Republic of the Philippines SUPREME COURT Manila THIRD DIVISION G.R. No.

133036 January 22, 2003

presented for payment within ninety (90) days from the date thereof was subsequently dishonored by the drawee bank for the reason "ACCOUNT CLOSED" and despite receipt of notice of such dishonor, the accused failed to pay said payee the face amount of said check or to make arrangement for full payment within five (5) banking days after receiving said notice." Except for the check numbers and dates of maturity, the four other informations are similarly worded. After trial, Branch 67 of the Makati MeTC convicted petitioner in a Joint Decision7 the dispositive portion of which reads: Wherefore, in view of the foregoing, the court finds the accused guilty beyond reasonable doubt of Violation of Batas Pambansa Bilang 22 on five (5) counts and therefore sentences the accused to suffer an imprisonment of 30 days for each count and to restitute the amount of P 200,000.00 to Miss Yolanda G. Floro, which is the total amount of the five (5) checks, and to pay her also the amount of P20,000.00 as damages to compensate the payment of attorneys fees. SO ORDERED.8 As stated early on, the RTC, on appeal, affirmed the decision of the MeTC. 9 And the Court of Appeals10 affirmed that of the RTC. In the petition for review on certiorari at bar, petitioner proffers as follows: "1. Petitioner was convicted by an invalid law which is Batas Pambansa Blg. 22 for being an unconstitutional law. 2. Petitioner was denied her constitutional right to due process for failure of the courts a quo to uphold her presumption of innocence and for convicting her even if the prosecution evidence does not prove her guilt beyond reasonable doubt. 3. The findings of fact of the courts a quo, primarily the Court of Appeals, are based on surmises, conjectures and speculations. 4. The Court of Appeals was biased against petitioner when it denied the petition moto propio (sic) without the comment of the Office of the Solicitor General." 11 Petitioner contends that since banks are not damaged by the presentment of dishonored checks as they impose a penalty for each, only creditors/payees are unduly favored by the law; that the law "is in essence a resurrected form of 19th century imprisonment for debt" since the drawer is coerced to pay his debt on threat of imprisonment even if his failure to pay does not arise from malice or fraud or from any criminal intent to cause damage; 12 and that the law is a bill of attainder13 as it does not leave much room for judicial determination, the guilt of the accused having already been decided by the legislature.14 These matters subject of petitioners contention have long been settled in the landmark case of Lozano v. Martinez15 where this Court upheld the constitutionality of B. P. 22: The gravamen of the offense punished by BP 22 is the act of making and issuing a worthless check or a check that is dishonored upon its presentation for payment. It is not the non-payment of an obligation which the law punishes. The law is not intended or designed to coerce a debtor to pay his debt. The thrust of the law is to prohibit, under pain of penal sanctions, the making of worthless checks and putting them in circulation. Because of its deleterious effects on the public interest, the practice is proscribed by law . The law punishes the act not as an offense against property, but an offense against public order.16 (Emphasis supplied)

JOY LEE RECUERDO, petitioner, vs. PEOPLE OF THE PHILIPPINES AND THE COURT OF APPEALS, respondents. CARPIO-MORALES, J.: Before us for review is the July 16, 1997 decision of the Court of Appeals in CA-G.R. No. 20577 affirming that rendered by the Regional Trial Court (RTC), Branch 150, Makati City which in turn affirmed that of the Metropolitan Trial Court (MeTC) of Makati City, Branch 67 convicting Joy Lee Recuerdo (petitioner) for violation of Batas Pambansa Blg. 22 (The Bouncing Checks Law) on 5 counts. From the evidence of the prosecution, the following facts are established: Sometime in the first week of December 1993, Yolanda Floro (Yolanda) who is engaged in jewelry business sold a 3-karat loose diamond stone valued at P420,000.00 to petitioner who gave a downpayment of P40,000.00. In settlement of the balance of the purchase price, petitioner issued 9 postdated checks, 8 of which in the amount of P40,000.00, and 1 in the amount of P20,000.00, all drawn against her account at the Prudential Bank. 1 When Yolanda deposited 8 of the 10 checks to her depository bank, Liberty Savings and Loan Association, only 3, those dated December 25, 1993, January 25, 1994, and February 25, 1994, were cleared. The remaining 5 were dishonored due to the closure of petitioners account.2 Yolanda thus went to petitioners dental clinic and advised her to change the dishonored checks to cash. Petitioner promised alright but she welshed on it.3 A demand letter4 was thereupon sent to petitioner for her to settle her obligation but she failed to heed the same,5 hence, the filing of 5 informations 6 against her for violation of B. P. 22 at the Makati MeTC, the accusatory portion of the first of which reads: That sometime in the first week of December, 1993, in the Municipality of Makati, Metro Manila, Philippines, and within the jurisdiction of this Honorable Court, the above-named accused, did then and there willfully, unlawfully and feloniously make out, drawn (sic) and issue to YOLANDA G. FLORO to apply on account or for value the check described below: Check No. Drawn Against In the Amount of Postdated/dated Payable to 008789 Prudential Bank P40,000.00 July 25, 1994 Cash

said accused well knowing that at the time of issue thereof, said account did not have sufficient funds in or credit with the drawee bank for the payment in full of the face amount of such check upon its presentment, which check when

The contention that B. P. 22 is a bill of attainder, one which inflicts punishment without trial and the essence of which is the substitution of a legislative for a judicial determination of guilt,17 fails. For under B. P. 22, every element of the crime is still to be proven before the trial court to warrant a conviction for violation thereof. Reinforcing her thesis, petitioner cites the speech made by now Vice-President Teofisto Guingona delivered before the Philippine Bar Association wherein he stressed the need to review the law since it has not prevented the proliferation of bouncing checks. 18 As correctly argued by the Solicitor General, however, while due deference is given to the opinion of the Vice-President, the same should properly be addressed to the legislature which is in a better position to review the effectiveness and usefulness of the law. 19 As held in the case of Lozano,20 it is not for the Court to question the wisdom or policy of the statute. It is sufficient that a reasonable nexus exists between the means and the end. Petitioner further claims that the dishonored checks were not issued for deposit and encashment,21 nor was there consideration therefor, in support of which she cites her alleged agreement with Yolanda that she could have the stone appraised to determine the purchase price,22 and since she found out that it is only worth P160,000.00, 23 there was no longer any need to fund the remaining checks which should be returned to her.24 Yolanda, however, so petitioner adds, could no longer be reached. 25 Petitioner thus concludes that she had already paid in full the purchase price of the stone, she having paid P40,000.00 cash plus the P120,000.00 proceeds of the three cleared checks.26 Petitioners submission does not lie. Such alleged agreement does not inspire belief. The terms and conditions surrounding the issuance of the checks are irrelevant. 27 "A check issued as an evidence of debt, though not intended for encashment, has the same effect like any other check. It is within the contemplation of B.P. 22, which is explicit that "any person who makes or draws and issues any check to apply for an account or for value, knowing at the time of issue that he does not have sufficient funds in or credit with the drawee bank x x x which check is subsequently dishonored x x x shall be punished by imprisonment." 28 (Emphasis supplied.) "BP 22 does not appear to concern itself with what might actually be envisioned by the parties, its primordial intention being to instead ensure the stability and commercial value of checks as being virtual substitutes for currency. It is a policy that can be easily eroded if one has yet to determine the reason for which checks are issued, or the terms and conditions for their issuance, before an appropriate application of the legislative enactment can be made." 29 (Emphasis supplied) Additionally, petitioner argues that as no bank representative testified as to "whether the questioned checks were dishonored due to insufficiency of funds (sic)," such element was not clearly and convincingly proven,30 hence, the trial court failed to uphold her right to presumption of innocence when she was convicted based on the sole testimony of Yolanda. Whether the checks were dishonored due to insufficiency of funds, or "Account Closed" as alleged in the informations and testified on by Yolanda, 31 petitioners argument is untenable. "It is not required much less indispensable, for the prosecution to present the drawee banks representative as a witness to testify on the dishonor of the checks because of insufficiency of funds. The prosecution may present, as it did in this case, only complainant as a witness to prove all the elements of the offense charged. She is competent and qualified witness to testify that she

deposited the checks to her account in a bank; that she subsequently received from the bank the checks returned unpaid with a notation drawn against insufficient funds stamped or written on the dorsal side of the checks themselves, or in a notice attached to the dishonored checks duly given to the complainant, and that petitioner failed to pay complainant the value of the checks or make arrangements for their payment in full within five (5) banking days after receiving notice that such checks had not been paid by the drawee bank." 32 (Emphasis supplied) Yolandas testimony that when she deposited the checks to her depository bank they were dishonored due to "Account Closed"33 thus sufficed. In fact, even petitioners counsel during trial admitted the dishonor, and on that ground. 34 Finally, petitioner imputes bias on the part of the appellate court when it decided her petition for review without the comment of the Office of the Solicitor General. The rendition of the decision by the appellate court without the comment of the PeopleAppellee is not by itself proof of bias. In any event, the Office of the Solicitor General gave its comment on petitioners Motion for Reconsideration of the appellate courts decision. In fine, the affirmance of petitioners conviction is in order. Under Administrative Circular No. 12-2000, imprisonment need not be imposed on those found guilty of violating B.P. Blg. 22. Administrative Circular No. 13-2001 issued on February 14, 2001 vests in the courts the discretion to determine, taking into consideration the peculiar circumstances of each case, whether the imposition of fine alone would best serve the interests of justice, or whether forbearing to impose imprisonment would depreciate the seriousness of the offense, work violence on the social order, or otherwise contrary to the imperatives of justice.35 In the case at bar, this Court notes that no proof, nay allegation, was proffered that petitioner was not a first time offender. Considering this and the correctness of the case, it would best serve the interests of justice if petitioner is just fined to enable her to continue her dental practice so as not to deprive her of her income, thus insuring the early settlement of the civil aspect of the case, not to mention the FINE. WHEREFORE, the assailed decision of the Court of Appeals finding petitioner JOY LEE RECUERDO guilty of violating Batas Pambansa Blg. 22 is AFFIRMED with MODIFICATION. In lieu of imprisonment, accused-herein petitioner JOY LEE RECUERDO, is ordered to pay a FINE equivalent to double the amount of each dishonored check subject of the five cases at bar. And she is also ordered to pay private complainant, Yolanda Floro, the amount of Two Hundred Thousand (P200,000.00) Pesos representing the total amount of the dishonored checks. SO ORDERED.

Republic of the Philippines SUPREME COURT Manila EN BANC G.R. No. 148326 November 15, 2001

Villaber fIled a motion for reconsideration but was denied by the COMELEC en banc in a Resolution12 dated May 10, 2001. Hence, this petition. The sole issue for our Resolution is whether or not violation of B.P. Blg. 22 involves moral turpitude. The COMELEC believes it is. In disqualifying petitioner Villaber from being a candidate for Congressman, the COMELEC applied Section 12 of the Omnibus Election Code which provides: "Sec. 12. Disqualifications. - Any person who has been declared by competent authority insane or incompetent, or has been sentenced by final judgment for subversion, insurrection, rebellion, or for any offense for which he has been sentenced to a penalty of more than eighteen months, or for a crime involving moral turpitude, shall be disqualified to be a candidate and to hold any office, unless he has been given plenary pardon or granted amnesty. "The disqualifications to be a candidate herein provided shall be deemed removed upon the declaration by competent authority that said insanity or incompetence had been removed or after the expiration of a period of five years from his service of sentence, unless within the same period he again becomes disqualified." (Emphasis ours) As to the meaning of "moral turpitude," we have consistently adopted the definition in Black's Law Dictionary as "an act of baseness, vileness, or depravity in the private duties which a man owes his fellow men, or to society in general, contrary to the accepted and customary rule of right and duty between man and woman, or conduct contrary to justice, honesty, modesty, or good morals."13 In In re Vinzon,14 the term "moral turpitude" is considered as encompassing "everything which is done contrary to justice, honesty , or good morals." We, however, clarified in Dela Torre vs. Commission on Elections15 that "not every criminal act involves moral turpitude," and that ''as to what crime involves moral turpitude is for the Supreme Court to determine."16 We further pronounced therein that: "...in International Rice Research Institute vs. NLRC (221 SCRA 760 [1993]), the Court admitted that it cannot always be ascertained whether moral turpitude does or does not exist by merely classifying a crime as malum in se or as malum prohibitum. There are crimes which are mala in se and yet but rarely involve moral turpitude, and there are crimes which involve moral turpitude and are mala prohibita only. In the final analysis, whether or not a crime involves moral turpitude is ultimately a question of fact and frequently depends on all the circumstances surrounding the violation of the statute." (Emphasis ours) We reiterate here our ruling in Dela Torre17 that the determination of whether a crime involves moral turpitude is a question of fact and frequently depends on all the circumstances surrounding the violation of the statute. In the case at bar, petitioner does not assail the facts and circumstances surrounding the commission of the crime. In effect, he admits all the elements of the crime for which he was convicted. At any rate, the question of whether or not the crime involves moral turpitude can be resolved by analyzing its elements alone, as we did in Dela Torre which involves the crime of fencing punishable by a special law. 18 Petitioner was charged for violating B.P. Blg. 22 under the following Information:

PABLO C. VILLABER, petitioner, vs. COMMISSION ON ELECTIONS and REP. DOUGLAS R. CAGAS, respondents. SANDOVAL-GUTIERREZ, J.: In this petition for certiorari, Pablo C. Villaber, seeks the nullification of two Resolutions of the Commission on Election (COMELEC) in SPA-01-058. The first one was issued by its Second Division on April 30, 2001, disqualifying him as a candidate for the position of Congressman in the First District of the Province of Davao del Sur in the last May 14, 2001 elections, and cancelling his certificate of candidacy; and the second is the en banc Resolution dated May 10, 2001 denying his motion for reconsideration. Both petitioner Villaber and respondent Douglas R. Cagas were rival candidates for a congressional seat in the First District of Davao del Sur during the May 14, 2001 elections. Villaber filed his certificate of candidacy for Congressman on February 19, 2001, 1 while Cagas filed his on February 28, 2001.2 On March 4, 2001, Cagas filed with the Office of the Provincial Election Supervisor, Commission On Elections (COMELEC), Davao del Sur, a consolidated petition3 to disqualify Villaber and to cancel the latter's certificate of candidacy. Cagas alleged in the said consolidated petition that on March 2, 1990, Villaber was convicted by the Regional Trial Court of Manila, Branch 15, in Criminal Case No. 86-46197 for violation of Batas Pambansa Blg. 22 and was sentenced to suffer one (1) year imprisonment. The check that bounced was in the sum of P100,000.00.4 Cagas further alleged that this crime involves moral turpitude; hence, under Section 12 of the Omnibus Election Code, he is disqualified to run for any public office. On appeal, the Court of Appeals (Tenth Division), in its Decision dated April23, 1992 in CA-G.R. CR No. 09017,5 affirmed the RTC Decision. Undaunted, Villaber filed with this Court a petition for review on certiorari assailing the Court of Appeals Decision, docketed as G. R. No. 106709. However, in its Resolution 6 of October 26, 1992, this Court (Third Division) dismissed the petition. On February 2, 1993, our Resolution became final and executory.7 Cagas also asserted that Villaber made a false material representation in his certificate of candidacy that he is "Eligible for the office I seek to be elected " - which false statement is a ground to deny due course or cancel the said certificate pursuant to Section 78 of the Omnibus Election Code. In his answers8 to the disqualification suit, Villaber countered mainly that his conviction has not become final and executory because the affirmed Decision was not remanded to the trial court for promulgation in his presence. 9 Furthermore, even if the judgment of conviction was already final and executory, it cannot be the basis for his disqualification since violation of B.P. Blg. 22 does not involve moral turpitude. After the opposing parties submitted their respective position papers, the case was forwarded to the COMELEC, Manila, for resolution. 1wphi1.nt On April 30, 2001, the COMELEC (Second Division), finding merit in Cagas' petition, issued the challenged Resolution10 in SPA A 01-058 declaring Villaber disqualified as "a candidate for and from holding any elective public office" and canceling his certificate of candidacy. The COMELEC ruled that a conviction for violation of B.P. BIg. 22 involves moral turpitude following the ruling of this Court en banc in the administrative case of People vs. Atty. Fe Tuanda.11

