Republic of the Philippines

SUPREME COURT
Manila
EN BANC
G.R. No. L-19650

September 29, 1966

CALTEX (PHILIPPINES), INC., petitioner-appellee,

vs.
ENRICO PALOMAR, in his capacity as THE POSTMASTER GENERAL, respondent-appellant.
Office of the Solicitor General for respondent and appellant.
Ross, Selph and Carrascoso for petitioner and appellee.

CASTRO, J.:
In the year 1960 the Caltex (Philippines) Inc. (hereinafter referred to as Caltex) conceived and laid
the groundwork for a promotional scheme calculated to drum up patronage for its oil products.
Denominated "Caltex Hooded Pump Contest", it calls for participants therein to estimate the actual
number of liters a hooded gas pump at each Caltex station will dispense during a specified period.
Employees of the Caltex (Philippines) Inc., its dealers and its advertising agency, and their
immediate families excepted, participation is to be open indiscriminately to all "motor vehicle owners
and/or licensed drivers". For the privilege to participate, no fee or consideration is required to be
paid, no purchase of Caltex products required to be made. Entry forms are to be made available
upon request at each Caltex station where a sealed can will be provided for the deposit of
accomplished entry stubs.
A three-staged winner selection system is envisioned. At the station level, called "Dealer Contest",
the contestant whose estimate is closest to the actual number of liters dispensed by the hooded
pump thereat is to be awarded the first prize; the next closest, the second; and the next, the third.
Prizes at this level consist of a 3-burner kerosene stove for first; a thermos bottle and a Ray-O-Vac
hunter lantern for second; and an Everready Magnet-lite flashlight with batteries and a screwdriver
set for third. The first-prize winner in each station will then be qualified to join in the "Regional
Contest" in seven different regions. The winning stubs of the qualified contestants in each region will
be deposited in a sealed can from which the first-prize, second-prize and third-prize winners of that
region will be drawn. The regional first-prize winners will be entitled to make a three-day allexpenses-paid round trip to Manila, accompanied by their respective Caltex dealers, in order to take
part in the "National Contest". The regional second-prize and third-prize winners will receive cash
prizes of P500 and P300, respectively. At the national level, the stubs of the seven regional first-prize
winners will be placed inside a sealed can from which the drawing for the final first-prize, secondprize and third-prize winners will be made. Cash prizes in store for winners at this final stage are:
P3,000 for first; P2,000 for second; Pl,500 for third; and P650 as consolation prize for each of the
remaining four participants.

Foreseeing the extensive use of the mails not only as amongst the media for publicizing the contest
but also for the transmission of communications relative thereto, representations were made by
Caltex with the postal authorities for the contest to be cleared in advance for mailing, having in view
sections 1954(a), 1982 and 1983 of the Revised Administrative Code, the pertinent provisions of
which read as follows:
SECTION 1954. Absolutely non-mailable matter. No matter belonging to any of the
following classes, whether sealed as first-class matter or not, shall be imported into the
Philippines through the mails, or to be deposited in or carried by the mails of the Philippines,
or be delivered to its addressee by any officer or employee of the Bureau of Posts:
Written or printed matter in any form advertising, describing, or in any manner pertaining to,
or conveying or purporting to convey any information concerning any lottery, gift enterprise,
or similar scheme depending in whole or in part upon lot or chance, or any scheme, device,
or enterprise for obtaining any money or property of any kind by means of false or fraudulent
pretenses, representations, or promises.
"SECTION 1982. Fraud orders.Upon satisfactory evidence that any person or company is
engaged in conducting any lottery, gift enterprise, or scheme for the distribution of money, or
of any real or personal property by lot, chance, or drawing of any kind, or that any person or
company is conducting any scheme, device, or enterprise for obtaining money or property of
any kind through the mails by means of false or fraudulent pretenses, representations, or
promises, the Director of Posts may instruct any postmaster or other officer or employee of
the Bureau to return to the person, depositing the same in the mails, with the word
"fraudulent" plainly written or stamped upon the outside cover thereof, any mail matter of
whatever class mailed by or addressed to such person or company or the representative or
agent of such person or company.
SECTION 1983. Deprivation of use of money order system and telegraphic transfer service.
The Director of Posts may, upon evidence satisfactory to him that any person or company
is engaged in conducting any lottery, gift enterprise or scheme for the distribution of money,
or of any real or personal property by lot, chance, or drawing of any kind, or that any person
or company is conducting any scheme, device, or enterprise for obtaining money or property
of any kind through the mails by means of false or fraudulent pretenses, representations, or
promise, forbid the issue or payment by any postmaster of any postal money order or
telegraphic transfer to said person or company or to the agent of any such person or
company, whether such agent is acting as an individual or as a firm, bank, corporation, or
association of any kind, and may provide by regulation for the return to the remitters of the
sums named in money orders or telegraphic transfers drawn in favor of such person or
company or its agent.
The overtures were later formalized in a letter to the Postmaster General, dated October 31, 1960, in
which the Caltex, thru counsel, enclosed a copy of the contest rules and endeavored to justify its
position that the contest does not violate the anti-lottery provisions of the Postal Law. Unimpressed,
the then Acting Postmaster General opined that the scheme falls within the purview of the provisions
aforesaid and declined to grant the requested clearance. In its counsel's letter of December 7, 1960,

Caltex sought a reconsideration of the foregoing stand, stressing that there being involved no
consideration in the part of any contestant, the contest was not, under controlling authorities,
condemnable as a lottery. Relying, however, on an opinion rendered by the Secretary of Justice on
an unrelated case seven years before (Opinion 217, Series of 1953), the Postmaster General
maintained his view that the contest involves consideration, or that, if it does not, it is nevertheless a
"gift enterprise" which is equally banned by the Postal Law, and in his letter of December 10, 1960
not only denied the use of the mails for purposes of the proposed contest but as well threatened that
if the contest was conducted, "a fraud order will have to be issued against it (Caltex) and all its
representatives".
Caltex thereupon invoked judicial intervention by filing the present petition for declaratory relief
against Postmaster General Enrico Palomar, praying "that judgment be rendered declaring its
'Caltex Hooded Pump Contest' not to be violative of the Postal Law, and ordering respondent to
allow petitioner the use of the mails to bring the contest to the attention of the public". After issues
were joined and upon the respective memoranda of the parties, the trial court rendered judgment as
follows:
In view of the foregoing considerations, the Court holds that the proposed 'Caltex Hooded
Pump Contest' announced to be conducted by the petitioner under the rules marked as
Annex B of the petitioner does not violate the Postal Law and the respondent has no right to
bar the public distribution of said rules by the mails.
The respondent appealed.
The parties are now before us, arrayed against each other upon two basic issues: first, whether the
petition states a sufficient cause of action for declaratory relief; and second, whether the proposed
"Caltex Hooded Pump Contest" violates the Postal Law. We shall take these up in seriatim.
1. By express mandate of section 1 of Rule 66 of the old Rules of Court, which was the applicable
legal basis for the remedy at the time it was invoked, declaratory relief is available to any person
"whose rights are affected by a statute . . . to determine any question of construction or validity
arising under the . . . statute and for a declaration of his rights thereunder" (now section 1, Rule 64,
Revised Rules of Court). In amplification, this Court, conformably to established jurisprudence on the
matter, laid down certain conditions sine qua non therefor, to wit: (1) there must be a justiciable
controversy; (2) the controversy must be between persons whose interests are adverse; (3) the party
seeking declaratory relief must have a legal interest in the controversy; and (4) the issue involved
must be ripe for judicial determination (Tolentino vs. The Board of Accountancy, et al., G.R. No. L3062, September 28, 1951; Delumen, et al. vs. Republic of the Philippines, 50 O.G., No. 2, pp. 576,
578-579; Edades vs. Edades, et al., G.R. No. L-8964, July 31, 1956). The gravamen of the
appellant's stand being that the petition herein states no sufficient cause of action for declaratory
relief, our duty is to assay the factual bases thereof upon the foregoing crucible.
As we look in retrospect at the incidents that generated the present controversy, a number of
significant points stand out in bold relief. The appellee (Caltex), as a business enterprise of some
consequence, concededly has the unquestioned right to exploit every legitimate means, and to avail
of all appropriate media to advertise and stimulate increased patronage for its products. In contrast,

