G.R. No.

90501 August 5, 1991

ARIS (PHIL.) INC., petitioner,
vs.
NATIONAL LABOR RELATIONS COMMISSION, LABOR ARBITER FELIPE
GARDUQUE III, LEODEGARIO DE GUZMAN, LILIA PEREZ, ROBERTO
BESTAMONTE, AIDA OPENA, REYNALDO TORIADO, APOLINARIO
GAGAHINA, RUFINO DE CASTRO, FLORDELIZA RAYOS DEL SOL, STEVE
SANCHO, ESTER CAIRO, MARIETA MAGALAD, and MARY B. NADALA,
respondents.
Cesar C. Cruz & Partners for petitioner.
Zosimo Morillo for respondent Rayos del Sol.
Banzuela, Flores, Miralles, Raneses, Sy & Associates for private respondents.

DAVIDE, JR., J .:p
Petitioner assails the constitutionality of the amendment introduced by Section 12 of Republic
Act No. 6715 to Article 223 of the Labor Code of the Philippines (PD No. 442, as amended)
allowing execution pending appeal of the reinstatement aspect of a decision of a labor arbiter
reinstating a dismissed or separated employee and of Section 2 of the NLRC Interim Rules on
Appeals under R.A. No. 6715 implementing the same. It also questions the validity of the
Transitory Provision (Section 17) of the said Interim Rules.
The challenged portion of Section 12 of Republic Act No. 6715, which took effect on 21
March 1989, reads as follows:
SEC 12. Article 223 of the same code is amended to read as follows:
ART. 223. Appeal.
xxx xxx xxx
In any event, the decision of the Labor Arbiter reinstating a dismissed or
separated employee, in so far as the reinstatement aspect is concerned, shall
immediately be executory, even pending appeal. The employee shall either
be admitted back to work under the same terms and conditions prevailing
prior to his dismissal or separation or, at the option of the employer, merely
reinstated in the payroll. The posting of a bond by the employer shall not
stay the execution for reinstatement provided therein.
This is a new paragraph ingrafted into the Article.
Sections 2 and 17 of the "NLRC Interim Rules On Appeals Under R.A. No. 6715, Amending
the Labor Code", which the National Labor Relations Commission (NLRC) promulgated on 8
August 1989, provide as follows:
Section 2. Order of Reinstatement and Effect of Bond. In so far as the
reinstatement aspect is concerned, the decision of the Labor Arbiter
reinstating a dismissed or separated employee shall immediately be
executory even pending appeal. The employee shall either be admitted back
to work under the same terms and conditions prevailing prior to his
dismissal or separation, or, at the option of the employer, merely be
reinstated in the payroll.
The posting of a bond by the employer shall not stay the execution for
reinstatement.
xxx xxx xxx
Section 17. Transitory provision. Appeals filed on or after March 21,
1989, but prior to the effectivity of these Interim Rules must conform to the
requirements as herein set forth or as may be directed by the Commission.
The antecedent facts and proceedings which gave rise to this petition are not disputed:
On 11 April 1988, private respondents, who were employees of petitioner, aggrieved by
management's failure to attend to their complaints concerning their working surroundings
which had become detrimental and hazardous, requested for a grievance conference. As none
was arranged, and believing that their appeal would be fruitless, they grouped together after
the end of their work that day with other employees and marched directly to the
management's office to protest its long silence and inaction on their complaints.
On 12 April 1988, the management issued a memorandum to each of the private respondents,
who were identified by the petitioner's supervisors as the most active participants in the rally
requiring them to explain why they should not be terminated from the service for their
conduct. Despite their explanation, private respondents were dismissed for violation of
company rules and regulations, more specifically of the provisions on security and public
order and on inciting or participating in illegal strikes or concerted actions.
Private respondents lost no time in filing a complaint for illegal dismissal against petitioner
and Mr. Gavino Bayan with the regional office of the NLRC at the National Capital Region,
Manila, which was docketed therein as NLRC-NCR-00-0401630-88.
After due trial, Labor Arbiter Felipe Garduque III handed down on 22 June 1989 a decision'
the dispositive portion of which reads:
ACCORDINGLY, respondent Aris (Phils.), Inc. is hereby ordered to
reinstate within ten (10) days from receipt hereof, herein complainants
Leodegario de Guzman, Rufino de Castro, Lilia M. Perez, Marieta Magalad,
Flordeliza Rayos del Sol, Reynaldo Toriado, Roberto Besmonte, Apolinario
Gagahina, Aidam (sic) Opena, Steve C. Sancho Ester Cairo, and Mary B.
Nadala to their former respective positions or any substantial equivalent
positions if already filled up, without loss of seniority right and privileges
but with limited backwages of six (6) months except complainant
Leodegario de Guzman.
All other claims and prayers are hereby denied for lack of merit.
SO ORDERED.
On 19 July 1989, complainants (herein private respondents) filed a Motion For Issuance of a
Writ of Execution
2
pursuant to the above-quoted Section 12 of R.A. No. 6715.
On 21 July 1989, petitioner filed its Appeal.
3

On 26 July 1989, the complainants, except Flor Rayos del Sol, filed a Partial Appeal.
4

On 10 August 1989, complainant Flor Rayos del Sol filed a Partial Appeal.
5

On 29 August 1989, petitioner filed an Opposition
6
to the motion for execution alleging that
Section 12 of R.A. No. 6715 on execution pending appeal cannot be applied retroactively to
cases pending at the time of its effectivity because it does not expressly provide that it shall be
given retroactive effect
7
and to give retroactive effect to Section 12 thereof to pending cases
would not only result in the imposition of an additional obligation on petitioner but would
also dilute its right to appeal since it would be burdened with the consequences of
reinstatement without the benefit of a final judgment. In their Reply
8
filed on 1 September
1989, complainants argued that R.A. No. 6715 is not sought to be given retroactive effect in
this case since the decision to be executed pursuant to it was rendered after the effectivity of
the Act. The said law took effect on 21 March 1989, while the decision was rendered on 22
June 1989.
Petitioner submitted a Rejoinder to the Reply on 5 September 1989.
9

On 5 October 1989, the Labor Arbiter issued an Order granting the motion for execution and
the issuance of a partial writ of execution
10
as far as reinstatement of herein complainants is
concerned in consonance with the provision of Section 2 of the rules particularly the last
sentence thereof.
In this Order, the Labor Arbiter also made reference to Section 17 of the NLRC Interim Rules
in this wise:
Since Section 17 of the said rules made mention of appeals filed on or after
March 21, 1989, but prior to the effectivity of these interim rules which
must conform with the requirements as therein set forth (Section 9) or as
may be directed by the Commission, it obviously treats of decisions of
Labor Arbiters before March 21,1989. With more reason these interim rules
be made to apply to the instant case since the decision hereof (sic) was
rendered thereafter.
11

Unable to accept the above Order, petitioner filed the instant petition on 26 October 1989
12

raising the issues adverted to in the introductory portion of this decision under the following
assignment of errors:
A. THE LABOR ARBITER A QUO AND THE NLRC, IN ORDERING
THE REINSTATEMENT OF THE PRIVATE RESPONDENTS
PENDING APPEAL AND IN PROVIDING FOR SECTION 2 OF THE
INTERIM RULES, RESPECTIVELY, ACTED WITHOUT AND IN
EXCESS OF JURISDICTION SINCE THE BASIS FOR SAID ORDER
AND INTERIM RULE, i.e., SECTION 12 OF R.A. 6715 IS VIOLATIVE
OF THE CONSTITUTIONAL GUARANTY OF DUE PROCESS IT
BEING OPPRESSIVE AND UNREASONABLE.
B. GRANTING ARGUENDO THAT THE PROVISION IN(SIC)
REINSTATEMENT PENDING APPEAL IS VALID, NONETHELESS,
THE LABOR ARBITER A QUO AND THE NLRC STILL ACTED IN
EXCESS AND WITHOUT JURISDICTION IN RETROACTIVELY
APPLYING SAID PROVISION TO PENDING LABOR CASES.
In Our resolution of 7 March 1989, We required the respondents to comment on the petition.
Respondent NLRC, through the Office of the Solicitor General, filed its Comment on 20
November 1989.
13
Meeting squarely the issues raised by petitioner, it submits that the
provision concerning the mandatory and automatic reinstatement of an employee whose
dismissal is found unjustified by the labor arbiter is a valid exercise of the police power of the
state and the contested provision "is then a police legislation."
As regards the retroactive application thereof, it maintains that being merely procedural in
nature, it can apply to cases pending at the time of its effectivity on the theory that no one can
claim a vested right in a rule of procedure. Moreover, such a law is compatible with the
constitutional provision on protection to labor.
On 11 December 1989, private respondents filed a Manifestation
14
informing the Court that
they are adopting the Comment filed by the Solicitor General and stressing that petitioner
failed to comply with the requisites for a valid petition for certiorari under Rule 65 of the
Rules of Court.
On 20 December 1989, petitioner filed a Rejoinder
15
to the Comment of the Solicitor
General.
In the resolution of 11 January 1990,
16
We considered the Comments as respondents'
Answers, gave due course to the petition, and directed that the case be calendared for
deliberation.
In urging Us to declare as unconstitutional that portion of Section 223 of the Labor Code
introduced by Section 12 of R.A. No. 6715, as well as the implementing provision covered by
Section 2 of the NLRC Interim Rules, allowing immediate execution, even pending appeal, of
the reinstatement aspect of a decision of a labor arbiter reinstating a dismissed or separated
employee, petitioner submits that said portion violates the due process clause of the
Constitution in that it is oppressive and unreasonable. It argues that a reinstatement pending
appeal negates the right of the employer to self-protection for it has been ruled that an
employer cannot be compelled to continue in employment an employee guilty of acts inimical
to the interest of the employer; the right of an employer to dismiss is consistent with the legal
truism that the law, in protecting the rights of the laborer, authorizes neither the oppression
nor the destruction of the employer. For, social justice should be implemented not through
mistaken sympathy for or misplaced antipathy against any group, but even-handedly and
fairly.
17

To clinch its case, petitioner tries to demonstrate the oppressiveness of reinstatement pending
appeal by portraying the following consequences: (a) the employer would be compelled to
hire additional employees or adjust the duties of other employees simply to have someone
watch over the reinstated employee to prevent the commission of further acts prejudicial to
the employer, (b) reinstatement of an undeserving, if not undesirable, employee may
demoralize the rank and file, and (c) it may encourage and embolden not only the reinstated
employees but also other employees to commit similar, if not graver infractions.
These rationalizations and portrayals are misplaced and are purely conjectural which,
unfortunately, proceed from a misunderstanding of the nature and scope of the relief of
execution pending appeal.
Execution pending appeal is interlinked with the right to appeal. One cannot be divorced from
the other. The latter may be availed of by the losing party or a party who is not satisfied with a
judgment, while the former may be applied for by the prevailing party during the pendency of
the appeal. The right to appeal, however, is not a constitutional, natural or inherent right. It is
a statutory privilege of statutory origin
18
and, therefore, available only if granted or provided
by statute. The law may then validly provide limitations or qualifications thereto or relief to
the prevailing party in the event an appeal is interposed by the losing party. Execution
pending appeal is one such relief long recognized in this jurisdiction. The Revised Rules of
Court allows execution pending appeal and the grant thereof is left to the discretion of the
court upon good reasons to be stated in a special order.
19

Before its amendment by Section 12 of R.A. No. 6715, Article 223 of the Labor Code already
allowed execution of decisions of the NLRC pending their appeal to the Secretary of Labor
and Employment.
In authorizing execution pending appeal of the reinstatement aspect of a decision of the Labor
Arbiter reinstating a dismissed or separated employee, the law itself has laid down a
compassionate policy which, once more, vivifies and enhances the provisions of the 1987
Constitution on labor and the working-man.
These provisions are the quintessence of the aspirations of the workingman for recognition of
his role in the social and economic life of the nation, for the protection of his rights, and the
promotion of his welfare. Thus, in the Article on Social Justice and Human Rights of the
Constitution,
20
which principally directs Congress to give highest priority to the enactment of
measures that protect and enhance the right of all people to human dignity, reduce social,
economic, and political inequalities, and remove cultural inequities by equitably diffusing
wealth and political power for the common good, the State is mandated to afford full
protection to labor, local and overseas, organized and unorganized, and promote full
employment and equality of employment opportunities for all; to guarantee the rights of all
workers to self-organization, collective bargaining and negotiations, and peaceful concerted
activities, including the right to strike in accordance with law, security of tenure, human
conditions of work, and a living wage, to participate in policy and decision-making processes
affecting their rights and benefits as may be provided by law; and to promote the principle of
shared responsibility between workers and employers and the preferential use of voluntary
modes in settling disputes. Incidentally, a study of the Constitutions of various nations readily
reveals that it is only our Constitution which devotes a separate article on Social Justice and
Human Rights. Thus, by no less than its fundamental law, the Philippines has laid down the
strong foundations of a truly just and humane society. This Article addresses itself to specified
areas of concern labor, agrarian and natural resources reform, urban land reform and housing,
health, working women, and people's organizations and reaches out to the underprivileged
sector of society, for which reason the President of the Constitutional Commission of 1986,
former Associate Justice of this Court Cecilia Muoz-Palma, aptly describes this Article as
the "heart of the new Charter."
21

These duties and responsibilities of the State are imposed not so much to express sympathy
for the workingman as to forcefully and meaningfully underscore labor as a primary social
and economic force, which the Constitution also expressly affirms With equal intensity.
22

Labor is an indispensable partner for the nation's progress and stability.
If in ordinary civil actions execution of judgment pending appeal is authorized for reasons the
determination of which is merely left to the discretion of the judge, We find no plausible
reason to withhold it in cases of decisions reinstating dismissed or separated employees. In
such cases, the poor employees had been deprived of their only source of livelihood, their
only means of support for their family their very lifeblood. To Us, this special circumstance is
far better than any other which a judge, in his sound discretion, may determine. In short, with
respect to decisions reinstating employees, the law itself has determined a sufficiently
overwhelming reason for its execution pending appeal.
The validity of the questioned law is not only supported and sustained by the foregoing
considerations. As contended by the Solicitor General, it is a valid exercise of the police
power of the State. Certainly, if the right of an employer to freely discharge his employees is
subject to regulation by the State, basically in the exercise of its permanent police power on
the theory that the preservation of the lives of the citizens is a basic duty of the State, that is
more vital than the preservation of corporate profits.
23
Then, by and pursuant to the same
power, the State may authorize an immediate implementation, pending appeal, of a decision
reinstating a dismissed or separated employee since that saving act is designed to stop,
although temporarily since the appeal may be decided in favor of the appellant, a continuing
threat or danger to the survival or even the life of the dismissed or separated employee and its
family.
The charge then that the challenged law as well as the implementing rule are unconstitutional
is absolutely baseless. Laws are presumed constitutional.
24
To justify nullification of a law,
there must be a clear and unequivocal breach of the Constitution, not a doubtful and
argumentative implication; a law shall not be declared invalid unless the conflict with the
constitution is clear beyond reasonable doubt.
25
In Parades, et al. vs. Executive Secretary
26

We stated:
2. For one thing, it is in accordance with the settled doctrine that between
two possible constructions, one avoiding a finding of unconstitutionality
and the other yielding such a result, the former is to be preferred. That
which will save, not that which will destroy, commends itself for
acceptance. After all, the basic presumption all these years is one of
validity. The onerous task of proving otherwise is on the party seeking to
nullify a statute. It must be proved by clear and convincing evidence that
there is an infringement of a constitutional provision, save in those cases
where the challenged act is void on its face. Absent such a showing, there
can be no finding of unconstitutionality. A doubt, even if well-founded,
does not suffice. Justice Malcolm's aphorism is apropos: To doubt is to
sustain.
27

The reason for this:
... can be traced to the doctrine of separation of powers which enjoins on
each department a proper respect for the acts of the other departments. ...
The theory is that, as the joint act of the legislative and executive
authorities, a law is supposed to have been carefully studied and determined
to be constitution before it was finally enacted. Hence, as long as there is
some other basis that can be used by the courts for its decision, the
constitutionality of the challenged law will not be touched upon and the
case will be decided on other available grounds.
28

The issue concerning Section 17 of the NLRC Interim Rules does not deserve a measure of
attention. The reference to it in the Order of the Labor Arbiter of 5 October 1989 was
unnecessary since the procedure of the appeal proper is not involved in this case. Moreover,
the questioned interim rules of the NLRC, promulgated on 8 August 1989, can validly be
given retroactive effect. They are procedural or remedial in character, promulgated pursuant
to the authority vested upon it under Article 218(a) of the Labor Code of the Philippines, as
amended. Settled is the rule that procedural laws may be given retroactive effect.
29
There are
no vested rights in rules of procedure.
30
A remedial statute may be made applicable to cases
pending at the time of its enactment.
31

WHEREFORE, the petition is hereby DISMISSED for lack of merit. Costs against petitioner.
SO ORDERED.



























G.R. No. 115044 January 27, 1995
HON. ALFREDO S. LIM, in his capacity as Mayor of Manila, and the City of Manila,
petitioners,
vs.
HON. FELIPE G. PACQUING, as Judge, branch 40, Regional Trial Court of Manila
and ASSOCIATED CORPORATION, respondents.
G.R. No. 117263 January 27, 1995
TEOFISTO GUINGONA, JR. and DOMINADOR R. CEPEDA, petitioners,
vs.
HON. VETINO REYES and ASSOCIATED DEVELOPMENT CORPORATION,
respondents.