"That on or about February 13, 1986, in the City of Manila, Philippines, the said accused did then and there wilfully, unlawfully and feloniously make or draw and issue to Efren D. Sawal to apply on account or for value Bank of Philippine Islands (Plaza Cervantes, Manila) Check No. 958214 dated February 13, 1986 payable to Efren D. Sawal in the amount of P100,000.00, said accused well knowing that at the time of issue he did not have sufficient funds in or credit with the drawee bank for payment of such check in full upon its presentment, which check, when presented for payment within ninety (90) days from the date thereof, was subsequently dishonored by the drawee bank for insufficiency of funds, and despite receipt of notice of such dishonor, said accused failed to pay said Efren D. Sawal the amount of said check or to make arrangement for full payment of the same within five (5) banking days after receiving said notice." (Emphasis ours) He was convicted for violating Section 1 of B.P. Blg. 22 provides : "SECTION 1. Checks without sufficient funds. - Any person who makes or draws and issues any check to apply on account or for value, knowing at the time of issue that he does not have sufficient funds in or credit with the drawee bank for the payment of such check in full upon its presentment , which check is subsequently dishonored by the drawee bank for insufficiency of funds or credit or would have been dishonored for the same reason had not the drawer, without any valid reason, ordered the bank to stop payment, shall be punished by imprisonment of not less than thirty days but not more than one (1) year or by a fine of not less than but not more than double the amount of the check which fine shall in no case exceed Two Hundred Thousand Pesos, or both such fine and imprisonment at the discretion of the court." (Emphasis ours). The elements of the offense under the above provision are: 1. The accused makes, draws or issues any check to apply to account or for value; 2. The accused knows at the time of the issuance that he or she does not have sufficient funds in, or credit with, the drawee bank for the payment of the check in full upon its presentment; and 3. The check is subsequently dishonored by the drawee bank for insufficiency of funds or credit, or it would have been dishonored for the same reason had not the drawer, without any valid reason, ordered the bank to stop payment. 19 The presence of the second element manifests moral turpitude. In People vs. Atty. Fe Tuanda20 we held that a conviction for violation of B.P. BIg. 22 "imports deceit" and "certainly relates to and affects the good moral character of a person." 21 The effects of the issuance of a worthless check, as we held in the landmark case of Lozano vs. Martinez,22 through Justice Pedro L. Yap, "transcends the private interests of the parties directly involved in the transaction and touches the interests of the community at large. The mischief it creates is not only a wrong to the payee or holder, but also an injury to the public" since the circulation of valueless commercial papers "can very well pollute the channels of trade and commerce, injure the banking system and eventually hurt the welfare of society and the public interest."23 Thus, paraphrasing Black's definition, a drawer who issues an unfunded check deliberately reneges on his private duties he owes his fellow men or society in a manner contrary to accepted and customary rule of right and duty, justice, honesty or good morals. Petitioner contends that this Court's pronouncement in People v. Atty. Fe Tuanda,24 insofar as it states that conviction under B.P. BIg. 22 involves moral turpitude, does not apply to him since he is not a lawyer.

This argument is erroneous. In that case, the Court of Appeals affirmed Atty. Fe Tuanda's conviction for violation of B.P. BIg. 22 and, in addition, suspended her from the practice of law pursuant to Sections 27 and 28 of Rule 138 of the Revised Rules of Court. Her motion seeking the lifting of her suspension was denied by this Court on the ground that the said offense involves moral turpitude. There we said in part: "We should add that the crimes of which respondent was convicted also import deceit and violation of her attorney's oath and the Code of Professional Responsibility, under both of which she was bound to 'obey the laws of the land.' Conviction of a crime involving moral turpitude might not (as in the instant case, violation of B.P. Blg. 22 does not) relate to the exercise of the profession of a lawyer; however, it certainly relates to and affects the good moral character of a person convicted of such offense. x x x."25 (Emphasis ours) Clearly, in Tuanda, this Court did not make a distinction whether the offender is a lawyer or a non-lawyer. Nor did it declare that such offense constitutes moral turpitude when committed by a member of the Bar but is not so when committed by a non-member. We cannot go along with petitioner's contention that this Court's ruling in Tuanda has been abandoned or modified in the recent case of Rosa Lim vs. People of the Philippines,26 which reiterated the ruling in Vaca vs. Court of Appeals.27 In these two latter cases, the penalty of imprisonment imposed on the accused for violation of B.P. BIg. 22 was deleted by this Court. Only a fine was imposed. Petitioner insists that with the deletion of the prison sentence, the offense no longer involves moral turpitude. We made no such pronouncement. This is what we said in Rosa Lim: "In Vaca v. Court of Appeals, we held that in determining the penalty to be imposed for violation of B.P. Blg. 22, the philosophy underlying the Indeterminate Sentence Law applies. The philosophy is to redeem valuable human material, and to prevent unnecessary deprivation of personal liberty and economic usefulness with due regard to the protection of the social order. There we deleted the prison sentence imposed on petitioners. We imposed on them only a fine double the amount of the check issued. We considered the fact that petitioners brought the appeal, believing in good faith, that no violation of B.P. Blg. 22 was committed, 'otherwise, they would have simply accepted the judgment of the trial court and applied for probation to evade prison term.' We do the same here. We believe such would best serve the ends of criminal justice." In fine, we find no grave abuse of discretion committed by respondent COMELEC in issuing the assailed Resolutions. WHEREFORE, the petition is DISMISSED. Costs against petitioner.1wphi1.nt SO ORDERED.

Republic of the Philippines SUPREME COURT Manila FIRST DIVISION G.R. No. 156658 March 10, 2004

dismissal. Petitioners motion for reconsideration5 was denied in a Resolution dated December 11, 2002.6 Hence, this petition for review assigning the following errors: 1. THE HONORABLE PUBLIC RESPONDENT COURT OF APPEALS, WITH DUE RESPECT, COMMITTED GRAVE ABUSE OF DISCRETION IN HOLDING THAT PETITIONER WAS "NOT SINGLED-OUT FOR TERMINATION, AS MANY OTHERS WERE ALSO ADVERSELY AFFECTED." 2. THE HONORABLE PUBLIC RESPONDENT COURT OF APPEALS COMMITTED GROSS MISAPPREHENSION OF FACT WHEN IT AFFIRMED THE FINDING OF THE LABOR ARBITER THAT THE POSITION OF PETITIONER BECAME REDUNDANT AT THE SUM-AG SALES OFFICES. 3. THE HONORABLE PUBLIC RESPONDENT COURT OF APPEALS COMMITTED GRAVE ABUSE OF DISCRETION WHEN IT HELD THAT THE DISMISSAL OF PETITIONER WAS VALID. 4. THE HONORABLE PUBLIC RESPONDENT COURT OF APPEALS ERRED IN DISMISSING THE ENTIRE RELIEFS PRAYED FOR BY THE PETITIONER. The primordial issue to be resolved is whether or not the dismissal of petitioner is based on a just and authorized cause. Factual findings of administrative bodies, being considered experts in their fields, are binding on this Court. However, this is a general rule which holds true only when established exceptions do not obtain. One of these exceptive circumstances is when the findings of the Labor Arbiter and the NLRC are conflicting. Considering that the ruling of the Labor Arbiter was reversed by the NLRC whose judgment was in turn overturned by the appellate court, it behooves us in the exercise of our equity jurisdiction to determine which findings are more conformable to the evidentiary facts. 7 In the case at bar, petitioner was dismissed on the ground of redundancy, one of the authorized causes for dismissal.8 In Dole Philippines, Inc. v. NLRC,9 citing the leading case of Wiltshire File Co., Inc. v. NLRC, 10 we explained the nature of redundancy as an authorized cause for dismissal thus: . . . redundancy in an employers personnel force necessarily or even ordinarily refers to duplication of work. That no other person was holding the same position that private respondent held prior to the termination of his services, does not show that his position had not become redundant. Indeed, in any well-organized business enterprise, it would be surprising to find duplication of work and two (2) or more people doing the work of one person. We believe that redundancy, for purposes of the Labor Code, exists where the services of an employee are in excess of what is reasonably demanded by the actual requirements of the enterprise. Succinctly put, a position is redundant where it is superfluous, and superfluity of a position or positions may be the outcome of a number of factors, such as overhiring of workers, decreased volume of business, or dropping of a particular product line or service activity previously manufactured or undertaken by the enterprise. The determination that employees services are no longer necessar y or sustainable and, therefore, properly terminable is an exercise of business judgment of the employer. The wisdom or soundness of this judgment is not subject to discretionary review of the Labor Arbiter and the NLRC, provided there is no violation of law and no showing that it was prompted by an arbitrary or malicious act.11 In other words, it is not enough for a company to merely declare that it has become overmanned. It must produce adequate proof that such is the actual situation to justify the dismissal of the affected employees for redundancy.12

BONIFACIO ASUFRIN, JR., petitioner, vs. SAN MIGUEL CORPORATION and the COURT OF APPEALS, respondents. DECISION YNARES-SANTIAGO, J.: Coca Cola Plant, then a department of respondent San Miguel Beer Corporation (SMC), hired petitioner as a utility/miscellaneous worker in February 1972. On November 1, 1973, he became a regular employee paid on daily basis as a Forklift Operator. On November 16, 1981, he became a monthly paid employee promoted as Stock Clerk. Sometime in 1984, the sales office and operations at the Sum-ag, Bacolod City Sales Office were reorganized. Several positions were abolished including petitioners position as Stock Clerk. After reviewing petitioners qualifications, he was designated warehouse checker at the Sum-ag Sales Office. On April 1, 1996, respondent SMC implemented a new marketing system known as the "pre-selling scheme" at the Sum-ag Beer Sales Office. As a consequence, all positions of route sales and warehouse personnel were declared redundant. Respondent notified the DOLE Director of Region VI that 22 personnel of the Sales Department of the Negros Operations Center1 would be retired effective March 31, 1995. Respondent SMC thereafter wrote a letter 2 to petitioner informing him that, owing to the implementation of the "pre-selling operations" scheme, all positions of route and warehouse personnel will be declared redundant and the Sum-ag Sales Office will be closed effective April 30, 1996. Thus, from April 1, 1996 to May 15, 1996, petitioner reported to respondents Personnel Department at the Sta. Fe Brewery, pursuant to a previous directive. Thereafter, the employees of Sum-ag sales force were informed that they can avail of respondents early retirement package pursuant to the retrenchment program, while those who will not avail of early retirement would be redeployed or absorbed at the Brewery or other sales offices. Petitioner opted to remain and manifested to Acting Personnel Manager Salvador Abadesco his willingness to be assigned to any job, considering that he had three children in college.3 Petitioner was surprised when he was informed by the Acting Personnel Manager that his name was included in the list of employees who availed of the early retirement package. Petitioners request that he be given an assignment in the company was ignored by the Acting Personnel Manager. Petitioner thus filed a complaint for illegal dismissal with the NLRC, docketed as RAB Case No. 06-06-10233-96. On December 27, 1996, the Labor Arbiter dismissed the complaint for lack of merit. Petitioner appealed to the National Labor Relations Commission (NLRC) which set aside the Labor Arbiters decision and ordered respondent SMC to reinstate petitioner to his former or equivalent position with full backwages. 4 Respondent filed a petition with the Court of Appeals which reversed the decision of the NLRC and reinstated the judgment of the Labor Arbiter dismissing the complaint for illegal

Persuasive as the explanation proffered by respondent may be to justify the dismissal of petitioner, a number of disturbing circumstances, however, leave us unconvinced. First, of the 23 SMC employees assigned at the Sum-ag Sales Office/Warehouse, 9 accepted the offer of SMC to avail of the early retirement whose separation benefits was computed at 250% of their regular pay. The rest, including petitioner, did not accept the offer. Out of the remaining fourteen 14, only petitioner clearly manifested, through several letters,13 his desire to be redeployed to the Sta. Fe Brewery or any sales office and for any position not necessarily limited to that of a warehouse checker. In short, he was even willing to accept a demotion just to continue his employment. Meanwhile, other employees who did not even write a letter to SMC were redeployed to the Sta. Fe Brewery or absorbed by other offices/outlets outside Bacolod City. 14 Second, petitioner was in the payroll of the Sta. Fe Brewery and assigned to the Materials Section, Logistics Department, although he was actually posted at the Sum-ag Warehouse.15 Thus, even assuming that his position in the Sum-ag Warehouse became redundant, he should have been returned to the Sta. Fe Brewery where he was actually assigned and where there were vacant positions to accommodate him. Third, it appears that despite respondents allegation that it ceased and closed down its warehousing operations at the Sum-ag Sales Office, actually it is still used for warehousing activities and as a transit point where buyers and dealers get their stocks. 16 Indeed, the Sum-ag Office is strategically situated on the southern part of Bacolod City making it convenient for dealers from the southern towns of Negros Occidental to get their stocks and deposit their empty bottles in the said warehouse, thereby decongesting the business activities at the Sta. Fe Brewery. Fourth, in selecting employees to be dismissed, a fair and reasonable criteria must be used, such as but not limited to (a) less preferred status, e.g. temporary employee; (b) efficiency; and (c) seniority.17 In the case at bar, no criterion whatsoever was adopted by respondent in dismissing petitioner. Furthermore, as correctly observed by the NLRC, respondent "has not shown how the cessation of operations of the Sum-ag Sales Office contributed to the ways and means of improving effectiveness of the organization with the end in view of efficiency and cutting distribution overhead and other related costs. Respondent, thus, clearly resorted to sweeping generalization[s] in dismissing complainant."18 Indeed, petitioners predicament may have something to do with an incident where he incurred the ire of an immediate superior in the Sales Logistics Unit for exposing certain irregularities committed by the latter. 19 In the earlier case of San Miguel Corporation v. NLRC, respondents reasons for terminating the services of its employees in the very same Sum-ag Sales Office was rejected, to wit: Even if private respondents were given the option to retire, be retrenched or dismissed, they were made to understand that they had no choice but to leave the company. More bluntly stated, they were forced to swallow the bitter pill of dismissal but afforded a chance to sweeten their separation from employment. They either had to voluntarily retire, be retrenched with benefits or be dismissed without receiving any benefit at all. What was the true nature of petitioners offer to private respondents? It was in reality a Hobsons choice.21 All that the private respondents were offered was a choice on the means or method of terminating their services but never as to the status of their employment. In short, they were never asked if they wanted to work for petitioner. In the case at bar, petitioner is similarly situated. It bears stressing that whether it be by redundancy or retrenchment or any of the other authorized causes, no employee may be dismissed without observance of the fundamentals of good faith.
20

