 is thus indivisible, and it is accordingly null and void in its totality.
14

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

The right of every citizen, taxpayer and voter of a community affected by legislation creating a town to ascertain that the law so 15 created is not dismembering his place of residence "in accordance with the Constitution" is recognized in this jurisdiction. Petitioner is a qualified voter. He expects to vote in the 1967 elections. His right to vote in his own barrio before it was annexed to a new town is affected. He may not want, as is the case here, to vote in a town different from his actual residence. He may not desire to be considered a part of hitherto different communities which are fanned into the new town; he may prefer to remain in the place where he is and as it was constituted, and continue to enjoy the rights and benefits he acquired therein. He may not even know the candidates of the new town; he may express a lack of desire to vote for anyone of them; he may feel that his vote should be cast for the officials in the town before dismemberment. Since by constitutional direction the purpose of a bill must be 16 shown in its title for the benefit, amongst others, of the community affected thereby, it stands to reason to say that when the constitutional right to vote on the part of any citizen of that community is affected, he may become a suitor to challenge the constitutionality of the Act as passed by Congress. For the reasons given, we vote to declare Republic Act 4790 null and void, and to prohibit respondent Commission from implementing the same for electoral purposes. No costs allowed. So ordered. Concepcion, C.J., Reyes, J.B.L., Dizon, Makalintal, Bengzon, J.P., Zaldivar, Castro and Angeles, JJ., concur.

Separate Opinions FERNANDO, J., dissenting: With regret and with due recognition of the merit of the opinion of the Court, I find myself unable to give my assent. Hence these few words to express my stand. Republic Act No. 4790 deals with one subject matter, the creation of the municipality of Dianaton in the province of Lanao del Sur. The title makes evident what is the subject matter of such an enactment. The mere fact that in the body of such statute barrios found in two other municipalities of another province were included does not of itself suffice for a finding of nullity by virtue of the constitutional provision invoked. At the most, the statute to be free from the insubstantial doubts about its validity must be construed as not including the barrios, located not in the municipalities of Butig and Balabagan, Lanao del Sur, but in Parang and Baldon, Cotabato. The constitutional requirement is that no bill which may be enacted into law shall embrace more than one subject which shall be 1 expressed in the title of the bill. This provision is similar to those found in the Constitution of many American States. It is aimed against the evils, of the so-called omnibus bills, and log-rolling legislation, and against surreptitious or unconsidered 2 enactments. Where the subject of a bill is limited to a particular matter, the members of the legislature as well as the people should be informed of the subject of proposed legislative measures. This constitutional provision thus precludes the insertion of riders in legislation, a rider being a provision not germane to the subject matter of the bill. It is not to be narrowly construed though as to cripple or impede proper legislation. The construction must be reasonable and not technical. It is sufficient if the title be comprehensive enough reasonably to include the general object which the statute seeks to effect without expressing each and every end and means necessary for the accomplishment of that object. Mere details need not be set forth. The legislature is not required to make the title of the act a complete index of its contents. The constitutional 3 provision is satisfied if all parts of an act which relates to its subject find expression in its title. The first decision of this Court, after the establishment of the Commonwealth of the Philippines, in 1938, construing a provision 4 of this nature, Government v. Hongkong & Shanghai Bank, held that the inclusion of Section 11 of Act No. 4007, the Reorganization Law, providing for the mode in which the total annual expenses of the Bureau of Banking may be reimbursed through assessment levied upon all banking institutions subject to inspection by the Bank Commissioner was not violative of such a requirement in the Jones Law, the previous organic act. Justice Laurel, however, vigorously dissented, his view being that while the main subject of the act was reorganization, the provision assailed did not deal with reorganization but with taxation. While the case ofGovernment vs. Hongkong & Shanghai Bank was decided by a bare majority of four justices against three, the present trend seems to be that the constitutional requirement is to be given the liberal test as indicated in the majority opinion penned by Justice Abad Santos, and not the strict test as desired by the majority headed by Justice Laurel. Such a trend has been reflected in subsequent decisions beginning with Sumulong v. Commission on Elections, up to and 6 including Felwa vs. Salas, a 1966 decision, the opinion coming from Justice Concepcion. It is true of course that in Philconsa v. Gimenez, one of the grounds on which the invalidity of Republic Act No. 3836 was predicated was the violation of the above constitutional provision. This Retirement Act for senators and representatives was entitled "AN ACT AMENDING SUB-SECTION (c), SECTION TWELVE OF COMMONWEALTH ACT NUMBERED ONE HUNDRED EIGHTYSIX, AS AMENDED BY REPUBLIC ACT NUMBERED THIRTY HUNDRED NINETY-SIX." As we noted, the paragraph in Republic Act No. 3836 deemed objectionable "refers to members of Congress and to elective officers thereof who are not members of the
7 5