the appellant, as the authority charged with the enforcement of the Postal Law, admittedly has the
power and the duty to suppress transgressions thereof particularly thru the issuance of fraud
orders, under Sections 1982 and 1983 of the Revised Administrative Code, against legally nonmailable schemes. Obviously pursuing its right aforesaid, the appellee laid out plans for the sales
promotion scheme hereinbefore detailed. To forestall possible difficulties in the dissemination of
information thereon thru the mails, amongst other media, it was found expedient to request the
appellant for an advance clearance therefor. However, likewise by virtue of his jurisdiction in the
premises and construing the pertinent provisions of the Postal Law, the appellant saw a violation
thereof in the proposed scheme and accordingly declined the request. A point of difference as to the
correct construction to be given to the applicable statute was thus reached. Communications in
which the parties expounded on their respective theories were exchanged. The confidence with
which the appellee insisted upon its position was matched only by the obstinacy with which the
appellant stood his ground. And this impasse was climaxed by the appellant's open warning to the
appellee that if the proposed contest was "conducted, a fraud order will have to be issued against it
and all its representatives."
Against this backdrop, the stage was indeed set for the remedy prayed for. The appellee's insistent
assertion of its claim to the use of the mails for its proposed contest, and the challenge thereto and
consequent denial by the appellant of the privilege demanded, undoubtedly spawned a live
controversy. The justiciability of the dispute cannot be gainsaid. There is an active antagonistic
assertion of a legal right on one side and a denial thereof on the other, concerning a real not a
mere theoretical question or issue. The contenders are as real as their interests are substantial.
To the appellee, the uncertainty occasioned by the divergence of views on the issue of construction
hampers or disturbs its freedom to enhance its business. To the appellant, the suppression of the
appellee's proposed contest believed to transgress a law he has sworn to uphold and enforce is an
unavoidable duty. With the appellee's bent to hold the contest and the appellant's threat to issue a
fraud order therefor if carried out, the contenders are confronted by the ominous shadow of an
imminent and inevitable litigation unless their differences are settled and stabilized by a tranquilizing
declaration (Pablo y Sen, et al. vs. Republic of the Philippines, G.R. No. L-6868, April 30, 1955).
And, contrary to the insinuation of the appellant, the time is long past when it can rightly be said that
merely the appellee's "desires are thwarted by its own doubts, or by the fears of others" which
admittedly does not confer a cause of action. Doubt, if any there was, has ripened into a justiciable
controversy when, as in the case at bar, it was translated into a positive claim of right which is
actually contested (III Moran, Comments on the Rules of Court, 1963 ed., pp. 132-133, citing:
Woodward vs. Fox West Coast Theaters, 36 Ariz., 251, 284 Pac. 350).
We cannot hospitably entertain the appellant's pretense that there is here no question of
construction because the said appellant "simply applied the clear provisions of the law to a given set
of facts as embodied in the rules of the contest", hence, there is no room for declaratory relief. The
infirmity of this pose lies in the fact that it proceeds from the assumption that, if the circumstances
here presented, the construction of the legal provisions can be divorced from the matter of their
application to the appellee's contest. This is not feasible. Construction, verily, is the art or process of
discovering and expounding the meaning and intention of the authors of the law with respect to its
application to a given case, where that intention is rendered doubtful, amongst others, by reason of
the fact that the given case is not explicitly provided for in the law (Black, Interpretation of Laws, p.
1). This is precisely the case here. Whether or not the scheme proposed by the appellee is within the

coverage of the prohibitive provisions of the Postal Law inescapably requires an inquiry into the
intended meaning of the words used therein. To our mind, this is as much a question of construction
or interpretation as any other.
Nor is it accurate to say, as the appellant intimates, that a pronouncement on the matter at hand can
amount to nothing more than an advisory opinion the handing down of which is anathema to a
declaratory relief action. Of course, no breach of the Postal Law has as yet been committed. Yet, the
disagreement over the construction thereof is no longer nebulous or contingent. It has taken a fixed
and final shape, presenting clearly defined legal issues susceptible of immediate resolution. With the
battle lines drawn, in a manner of speaking, the propriety nay, the necessity of setting the
dispute at rest before it accumulates the asperity distemper, animosity, passion and violence of a
full-blown battle which looms ahead (III Moran, Comments on the Rules of Court, 1963 ed., p. 132
and cases cited), cannot but be conceded. Paraphrasing the language in Zeitlin vs. Arnebergh 59
Cal., 2d., 901, 31 Cal. Rptr., 800, 383 P. 2d., 152, cited in 22 Am. Jur., 2d., p. 869, to deny
declaratory relief to the appellee in the situation into which it has been cast, would be to force it to
choose between undesirable alternatives. If it cannot obtain a final and definitive pronouncement as
to whether the anti-lottery provisions of the Postal Law apply to its proposed contest, it would be
faced with these choices: If it launches the contest and uses the mails for purposes thereof, it not
only incurs the risk, but is also actually threatened with the certain imposition, of a fraud order with
its concomitant stigma which may attach even if the appellee will eventually be vindicated; if it
abandons the contest, it becomes a self-appointed censor, or permits the appellant to put into effect
a virtual fiat of previous censorship which is constitutionally unwarranted. As we weigh these
considerations in one equation and in the spirit of liberality with which the Rules of Court are to be
interpreted in order to promote their object (section 1, Rule 1, Revised Rules of Court) which, in
the instant case, is to settle, and afford relief from uncertainty and insecurity with respect to, rights
and duties under a law we can see in the present case any imposition upon our jurisdiction or any
futility or prematurity in our intervention.
The appellant, we apprehend, underrates the force and binding effect of the ruling we hand down in
this case if he believes that it will not have the final and pacifying function that a declaratory
judgment is calculated to subserve. At the very least, the appellant will be bound. But more than this,
he obviously overlooks that in this jurisdiction, "Judicial decisions applying or interpreting the law
shall form a part of the legal system" (Article 8, Civil Code of the Philippines). In effect, judicial
decisions assume the same authority as the statute itself and, until authoritatively abandoned,
necessarily become, to the extent that they are applicable, the criteria which must control the
actuations not only of those called upon to abide thereby but also of those in duty bound to enforce
obedience thereto. Accordingly, we entertain no misgivings that our resolution of this case will
terminate the controversy at hand.
It is not amiss to point out at this juncture that the conclusion we have herein just reached is not
without precedent. In Liberty Calendar Co. vs. Cohen, 19 N.J., 399, 117 A. 2d., 487, where a
corporation engaged in promotional advertising was advised by the county prosecutor that its
proposed sales promotion plan had the characteristics of a lottery, and that if such sales promotion
were conducted, the corporation would be subject to criminal prosecution, it was held that the
corporation was entitled to maintain a declaratory relief action against the county prosecutor to
determine the legality of its sales promotion plan. In pari materia, see also: Bunis vs. Conway, 17

App. Div. 2d., 207, 234 N.Y.S. 2d., 435; Zeitlin vs. Arnebergh, supra; Thrillo, Inc. vs. Scott, 15 N.J.
Super. 124, 82 A. 2d., 903.
In fine, we hold that the appellee has made out a case for declaratory relief.
2. The Postal Law, chapter 52 of the Revised Administrative Code, using almost identical
terminology in sections 1954(a), 1982 and 1983 thereof, supra, condemns as absolutely nonmailable, and empowers the Postmaster General to issue fraud orders against, or otherwise deny
the use of the facilities of the postal service to, any information concerning "any lottery, gift
enterprise, or scheme for the distribution of money, or of any real or personal property by lot,
chance, or drawing of any kind". Upon these words hinges the resolution of the second issue posed
in this appeal.
Happily, this is not an altogether untrodden judicial path. As early as in 1922, in "El Debate", Inc. vs.
Topacio, 44 Phil., 278, 283-284, which significantly dwelt on the power of the postal authorities under
the abovementioned provisions of the Postal Law, this Court declared that
While countless definitions of lottery have been attempted, the authoritative one for this
jurisdiction is that of the United States Supreme Court, in analogous cases having to do with
the power of the United States Postmaster General, viz.: The term "lottery" extends to all
schemes for the distribution of prizes by chance, such as policy playing, gift exhibitions, prize
concerts, raffles at fairs, etc., and various forms of gambling. The three essential elements of
a lottery are: First, consideration; second, prize; and third, chance. (Horner vs. States [1892],
147 U.S. 449; Public Clearing House vs. Coyne [1903], 194 U.S., 497; U.S. vs. Filart and
Singson [1915], 30 Phil., 80; U.S. vs. Olsen and Marker [1917], 36 Phil., 395; U.S. vs. Baguio
[1919], 39 Phil., 962; Valhalla Hotel Construction Company vs. Carmona, p. 233, ante.)
Unanimity there is in all quarters, and we agree, that the elements of prize and chance are too
obvious in the disputed scheme to be the subject of contention. Consequently as the appellant
himself concedes, the field of inquiry is narrowed down to the existence of the element of
consideration therein. Respecting this matter, our task is considerably lightened inasmuch as in the
same case just cited, this Court has laid down a definitive yard-stick in the following terms
In respect to the last element of consideration, the law does not condemn the gratuitous
distribution of property by chance, if no consideration is derived directly or indirectly from the
party receiving the chance, but does condemn as criminal schemes in which a valuable
consideration of some kind is paid directly or indirectly for the chance to draw a prize.
Reverting to the rules of the proposed contest, we are struck by the clarity of the language in which
the invitation to participate therein is couched. Thus
No puzzles, no rhymes? You don't need wrappers, labels or boxtops? You don't have to buy
anything? Simply estimate the actual number of liter the Caltex gas pump with the hood at
your favorite Caltex dealer will dispense from to , and win valuable prizes . . . ." .