It is not difficult for employers to abolish positions in the guise of a cost-cutting measure and we should not be easily swayed by such schemes which all too often reduce to near nothing what is left of the rubble of rights of our exploited workers. 22 Given the nature of petitioners job as a Warehouse Checker, it is inconceivable that respondent could not accommodate his services considering that the warehousing operations at Sum-ag Sales Office has not shut down. All told, to sustain the position taken by the appellate court would be to dilute the workingmans most important right: his constitutional right to security of tenure. While respondent may have offered a generous compensation package to those whose services were terminated upon the implementation of the "pre-selling scheme," we find such an offer, in the face of the prevailing facts, anathema to the underlying principles which give life to our labor statutes because it would be tantamount to likening an employer-employee relationship to a salesman and a purchaser of a commodity. It is an archaic abomination. To quote what has been aptly stated by former Governor General Leonard Wood in his inaugural message before the 6th Philippine Legislature on October 27, 1922 "labor is neither a chattel nor a commodity, but human and must be dealt with from the standpoint of human interest."23 As has been said: "We do not treat our workers as merchandise and their right to security of tenure cannot be valued in precise peso-and-centavo terms. It is a right which cannot be allowed to be devalued by the purchasing power of employers who are only too willing to bankroll the separation pay of their illegally dismissed employees to get rid of them." 24 This right will never be respected by the employer if we merely honor it with a price tag. The policy of "dismiss now and pay later" favors moneyed employers and is a mockery of the right of employees to social justice.25 WHEREFORE, in view of all the foregoing, the petition is GRANTED. The Decision of the Court of Appeals in CA-G.R. SP No. 53521 dated April 10, 2002, and the Resolution dated December 11, 2002 denying petitioners Motion for Reconside ration, are SET ASIDE. The decision of the National Labor Relations Division dated February 20, 1998 is REINSTATED. Accordingly, petitioners dismissal is declared illegal, and respondent is ordered to reinstate him to his former or equivalent position, with full backwages computed from April 1, 1996 up to his actual reinstatement. Respondent is likewise ordered to pay petitioner the sum equivalent to ten percent (10%) of his total monetary award as attorneys fees. SO ORDERED.

Republic of the Philippines SUPREME COURT Manila SECOND DIVISION G.R. No. 120384 January 13, 2004

to Dismiss4 on the ground that the complaint states no cause of action since it does not allege that petitioner has suffered any damage, loss or penalty because of the guarantees petitioner had extended for and on behalf of respondent PII. The other respondents filed their respective responsive pleadings. On June 10, 1987, Judge Roberto M. Lagman issued an Order5 suspending the case only as against respondent BF Homes and denying respondent PIIs motion to dismiss. Thereafter, hearing on the merits ensued. On January 21, 1992, petitioner presented Rosauro Termulo, the treasury department manager of petitioner, who testified that the amount of P19,035,256.57 was paid on July 28, 1990 by petitioner to the PNB through the account of the National Treasury to cover the principal loan and interests, as guaranteed by petitioner; and, Exhibit "LL," a debit memo issued by the PNB, showing that the latter was paid by the National Treasurer in behalf of petitioner corporation. Consequently, on February 19, 1992, petitioner filed a Motion to Amend Complaint to Conform to Evidence6 pursuant to Section 5, Rule 10 of the Revised Rules of Court, seeking to amend Paragraph 17 and the pertinent portion of the prayer in the complaint, to read as follows: 17. Because of the unjustified refusal of the defendants to comply with their respective obligations, the plaintiff as guarantor has been constrained to pay the Philippine National Bank thru the account of the National Treasury the amount of Nineteen Million Thirty-five Thousand Two Hundred Fifty-six and 57/100 (P19,035,256.57) on July 28, 1990 representing payment of principal loan of P12,790,094.83 and interest of P6,245,111.54 due March 16, 1987 on the Philippine Infrastructure, Inc./Philguaranty loan under the PNB Expanded Loan Collection Program; and which amount was deducted from the equity share of the National Government in Philguarantee. In view of defendants unwarranted failure and refusal to settle their respective accountabilities plaintiff was likewise constrained to secure the services of counsel and incur expenses in the process of prosecuting its just and valid claims against the defendants; accordingly, the defendants should be held liable, jointly and severally, to pay the plaintiff attorneys fees and expenses of litigation in the amount of P2,000,000.00 or about ten (10%) percent of the guaranteed obligations. ... PRAYER ... (a) Ordering defendant PII, BF Homes, PILAR and AGUIRRE to pay plaintiff, jointly and severally, the amount of P19,035,256.57 plus P351,517.57 extension guarantee fees and amendment fees, plus interests and penalty charges thereon; . . .7 Acting on the motion to amend, the trial court, at that time presided by Judge Joselito J. Dela Rosa, issued the assailed Order dated December 7, 1992, 8 dismissing the case without prejudice on the ground of failure of the complaint to state a cause of action, thus in effect, reversing the Order dated June 10, 1987 issued by Judge Lagman five years earlier. Petitioners motion for reconsideration of the order of dismissal was denied by Judge de la Rosa per his Order9 dated April 12, 1993. On June 9, 1993, a petition for review on certiorari was filed by petitioner against the Regional Trial Court with this Court. On June 23, 1993, the Court issued a Resolution10 which reads: Considering that under Section 9 of Batas Pambansa Blg. 129, the Intermediate Appellate Court (Court of Appeals) now exercises exclusive appellate jurisdiction over all final judgments, decisions, resolutions, orders or awards of Regional Trial Courts and quasi-judicial agencies, instrumentalities, boards or commissions, the Court Resolved to REFER this case to the Court of Appeals, for disposition. The Court of Appeals re-docketed the petition as CA-G.R. SP No. 31483.

PHILIPPINE EXPORT AND FOREIGN LOAN GUARANTEE CORPORATION, petitionerappellant, vs. PHILIPPINE INFRASTRUCTURES, INC., PHILIPPINE BRITISH ASSURANCE CO., INC., THE SOLID GUARANTY, INC., B.F. HOMES, INC., PILAR DEVELOPMENT CORPORATION and TOMAS F. AGUIRRE, respondents-appellees. DECISION AUSTRIA-MARTINEZ, J.: Before the Court is a petition for review on certiorari under Rule 45 of the Rules of Court filed by Philippine Export and Foreign Loan Guarantee Corporation. Petitioner corporation seeks to set aside the Decision1 of the Court of Appeals dated August 31, 1994, dismissing CA-G.R. SP No. 31483; the Resolution dated May 18, 1995 denying petitioners motion f or reconsideration; the Order of the Regional Trial Court (Branch 29) of Manila, dated December 7, 1992, dismissing Civil Case No. 86-381692 and the Order dated April 12, 1993 denying the motion for reconsideration of said dismissal order. The antecedent facts are as follows: The case was commenced at the Regional Trial Court on October 30, 1986, upon the filing by herein petitioner of a complaint for collection of sum of money against herein respondents Philippine Infrastructures, Inc. (PII for brevity), Philippine British Assurance Co., Inc. (PBAC), The Solid Guaranty, Inc. (Solid), B.F. Homes, Inc. (BF Homes), Pilar Development Corporation (PDC) and Tomas B. Aguirre (Aguirre). The complaint alleges that: petitioner issued five separate Letters of Guarantee in favor of the Philippine National Bank (PNB) as security for various credit accommodations extended by PNB to respondent PII; respondents PII, BF Homes, PDC and Aguirre executed a Deed of Undertaking binding themselves, jointly and severally, to pay or reimburse petitioner upon demand such amount of money or to repair the damages, losses or penalties which petitioner may pay or suffer on account of its guarantees; as security for prompt payment by respondent PII, the latter submitted to petitioner, surety and performance bonds issued by respondents PBAC and Solid; on April 24, 1985, the PNB called on the guarantees of petitioner, and so, the latter demanded from respondent PII the immediate settlement of P20,959, 529.36, representing the aggregate amount of the guarantees of petitioner called by PNB and the further sum of P351,517.57 representing various fees and charges; PII refused to settle said obligations; petitioner likewise demanded payment from respondents Solid and PBAC but they also refused to pay petitioner; and because of the unjustified refusal of respondents to comply with their respective obligations, petitioner was constrained to secure the services of counsel and incur expenses for the purpose of prosecuting its valid claims against the respondents. It is prayed in the complaint that judgment be rendered ordering respondents PII, BF Homes, PDC and Aguirre to pay petitioner the amount of P21,311,046.93 plus interest and penalty charges thereon, ordering respondents Solid and PBAC to pay P5,758,000.00 and P9,596,000.00, respectively, under their surety and/or performance bonds and ordering respondents to pay petitioner the sums of P2,000,000.00 as attorneys fees and expenses of litigation and P50,000.00 as exemplary damages. Respondent BF Homes filed a Motion to Dismiss3 on the ground that it is undergoing rehabilitation receivership in the Securities and Exchange Commission (SEC) and pursuant to P.D. 902-A, the trial court has no jurisdiction to try the case. Respondent PII also filed a Motion

On August 31, 1994, the Court of Appeals promulgated the assailed Decision, dismissing the petition on the following grounds: FIRSTLY, an order of dismissal, whether right or wrong, is a final order. If it is erroneous, the remedy of the aggrieved party is appeal. Hence, the same cannot be assailed by certiorari, as in this case (Marahay vs. Malicor, 181 SCRA 811). Considering the Supreme Court Circular No. 2-90, paragraph 4 regarding an appeal by wrong mode, the order of dismissal in this case was therefore correctly issued by the respondent court a quo. SECONDLY, the real purpose of petitioner herein in asking the respondent court a quo for leave to amend its complaint was not ostensibly to make the complaint conform to the evidence presented, as petitioner alleges, but to introduce a cause of action then non-existing when the complaint was filed. The ruling in the leading case of Surigao Mine Exploration Co. vs. Harris (69 Phil. 113) does not allow such amendment. Hence, the trial court was correct in denying the amendment and instead it dismissed the case. THIRDLY, in the case at bar, the motion to dismiss was first denied but there is nothing in the Rules of Court which prohibits the court from later on reversing itself and granting the motion to dismiss. This ruling is supported by earlier decisions of the Supreme Court in Lucas vs. Mariano, et al (L29157, April 27, 1972) and Vda. De Haberer vs. Martinez, et al. (L-39386, Jan. 29, 1975) where the trial court dismissed the complaint, then set it aside and finally again ordered it dismissed. 11 On May 19, 1995, the appellate court issued a Resolution12 denying petitioners motion for reconsideration. Hence, on June 14, 1995, petitioner filed the present petition for review on certiorari, claiming that the Court of Appeals committed the following errors: I. THE HONORABLE COURT OF APPEALS AFFIRMATION OF THE REGIONAL TRIAL COURT JUDGES ORDER DISMISSING CIVIL CASE NO. 86-38169 MOTU PROPIO ON THE PREMISE THAT HIS PREDECESSOR JUDGE WAS IN ERROR IN NOT GRANTING THE MOTION TO DISMISS FILED YEARS BACK, ALLEGEDLY BECAUSE "THERE WAS NO CAUSE OF ACTION AT THE TIME OF THE FILING OF THE COMPLAINT" IS CONTRARY TO LAW AND JURISPRUDENCE. II. THE HONORABLE COURT OF APPEALS AFFIRMATION OF THE REGIONAL TRIAL COURT JUDGES ORDER IN NOT ALLOWING THE AMENDMENT OF THE COMPLAINT TO CONFORM TO THE EVIDENCE PRESENTED WITHOUT OBJECTIONS, IS CONTRARY TO LAW AND JURISPRUDENCE. III. THE HONORABLE COURT OF APPEALS ERRED IN FINDING THAT THE REAL PURPOSE OF PETITIONER-APPELLANT IN ASKING FOR LEAVE TO AMEND ITS COMPLAINT WAS NOT TO MAKE THE COMPLAINT CONFORM TO THE EVIDENCE PRESENTED BUT TO INTRODUCE A CAUSE OF ACTION THEN NONEXISTING WHEN THE COMPLAINT WAS FILED. IV. THE HONORABLE COURT OF APPEALS ERRED IN NOT GIVING DUE COURSE TO PETITIONER-APPELLANTS PETITION FOR REVIEW.13

Respondents, on the other hand, asseverate that the petitioner went to the Court of Appeals on a wrong remedy as the proper remedy was for it to appeal from the order of dismissal and not to file a petition for review on certiorari; and that the Court of Appeals committed no error in sustaining the lower court as the original complaint below failed to state a cause of action and the real purpose of the amendment was to introduce a subsequently acquired cause of action. The Court will first resolve the question whether an order dismissing a petition without prejudice should be appealed by way of ordinary appeal, petition for review on certiorari or a petition for certiorari. Indeed, prior to the 1997 Rules of Civil Procedure, an order dismissing an action may be appealed by ordinary appeal as what happened in Lucas vs. Mariano14 and Vda. de Haberer vs. Martinez,15 cited by the Court of Appeals in its assailed decision. However, in the advent of the 1997 Rules of Civil Procedure, Section 1(h), Rule 41 thereof expressly provides that no appeal may be taken from an order dismissing an action without prejudice. It may be subject of a special civil action for certiorari under Rule 65 of the Rules of Court, as amended by the said 1997 Rules of Civil Procedure. Considering that the assailed decision of the Court of Appeals was promulgated in 1994, respondent appellate court could not have committed any grave abuse of discretion in dismissing CA-G.R. SP No. 31483. Nevertheless, in the higher interest of substantial justice and pursuant to the hornbook doctrine that procedural laws may be applied retroactively,16 the Court gives due course to the present petition and will resolve the issue whether the Court of Appeals erred in affirming the lower courts order dismissing the complaint on the ground that petitioner failed to state a cause of action for not alleging loss or actual payment made by it to PNB under its guarantees. The trial court issued an order of dismissal in stead of granting a motion to amend complaint to conform to evidence, pursuant to Section 5, Rule 10 of the Revised Rules of Court, to wit: Sec. 5. Amendment to conform to or authorize presentation of evidence. When issues not raised by the pleadings are tried by express or implied consent of the parties, they shall be treated in all respects, as if they had been raised in the pleadings. Such amendment of the pleadings as may be necessary to cause them to conform to the evidence and to raise these issues may be made upon motion of any party at any time, even after judgment, but failure to amend does not affect the result of the trial of these issues. If evidence is objected to at the trial on the ground that it is not within the issues made by the pleadings, the court may allow the pleadings to be amended and shall do so freely when presentation of the merits of the action will be subserved thereby and the objecting party fails to satisfy the court that the admission of such evidence would prejudice him in maintaining his action or defense upon the merits. The court may grant a continuance to enable the objecting party to meet such evidence. It should be stressed that amendment was sought after petitioner had already presented evidence, more specifically, the testimony of petitioners Treasury Department Manager and a debit memo from the PNB (Exhibit "LL") proving that petitioner had paid the PNB in the amount of P19,035,256.57 pursuant to the guarantees it accorded to respondent PII. Petitioner avers that respondents did not raise any objection when it presented evidence to prove payment to PNB. Hence, as provided for in Section 5, Rule 10 of the Revised Rules of Court, when issues not raised by the pleadings are tried by express or implied consent of the parties, they shall be treated in all respects, as if they had been raised in the pleadings. A scrutiny of the pleadings filed by respondents reveal that none of them denied petitioners claim that said evidence was presented before the trial court without objections having been raised by respondents. None of them claimed that they raised any objections at the time when petitioner presented its evidence to prove its payment to PNB. Respondents Pilar and Aguirre admitted the presentation of the said evidence. Respondents contend that since they had already alleged the failure of the complaint to state a cause of action as an affirmative defense in their answer, there was no further need for them to raise an objection at the time the evidence was introduced. This is not plausible. In Bernardo, Sr. vs. Court of Appeals,17 respondents therein also put up in their answer the affirmative defense of failure of the complaint to state a cause of action and the parties went on to present their