PADILLA, J .:
These two (2) cases which are inter-related actually involve simple issues. if these issues have
apparently become complicated, it is not by reason of their nature because of the events and
dramatis personae involved.
The petition in G.R. No. 115044 was dismissed by the First Division of this Court on 01
September 1994 based on a finding that there was "no abuse of discretion, much less lack of
or excess of jurisdiction, on the part of respondent judge [Pacquing]", in issuing the
questioned orders. Judge Pacquing had earlier issued in Civil Case No. 88-45660, RTC of
Manila, Branch 40, the following orders which were assailed by the Mayor of the City of
Manila, Hon. Alfredo S. Lim, in said G.R. No. 115044:
a. order dated 28 March 1994 directing Manila mayor Alfredo S. Lim to
issue the permit/license to operate the jai-alai in favor of Associated
Development Corporation (ADC).
b. order dated 11 April 1994 directing mayor Lim to explain why he should
not be cited for contempt for non-compliance with the order dated 28 March
1994.
c. order dated 20 April 1994 reiterating the previous order directing Mayor
Lim to immediately issue the permit/license to Associated Development
Corporation (ADC).
The order dated 28 march 1994 was in turn issued upon motion by ADC for execution of a
final judgment rendered on 9 September 1988 which ordered the Manila Mayor to
immediately issue to ADC the permit/license to operate the jai-alai in Manila, under Manila
Ordinance No. 7065.
On 13 September 1994, petitioner Guingona (as executive secretary) issued a directive to then
chairman of the Games and Amusements Board (GAB) Francisco R. Sumulong, jr. to hold in
abeyance the grant of authority, or if any had been issued, to withdraw such grant of authority,
to Associated Development Corporation to operate the jai-alai in the City of Manila, until the
following legal questions are properly resolved:
1. Whether P.D. 771 which revoked all existing Jai-Alai franchisers issued
by local governments as of 20 August 1975 is unconstitutional.
2. Assuming that the City of Manila had the power on 7 September 1971 to
issue a Jai-Alai franchise to Associated Development Corporation, whether
the franchise granted is valied considering that the franchise has no
duration, and appears to be granted in perpetuity.
3. Whether the City of Manila had the power to issue a Jai-Alai franchise to
Associated Development Corporation on 7 September 1971 in view of
executive Order No. 392 dated 1 January 1951 which transferred from local
governments to the Games and Amusements Board the power to regulate
Jai-Alai.
1

On 15 September 1994, respondent Associated Development Corporation (ADC) filed a
petition for prohibition, mandamus, injunction and damages with prayer for temporary
restraining order and/or writ of preliminary injunction in the Regional Trial Court of Manila
against petitioner Guingona and then GAB chairman Sumulong, docketed as Civil Case No.
94-71656, seeking to prevent GAB from withdrawing the provisional authority that had
earlier been granted to ADC. On the same day, the RTC of Manila, Branch 4, through
presiding Judge Vetino Reyes, issued a temporary restraining order enjoining the GAB from
withdrawing ADC's provisional authority. This temporary restraining order was converted
into a writ of preliminary injunction upon ADC's posting of a bond in the amount of
P2,000,000.00.
2

Subsequently, also in G.R. No. 115044, the Republic of the Philippines, through the Games
and Amusements Board, filed a "Motion for Intervention; for Leave to File a Motion for
reconsideration in Intervention; and to Refer the case to the Court En Banc" and later a
"Motion for Leave to File Supplemental Motion for Reconsideration-in-Intervention and to
Admit Attached Supplemental Motion for Reconsideration-in-Intervention".
In an En Banc Resolution dated 20 September 1994, this Court referred G.R. No. 115044 to
the Court En Banc and required the respondents therein to comment on the aforementioned
motions.
Meanwhile, Judge Reyes on 19 October 1994 issued another order, this time, granting ADC a
writ of preliminary mandatory injunction against Guingona and GAB to compel them to issue
in favor of ADC the authority to operate jai-alai.
Guingona, as executive secretary, and Dominador Cepeda, Jr. as the new GAB chairman, then
filed the petition in G.R. No. 117263 assailing the abovementioned orders of respondent
Judge Vetino Reyes.
On 25 October 1994, in G.R. No. 117263, this Court granted petitioner's motion for leave to
file supplemental petition and to admit attached supplemental petition with urgent prayer for
restraining order. The Court further required respondents to file their comment on the petition
and supplemental petition with urgent prayer for restraining order. The Court likewise set the
case and all incidents thereof for hearing on 10 November 1994.
At the hearing on 10 November 1994, the issues to be resolved were formulated by the Court
as follows:
1. whether or not intervention by the Republic of the Philippines at this
stage of the proceedings is proper;
2. assuming such intervention is proper, whether or not the Associated
Development Corporation has a valid and subsisting franchise to maintain
and operate the jai-alai;
3. whether or not there was grave abuse of discretion committed by
respondent Judge Reyes in issuing the aforementioned temporary
restraining order (later writ of preliminary injunction); and
4. whether or not there was grave abuse of discretion committed by
respondent Judge Reyes in issuing the aforementioned writ of preliminary
mandatory injunction.
On the issue of the propriety of the intervention by the Republic of the Philippines, a question
was raised during the hearing on 10 November 1994 as to whether intervention in G.R. No.
115044 was the proper remedy for the national government to take in questioning the
existence of a valid ADC franchise to operate the jai-alai or whether a separate action for quo
warranto under Section 2, Rule 66 of the Rules of Court was the proper remedy.
We need not belabor this issue since counsel for respondent ADC agreed to the suggestion
that this Court once and for all settle all substantive issues raised by the parties in these cases.
Moreover, this Court can consider the petition filed in G.R. No. 117263 as one for quo
warranto which is within the original jurisdiction of the Court under section 5(1), Article VIII
of the Constitution.
3

On the propriety of intervention by the Republic, however, it will be recalled that this Court in
Director of Lands v. Court of Appeals (93 SCRA 238) allowed intervention even beyond the
period prescribed in Section 2 Rule 12 of the Rules of Court. The Court ruled in said case that
a denial of the motions for intervention would "lead the Court to commit an act of injustice to
the movants, to their successor-in-interest and to all purchasers for value and in good faith and
thereby open the door to fraud, falsehood and misrepresentation, should intervenors' claim be
proven to be true."
In the present case, the resulting injustice and injury, should the national government's
allegations be proven correct, are manifest, since the latter has squarely questioned the very
existence of a valid franchise to maintain and operate the jai-alai (which is a gambling
operation) in favor of ADC. As will be more extensively discussed later, the national
government contends that Manila Ordinance No. 7065 which purported to grant to ADC a
franchise to conduct jai-alai operations is void and ultra vires since Republic Act No. 954,
approved on 20 June 1953, or very much earlier than said Ordinance No. 7065, the latter
approved 7 September 1971, in Section 4 thereof, requires a legislative franchise, not a
municipal franchise, for the operation of jai-alai. Additionally, the national government
argues that even assuming, arguendo, that the abovementioned ordinance is valid, ADC's
franchise was nonetheless effectively revoked by Presidential decree No. 771, issued on 20
August 1975, Sec. 3 of which expressly revoked all existing franchises and permits to operate
all forms of gambling facilities (including the jai-alai) issued by local governments.
On the other hand, ADC's position is that Ordinance No. 7065 was validly enacted by the City
of Manila pursuant to its delegated powers under it charter, Republic Act No. 409. ADC also
squarely assails the constitutionality of PD No. 771 as violative of the equal protection and
non-impairment clauses of the Constitution. In this connection, counsel for ADC contends
that this Court should really rule on the validity of PD No. 771 to be able to determine
whether ADC continues to possess a valid franchise.
It will undoubtedly be a grave injustice to both parties in this case if this Court were to shirk
from ruling on the issue of constitutionality of PD No. 771. Such issue has, in our view,
become the very lis mota in resolving the present controversy, in view of ADC's insistence
that it was granted a valid and legal franchise by Ordinance No. 7065 to operate the jai-alai.
The time-honored doctrine is that all laws (PD No. 771 included) are presumed valid and
constitutional until or unless otherwise ruled by this Court. Not only this; Article XVIII
Section 3 of the Constitution states:
Sec. 3. All existing laws, decrees, executive orders, proclamations, letters of
instructions and other executive issuances not inconsistent with this
Constitution shall remain operative until amended, repealed or revoked.
There is nothing on record to show or even suggest that PD No. 771 has been repealed, altered
or amended by any subsequent law or presidential issuance (when the executive still exercised
legislative powers).
Neither can it be tenably stated that the issue of the continued existence of ADC's franchise by
reason of the unconstitutionality of PD No. 771 was settled in G.R. No. 115044, for the
decision of the Court's First Division in said case, aside from not being final, cannot have the
effect of nullifying PD No. 771 as unconstitutional, since only the Court En Banc has that
power under Article VIII, Section 4(2) of the Constitution.
4

And on the question of whether or not the government is estopped from contesting ADC's
possession of a valid franchise, the well-settled rule is that the State cannot be put in estoppel
by the mistakes or errors, if any, of its officials or agents (Republic v. Intermediate Appellate
Court, 209 SCRA 90)
Consequently, in the light of the foregoing expostulation, we conclude that the republic (in
contra distinction to the City of Manila) may be allowed to intervene in G.R. No. 115044. The
Republic is intervening in G.R. No. 115044 in the exercise, not of its business or proprietary
functions, but in the exercise of its governmental functions to protect public morals and
promote the general welfare.
II
Anent the question of whether ADC has a valid franchise to operate the Jai-Alai de Manila, a
statement of the pertinent laws is in order.
1. The Charter of the City of Manila was enacted by Congress on 18 June 1949. Section 18
thereof provides:
Sec. 18. Legislative Powers. The Municipal Board shall have the
following legislative powers:
xxx xxx xxx
(jj) To tax, license, permit and regulate wagers or betting by the public on
boxing, sipa, bowling, billiards, pools, horse and dog races, cockpits, jai-
alai, roller or ice-skating on any sporting or athletic contests, as well as
grant exclusive rights to establishments for this purpose, notwithstanding
any existing law to the contrary.
2. On 1 January 1951, Executive Order No. 392 was issued transferring the authority to
regulate jai-alais from local government to the Games and Amusements Board (GAB).
3. On 20 June 1953, Congress enacted Republic Act No. 954, entitled "An Act to Prohibit
With Horse Races and Basque Pelota Games (Jai-Alai), And To Prescribe Penalties For Its
Violation". The provisions of Republic Act No. 954 relating to jai-alai are as follows:
Sec. 4. No person, or group of persons other than the operator or maintainer
of a fronton with legislative franchise to conduct basque pelota games (Jai-
alai), shall offer, to take or arrange bets on any basque pelota game or event,
or maintain or use a totalizator or other device, method or system to bet or
gamble on any basque pelota game or event. (emphasis supplied).
Sec. 5. No person, operator or maintainer of a fronton with legislative
franchise to conduct basque pelota games shall offer, take, or arrange bets
on any basque pelota game or event, or maintain or use a totalizator or other
device, method or system to bet or gamble on any basque pelota game or
event outside the place, enclosure, or fronton where the basque pelota game
is held. (emphasis supplied).
4. On 07 September 1971, however, the Municipal Board of Manila nonetheless passed
Ordinance No. 7065 entitled "An Ordinance Authorizing the Mayor To Allow And Permit
The Associated Development Corporation To Establish, Maintain And Operate A Jai-Alai In
The City Of Manila, Under Certain Terms And Conditions And For Other Purposes."
5. On 20 August 1975, Presidential Decree No. 771 was issued by then President Marcos. The
decree, entitled "Revoking All Powers and Authority of Local Government(s) To Grant
Franchise, License or Permit And Regulate Wagers Or Betting By The Public On Horse And
Dog Races, Jai-Alai Or Basque Pelota, And Other Forms Of Gambling", in Section 3 thereof,
expressly revoked all existing franchises and permits issued by local governments.
6. On 16 October 1975, Presidential Decree No. 810, entitled "An Act granting The Philippine
Jai-Alai And Amusement Corporation A Franchise To Operate, Construct And Maintain A
Fronton For Basque Pelota And Similar Games of Skill In THE Greater Manila Area," was
promulgated.
7 On 08 May 1987, then President Aquino, by virtue of Article XVIII, Section 6, of the
Constitution, which allowed the incumbent legislative powers until the first Congress was
convened, issued Executive Order No. 169 expressly repealing PD 810 and revoking and
cancelling the franchise granted to the Philippine Jai-Alai and Amusement Corporation.
Petitioners in G.R. No. 117263 argue that Republic Act No. 954 effectively removed the
power of the Municipal Board of Manila to grant franchises for gambling operations. It is
argued that the term "legislative franchise" in Rep. Act No. 954 is used to refer to franchises
issued by Congress.
On the other hand, ADC contends that Republic Act N. 409 (Manila Chapter) gives legislative
powers to the Municipal Board to grant franchises, and since Republic Act No. 954 does not
specifically qualify the word "legislative" as referring exclusively to Congress, then Rep. Act
No. 954 did not remove the power of the Municipal Board under Section 18(jj) of Republic
Act No. 409 and consequently it was within the power of the City of Manila to allow ADC to
operate the jai-alai in the City of Manila.
On this point, the government counter-argues that the term "legislative powers" is used in
Rep. Act No. 409 merely to distinguish the powers under Section 18 of the law from the other
powers of the Municipal Board, but that the term "legislative franchise" in Rep. Act No. 954
refers to a franchise granted solely by Congress.
Further, the government argues that Executive Order No. 392 dated 01 January 1951
transferred even the power to regulate Jai-Alai from the local governments to the Games and
Amusements Board (GAB), a national government agency.
It is worthy of note that neither of the authorities relied upon by ADC to support its alleged
possession of a valid franchise, namely the Charter of the City of Manila (Rep. Act No. 409)
and Manila Ordinance No. 7065 uses the word "franchise". Rep. Act No. 409 empowers the
Municipal Board of Manila to "tax, license, permit and regulate wagers or betting" and to
"grant exclusive rights to establishments", while Ordinance No. 7065 authorized the Manila
City Mayor to "allow and permit" ADC to operate jai-alai facilities in the City of Manila.
It is clear from the foregoing that Congress did not delegate to the City of Manila the power
"to franchise" wagers or betting, including the jai-alai, but retained for itself such power "to
franchise". What Congress delegated to the City of Manila in Rep. Act No. 409, with respect
to wagers or betting, was the power to "license, permit, or regulate" which therefore means
that a license or permit issued by the City of Manila to operate a wager or betting activity,
such as the jai-alai where bets are accepted, would not amount to something meaningful
UNLESS the holder of the permit or license was also FRANCHISED by the national
government to so operate. Moreover, even this power to license, permit, or regulate wagers or
betting on jai-alai was removed from local governments, including the City of Manila, and
transferred to the GAB on 1 January 1951 by Executive Order No. 392. The net result is that
the authority to grant franchises for the operation of jai-alai frontons is in Congress, while the
regulatory function is vested in the GAB.
In relation, therefore, to the facts of this case, since ADC has no franchise from Congress to
operate the jai-alai, it may not so operate even if its has a license or permit from the City
Mayor to operate the jai-alai in the City of Manila.
It cannot be overlooked, in this connection, that the Revised Penal Code punishes gambling
and betting under Articles 195 to 199 thereof. Gambling is thus generally prohibited by law,
unless another law is enacted by Congress expressly exempting or excluding certain forms of
gambling from the reach of criminal law. Among these form the reach of criminal law.
Among these forms of gambling allowed by special law are the horse races authorized by
Republic Acts Nos. 309 and 983 and gambling casinos authorized under Presidential Decree
No. 1869.
While jai-alai as a sport is not illegal per se, the accepting of bets or wagers on the results of
jai-alai games is undoubtedly gambling and, therefore, a criminal offense punishable under
Articles 195-199 of the Revised Penal Code, unless it is shown that a later or special law had
been passed allowing it. ADC has not shown any such special law.
Republic Act No. 409 (the Revised Charter of the City of Manila) which was enacted by
Congress on 18 June 1949 gave the Municipal Board certain delegated legislative powers
under Section 18. A perusal of the powers enumerated under Section 18 shows that these
powers are basically regulatory in nature.
5
The regulatory nature of these powers finds
support not only in the plain words of the enumerations under Section 28 but also in this
Court's ruling in People v. Vera (65 Phil. 56).
In Vera, this Court declared that a law which gives the Provincial Board the discretion to
determine whether or not a law of general application (such as, the Probation law-Act No.
4221) would or would not be operative within the province, is unconstitutional for being an
undue delegation of legislative power.
From the ruling in Vera, it would be logical to conclude that, if ADC's arguments were to
prevail, this Court would likewise declare Section 18(jj) of the Revised Charter of Manila
unconstitutional for the power it would delegate to the Municipal Board of Manila would give
the latter the absolute and unlimited discretion to render the penal code provisions on
gambling inapplicable or inoperative to persons or entities issued permits to operate gambling
establishments in the City of Manila.
We need not go to this extent, however, since the rule is that laws must be presumed valid,
constitutional and in harmony with other laws. Thus, the relevant provisions of Rep. Acts
Nos. 409 and 954 and Ordinance No. 7065 should be taken together and it should then be
clear that the legislative powers of the Municipal Board should be understood to be regulatory
in nature and that Republic Act No. 954 should be understood to refer to congressional
franchises, as a necessity for the operation of jai-alai.
We need not, however, again belabor this issue further since the task at hand which will
ultimately, and with finality, decide the issues in this case is to determine whether PD No. 771
validly revoked ADC's franchise to operate the jai-alai, assuming (without conceding) that it
indeed possessed such franchise under Ordinance No. 7065.
ADC argues that PD No. 771 is unconstitutional for being violative of the equal protection
and non-impairment provisions of the Constitution. On the other hand, the government
contends that PD No. 771 is a valid exercise of the inherent police power of the State.
The police power has been described as the least limitable of the inherent powers of the State.
It is based on the ancient doctrine salus populi est suprema lex (the welfare of the people is
the supreme law.) In the early case of Rubi v. Provincial Board of Mindoro (39 Phil. 660), this
Court through Mr. Justice George A. Malcolm stated thus:
The police power of the State . . . is a power co-extensive with self-
protection, and is not inaptly termed the "law of overruling necessity." It
may be said to be that inherent and plenary power in the State which
enables it to prohibit all things hurtful to the comfort, safety and welfare of
society. Carried onward by the current of legislation, the judiciary rarely
attempts to dam the onrushing power of legislative discretion, provided the
purposes of the law do not go beyond the great principles that mean security
for the public welfare or do not arbitrarily interfere with the right of the
individual.
In the matter of PD No. 771, the purpose of the law is clearly stated in the "whereas clause" as
follows:
WHEREAS, it has been reported that in spite of the current drive of our law
enforcement agencies against vices and illegal gambling, these social ills
are still prevalent in many areas of the country;
WHEREAS, there is need to consolidate all the efforts of the government to
eradicate and minimize vices and other forms of social ills in pursuance of
the social and economic development program under the new society;
WHEREAS, in order to effectively control and regulate wagers or betting
by the public on horse and dog races, jai-alai and other forms of gambling
there is a necessity to transfer the issuance of permit and/or franchise from
local government to the National Government.
It cannot be argued that the control and regulation of gambling do not promote public morals
and welfare. Gambling is essentially antagonistic and self-reliance. It breeds indolence and
erodes the value of good, honest and hard work. It is, as very aptly stated by PD No. 771, a
vice and a social ill which government must minimize (if not eradicate) in pursuit of social
and economic development.
In Magtajas v. Pryce Properties Corporation (20 July 1994, G.R. No. 111097), this Court
stated thru Mr. Justice Isagani A. Cruz:
In the exercise of its own discretion, the legislative power may prohibit
gambling altogether or allow it without limitation or it may prohibit some
forms of gambling and allow others for whatever reasons it may consider
sufficient. Thus, it has prohibited jueteng and monte but permits lotteries,
cockfighting and horse-racing. In making such choices, Congress has
consulted its own wisdom, which this Court has no authority to review,
much less reverse. Well has it been said that courts do not sit to resolve the
merits of conflicting theories. That is the prerogative of the political
departments. It is settled that questions regarding wisdom, morality and
practicability of statutes are not addressed to the judiciary but may be
resolved only by the executive and legislative departments, to which the
function belongs in our scheme of government. (Emphasis supplied)
Talks regarding the supposed vanishing line between right and privilege in American
constitutional law has no relevance in the context of these cases since the reference there is to
economic regulations. On the other hand, jai-alai is not a mere economic activity which the
law seeks to regulate. It is essentially gambling and whether it should be permitted and, if so,
under what conditions are questions primarily for the lawmaking authority to determine,
talking into account national and local interests. Here, it is the police power of the State that is
paramount.
ADC questions the motive for the issuance of PD Nos. 771. Clearly, however, this Court
cannot look into allegations that PD No. 771 was enacted to benefit a select group which was
later given authority to operate the jai-alai under PD No. 810. The examination of legislative
motivation is generally prohibited. (Palmer v. Thompson, 403 U.S. 217, 29 L. Ed. 2d 438
[1971] per Black, J.) There is, the first place, absolute lack of evidence to support ADC's
allegation of improper motivation in the issuance of PD No. 771. In the second place, as
already averred, this Court cannot go behind the expressed and proclaimed purposes of PD
No. 771, which are reasonable and even laudable.
It should also be remembered that PD No. 771 provides that the national government can
subsequently grant franchises "upon proper application and verification of the qualifications
of the applicant." ADC has not alleged that it filed an application for a franchise with the
national government subsequent to the enactment of PD No. 771; thus, the allegations
abovementioned (of preference to a select group) are based on conjectures, speculations and
imagined biases which do not warrant the consideration of this Court.
On the other hand, it is noteworthy that while then president Aquino issued Executive Order
No. 169 revoking PD No. 810 (which granted a franchise to a Marcos-crony to operate the jai-
alai), she did not scrap or repeal PD No. 771 which had revoked all franchises to operate jai-
alais issued by local governments, thereby re-affirming the government policy that franchises
to operate jai-alais are for the national government (not local governments) to consider and
approve.
On the alleged violation of the non-impairment and equal protection clauses of the
Constitution, it should be remembered that a franchise is not in the strict sense a simple
contract but rather it is more importantly, a mere privilege specially in matters which are
within the government's power to regulate and even prohibit through the exercise of the police
power. Thus, a gambling franchise is always subject to the exercise of police power for the
public welfare.
In RCPI v. NTC (150 SCRA 450), we held that:
A franchise started out as a "royal privilege or (a) branch of the King's
prerogative, subsisting in the hands of a subject." This definition was given
by Finch, adopted by Blackstone, and accepted by every authority since . . .
Today, a franchise being merely a privilege emanating from the sovereign
power of the state and owing its existence to a grant, is subject to regulation
by the state itself by virtue of its police power through its administrative
agencies.
There is a stronger reason for holding ADC's permit to be a mere privilege because jai-alai,
when played for bets, is pure and simple gambling. To analogize a gambling franchise for the
operation of a public utility, such as public transportation company, is to trivialize the great
historic origin of this branch of royal privilege.
As earlier noted, ADC has not alleged ever applying for a franchise under the provisions of
PD No. 771. and yet, the purpose of PD No. 771 is quite clear from its provisions, i.e., to give
to the national government the exclusive power to grant gambling franchises. Thus, all
franchises then existing were revoked but were made subject to reissuance by the national
government upon compliance by the applicant with government-set qualifications and
requirements.
There was no violation by PD No. 771 of the equal protection clause since the decree revoked
all franchises issued by local governments without qualification or exception. ADC cannot
allege violation of the equal protection clause simply because it was the only one affected by
the decree, for as correctly pointed out by the government, ADC was not singled out when all
jai-alai franchises were revoked. Besides, it is too late in the day for ADC to seek redress for
alleged violation of its constitutional rights for it could have raised these issues as early as
1975, almost twenty 920) years ago.
Finally, we do not agree that Section 3 of PD No. 771 and the requirement of a legislative
franchise in Republic Act No. 954 are "riders" to the two 92) laws and are violative of the rule
that laws should embrace one subject which shall be expressed in the title, as argued by ADC.
In Cordero v. Cabatuando (6 SCRA 418), this Court ruled that the requirement under the
constitution that all laws should embrace only one subject which shall be expressed in the title
is sufficiently met if the title is comprehensive enough reasonably to include the general
object which the statute seeks to effect, without expressing each and every end and means
necessary or convenient for the accomplishing of the objective.
III
On the issue of whether or not there was grave abuse of discretion committed by respondent
Judge Reyes in issuing the temporary restraining order (later converted to a writ of
preliminary injunction) and the writ of preliminary mandatory injunction, we hold and rule
there was.
Section 3, Rule 58 of the rules of Court provides for the grounds for the issuance of a
preliminary injunction. While ADC could allege these grounds, respondent judge should have
taken judicial notice of Republic Act No. 954 and PD 771, under Section 1 rule 129 of the
Rules of court. These laws negate the existence of any legal right on the part of ADC to the
reliefs it sought so as to justify the issuance of a writ of preliminary injunction. since PD No.
771 and Republic Act No. 954 are presumed valid and constitutional until ruled otherwise by
the Supreme Court after due hearing, ADC was not entitled to the writs issued and
consequently there was grave abuse of discretion in issuing them.
WHEREFORE, for the foregoing reasons, judgment is hereby rendered:
1. allowing the Republic of the Philippines to intervene in G.R. No. 115044.
2. declaring Presidential Decree No. 771 valid and constitutional.
3. declaring that respondent Associated Development corporation (ADC)
does not possess the required congressional franchise to operate and
conduct the jai-alai under Republic Act No. 954 and Presidential Decree
No. 771.
4. setting aside the writs of preliminary injunction and preliminary
mandatory injunction issued by respondent Judge Vetino Reyes in civil
Case No. 94-71656.
SO ORDERED.

