Government Service Insurance System. To provide retirement benefits, therefore, for these officials, would relate to a subject matter which is not germane to Commonwealth Act No. 186. In other words, this portion of the amendment ( re retirement benefits for Members of Congress and appointive officers, such as the Secretary and Sergeants-at-arms for each house) is not related in any manner to the subject of Commonwealth Act No. 186 establishing the Government Service Insurance System and which provides for both retirement and insurance benefits to its members." Nonetheless our opinion was careful to note that there was no abandonment of the principle of liberality. Thus: "we are not unmindful of the fact that there has been a general disposition in all courts to construe the constitutional provision with reference to the subject and title of the Act, liberally." It would follow therefore that the challenged legislation Republic Act No. 4790 is not susceptible to the indictment that the constitutional requirement as to legislation having only one subject which should be expressed in his title was not met. The subject was the creation of the municipality of Dianaton. That was embodied in the title. It is in the light of the aforementioned judicial decisions of this Court, some of the opinions coming from jurists illustrious for their mastery of constitutional law and their acknowledged erudition, that, with all due respect, I find the citation from Corpus Juris Secundum, unnecessary and far from persuasive. The State decisions cited, I do not deem controlling, as the freedom of this Court to accept or reject doctrines therein announced cannot be doubted. Wherein does the weakness of the statute lie then? To repeat, several barrios of two municipalities outside Lanao del Sur were included in the municipality of Dianaton of that province. That itself would not have given rise to a constitutional question considering the broad, well-high plenary powers possessed by Congress to alter provincial and municipal boundaries. What justified resort to this Court was the congressional failure to make explicit that such barrios in two municipalities located in Cotabato would thereafter form part of the newly created municipality of Dianaton, Lanao del Sur. To avoid any doubt as to the validity of such statute, it must be construed as to exclude from Dianaton all of such barrios mentioned in Republic Act No. 4790 found in municipalities outside Lanao del Sur. As thus interpreted, the statute can meet the test of the most rigid scrutiny. Nor is this to do violence to the legislative intent. What was created was a new municipality from barrios named as found in Lanao del Sur. This construction assures precisely that. This mode of interpreting Republic Act No. 4790 finds support in basic principles underlying precedents, which if not precisely 8 controlling, have a persuasive ring. In Radiowealth v. Agregado, certain provisions of the Administrative Code were interpreted and given a "construction which would be more in harmony with the tenets of the fundamental law." In Sanchez v. Lyon 9 Construction, this Court had a similar ruling: "Article 302 of the Code of Commerce must be applied in consonance with [the relevant] provisions of our Constitution." The above principle gained acceptance at a much earlier period in our constitutional 10 history. Thus in a 1913 decision, In re Guaria: "In construing a statute enacted by the Philippine Commission we deem it our duty not to give it a construction which would be repugnant to an Act of Congress, if the language of the statute is fairly susceptible of another construction not in conflict with the higher law. In doing so, we think we should not hesitate to disregard contentions touching the apparent intention of the legislator which would lead to the conclusion that the Commission intended to enact a law in violation of the Act of Congress. However specious the argument may be in favor of one of two possible constructions, it must be disregarded if on examination it is found to rest on the contention that the legislator designed an attempt to transcend the rightful limits of his authority, and that his apparent intention was to enact an invalid law." American Supreme Court decisions are equally explicit. The then Justice, later Chief Justice, Stone, construed statutes "with an 11 eye to possible constitutional limitations so as to avoid doubts as to [their] validity." From the pen of the articulate jurist, 12 Frankfurter: "Accordingly, the phrase "lobbying activities" in the resolution must be given the meaning that may fairly be attributed to it, having special regard for the principle of constitutional adjudication which makes it decisive in the choice of fair alternatives that one construction may raise serious constitutional questions avoided by another." His opinion in the Rumely case continues with the above pronouncement of Stone and two other former Chief Justices: "In the words of Mr. Chief Justice Taft, '(i)t is our duty in the interpretation of federal statutes to reach conclusion which will avoid serious doubt of their constitutionality', Richmond Screw Anchor Co. v. United States, 275 US 331, 346, 48 S. Ct. 194, 198, 72 L. ed. 303. . . . As phrased by Mr. Chief Justice Hughes, "if a serious doubt of constitutionality is raised, it is a cardinal principle that this Court will first ascertain whether a construction of the statute is fairly possible by which the question may be avoided.' Crowell v. Benson, 285, 13 296, 76 L. ed. 598, and cases cited." The prevailing doctrine then as set forth by Justice Clark in a 1963 decision, is that courts "have consistently sought an interpretation which supports the constitutionality of legislation." Phrased differently by Justice Douglas, the judiciary favors "that interpretation of legislation which gives it the greater change of surviving the test of 14 constitutionality." It would follow then that both Philippine and American decisions unite in the view that a legislative measure, in the language of Van Devanter "should not be given a construction which will imperil its validity where it is reasonably open to construction free 15 from such peril." Republic Act No. 4790 as above construed incurs no such risk and is free from the peril of nullity. So I would view the matter, with all due acknowledgment of the practical considerations clearly brought to light in the opinion of the Court.