respective evidence. The Court did not consider the allegation of this affirmative defense in the answer as an objection to evidence presented by the plaintiffs. Furthermore, the Court ruled that: The presentation of the contrariant evidence for and against imputations undoubtedly cured, clarified or expanded, as the case may be, whatever defects in the pleadings or vagueness in the issues there might have been in the amended complaint. . . . It is settled that even if the complaint be defective, but the parties go to trial thereon, and the plaintiff, without objection, introduces sufficient evidence to constitute the particular cause of action which it intended to allege in the original complaint, and the defendant voluntarily produces witnesses to meet the cause of action thus established, an issue is joined as fully and as effectively as if it had been previously joined by the most perfect pleadings. Likewise, when issues not raised by the pleadings are tried by express or implied consent of the parties, they shall be treated in all respects as if they had been raised in the pleadings.18 Evidently, herein respondents failure to object to the evidence at the time it is pres ented in court is fatal to their cause inasmuch as whatever perceived defect the complaint had was cured by the introduction of petitioners evidence proving actual loss sustained by petitioner due to payment made by it to PNB. Thus, the contention of respondents that the amendment would introduce a subsequently acquired cause of action as there was none at the time the original complaint was filed, is untenable. Furthermore, petitioners cause of action against respondents stemmed from the obligation of respondents PII, BF Homes, PDC and Aguirre under their Deed of Undertaking that was secured by the surety and performance bonds issued by respondents PBAC and Solid. Said Deed of Undertaking, which was annexed to and made an integral part of the complaint, provides as follows: ... NOW, THEREFORE, for and in consideration of the foregoing premises, the OBLIGOR [PII] and CO-OBLIGORS [BF HOMES, PILAR, AGUIRRE] hereby promise, undertake and bind themselves to keep the OBLIGEE [PETITIONER] free and harmless from any damage or liability which may arise out of the issuance of its guarantee referred to in the first "whereas" clause. By these presents, the OBLIGOR and CO-OBLIGORS further bind themselves, jointly and severally, to pay or reimburse on demand, such amount of money, or repair the damages, losses or penalties which the OBLIGEE may pay or suffer on account of the aforementioned guarantees. The OBLIGOR and CO-OBLIGORS further undertake to comply with and be bound by the aforementioned terms and conditions enumerated in the attached Annex "A" and to perform such other acts and deeds which the OBLIGEE may impose for the implementation of the aforementioned guarantees. It is a condition of this instrument that failure of the OBLIGOR and CO-OBLIGORS to comply with this undertaking and to make good the performance of the other obligations herein undertaken and/or promised, shall be sufficient cause for the OBLIGEE to consider such failure as an event of default which shall give to the OBLIGEE the right to take such action against the OBLIGOR and/or CO-OBLIGORS for the protection of the OBLIGEEs interests. . . .19 A reading of the foregoing provisions of the contract, specially the phrase "the OBLIGOR and CO-OBLIGORS hereby promise, undertake and bind themselves to keep the OBLIGEE free and harmless from any damage or liability which may arise out of the issuance of its guarantee referred to in the first whereas clause," shows that the Deed of Undertaking is actually an indemnity against liability. In Cochingyan, Jr. vs. R & B Surety and Insurance Co., Inc.,20 the Court held thus:

The petitioners lose sight of the fact that the Indemnity Agreements are contracts of indemnification not only against actual loss but against liability as well. While in a contract of indemnity against loss an indemnitor will not be liable until the person to be indemnified makes payment or sustains loss, in a contract of indemnity against liability, as in this case, the indemnitors liability arises as soon as the liability of the person to be indemnified has arisen without regard to whether or not he has suffered actual loss. ... (3) Petitioners are indemnitors of R & B Surety against both payments to and liability for payments to the PNB. The present suit is therefore not premature despite the fact that the PNB has not instituted any action against R & B Surety for the collection of its matured obligation under the Surety Bond.21 [Emphasis supplied] In the present petition, petitioner had become liable to pay the amounts covered by said guarantees when, as the original complaint alleges, the PNB called upon said guarantees. Respondents obligation under the Deed of Undertaking to keep petitioner free and harmless from any damage or liability then became operative as soon as the liability of petitioner arose and there was no need for petitioner to first sustain actual loss before it could have a cause of action against respondents. The mere inclusion in petitioners original complaint of the allegation that the PNB had already called on the guarantees of petitioner is sufficient to constitute a cause of action against respondents. Clearly therefore, the original complaint, by itself, stated a valid cause of action. Verily, it was patently erroneous on the part of the trial court not to have allowed the amendments as to make the complaint conform to petitioners evidence that was presented without any objection from respondents. The trial court likewise patently acted with grave abuse of discretion or in excess of its jurisdiction amounting to lack of jurisdiction when, acting on a mere motion to amend the complaint, it erroneously dismissed the complaint on the ground of failure to state a cause of action. Consequently, the Court of Appeals committed a reversible error in sustaining the trial court. WHEREFORE, the petition is GRANTED. The Decision of the Court of Appeals dated August 31, 1994 and its Resolution dated May 18, 1995 are REVERSED and SET ASIDE; and the Orders of the Regional Trial Court (Branch 29), Manila, dated December 7, 1992 and April 12, 1993 are NULL and VOID and SET ASIDE. Let the original records of Civil Case No. 86-38169 be REMANDED to the Regional Trial Court (Branch 29), Manila, for continuation of the trial on the merits. The presiding judge is directed to proceed with immediate dispatch upon receipt of the records of the case. Treble costs against private respondents. SO ORDERED.

Republic of the Philippines SUPREME COURT Manila EN BANC G.R. No. L-953 September 18, 1947

con las disposiciones del Tratado de Paz entre los Estados Unidos y Espaa, firmado en Paris el diez de diciembre de mil ochocientos noventa y ocho, y con excepcion de aquellos otros que despues de dicha fecha se hayan cuidadanos de algun otro pais: ... . El articulo 4 de la ley constitutiva de Filipina de 1.o de julio de 1902, es del tenor siguiente: "Todos los habitantes de los Islas Filipinas que residan en ellas y que el once deabril de mil ochocientos noventa y nueve eran subditos espaoles residentes en dichas Islas y sus hijos nacidos con posterioridad a aquella fecha, seran considerados y tenidos como cuidadanos de las Islas Filipinas y como tales conderecho a la proteccion de los Estados Unidos, exceptuandose aquellos que hayan eligado conservar su lealtad a la Corona de Espana, de acuerdo con las disposiciones del Tratado de Paz entre los Estados Unidos y Espaa firmado en Paris el diez de diciembre de mil ochocientos noventa y ocho." El acusado se llama Pedro Marcaida. Por su nombre y apellido, puede ser filipino, espaol o sudamericano. Nohay prueba de que era residente de Filipinas y subdito espaol el 11 de abril de 1899. Si era residente y no era subdito espaol no podia adquirir la cuidadania filipina porque continuaria siendo extranjero. Si era subdito espaol y residia en las Islas Filipinas el 11 de abril de 1899, automaticamente se hizo cuidadanofilipino a menos que haya optado por conservar la cuidadania espaol; pero como no hay pruebas en tal sentido, la presuncion es que el es filipino. Si nacio despues del 11 de abril de 1899 de padres que eran subditos espaol seguiria la nacionalidad de aquellos: espaol, si sus padres han querido de conservar su lealtad ala Corona de Espaa, y filipino, si optaron por perderla. No hay prueba presentada en un sentido u otro: puede serentonces espaol o filipino. Si nacio despues del 11 de abril de 1899 de padres filipinos es filipinos. Puede suceder que descendiente de un sudamericano que se haya establecido en la provincia de Quezon despues de la firma del Tratado de Paris; si su padre no quiso acogerse a las disposiciones de la ley de naturalizacion, entonces el acusado es extranjero: segue la nacionalidad de su padre. Si es descendiente de un cuidadano espaol que haya comenzado a residir en Filipinas despues del Tratado de Paris, continuaria siendo espaol a menos que se haya naturalizado. Tampoco hay pruebas en este sentido; entonces es espaol, extranjero. Paz Chua Uang por el mero hecho de haber nacido en Filipinas de fue declarada filipina porque no era sibdita espaola o hija de un subdito espaol el 11 de abril de 1899. (Chua contra Secretario del Trabajo, 68 Phil., 649.) Esta doctrina ha revocado implicitamente la de Roa contra Administrador Insular de Aduanas (23 Jur. Fil., 321) y otras posteriores. (Vao contra Administrador Insularde Aduanas, 23 Jur. Fil., 491; Estados Unidos contra Ong Tianse, 29 Jur. Fil., 352; Estados Unidos contra Ang, 36 Jur. Fil., 915; Go Julian contra Gobierno de las Islas Filipinas, 45 Jur. Fil., 301; Haw contra Administrador Insular de Aduanas, 59 Jur. Fil., 646.) En el asunto de Torres y Gallofin contra Tan Chim se adopto otra vezla teoria sentada en el asunto de Roa, pero el Tribunal estaba dividido en la proporcion de cuatro por tres. Elactual Presidente del Tribunal y el Magistrado Imperial eran disidentes. El magistrado Villareal opinaba que el simple nacimiento en filipinas no le hace a uno cuidadano filipino; pero concurrio en la parte dispositiva porque ladoctrina de Roa se estuvo

EL PUEBLO DE FILIPINAS, querellante-apelado, vs. PEDRO MARCAIDA, acusado-apelante. D. Victoriano H. Endaya en representacion del apelante. El Procurador General Auxiliar Sr. Ruperto Kapunan,Jr., y el Procurador Sr. Esmeraldo Umali en representacion del Gobierno. PABLO, J.: Satrata de una apelacion interpuesta por Pedro Marcaidaque fue condenado por el delito de traicion, despues de lavista correspondiente, a la pena de reclusion perpetua con las accesorias prescritas por la ley y al pago de una multa de P10,000 y las costas del juico. El apelante senala tres errores en que incurrio, segun el, el Tribunal del Pueblo.1.o Al declarar que la cuidadania y lealtad del acusado estaban suficientemente probados; 2.o Al dar credito al testimonio de los testigos de la acusacion; y 3.o Al declarar culpable al acusado del cargo No. 3. La defensa contiende que las pruebas obrantes en autos no prueban la cuindadania filipina y alianza del acusado algobierno del Commonwealth. La transcripcion de las notas taquigraficas dice aue el acusado es natural de Lopez (a native of Lopez). La defensa alega que el testigo declaro en Tagalog diciendo: "Taga Lopez" y no dijo "ay panganak sa Lopez." No aperece tal cosa en el expediente. Si fuese cierto, es extrao que el abogado no haya pedido el Juzgadoque ordenase al taquigrafo que hiciera constar asi en sus notas. Cuando una parte no esta conforme con la traduction de una declaracion de un testigo debe pedir que se haga constar en autos ne solamente la traduccion sino tambien la declaracion original traducida; en su defecto, sepresumira correcta la traduccion del interprete oficial. Pero aun admitiendo dice la defensa que el acusado fuese natural de Lopez, provincia de Quezon, su cuidadaniafilipina no esta debidamente probada. En apoyo de esta contencion invoca el articulo IV de la Constitucion, que entro en vigor el 15 de noviembre de 1935. (Articulo XVI, seccion 6, Constitucion.) La vista de esta causa tuvo lugarel 15 de julio de 1946. Si el acusado he nacido, por ejemplo, un dia despues que entro en vigor la Constitucion, en el dia de la vista no tendria mas que diez aos y ocho mesesde edad, y entonces cometio el delito a la edad de unos nueve aos. Aunque no consta en autos la fecha de sunacimiento, estamos seguros sin embargo que no era un nio de tal edad cuando entro en vista. No le hubiera querallado el fiscal de un delito tan grave. Indudablemente, nacio antes y no despues de entrar en vigor la Constitucion. No puede acogerse, por tanto, a sus disposiciones. El articulo 2 de la Ley Jones aprobada por el Congreso el 29 de agosto de 1916, dispone asi: "Que todos los habitantes de las Islas Filipinas que el once de abril de milochocientos noventa y nueve eran subditos espaoles y quea la sazon residian en dichas Islas, y sus hijos nacidos con posterioridad a aquella fecha, seran considerados y tenidos como cuidadanos de las Islas Filipinas, exceptuandose a aquellos que hayan preferido conservar su lealtad a laCorona de Espaa, de acuerdo

aplicando por mas de 20 aos. El principio de stare decisis es la razon principal que movio a la mayoria a volver a adoptar la teoria de Roa. En su disidencia, el actual Presidente del Tribunal decia: The majority says nothing in support of the correctness of theRoa ruling, and seeks simply to justify its continued observance upon the fact that it "had been adhered to and accepted for more than 20 years before the adoption of the Constitution," and that not "only this Court but also inferior courts had consistently and invariably followed it; the executive and administrative agencies of theGovernment had theretofore abide by it; and the general public had acquiesced in it. I do not yield to this judicial policy. If we induced the Government and the public to follow and accept an error for some time, it does not seem to be a good policy to continue inducing them to follow and accept the same error once discovered. The rule of stare decisis does not apply to the extent of perpetuating an error (15 C. J., p. 918.) It is the duty of every court to examine its own decisions without fear and to revise them reluctance (Baker vs. Lorillard, 4 N. Y., 257.) As was well said in a case, "I hold itto be the duty of this court freely to examine its own decisions, and, when satisfied that it has fallen into a mistake, to correct the error by overruling its own decision. An acknowledged error must be more venerable and more inveterate than it can be made by any single decision before it can claim impunity upon the principle of stare decisis." (Leavitt vs. Blatchaford, 17 N. Y., 521, 523.)"Precedents are to be regarded as the great storehouse of experience; not always to be followed, but to be looked to as beacon lights in the progress of judicial investigation." (Per Bartley, C. J., in Leavitt vs. Morrow, 6 Ohio St., 71, 78.) Their "authority must often yield to the force of reason, and to the paramount demands of justice as well as to the decencies of civilized society, and the law ought to speak with a voice responsive to these demands." (Norton vs. Randolph, 176 Ala., 381, 383, 58 S. 283.)" (Torres y Gallofin contra Tan Chim, 69 Phil., 518.) En los asuntos de Tan Chong contra Secretario del Trabajo, p. 249, ante, y Lam Swee Sang contra Commonwealth de Filipinas, p. 249, ante, hemos declarado definitivamente abandonada esta teoria y adoptado la deChua contra Secretario del Trabajo. La razon es sencilla. La teoria de jus soli en Estados Unidos es absoluta: elsimple nacimiento en Americano segun su constitucion y la decision en United States vs. Wong Kim Ark (169 U. S.,649). La constitucion americana nunca entro en vigor en Filipinas. La teoria de jus soli en Filipinas de acuerdo con la ley de 1.o de julio de 1902, aprobada por el Congreso Americano que, segun el Tratado de Paris, es el que ha dedeterminar la condicional: que el nacido en Filipinas esconsiderado cuidadano filipino si era residente y subdito espaol o hijo de un residente y subdito espaol en 11 de abril de 1899. Si era extranjero o hijo de un extranjero en aqeulla fecha no puede ser cuidadano filipino. El acusado pues, de acuerdo con las pruebas obrantes enautos, puede ser filipino o extranjero. Bajo la ley de traicion No. 292 de la Comision Civil, todo residente en Filipinas que, debiendo fidelidad a los EstadosUnidos o al Gobierno de las Islas Filipinas, les heciere guerra o formare causa comun con sus enemigos ayudandoles y socorriendoles dentro o fuera de dichas Islas, cometia el delito traicion. El articulo 1.o de esta ley es unasimple transplantacion de las dispocisiones del Codigo Criminal Americano que es del tenor siguente: "Whoever,owing allegiance to the United