Nowhere in the said rules is any requirement that any fee be paid, any merchandise be bought, any
service be rendered, or any value whatsoever be given for the privilege to participate. A prospective
contestant has but to go to a Caltex station, request for the entry form which is available on demand,
and accomplish and submit the same for the drawing of the winner. Viewed from all angles or turned
inside out, the contest fails to exhibit any discernible consideration which would brand it as a lottery.
Indeed, even as we head the stern injunction, "look beyond the fair exterior, to the substance, in
order to unmask the real element and pernicious tendencies which the law is seeking to prevent" ("El
Debate", Inc. vs. Topacio, supra, p. 291), we find none. In our appraisal, the scheme does not only
appear to be, but actually is, a gratuitous distribution of property by chance.
There is no point to the appellant's insistence that non-Caltex customers who may buy Caltex
products simply to win a prize would actually be indirectly paying a consideration for the privilege to
join the contest. Perhaps this would be tenable if the purchase of any Caltex product or the use of
any Caltex service were a pre-requisite to participation. But it is not. A contestant, it hardly needs
reiterating, does not have to buy anything or to give anything of value.
1awphl.nt

Off-tangent, too, is the suggestion that the scheme, being admittedly for sales promotion, would
naturally benefit the sponsor in the way of increased patronage by those who will be encouraged to
prefer Caltex products "if only to get the chance to draw a prize by securing entry blanks". The
required element of consideration does not consist of the benefit derived by the proponent of the
contest. The true test, as laid down in People vs. Cardas, 28 P. 2d., 99, 137 Cal. App. (Supp.) 788, is
whether the participant pays a valuable consideration for the chance, and not whether those
conducting the enterprise receive something of value in return for the distribution of the prize.
Perspective properly oriented, the standpoint of the contestant is all that matters, not that of the
sponsor. The following, culled from Corpus Juris Secundum, should set the matter at rest:
The fact that the holder of the drawing expects thereby to receive, or in fact does receive,
some benefit in the way of patronage or otherwise, as a result of the drawing; does not
supply the element of consideration.Griffith Amusement Co. vs. Morgan, Tex. Civ. App., 98
S.W., 2d., 844" (54 C.J.S., p. 849).
Thus enlightened, we join the trial court in declaring that the "Caltex Hooded Pump Contest"
proposed by the appellee is not a lottery that may be administratively and adversely dealt with under
the Postal Law.
But it may be asked: Is it not at least a "gift enterprise, or scheme for the distribution of money, or of
any real or personal property by lot, chance, or drawing of any kind", which is equally prescribed?
Incidentally, while the appellant's brief appears to have concentrated on the issue of consideration,
this aspect of the case cannot be avoided if the remedy here invoked is to achieve its tranquilizing
effect as an instrument of both curative and preventive justice. Recalling that the appellant's action
was predicated, amongst other bases, upon Opinion 217, Series 1953, of the Secretary of Justice,
which opined in effect that a scheme, though not a lottery for want of consideration, may
nevertheless be a gift enterprise in which that element is not essential, the determination of whether
or not the proposed contest wanting in consideration as we have found it to be is a prohibited
gift enterprise, cannot be passed over sub silencio.

While an all-embracing concept of the term "gift enterprise" is yet to be spelled out in explicit words,
there appears to be a consensus among lexicographers and standard authorities that the term is
commonly applied to a sporting artifice of under which goods are sold for their market value but by
way of inducement each purchaser is given a chance to win a prize (54 C.J.S., 850; 34 Am. Jur.,
654; Black, Law Dictionary, 4th ed., p. 817; Ballantine, Law Dictionary with Pronunciations, 2nd ed.,
p. 55; Retail Section of Chamber of Commerce of Plattsmouth vs. Kieck, 257 N.W., 493, 128 Neb.
13; Barker vs. State, 193 S.E., 605, 56 Ga. App., 705; Bell vs. State, 37 Tenn. 507, 509, 5 Sneed,
507, 509). As thus conceived, the term clearly cannot embrace the scheme at bar. As already noted,
there is no sale of anything to which the chance offered is attached as an inducement to the
purchaser. The contest is open to all qualified contestants irrespective of whether or not they buy the
appellee's products.
Going a step farther, however, and assuming that the appellee's contest can be encompassed within
the broadest sweep that the term "gift enterprise" is capable of being extended, we think that the
appellant's pose will gain no added comfort. As stated in the opinion relied upon, rulings there are
indeed holding that a gift enterprise involving an award by chance, even in default of the element of
consideration necessary to constitute a lottery, is prohibited (E.g.: Crimes vs. States, 235 Ala 192,
178 So. 73; Russell vs. Equitable Loan & Sec. Co., 129 Ga. 154, 58 S.E., 88; State ex rel. Stafford
vs. Fox-Great Falls Theater Corporation, 132 P. 2d., 689, 694, 698, 114 Mont. 52). But this is only
one side of the coin. Equally impressive authorities declare that, like a lottery, a gift enterprise comes
within the prohibitive statutes only if it exhibits the tripartite elements of prize, chance and
consideration (E.g.: Bills vs. People, 157 P. 2d., 139, 142, 113 Colo., 326; D'Orio vs. Jacobs, 275 P.
563, 565, 151 Wash., 297; People vs. Psallis, 12 N.Y.S., 2d., 796; City and County of Denver vs.
Frueauff, 88 P., 389, 394, 39 Colo., 20, 7 L.R.A., N.S., 1131, 12 Ann. Cas., 521; 54 C.J.S., 851,
citing: Barker vs. State, 193 S.E., 605, 607, 56 Ga. App., 705; 18 Words and Phrases, perm. ed., pp.
590-594). The apparent conflict of opinions is explained by the fact that the specific statutory
provisions relied upon are not identical. In some cases, as pointed out in 54 C.J.S., 851, the terms
"lottery" and "gift enterprise" are used interchangeably (Bills vs. People, supra); in others, the
necessity for the element of consideration or chance has been specifically eliminated by statute. (54
C.J.S., 351-352, citing Barker vs. State,supra; State ex rel. Stafford vs. Fox-Great Falls Theater
Corporation, supra). The lesson that we derive from this state of the pertinent jurisprudence is,
therefore, that every case must be resolved upon the particular phraseology of the applicable
statutory provision.
Taking this cue, we note that in the Postal Law, the term in question is used in association with the
word "lottery". With the meaning of lottery settled, and consonant to the well-known principle of legal
hermeneutics noscitur a sociis which Opinion 217 aforesaid also relied upon although only insofar
as the element of chance is concerned it is only logical that the term under a construction should
be accorded no other meaning than that which is consistent with the nature of the word associated
therewith. Hence, if lottery is prohibited only if it involves a consideration, so also must the term "gift
enterprise" be so construed. Significantly, there is not in the law the slightest indicium of any intent to
eliminate that element of consideration from the "gift enterprise" therein included.
This conclusion firms up in the light of the mischief sought to be remedied by the law, resort to the
determination thereof being an accepted extrinsic aid in statutory construction. Mail fraud orders, it is
axiomatic, are designed to prevent the use of the mails as a medium for disseminating printed

matters which on grounds of public policy are declared non-mailable. As applied to lotteries, gift
enterprises and similar schemes, justification lies in the recognized necessity to suppress their
tendency to inflame the gambling spirit and to corrupt public morals (Com. vs. Lund, 15 A. 2d., 839,
143 Pa. Super. 208). Since in gambling it is inherent that something of value be hazarded for a
chance to gain a larger amount, it follows ineluctably that where no consideration is paid by the
contestant to participate, the reason behind the law can hardly be said to obtain. If, as it has been
held
Gratuitous distribution of property by lot or chance does not constitute "lottery", if it is not
resorted to as a device to evade the law and no consideration is derived, directly or indirectly,
from the party receiving the chance, gambling spirit not being cultivated or stimulated
thereby. City of Roswell vs. Jones, 67 P. 2d., 286, 41 N.M., 258." (25 Words and Phrases,
perm. ed., p. 695, emphasis supplied).
we find no obstacle in saying the same respecting a gift enterprise. In the end, we are persuaded to
hold that, under the prohibitive provisions of the Postal Law which we have heretofore examined, gift
enterprises and similar schemes therein contemplated are condemnable only if, like lotteries, they
involve the element of consideration. Finding none in the contest here in question, we rule that the
appellee may not be denied the use of the mails for purposes thereof.
Recapitulating, we hold that the petition herein states a sufficient cause of action for declaratory
relief, and that the "Caltex Hooded Pump Contest" as described in the rules submitted by the
appellee does not transgress the provisions of the Postal Law.
ACCORDINGLY, the judgment appealed from is affirmed. No costs.