Footnotes
1

Hereinafter referred to as Comelec.

Article VI, Sec. 21(1), Philippine Constitution. Stiglitz vs. Schiardien, 40 SW 2d 315, 317, 320. Congressional Record, Vol. I, No. 40, p. 8; Vol. I, No. 50, pp. 40-41. Section 18, Article VI of the Constitution, provides: "Sec. 18. All appropriation, revenue or tariff bills, bills authorizing increase of the public debt, bills of local application, and private bills, shall originate exclusively in the House of Representatives, but the Senate may propose or concur with amendments."

Vidal de Roces vs. Posadas, 58 Phil. 108, 111-112; Ichong vs. Hernandez, 101 Phil. 1155, 1188-1190. 82 C.J.S. pp. 365, 370; emphasis supplied. Emphasis ours. Emphasis supplied.

10

Examples: Wilcox vs. Paddock, 31 NW 609, where the statute entitled "An act making an appropriation of state swamp lands to aid the county of Gratiot in improving the channel of Maple river . . ." but the body of the act affected another county other than Gratiot. State vs. Burr, 238 P 585, the statute entitled "An act to amend Secs. 4318 and 4327 of the Codes of Montana relating to changing the boundaries of Fergus and Judith Basin countries" was rendered void because the body of the act included the boundaries of Petroleum county. Atchison vs. Kearney County, 48 P 583, where the title of the act purported to attach Kearney county to Finney county the body of the act attached it to Hamilton county. State vs. Nelson, 98 So. 715, the title of the act purporting to alter or rearrange the boundaries of Decatur city and the body of the act which actually diminished the boundary lines of the city were considered by the court as dealing with incongruous matters. The reading of the former would give no clear suggestion that the latter would follow and be made the subject of the act. Jackson, Clerk vs. Sherrod, 92 So. 481; City of Ensley vs. Simpson, 52 So. 61, cited. Fairview vs. City of Detroit, 113 NW 368, where the title gave notice that the entire village of Fairview is annexed to Detroit when the body affected only a portion.
11

Black, Interpretation of Laws, 2d. ed., p. 116. Barrameda vs. Moir, 25 Phil. 44, 47-48, quoted in Government vs. Springer (50 Phil. 259, 292; emphasis supplied). McQuillin, Municipal Corporations, 3d ed., pp. 456-464.

12

13

14

In the case of Fuqua vs. City of Mobile, 121 So. 696, it was asserted that the portion of the statute excluding a territory from Mobile which was not express in the title "An act to alter and rearrange the boundary lines of the city of Mobile in the state of Alabama" should be the only portion invalidated. The court, using the test whether or not after the objectionable feature is stricken off there would still remain an act complete in itself, sensible, capable of being executed, ruled that there can be no segregation of that portion dealing with the excluded territory from that dealing with additional territory because these two matters are all embraced and intermingled in one section dealing with the corporate limits of the city. In the case of Engle vs. Bonnie, 204 SW 2d 963, the statute involved was entitled "An Act relating to cities". Section 4 thereof "requires the creation of a municipality on petition of a majority of voters or 500 voters." But some of the provisions were germane to the title of the law. This statute was declared void in toto. The Court of Appeals of Kentucky ruled as follows: "The judgment declared only Section 4 [relative to the creation of a municipality on petition of the voters] to be void and the remainder valid. While some of the provisions of the act are germane to the title, since they deal with the classification of cities to be created, they seem merely to harmonize other sections of the statute which they amend with a new creation of cities other than sixth class towns. To remove only Section 4 would be like taking the motor of an automobile which leaves the machine of no use. We are quite sure that these provisions would not have been enacted without Section 4; hence, they too must fall."
15

Macias vs. The Commission on Elections, L-18684, September 14, 1961.