JOVENCIO LIM and TERESITA LIM, petitioners, vs. THE PEOPLE OF THE
PHILIPPINES, THE REGIONAL TRIAL COURT OF QUEZON CITY, BRANCH 217,
THE CITY PROSECUTOR OF QUEZON CITY, AND WILSON CHAM, respondents.
D E C I S I O N
CORONA, J.:
The constitutionality of PD 818, a decree which amended Article 315 of the Revised Penal
Code by increasing the penalties for estafa committed by means of bouncing checks, is being
challenged in this petition for certiorari, for being violative of the due process clause, the right
to bail and the provision against cruel, degrading or inhuman punishment enshrined under the
Constitution.
The antecedents of this case, as gathered from the parties pleadings and documentary proofs,
follow.
In December 1991, petitioner spouses issued to private respondent two postdated checks,
namely, Metrobank check no. 464728 dated January 15, 1992 in the amount of P365,750 and
Metrobank check no. 464743 dated January 22, 1992 in the amount of P429,000. Check no.
464728 was dishonored upon presentment for having been drawn against insufficient funds
while check no. 464743 was not presented for payment upon request of petitioners who
promised to replace the dishonored check.
When petitioners reneged on their promise to cover the amount of check no. 464728, the
private respondent filed a complaint-affidavit before the Office of the City Prosecutor of
Quezon City charging petitioner spouses with the crime of estafa under Article 315, par. 2 (d)
of the Revised Penal Code, as amended by PD 818.
On February 16, 2001, the City Prosecutor issued a resolution finding probable cause against
petitioners and recommending the filing of an information for estafa with no bail
recommended. On the same day, an information for the crime of estafa was filed with Branch
217 of the Regional Trial Court of Quezon City against petitioners. The case was docketed as
Criminal Case No. Q-01-101574. Thereafter, the trial court issued a warrant for the arrest of
herein petitioners, thus:
It appearing on the face of the information and from supporting affidavit of the complaining
witness and its annexes that probable cause exists, that the crime charged was committed and
accused is probably guilty thereof, let a warrant for the arrest of the accused be issued.
No Bail Recommended.
SO ORDERED.
On July 18, 2001, petitioners filed an Urgent Motion to Quash Information and Warrant of
Arrest which was denied by the trial court. Likewise, petitioners motion for bail filed on
July 24, 2001 was denied by the trial court on the same day. Petitioner Jovencio Lim was
arrested by virtue of the warrant of arrest issued by the trial court and was detained at the
Quezon City Jail. However, petitioner Teresita Lim remained at large.
On August 22, 2001, petitioners filed the instant petition for certiorari imputing grave abuse
of discretion on the part of the lower court and the Office of the City Prosecutor of Quezon
City, arguing that PD 818 violates the constitutional provisions on due process, bail and
imposition of cruel, degrading or inhuman punishment.
In a resolution dated February 26, 2002, this Court granted the petition of Jovencio Lim to
post bail pursuant to Department of Justice Circular No. 74 dated November 6, 2001 which
amended the 2000 Bail Bond Guide involving estafa under Article 315, par. 2 (d), and
qualified theft. Said Circular specifically provides as follows:
xxx xxx xxx
3) Where the amount of fraud is P32,000.00 or over in which the imposable penalty is
reclusion temporal to reclusion perpetua, bail shall be based on reclusion temporal maximum,
pursuant to Par. 2 (a) of the 2000 Bail Bond Guide, multiplied by P2,000.00, plus an
additional of P2,000.00 for every P10,000.00 in excess of P22,000.00; Provided, however,
that the total amount of bail shall not exceed P60,000.00.
In view of the aforementioned resolution, the matter concerning bail shall no longer be
discussed. Thus, this decision will focus on whether or not PD 818 violates Sections 1 and 19
of Article III of the Constitution, which respectively provide:
Section 1. No person shall be deprived of life, liberty or property without due process of law,
nor shall any person be denied the equal protection of the laws.
x x x
Section 19 (1) Excessive fines shall not be imposed, nor cruel, degrading or inhuman
punishment inflicted. x x x.
We shall deal first with the issue of whether PD 818 was enacted in contravention of Section
19 of Article III of the Constitution. In this regard, the impugned provision of PD 818 reads
as follows:
SECTION 1. Any person who shall defraud another by means of false pretenses or fraudulent
acts as defined in paragraph 2(d) of Article 315 of the Revised Penal Code, as amended by
Republic Act No. 4885, shall be punished by:
1
st
. The penalty of reclusion temporal if the amount of the fraud is over 12,000 pesos but does
not exceed 22,000 pesos, and if such amount exceeds the later sum, the penalty provided in
this paragraph shall be imposed in its maximum period, adding one year for each additional
10,000 pesos but the total penalty which may be imposed shall in no case exceed thirty years.
In such cases, and in connection with the accessory penalties which may be imposed under
the Revised Penal Code, the penalty shall be termed reclusion perpetua;
2
nd
. The penalty of prision mayor in its maximum period, if the amount of the fraud is over
6,000 pesos but does not exceed 12,000 pesos.
3
rd
. The penalty of prision mayor in its medium period, if such amount is over 200 pesos but
does not exceed 6,000 pesos; and
4
th
. By prision mayor in its minimum period, if such amount does not exceed 200 pesos.
Petitioners contend that, inasmuch as the amount of the subject check is P365,750, they can
be penalized with reclusion perpetua or 30 years of imprisonment. This penalty, according to
petitioners, is too severe and disproportionate to the crime they committed and infringes on
the express mandate of Article III, Section 19 of the Constitution which prohibits the
infliction of cruel, degrading and inhuman punishment.
Settled is the rule that a punishment authorized by statute is not cruel, degrading or
disproportionate to the nature of the offense unless it is flagrantly and plainly oppressive and
wholly disproportionate to the nature of the offense as to shock the moral sense of the
community. It takes more than merely being harsh, excessive, out of proportion or severe for
a penalty to be obnoxious to the Constitution. Based on this principle, the Court has
consistently overruled contentions of the defense that the penalty of fine or imprisonment
authorized by the statute involved is cruel and degrading.
In People vs. Tongko, this Court held that the prohibition against cruel and unusual
punishment is generally aimed at the form or character of the punishment rather than its
severity in respect of its duration or amount, and applies to punishments which never existed
in America or which public sentiment regards as cruel or obsolete. This refers, for instance, to
those inflicted at the whipping post or in the pillory, to burning at the stake, breaking on the
wheel, disemboweling and the like. The fact that the penalty is severe provides insufficient
basis to declare a law unconstitutional and does not, by that circumstance alone, make it cruel
and inhuman.
Petitioners also argue that while PD 818 increased the imposable penalties for estafa
committed under Article 315, par. 2 (d) of the Revised Penal Code, it did not increase the
amounts corresponding to the said new penalties. Thus, the original amounts provided for in
the Revised Penal Code have remained the same notwithstanding that they have become
negligible and insignificant compared to the present value of the peso.
This argument is without merit. The primary purpose of PD 818 is emphatically and
categorically stated in the following:
WHEREAS, reports received of late indicate an upsurge of estafa (swindling) cases committed
by means of bouncing checks;
WHEREAS, if not checked at once, these criminal acts would erode the peoples confidence in
the use of negotiable instruments as a medium of commercial transaction and consequently
result in the retardation of trade and commerce and the undermining of the banking system of
the country;
WHEREAS, it is vitally necessary to arrest and curb the rise in this kind of estafa cases by
increasing the existing penalties provided therefor.
Clearly, the increase in the penalty, far from being cruel and degrading, was motivated by a
laudable purpose, namely, to effectuate the repression of an evil that undermines the countrys
commercial and economic growth, and to serve as a necessary precaution to deter people from
issuing bouncing checks. The fact that PD 818 did not increase the amounts corresponding to
the new penalties only proves that the amount is immaterial and inconsequential. What the
law sought to avert was the proliferation of estafa cases committed by means of bouncing
checks. Taking into account the salutary purpose for which said law was decreed, we
conclude that PD 818 does not violate Section 19 of Article III of the Constitution.
Moreover, when a law is questioned before the Court, the presumption is in favor of its
constitutionality. To justify its nullification, there must be a clear and unmistakable breach of
the Constitution, not a doubtful and argumentative one. The burden of proving the invalidity
of a law rests on those who challenge it. In this case, petitioners failed to present clear and
convincing proof to defeat the presumption of constitutionality of PD 818.
With respect to the issue of whether PD 818 infringes on Section 1 of Article III of the
Constitution, petitioners claim that PD 818 is violative of the due process clause of the
Constitution as it was not published in the Official Gazette. This claim is incorrect and must
be rejected. Publication, being an indispensable part of due process, is imperative to the
validity of laws, presidential decrees and executive orders. PD 818 was published in the
Official Gazette on December 1, 1975.
With the foregoing considerations in mind, this Court upholds the constitutionality of PD 818.
WHEREFORE, the petition is hereby DISMISSED.
SO ORDERED.


























.R. No. 94723 August 21, 1997
KAREN E. SALVACION, minor, thru Federico N. Salvacion, Jr., father and Natural
Guardian, and Spouses FEDERICO N. SALVACION, JR., and EVELINA E.
SALVACION, petitioners,
vs.
CENTRAL BANK OF THE PHILIPPINES, CHINA BANKING CORPORATION and
GREG BARTELLI y NORTHCOTT, respondents.