Republic of the Philippines

SUPREME COURT
Manila
EN BANC
G.R. No. L-22301

August 30, 1967

THE PEOPLE OF THE PHILIPPINES, plaintiff-appellee,

vs.
MARIO MAPA Y MAPULONG, defendant-appellant.
Francisco P. Cabigao for defendant-appellant.
Office of the Solicitor General Arturo A. Alafriz, Assistant Solicitor General F. R. Rosete and Solicitor
O. C. Hernandez for plaintiff-appellee.
FERNANDO, J.:
The sole question in this appeal from a judgment of conviction by the lower court is whether or not
the appointment to and holding of the position of a secret agent to the provincial governor would
constitute a sufficient defense to a prosecution for the crime of illegal possession of firearm and
ammunition. We hold that it does not.
The accused in this case was indicted for the above offense in an information dated August 14, 1962
reading as follows: "The undersized accuses MARIO MAPA Y MAPULONG of a violation of Section
878 in connection with Section 2692 of the Revised Administrative Code, as amended by
Commonwealth Act No. 56 and as further amended by Republic Act No. 4, committed as follows:
That on or about the 13th day of August, 1962, in the City of Manila, Philippines, the said accused
did then and there wilfully and unlawfully have in his possession and under his custody and control
one home-made revolver (Paltik), Cal. 22, without serial number, with six (6) rounds of ammunition,
without first having secured the necessary license or permit therefor from the corresponding
authorities. Contrary to law."
When the case was called for hearing on September 3, 1963, the lower court at the outset asked the
counsel for the accused: "May counsel stipulate that the accused was found in possession of the
gun involved in this case, that he has neither a permit or license to possess the same and that we
can submit the same on a question of law whether or not an agent of the governor can hold a firearm
without a permit issued by the Philippine Constabulary." After counsel sought from the fiscal an
assurance that he would not question the authenticity of his exhibits, the understanding being that
only a question of law would be submitted for decision, he explicitly specified such question to be
"whether or not a secret agent is not required to get a license for his firearm."
Upon the lower court stating that the fiscal should examine the document so that he could pass on
their authenticity, the fiscal asked the following question: "Does the accused admit that this pistol cal.
22 revolver with six rounds of ammunition mentioned in the information was found in his possession
on August 13, 1962, in the City of Manila without first having secured the necessary license or permit

thereof from the corresponding authority?" The accused, now the appellant, answered categorically:
"Yes, Your Honor." Upon which, the lower court made a statement: "The accused admits, Yes, and
his counsel Atty. Cabigao also affirms that the accused admits."
Forthwith, the fiscal announced that he was "willing to submit the same for decision." Counsel for the
accused on his part presented four (4) exhibits consisting of his appointment "as secret agent of the
Hon. Feliciano Leviste," then Governor of Batangas, dated June 2, 1962; 1 another document likewise
issued by Gov. Leviste also addressed to the accused directing him to proceed to Manila, Pasay and
Quezon City on a confidential mission;2 the oath of office of the accused as such secret agent, 3 a
certificate dated March 11, 1963, to the effect that the accused "is a secret agent" of Gov.
Leviste.4 Counsel for the accused then stated that with the presentation of the above exhibits he was
"willing to submit the case on the question of whether or not a secret agent duly appointed and
qualified as such of the provincial governor is exempt from the requirement of having a license of
firearm." The exhibits were admitted and the parties were given time to file their respective
memoranda.
1wph1.t

Thereafter on November 27, 1963, the lower court rendered a decision convicting the accused "of
the crime of illegal possession of firearms and sentenced to an indeterminate penalty of from one
year and one day to two years and to pay the costs. The firearm and ammunition confiscated from
him are forfeited in favor of the Government."
The only question being one of law, the appeal was taken to this Court. The decision must be
affirmed.
The law is explicit that except as thereafter specifically allowed, "it shall be unlawful for any person to
. . . possess any firearm, detached parts of firearms or ammunition therefor, or any instrument or
implement used or intended to be used in the manufacture of firearms, parts of firearms, or
ammunition."5 The next section provides that "firearms and ammunition regularly and lawfully issued
to officers, soldiers, sailors, or marines [of the Armed Forces of the Philippines], the Philippine
Constabulary, guards in the employment of the Bureau of Prisons, municipal police, provincial
governors, lieutenant governors, provincial treasurers, municipal treasurers, municipal mayors, and
guards of provincial prisoners and jails," are not covered "when such firearms are in possession of
such officials and public servants for use in the performance of their official duties." 6
The law cannot be any clearer. No provision is made for a secret agent. As such he is not exempt.
Our task is equally clear. The first and fundamental duty of courts is to apply the law. "Construction
and interpretation come only after it has been demonstrated that application is impossible or
inadequate without them."7 The conviction of the accused must stand. It cannot be set aside.
Accused however would rely on People v. Macarandang,8 where a secret agent was acquitted on
appeal on the assumption that the appointment "of the accused as a secret agent to assist in the
maintenance of peace and order campaigns and detection of crimes, sufficiently put him within the
category of a "peace officer" equivalent even to a member of the municipal police expressly covered
by section 879." Such reliance is misplaced. It is not within the power of this Court to set aside the
clear and explicit mandate of a statutory provision. To the extent therefore that this decision conflicts
with what was held in People v. Macarandang, it no longer speaks with authority.

Wherefore, the judgment appealed from is affirmed.

Concepcion, C.J., Reyes, J.B.L., Dizon, Makalintal, Bengzon, J.P., Zaldivar, Sanchez, Castro and
Angeles, JJ., concur.

Republic of the Philippines

SUPREME COURT
Manila
SECOND DIVISION
G.R. No. L-34568 March 28, 1988
RODERICK DAOANG, and ROMMEL DAOANG, assisted by their father, ROMEO
DAOANG, petitioners,
vs.
THE MUNICIPAL JUDGE, SAN NICOLAS, ILOCOS NORTE, ANTERO AGONOY and AMANDA
RAMOS-AGONOY, respondents.

PADILLA, J.:
This is a petition for review on certiorari of the decision, dated 30 June 1971, rendered by the
respondent judge * in Spec. Proc. No. 37 of Municipal Court of San Nicolas, Ilocos Norte, entitled: "In re Adoption of the Minors
Quirino Bonilla and Wilson Marcos; Antero Agonoy and Amanda R. Agonoy, petitioners", the dispositive part of which reads, as follows:

Wherefore, Court renders judgment declaring that henceforth Quirino Bonilla and
Wilson Marcos be, to all legitimate intents and purposes, the children by adoption of
the joint petitioners Antero Agonoy and Amanda R. Agonoy and that the former be
freed from legal obedience and maintenance by their respective parents, Miguel
Bonilla and Laureana Agonoy for Quirino Bonilla and Modesto Marcos and
Benjamina Gonzales for Wilson Marcos and their family names 'Bonilla' and 'Marcos'
be changed with "Agonoy", which is the family name of the petitioners.
Successional rights of the children and that of their adopting parents shall be
governed by the pertinent provisions of the New Civil Code.
Let copy of this decision be furnished and entered into the records of the Local Civil
Registry of San Nicolas, Ilocos Norte, for its legal effects at the expense of the
petitioners. 1
The undisputed facts of the case are as follows:
On 23 March 1971, the respondent spouses Antero and Amanda Agonoy filed a petition with the
Municipal Court of San Nicolas, Ilocos Norte, seeking the adoption of the minors Quirino Bonilla and
Wilson Marcos. The case, entitled: "In re Adoption of the Minors Quirino Bonilla and Wilson Marcos,
Antero Agonoy and Amanda Ramos-Agonoy, petitioners", was docketed therein as Spec. Proc. No.
37. 2