16

Brooks vs. Hydorn, 42 NW 1122, 1123-1124; Fairview vs. City of Detroit, 113 NW 368, 370.

FERNANDO, J., dissenting:

1

Art. VI, Sec. 21, par. 1, Constitution. Government v. Hongkong & Shanghai Bank (1938), 66 Phil. 483. People vs. Carlos (1947), 78 Phil. 535. 66 Phil. 483. 73 Phil. (1942) 228.

L-26511, October 29, 1960. The other cases that may be cited follows People v. Carlos (1947), 78 Phil. 535; Nuval v. de la Fuente (1953), 92 Phil. 1074; Ichong v. Hernandez (1951), 101 Phil. 1155; Cordero v. Cabatuando, L-14542, Oct. 31, 1962; Municipality of Jose Panganiban v. Shell Company, L-18349, July 30, 1966.
7

L-23326, December 18, 1965. 86 Phil. 429 (1950). 87 Phil. 309 (1950), Cf . City of Manila v. Arellano Law Colleges, Inc. (1950), 85 Phil. 663.

10

24 Phil. 37. Justice Carson who penned the opinion cited Black on Interpretation of Laws to this effect: "Hence it follows that the courts will not so construe the law as to make it conflict with the constitution, but will rather put such an interpretation upon it as will avoid conflict with the constitution and give it full force and effect, if this can be done without extravagance. If there is doubt, or uncertainty as to the meaning of the legislature, if the words or provisions of the statute are obscure, or if the enactment is fairly susceptible of two or more constructions, that interpretation will be adopted which will avoid the effect of unconstitutionality, even though it may be necessary, for this purpose, to disregard the more usual or apparent impact of the language employed."
11

Lucas v. Alexander (1928). 279 US 573, 577-578, citing United States ex rel. Atty. Gen. v. Delaware & H. Co. 213 US 366, 407, 408, 53 L. ed. 836, 848, 849, 29 Sup. Ct. Rep. 527: United States v. Standard Brewery, 251 US 210, 220, 64 L. ed. 229, 235, 40 Sup. Ct. Rep. 139; Texas v. Eastern Texas R. Co. 258 US 204, 217, 66 L. ed. 566, 572, 42 Sup. Ct. Rep. 281; Bratton v. Chandler, 260 US 110, 114, 67 L. ed. 157, 161, 43 Sup. Ct. Rep. 43; Panama R. Co. v. Johnson, 264 US 375, 390, 68 L. ed. 748, 754, 44 Sup. Ct. Rep. 391.
12

United States v. Rumely (1953), 345 US 41, 45. United States v. National Dairy Product Corp. 373 US 29, 32. Ex parte Endo (1944), 323 US 283, 299-300. Chippewa Indians v. United States (1937), 301 US 358, 376.

13

14

15

The Lawphil Project - Arellano Law Foundation Republic of the Philippines SUPREME COURT Manila EN BANC G.R. No. L-16704 March 17, 1962

VICTORIAS MILLING COMPANY, INC., petitioner-appellant, vs. SOCIAL SECURITY COMMISSION, respondent-appellee. Ross, Selph and Carrascoso for petitioner-appellant. Office of the Solicitor General and Ernesto T. Duran for respondent-appellee.