States, levies war against them or adhere to their enemies, giving them aid and comfort within the United States or elsewhere, is guilty of treason." (Sec. 1, Crim. Code: R. S., sec. 5331; Mar. 4,1909, c. 321, sec. 1, 35 Stat., 1088.) "Treason against the United States," dice la Constitucion Americana, "shall consist only in levying against them,or in adhering to their Enemies, giving them aid and comfort." (Section 3 [1], Article III.) En Americana tanto los extranjros como los nacionales pueden cometer el delito de traicion. Los extranjeros deben lealtad al gobierno de America durante el tiempo de su residencia. (Carlisle vs. U. S., 21 Law. ed., 426; Raditch vs. Hutchins, 24 Law. ed., 409.) Los ingleses sostienen la misma teoria. (De Jager vs. Attorney General of Natal, 8 Ann. Cas., 76.) No es necesario ser cuidadano americano para que puedan cometer el delito de traicion. Pero el Codigo Penal Revisado he excluido a los extranjeros, solamente los nacionales pueden cometerlo. El articulo 114 dice asi: "El que, debiendo fidelidad a los Estados Unidos o al Gobierno de las Islas Filipinas, sinser de nacionalidad extranjera, les hiciere la guerra o formare causa comun con sus enemigos, ayudandoles o socorriendoles dentro o fuera de dichas Islas, sera castigado con las penas de reclusion temporal a muerte y multa que no exceda de viente mil pesos." La orden ejecutiva No.44, reconociendo que no era posible bajo el Codigo Penal Revisado castigar por el delito de traicion a los extranjeros residentes en Filipinas que han ayudado a los enemigos,enmendo el articulo 114, aadiendo un parrafo del tenor siguente: "Likewise, any alien, residing in the Philippine Islands, who commits acts of treason as defined in paragraph 1 of this article shall be punished by prision mayor to death and shall pay a fine not to exceed 20,000 pesos." (Executive Order No. 44, May 31, 1945.) Si el acusado es filipino, debe lealtad al Gobierno del Commonwealth y debe ser condenado por traicion; pero sies extranjero no puede ser castigado por actos cometidos por el antes de la enmienda del articulo 114 del CodigoPenal Revisado. Como las pruebas no establecen de unamanera clara que el acusado es filipino, no puede ser responsable criminalmente del delito de traicion. Se revoca la sentencia apelada. Se ordena su inmediata libertad con las costas de oficio.

Republic of the Philippines SUPREME COURT Manila FIRST DIVISION G.R. No. 137980 June 20, 2000

TALA REALTY SERVICES CORP., petitioner, vs. BANCO FILIPINO SAVINGS AND MORTGAGE BANK, respondent. YNARES-SANTIAGO, J.: The instant Petition presents a classic example where the application of the principle of stare decisis comes into play. The facts may be summarized as follows: Sometime in 1979, respondent Banco Filipino Savings and Mortgage Bank faced a legal problem with respect to its branch site holdings. Republic Act No. 337, otherwise known as the General Banking Act, provides that banks may only invest in real estate 1 up to fifty percent (50%) of their net worth. This ceiling on real estate holdings posed a bar to respondent's plans for expansion and to address the problem, its major stockholders agreed to set up an entity to which its existing branch sites may be unloaded. The said entity would also acquire new branch sites for it, with all such branch sites, including those unloaded, to be leased to respondent bank. It was thus that petitioner was organized, its name TALA being an acronym of four (4) of the major stockholders and directors of respondent, namely: Antonio Tiu, Tomas B. Aguirre, Nancy Lim Ty and Pedro B. Aguirre. On August 25, 1981, pursuant to the foregoing arrangement, respondent sold eleven (11) real estate properties housing its branch sites to petitioner, including the Davao branch site subject of the instant suit. Immediately following the sale, petitioner leased the same branch sites to respondent. According to respondent, petitioner was merely holding out such properties for it for a three percent (3%) per annum add-on to their carrying cost. Respondent further claims that it was part of their agreement that the said properties would be returned to it at its pleasure at the same transfer price. At present, therefore, there stand pending cases filed by respondent against petitioner for reconveyance of all such branch sites held by petitioner on the ground that the latter is a mere trustee of respondent. The present Petition, however, stems from an action for ejectment wherein the issue was which of two (2) different contracts of lease presented by each party governs them. For its part, petitioner presents an 11-year amended lease contract allegedly executed on August 25, 1981 before Notary Public Generoso Fulgencio. On the other hand, respondent presents a 20-year lease contract executed on the same date, August 25, 1981, but before Notary Public Jose Dimaisip. The lease arrangement subject of this case also covered the other branch sites held by petitioner in other locations, i.e., Malabon, Sta. Cruz, R. Hidalgo, Paraaque, Marikina, Malolos, Cabanatuan, Lucena, Urdaneta, La Union, Iloilo and Cotabato. Aside from the present case, therefore, other similar cases for ejectment have been filed where, ultimately, the question of which among the two lease contracts is valid becomes an issue.

Under the terms of the eleven-year amended contract presented by petitioner, the lease expired on August 31, 1992. Petitioner claims that thereafter, the lease was extended on a month-to-month basis on the condition that whatever terms and conditions are agreed upon would retroact to September 1, 1992. The parties' negotiations failed to yield any results, whereupon petitioner informed respondent that the rental rates shall be those it submitted to the latter, which were based on a study by the Asian Appraisal Co., Inc., retroactive to September 1, 1992. More particularly, rates were as follows: Two Hundred Thousand Eight Hundred Forty Pesos (P200,840.00) monthly with a rental escalation of ten percent (10%) per year, with four months deposit, four months advance deposit, and a Five Hundred Thousand Peso (P500,000.00) goodwill. Respondent refused to comply with these terms. Instead, it continued to pay rent in the old monthly rate until March 31, 1994, when it totally ceased paying any rent. This prompted petitioner to demand from respondent, in a letter dated April 14, 1994, payment of its accrued rentals. Petitioner also gave notice to respondent that at the end of the month, the month-to-month lease over the premises would no longer be renewed. This was followed by a letter, dated May 2, 1994, demanding that respondent pay its obligations under the lease and vacate the premises. On March 27, 1995, petitioner instituted a Complaint for Ejectment against respondent before the Municipal Trial Court of Davao City, docketed as Civil Case No. 2109-95. On June 5, 1995, respondent filed its Answer. After the submission of the parties' respective Position Papers, the court a quo rendered its Decision on July 2 20, 1995, dismissing the Complaint on the ground of lack of jurisdiction, after finding that the real issue, i.e., which of the two contracts of lease was controlling, was not capable of pecuniary estimation. On appeal, the Regional Trial Court of Davao City affirmed the decision in toto on 3 June 13, 1996. With the denial of its Motion for Reconsideration, petitioner filed a 4 Petition for Review with the Court of Appeals, docketed as CA-G.R. SP No. 48667. On January 12, 1999, the Court of Appeals rendered its now questioned Decision, holding that both lower courts erred in refusing to exercise jurisdiction over the case when the issue of validity of lease contract is intertwined with the issue of possession. However, it dismissed the Petition to maintain judicial stability and consistency, it appearing that in other similar ejectment suits brought before the Court of Appeals, the twenty-year lease contract presented by respondent had been upheld. Petitioner's Motion for Reconsideration was granted in that respondent was ordered to pay 6 unpaid rentals to petitioner. Subsequently, however, on Motion for Reconsideration of respondent, the Court of Appeals reversed itself and revoked its order for payment 7 of back rentals. Petitioner now seeks a reversal of the Decision of the Court of Appeals upon the following grounds I THE HONORABLE COURT OF APPEALS ERRED IN CONSIDERING THE RULING OF THE COURT IN CA-G.R. NO. 39104 AS THE LAW OF THE CASE BETWEEN HEREIN PARTIES. II
5

THE HONORABLE COURT BELOW ERRED IN NOT EJECTING 8 RESPONDENT FROM THE LEASED PREMISES. In its favor, respondent argues that "only decisions of the Supreme Court establish jurisprudence or doctrines." And that is exactly what we are faced with at present. On February 17, 2000, the Second Division of this Court, through Mr. Justice Sabino R. De Leon, Jr., rendered a Decision in G.R. No. 129887 between the same parties, this time involving respondent's Urdaneta, Pangasinan branch, finding the elevenyear lease contract presented by petitioner as a forgery and consequently upholding the validity of the twenty-year lease contract. Resolving this identical issue, the Decision states, to wit Second. Petitioner Tala Realty insists that its eleven (11)-year lease contract controls. We agree with the MTC and the RTC, however, that the eleven (11)-year contract is a forgery because (1) Teodoro O. Arcenas, then Executive Vice-President of private respondent Banco Filipino, denied having signed the contract; (2) the records of the notary public who notarized the said contract, Atty. Generoso S. Fulgencio, Jr., do not include the said document; and (3) the said contract was never submitted to the Central Bank as required by the latter's rules and regulations ( Rollo, pp. 383-384.). Clearly, the foregoing circumstances are badges of fraud and simulation that rightly make any court suspicious and wary of imputing any legitimacy and validity to the said lease contract. Executive Vice-President Arcenas of private respondent Banco Filipino testified that he was responsible for the daily operations of said bank. He denied having signed the eleven (11)-year contract and reasoned that it was not in the interest of Banco Filipino to do so ( Rollo, p. 384). That fact was corroborated by Josefina C. Salvador, typist of Banco Filipino's Legal Department, who allegedly witnessed the said contract and whose initials allegedly appear in all the pages thereof. She disowned the said marginal initials (Id., p. 385). The Executive Judge of the RTC supervises a notary public by requiring submission to the Office of the Clerk of Court of his monthly notarial report with copies of acknowledged documents thereto attached. Under this procedure and requirement of the Notarial Law, failure to submit such notarial report and copies of acknowledged documents has dire consequences including the possible revocation of the notary's notarial commission. The fact that the notary public who notarized petitioner Tala Realty's alleged eleven (11)-year lease contract did not retain a copy thereof for submission to the Office of the Clerk of Court of the proper RTC militates against the use of said document as a basis to uphold petitioner's claim. The said alleged eleven (11)-year lease contract was not submitted to the Central Bank whose strict documentation rules must be complied with by banks to ensure their continued good standing. On the contrary, what was submitted to the Central Bank was the twenty (20)-year lease contract. Granting arguendo that private respondent Banco Filipino deliberately omitted to submit the eleven (11)-year contract to the Central Bank, we do not consider that fact as violative of the res inter alios acta aliis non nocet

(Section 28, Rule 130, Revised Rules of Court provides, viz.: "Sec. 28. Admission by third party The rights of a party cannot be prejudiced by an act, declaration or omission of another, except as hereinafter provided."; Compania General de Tabacos v. Ganson, 13 Phil. 472, 477 [1909]) rule in evidence. Rather, it is an indication of said contract's inexistence. It is not the eleven (11)-year lease contract but the twenty (20)-year lease contract which is the real and genuine contract between petitioner Tala Realty and private respondent Banco Filipino. Considering that the twenty (20)-year lease contract is still subsisting and will expire in 2001 yet, Banco Filipino is entitled to the possession of the subject premises for as long as it pays the agreed rental and does not violate the other terms and conditions thereof (Art. 1673, New Civil Code). In light of the foregoing recent Decision of this Court, we have no option but to uphold the twenty-year lease contract over the eleven-year contract presented by petitioner. It is the better practice that when a court has laid down a principle of law as applicable to a certain state of facts, it will adhere to that principle and apply it to all future cases where the facts are substantially the same. " Stare decisis et non quieta 9 movere." That the principle of stare decisis applies in the instant case, even though the subject property is different, may be gleaned from the pronouncement in Negros Navigation 10 Co., Inc. vs. Court of Appeals, to wit Petitioner criticizes the lower court's reliance on the Mecenas case, arguing that although this case arose out of the same incident as that involved in Mecenas, the parties are different and trial was conducted separately. Petitioner contends that the decision in this case should be based on the allegations and defenses pleaded and evidence adduced in it or, in short, on the record of this case. The contention is without merit. What petitioner contends may be true with respect to the merits of the individual claims against petitioner but not as to the cause of the sinking of its ship on April 22, 1980 and its liability for such accident, of which there is only one truth. Otherwise, one would be subscribing to the sophistry: truth on one side of the Pyrenees, falsehood on the other! Adherence to the Mecenas case is dictated by this Court's policy of maintaining stability in jurisprudence in accordance with the legal maxim "stare decisis et non quieta movere" (Follow past precedents and do not disturb what has been settled.) Where, as in this case, the same questions relating to the same event have been put forward by parties similarly situated as in a previous case litigated and decided by a competent court , the rule of stare decisis is a bar to any attempt to relitigate the same issue (J.M. Tuason & Corp. v. Mariano, 85 SCRA 644 [1978]). In Woulfe v. Associated Realties Corporation (130 N.J. Eq. 519, 23 A. 2d 399, 401 [1942]), the Supreme Court of New Jersey held that where substantially similar cases to the pending case were presented and applicable principles declared in prior decisions, the court was bound by the principle of stare decisis. Similarly, in State ex rel. Tollinger v. Gill (75 Ohio App., 62 N.E. 2d 760 [1944]), it was held that under the doctrine of stare decisis a ruling is final even as to parties who are strangers to the original proceeding and not

bound by the judgment under the res judicata doctrine. The Philadelphia court expressed itself in this wise: " Stare decisis simply declares that, for the sake of certainty, a conclusion reached in one case should be applied to those which follow, if the facts are substantially the same, even though the parties may be different" (Heisler v. Thomas Colliery Co., 274 Pa. 448, 452, 118A, 394, 395 [1922]. Manogahela Street Ry, Co. v. Philadelphia Co., 350 Pa. 603, 39 A. 2d 909, 916 [1944]; In re Burtt's Estate, 353 Pa. 217, 4 A. 2d 670, 677 [1945]). Thus, in J. M. Tuason v. Mariano, supra, this Court relied on its rulings in other cases involving different parties in sustaining the validity of a land title on the principle of "stare decisis et non quieta movere." (emphasis, Ours) Here, therefore, even if the property subject of the Decision of G.R. No. 129887 is located in Urdaneta, Pangasinan while that in the instant case is located in Davao, we can very well apply the conclusion in G.R. No. 129887 that it is the twenty-year lease contract which is controlling inasmuch as not only are the parties the same, but more importantly, the issue regarding its validity is one and the same and, hence, should no longer be relitigated. Petitioner is even barred from questioning our adherence to the ruling in G.R. No. 129887 since it categorically declared in its Petition that the same was "likewise filed so that any favorable ruling in said petitions (referring to G.R. Nos. 129887 and 11 132051) may be extended or made to apply in the instant case." Petitioner cannot now complain that the ruling in G.R. No. 129887 regarding the validity of the twentyyear lease contract is not binding in this case simply because the same is unfavorable to it. Coming now to the issue of whether or not respondent should be ejected for nonpayment of rentals, we do not agree with the ruling in G.R. No. 129887 that since the unpaid rentals demanded by petitioner were based on a new rate which it unilaterally imposed and to which respondent did not agree, there lies no ground for ejectment. In such a case, there could still be ground for ejectment based on non-payment of 12 rentals. The recent case of T & C Development Corporation vs. Court of Appeals is instructional on this point. It was there cautioned that The trial court found that private respondent had failed to pay the monthly rental of P1,800.00 from November 1992 to February 16, 1993, despite demands to pay and to vacate the premises made by petitioner. Even if private respondent deposited the rents in arrears in the bank, this fact cannot alter the legal situation of private respondent since the account was opened in private respondent's name. Clearly, there was cause for the ejectment of private respondent. Although the increase in monthly rentals from P700.00 to P1,800.00 was in excess of 20% allowed by B.P. Blg. 877, as amended by R.A. No. 6828, what private respondent could have done was to deposit the original rent of P700.00 either with the judicial authorities or in a bank in the name of, and with notice to, petitioner. As this Court held in Uy v. Court of Appeals (178 SCRA 671, 676 [1989]): The records reveal that the new rentals demanded since 1979 (P150.00 per month) exceed that allowed by law so refusal on the part of the lessor to accept was justified. However, what the lessee should have done was to deposit in 1979 the previous rent. This deposit in the Bank was made only in 1984 indicating a delay of more than four years.