The petition was set for hearing on 24 April 1971 and notices thereof were caused to be served upon
the office of the Solicitor General and ordered published in the ILOCOS TIMES, a weekly newspaper
of general circulation in the province of Ilocos Norte, with editorial offices in Laoag City. 3
On 22 April 1971, the minors Roderick and Rommel Daoang, assisted by their father and
guardian ad litem, the petitioners herein, filed an opposition to the aforementioned petition for
adoption, claiming that the spouses Antero and Amanda Agonoy had a legitimate daughter named
Estrella Agonoy, oppositors' mother, who died on 1 March 1971, and therefore, said spouses were
disqualified to adopt under Art. 335 of the Civil Code. 4
After the required publication of notice had been accomplished, evidence was presented. Thereafter,
the Municipal Court of San Nicolas, Ilocos Norte rendred its decision, granting the petition for
adoption. 5
Hence, the present recourse by the petitioners (oppositors in the lower court).
The sole issue for consideration is one of law and it is whether or not the respondent spouses Antero
Agonoy and Amanda Ramos-Agonoy are disqualified to adopt under paragraph (1), Art. 335 of the
Civil Code.
The pertinent provision of law reads, as follows:
Art. 335. The following cannot adopt:
(1) Those who have legitimate, legitimated, acknowledged natural children, or
children by legal fiction;
xxx xxx xxx
In overruling the opposition of the herein petitioners, the respondents judge held that "to add
grandchildren in this article where no grandchil is included would violate to (sic) the legal maxim that
what is expressly included would naturally exclude what is not included".
But, it is contended by the petitioners, citing the case of In re Adoption of Millendez, 6 that the
adoption of Quirino Bonilla and Wilson Marcos would not only introduce a foreign element into the family
unit, but would result in the reduction of their legititimes. It would also produce an indirect, permanent and
irrevocable disinheritance which is contrary to the policy of the law that a subsequent reconciliation
between the offender and the offended person deprives the latter of the right to disinherit and renders
ineffectual any disinheritance that may have been made.
We find, however, that the words used in paragraph (1) of Art. 335 of the Civil Code, in enumerating
the persons who cannot adopt, are clear and unambiguous. The children mentioned therein have a
clearly defined meaning in law and, as pointed out by the respondent judge, do not include
grandchildren.

Well known is the rule of statutory construction to the effect that a statute clear and unambiguous on
its face need not be interpreted; stated otherwise, the rule is that only statutes with an ambiguous or
doubtful meaning may be the subject of statutory construction. 7
Besides, it appears that the legislator, in enacting the Civil Code of the Philippines, obviously
intended that only those persons who have certain classes of children, are disqualified to adopt. The
Civil Code of Spain, which was once in force in the Philippines, and which served as the pattern for
the Civil Code of the Philippines, in its Article 174, disqualified persons who have legitimate or
legitimated descendants from adopting. Under this article, the spouses Antero and Amanda Agonoy
would have been disqualified to adopt as they have legitimate grandchildren, the petitioners herein.
But, when the Civil Code of the Philippines was adopted, the word "descendants" was changed to
"children", in paragraph (1) of Article 335.
Adoption used to be for the benefit of the adoptor. It was intended to afford to persons who have no
child of their own the consolation of having one, by creating through legal fiction, the relation of
paternity and filiation where none exists by blood relationship. 8 The present tendency, however, is
geared more towards the promotion of the welfare of the child and the enhancement of his opportunities
for a useful and happy life, and every intendment is sustained to promote that objective. 9 Under the law
now in force, having legitimate, legitimated, acknowledged natural children, or children by legal fiction, is
no longer a ground for disqualification to adopt. 10
WHEREFORE, the petition is DENIED. The judgment of the Municipal Court of San Nicolas, Ilocos
Norte in Spec. Proc. No. 37 is AFFIRMED. Without pronouncement as to costs in this instance.
SO ORDERED.
Yap, Melencio-Herrera, Paras and Sarmiento, JJ., concur.

Republic of the Philippines

SUPREME COURT
Manila
EN BANC
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 coheirs satisfied the requirement of the law. 7

In truth, such actual notice as acquired by the co-heirs cannot be plausibly denied. The other coheirs, 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.
Teehankee, C.J., Yap, Narvasa, Melencio-Herrera Gutierrez, Jr., Paras, Gancayco, Padilla, Bidin,
Sarmiento and Cortes, JJ., concur.
Fernan and Feliciano, JJ., are on leave.

Republic of the Philippines

SUPREME COURT
Manila
FIRST DIVISION
G. R. No. L-41001 September 30, 1976
MANILA LODGE NO. 761, BENEVOLENT AND PROTECTIVE ORDER OF THE ELKS,
INC., petitioner,
vs.
THE HONORABLE COURT OF APPEALS, CITY OF MANILA, and TARLAC DEVELOPMENT
CORPORATION,respondents.
No. L-41012 September 30, 1976
TARLAC DEVELOPMENT CORPORATION, petitioner,
vs.
HONORABLE COURT OF APPEALS, CITY OF MANILA, LODGE NO. 761, BENEVOLENT AND
PROTECTIVE ORDER OF ELKS, INC., respondents.

CASTRO, C.J.:

t.hqw

STATEMENT OF THE CASE AND STATEMENTOF THE FACTS

These two cases are petitions on certiorari to review the decision dated June 30, 1975 of the Court
of Appeals in CA-G.R. No. 51590-R entitled "Tarlac Development Corporation vs. City of Manila, and
Manila Lodge No. 761, Benevolent and Protective Order of Elks, Inc.," affirming the trial court's
finding in Civil Case No. 83009 that the property subject of the decision a quo is a "public park or
plaza."
On June 26, 1905 the Philippine Commission enacted Act No. l360 which authorized the City of
Manila to reclaim a portion of Manila Bay. The reclaimed area was to form part of the Luneta
extension. The Act provided that the reclaimed area "Shall be the property of the City of Manila" and
that "the City of Manila is hereby authorized to set aside a tract of the reclaimed land formed by the
Luneta extension x x x at the north end not to exceed five hundred feet by six hundred feet in size,
for a hotel site, and to lease the same, with the approval of the Governor General, to a responsible
person or corporation for a term not exceed ninety-nine years."
Subsequently, the Philippine Commission passed on May 18, 1907 Act No. 1657, amending Act No.
1360, so as to authorize the City of' Manila either to lease or to sell the portion set aside as a hotel
site.
The total area reclaimed was a little over 25 hectares. The City of Manila applied for the registration
of the reclaimed area, and on January 20, 1911, O.C.T. No. 1909 was issued in the name of the City
of Manila. The title described the registered land as "un terreno conocido con el nombre de Luneta
Extension, situato en el distrito de la Ermita x x x." The registration was "subject, however to such of
the incumbrances mentioned in Article 39 of said law (Land Registration Act) as may be subsisting"
and "sujeto a las disposiciones y condiciones impuestas en la Ley No. 1360; y sujeto tambein a los
contratos de venta, celebrados y otorgados por la Ciudad de Manila a favor del Army and Navy Club
y la Manila Lodge No. 761, Benevolent and Protective Order of Elks, fechados respectivamente, en
29 de Diciembre de 1908 y 16 de Enero de 1909." 1
On July 13, 1911 the City of Manila, affirming a prior sale dated January 16, 1909 cancelled 5,543.07
square meters of the reclaimed area to the Manila Lodge No. 761, Benevolent and Protective Order
of Elks of the U.S.A. (BPOE, for short) on the basis of which TCT No. 2195 2 was issued to the latter
over the Marcela de terreno que es parte de la Luneta Extension, Situada en el Distrito le la Ermita ... ."
At the back of this title vas annotated document 4608/T-1635, which in part reads as follows: "que la
citada Ciusdad de Manila tendra derecho a su opcion, de recomparar la expresada propiedad para fines
publicos solamete in cualquier tiempo despues de cincuenta anos desde el 13 le Julio le 1911, precio de
la misma propiedad, mas el valor que entonces tengan las mejoras."
For the remainder of the Luneta Extension, that is, after segregating therefrom the portion sold to the
Manila Lodge No. 761, PBOE, a new Certificate of Title No. 2196 3 was issued on July 17, 1911 to the
City of Manila.
Manila Lodge No. 761, BPOE, subsequently sold the said 5,543.07 square meters to the Elks Club,
Inc., to which was issued TCT No. 67488. 4 The registered owner, "The Elks Club, Inc.," was later
changed by court oder to "Manila Lodge No. 761, Benevolent and Protective Order of Elks, Inc."