BARRERA, J.: On October 15, 1958, the Social Security Commission issued its Circular No. 22 of the following tenor: . Effective November 1, 1958, all Employers in computing the premiums due the System, will take into consideration and include in the Employee's remuneration all bonuses and overtime pay, as well as the cash value of other media of remuneration. All these will comprise the Employee's remuneration or earnings, upon which the 3-1/2% and 2-1/2% contributions will be based, up to a maximum of P500 for any one month. Upon receipt of a copy thereof, petitioner Victorias Milling Company, Inc., through counsel, wrote the Social Security Commission in effect protesting against the circular as contradictory to a previous Circular No. 7, dated October 7, 1957 expressly excluding overtime pay and bonus in the computation of the employers' and employees' respective monthly premium contributions, and submitting, "In order to assist your System in arriving at a proper interpretation of the term 'compensation' for the purposes of" such computation, their observations on Republic Act 1161 and its amendment and on the general interpretation of the words "compensation", "remuneration" and "wages". Counsel further questioned the validity of the circular for lack of authority on the part of the Social Security Commission to promulgate it without the approval of the President and for lack of publication in the Official Gazette. Overruling these objections, the Social Security Commission ruled that Circular No. 22 is not a rule or regulation that needed the approval of the President and publication in the Official Gazette to be effective, but a mere administrative interpretation of the statute, a mere statement of general policy or opinion as to how the law should be construed. Not satisfied with this ruling, petitioner comes to this Court on appeal. The single issue involved in this appeal is whether or not Circular No. 22 is a rule or regulation, as contemplated in Section 4(a) of Republic Act 1161 empowering the Social Security Commission "to adopt, amend and repeal subject to the approval of the President such rules and regulations as may be necessary to carry out the provisions and purposes of this Act." There can be no doubt that there is a distinction between an administrative rule or regulation and an administrative interpretation of a law whose enforcement is entrusted to an administrative body. When an administrative agency promulgates rules and regulations, it "makes" a new law with the force and effect of a valid law, while when it renders an opinion or gives a statement of policy, it merely interprets a pre-existing law (Parker, Administrative Law, p. 197; Davis, Administrative Law, p. 194). Rules and regulations when promulgated in pursuance of the procedure or authority conferred upon the administrative agency by law, partake of the nature of a statute, and compliance therewith may be enforced by a penal sanction provided in the law. This is so because statutes are usually couched in general terms, after expressing the policy, purposes, objectives, remedies and sanctions intended by the legislature. The details and the manner of carrying out the law are often times left to the administrative agency entrusted with its enforcement. In this sense, it has been said that rules and regulations are the product of a delegated power to create new or additional legal provisions that have the effect of law. (Davis,op. cit., p. 194.) . A rule is binding on the courts so long as the procedure fixed for its promulgation is followed and its scope is within the statutory authority granted by the legislature, even if the courts are not in agreement with the policy stated therein or its innate wisdom (Davis, op. cit., 195-197). On the other hand, administrative interpretation of the law is at best merely advisory, for it is the courts that finally determine what the law means. Circular No. 22 in question was issued by the Social Security Commission, in view of the amendment of the provisions of the Social Security Law defining the term "compensation" contained in Section 8 (f) of Republic Act No. 1161 which, before its amendment, reads as follows: . (f) Compensation All remuneration for employment include the cash value of any remuneration paid in any medium other than cash except (1) that part of the remuneration in excess of P500 received during the month; (2) bonuses, allowances or overtime pay; and (3) dismissal and all other payments which the employer may make, although not legally required to do so. Republic Act No. 1792 changed the definition of "compensation" to: (f) Compensation All remuneration for employment include the cash value of any remuneration paid in any medium other than cash except that part of the remuneration in excess of P500.00 received during the month. It will thus be seen that whereas prior to the amendment, bonuses, allowances, and overtime pay given in addition to the regular or base pay were expressly excluded, or exempted from the definition of the term "compensation", such exemption or exclusion was deleted by the amendatory law. It thus became necessary for the Social Security Commission to interpret the effect of such deletion or elimination. Circular No. 22 was, therefore, issued to apprise those concerned of the interpretation or understanding of the Commission, of the law as amended, which it was its duty to enforce. It did not add any duty or detail that was not already in the law as amended. It merely stated and circularized the opinion of the Commission as to how the law should be construed. 1wph1.t The case of People v. Jolliffe (G.R. No. L-9553, promulgated on May 30, 1959) cited by appellant, does not support its contention that the circular in question is a rule or regulation. What was there said was merely that a regulation may be incorporated in the