From the foregoing facts, it is clear that the lessor was correct in asking for the ejectment of the delinquent lessee. Moreover, he should be granted not only the current rentals but also all the rentals in arrears. This is so even if the lessor himself did not appeal because as ruled by this Court, there have been instances when substantial justice demands the giving of the proper reliefs." (Emphasis, ours). While advance rentals appear to have been made to be applied for the payment of rentals due from the eleventh year to the twentieth year of the lease, to wit 3. That upon the signing and execution of this Contract, the LESSEE shall pay the LESSOR ONE MILLION TWENTY THOUSAND PESOS ONLY (P1,020,000.00) Philippine Currency representing advance rental to be applied on the monthly rental for the period from the eleventh to the 1 twentieth year, the records show that such advance rental had already been applied for rent on the 14 property for the period of August, 1985 to November, 1989. Thus, when respondent stopped paying any rent at all beginning April, 1994, it gave 15 petitioner good ground for instituting ejectment proceedings. We reiterate the ruling in T & C Development Corporation, supra, that if ever petitioner took exception to the unilateral or illegal increase in rental rate, it should not have completely stopped paying rent but should have deposited the original rent amount with the judicial authorities or in a bank in the name of, and with notice to, petitioner. This circumstance, i.e., respondent's failure to pay the rent at the old rate, does not appear in G.R. No. 129887. Thus, while we are bound by the findings of this Court's Second Division in that case under the principle of stare decisis, the fact that respondent's failure to pay any rentals beginning April 1994, which provided ground for its ejectment from the premises, justifies our departure from the outcome of G.R. No. 129887. In this case, we uphold petitioner's right to eject respondent from the leased premises. WHEREFORE, for the reasons aforestated, the instant Petition is GRANTED. The Decision in CA-G.R. SP No. 48667 is SET ASIDE insofar as it denies the prayer for ejectment of petitioner. Judgment is rendered ordering respondent to vacate the subject premises and to restore possession thereof to petitioner. Respondent is also ordered to pay rent in the amount of P20,500.00 per month computed from April, 1994 until such time as it vacates the subject property, with interest thereon at the legal rate. No pronouncement as to costs. SO ORDERED.

Republic of the Philippines SUPREME COURT Manila EN BANC G.R. No. 47616 September 16, 1947

649), this Court abandoned it and held that a person of Chinese parentage born in the Philippines in 1941 is not a citizen thereof, because she followed the citizenship of her Chinese parents and she is not a citizen of the Philippines under the provisions of section 2 of the Jones Law, the Act of Congress of 29 August 1916. But in the cases of Torres and Gallofin vs. Tan Chim (69 Phil., 518), decided on 3 February 1940 (69 Phil., 518), and Gallofin vs. Ordoez, decided on 27 June 1940 (70 Phil., 287), this Court reverted to the rule of jus soli laid down in the cases prior to the decisionin the case of Chua vs. Secretary of Labor, supra. The Solicitor General heeding the opinions of the Assitant Secretary of State, Mr. G.S. Messermith, of 15 January 1938; of the Second Assistant Secretary of State, Mr. Alvey A. Adee, dated 12 September 1921, and of the Acting Secretary of State, Mr. Huntington Wilson, of 5April 1912, who held that a person born in the Philippines of alien parentage is not a citizen thereof, because the common law principle of jus soli or the Fourteenth Amendment to the Constitutiton of United States was not extended to the Philippines the same opinions upon which the Solicitor General had relied in the case of Chua vs. The Secretary of Labor, supra, in his contention that the rule applying the principle of jus soli in this jurisdiction should be abandoned urges upon this Court to reconsider its decisions in the cases under consideration. In the case of Muoz vs. Collector of Customs, 20 Phil.,494, the Court applied the principle of jus soli to a person born in the Philippines of a Chinese father and a Filipino mother, and in so doing it cited the case of U.S. vs. Gosiaco, 12 Phil., 490 where, according to the Court, the principle had been applied. But nowhere in the decision of the last mentioned case was such principle applied, because the only question passed upon was whether a person detained for not having a certificate of registration, as required by Act 702, could be admitted to bail pending determination of his appeal by this Court as to whether he did come within the provisions of said Act. In the case of Roa vs. Collector of Customs, 23 Phil.,315, this Court passed upon the question as to whether a person born in the Philippines of a Chinese father and a Filipino mother, legally married; is a citizen thereof. In this case this Court took into consideration the provisions of articles 17, 18 and 19 of the Civil Code in viewof the fact that the petitioner was born on 6 July 1889; the second paragraph of Article IX of the Treaty of Paris; section 4 of the Philippine Bill (Act of Congress of 1 July 1902) and the amendatory Act of Congress of 23 March 1912, these being the laws then applicable. Commenting on sec. 4 of the Philippine Bill, as amended, this Court said: By section 4 the doctrine or principle of citizenship by place of birth which prevails in the United States was extended to the Philippine Islands, but with limitations. In the United States every person, which certain specific exceptions, born in the United States is a citizen of that country. Under section 4 every person born after the 11th of April, 1889, of parents who were Spanish subjects on that date and who continued to reside in this country are at themoment of their birth ipso facto citizens of the Philippine Islands. From the reading of section 4 and taking into consideration the Act of March 23, 1912, it is clear that Congress realized that there were inhabitants in the Philippine Islands who did not come within the provisions of said section, and also that Congress did not then by express legislation determine the political status of such persons. Therefore, the inquiry is Did Congress intend to say that all of the inhabitants who were not included in section 4 are to be "deemedand held to be" aliens to the Philippine islands? (Pp. 333-334.) (Emphasis supplied.) In answering the question in the negative, this Court cited the case of an unmarried woman, a native of Porto Rico, 20 years of age, who arrived in New York by steamer from Porto Rico on 24 August 1902. She was detained at the Immigrant station, examined by a board of special inquiry, and excluded. The writ for habeas corpus having been denied by the Circuit Court, for the reason that she might become a public charge, she appealed to the Supreme Court of the United States which held that she was not an alien to the United States. But the decision of the Supreme Court of the United States in the case cited does not answer negatively the question asked by this Court, because it does not appear that she is of alien parentage and it appears that she was a resident of Porto Rico on11 April 1899. (192 U.S. 1.) Further commenting on section 4, this Court said:

JOSE TAN CHONG, petitioner-appellee, vs. THE SECRETARY OF LABOR, respondent-appellant. x---------------------------------------------------------x G.R. No. 47623 September 16, 1947

LAM SWEE SANG, petitioner-appellee, vs. THE COMMONWEALTH OF THE PHILIPPINES, oppositor-appellant. First Assistance Solicitor General Jose B. L. Reyes and Solicitor Lucas Lacson for appellants. Antonio V. Raquiza for appellee. PADILLA, J.: On 15 October 1941, a decision was promulgated in thecase of Tan Chong vs. Secretary of Labor, G.R. No. 47616,whereby this Court affirmed the judgment of the Court of First Instance of Manila, which hAd granted the writ of habeas corpus applied for by tan Chong, on the ground that he, being a native of the Philippines, of a Chinese father and a Filipino mother, is a citizen of the Philippines. On the same date, in the case of Lam Swee Sang vs. Commonwealth of the Philippines (G.R. No. 47623), this Court rendered a decision dismissing the petition of the applicant for naturalization filed in the Court of First Instance of Zamboanga, on the ground that the applicant, having been born in Sulu, Philippines, of a Chinese father and Filipino mother, is a citizen of the Philippines. The dismissal of the petition implies and means that there was no need of naturalization for the applicant who is aFilipino citizen. On 21 October 1941, a motion for reconsideration was filed in both cases by the Solicitor General. The latter contends that even if the petitioner in the first case and the applicant in the second were born in the Philippines, of a Chines father and a Filipino mother, lawfully married, still they are not citizens of the Philippines under and pursuant to the laws in force at the time of their birth, and prays that both decisions be set aside and the judgments appealed from be reversed. This motion for reconsideration was pending in this Court when the Pacific was broke out. During the battle for liberation, the records of both cases were destroyed. Upon petition of the Assistant Solicitor General, Mr. Roberto A. Gianzon, therecords were reconstituted in accordance with the provisionsof Act. No. 3110. The record of the first case, G.R. No. 47616,was declared reconstituted on 5 June, and of the second case, G.R. No. 47623, on 28 June 1946. Upon these reconstituted records, we now proceed to dispose of the motion for reconsideration. In a long line of decisions, this Court has held that the principle of jus soli applies in this jurisdiction. It is embodied in the Fourteenth Amendment to the Constitution of the United States which provides that "All persons born or naturalized in the United States, and subject to the jurisdiction thereof, are citizens of the United States and of the state wherein they reside." In the case of U.S. vs. Wong Kim Ark, 169 U.S., 649, the SupremeCourt of the United States applying the principle of jus soli held that a person born in the United States of Chinese parents domiciled therein is a citizen of the United States. It further held that the Fourteenth Amendment was declaratory of the common law as existed in England and in the United States before and after the Declaration of independence. From that decision, Mr. Chief Justice Fuller, with whom concurred Mr. Justice Harlan, dissented. The principle of jus soli was the rule in this jurisdiction until the 30th of September, 1939, when in the case of Chua vs. Secretary of Labor (68 Phil.,

This section declares that a certain class of inhabitants shall be citizens of the Philippine Islands. It does not declare that other inhabitants shall not be citizens. Neither does it declare that other inhabitants shall be deemed to be aliens to the Philippine Islands, and especially it does not declare that aperson situated as in the appellant shall not be nor shall not elect to be a citizen of the country on his birth. The appellant could, as we have said, elect to become a citizen of the United States had he been born in that country under the same circumstances which now surround him. All the laws and the rulings of the courts on the subject so declare, and this has been the declared policy of the United States. While it has been decided that the Constitution and acts of Congress do not apply ex proprio vigore to this country, but that they must be expressly entended by Congress, nevertheless, some of the basic principles upon which the government of the United States rests and the greater part of the Bill of Rights, which protects the citizens of that country, have been extended to the Philippine Islands by the instructions of the President to the first Philippine Commission and the Philippine Bill. (P. 339-340.) The declaration that a certain class of inhabitants shall be citizens of the Philippines is tantamount or equivalent to declaring that those who do not belong to that class shall not be. Realizing the weakness of the position taken, in view of the express provisions of section 4 of the Philippine Bill, as amended, and of the fact that the Constitution of the United States and Acts of Congress do not apply ex proprio vigore to the Philippines, the Court hastened to add another ground in support of the pronouncement that petitioner Roa is a Filipino citizen, and for that reason entitled to land and reside in the Philippines. The additional ground is that the petitioner's father having died in China in 1900, his mother reacquired her Filipino citizenship which he being under age followed upon the death of his father. The concluding pronouncement in the decisionof the case is, as follows: The nationality of the appellant having followed that of his mother, he was therefore a citizen of the Philippine Islands on July 1, 1902, and never having expatriated himself, he still remains a citizen of this country. If all the native inhabitants residing in the Philippines on the 11th day of April 1899, regardless of their alien parentage, are citizens thereof, the amendatory Act of Congress of 23 March 1912 empowering the Philippine Legislature to provide by legislation for the acquisition of Filipino citizenship by those natives excluded from such citizenship by the original section 4 of the Philippine Bill, would be meaningless. We are not unmindful of the importance of the question submitted to us for decision. We know that the decision upon the motion for reconsideration in these cases is momentous. We have given the time and the thought demanded by its importance. While birth is an important element of citizenship, it alone does not make a person a citizen of the country of his birth. Youth spent in the country; intimate and endearing association with the citizens among whom he lives; knowledge and pride of the country's past; belief in the greatness and security of its institutions, in the loftiness of its ideals, and in the ability of the country's government to protect him, his children, and his earthly possessions against perils from within and from without; and his readiness to defend the country against such perils, are some of the important elements that would make a person living in a country its citizen. Citizenship is a political status. The citizen must be proud of his citizenship. He should treasure and cherish it. In the language of Mr. Chief Justice Fuller, "the question of citizenship in a nation is of the most vital importance. It is a precious heritage, as well as an inestimable acquisition." (U.S. vs. Wong Kim Ark, supra.) Citizenship, the main integrate element of which is allegiance, must not be taken lightly. Dual allegiance must be discouraged and prevented. But the application of the principle of jus soli to persons born in this country of alien parentage would encourage dual allegiance which in the long run would be detrimental to both countries of which such persons might claim to be citizens. The pinciple of stare decisis does not mean blind adherence to precedents. The doctrines or rule laid down, which has been followed for years, no matter how sound it may be, if found to be contrary to law, must be abandoned. The principleof stare decisis does not and should not apply when there is conflict between the precedent and the law. The duty of this Court is to forsake and abandon any doctrine or rule found to be in violation of the law in force.