In January 1963 the BPOE. petitioned the Court of First Instance of Manila, Branch IV, for the
cancellation of the right of the City of Manila to repurchase the property This petition was granted on
February 15, 1963.
On November 19, 1963 the BPOE sold for the sum of P4,700,000 the land together with all the
improvements thereon to the Tarlac Development Corporation (TDC, for short) which paid
P1,700.000 as down payment and mortgaged to the vendor the same realty to secure the payment
of the balance to be paid in quarterly installments.5At the time of the sale,, there was no annotation of any subsisting lien
on the title to the property. On December 12, 1963 TCT No. 73444 was issued to TDC over the subject land still described as "UNA
PARCELA DE TERRENO, que es parte de la Luneta Extension, situada en el Distrito de Ermita ... ."

In June 1964 the City of Manila filed with the Court of First Instance of Manila a petition for the
reannotation of its right to repurchase; the court, after haering, issued an order, dated November 19,
1964, directing the Register of Deeds of the City of Manila to reannotate in toto the entry regarind
the right of the City of Manila to repurchase the property after fifty years. From this order TDC and
BPOE appealed to this Court which on July 31, 1968 affirmed in G.R. Nos. L-24557 and L-24469 the
trial court's order of reannotation, but reserved to TDC the right to bring another action for the
clarification of its rights.
As a consequence of such reservation, TDC filed on April 28, 1971 against the City of Manila and the
Manila Lodge No. 761, BPOE, a complaint, docketed as Civil Case No. 83009 of the Court of First
Instance of Manila, containing three causes of action and praying a) On the first cause of action, that the plaintiff TDC be declared to have purchased the parcel of
land now in question with the buildings and improvements thereon from the defendant BPOE for
value and in good faith, and accordingly ordering the cancellation of Entry No. 4608/T-1635 on
Transfer Certificate of Title No. 73444 in the name of the Plaintiff;
b) On the second cause of action, ordering the defendant City of Manila to pay the plaintiff TDC
damages in the sum of note less than one hundred thousand pesos (P100,000.00);
c) On the third cause of action, reserving to the plaintiff TDC the right to recover from the defendant
BPOE the amounts mentioned in par. XVI of the complaint in accordance with Art. 1555 of the Civil
Code, in the remote event that the final judgment in this case should be that the parcel of land now
in question is a public park; and
d) For costs, and for such other and further relief as the Court may deem just and equitable.

Therein defendant City of Manila, in its answer dated May 19, 1971, admitted all the facts alleged in
the first cause of action except the allegation that TDC purchased said property "for value and in
good faith," but denied for lack of knowledge or information the allegations in the second and third
causes of action. As, special and affirmative defense, the City of Manila claimed that TDC was not a
purchaser in good faith for it had actual notice of the City's right to repurchase which was annotated
at the back of the title prior to its cancellation, and that, assumingarguendo that TDC had no notice
of the right to repurchase, it was, nevertheless, under obligation to investigate inasmuch as its title
recites that the property is a part of the Luneta extension. 7

The Manila Lodge No. 761, BPOE, in its answer dated June 7, 1971, admitted having sold the land
together with the improvements thereon for value to therein plaintiff which was in good faith, but
denied for lack of knowledge as to their veracity the allegations under the second cause of action. It
furthermore admitted that TDC had paid the quarterly installments until October l5, 1964 but claimed
that the latter failed without justifiable cause to pay the subsequent installments. It also asserted that
it was a seller for value in good faith without having misrepresented or concealed tacts relative to the
title on the property. As counterclaim, Manila Lodge No. 761 (BPOE) sought to recover the balance
of the purchase price plus interest and costs. 8
On June 15, 1971 TDC answered the aforesaid counterclaim, alleging that its refusal to make further
payments was fully justified. 9
After due trial the court a quo rendered on July 14, 1972 its decision finding the subject land to be
part of the "public park or plaza" and, therefore, part of the public domain. The court consequently
declared that the sale of the subject land by the City of Manila to Manila Lodge No. 761, BPOE, was
null and void; that plaintiff TDC was a purchaser thereof in g faith and for value from BPOE and can
enforce its rights against the latter; and that BPOE is entitled to recover from the City of Manila
whatever consideration it had 'paid the latter. 'The dispositive part of the decision reads:
+.wph!1

WHEREFORE, the Court hereby declares that the parcel of land formerly covered by
Transfer Certificate of Title Nos 2195 and 67488 in the name of BPOE and now by
Transfer Certificate of Title No. 73444 in the name of Tarlac Development
Corporation is a public' park or plaza, and, consequently, instant complaint is
dimissed, without pronouncement as to costs.
In view of the reservation made by plaintiff Tarlac Development Corporation to
recover from defendant BPOE the amounts mentioned in paragraph XVI of the
complaint in accordance with Article 1555 of the Civil Code, the Court makes no
pronouncement on this point. 10
From said decision the therein plaintiff TDC as well as the defendant Manila Lodge No. 761, BPOE,
appealed to the Court of Appeals.
In its appeal docketed as CA-G.R. No. 51590-R, the Manila Lodge No. 761, BPOE, avers that the
trial court committed the following errors, namely:
1. In holding that the property subject of the action is not patrimonial property of the City of Manila;
and
2. In holding that the Tarlac Development Corporation may recover and enforce its right against the
defendant BPOE. 11
The Tarlac Development Corporation, on the other hand, asserts that the trial court erred:
(1) In finding that the property in question is or was a public park and in consequently nullifying the
sale thereof by the City of Manila to BPOE;

(2) In applying the cases of Municipality of Cavite vs. Rojas, 30 Phil. 602, and Government vs.
Cabangis, 53 Phil. 112, to the case at bar; and
(3) In not holding that the plaintiff-appellant is entitled to ,recover damages from the defendant City
of Manila. 12
Furthermore, TDC as appellee regarding the second assignment of error raised by BPOE,
maintained that it can recover and enforce its rigth against BPOE in the event that the land in
question is declared a public park or part thereof. 13
In its decision promulgated on June 30, 1975, the Court of Appeals concur ed in the findings and
conclusions of the lower court upon the ground that they are supported by he evidence and are in
accordance with law, and accordingly affirmed the lower court's judgment.
Hence, the present petitions for review on certiorari.
G.R. No. L-41001
The Manila Lodge No. 761, BPOE, contends, in its petition for review on certiorari docketed as G.R.
No. L-41001, that the Court of Appeals erred in (1) disregarding the very enabling acts and/or
statutes according to which the subject property was, and still is, patrimonial property of the City of
Manila and could therefore be sold and/or disposed of like any other private property; and (2) in
departing from the accepted and usual course of judicial proceedings when it simply made a general
affirmance of the court a quo's findings and conclusions without bothering to discuss or resolve
several vital points stressed by the BPOE in its assigned errrors. 14
G.R. No. L-41012
The Tarlac Development Corporation, in its petition for review on certiorari docketed as G.R. No. L41012, relies on the following grounds for the allowance of its petition:
1. that the Court of Appeals did not correctly interpret Act No. 1360, as amended by Act No. 1657, of
the Philippine Commission; and
2. that the Court of Appeals has departed from the accepted and usual course of judicial
proceedings in that it did not make its own findings but simply recited those of the lower court.