form of a circular. Such statement simply meant that the substance and not the form of a regulation is decisive in determining its nature. It does not lay down a general proposition of law that any circular, regardless of its substance and even if it is only interpretative, constitutes a rule or regulation which must be published in the Official Gazette before it could take effect. The case of People v. Que Po Lay (50 O.G. 2850) also cited by appellant is not applicable to the present case, because the penalty that may be incurred by employers and employees if they refuse to pay the corresponding premiums on bonus, overtime pay, etc. which the employer pays to his employees, is not by reason of non-compliance with Circular No. 22, but for violation of the specific legal provisions contained in Section 27(c) and (f) of Republic Act No. 1161. We find, therefore, that Circular No. 22 purports merely to advise employers-members of the System of what, in the light of the amendment of the law, they should include in determining the monthly compensation of their employees upon which the social security contributions should be based, and that such circular did not require presidential approval and publication in the Official Gazette for its effectivity. It hardly need be said that the Commission's interpretation of the amendment embodied in its Circular No. 22, is correct. The express elimination among the exemptions excluded in the old law, of all bonuses, allowances and overtime pay in the determination of the "compensation" paid to employees makes it imperative that such bonuses and overtime pay must now be included in the employee's remuneration in pursuance of the amendatory law. It is true that in previous cases, this Court has held that bonus is not demandable because it is not part of the wage, salary, or compensation of the employee. But the question in the instant case is not whether bonus is demandable or not as part of compensation, but whether, after the employer does, in fact, give or pay bonus to his employees, such bonuses shall be considered compensation under the Social Security Act after they have been received by the employees. While it is true that terms or words are to be interpreted in accordance with their wellaccepted meaning in law, nevertheless, when such term or word is specifically defined in a particular law, such interpretation must be adopted in enforcing that particular law, for it can not be gainsaid that a particular phrase or term may have one meaning for one purpose and another meaning for some other purpose. Such is the case that is now before us. Republic Act 1161 specifically defined what "compensation" should mean "For the purposes of this Act". Republic Act 1792 amended such definition by deleting same exemptions authorized in the original Act. By virtue of this express substantial change in the phraseology of the law, whatever prior executive or judicial construction may have been given to the phrase in question should give way to the clear mandate of the new law. IN VIEW OF THE FOREGOING, the Resolution appealed from is hereby affirmed, with costs against appellant. So ordered. Bengzon, C.J., Padilla, Bautista Angelo, Labrador, Concepcion, Reyes, J.B.L., Paredes, Dizon and De Leon, JJ., concur.

The Lawphil Project - Arellano Law Foundation Republic of the Philippines SUPREME COURT Manila EN BANC DECISION June 30, 1970 G.R. No. L-25619 DOMINGO B. TEOXON, petitioner-appellant, vs. MEMBERS OF THE BOARD OF ADMINISTRATORS, PHILIPPINE VETERANS ADMINISTRATION , respondents-appellees. Ulpiano S. Masallo for petitioner-appellant. Office of the Solicitor General Antonio P. Barredo, Assistant Solicitor General Isidro C. Borromeo and Perfecto O. Fernandez for respondents-appellees. Fernando, J.: The pivotal question raised by petitioner, a veteran who suffered from permanent physical disability, in this appeal from a lower court decision dismissing his suit for mandamus, is its failure to accord primacy to statutory provisions fixing the amount of pension to which he was entitled. 1 Instead, it sustained the plea of respondent officials, members of the board of Administrators of the Philippine Veterans Administration, relying on the administrative rules issued by them presumably in pursuance of their duty to enforce the Veterans Bill of Rights. We have to resolve, then, whether or not there has been a failure to apply the doctrine to which this Court has been committed that if it can be shown that there is repugnancy between the statute and the rules issued in pursuance thereof, the former prevails. Unfortunately, as will be hereafter shown, the lower court did not see it that way. It found nothing objectionable in respondents following a contrary norm and thus disregarding petitioners legal ri ght