TORRES, JR., J .:
In our predisposition to discover the "original intent" of a statute, courts become the unfeeling
pillars of the status quo. Ligle do we realize that statutes or even constitutions are bundles of
compromises thrown our way by their framers. Unless we exercise vigilance, the statute may
already be out of tune and irrelevant to our day.
The petition is for declaratory relief. It prays for the following reliefs:
a.) Immediately upon the filing of this petition, an Order be issued
restraining the respondents from applying and enforcing Section 113 of
Central Bank Circular No. 960;
b.) After hearing, judgment be rendered:
1.) Declaring the respective rights and duties of petitioners and respondents;
2.) Adjudging Section 113 of Central Bank Circular No. 960 as contrary to
the provisions of the Constitution, hence void; because its provision that
"Foreign currency deposits shall be exempt from attachment, garnishment,
or any other order or process of any court, legislative body, government
agency or any administrative body whatsoever
i.) has taken away the right of petitioners to have the bank
deposit of defendant Greg Bartelli y Northcott garnished
to satisfy the judgment rendered in petitioners' favor in
violation of substantive due process guaranteed by the
Constitution;
ii.) has given foreign currency depositors an undue favor
or a class privilege in violation of the equal protection
clause of the Constitution;
iii.) has provided a safe haven for criminals like the herein
respondent Greg Bartelli y Northcott since criminals
could escape civil liability for their wrongful acts by
merely converting their money to a foreign currency and
depositing it in a foreign currency deposit account with an
authorized bank.
The antecedent facts:
On February 4, 1989, Greg Bartelli y Northcott, an American tourist, coaxed and lured
petitioner Karen Salvacion, then 12 years old to go with him to his apartment. Therein, Greg
Bartelli detained Karen Salvacion for four days, or up to February 7, 1989 and was able to
rape the child once on February 4, and three times each day on February 5, 6, and 7, 1989. On
February 7, 1989, after policemen and people living nearby, rescued Karen, Greg Bartelli was
arrested and detained at the Makati Municipal Jail. The policemen recovered from Bartelli the
following items: 1.) Dollar Check No. 368, Control No. 021000678-1166111303, US
3,903.20; 2.) COCOBANK Bank Book No. 104-108758-8 (Peso Acct.); 3.) Dollar Account
China Banking Corp., US$/A#54105028-2; 4.) ID-122-30-8877; 5.) Philippine Money
(P234.00) cash; 6.) Door Keys 6 pieces; 7.) Stuffed Doll (Teddy Bear) used in seducing the
complainant.
On February 16, 1989, Makati Investigating Fiscal Edwin G. Condaya filed against Greg
Bartelli, Criminal Case No. 801 for Serious Illegal Detention and Criminal Cases Nos. 802,
803, 804, and 805 for four (4) counts of Rape. On the same day, petitioners filed with the
Regional Trial Court of Makati Civil Case No. 89-3214 for damages with preliminary
attachment against Greg Bartelli. On February 24, 1989, the day there was a scheduled
hearing for Bartelli's petition for bail the latter escaped from jail.
On February 28, 1989, the court granted the fiscal's Urgent Ex-Parte Motion for the Issuance
of Warrant of Arrest and Hold Departure Order. Pending the arrest of the accused Greg
Bartelli y Northcott, the criminal cases were archived in an Order dated February 28, 1989.
Meanwhile, in Civil Case No. 89-3214, the Judge issued an Order dated February 22, 1989
granting the application of herein petitioners, for the issuance of the writ of preliminary
attachment. After petitioners gave Bond No. JCL (4) 1981 by FGU Insurance Corporation in
the amount of P100,000.00, a Writ of Preliminary Attachment was issued by the trial court on
February 28, 1989.
On March 1, 1989, the Deputy Sheriff of Makati served a Notice of Garnishment on China
Banking Corporation. In a letter dated March 13, 1989 to the Deputy Sheriff of Makati, China
Banking Corporation invoked Republic Act No. 1405 as its answer to the notice of
garnishment served on it. On March 15, 1989, Deputy Sheriff of Makati Armando de Guzman
sent his reply to China Banking Corporation saying that the garnishment did not violate the
secrecy of bank deposits since the disclosure is merely incidental to a garnishment properly
and legally made by virtue of a court order which has placed the subject deposits in custodia
legis. In answer to this letter of the Deputy Sheriff of Makati, China Banking Corporation, in
a letter dated March 20, 1989, invoked Section 113 of Central Bank Circular No. 960 to the
effect that the dollar deposits or defendant Greg Bartelli are exempt from attachment,
garnishment, or any other order or process of any court, legislative body, government agency
or any administrative body, whatsoever.
This prompted the counsel for petitioners to make an inquiry with the Central Bank in a letter
dated April 25, 1989 on whether Section 113 of CB Circular No. 960 has any exception or
whether said section has been repealed or amended since said section has rendered nugatory
the substantive right of the plaintiff to have the claim sought to be enforced by the civil action
secured by way of the writ of preliminary attachment as granted to the plaintiff under Rule 57
of the Revised Rules of Court. The Central Bank responded as follows:
May 26, 1989
Ms. Erlinda S. Carolino
12 Pres. Osmena Avenue
South Admiral Village
Paranaque, Metro Manila
Dear Ms. Carolino:
This is in reply to your letter dated April 25, 1989 regarding your inquiry on
Section 113, CB Circular No. 960 (1983).
The cited provision is absolute in application. It does not admit of any
exception, nor has the same been repealed nor amended.
The purpose of the law is to encourage dollar accounts within the country's
banking system which would help in the development of the economy.
There is no intention to render futile the basic rights of a person as was
suggested in your subject letter. The law may be harsh as some perceive it,
but it is still the law. Compliance is, therefore, enjoined.
Very truly yours,
(SGD) AGAPITO S. FAJARDO
Director
1

Meanwhile, on April 10, 1989, the trial court granted petitioners' motion for leave to serve
summons by publication in the Civil Case No. 89-3214 entitled "Karen Salvacion, et al. vs.
Greg Bartelli y Northcott." Summons with the complaint was a published in the Manila Times
once a week for three consecutive weeks. Greg Bartelli failed to file his answer to the
complaint and was declared in default on August 7, 1989. After hearing the case ex-parte, the
court rendered judgment in favor of petitioners on March 29, 1990, the dispositive portion of
which reads:
WHEREFORE, judgment is hereby rendered in favor of plaintiffs and
against defendant, ordering the latter:
1. To pay plaintiff Karen E. Salvacion the amount of P500,000.00 as moral
damages;
2. To pay her parents, plaintiffs spouses Federico N. Salvacion, Jr., and
Evelina E. Salvacion the amount of P150,000.00 each or a total of
P300,000.00 for both of them;
3. To pay plaintiffs exemplary damages of P100,000.00; and
4. To pay attorney's fees in an amount equivalent to 25% of the total amount
of damages herein awarded;
5. To pay litigation expenses of P10,000.00; plus
6. Costs of the suit.
SO ORDERED.
The heinous acts of respondent Greg Bartelli which gave rise to the award were related in
graphic detail by the trial court in its decision as follows:
The defendant in this case was originally detained in the municipal jail of
Makati but was able to escape therefrom on February 24, 1989 as per report
of the Jail Warden of Makati to the Presiding Judge, Honorable Manuel M.
Cosico of the Regional Trial Court of Makati, Branch 136, where he was
charged with four counts of Rape and Serious Illegal Detention (Crim.
Cases Nos. 802 to 805). Accordingly, upon motion of plaintiffs, through
counsel, summons was served upon defendant by publication in the Manila
Times, a newspaper of general circulation as attested by the Advertising
Manager of the Metro Media Times, Inc., the publisher of the said
newspaper. Defendant, however, failed to file his answer to the complaint
despite the lapse of the period of sixty (60) days from the last publication;
hence, upon motion of the plaintiffs, through counsel, defendant was
declared in default and plaintiffs were authorized to present their evidence
ex parte.
In support of the complaint, plaintiffs presented as witnesses the minor
Karen E. Salvacion, her father, Federico N. Salvacion, Jr., a certain Joseph
Aguilar and a certain Liberato Madulio, who gave the following testimony:
Karen took her first year high school in St. Mary's Academy in Pasay City
but has recently transferred to Arellano University for her second year.
In the afternoon of February 4, 1989, Karen was at the Plaza Fair Makati
Cinema Square, with her friend Edna Tangile whiling away her free time.
At about 3:30 p.m. while she was finishing her snack on a concrete bench in
front of Plaza Fair, an American approached her. She was then alone
because Edna Tangile had already left, and she was about to go home.
(TSN, Aug. 15, 1989, pp. 2 to 5)
The American asked her name and introduced himself as Greg Bartelli. He
sat beside her when he talked to her. He said he was a Math teacher and told
her that he has a sister who is a nurse in New York. His sister allegedly has
a daughter who is about Karen's age and who was with him in his house
along Kalayaan Avenue. (TSN, Aug. 15, 1989, pp. 4-5)
The American asked Karen what was her favorite subject and she told him
it's Pilipino. He then invited her to go with him to his house where she
could teach Pilipino to his niece. He even gave her a stuffed toy to persuade
her to teach his niece. (Id., pp. 5-6)
They walked from Plaza Fair along Pasong Tamo, turning right to reach the
defendant's house along Kalayaan Avenue. (Id., p. 6)
When they reached the apartment house, Karen noticed that defendant's
alleged niece was not outside the house but defendant told her maybe his
niece was inside. When Karen did not see the alleged niece inside the
house, defendant told her maybe his niece was upstairs, and invited Karen
to go upstairs. (Id., p. 7)
Upon entering the bedroom defendant suddenly locked the door. Karen
became nervous because his niece was not there. Defendant got a piece of
cotton cord and tied Karen's hands with it, and then he undressed her. Karen
cried for help but defendant strangled her. He took a packing tape and he
covered her mouth with it and he circled it around her head. (Id., p. 7)
Then, defendant suddenly pushed Karen towards the bed which was just
near the door. He tied her feet and hands spread apart to the bed posts. He
knelt in front of her and inserted his finger in her sex organ. She felt severe
pain. She tried to shout but no sound could come out because there were
tapes on her mouth. When defendant withdrew his finger it was full of
blood and Karen felt more pain after the withdrawal of the finger. (Id., p. 8)
He then got a Johnson's Baby Oil and he applied it to his sex organ as well
as to her sex organ. After that he forced his sex organ into her but he was
not able to do so. While he was doing it, Karen found it difficult to breathe
and she perspired a lot while feeling severe pain. She merely presumed that
he was able to insert his sex organ a little, because she could not see. Karen
could not recall how long the defendant was in that position. (Id. pp. 8-9)
After that, he stood up and went to the bathroom to wash. He also told
Karen to take a shower and he untied her hands. Karen could only hear the
sound of the water while the defendant, she presumed, was in the bathroom
washing his sex organ. When she took a shower more blood came out from
her. In the meantime, defendant changed the mattress because it was full of
blood. After the shower, Karen was allowed by defendant to sleep. She fell
asleep because she got tired crying. The incident happened at about 4:00
p.m. Karen had no way of determining the exact time because defendant
removed her watch. Defendant did not care to give her food before she went
to sleep. Karen woke up at about 8:00 o'clock the following morning. (Id.,
pp. 9-10)
The following day, February 5, 1989, a Sunday, after a breakfast of biscuit
and coke at about 8:30 to 9:00 a.m. defendant raped Karen while she was
still bleeding. For lunch, they also took biscuit and coke. She was raped for
the second time at about 12:00 to 2:00 p.m. In the evening, they had rice for
dinner which defendant had stored downstairs; it was he who cooked the
rice that is why it looks like "lugaw". For the third time, Karen was raped
again during the night. During those three times defendant succeeded in
inserting his sex organ but she could not say whether the organ was inserted
wholly.
Karen did not see any firearm or any bladed weapon. The defendant did not
tie her hands and feet nor put a tape on her mouth anymore but she did not
cry for help for fear that she might be killed; besides, all the windows and
doors were closed. And even if she shouted for help, nobody would hear
her. She was so afraid that if somebody would hear her and would be able
to call the police, it was still possible that as she was still inside the house,
defendant might kill her. Besides, the defendant did not leave that Sunday,
ruling out her chance to call for help. At nighttime he slept with her again.
(TSN, Aug. 15, 1989, pp. 12-14)
On February 6, 1989, Monday, Karen was raped three times, once in the
morning for thirty minutes after a breakfast of biscuits; again in the
afternoon; and again in the evening. At first, Karen did not know that there
was a window because everything was covered by a carpet, until defendant
opened the window for around fifteen minutes or less to let some air in, and
she found that the window was covered by styrofoam and plywood. After
that, he again closed the window with a hammer and he put the styrofoam,
plywood, and carpet back. (Id., pp. 14-15)
That Monday evening, Karen had a chance to call for help, although
defendant left but kept the door closed. She went to the bathroom and saw a
small window covered by styrofoam and she also spotted a small hole. She
stepped on the bowl and she cried for help through the hole. She cried:
"Maawa no po kayo so akin. Tulungan n'yo akong makalabas dito.
Kinidnap ako!" Somebody heard her. It was a woman, probably a neighbor,
but she got angry and said she was "istorbo". Karen pleaded for help and
the woman told her to sleep and she will call the police. She finally fell
asleep but no policeman came. (TSN, Aug. 15, 1989, pp. 15-16)
She woke up at 6:00 o'clock the following morning, and she saw defendant
in bed, this time sleeping. She waited for him to wake up. When he woke
up, he again got some food but he always kept the door locked. As usual,
she was merely fed with biscuit and coke. On that day, February 7, 1989,
she was again raped three times. The first at about 6:30 to 7:00 a.m., the
second at about 8:30 9:00, and the third was after lunch at 12:00 noon.
After he had raped her for the second time he left but only for a short while.
Upon his return, he caught her shouting for help but he did not understand
what she was shouting about. After she was raped the third time, he left the
house. (TSN, Aug. 15, 1989, pp. 16-17) She again went to the bathroom and
shouted for help. After shouting for about five minutes, she heard many
voices. The voices were asking for her name and she gave her name as
Karen Salvacion. After a while, she heard a voice of a woman saying they
will just call the police. They were also telling her to change her clothes.
She went from the bathroom to the room but she did not change her clothes
being afraid that should the neighbors call for the police and the defendant
see her in different clothes, he might kill her. At that time she was wearing a
T-shirt of the American because the latter washed her dress. (Id., p. 16)
Afterwards, defendant arrived and he opened the door. He asked her if she
had asked for help because there were many policemen outside and she
denied it. He told her to change her clothes, and she did change to the one
she was wearing on Saturday. He instructed her to tell the police that she
left home and willingly; then he went downstairs but he locked the door.
She could hear people conversing but she could not understand what they
were saying. (Id., p. 19)
When she heard the voices of many people who were conversing
downstairs, she knocked repeatedly at the door as hard as she could. She
heard somebody going upstairs and when the door was opened, she saw a
policeman. The policeman asked her name and the reason why she was
there. She told him she was kidnapped. Downstairs, he saw about five
policemen in uniform and the defendant was talking to them. "Nakikipag-
areglo po sa mga pulis," Karen added. "The policeman told him to just
explain at the precinct. (Id., p. 20)
They went out of the house and she saw some of her neighbors in front of
the house. They rode the car of a certain person she called Kuya Boy
together with defendant, the policeman, and two of her neighbors whom she
called Kuya Bong Lacson and one Ate Nita. They were brought to Sub-
Station I and there she was investigated by a policeman. At about 2:00 a.m.,
her father arrived, followed by her mother together with some of their
neighbors. Then they were brought to the second floor of the police
headquarters. (Id., p. 21)
At the headquarters, she was asked several questions by the investigator.
The written statement she gave to the police was marked as Exhibit A. Then
they proceeded to the National Bureau of Investigation together with the
investigator and her parents. At the NBI, a doctor, a medico-legal officer,
examined her private parts. It was already 3:00 in the early morning of the
following day when they reached the NBI. (TSN, Aug. 15, 1989, p. 22) The
findings of the medico-legal officer has been marked as Exhibit B.
She was studying at the St. Mary's Academy in Pasay City at the time of the
incident but she subsequently transferred to Apolinario Mabini, Arellano
University, situated along Taft Avenue, because she was ashamed to be the
subject of conversation in the school. She first applied for transfer to Jose
Abad Santos, Arellano University along Taft Avenue near the Light Rail
Transit Station but she was denied admission after she told the school the
true reason for her transfer. The reason for their denial was that they might
be implicated in the case. (TSN, Aug. 15, 1989, p. 46)
xxx xxx xxx
After the incident, Karen has changed a lot. She does not play with her
brother and sister anymore, and she is always in a state of shock; she has
been absent-minded and is ashamed even to go out of the house. (TSN,
Sept. 12, 1989, p. 10) She appears to be restless or sad, (Id., p. 11) The
father prays for P500,000.00 moral damages for Karen for this shocking
experience which probably, she would always recall until she reaches old
age, and he is not sure if she could ever recover from this experience. (TSN,
Sept. 24, 1989, pp. 10-11)
Pursuant to an Order granting leave to publish notice of decision, said notice was published in
the Manila Bulletin once a week for three consecutive weeks. After the lapse of fifteen (15)
days from the date of the last publication of the notice of judgment and the decision of the
trial court had become final, petitioners tried to execute on Bartelli's dollar deposit with China
Banking Corporation. Likewise, the bank invoked Section 113 of Central Bank Circular No.
960.
Thus, petitioners decided to seek relief from this Court.
The issues raised and the arguments articulated by the parties boil down to two:
May this Court entertain the instant petition despite the fact that original jurisdiction in
petitions for declaratory relief rests with the lower court? Should Section 113 of Central Bank
Circular No. 960 and Section 8 of R.A. 6426, as amended by P.D. 1246, otherwise known as
the Foreign Currency Deposit Act be made applicable to a foreign transient?
Petitioners aver as heretofore stated that Section 113 of Central Bank Circular No. 960
providing that "Foreign currency deposits shall be exempt from attachment, garnishment, or
any other order or process of any court, legislative body, government agency or any
administrative body whatsoever." should be adjudged as unconstitutional on the grounds that:
1.) it has taken away the right of petitioners to have the bank deposit of defendant Greg
Bartelli y Northcott garnished to satisfy the judgment rendered in petitioners' favor in
violation of substantive due process guaranteed by the Constitution; 2.) it has given foreign
currency depositors an undue favor or a class privilege in violation of the equal protection
clause of the Constitution; 3.) it has provided a safe haven for criminals like the herein
respondent Greg Bartelli y Northcott since criminals could escape civil liability for their
wrongful acts by merely converting their money to a foreign currency and depositing it in a
foreign currency deposit account with an authorized bank; and 4.) The Monetary Board, in
issuing Section 113 of Central Bank Circular No. 960 has exceeded its delegated quasi-
legislative power when it took away: a.) the plaintiffs substantive right to have the claim
sought to be enforced by the civil action secured by way of the writ of preliminary attachment
as granted by Rule 57 of the Revised Rules of Court; b.) the plaintiffs substantive right to
have the judgment credit satisfied by way of the writ of execution out of the bank deposit of
the judgment debtor as granted to the judgment creditor by Rule 39 of the Revised Rules of
Court, which is beyond its power to do so.
On the other hand, respondent Central Bank, in its Comment alleges that the Monetary Board
in issuing Section 113 of CB Circular No. 960 did not exceed its power or authority because
the subject Section is copied verbatim from a portion of R.A. No. 6426 as amended by P.D.
1246. Hence, it was not the Monetary Board that grants exemption from attachment or
garnishment to foreign currency deposits, but the law (R.A. 6426 as amended) itself; that it
does not violate the substantive due process guaranteed by the Constitution because a.) it was
based on a law; b.) the law seems to be reasonable; c.) it is enforced according to regular
methods of procedure; and d.) it applies to all members of a class.
Expanding, the Central Bank said; that one reason for exempting the foreign currency
deposits from attachment, garnishment or any other order or process of any court, is to assure
the development and speedy growth of the Foreign Currency Deposit System and the
Offshore Banking System in the Philippines; that another reason is to encourage the inflow of
foreign currency deposits into the banking institutions thereby placing such institutions more
in a position to properly channel the same to loans and investments in the Philippines, thus
directly contributing to the economic development of the country; that the subject section is
being enforced according to the regular methods of procedure; and that it applies to all foreign
currency deposits made by any person and therefore does not violate the equal protection
clause of the Constitution.
Respondent Central Bank further avers that the questioned provision is needed to promote the
public interest and the general welfare; that the State cannot just stand idly by while a
considerable segment of the society suffers from economic distress; that the State had to take
some measures to encourage economic development; and that in so doing persons and
property may be subjected to some kinds of restraints or burdens to secure the general welfare
or public interest. Respondent Central Bank also alleges that Rule 39 and Rule 57 of the
Revised Rules of Court provide that some properties are exempted from execution/attachment
especially provided by law and R.A. No. 6426 as amended is such a law, in that it specifically
provides, among others, that foreign currency deposits shall be exempted from attachment,
garnishment, or any other order or process of any court, legislative body, government agency
or any administrative body whatsoever.
For its part, respondent China Banking Corporation, aside from giving reasons similar to that
of respondent Central Bank, also stated that respondent China Bank is not unmindful of the
inhuman sufferings experienced by the minor Karen E. Salvacion from the beastly hands of
Greg Bartelli; that it is only too willing to release the dollar deposit of Bartelli which may
perhaps partly mitigate the sufferings petitioner has undergone; but it is restrained from doing
so in view of R.A. No. 6426 and Section 113 of Central Bank Circular No. 960; and that
despite the harsh effect of these laws on petitioners, CBC has no other alternative but to
follow the same.
This Court finds the petition to be partly meritorious.
Petitioner deserves to receive the damages awarded to her by the court. But this petition for
declaratory relief can only be entertained and treated as a petition for mandamus to require
respondents to honor and comply with the writ of execution in Civil Case No. 89-3214.
This Court has no original and exclusive jurisdiction over a petition for declaratory relief.
2