15

ISSUES AND ARGUMENTS

FIRST ISSUE
Upon the first issue, both petitioners claim that the property subject of the action, pursuant to the
provisions of Act No. 1360, as amended by Act No. 1657, was patrimonial property of the City of
Manila and not a park or plaza.
Arguments of Petitioners

In G.R. No. L-41001, the Manila Lodge No. 761, BPOE, admits that "there appears to be some logic
in the conclusion" of the Court of Appeals that "neither Act No. 1360 nor Act No. 1657 could have
meant to supply the City of Manila the authority to sell the subject property which is located at the
south end not the north of the reclaimed area." 16 It argues, however, that when Act No. 1360, as
amended, authorized the City of Manila to undertake the construction of the Luneta extension by
reclaimed land from the Manila Bay, and declared that the reclaimed land shall be the "property of the City
of Manila," the State expressly granted the ownership thereof to the City of Manila which. consequently.
could enter into transactions involving it; that upon the issuance of O.C.T. No. 1909, there could he no
doubt that the reclaimed area owned by the City was its patrimonial property;" that the south end of the
reclaimed area could not be for public use for. as argued by TDC a street, park or promenade can be
property for public use pursuant to Article 344 of the Spanish Civil Code only when it has already been so
constructed or laid out, and the subject land, at the time it was sold to the Elk's Club, was neither actually
constructed as a street, park or promenade nor laid out as a street, park or promenade;" that even
assuming that the subject property was at the beginning property of public dominion, it was subsequently
converted into patrimonial property pursuant to Art. 422 of the Civil Code, inasmuch as it had never been
used, red or utilized since it was reclaimed in 1905 for purpose other than this of an ordinary real estate
for sale or lease; that the subject property had never been intended for public use, is further shown by the
fact that it was neither included as a part of the Luneta Park under Plan No. 30 of the National Planning
Commission nor considered a part of the Luneta National Park (now Rizal Park) by Proclamation No. 234
dated December 19, 1955 of President Ramon Magsaysay or by Proclamation Order No. 274 dated
October 4, 1967 of President Ferdinand E. Marcos;" 19 that, such being the case, there is no reason why
the subject property should -not be considered as having been converted into patrimonial property,
pursuant to the ruling in Municipality vs. Roa 7 Phil. 20, inasmuch as the City of Manila has considered it
as its patrimonial property not only bringing it under the operation of the Land Registration Act but also by
disposing of it; 20 and that to consider now the subject property as a public plaza or park would not only
impair the obligations of the parties to the contract of sale (rated July 13, 1911, but also authorize
deprivation of property without due process of law. 21
G.R. No. L-410112
In L-41012, the petitioner TDC stresses that the principal issue is the interpretation of Act No. 1360,
as amended by. Act No. 1657 of the Philippine Commission, 22 and avers that inasmuch as Section 6 of
Act No. 1360, as amended by Act 1657, provided that the reclamation of the Luneta extension was to be
paid for out of the funds of the City of Manila which was authorized to borrow P350,000 "to be expended
in the construction of Luneta Extension," the reclaimed area became "public land" belonging to the City of
Manila that spent for the reclamation, conformably to the holding in Cabangis, 23 and consequently, said
land was subject to sale and other disposition; that the Insular Government itself considered the
reclaimed Luneta extension as patrimonial property subject to disposition as evidenced by the fact that
See. 3 of Act 1360 declared that "the land hereby reclaimed shall be the property of the City of Manila;"
that this property cannot be property for public use for according to Article 344 of the Civil Code, the
character of property for public use can only attach to roads and squares that have already been
constructed or at least laid out as such, which conditions did not obtain regarding the subject land, that
Sec. 5 of Act 1360 authorized the City of Manila to lease the northern part of the reclaimed area for hotel
purposes; that Act No. 1657 furthermore authorized the City of Manila to sell the same; 24 that the express
statutory authority to lease or sell the northern part of the reclaimed area cannot be interpreted to mean
that the remaining area could not be sold inasmuch as the purpose of the statute was not merely to confer
authority to sell the northern portion but rather to limit the city's power of disposition thereof, to wit: to
prevent disposition of the northern portion for any purpose other than for a hotel site that the northern and

southern ends of the reclaimed area cannot be considered as extension of the Luneta for they lie beyond
the sides of the original Luneta when extended in the direction of the sea, and that is the reason why the
law authorized the sale of the northern portion for hotel purposes, and, for the same reason, it is implied
that the southern portion could likewise be disposed of. 26

TDC argues likewise that there are several items of uncontradicted circumstantial evidence which
may serve as aids in construing the legislative intent and which demonstrate that the subject
property is patrimonial in nature, to wit: (1) Exhibits "J" and "J-1", or Plan No. 30 of the National
Planning Commission showing the Luneta and its vicinity, do not include the subject property as part
of the Luneta Park; (2) Exhibit "K", which is the plan of the subject property covered by TCT No.
67488 of BPOE, prepared on November 11, 1963, indicates that said property is not a public park;
(3) Exhibit "T", which is a certified copy of Proclamation No. 234 issued on December 15, 1955 is
President Magsaysay, and Exhibit "U" which is Proclamation Order No. 273 issued on October 4,
1967 by President Marcos, do not include the subject property in the Luneta Park-, (4) Exhibit "W",
which is the location plan of the Luneta National Park under Proclamations Nos. 234 and 273,
further confirms that the subject property is not a public park; and (5) Exhibit "Y", which is a copy of
O.C.T. No. 7333 in the name of the United States of America covering the land now occupied by the
America covering the land now occupied by the American Embassy, the boundaries of which were
delineated by the Philippine Legislature, states that the said land is bounded on the northwest by
properties of the Army and Navy Club (Block No. 321) and the Elks Club (Block No. 321), and this
circumstance shows that even the Philippine Legislature recognized the subject property as private
property of the Elks Club. 27
TDC furthermore contends that the City of Manila is estopped from questioning the validity of the
sale of the subject property that it executed on July 13, 1911 to the Manila Lodge No. 761, BPOE, for
several reasons, namely: (1) the City's petition for the reannotation of Entry No. 4608/T-1635 was
predicated on the validity of said sale; (2) when the property was bought by the petitioner TDC it was
not a public plaza or park as testified to by both Pedro Cojuanco, treasurer of TDC, and the
surveyor, Manuel Aoneuvo, according to whom the subject property was from all appearances
private property as it was enclosed by fences; (3) the property in question was cadastrally surveyed
and registered as property of the Elks Club, according to Manuel Anonuevo; (4) the property was
never used as a public park, for, since the issuance of T.C.T. No. 2165 on July 17, 1911 in the name
of the Manila Lodge NO. 761, the latter used it as private property, and as early as January 16, 1909
the City of Manila had already executed a deed of sale over the property in favor of the Manila
Lodge No. 761; and (5) the City of Manila has not presented any evidence to show that the subject
property has ever been proclaimed or used as a public park. 28
TDC, moreover, contends that Sec. 60 of Com. Act No. 141 cannot apply to the subject land, for
Com. Act No. 141 took effect on December 1, 1936 and at that time the subject land was no longer
part of the part of the public domain. 29
TDC also stresses that its rights as a purchaser in good faith cannot be disregarded, for the mere
mention in the certificate of title that the lot it purchased was "part of the Luneta extension" was not a
sufficient warning that tile title to the City of Manila was invalid; and that although the trial court, in its
decision affirmed by the Court of Appeals, found the TDC -to has been an innocent purchaser for

value, the court disregarded the petitioner's rights as such purchaser that relied on Torrens certificate
of title. 30
The Court, continues the petitioner TDC erred in not holding that the latter is entitled to recover from
the City of Manila damages in the amount of P100,000 caused by the City's petition for- reannotation
of its right to repurchase.
DISCUSSION AND RESOLUTION OF FIRST ISSUE
It is a cardinal rule of statutory construction that courts must give effect to the general legislative
intent that can be discovered from or is unraveled by the four corners of the statute, 31 and in order to
discover said intent, the whole statute, and not only a particular provision thereof, should be
considered. 32 It is, therefore, necessary to analyze all the provisions of Act No. 1360, as amended, in
order to unravel the legislative intent.
Act No. 1360 which was enacted by the Philippine Commission on June 26, 1905, as amended by
Act No. 1657 enacted on May 18, 1907, authorized the "construction of such rock and timber
bulkheads or sea walls as may be necessary for the making of an extension to the Luneta" (Sec. 1
[a]), and the placing of the material dredged from the harbor of Manila "inside the bulkheads
constructed to inclose the Luneta extension above referred to" (Sec. 1 [a]). It likewise provided that
the plan of Architect D. H. Burnham as "a general outline for the extension and improvement of the
Luneta in the City of Manila" be adopted; that "the reclamation from the Bay of Manila of the land
included in said projected Luneta extension... is hereby authorized and the land thereby reclaimed
shall be the property of the City of Manila" (Sec. 3); that "the City of Manila is hereby authorized to
set aside a tract of the reclaimed land formed by the Luneta extension authorized by this Act at the
worth end of said tract, not to exceed five hundred feet by six hundred feet in size, for a hotel site,
and to lease the same with the approval of the Governor General, ... for a term not exceeding ninetynine years; that "should the Municipal Board ... deem it advisable it is hereby authorized to advertise
for sale to sell said tract of land ... ;" "that said tract shall be used for hotel purposes as herein
prescribed, and shall not be devoted to any other purpose or object whatever;" "that should the
grantee x x x fail to maintain on said tract a first-class hotel x x x then the title to said tract of land
sold, conveyed, and transferred, and shall not be devoted to any other purpose or object whatever;"
"that should the grantee x x x fail to maintain on said tract a first-class hotel x x x then the title to said
tract of land sold, conveyed, and transferred to the grantee shall revert to the City of Manila, and
said City of Manila shall thereupon become entitled to immediate possession of said tract of land"
(Sec. 5); that the construction of the rock and timber bulkheads or sea wall "shall be paid for out of
the funds of the City of Manila, but the area to be reclaimed by said proposed Luneta extension shall
be filled, without cost to the City of Manila, with material dredged from Manila Bay at the expense of
the Insular Government" (Sec. 6); and that "the City of Manila is hereby authorized to borrow from
the Insular Government ... the sum of three hundred thousand pesos, to be expended in the
construction of Luneta extension provided for by paragraph (a) of section one hereof" (Sec.7).
The grant made by Act No. 1360 of the reclaimed land to the City of Manila is a grant of "public"
nature, the same having been made to a local political subdivision. Such grants have always
been strictly construed against the grantee. 33 One compelling reason given for the strict interpretation of
a public grant is that there is in such grant a gratuitous donation of, public money or resources which