for which mandamus is the proper remedy. We cannot lend our approval then to such conclusion especially so in the light of our decision barely two months ago, Begosa v. Chairman, Philippine Veterans Administration, 2 where we categorically held that a veteran suffering from permanent disability is not to be denied what has been granted him specifically by legislative enactment, which certainly is superior to any regulation that may be promulgated by the Philippine Veterans Administration, presumably in the implementation thereof. We reverse. Petitioner, on April 23, 1965, filed his suit for mandamus before the Court of First Instance of Manila alleging that he filed his claim for disability pension under the Veterans Bill of Rights, Republic Act No. 65, for having been permanently incapacitat ed from work and that he was first awarded only P25.00 monthly, thereafter increased to P50.00 a month contrary to the terms of the basic law as thereafter amended. 3 His claim, therefore, was for a pension effective May 10, 1955 at the rate of P50.00 a month up to June 21, 1957 and at the rate of P100.00 a month, plus P10.00 a month, for each of his unmarried minor children below 18 years of age from June 22, 1957 up to June 30, 1963; and the difference of P50.00 a month, plus P10.00 a month for each of his four unmarried minor children below 18 years of age from July 1, 1963. He would likewise seek for the payment of moral and exemplary damages as well as attorneys fees. 4 The answer for respondents filed on May 25, 1965, while admitting, with qualification, the facts as alleged in the petition, would rely primarily in its special and affirmative defenses, on petitioner not having exhausted its administrative remedies and his suit being in effect one against the government, which cannot prosper without its consent. 5 In the stipulation of facts dated Oct. 13, 1965, it was expressly agr eed: That the petitioner sustained physical injuries in line of duty as a former member of a recognized guerilla organization which participated actively in the resistance movement against the enemy, and as a result of which petitioner suffered a permanen t, physical disability. 6 Mention was likewise made in the aforesaid stipulation of facts that while petitioner would rely on what is set forth in the Veterans Bill of Rights, as amended, respondents in turn would limit the amount of pension received by him in accordance with the rules and regulations promulgated by them. In the decision now on appeal, promulgated on Dec. 4, 1965, the lower court, in dismissing the petition, expressed its conformity with the contention of respondents. Thus: Upon examinat ion of the issues involved in this case, the Court believes that a case for mandamus will not lie. The respondent Board has authority under the Pension law to process applications for pension, using as guide the rules and regulations that it adopted under the law and their decisions, unless shown clearly to be in error or against the law or against the general policy of the Board, should be maintained. 7 The lower court went even further in its recogni tion of the binding force to be given the administrativ e rules and regulations promulgated by respondents. Thus: As mentioned above, under the provisions of the Veterans Law as subsequently amended, the Board is authorized to promulgate regulations to carry into effect the provisions of the law. In accordance with said law, the Board has promulgated rules and regulations which are considered in the approval of the claims for pension. The court sees no reason why the case of petitioner should be considered as an exception. There is no question that his disability is not complete, and, therefore, he cannot be entitled to complete disability allowance. That the decision of the Board is based on its regulations is also, according to the Court, justified because that is how the Board functions. 8 Hence, this appeal, which, as noted at the outset, calls for an affirmative response. Petitioners contention that his right as conferred by law takes precedence to what the administrative rules and regulations of respondents provide is indisputable. So our decisions have indicated with unfailing uniformity. 1. The recognition of the power of administrative officials to promulgate rules in the implementation of the statute, necessarily limited to what is provided for in the legislative enactment, may be found in the early case of United States v. Barrias 9 decided in 1908. Then came, in a 1914 decision, United States v. Tupasi Molina, 10 a delineation of the scope of such competence. Thus: Of course the regulations adopted under legislative authority by a particular department must be in harmony with the provisions of the law, and for the sole purpose of carrying into effect its general provisions. By such regulations, of course, the law itself can not be extended. So long, however, as the regulations relate solely to carrying into effect the provisions of the law, they are valid. In 1936, in People v. Santos, 11 this Court expressed its disapproval of an administrative order that would amount to an excess of the regulatory power vested in an administrative official. We reaffirmed such a doctrine in a 1951 decision, where we again made clear that where an administrative order betrays inconsistency or repugnancy to the provisions of the Act, the mandate of the Act must prevail and must be followed. 12 Justice Barrera, speakin g for the Court in Victorias Milling Company, Inc. v. Social Security Commission, 13 citing Parker, 14 as well as Davis 15 did tersely sum up the matter thus: A rule is b inding on the courts so long as the procedure fixed for its promulgation is followed and its scope is within the statutory granted by the legislature, even if the courts are not in agreement with the policy stated therein or its innate wisdom . On the other hand , administrative interpretation of the law is at best merely advisory, for it is the courts that finally determine what the law means. It cannot be otherwise as the Constitution limits the authority of the President, in whom all executive power resides, to take care that the laws be faithfully executed. 16 No lesser administrative executive office or agency then can, contrary to the express language of the Constitution, assert for itself a more extensive prerogative. Necessarily, it is bound to observe the constitutional mandate. There must be strict compliance with the legislative enactment. Its terms must be followed. The statute requires