However, exceptions to this rule have been recognized. Thus, where the petition has far-
reaching implications and raises questions that should be resolved, it may be treated as one for
mandamus.
3

Here is a child, a 12-year old girl, who in her belief that all Americans are good and in her
gesture of kindness by teaching his alleged niece the Filipino language as requested by the
American, trustingly went with said stranger to his apartment, and there she was raped by said
American tourist Greg Bartelli. Not once, but ten times. She was detained therein for four (4)
days. This American tourist was able to escape from the jail and avoid punishment. On the
other hand, the child, having received a favorable judgment in the Civil Case for damages in
the amount of more than P1,000,000.00, which amount could alleviate the humiliation,
anxiety, and besmirched reputation she had suffered and may continue to suffer for a long,
long time; and knowing that this person who had wronged her has the money, could not,
however get the award of damages because of this unreasonable law. This questioned law,
therefore makes futile the favorable judgment and award of damages that she and her parents
fully deserve. As stated by the trial court in its decision,
Indeed, after hearing the testimony of Karen, the Court believes that it was
undoubtedly a shocking and traumatic experience she had undergone which
could haunt her mind for a long, long time, the mere recall of which could
make her feel so humiliated, as in fact she had been actually humiliated
once when she was refused admission at the Abad Santos High School,
Arellano University, where she sought to transfer from another school,
simply because the school authorities of the said High School learned about
what happened to her and allegedly feared that they might be implicated in
the case.
xxx xxx xxx
The reason for imposing exemplary or corrective damages is due to the
wanton and bestial manner defendant had committed the acts of rape during
a period of serious illegal detention of his hapless victim, the minor Karen
Salvacion whose only fault was in her being so naive and credulous to
believe easily that defendant, an American national, could not have such a
bestial desire on her nor capable of committing such a heinous crime. Being
only 12 years old when that unfortunate incident happened, she has never
heard of an old Filipino adage that in every forest there is a
snake, . . . .
4

If Karen's sad fate had happened to anybody's own kin, it would be difficult for him to fathom
how the incentive for foreign currency deposit could be more important than his child's rights
to said award of damages; in this case, the victim's claim for damages from this alien who had
the gall to wrong a child of tender years of a country where he is a mere visitor. This further
illustrates the flaw in the questioned provisions.
It is worth mentioning that R.A. No. 6426 was enacted in 1983 or at a time when the country's
economy was in a shambles; when foreign investments were minimal and presumably, this
was the reason why said statute was enacted. But the realities of the present times show that
the country has recovered economically; and even if not, the questioned law still denies those
entitled to due process of law for being unreasonable and oppressive. The intention of the
questioned law may be good when enacted. The law failed to anticipate the iniquitous effects
producing outright injustice and inequality such as the case before us.
It has thus been said that
But I also know,
5
that laws and institutions must go hand in hand with the
progress of the human mind. As that becomes more developed, more
enlightened, as new discoveries are made, new truths are disclosed and
manners and opinions change with the change of circumstances, institutions
must advance also, and keep pace with the times. . . We might as well
require a man to wear still the coat which fitted him when a boy, as
civilized society to remain ever under the regimen of their barbarous
ancestors.
In his Comment, the Solicitor General correctly opined, thus:
The present petition has far-reaching implications on the right of a national
to obtain redress for a wrong committed by an alien who takes refuge under
a law and regulation promulgated for a purpose which does not contemplate
the application thereof envisaged by the alien. More specifically, the
petition raises the question whether the protection against attachment,
garnishment or other court process accorded to foreign currency deposits by
PD No. 1246 and CB Circular No. 960 applies when the deposit does not
come from a lender or investor but from a mere transient or tourist who is
not expected to maintain the deposit in the bank for long.
The resolution of this question is important for the protection of nationals
who are victimized in the forum by foreigners who are merely passing
through.
xxx xxx xxx
. . . Respondents China Banking Corporation and Central Bank of the
Philippines refused to honor the writ of execution issued in Civil Case No.
89-3214 on the strength of the following provision of Central Bank Circular
No. 960:
Sec. 113. Exemption from attachment. Foreign
currency deposits shall be exempt from attachment,
garnishment, or any other order or process of any court,
legislative body, government agency or any
administrative body whatsoever.
Central Bank Circular No. 960 was issued pursuant to Section 7 of Republic
Act No. 6426:
Sec. 7. Rules and Regulations. The Monetary Board of the
Central Bank shall promulgate such rules and regulations
as may be necessary to carry out the provisions of this Act
which shall take effect after the publication of such rules
and regulations in the Official Gazette and in a newspaper
of national circulation for at least once a week for three
consecutive weeks. In case the Central Bank promulgates
new rules and regulations decreasing the rights of
depositors, the rules and regulations at the time the
deposit was made shall govern.
The aforecited Section 113 was copied from Section 8 of Republic Act NO.
6426, as amended by P.D. 1246, thus:
Sec. 8. Secrecy of Foreign Currency Deposits. All
foreign currency deposits authorized under this Act, as
amended by Presidential Decree No. 1035, as well as
foreign currency deposits authorized under Presidential
Decree No. 1034, are hereby declared as and considered
of an absolutely confidential nature and, except upon the
written permission of the depositor, in no instance shall
such foreign currency deposits be examined, inquired or
looked into by any person, government official, bureau or
office whether judicial or administrative or legislative or
any other entity whether public or private: Provided,
however, that said foreign currency deposits shall be
exempt from attachment, garnishment, or any other order
or process of any court, legislative body, government
agency or any administrative body whatsoever.
The purpose of PD 1246 in according protection against attachment,
garnishment and other court process to foreign currency deposits is stated in
its whereases, viz.:
WHEREAS, under Republic Act No. 6426, as amended
by Presidential Decree No. 1035, certain Philippine
banking institutions and branches of foreign banks are
authorized to accept deposits in foreign currency;
WHEREAS, under the provisions of Presidential Decree
No. 1034 authorizing the establishment of an offshore
banking system in the Philippines, offshore banking units
are also authorized to receive foreign currency deposits in
certain cases;
WHEREAS, in order to assure the development and
speedy growth of the Foreign Currency Deposit System
and the Offshore Banking System in the Philippines,
certain incentives were provided for under the two
Systems such as confidentiality of deposits subject to
certain exceptions and tax exemptions on the interest
income of depositors who are nonresidents and are not
engaged in trade or business in the Philippines;
WHEREAS, making absolute the protective cloak of
confidentiality over such foreign currency deposits,
exempting such deposits from tax, and guaranteeing the
vested rights of depositors would better encourage the
inflow of foreign currency deposits into the banking
institutions authorized to accept such deposits in the
Philippines thereby placing such institutions more in a
position to properly channel the same to loans and
investments in the Philippines, thus directly contributing
to the economic development of the country;
Thus, one of the principal purposes of the protection accorded to foreign
currency deposits is "to assure the development and speedy growth of the
Foreign Currency Deposit system and the Offshore Banking in the
Philippines" (3rd Whereas).
The Offshore Banking System was established by PD No. 1034. In turn, the
purposes of PD No. 1034 are as follows:
WHEREAS, conditions conducive to the establishment of
an offshore banking system, such as political stability, a
growing economy and adequate communication facilities,
among others, exist in the Philippines;
WHEREAS, it is in the interest of developing countries to
have as wide access as possible to the sources of capital
funds for economic development;
WHEREAS, an offshore banking system based in the
Philippines will be advantageous and beneficial to the
country by increasing our links with foreign lenders,
facilitating the flow of desired investments into the
Philippines, creating employment opportunities and
expertise in international finance, and contributing to the
national development effort.
WHEREAS, the geographical location, physical and
human resources, and other positive factors provide the
Philippines with the clear potential to develop as another
financial center in Asia;
On the other hand, the Foreign Currency Deposit system was created by
PD. No. 1035. Its purposes are as follows:
WHEREAS, the establishment of an offshore banking
system in the Philippines has been authorized under a
separate decree;
WHEREAS, a number of local commercial banks, as
depository bank under the Foreign Currency Deposit Act
(RA No. 6426), have the resources and managerial
competence to more actively engage in foreign exchange
transactions and participate in the grant of foreign
currency loans to resident corporations and firms;
WHEREAS, it is timely to expand the foreign currency
lending authority of the said depository banks under RA
6426 and apply to their transactions the same taxes as
would be applicable to transaction of the proposed
offshore banking units;
It is evident from the above [Whereas clauses] that the Offshore Banking
System and the Foreign Currency Deposit System were designed to draw
deposits from foreign lenders and investors (Vide second Whereas of PD
No. 1034; third Whereas of PD No. 1035). It is these deposits that are
induced by the two laws and given protection and incentives by them.
Obviously, the foreign currency deposit made by a transient or a tourist is
not the kind of deposit encouraged by PD Nos. 1034 and 1035 and given
incentives and protection by said laws because such depositor stays only for
a few days in the country and, therefore, will maintain his deposit in the
bank only for a short time.
Respondent Greg Bartelli, as stated, is just a tourist or a transient. He
deposited his dollars with respondent China Banking Corporation only for
safekeeping during his temporary stay in the Philippines.
For the reasons stated above, the Solicitor General thus submits that the
dollar deposit of respondent Greg Bartelli is not entitled to the protection of
Section 113 of Central Bank Circular No. 960 and PD No. 1246 against
attachment, garnishment or other court processes.
6

In fine, the application of the law depends on the extent of its justice. Eventually, if we rule
that the questioned Section 113 of Central Bank Circular No. 960 which exempts from
attachment, garnishment, or any other order or process of any court, legislative body,
government agency or any administrative body whatsoever, is applicable to a foreign
transient, injustice would result especially to a citizen aggrieved by a foreign guest like
accused Greg Bartelli. This would negate Article 10 of the New Civil Code which provides
that "in case of doubt in the interpretation or application of laws, it is presumed that the
lawmaking body intended right and justice to prevail. "Ninguno non deue enriquecerse
tortizeramente con dano de otro." Simply stated, when the statute is silent or ambiguous, this
is one of those fundamental solutions that would respond to the vehement urge of conscience.
(Padilla vs. Padilla, 74 Phil. 377).
It would be unthinkable, that the questioned Section 113 of Central Bank No. 960 would be
used as a device by accused Greg Bartelli for wrongdoing, and in so doing, acquitting the
guilty at the expense of the innocent.
Call it what it may but is there no conflict of legal policy here? Dollar against Peso?
Upholding the final and executory judgment of the lower court against the Central Bank
Circular protecting the foreign depositor? Shielding or protecting the dollar deposit of a
transient alien depositor against injustice to a national and victim of a crime? This situation
calls for fairness against legal tyranny.
We definitely cannot have both ways and rest in the belief that we have served the ends of
justice.
IN VIEW WHEREOF, the provisions of Section 113 of CB Circular No. 960 and PD No.
1246, insofar as it amends Section 8 of R.A. No. 6426 are hereby held to be INAPPLICABLE
to this case because of its peculiar circumstances. Respondents are hereby REQUIRED to
COMPLY with the writ of execution issued in Civil Case No. 89-3214, "Karen Salvacion, et
al. vs. Greg Bartelli y Northcott, by Branch CXLIV, RTC Makati and to RELEASE to
petitioners the dollar deposit of respondent Greg Bartelli y Northcott in such amount as would
satisfy the judgment.
SO ORDERED.
G.R. No. 72873 May 28, 1987
CARLOS ALONZO and CASIMIRA ALONZO, petitioners,
vs.
INTERMEDIATE APPELLATE COURT and TECLA PADUA, respondents.
Perpetuo L.B. Alonzo for petitioners.
Luis R. Reyes for private respondent.

CRUZ, J .:
The question is sometimes asked, in serious inquiry or in curious conjecture, whether we are a
court of law or a court of justice. Do we apply the law even if it is unjust or do we administer
justice even against the law? Thus queried, we do not equivocate. The answer is that we do
neither because we are a court both of law and of justice. We apply the law with justice for
that is our mission and purpose in the scheme of our Republic. This case is an illustration.
Five brothers and sisters inherited in equal pro indiviso shares a parcel of land registered in
'the name of their deceased parents under OCT No. 10977 of the Registry of Deeds of Tarlac.
1
On March 15, 1963, one of them, Celestino Padua, transferred his undivided share of the
herein petitioners for the sum of P550.00 by way of absolute sale.
2
One year later, on April
22, 1964, Eustaquia Padua, his sister, sold her own share to the same vendees, in an
instrument denominated "Con Pacto de Retro Sale," for the sum of P 440.00.
3

By virtue of such agreements, the petitioners occupied, after the said sales, an area
corresponding to two-fifths of the said lot, representing the portions sold to them. The
vendees subsequently enclosed the same with a fence. In 1975, with their consent, their son
Eduardo Alonzo and his wife built a semi-concrete house on a part of the enclosed area.
4

On February 25, 1976, Mariano Padua, one of the five coheirs, sought to redeem the area sold
to the spouses Alonzo, but his complaint was dismissed when it appeared that he was an
American citizen .
5
On May 27, 1977, however, Tecla Padua, another co-heir, filed her own
complaint invoking the same right of redemption claimed by her brother.
6

The trial court * also dismiss this complaint, now on the ground that the right had lapsed, not
having been exercised within thirty days from notice of the sales in 1963 and 1964. Although
there was no written notice, it was held that actual knowledge of the sales by the co-heirs
satisfied the requirement of the law.
7