It appears that the petitioner in the first case was born in San Pablo, Laguna, in July 1915, of a Chinese father and a Filipino mother, lawfully married, left for China in 1925, and returned to the Philippines on 25 January1940. The applicant in the second case was born in Jolo, Sulu, on 8 May 1900, of a Chinese father and a Filipino mother. It does not appear whether they were legally married, so in the absence of proof to the contrary they are presumed to be lawfully married. From the date of his birth up to 16 November 1938, the date of filing of his application for naturalization, and up to the date of hearing, he had been residing in the Philippines. He is married to a Filipino woman and has three children by her. He speaks the local dialect and the Spanish and English languages. Considering that the common law principle or rule of jus soli obtaining in England and in the United States, as embodied in the Fourteenth Amendment to the Constitution of the United States, has never been entended to this jurisdiction (section 1, Act of 1 July 1902; sec. 5, Actof 29 August 1916); considering that the law in force and applicable to the petitioner and the applicant in the two cases at the time of their birth is sec. 4 of the Philippine Bill (Act of 1 July 1902), as amended by Act of 23 March 1912, which provides that only those "inhabitants of the Philippine Islands continuing to reside therein who were Spanish subjects on the 11th day of April, 1899, and then resided in said Islands, and their children born subsequent thereto, shall be deemed and held to be citizens of the Philippine Islands," we are of the opinion and so hold that the petitioner in the first case and the applicant in the second case, who were born of alien parentage, were not and are not, under saidsection, citizens of the Philippine Islands. Needless to say, this decision is not intended or designed to deprive, as it cannot divest, of their Filipino citizenship, those who had been declared to be Filipino citizens, or upon whom such citizenship had been conferred, by the courts because of the doctrine or principle of res adjudicata. Accordingly, the decision of this Court in the first case confirming the lower court's judgment is set aside; the judgment of the Court of First Instance of Manila appealed from is reversed; the petitioner is recommitted to the custody of the Commissioner of Immigration to be dealt with in accordance with law; and the decision of this Court in the second case is set aside; the decree of theCourt of First Instance of Zamboanga appealed from granting the applicant's peition for naturalization filed on16 November 1938 is affirmed, for the applicant comes under section 1 (a), Act 2927, as amended by Act 3448, and possesses the qualifications required by setion 3 of the same Act, as amended, which was the law in force at the time of the filing of the petition for naturalization. No costs shall be taxed in both cases.

Republic of the Philippines SUPREME COURT Manila EN BANC

vs. THE DIVISION SUPERINTENDENT OF SCHOOLS OF CEBU and ANTONIO A. SANGUTAN, respondents. Felino M. Ganal for petitioners. The Solicitor General for respondents.

G.R. No. 95770 March 1, 1993 ROEL EBRALINAG, EMILY EBRALINAG, represented by their parents MR. & MRS. LEONARDO EBRALINAG, JUSTINIANA TANTOG, represented by her father AMOS TANTOG; JEMILOYAO & JOEL OYAO, represented by their parents MR. & MRS. ELIEZER OYAO; JANETH DIAMOS & JEREMIAS DIAMOS, represented by parents MR. & MRS. GODOFREDO DIAMOS; SARA OSTIA & JONATHAN OSTIA, represented by their parents MR. & MRS. FAUTO OSTIA; IRVIN SEQUINO & RENAN SEQUINO, represented by their parents MR. & MRS. LYDIO SEQUINO; NAPTHALE TANACAO, represented by his parents MR. & MRS. MANUEL TANACAO; PRECILA PINO, represented by her parents MR. & MRS. FELIPE PINO; MARICRIS ALFAR, RUWINA ALFAR, represented by their parents MR. & MRS. HERMINIGILDO ALFAR; FREDESMINDA ALFAR & GUMERSINDO ALFAR, represented by their parents ABDON ALFAR; ALBERTO ALFAR & ARISTIO ALFAR, represented by their parents MR. & MRS. GENEROSO ALFAR; MARTINO VILLAR, represented by his parents MR. & MRS. GENARO VILLAR; PERGEBRIEL GUINITA & CHAREN GUINITA, represented by their parents MR. & MRS. CESAR GUINITA; ALVIN DOOP, represented by his parents MR. & MRS. LEONIDES DOOP; RHILYN LAUDE, represented by her parents MR. & MRS. RENE LAUDE; LEOREMINDA MONARES, represented by her parents, MR. & MRS. FLORENCIO MONARES; MERCY MONTECILLO, represented by her parents MR. & MRS. MANUEL MONTECILLO; ROBERTO TANGAHA, represented by his parent ILUMINADA TANGAHA; EVELYN, MARIA & FLORA TANGAHA, represented by their parents MR. & MRS. ALBERTO TANGAHA; MAXIMO EBRALINAG, represented by his parents, MR. & MRS. PAQUITO EBRALINAG; JUTA CUMON, GIDEON CUMON & JONATHAN CUMON, represented by their father RAFAEL CUMON; EVIE LUMAKANG & JUNAR LUMAKANG, represented by their parents MR. & MRS. LUMAKANG; EMILIO SARSOZO, PAZ AMOR SARSOZO & IGNA MARIE SARSOZO, represented by their parents MR. & MRS. VIRGILIO SARSOZO; MICHAEL JOSEPH & HENRY JOSEPH, represented by parent ANNIE JOSEPH; EMERSON TABLASON & MASTERLOU TABLASON, represented by their parent EMERLITO TABLASON, petitioners, vs. THE DIVISION SUPERINTENDENT OF SCHOOLS OF CEBU, respondent. G.R. No. 95887 March 1, 1993 MAY AMOLO, represented by her parents MR. & MRS. ISAIAS AMOLO; REDFORD ALSADO, JOEBERT ALSADO & RUDYARD ALSADO, represented by their parents MR. & MRS. ABELARDO ALSADO; NELIA ALSADO, REU ALSADO & LILIBETH ALSADO, represented by their parents MR. & MRS. ROLANDO ALSADO; SUZETTE NAPOLES, represented by her parents ISMAILITO NAPOLES & OPHELIA NAPOLES; JESICA CARMELOTES, represented by her parents MR. & MRS. SERGIO CARMELOTES; BABY JEAN MACAPAS, represented by her parents MR. & MRS. TORIBIO MACAPAS; GERALDINE ALSADO, represented by her parents MR. & MRS. JOEL ALSADO; RAQUEL DEMOTOR & LEAH DEMOTOR, represented by their parents MR. & MRS. LEONARDO DEMOTOR; JURELL VILLA & MELONEY VILLA, represented by their parents MR. & MRS. JOVENIANO VILLA; JONELL HOPE MAHINAY, MARY GRACE MAHINAY and MAGDALENE MAHINAY, represented by their parents MR. & MRS. FELIX MAHINAY; JONALYN ANTIOLA and JERWIN ANTIOLA, represented by their parents FELIFE ANTIOLA and ANECITA ANTIOLA; MARIA CONCEPCION CABUYAO, represented by her parents WENIFREDO CABUYAO and ESTRELLITA CABUYAO, NOEMI TURNO represented by her parents MANUEL TURNO and VEVENCIA TURNO; SOLOMON PALATULON, SALMERO PALATULON and ROSALINDA PALATULON, represented by their parents MARTILLANO PALATULON and CARMILA PALATULON, petitioners, GRIO-AQUINO, J.: These two special civil actions for certiorari, Mandamus and Prohibition were consolidated because they raise essentially the same issue: whether school children who are members or a religious sect known as Jehovah's Witnesses may be expelled from school (both public and private), for refusing, on account of their religious beliefs, to take part in the flag ceremony which includes playing (by a band) or singing the Philippine national anthem, saluting the Philippine flag and reciting the patriotic pledge. In G.R. No. 95770 "Roel Ebralinag, et al. vs. Division Superintendent of Schools of Cebu and Manuel F. Biongcog, Cebu District Supervisor," the petitioners are 43 high school and elementary school students in the towns of Daan Bantayan, Pinamungajan, Carcar, and Taburan Cebu province. All minors, they are assisted by their parents who belong to the religious group known as Jehovah's Witnesses which claims some 100,000 "baptized publishers" in the Philippines. In G.R. No. 95887, "May Amolo, et al. vs. Division Superintendent of Schools of Cebu and Antonio A. Sangutan," the petitioners are 25 high school and grade school students enrolled in public schools in Asturias, Cebu, whose parents are Jehovah's Witnesses. Both petitions were prepared by the same counsel, Attorney Felino M. Ganal. All the petitioners in these two cases were expelled from their classes by the public school authorities in Cebu for refusing to salute the flag, sing the national anthem and recite the patriotic pledge as required by Republic Act No. 1265 of July 11, 1955, and by Department Order No. 8 dated July 21, 1955 of the Department of Education, Culture and Sports (DECS) making the flag ceremony compulsory in all educational institutions. Republic Act No. 1265 provides: Sec. 1. All educational institutions shall henceforth observe daily flag ceremony, which shall be simple and dignified and shall include the playing or singing of the Philippine National anthem. Sec. 2. The Secretary of Education is hereby authorized and directed to issue or cause to be issued rules and regulations for the proper conduct of the flag ceremony herein provided. Sec. 3. Failure or refusal to observe the flag ceremony provided by this Act and in accordance with rules and regulations issued by the Secretary of Education, after proper notice and hearing, shall subject the educational institution concerned and its head to public censure as an administrative punishment which shall be published at least once in a newspaper of general circulation. In case of failure to observe for the second time the flag-ceremony provided by this Act, the Secretary of Education, after proper notice and hearing, shall cause the cancellation of the recognition or permit of the private educational institution responsible for such failure. The implementing rules and regulations in Department Order No. 8 provide: RULES AND REGULATIONS FOR CONDUCTING CEREMONY IN ALL EDUCATIONAL INSTITUTIONS. THE FLAG

1. The Filipino Flag shall be displayed by all educational institutions, public and private, every school day throughout the year. It shall be raised at sunrise and lowered at sunset. The flag-staff must be straight, slightly and gently tapering at the end, and of such height as would give the Flag a commanding position in front of the building or within the compound. 2. Every public and private educational institution shall hold a flag-raising ceremony every morning except when it is raining, in which event the ceremony may be conducted indoors in the best way possible. A retreat shall be held in the afternoon of the same day. The flag-raising ceremony in the morning shall be conducted in the following manner: a. Pupils and teachers or students and faculty members who are in school and its premises shall assemble in formation facing the flag. At command, books shall be put away or held in the left hand and everybody shall come to attention. Those with hats shall uncover. No one shall enter or leave the school grounds during the ceremony. b. The assembly shall sing the Philippine National Anthem accompanied by the school band or without the accompaniment if it has none; or the anthem may be played by the school band alone. At the first note of the Anthem, the flag shall be raised briskly. While the flag is being raised, all persons present shall stand at attention and execute a salute. Boys and men with hats shall salute by placing the hat over the heart. Those without hat may stand with their arms and hands down and straight at the sides. Those in military or Boy Scout uniform shall give the salute prescribed by their regulations. The salute shall be started as the Flag rises, and completed upon last note of the anthem. c. Immediately following the singing of the Anthem, the assembly shall recite in unison the following patriotic pledge (English or vernacular version), which may bring the ceremony to a close. This is required of all public schools and of private schools which are intended for Filipino students or whose population is predominantly Filipino. English Version I love the Philippines. It is the land of my birth; It is the home of my people. It protects me and helps me to be, strong, happy and useful. In return, I will heed the counsel of my parents; I will obey the rules of my school; I will perform the duties of a patriotic, law-abiding citizen; I will serve my country unselfishly and faithfully; I will be a true, Filipino in thought, in word, in deed. xxx xxx xxx Jehovah's Witnesses admittedly teach their children not to salute the flag, sing the national anthem, and recite the patriotic pledge for they believe that those are "acts of worship" or "religious devotion" (p. 10, Rollo) which they "cannot conscientiously give . . . to anyone or

anything except God" (p. 8, Rollo). They feel bound by the Bible's command to "guard ourselves from idols 1 John 5:21" (p. 9, Rollo). They consider the flag as an image or idol representing the State (p. 10, Rollo). They think the action of the local authorities in compelling the flag salute and pledge transcends constitutional limitations on the State's power and invades the sphere of the intellect and spirit which the Constitution protect against official control (p. 10, Rollo). This is not the first time that the question, of whether the children of Jehovah's Witnesses may be expelled from school for disobedience of R.A. No. 1265 and Department Order No. 8, series of 1955, has been raised before this Court. The same issue was raised in 1959 in Gerona, et al. vs. Secretary of Education, et al., 106 Phil. 2 (1959) and Balbuna, et al. vs. Secretary of Education, 110 Phil. 150 (1960). This Court in the Gerona case upheld the expulsion of the students, thus: The flag is not an image but a symbol of the Republic of the Philippines, an emblem of national sovereignty, of national unity and cohesion and of freedom and liberty which it and the Constitution guarantee and protect. Under a system of complete separation of church and state in the government, the flag is utterly devoid of any religious significance. Saluting the flag does not involve any religious ceremony. The flag salute is no more a religious ceremony than the taking of an oath of office by a public official or by a candidate for admission to the bar. In requiring school pupils to participate in the flag salute, the State thru the Secretary of Education is not imposing a religion or religious belief or a religious test on said students. It is merely enforcing a non-discriminatory school regulation applicable to all alike whether Christian, Moslem, Protestant or Jehovah's Witness. The State is merely carrying out the duty imposed upon it by the Constitution which charges it with supervision over and regulation of all educational institutions, to establish and maintain a complete and adequate system of public education, and see to it that all schools aim to develop, among other things, civic conscience and teach the duties of citizenship. The children of Jehovah's Witnesses cannot be exempted from participation in the flag ceremony. They have no valid right to such exemption. Moreover, exemption to the requirement will disrupt school discipline and demoralize the rest of the school population which by far constitutes the great majority. The freedom of religious belief guaranteed by the Constitution does not and cannot mean exemption from or non-compliance with reasonable and nondiscriminatory laws, rules and regulations promulgated by competent authority. (pp. 2-3). Gerona was reiterated in Balbuna, as follows: The Secretary of Education was duly authorized by the Legislature thru Republic Act 1265 to promulgate said Department Order, and its provisions requiring the observance of the flag salute, not being a religious ceremony but an act and profession of love and allegiance and pledge of loyalty to the fatherland which the flag stands for, does not violate the constitutional provision on freedom of religion. (Balbuna, et al. vs. Secretary of Education, et al., 110 Phil. 150). Republic Act No. 1265 and the ruling in Gerona have been incorporated in Section 28, Title VI, Chapter 9 of the Administrative Code of 1987 (Executive Order No. 292) which took effect on September 21, 1988 (one year after its publication in the Official Gazette, Vol. 63, No. 38 of September 21, 1987). Paragraph 5 of Section 28 gives legislative cachet to the ruling in Gerona, thus:

5. Any teacher or student or pupil who refuses to join or participate in the flag ceremony may be dismissed after due investigation. However, the petitioners herein have not raised in issue the constitutionality of the above provision of the new Administrative Code of 1987. They have targeted only Republic Act No. 1265 and the implementing orders of the DECS. In 1989, the DECS Regional Office in Cebu received complaints about teachers and pupils belonging to the Jehovah's Witnesses, and enrolled in various public and private schools, who refused to sing the Philippine national anthem, salute the Philippine flag and recite the patriotic pledge. Division Superintendent of Schools, Susana B. Cabahug of the Cebu Division of DECS, and Dr. Atty. Marcelo M. Bacalso, Assistant Division Superintendent, recalling this Court's decision in Gerona, issued Division Memorandum No. 108, dated November 17, 1989 (pp. 147148, Rollo of G.R. No. 95770) directing District Supervisors, High School Principals and Heads of Private Educational institutions as follows: 1. Reports reaching this Office disclose that there are a number of teachers, pupils, students, and school employees in public schools who refuse to salute the Philippine flag or participate in the daily flag ceremony because of some religious belief. 2. Such refusal not only undermines Republic Act No. 1265 and the DECS Department Order No. 8, Series of 1955 (Implementing Rules and Regulations) but also strikes at the heart of the DECS sustained effort to inculcate patriotism and nationalism. 3. Let it be stressed that any belief that considers the flag as an image is not in any manner whatever a justification for not saluting the Philippine flag or not participating in flag ceremony. Thus, the Supreme Court of the Philippine says: The flag is not an image but a symbol of the Republic of the Philippines, an emblem of national sovereignty, of national unity and cohesion and freedom and liberty which it and the Constitution guarantee and protect. (Gerona, et al. vs. Sec. of Education, et al., 106 Phil. 11.) 4. As regards the claim for freedom of belief, which an objectionist may advance, the Supreme Court asserts: But between the freedom of belief and the exercise of said belief, there is quite a stretch of road to travel. If the exercise of said religious belief clashes with the established institutions of society and with the law, then the former must yield and give way to the latter. (Gerona, et al. vs. Sec. of Education, et al., 106 Phil. 11.) 5. Accordingly, teachers and school employees who choose not to participate in the daily flag ceremony or to obey the flag salute regulation spelled out in Department Order No. 8, Series of 1955, shall be considered removed from the service after due process. 6. In strong language about pupils and students who do the same the Supreme Court has this to say: If they choose not to obey the flag salute regulation, they merely lost the benefits of public education being maintained at the expense of their fellow Citizens, nothing more. According to a popular expression, they could take it or leave it! Having elected not to comply

with the regulation about the flag salute they forfeited their right to attend public schools. (Gerona, et al. vs. Sec. of Education, et al., 106 Phil. 15.) 7. School administrators shall therefore submit to this Office a report on those who choose not to participate in flag ceremony or salute the Philippine flag. (pp. 147-148, Rollo of G.R. No. 95770; Emphasis supplied). Cebu school officials resorted to a number of ways to persuade the children of Jehovah's Witnesses to obey the memorandum. In the Buenavista Elementary School, the children were asked to sign an Agreement (Kasabutan) in the Cebuano dialect promising to sing the national anthem, place their right hand on their breast until the end of the song and recite the pledge of allegiance to the flag (Annex D, p. 46, Rollo of G.R. No. 95770 and p. 48, Rollo of G.R. No. 95887), but they refused to sign the "Kasabutan" (p. 20, Rollo of G.R. No. 95770). In Tubigmanok Elementary School, the Teacher-In-Charge, Antonio A. Sangutan, met with the Jehovah's Witnesses' parents, as disclosed in his letter of October 17, 1990, excerpts from which reveal the following: After two (2) fruitless confrontation meetings with the Jehovah's Witnesses' parents on October 2, 1990 and yesterday due to their firm stand not to salute the flag of the Republic of the Philippines during Flag Ceremony and other occasions, as mandated by law specifically Republic Act No. 1265, this Office hereby orders the dropping from the list in the School Register (BPS Form I) of all teachers, all Jehovah Witness pupils from Grade I up to Grade VI effective today. xxx xxx xxx This order is in compliance with Division Memorandum No. 108 s. 1989 dated November 17, 1989 by virtue of Department Order No. 8 s. 1955 dated July 21, 1955 in accordance with Republic Act No. 1265 and Supreme Court Decision of a case "Genaro Gerona, et al., Petitioners and Appellants vs. The Honorable Secretary of Education, et al., Respondents and Appellees' dated August 12, 1959 against their favor. (p. 149, Rollo of G.R. No. 95770.) In the Daan Bantayan District, the District Supervisor, Manuel F. Biongcog, ordered the "dropping from the rolls" of students who "opted to follow their religious belief which is against the Flag Salute Law" on the theory that "they forfeited their right to attend public schools." (p. 47, Rollo of G.R. No. 95770.) 1st Indorsement DAANBANTAYAN DISTRICT II Daanbantayan, Cebu, July 24, 1990. Respectfully returned to Mrs. Alicia A. Diaz, School In Charge [sic], Agujo Elementary School with the information that this office is sad to order the dropping of Jeremias Diamos and Jeaneth Diamos, Grades III and IV pupils respectively from the roll since they opted to follow their religious belief which is against the Flag Salute Law (R.A. 1265) and DECS Order No. 8, series of 1955, having elected not to comply with the regulation about the flag salute they forfeited their right to attend public schools (Gerona, et al. vs. Sec. of Education, et al., 106 Philippines 15). However, should they change their mind to respect and follow the Flag Salute Law they may be reaccepted. (Sgd.) MANUEL F. BIONGCOG District Supervisor

(p. 47, Rollo of G.R. No. 95770.) The expulsion as of October 23, 1990 of the 43 petitioning students of the Daanbantayan National High School, Agujo Elementary School, Calape Barangay National High School, Pinamungajan Provincial High School, Tabuelan Central School, Canasojan Elementary School, Liboron Elementary School, Tagaytay Primary School, San Juan Primary School and Northern Central Elementary School of San Fernando, Cebu, upon order of then Acting Division Superintendent Marcelo Bacalso, prompted some Jehovah's Witnesses in Cebu to appeal to the Secretary of Education Isidro Cario but the latter did not answer their letter. (p. 21, Rollo.) The petition in G.R. No. 95887 was filed by 25 students who were similarly expelled because Dr. Pablo Antopina, who succeeded Susana Cabahug as Division Superintendent of Schools, would not recall the expulsion orders of his predecessor. Instead, he verbally caused the expulsion of some more children of Jehovah's Witnesses. On October 31, 1990, the students and their parents filed these special civil actions for Mandamus, Certiorari and Prohibition alleging that the public respondents acted without or in excess of their jurisdiction and with grave abuse of discretion (1) in ordering their expulsion without prior notice and hearing, hence, in violation of their right to due process, their right to free public education, and their right to freedom of speech, religion and worship (p. 23, Rollo). The petitioners pray that: c. Judgment be rendered: i. declaring null and void the expulsion or dropping from the rolls of herein petitioners from their respective schools; ii. prohibiting and enjoining respondent from further barring the petitioners from their classes or otherwise implementing the expulsion ordered on petitioners; and iii. compelling the respondent and all persons acting for him to admit and order the re-admission of petitioners to their respective schools. (p. 41, Rollo.) and that pending the determination of the merits of these cases, a temporary restraining order be issued enjoining the respondents from enforcing the expulsion of the petitioners and to readmit them to their respective classes. On November 27, 1990, the Court issued a temporary restraining order and a writ of preliminary mandatory injunction commanding the respondents to immediately re-admit the petitioners to their respective classes until further orders from this Court (p. 57, Rollo). The Court also ordered the Secretary of Education and Cebu District Supervisor Manuel F. Biongcog to be impleaded as respondents in these cases. On May 13, 1991, the Solicitor General filed a consolidated comment to the petitions (p. 98, Rollo) defending the expulsion orders issued by the public respondents on the grounds that: 1. Bizarre religious practices of the Jehovah's Witnesses produce rebellious and anti-social school children and consequently disloyal and mutant Filipino citizens. 2. There are no new and valid grounds to sustain the charges of the Jehovah's Witnesses that the DECS' rules and regulations on the flag salute ceremonies are violative of their freedom of religion and worship. 3. The flag salute is devoid of any religious significance; instead, it inculcates respect and love of country, for which the flag stands. 4. The State's compelling interests being pursued by the DECS' lawful regulations in question do not warrant exemption of the school children of

the Jehovah's Witnesses from the flag salute ceremonies on the basis of their own self-perceived religious convictions. 5. The issue is not freedom of speech but enforcement of law and jurisprudence. 6. State's power to regulate repressive and unlawful religious practices justified, besides having scriptural basis. 7. The penalty of expulsion is legal and valid, more so with the enactment of Executive Order No. 292 (The Administrative Code of 1987). Our task here is extremely difficult, for the 30-year old decision of this court in Gerona upholding the flag salute law and approving the expulsion of students who refuse to obey it, is not lightly to be trifled with. It is somewhat ironic however, that after the Gerona ruling had received legislative cachet by its in corporation in the Administrative Code of 1987, the present Court believes that the time has come to re-examine it. The idea that one may be compelled to salute the flag, sing the national anthem, and recite the patriotic pledge, during a flag ceremony on pain of being dismissed from one's job or of being expelled from school, is alien to the conscience of the present generation of Filipinos who cut their teeth on the Bill of Rights which guarantees their rights to free speech ** and the free exercise of religious profession and worship (Sec. 5, Article III, 1987 Constitution; Article IV, Section 8, 1973 Constitution; Article III, Section 1[7], 1935 Constitution). Religious freedom is a fundamental right which is entitled to the highest priority and the amplest protection among human rights, for it involves the relationship of man to his Creator (Chief Justice Enrique M. Fernando's separate opinion in German vs. Barangan, 135 SCRA 514, 530531). The right to religious profession and worship has a two-fold aspect, vis., freedom to believe and freedom to act on one's belief. The first is absolute as long as the belief is confined within the realm of thought. The second is subject to regulation where the belief is translated into external acts that affect the public welfare (J. Cruz, Constitutional Law, 1991 Ed., pp. 176177). Petitioners stress, however, that while they do not take part in the compulsory flag ceremony, they do not engage in "external acts" or behavior that would offend their countrymen who believe in expressing their love of country through the observance of the flag ceremony. They quietly stand at attention during the flag ceremony to show their respect for the right of those who choose to participate in the solemn proceedings (Annex F, Rollo of G.R. No. 95887, p. 50 and Rollo of G.R. No. 95770, p. 48). Since they do not engage in disruptive behavior, there is no warrant for their expulsion. The sole justification for a prior restraint or limitation on the exercise of religious freedom (according to the late Chief Justice Claudio Teehankee in his dissenting opinion in German vs. Barangan, 135 SCRA 514, 517) is the existence of a grave and present danger of a character both grave and imminent, of a serious evil to public safety, public morals, public health or any other legitimate public interest, that the State has a right (and duty) to prevent." Absent such a threat to public safety, the expulsion of the petitioners from the schools is not justified. The situation that the Court directly predicted in Gerona that: The flag ceremony will become a thing of the past or perhaps conducted with very few participants, and the time will come when we would have citizens untaught and uninculcated in and not imbued with reverence for the flag and love of country, admiration for national heroes, and patriotism a pathetic, even tragic situation, and all because a small portion of the school

population imposed its will, demanded and was granted an exemption. (Gerona, p. 24.) has not come to pass. We are not persuaded that by exempting the Jehovah's Witnesses from saluting the flag, singing the national anthem and reciting the patriotic pledge, this religious group which admittedly comprises a "small portion of the school population" will shake up our part of the globe and suddenly produce a nation "untaught and uninculcated in and unimbued with reverence for the flag, patriotism, love of country and admiration for national heroes" (Gerona vs. Sec. of Education, 106 Phil. 2, 24). After all, what the petitioners seek only is exemption from the flag ceremony, not exclusion from the public schools where they may study the Constitution, the democratic way of life and form of government, and learn not only the arts, sciences, Philippine history and culture but also receive training for a vocation of profession and be taught the virtues of "patriotism, respect for human rights, appreciation for national heroes, the rights and duties of citizenship, and moral and spiritual values (Sec. 3[2], Art. XIV, 1987 Constitution) as part of the curricula. Expelling or banning the petitioners from Philippine schools will bring about the very situation that this Court had feared in Gerona. Forcing a small religious group, through the iron hand of the law, to participate in a ceremony that violates their religious beliefs, will hardly be conducive to love of country or respect for dully constituted authorities. As Mr. Justice Jackson remarked in West Virginia vs. Barnette, 319 U.S. 624 (1943): . . . To believe that patriotism will not flourish if patriotic ceremonies are voluntary and spontaneous instead of a compulsory routine is to make an unflattering estimate of the appeal of our institutions to free minds. . . . When they [diversity] are so harmless to others or to the State as those we deal with here, the price is not too great. But freedom to differ is not limited to things that do not matter much. That would be a mere shadow of freedom. The test of its substance is the right to differ as to things that touch the heart of the existing order. Furthermore, let it be noted that coerced unity and loyalty even to the country, . . . assuming that such unity and loyalty can be attained through coercion is not a goal that is constitutionally obtainable at the expense of religious liberty. A desirable end cannot be promoted by prohibited means. (Meyer vs. Nebraska, 262 U.S. 390, 67 L. ed. 1042, 1046.) Moreover, the expulsion of members of Jehovah's Witnesses from the schools where they are enrolled will violate their right as Philippine citizens, under the 1987 Constitution, to receive free education, for it is the duty of the State to "protect and promote the right of all citizens to quality education . . . and to make such education accessible to all (Sec. 1, Art. XIV). In Victoriano vs. Elizalde Rope Workers' Union, 59 SCRA 54, 72-75, we upheld the exemption of members of the Iglesia ni Cristo, from the coverage of a closed shop agreement between their employer and a union because it would violate the teaching of their church not to join any labor group: . . . It is certain that not every conscience can be accommodated by all the laws of the land; but when general laws conflict with scruples of conscience, exemptions ought to be granted unless some "compelling state interests" intervenes. (Sherbert vs. Berner, 374 U.S. 398, 10 L. Ed. 2d 965, 970, 83 S. Ct. 1790.) We hold that a similar exemption may be accorded to the Jehovah's Witnesses with regard to the observance of the flag ceremony out of respect for their religious beliefs, however "bizarre" those beliefs may seem to others. Nevertheless, their right not to participate in the flag ceremony does not give them a right to disrupt such patriotic exercises. Paraphrasing the warning cited by this Court in Non vs. Dames II, 185 SCRA 523, 535, while the highest regard must be afforded their right to the free exercise of their religion, "this should not be taken to mean that school authorities are powerless to discipline them" if they should commit breaches of the peace by actions that offend the sensibilities, both religious and patriotic, of other persons. If they quietly stand at attention during the flag ceremony while their classmates and teachers salute the flag,

sing the national anthem and recite the patriotic pledge, we do not see how such conduct may possibly disturb the peace, or pose "a grave and present danger of a serious evil to public safety, public morals, public health or any other legitimate public interest that the State has a right (and duty) to prevent (German vs. Barangan, 135 SCRA 514, 517). Before we close this decision, it is appropriate to recall the Japanese occupation of our country in 1942-1944 when every Filipino, regardless of religious persuasion, in fear of the invader, saluted the Japanese flag and bowed before every Japanese soldier. Perhaps, if petitioners had lived through that dark period of our history, they would not quibble now about saluting the Philippine flag. For when liberation came in 1944 and our own flag was proudly hoisted aloft again, it was a beautiful sight to behold that made our hearts pound with pride and joy over the newly-regained freedom and sovereignty of our nation. Although the Court upholds in this decision the petitioners' right under our Constitution to refuse to salute the Philippine flag on account of their religious beliefs, we hope, nevertheless, that another foreign invasion of our country will not be necessary in order for our countrymen to appreciate and cherish the Philippine flag. WHEREFORE, the petition for certiorari and prohibition is GRANTED. The expulsion orders issued by the public respondents against the petitioners are hereby ANNULLED AND SET ASIDE. The temporary restraining order which was issued by this Court is hereby made permanent. SO ORDERED.