adherence to, not departure from, its provisions. No deviation is allowable. In the terse language of the present Chief Justice, an administrative agency cannot amend an act of Congress. 17 Resp ondents can be sustained, therefore, only if it could be shown that the rules and regulations promulgated by them were in accordance with what the Veterans Bill of Rights provides. We examine, then, the original act approved in 1946 18 and its later amend ments. The Veterans Bill of Rights, as it read when enacted in 1946, insofar as pertinent, provides: The persons mentioned in sections one and two hereof, who are permanently incapacitated from work owing to sickness, disease, or injuries sustained in line of duty, shall be given a life pension of fifty pesos a month unless they are actually receiving a similar pension from other government funds, and shall receive, in addition, the necessary hospitalization and medical care. The act took effect upon its approval, on Oct. 18 of that year. Then, in 1955, came the first amendment in these words; *Sec.+ 9; The persons mentioned in sections one and two hereof who permanent incapacitated from work owing to sickness, disease, or injuries sustained in line of duty, shall be given a life pension of fifty pesos a month, and ten pesos a month for each of his unmarried minor children below eighteen years of age, unless they are actually receiving a similar pension from other government funds, and shall receive, in addition, the necessary hospitalization and medical care. 19 The present Section 9, as again amended in 1957, reads as follows: The persons mentioned in sections one and two hereof who are permanently incapacitated from work owing sickness, disease, or injuries sustained in line of duty, shall be given a life pension of one hundred pesos a month, and ten pesos a month for each of his unmarried minor children below eighteen years of age, unless they are actually receiving a similar pension from other Government funds, and shall receive, in addition, the necessary hospitalization and medical care. 20 To the extent, therefore, that petitioner would base his suit on the legal rights thus conferred on him by the above statutory provisions, he is entitled to a favorable judgment. That is what was decided in Begosa v. Chairman, Philippine Veterans Administration, referred to by us earlier in the opinion as decisive of a controversy of this nature. We do so again. Hence, a reversal of the appealed decision is indicated. 2. The affirmative defenses as to non-exhaustion of administrative remedies as well as a proceeding of this character being a suit against the State were considered and rejected in the aforesaid Begosa decision. WHEREFORE, the decision of December 4, 1965 of the lower court is reversed, and another one entered granting this petition for mandamus. Respondents are ordered to pay petitioner a pension effective as of May 10, 1955 at the rate of P50.00 a month up to June 21, 1957 and at the rate of P100.00 a month, plus P10.00 a month for each of his unmarried minor children below 18 years of age from June 22, 1957 up to June 30, 1963; and the difference of P50.00 a month plus P10.00 a month for each of his four unmarried minor children below 18 years of age from July 1, 1963 until the statutory rate has been satisfied. Thereafter petitioner is entitled to the amount of P100.00 a month plus P10.00 a month for each of his four unmarried minor children below eighteen years of age, in accordance with law. Without pronouncement as to costs. Concepcion, C.J., Reyes, J.B.L., Dizon, Makalintal, Zaldivar, Castro and Teehankee, JJ., concur. Barredo and Villamor, JJ., took no part. # Footnotes 1 Petitioner would avail himself of the rights granted him by Republic Act No. 65, Veterans Bill of Rights (1946) as amended by Republic Acts Nos. 1362 (1955) and 1920 (1957). 2 L-25916, April 30, 1970. 3 Republic Acts Nos. 1362 (1955) and 1920 (1957). 4 Petition, Record on Appeal, pp. 2-7. 5 Answer, ibid, pp. 7-12. 6 Stipulations of Facts, ibid, p. 13. 7 Decision, ibid, p. 49. 8 Ibid. 9 11 Phil. 327. 10 29 Phil. 119. 11 63 Phil. 300. 12 Chinese Flour Importers Association v. Price Stabilization Board, 89 Phil. 439.

13 L-16704, March 17, 1962, 4 SCRA 627. 14 Parker on Administration Law, p. 197 (1952). 15 Davis on Administrative Law, pp. 194-197 (1957). 16 Art. 7, sec. 10, par. 1, Constitution. 17 Santos v. Estenzo, 109 Phil. 419 (1960). 18 Republic Act No. 65. 19 Republic Act No. 1362, approved June 18, 1955. 20 Republic Act No. 1920, approved June 22, 1957.