In truth, such actual notice as acquired by the co-heirs cannot be plausibly denied. The other
co-heirs, including Tecla Padua, lived on the same lot, which consisted of only 604 square
meters, including the portions sold to the petitioners .
8
Eustaquia herself, who had sold her
portion, was staying in the same house with her sister Tecla, who later claimed redemption
petition.
9
Moreover, the petitioners and the private respondents were close friends and
neighbors whose children went to school together. 10
It is highly improbable that the other co-heirs were unaware of the sales and that they thought,
as they alleged, that the area occupied by the petitioners had merely been mortgaged by
Celestino and Eustaquia. In the circumstances just narrated, it was impossible for Tecla not to
know that the area occupied by the petitioners had been purchased by them from the other. co-
heirs. Especially significant was the erection thereon of the permanent semi-concrete structure
by the petitioners' son, which was done without objection on her part or of any of the other
co-heirs.
The only real question in this case, therefore, is the correct interpretation and application of
the pertinent law as invoked, interestingly enough, by both the petitioners and the private
respondents. This is Article 1088 of the Civil Code, providing as follows:
Art. 1088. Should any of the heirs sell his hereditary rights to a stranger
before the partition, any or all of the co-heirs may be subrogated to the
rights of the purchaser by reimbursing him for the price of the sale,
provided they do so within the period of one month from the time they were
notified in writing of the sale by the vendor.
In reversing the trial court, the respondent court ** declared that the notice required by the
said article was written notice and that actual notice would not suffice as a substitute. Citing
the same case of De Conejero v. Court of Appeals 11 applied by the trial court, the respondent
court held that that decision, interpreting a like rule in Article 1623, stressed the need for
written notice although no particular form was required.
Thus, according to Justice J.B.L. Reyes, who was the ponente of the Court, furnishing the co-
heirs with a copy of the deed of sale of the property subject to redemption would satisfy the
requirement for written notice. "So long, therefore, as the latter (i.e., the redemptioner) is
informed in writing of the sale and the particulars thereof," he declared, "the thirty days for
redemption start running. "
In the earlier decision of Butte v. UY, 12 " the Court, speaking through the same learned jurist,
emphasized that the written notice should be given by the vendor and not the vendees,
conformably to a similar requirement under Article 1623, reading as follows:
Art. 1623. The right of legal pre-emption or redemption shall not be
exercised except within thirty days from the notice in writing by the
prospective vendor, or by the vendors, as the case may be. The deed of sale
shall not be recorded in the Registry of Property, unless accompanied by an
affidavit of the vendor that he has given written notice thereof to all
possible redemptioners.
The right of redemption of co-owners excludes that of the adjoining owners.
As "it is thus apparent that the Philippine legislature in Article 1623 deliberately selected a
particular method of giving notice, and that notice must be deemed exclusive," the Court held
that notice given by the vendees and not the vendor would not toll the running of the 30-day
period.
The petition before us appears to be an illustration of the Holmes dictum that "hard cases
make bad laws" as the petitioners obviously cannot argue against the fact that there was really
no written notice given by the vendors to their co-heirs. Strictly applied and interpreted,
Article 1088 can lead to only one conclusion, to wit, that in view of such deficiency, the 30
day period for redemption had not begun to run, much less expired in 1977.
But as has also been aptly observed, we test a law by its results; and likewise, we may add, by
its purposes. It is a cardinal rule that, in seeking the meaning of the law, the first concern of
the judge should be to discover in its provisions the in tent of the lawmaker. Unquestionably,
the law should never be interpreted in such a way as to cause injustice as this is never within
the legislative intent. An indispensable part of that intent, in fact, for we presume the good
motives of the legislature, is to render justice.
Thus, we interpret and apply the law not independently of but in consonance with justice. Law
and justice are inseparable, and we must keep them so. To be sure, there are some laws that,
while generally valid, may seem arbitrary when applied in a particular case because of its
peculiar circumstances. In such a situation, we are not bound, because only of our nature and
functions, to apply them just the same, in slavish obedience to their language. What we do
instead is find a balance between the word and the will, that justice may be done even as the
law is obeyed.
As judges, we are not automatons. We do not and must not unfeelingly apply the law as it is
worded, yielding like robots to the literal command without regard to its cause and
consequence. "Courts are apt to err by sticking too closely to the words of a law," so we are
warned, by Justice Holmes again, "where these words import a policy that goes beyond
them." 13 While we admittedly may not legislate, we nevertheless have the power to interpret
the law in such a way as to reflect the will of the legislature. While we may not read into the
law a purpose that is not there, we nevertheless have the right to read out of it the reason for
its enactment. In doing so, we defer not to "the letter that killeth" but to "the spirit that
vivifieth," to give effect to the law maker's will.
The spirit, rather than the letter of a statute determines its construction,
hence, a statute must be read according to its spirit or intent. For what is
within the spirit is within the letter but although it is not within the letter
thereof, and that which is within the letter but not within the spirit is not
within the statute. Stated differently, a thing which is within the intent of the
lawmaker is as much within the statute as if within the letter; and a thing
which is within the letter of the statute is not within the statute unless within
the intent of the lawmakers. 14
In requiring written notice, Article 1088 seeks to ensure that the
redemptioner is properly notified of the sale and to indicate the date of such
notice as the starting time of the 30-day period of redemption. Considering
the shortness of the period, it is really necessary, as a general rule, to
pinpoint the precise date it is supposed to begin, to obviate any problem of
alleged delays, sometimes consisting of only a day or two.
The instant case presents no such problem because the right of redemption was invoked not
days but years after the sales were made in 1963 and 1964. The complaint was filed by Tecla
Padua in 1977, thirteen years after the first sale and fourteen years after the second sale. The
delay invoked by the petitioners extends to more than a decade, assuming of course that there
was a valid notice that tolled the running of the period of redemption.
Was there a valid notice? Granting that the law requires the notice to be written, would such
notice be necessary in this case? Assuming there was a valid notice although it was not in
writing. would there be any question that the 30-day period for redemption had expired long
before the complaint was filed in 1977?
In the face of the established facts, we cannot accept the private respondents' pretense that
they were unaware of the sales made by their brother and sister in 1963 and 1964. By
requiring written proof of such notice, we would be closing our eyes to the obvious truth in
favor of their palpably false claim of ignorance, thus exalting the letter of the law over its
purpose. The purpose is clear enough: to make sure that the redemptioners are duly notified.
We are satisfied that in this case the other brothers and sisters were actually informed,
although not in writing, of the sales made in 1963 and 1964, and that such notice was
sufficient.
Now, when did the 30-day period of redemption begin?
While we do not here declare that this period started from the dates of such sales in 1963 and
1964, we do say that sometime between those years and 1976, when the first complaint for
redemption was filed, the other co-heirs were actually informed of the sale and that thereafter
the 30-day period started running and ultimately expired. This could have happened any time
during the interval of thirteen years, when none of the co-heirs made a move to redeem the
properties sold. By 1977, in other words, when Tecla Padua filed her complaint, the right of
redemption had already been extinguished because the period for its exercise had already
expired.
The following doctrine is also worth noting:
While the general rule is, that to charge a party with laches in the assertion
of an alleged right it is essential that he should have knowledge of the facts
upon which he bases his claim, yet if the circumstances were such as should
have induced inquiry, and the means of ascertaining the truth were readily
available upon inquiry, but the party neglects to make it, he will be
chargeable with laches, the same as if he had known the facts. 15
It was the perfectly natural thing for the co-heirs to wonder why the spouses Alonzo, who
were not among them, should enclose a portion of the inherited lot and build thereon a house
of strong materials. This definitely was not the act of a temporary possessor or a mere
mortgagee. This certainly looked like an act of ownership. Yet, given this unseemly situation,
none of the co-heirs saw fit to object or at least inquire, to ascertain the facts, which were
readily available. It took all of thirteen years before one of them chose to claim the right of
redemption, but then it was already too late.
We realize that in arriving at our conclusion today, we are deviating from the strict letter of
the law, which the respondent court understandably applied pursuant to existing
jurisprudence. The said court acted properly as it had no competence to reverse the doctrines
laid down by this Court in the above-cited cases. In fact, and this should be clearly stressed,
we ourselves are not abandoning the De Conejero and Buttle doctrines. What we are doing
simply is adopting an exception to the general rule, in view of the peculiar circumstances of
this case.
The co-heirs in this case were undeniably informed of the sales although no notice in writing
was given them. And there is no doubt either that the 30-day period began and ended during
the 14 years between the sales in question and the filing of the complaint for redemption in
1977, without the co-heirs exercising their right of redemption. These are the justifications for
this exception.
More than twenty centuries ago, Justinian defined justice "as the constant and perpetual wish
to render every one his due." 16 That wish continues to motivate this Court when it assesses
the facts and the law in every case brought to it for decision. Justice is always an essential
ingredient of its decisions. Thus when the facts warrants, we interpret the law in a way that
will render justice, presuming that it was the intention of the lawmaker, to begin with, that the
law be dispensed with justice. So we have done in this case.
WHEREFORE, the petition is granted. The decision of the respondent court is REVERSED
and that of the trial court is reinstated, without any pronouncement as to costs. It is so ordered.








G.R. No. 112099 February 21, 1995
ACHILLES C. BERCES, SR., petitioner,
vs.
HON. EXECUTIVE SECRETARY TEOFISTO T. GUINGONA, JR., CHIEF
PRESIDENTIAL LEGAL COUNSEL ANTONIO CARPIO and MAYOR NAOMI C.
CORRAL OF TIWI, ALBAY, respondents.

QUIASON, J .:
This is a petition for certiorari and prohibition under Rule 65 of the Revised Rules of Court
with prayer for mandatory preliminary injunction, assailing the Orders of the Office of the
President as having been issued with grave abuses of discretion. Said Orders directed the stay
of execution of the decision of the Sangguniang Panlalawigan suspending the Mayor of Tiwi,
Albay from office.
I
Petitioner filed two administrative cases against respondent Naomi C. Corral, the incumbent
Mayor of Tiwi, Albay with the Sangguniang Panlalawigan of Albay, to wit:
(1) Administrative Case No. 02-92 for abuse of authority and/or oppression
for non-payment of accrued leave benefits due the petitioner amounting to
P36,779.02.
(2) Administrative Case No. 05-92 for dishonesty and abuse of authority for
installing a water pipeline which is being operated, maintained and paid for
by the municipality to service respondent's private residence and medical
clinic.
On July 1, 1993, the Sangguniang Panlalawigan disposed the two Administrative cases in the
following manner:
(1) Administrative Case No. 02-92
ACCORDINGLY, respondent Mayor Naomi C. Corral of Tiwi, Albay, is
hereby ordered to pay Achilles Costo Berces, Sr. the sum of THIRTY-SIX
THOUSAND AND SEVEN HUNDRED SEVENTY-NINE PESOS and
TWO CENTAVOS (P36,779.02) per Voucher No. 352, plus legal interest
due thereon from the time it was approved in audit up to final payment, it
being legally due the Complainant representing the money value of his
leave credits accruing for services rendered in the municipality from 1988
to 1992 as a duly elected Municipal Councilor. IN ADDITION, respondent
Mayor NAOMI C. CORRAL is hereby ordered SUSPENDED from office
as Municipal Mayor of Tiwi, Albay, for a period of two (2) months,
effective upon receipt hereof for her blatant abuse of authority coupled with
oppression as a public example to deter others similarly inclined from using
public office as a tool for personal vengeance, vindictiveness and
oppression at the expense of the Taxpayer (Rollo, p. 14).
(2) Administrative Case No. 05-92
WHEREFORE, premises considered, respondent Mayor NAOMI C.
CORRAL of Tiwi, Albay, is hereby sentenced to suffer the penalty of
SUSPENSION from office as Municipal Mayor thereof for a period of
THREE (3) MONTHS beginning after her service of the first penalty of
suspension ordered in Administrative Case No. 02-92. She is likewise
ordered to reimburse the Municipality of Tiwi One-half of the amount the
latter have paid for electric and water bills from July to December 1992,
inclusive (Rollo, p. 16).
Consequently, respondent Mayor appealed to the Office of the President questioning the
decision and at the same time prayed for the stay of execution thereof in accordance with
Section 67(b) of the Local Government Code, which provides:
Administrative Appeals. Decision in administrative cases may, within
thirty (30) days from receipt thereof, be appealed to the following:
xxx xxx xxx
(b) The Office of the President, in the case of decisions of
the sangguniang panlalawigan and the sangguniang
panglungsod of highly urbanized cities and independent
component cities.
Acting on the prayer to stay execution during the pendency of the appeal, the Office of the
President issued an Order on July 28, 1993, the pertinent portions of which read as follows:
xxx xxx xxx
The stay of the execution is governed by Section 68 of R.A. No. 7160 and
Section 6 of Administrative Order No. 18 dated 12 February 1987, quoted
below:
Sec. 68. Execution Pending Appeal. An appeal shall not prevent a
decision from becoming final or executory. The respondent shall be
considered as having been placed under preventive suspension during the
pendency of an appeal in the events he wins such appeal. In the event the
appeal results in an exoneration, he shall be paid his salary and such other
emoluments during the pendency of the appeal (R.A. No. 7160).
Sec. 6 Except as otherwise provided by special laws, the execution of the
decision/resolution/order appealed from is stayed upon filing of the appeal
within the period prescribed herein. However, in all cases, at any time
during the pendency of the appeal, the Office of the President may direct or
stay the execution of the decision/resolution/order appealed from upon such
terms and conditions as it may deem just and reasonable (Adm. Order No.
18).
xxx xxx xxx
After due consideration, and in the light of the Petition for Review filed
before this Office, we find that a stay of execution pending appeal would be
just and reasonable to prevent undue prejudice to public interest.
WHEREFORE, premises considered, this Office hereby orders the
suspension/stay of execution of:
a) the Decision of the Sangguniang Panlalawigan of
Albay in Administrative Case No. 02-92 dated 1 July
1993 suspending Mayor Naomi C. Corral from office for
a period of two (2) months, and
b) the Resolution of the Sangguniang Panlalawigan of
Albay in Administrative Case. No. 05-92 dated 5 July
1993 suspending Mayor Naomi C. Corral from office for
a period of three (3) months (Rollo, pp. 55-56).
Petitioner then filed a Motion for Reconsideration questioning the aforesaid Order of the
Office of the President.
On September 13, 1990, the Motion for Reconsideration was denied.
Hence, this petition.
II
Petitioner claims that the governing law in the instant case is R.A. No. 7160, which contains a
mandatory provision that an appeal "shall not prevent a decision from becoming final and
executory." He argues that administrative Order No. 18 dated February 12, 1987, (entitle
"Prescribing the Rules and Regulations Governing Appeals to Office the President")
authorizing the President to stay the execution of the appealed decision at any time during the
pendency of the appeal, was repealed by R.A. No. 7160, which took effect on January 1, 1991
(Rollo, pp. 5-6).
The petition is devoid of merit.
Petitioner invokes the repealing clause of Section 530 (f), R.A. No. 7160, which provides:
All general and special laws, acts, city charters, decrees, executive orders,
administrative regulations, part or parts thereof, which are incosistent with
any of the provisions of this Code, are hereby repealed or modified
accordingly.
The aforementioned clause is not an express repeal of Section 6 of Administrative Order No.
18 because it failed to identify or designate the laws or executive orders that are intended to
be repealed (cf. I Sutherland, Statutory Construction 467 [1943]).
If there is any repeal of Administrative Order No. 18 by R.A. No. 7160, it is through
implication though such kind of repeal is not favored (The Philippine American Management
Co., Inc. v. The Philippine American Management Employees Association, 49 SCRA 194
[1973]). There is even a presumption against implied repeal.
An implied repeal predicates the intended repeal upon the condition that a substantial conflict
must be found between the new and prior laws. In the absence of an express repeal, a
subsequent law cannot be construed as repealing a prior law unless an irreconcible
inconsistency and repugnancy exists in the terms of the new and old laws (Iloilo Palay and
Corn Planters Association, Inc. v. Feliciano, 13 SCRA 377 [1965]). The two laws must be
absolutely incompatible (Compania General de Tabacos v. Collector of Customs, 46 Phil. 8
[1924]). There must be such a repugnancy between the laws that they cannot be made to stand
together (Crawford, Construction of Statutes 631 [1940]).
We find that the provisions of Section 68 of R.A. No. 7160 and Section 6 of Administrative
Order No. 18 are not irreconcillably inconsistent and repugnant and the two laws must in fact
be read together.
The first sentence of Section 68 merely provides that an "appeal shall not prevent a decision
from becoming final or executory." As worded, there is room to construe said provision as
giving discretion to the reviewing officials to stay the execution of the appealed decision.
There is nothing to infer therefrom that the reviewing officials are deprived of the authority to
order a stay of the appealed order. If the intention of Congress was to repeal Section 6 of
Administrative Order No. 18, it could have used more direct language expressive of such
intention.
The execution of decisions pending appeal is procedural and in the absence of a clear
legislative intent to remove from the reviewing officials the authority to order a stay of
execution, such authority can provided in the rules and regulations governing the appeals of
elective officials in administrative cases.
The term "shall" may be read either as mandatory or directory depending upon a
consideration of the entire provisions in which it is found, its object and the consequences that
would follow from construing it one way or the other (cf. De Mesa v. Mencias, 18 SCRA 533
[1966]). In the case at bench, there is no basis to justify the construction of the word as
mandatory.
The Office of the President made a finding that the execution of the decision of the
Sagguniang Panlalawigan suspending respondent Mayor from office might be prejudicial to
the public interest. Thus, in order not to disrupt the rendition of service by the mayor to the
public, a stay of the execution of the decision is in order.
WHEREFORE, the petition is DISMISSED.
SO ORDERED.
















G.R. No. 103982 December 11, 1992
ANTONIO A. MECANO, petitioner,
vs.
COMMISSION ON AUDIT, respondent.

CAMPOS, JR., J .:
Antonio A. Mecano, through a petition for certiorari, seeks to nullify the decision of the
Commission on Audit (COA, for brevity) embodied in its 7th Indorsement, dated January 16,
1992, denying his claim for reimbursement under Section 699 of the Revised Administrative
Code (RAC), as amended, in the total amount of P40,831.00.
Petitioner is a Director II of the National Bureau of Investigation (NBI). He was hospitalized
for cholecystitis from March 26, 1990 to April 7, 1990, on account of which he incurred
medical and hospitalization expenses, the total amount of which he is claiming from the COA.
On May 11, 1990, in a memorandum to the NBI Director, Alfredo S. Lim (Director Lim, for
brevity), he requested reimbursement for his expenses on the ground that he is entitled to the
benefits under Section 699
1
of the RAC, the pertinent provisions of which read:
Sec. 699. Allowances in case of injury, death, or sickness incurred in
performance of duty. When a person in the service of the national
government of a province, city, municipality or municipal district is so
injured in the performance of duty as thereby to receive some actual
physical hurt or wound, the proper Head of Department may direct that
absence during any period of disability thereby occasioned shall be on full
pay, though not more than six months, and in such case he may in his
discretion also authorize the payment of the medical attendance, necessary
transportation, subsistence and hospital fees of the injured person. Absence
in the case contemplated shall be charged first against vacation leave, if any
there be.
xxx xxx xxx
In case of sickness caused by or connected directly with the performance of
some act in the line of duty, the Department head may in his discretion
authorize the payment of the necessary hospital fees.
Director Lim then forwarded petitioner's claim, in a 1st Indorsement dated June 22, 1990, to
the Secretary of Justice, along with the comment, bearing the same date, of Gerarda Galang,
Chief, LED of the NBI, "recommending favorable action thereof". Finding petitioner's illness
to be service-connected, the Committee on Physical Examination of the Department of Justice
favorably recommended the payment of petitioner's claim.
However, then Undersecretary of Justice Silvestre H. Bello III, in a 4th Indorsement dated
November 21, 1990, returned petitioner's claim to Director Lim, having considered the
statements of the Chairman of the COA in its 5th Indorsement dated 19 September 1990, to
the effect that the RAC being relied upon was repealed by the Administrative Code of 1987.
Petitioner then re-submitted his claim to Director Lim, with a copy of Opinion No. 73, S.
1991
2
dated April 26, 1991 of then Secretary of Justice Franklin M. Drilon (Secretary Drilon,
for brevity) stating that "the issuance of the Administrative Code did not operate to repeal or
abregate in its entirety the Revised Administrative Code, including the particular Section 699
of the latter".
On May 10, 1991, Director Lim, under a 5th Indorsement transmitted anew Mecano's claim to
then Undersecretary Bello for favorable consideration. Under a 6th Indorsement, dated July 2,
1991, Secretary Drilon forwarded petitioner's claim to the COA Chairman, recommending
payment of the same. COA Chairman Eufemio C. Domingo, in his 7th Indorsement of
January 16, 1992, however, denied petitioner's claim on the ground that Section 699 of the
RAC had been repealed by the Administrative Code of 1987, solely for the reason that the
same section was not restated nor re-enacted in the Administrative Code of 1987. He
commented, however, that the claim may be filed with the Employees' Compensation
Commission, considering that the illness of Director Mecano occurred after the effectivity of
the Administrative Code of 1987.
Eventually, petitioner's claim was returned by Undersecretary of Justice Eduardo Montenegro
to Director Lim under a 9th Indorsement dated February 7, 1992, with the advice that
petitioner "elevate the matter to the Supreme Court if he so desires".
On the sole issue of whether or not the Administrative Code of 1987 repealed or abrogated
Section 699 of the RAC, this petition was brought for the consideration of this Court.
Petitioner anchors his claim on Section 699 of the RAC, as amended, and on the
aforementioned Opinion No. 73, S. 1991 of Secretary Drilon. He further maintains that in the
event that a claim is filed with the Employees' Compensation Commission, as suggested by
respondent, he would still not be barred from filing a claim under the subject section. Thus,
the resolution of whether or not there was a repeal of the Revised Administrative Code of
1917 would decide the fate of petitioner's claim for reimbursement.
The COA, on the other hand, strongly maintains that the enactment of the Administrative
Code of 1987 (Exec. Order No. 292) operated to revoke or supplant in its entirety the Revised
Administrative Code of 1917. The COA claims that from the "whereas" clauses of the new
Administrative Code, it can be gleaned that it was the intent of the legislature to repeal the old
Code. Moreover, the COA questions the applicability of the aforesaid opinion of the Secretary
of Justice in deciding the matter. Lastly, the COA contends that employment-related sickness,
injury or death is adequately covered by the Employees' Compensation Program under P.D.
626, such that to allow simultaneous recovery of benefits under both laws on account of the
same contingency would be unfair and unjust to the Government.
The question of whether a particular law has been repealed or not by a subsequent law is a
matter of legislative intent. The lawmakers may expressly repeal a law by incorporating
therein a repealing provision which expressly and specifically cites the particular law or laws,
and portions thereof, that are intended to be repealed.
3
A declaration in a statute, usually in its
repealing clause, that a particular and specific law, identified by its number or title, is repealed
is an express repeal; all others are implied repeals.
4

In the case of the two Administrative Codes in question, the ascertainment of whether or not it
was the intent of the legislature to supplant the old Code with the new Code partly depends on
the scrutiny of the repealing clause of the new Code. This provision is found in Section 27,
Book VII (Final Provisions) of the Administrative Code of 1987 which reads:
Sec. 27. Repealing Clause. All laws, decrees, orders, rules and
regulations, or portions thereof, inconsistent with this Code are hereby
repealed or modified accordingly.
The question that should be asked is: What is the nature of this repealing clause? It is certainly
not an express repealing clause because it fails to identify or designate the act or acts that are
intended to be repealed.
5
Rather, it is an example of a general repealing provision, as stated in
Opinion No. 73, S. 1991. It is a clause which predicates the intended repeal under the
condition that substantial conflict must be found in existing and prior acts. The failure to add a
specific repealing clause indicates that the intent was not to repeal any existing law, unless an
irreconcilable inconcistency and repugnancy exist in the terms of the new and old laws.
6
This
latter situation falls under the category of an implied repeal.
Repeal by implication proceeds on the premise that where a statute of later date clearly
reveals an intention on the part of the legislature to abrogate a prior act on the subject, that
intention must be given effect.
7
Hence, before there can be a repeal, there must be a clear
showing on the part of the lawmaker that the intent in enacting the new law was to abrogate
the old one. The intention to repeal must be clear and manifest;
8
otherwise, at least, as a
general rule, the later act is to be construed as a continuation of, and not a substitute for, the
first act and will continue so far as the two acts are the same from the time of the first
enactment.
9

There are two categories of repeal by implication. The first is where provisions in the two acts
on the same subject matter are in an irreconcilable conflict, the later act to the extent of the
conflict constitutes an implied repeal of the earlier one. The second is if the later act covers
the whole subject of the earlier one and is clearly intended as a substitute, it will operate to
repeal the earlier law.
10

Implied repeal by irreconcilable inconsistency takes place when the two statutes cover the
same subject matter; they are so clearly inconsistent and incompatible with each other that
they cannot be reconciled or harmonized; and both cannot be given effect, that is, that one law
cannot be enforced without nullifying the other.
11

Comparing the two Codes, it is apparent that the new Code does not cover nor attempt to
cover the entire subject matter of the old Code. There are several matters treated in the old
Code which are not found in the new Code, such as the provisions on notaries public, the
leave law, the public bonding law, military reservations, claims for sickness benefits under
Section 699, and still others.
Moreover, the COA failed to demonstrate that the provisions of the two Codes on the matter
of the subject claim are in an irreconcilable conflict. In fact, there can be no such conflict
because the provision on sickness benefits of the nature being claimed by petitioner has not
been restated in the Administrative Code of 1987. However, the COA would have Us
consider that the fact that Section 699 was not restated in the Administrative Code of 1987
meant that the same section had been repealed. It further maintained that to allow the
particular provisions not restated in the new Code to continue in force argues against the Code
itself. The COA anchored this argument on the whereas clause of the 1987 Code, which
states:
WHEREAS, the effectiveness of the Government will be enhanced by a
new Administrative Code which incorporate in a unified document the
major structural, functional and procedural principles and rules of
governance; and
xxx xxx xxx
It argues, in effect, that what is contemplated is only one Code the Administrative Code of
1987. This contention is untenable.
The fact that a later enactment may relate to the same subject matter as that of an earlier
statute is not of itself sufficient to cause an implied repeal of the prior act, since the new
statute may merely be cumulative or a continuation of the old one.
12
What is necessary is a
manifest indication of legislative purpose to repeal.
13

We come now to the second category of repeal the enactment of a statute revising or
codifying the former laws on the whole subject matter. This is only possible if the revised
statute or code was intended to cover the whole subject to be a complete and perfect system in
itself. It is the rule that a subsequent statute is deemed to repeal a prior law if the former
revises the whole subject matter of the former statute.
14
When both intent and scope clearly
evidence the idea of a repeal, then all parts and provisions of the prior act that are omitted
from the revised act are deemed repealed.
15
Furthermore, before there can be an implied
repeal under this category, it must be the clear intent of the legislature that the later act be the
substitute to the prior act.
16

According to Opinion No. 73, S. 1991 of the Secretary of Justice, what appears clear is the
intent to cover only those aspects of government that pertain to administration, organization
and procedure, understandably because of the many changes that transpired in the government
structure since the enactment of the RAC decades of years ago. The COA challenges the
weight that this opinion carries in the determination of this controversy inasmuch as the body
which had been entrusted with the implementation of this particular provision has already
rendered its decision. The COA relied on the rule in administrative law enunciated in the case
of Sison vs. Pangramuyen
17
that in the absence of palpable error or grave abuse of discretion,
the Court would be loathe to substitute its own judgment for that of the administrative agency
entrusted with the enforcement and implementation of the law. This will not hold water. This
principle is subject to limitations. Administrative decisions may be reviewed by the courts
upon a showing that the decision is vitiated by fraud, imposition or mistake.
18
It has been held
that Opinions of the Secretary and Undersecretary of Justice are material in the construction
of statutes in pari materia.
19

Lastly, it is a well-settled rule of statutory construction that repeals of statutes by implication
are not favored.
20
The presumption is against inconsistency and repugnancy for the legislature
is presumed to know the existing laws on the subject and not to have enacted inconsistent or
conflicting statutes.
21

This Court, in a case, explains the principle in detail as follows: "Repeals by implication are
not favored, and will not be decreed unless it is manifest that the legislature so intended. As
laws are presumed to be passed with deliberation with full knowledge of all existing ones on
the subject, it is but reasonable to conclude that in passing a statute it was not intended to
interfere with or abrogate any former law relating to some matter, unless the repugnancy
between the two is not only irreconcilable, but also clear and convincing, and flowing
necessarily from the language used, unless the later act fully embraces the subject matter of
the earlier, or unless the reason for the earlier act is beyond peradventure renewed. Hence,
every effort must be used to make all acts stand and if, by any reasonable construction, they
can be reconciled, the later act will not operate as a repeal of the earlier.
22

Regarding respondent's contention that recovery under this subject section shall bar the
recovery of benefits under the Employees' Compensation Program, the same cannot be
upheld. The second sentence of Article 173, Chapter II, Title II (dealing on Employees'
Compensation and State Insurance Fund), Book IV of the Labor Code, as amended by P.D.
1921, expressly provides that "the payment of compensation under this Title shall not bar the
recovery of benefits as provided for in Section 699 of the Revised Administrative Code . . .
whose benefits are administered by the system (meaning SSS or GSIS) or by other agencies of
the government."
WHEREFORE, premises considered, the Court resolves to GRANT the petition; respondent
is hereby ordered to give due course to petitioner's claim for benefits. No costs.
SO ORDERED.




G.R. No. 123169 November 4, 1996
DANILO E. PARAS, petitioner,
vs.
COMMISSION ON ELECTIONS, respondent.
R E S O L U T I O N

FRANCISCO, J .:
Petitioner Danilo E. Paras is the incumbent Punong Barangay of Pula, Cabanatuan City who
won during the last regular barangay election in 1994. A petition for his recall as Punong
Barangay was filed by the registered voters of the barangay. Acting on the petition for recall,
public respondent Commission on Elections (COMELEC) resolved to approve the petition,
scheduled the petition signing on October 14, 1995, and set the recall election on November
13,
1995.
1
At least 29.30% of the registered voters signed the petition, well above the 25%
requirement provided by law. The COMELEC, however, deferred the recall election in view
of petitioner's opposition. On December 6, 1995, the COMELEC set anew the recall election,
this time on December 16, 1995. To prevent the holding of the recall election, petitioner filed
before the Regional Trial Court of Cabanatuan City a petition for injunction, docketed as SP
Civil Action No. 2254-AF, with the trial court issuing a temporary restraining order. After
conducting a summary hearing, the trial court lifted the restraining order, dismissed the
petition and required petitioner and his counsel to explain why they should not be cited for
contempt for misrepresenting that the barangay recall election was without COMELEC
approval.
2

In a resolution dated January 5, 1996, the COMELEC, for the third time, re-scheduled the
recall election an January 13, 1996; hence, the instant petition for certiorari with urgent
prayer for injunction. On January 12, 1996, the Court issued a temporary restraining order and
required the Office of the Solicitor General, in behalf of public respondent, to comment on the
petition. In view of the Office of the Solicitor General's manifestation maintaining an opinion
adverse to that of the COMELEC, the latter through its law department filed the required
comment. Petitioner thereafter filed a reply.
3

Petitioner's argument is simple and to the point. Citing Section 74 (b) of Republic Act No.
7160, otherwise known as the Local Government Code, which states that "no recall shall take
place within one (1) year from the date of the official's assumption to office or one (1) year
immediately preceding a regular local election", petitioner insists that the scheduled January
13, 1996 recall election is now barred as the Sangguniang Kabataan (SK) election was set by
Republic Act No. 7808 on the first Monday of May 1996, and every three years thereafter. In
support thereof, petitioner cites Associated Labor Union v. Letrondo-Montejo, 237 SCRA
621, where the Court considered the SK election as a regular local election. Petitioner
maintains that as the SK election is a regular local election, hence no recall election can be
had for barely four months separate the SK election from the recall election. We do not agree.
The subject provision of the Local Government Code provides:
Sec. 74. Limitations on Recall. (a) Any elective local official may be the
subject of a recall election only once during his term of office for loss of
confidence.
(b) No recall shall take place within one (1) year from the date of the
official's assumption to office or one (1) year immediately preceding a
regular local election.
[Emphasis added]
It is a rule in statutory construction that every part of the statute must be interpreted with
reference to the context, i.e., that every part of the statute must be considered together with
the other parts, and kept subservient to the general intent of the whole enactment.
4
The
evident intent of Section 74 is to subject an elective local official to recall election once
during his term of office. Paragraph (b) construed together with paragraph (a) merely
designates the period when such elective local official may be subject of a recall election, that
is, during the second year of his term of office. Thus, subscribing to petitioner's interpretation
of the phrase regular local election to include the SK election will unduly circumscribe the
novel provision of the Local Government Code on recall, a mode of removal of public
officers by initiation of the people before the end of his term. And if the SK election which is
set by R.A No. 7808 to be held every three years from May 1996 were to be deemed within
the purview of the phrase "regular local election", as erroneously insisted by petitioner, then
no recall election can be conducted rendering inutile the recall provision of the Local
Government Code.
In the interpretation of a statute, the Court should start with the assumption that the legislature
intended to enact an effective law, and the legislature is not presumed to have done a vain
thing in the enactment of a statute.
5
An interpretation should, if possible, be avoided under
which a statute or provision being construed is defeated, or as otherwise expressed, nullified,
destroyed, emasculated, repealed, explained away, or rendered insignificant, meaningless,
inoperative or nugatory.
6

It is likewise a basic precept in statutory construction that a statute should be interpreted in
harmony with the Constitution.
7
Thus, the interpretation of Section 74 of the Local
Government Code, specifically paragraph (b) thereof, should not be in conflict with the
Constitutional mandate of Section 3 of Article X of the Constitution to "enact a local
government code which shall provide for a more responsive and accountable local
government structure instituted through a system of decentralization with effective mechanism
of recall, initiative, and referendum . . . ."
Moreover, petitioner's too literal interpretation of the law leads to absurdity which we cannot
countenance. Thus, in a case, the Court made the following admonition:
We admonish against a too-literal reading of the law as this is apt to
constrict rather than fulfill its purpose and defeat the intention of its authors.
That intention is usually found not in "the letter that killeth but in the spirit
that vivifieth". . .
8

The spirit, rather than the letter of a law determines its construction; hence, a statute,
as in this case, must be read according to its spirit and intent.
Finally, recall election is potentially disruptive of the normal working of the local government
unit necessitating additional expenses, hence the prohibition against the conduct of recall
election one year immediately preceding the regular local election. The proscription is due to
the proximity of the next regular election for the office of the local elective official concerned.
The electorate could choose the official's replacement in the said election who certainly has a
longer tenure in office than a successor elected through a recall election. It would, therefore,
be more in keeping with the intent of the recall provision of the Code to construe regular
local election as one referring to an election where the office held by the local elective official
sought to be recalled will be contested and be filled by the electorate.
Nevertheless, recall at this time is no longer possible because of the limitation stated under
Section 74 (b) of the Code considering that the next regular election involving the barangay
office concerned is barely seven (7) months away, the same having been scheduled on May
1997.
9

ACCORDINGLY, the petition is hereby dismissed for having become moot and academic.
The temporary restraining order issued by the Court on January 12, 1996, enjoining the recall
election should be as it is hereby made permanent.
SO ORDERED.
















.R. Nos. L-28502-03 April 18, 1989
COMMISSIONER OF INTERNAL REVENUE, petitioner,
vs.
ESSO STANDARD EASTERN, INC. and THE COURT OF TAX APPEALS,
respondents.

NARVASA, J .:
In two (2) cases appealed to it 1 by the private respondent, hereafter simply referred to as
ESSO, the Court of Tax Appeals rendered judgment 2 sustaining the decisions of the
Commissioner of Internal Revenue excepted to, save "the refund-claim .. in the amount of
P39,787.94 as overpaid interest which it ordered refunded to ESSO
Reversal of this decision is sought by the Commissioner by a petition for review on certiorari
filed with this Court. He ascribes to the Tax Court one sole error: "of applying the tax credit
for overpayment of the 1959 income tax of .. ESSO, granted by the petitioner
(Commissioner), to .. (ESSO's) basic 1960 deficiency income tax liability x x and imposing
the 1-1/2% monthly interests 3 only on the remaining balance thereof in the sum of
P146,961.00" 4 (instead of the full amount of the 1960 deficiency liability in the amount of
P367,994.00). Reversal of the same judgment of the Court of Tax Appeals is also sought by
ESSO in its own appeal (docketed as G.R. Nos. L28508-09); but in the brief filed by it in this
case, it indicates that it will not press its appeal in the event that "the instant petition for
review be denied and that judgment be rendered affirming the decision of the Court of Tax
Appeals."
The facts are simple enough and are quite quickly recounted. ESSO overpaid its 1959 income
tax by P221,033.00. It was accordingly granted a tax credit in this amount by the Comissioner
on August 5,1964. However, ESSOs payment of its income tax for 1960 was found to be
short by P367,994.00. So, on July 10, 1964, the Commissioner wrote to ESSO demanding
payment of the deficiency tax, together with interest thereon for the period from April
18,1961 to April 18,1964. On August 10, 1964, ESSO paid under protest the amount alleged
to be due, including the interest as reckoned by the Commissioner. It protested the
computation of interest, contending it was more than that properly due. It claimed that it
should not have been required to pay interest on the total amount of the deficiency tax,
P367,994.00, but only on the amount of P146,961.00representing the difference between
said deficiency, P367,994.00, and ESSOs earlier overpayment of P221,033.00 (for which it
had been granted a tax credit). ESSO thus asked for a refund.
The Internal Revenue Commissioner denied the claim for refund. ESSO appealed to the Court
of Tax Appeals. As aforestated. that Court ordered payment to ESSO of its "refund-claim x x
in the amount of P39,787.94 as overpaid interest. Hence, this appeal by the Commissioner.
The CTA justified its award of the refund as follows:
... In the letter of August 5, 1964, .. (the Commissioner) admitted that ..
ESSO had overpaid its 1959 income tax by P221,033.00. Accordingly ..
(the Commissioner) granted to .. ESSO a tax credit of P221,033.00. In
short, the said sum of P221,033.00 of ESSO's money was in the
Government's hands at the latest on July 15, 1960 when it ESSO paid in full
its second installment of income tax for 1959. On July 10, 1964 .. (the
Commissioner) claimed that for 1960, .. ESSO underpaid its income tax by
P367,994.00. However, instead of deducting from P367,994.00 the tax
credit of P221,033.00 which .. (the Commissioner) had already admitted
was due .. ESSO .. (the Commissioner) still insists in collecting the interest
on the full amount of P367,994.00 for the period April 18, 1961 to April
18,1964 when the Government had already in its hands the sum of
P221,033.00 of .. ESSOs money even before the latter's income tax for 1960
was due and payable. If the imposition of interest does not amount to a
penalty but merely a just compensation to the State for the delay in paying
the tax, and for the concomitant use by the taxpayer of funds that rightfully
should be in the Government's hand (Castro v. Collector, G.R. No. L-1274,
Dec. 28, 1962), the collection of the interest on the full amount of
P367,994.00 without deducting first the tax credit of P221,033.00, which
has long been in the hands of the Government, becomes erroneous, illegal
and arbitrary.
.. (ESSO) could hardly be charged of delinquency in paying P221,033.00
out of the deficiency income tax of P367,994.00, for which the State should
be compensated by the payment of interest, because the said amount of
P221,033.00 was already in the coffers of the Government. Neither could ..
ESSO be charged for the concomitant use of funds that rightfully belong to
the Government because as early as July 15, 1960, it was the Government
that was using .. ESSOs funds of P221,033.00. In the circumstances, we
find it unfair and unjust for .. (the Commissioner) to exact the interest on
the said sum of P221,033.00 which, after all, was paid to and received by
the Government even before the incidence of the deficiency income tax of
P367,994.00. (Itogon-Suyoc Mines, Inc. v. Commissioner, C.T.A. Case No.
1327, Sept. 30,1965). On the contrary, the Government should be the first to
blaze the trail and set the example of fairness and honest dealing in the
administration of tax laws.
Accordingly, we hold that the tax credit of P221,033.00 for 1959 should
first be deducted from the basic deficiency tax of P367,994.00 for 1960 and
the resulting difference of P146,961.00 would be subject to the 18% interest
prescribed by Section 51 (d) of the Revenue Code. According to the prayer
of ..(ESSO) .. (the Commissioner) is hereby ordered to refund to .. (ESSO)
the amount of P39,787.94 as overpaid interest in the settlement of its 1960
income tax liability. However, as the collection of the tax was not attended
with arbitrariness because .. (ESSO) itself followed x x (the
Commissioner's) manner of computing the tax in paying the sum of
P213,189.93 on August 10, 1964, the prayer of .. (ESSO) that it be granted
the legal rate of interest on its overpayment of P39,787.94 from August 10,
1964 to the time it is actually refunded is denied. (See Collector of Internal
Revenue v. Binalbagan Estate, Inc., G.R. No. 1,12752, Jan. 30, 1965).
The Commissioner's position is that income taxes are determined and paid on an annual basis,
and that such determination and payment of annual taxes are separate and independent
transactions; and that a tax credit could not be so considered until it has been finally approved
and the taxpayer duly notified thereof. Since in this case, he argues, the tax credit of
P221,033.00 was approved only on August 5, 1964, it could not be availed of in reduction of
ESSOs earlier tax deficiency for the year 1960; as of that year, 1960, there was as yet no tax
credit to speak of, which would reduce the deficiency tax liability for 1960. In support of his
position, the Commissioner invokes the provisions of Section 51 of the Tax Code pertinently
reading as follows:
(c) Definition of deficiency. As used in this Chapter in respect of tax
imposed by this Title, the term 'deficiency' means:
(1) The amount by which the tax imposed by this Title exceeds the amount
shown as the tax by the taxpayer upon his return; but the amount so shown
on the return shall first be increased by the amounts previously assessed (or
collected without assessment) as a deficiency, and decreased by the amount
previously abated credited, returned, or otherwise in respect of such tax; ..
xxx xxx xxx
(d) Interest on deficiency. Interest upon the amount determined as
deficiency shall be assessed at the same time as the deficiency and shall be
paid upon notice and demand from the Commissioner of Internal Revenue;
and shall be collected as a part of the tax, at the rate of six per centum per
annum from the date prescribed for the payment of the tax (or, if the tax is
paid in installments, from the date prescribed for the payment of the first
installment) to the date the deficiency is assessed; Provided, That the
amount that may be collected as interest on deficiency shall in no case
exceed the amount corresponding to a period of three years, the present
provision regarding prescription to the contrary notwithstanding.
The fact is that, as respondent Court of Tax Appeals has stressed, as early as July 15, 1960,
the Government already had in its hands the sum of P221,033.00 representing excess
payment. Having been paid and received by mistake, as petitioner Commissioner
subsequently acknowledged, that sum unquestionably belonged to ESSO, and the
Government had the obligation to return it to ESSO That acknowledgment of the erroneous
payment came some four (4) years afterwards in nowise negates or detracts from its actuality.
The obligation to return money mistakenly paid arises from the moment that payment is
made, and not from the time that the payee admits the obligation to reimburse. The obligation
of the payee to reimburse an amount paid to him results from the mistake, not from the
payee's confession of the mistake or recognition of the obligation to reimburse. In other
words, since the amount of P221,033.00 belonging to ESSO was already in the hands of the
Government as of July, 1960, although the latter had no right whatever to the amount and
indeed was bound to return it to ESSO, it was neither legally nor logically possible for ESSO
thereafter to be considered a debtor of the Government in that amount of P221,033.00; and
whatever other obligation ESSO might subsequently incur in favor of the Government would
have to be reduced by that sum, in respect of which no interest could be charged. To interpret
the words of the statute in such a manner as to subvert these truisms simply can not and
should not be countenanced. "Nothing is better settled than that courts are not to give words a
meaning which would lead to absurd or unreasonable consequences. That is a principle that
goes back to In re Allen (2 Phil. 630) decided on October 29, 1903, where it was held that a
literal interpretation is to be rejected if it would be unjust or lead to absurd results." 6
"Statutes should receive a sensible construction, such as will give effect to the legislative
intention and so as to avoid an unjust or absurd conclusion." 7
WHEREFORE, the petition for review is DENIED, and the Decision of the Court of Tax
Appeals dated October 28, 1967 subject of the petition is AFFIRMED, without
pronouncement as to costs.

G.R. No. 112170 April 10, 1996
CESARIO URSUA, petitioner,
vs.
COURT OF APPEALS AND PEOPLE OF THE PHILIPPINES, respondents.

BELLOSILLO, J .:p
This is a petition for review of the decision of the Court of Appeals which affirmed the
conviction of petitioner by the Regional Trial Court of Davao City for violation of Sec. 1 of
C.A. No. 142, as amended by R.A. No. 6085, otherwise known as "An Act to Regulate the
Use of Aliases".
1

Petitioner Cesario Ursua was a Community Environment and Natural Resources Officer
assigned in Kidapawan, Cotabato. On 9 May 1989 the Provincial Governor of Cotabato
requested the Office of the Ombudsman in Manila to conduct an investigation on a complaint
for bribery, dishonesty, abuse of authority and giving of unwarranted benefits by petitioner
and other officials of the Department of Environment and Natural Resources. The complaint
was initiated by the Sangguniang Panlalawigan of Cotabato through a resolution advising the
Governor to report the involvement of petitioner and others in the illegal cutting of mahogany
trees and hauling of illegally-cut logs in the area.
2

On 1 August 1989 Atty. Francis Palmones, counsel for petitioner, wrote the Office of the
Ombudsman in Davao City requesting that he be furnished copy of the complaint against
petitioner. Atty. Palmones then asked his client Ursua to take his letter-request to the Office of
the Ombudsman because his law firm's messenger, Oscar Perez, had to attend to some
personal matters. Before proceeding to the Office of the Ombudsman petitioner talked to
Oscar Perez and told him that he was reluctant to personally ask for the document since he
was one of the respondents before the Ombudsman. However, Perez advised him not to worry
as he could just sign his (Perez) name if ever he would be required to acknowledge receipt of
the complaint.
3

When petitioner arrived at the Office of the Ombudsman in Davao City he was instructed by
the security officer to register in the visitors' logbook. Instead of writing down his name
petitioner wrote the name "Oscar Perez" after which he was told to proceed to the
Administrative Division for the copy of the complaint he needed. He handed the letter of Atty.
Palmones to the Chief of the Administrative Division, Ms. Loida Kahulugan, who then gave
him a copy of the complaint, receipt of which he acknowledged by writing the name "Oscar
Perez."
4

Before petitioner could leave the premises he was greeted by an acquaintance, Josefa Amparo,
who also worked in the same office. They conversed for a while then he left. When Loida
learned that the person who introduced himself as "Oscar Perez" was actually petitioner
Cesario Ursua, a customer of Josefa Amparo in her gasoline station, Loida reported the matter
to the Deputy Ombudsman who recommended that petitioner be accordingly charged.
On 18 December 1990, after the prosecution had completed the presentation of its evidence,
petitioner without leave of court filed a demurrer to evidence alleging that the failure of the
prosecution to prove that his supposed alias was different from his registered name in the
local civil registry was fatal to its cause. Petitioner argued that no document from the local
civil registry was presented to show the registered name of accused which according to him
was a condition sine qua non for the validity of his conviction.
The trial court rejected his contentions and found him guilty of violating Sec. 1 of C.A. No.
142 as amended by R.A. No. 6085. He was sentenced to suffer a prison term of one (1) year
and one (1) day of prision correccional minimum as minimum, to four (4) years of prision
correccional medium as maximum, with all the accessory penalties provided for by law, and
to pay a fine of P4,000.00 plus costs.
Petitioner appealed to the Court of Appeals.
On 31 May 1993 the Court of Appeals affirmed the conviction of petitioner but modified the
penalty by imposing an indeterminate term of one (1) year as minimum to three (3) years as
maximum and a fine of P5,000.00.
Petitioner now comes to us for review of his conviction as he reasserts his innocence. He
contends that he has not violated C.A. No. 142 as amended by R.A. No. 6085 as he never
used any alias name; neither is "Oscar Perez" his alias. An alias, according to him, is a term
which connotes the habitual use of another name by which a person is also known. He claims
that he has never been known as "Oscar Perez" and that he only used such name on one
occasion and it was with the express consent of Oscar Perez himself. It is his position that an
essential requirement for a conviction under C.A. No. 142 as amended by R.A. No. 6085 has
not been complied with when the prosecution failed to prove that his supposed alias was
different from his registered name in the Registry of Births. He further argues that the Court
of Appeals erred in not considering the defense theory that he was charged under the wrong
law.
5

Time and again we have decreed that statutes are to be construed in the light of the purposes
to be achieved and the evils sought to be remedied. Thus in construing a statute the reason for
its enactment should be kept in mind and the statute should be construed with reference to the
intended scope and purpose.
6
The court may consider the spirit and reason of the statute,
where a literal meaning would lead to absurdity, contradiction, injustice, or would defeat the
clear purpose of the lawmakers.
7

For a clear understanding of the purpose of C.A. No. 142 as amended, which was allegedly
violated by petitioner, and the surrounding circumstances under which the law was enacted,
the pertinent provisions thereof, its amendments and related statutes are herein cited. C.A. No.
142, which was approved on 7 November 1936, and before its amendment by R.A. No. 6085,
is entitled An Act to Regulate the Use of Aliases. It provides as follows:
Sec. 1. Except as a pseudonym for literary purposes, no person shall use any
name different from the one with which he was christened or by which he
has been known since his childhood, or such substitute name as may have
been authorized by a competent court. The name shall comprise the
patronymic name and one or two surnames.
Sec. 2. Any person desiring to use an alias or aliases shall apply for
authority therefor in proceedings like those legally provided to obtain
judicial authority for a change of name. Separate proceedings shall be had
for each alias, and each new petition shall set forth the original name and
the alias or aliases for the use of which judicial authority has been,
obtained, specifying the proceedings and the date on which such authority
was granted. Judicial authorities for the use of aliases shall be recorded in
the proper civil register . . . .
The above law was subsequently amended by R.A. No. 6085, approved on 4 August 1969. As
amended, C.A. No. 142 now reads:
Sec. 1. Except as a pseudonym solely for literary, cinema, television, radio
or other entertainment purposes and in athletic events where the use of
pseudonym is a normally accepted practice, no person shall use any name
different from the one with which he was registered at birth in the office of
the local civil registry or with which he was baptized for the first time, or in
case of all alien, with which he was registered in the bureau of immigration
upon entry; or such substitute name as may have been authorized by a
competent court: Provided, That persons whose births have not been
registered in any local civil registry and who have not been baptized, have
one year from the approval of this act within which to register their names
in the civil registry of their residence. The name shall comprise the
patronymic name and one or two surnames.
Sec. 2. Any person desiring to use an alias shall apply for authority therefor
in proceedings like those legally provided to obtain judicial authority for a
change of name and no person shall be allowed to secure such judicial
authority for more than one alias. The petition for an alias shall set forth the
person's baptismal and family name and the name recorded in the civil
registry, if different, his immigrant's name, if an alien, and his pseudonym,
if he has such names other than his original or real name, specifying the
reason or reasons for the desired alias. The judicial authority for the use of
alias, the Christian name and the alien immigrant's name shall be recorded
in the proper local civil registry, and no person shall use any name or names
other than his original or real name unless the same is or are duly recorded
in the proper local civil registry.
The objective and purpose of C.A. No. 142 have their origin and basis in Act No. 3883, An
Act to Regulate the Use in Business Transactions of Names other than True Names,
Prescribing the Duties of the Director of the Bureau of Commerce and Industry in its
Enforcement, Providing Penalties for Violations thereof, and for other purposes, which was
approved on 14 November 1931 and amended by Act No. 4147, approved on 28 November
1934.
8
The pertinent provisions of Act No. 3883 as amended follow
Sec. 1. It shall be unlawful for any person to use or sign, on any written or
printed receipt including receipt for tax or business or any written or printed
contract not verified by a notary public or on any written or printed
evidence of any agreement or business transactions, any name used in
connection with his business other than his true name, or keep
conspicuously exhibited in plain view in or at the place where his business
is conducted, if he is engaged in a business, any sign announcing a firm
name or business name or style without first registering such other name, or
such firm name, or business name or style in the Bureau of Commerce
together with his true name and that of any other person having a joint or
common interest with him in such contract, agreement, business transaction,
or business . . . .
For a bit of history, the enactment of C.A. No. 142 as amended was made primarily to curb
the common practice among the Chinese of adopting scores of different names and aliases
which created tremendous confusion in the field of trade. Such a practice almost bordered on
the crime of using fictitious names which for obvious reasons could not be successfully
maintained against the Chinese who, rightly or wrongly, claimed they possessed a thousand
and one names. C.A. No. 142 thus penalized the act of using an alias name, unless such alias
was duly authorized by proper judicial proceedings and recorded in the civil register.
9

In Yu Kheng Chiau v. Republic
10
the Court had occasion to explain the meaning, concept and
ill effects of the use of an alias within the purview of C.A. No. 142 when we ruled
There can hardly be any doubt that petitioner's use of alias "Kheng Chiau
Young" in addition to his real name "Yu Cheng Chiau" would add to more
confusion. That he is known in his business, as manager of the Robert Reid,
Inc., by the former name, is not sufficient reason to allow him its use. After
all, petitioner admitted that he is known to his associates by both names. In
fact, the Anselmo Trinidad, Inc., of which he is a customer, knows him by
his real name. Neither would the fact that he had encountered certain
difficulties in his transactions with government offices which required him
to explain why he bore two names, justify the grant of his petition, for
petitioner could easily avoid said difficulties by simply using and sticking
only to his real name "Yu Kheng Chiau."
The fact that petitioner intends to reside permanently in the Philippines, as
shown by his having filed a petition for naturalization in Branch V of the
above-mentioned court, argues the more against the grant of his petition,
because if naturalized as a Filipino citizen, there would then be no necessity
for his further using said alias, as it would be contrary to the usual Filipino
way and practice of using only one name in ordinary as well as business
transactions. And, as the lower court correctly observed, if he believes (after
he is naturalized) that it would be better for him to write his name following
the Occidental method, "he can easily file a petition for change of name, so
that in lieu of the name "Yu Kheng Chian," he can, abandoning the same,
ask for authority to adopt the name Kheng Chiau Young."
All things considered, we are of the opinion and so hold, that petitioner has
not shown satisfactory proper and reasonable grounds under the aforequoted
provisions of Commonwealth Act No. 142 and the Rules of Court, to
warrant the grant of his petition for the use of an alias name.
Clearly therefore an alias is a name or names used by a person or intended to be used by him
publicly and habitually usually in business transactions in addition to his real name by which
he is registered at birth or baptized the first time or substitute name authorized by a competent
authority. A man's name is simply the sound or sounds by which he is commonly designated
by his fellows and by which they distinguish him but sometimes a man is known by several
different names and these are known as aliases.
11
Hence, the use of a fictitious name or a
different name belonging to another person in a single instance without any sign or indication
that the user intends to be known by this name in addition to his real name from that day forth
does not fall within the prohibition contained in C.A. No. 142 as amended. This is so in the
case at bench.
It is not disputed that petitioner introduced himself in the Office of the Ombudsman as "Oscar
Perez," which was the name of the messenger of his lawyer who should have brought the
letter to that office in the first place instead of petitioner. He did so while merely serving the
request of his lawyer to obtain a copy of the complaint in which petitioner was a respondent.
There is no question then that "Oscar Perez" is not an alias name of petitioner. There is no
evidence showing that he had used or was intending to use that name as his second name in
addition to his real name. The use of the name "Oscar Perez" was made by petitioner in an
isolated transaction where he was not even legally required to expose his real identity. For,
even if he had identified himself properly at the Office of the Ombudsman, petitioner would
still be able to get a copy of the complaint as a matter of right, and the Office of the
Ombudsman could not refuse him because the complaint was part of public records hence
open to inspection and examination by anyone under the proper circumstances.
While the act of petitioner may be covered by other provisions of law, such does not
constitute an offense within the concept of C.A. No. 142 as amended under which he is
prosecuted. The confusion and fraud in business transactions which the anti-alias law and its
related statutes seek to prevent are not present here as the circumstances are peculiar and
distinct from those contemplated by the legislature in enacting C.A. No. 142 as amended.
There exists a valid presumption that undesirable consequences were never intended by a
legislative measure and that a construction of which the statute is fairly susceptible is favored,
which will avoid all objectionable, mischievous, indefensible, wrongful, evil and injurious
consequences.
12
Moreover, as C.A. No. 142 is a penal statute, it should be construed strictly
against the State and in favor of the accused.
13
The reason for this principle is the tenderness
of the law for the rights of individuals and the object is to establish a certain rule by
conformity to which mankind would be safe, and the discretion of the court limited.
14
Indeed,
our mind cannot rest easy on the proposition that petitioner should be convicted on a law that
does not clearly penalize the act done by him.
WHEREFORE, the questioned decision of the Court of Appeals affirming that of the
Regional Trial Court of Davao City is REVERSED and SET ASIDE and petitioner
CESARIO URSUA is ACQUITTED of the crime charged.
SO ORDERED.