results in an unfair advantage to the grantee and for that reason, the grant should be narrowly restricted
in favor of the public. 34 This reason for strict interpretation obtains relative to the aforesaid grant, for,
although the City of Manila was to pay for the construction of such work and timber bulkheads or sea
walls as may be necessary for the making of the Luneta extension, the area to be reclaimed would be
filled at the expense of the Insular Government and without cost to the City of Manila, with material
dredged from Manila Bay. Hence, the letter of the statute should be narrowed to exclude maters which if
included would defeat the policy of the legislation.

The reclaimed area, an extension to the Luneta, is declared to be property of the City of Manila.
Property, however, is either of public ownership or of private ownership. 35 What kind of property of
the City is the reclaimed land? Is it of public ownership (dominion) or of private ownership?
We hold that it is of public dominion, intended for public use.
Firstly, if the reclaimed area was granted to the City of Manila as its patrimonial property, the City
could, by virtue of its ownership, dispose of the whole reclaimed area without need
of authorization to do so from the lawmaking body. Thus Article 348 of the Civil Code of Spain
provides that "ownership is the right to enjoy and dispose of a thing without further limitations than
those established by law." 36 The right to dispose (jus disponendi) of one's property is an attribute of
ownership. Act No. 1360, as amended, however, provides by necessary implication, that the City of
Manila could not dispose of the reclaimed area without being authorized by the lawmaking body. Thus the
statute provides that "the City of Manila is hereby authorized to set aside a tract ... at the north end, for a
hotel site, and to lease the same ... should the municipal board ... deem it advisable, it is hereby
authorized ...to sell said tract of land ... " (Sec. 5). If the reclaimed area were patrimonial property of the
City, the latter could dispose of it without need of the authorization provided by the statute, and the
authorization to set aside ... lease ... or sell ... given by the statute would indeed be superfluous. To so
construe the statute s to render the term "authorize," which is repeatedly used by the statute, superfluous
would violate the elementary rule of legal hermeneutics that effect must be given to every word, clause,
and sentence of the statute and that a statute should be so interpreted that no part thereof becomes
inoperative or superfluous. 37 To authorize means to empower, to give a right to act. 38 Act No. 1360
furthermore qualifies the verb it authorize" with the adverb "hereby," which means "by means of this
statue or section," Hence without the authorization expressly given by Act No. 1360, the City of Manila
could not lease or sell even the northern portion; much less could it dispose of the whole reclaimed area.
Consequently, the reclaimed area was granted to the City of Manila, not as its patrimonial property. At
most, only the northern portion reserved as a hotel site could be said to be patrimonial property for, by
express statutory provision it could be disposed of, and the title thereto would revert to the City should the
grantee fail to comply with the terms provided by the statute.
TDC however, contends that the purpose of the authorization provided in Act No. 1360 to lease or
sell was really to limit the City's power of disposition. To sustain such contention is to beg the
question. If the purpose of the law was to limit the City's power of disposition then it is necessarily
assumed that the City had already the power to dispose, for if such power did not exist, how could it
be limited? It was precisely Act 1360 that gave the City the power to dispose for it was hereby
authorized by lease of sale. Hence, the City of Manila had no power to dispose of the reclaimed land
had such power not been granted by Act No. 1360, and the purpose of the authorization was to
empower the city to sell or lease the northern part and not, as TDC claims, to limit only the power to
dispose. Moreover, it is presumed that when the lawmaking body enacted the statute, it had full

knowledge of prior and existing laws and legislation on the subject of the statute and acted in
accordance or with respect thereto. 39 If by another previous law, the City of Manila could already
dispose of the reclaimed area, which it could do if such area were given to it as its patrimonial property,
would it then not be a superfluity for Act No. 1360 to authorize the City to dispose of the reclaimed land?
Neither has petitioner TDC pointed to any other law that authorized the City to do so, nor have we come
across any. What we do know is that if the reclaimed land were patrimonial property, there would be no
need of giving special authorization to the City to dispose of it. Said authorization was given because the
reclaimed land was not intended to be patrimonial property of the City of Manila, and without the express
authorization to dispose of the northern portion, the City could not dispose of even that part.
Secondly, the reclaimed area is an "extension to the Luneta in the City of Manila." 40 If the reclaimed
area is an extension of the Luneta, then it is of the same nature or character as the old Luneta. Anent this
matter, it has been said that a power to extend (or continue an act or business) cannot authorize a
transaction that is totally distinct. 41 It is not disputed that the old Luneta is a public park or plaza and it is
so considered by Section 859 of the Revised Ordinances of the City of Manila. 42 Hence the "extension to
the Luneta" must be also a public park or plaza and for public use.
TDC, however, contends that the subject property cannot be considered an extension of the old
Luneta because it is outside of the limits of the old Luneta when extended to the sea. This is a
strained interpretation of the term "extension," for an "extension," it has been held, "signifies
enlargement in any direction in length, breadth, or circumstance." 43
Thirdly, the reclaimed area was formerly a part of the manila Bay. A bay is nothing more than an inlet
of the sea. Pursuant to Article 1 of the Law of Waters of 1866, bays, roadsteads, coast sea, inlets
and shores are parts of the national domain open to public use. These are also property of public
ownership devoted to public use, according to Article 339 of the Civil Code of Spain.
When the shore or part of the bay is reclaimed, it does not lose its character of being property for
public use, according to Government of the Philippine Islands vs. Cabangis. 44 The predecessor of the
claimants in this case was the owner of a big tract of land including the lots in question. From 1896 said
land began to wear away due to the action of the waters of Manila Bay. In 1901 the lots in question
became completely submerged in water in ordinary tides. It remained in such a state until 1912 when the
Government undertook the dredging of the Vitas estuary and dumped the Sand and - silt from estuary on
the low lands completely Submerged in water thereby gradually forming the lots in question. Tomas
Cabangis took possession thereof as soon as they were reclaimed hence, the claimants, his successors
in interest, claimed that the lots belonged to them. The trial court found for the claimants and the
Government appealed. This Court held that when the lots became a part of the shore. As they remained
in that condition until reclaimed by the filling done by the Government, they belonged to the public
domain. for public use .4' Hence, a part of the shore, and for that purpose a part of the bay, did not lose its
character of being for public use after it was reclaimed.
Fourthly, Act 1360, as amended, authorized the lease or sale of the northern portion of the reclaimed
area as a hotel sites. The subject property is not that northern portion authorized to be leased or
sold; the subject property is the southern portion. Hence, applying the rule of expresio unius est
exlusio alterius, the City of Manila was not authorized to sell the subject property. The application of
this principle of statutory construction becomes the more imperative in the case at bar inasmuch as
not only must the public grant of the reclaimed area to the City of Manila be, as above stated, strictly

construed against the City of Manila, but also because a grant of power to a municipal corporation,
as happens in this case where the city is author ized to lease or sell the northern portion of the
Luneta extension, is strictly limited to such as are expressly or impliedly authorized or necessarily
incidental to the objectives of the corporation.
Fifthly, Article 344 of the Civil Code of Spain provides that to property of public use, in provinces and
in towns, comprises the provincial and town roads, the squares streets fountains, and public waters
the promenades, and public works of general service paid for by such towns or provinces." A park or
plaza, such as the extension to the Luneta, is undoubtedly comprised in said article.
The petitioners, however, argue that, according to said Article 344, in order that the character of
property for public use may be so attached to a plaza, the latter must be actually constructed or at
least laid out as such, and since the subject property was not yet constructed as a plaza or at least
laid out as a plaza when it was sold by the City, it could not be property for public use. It should be
noted, however, that properties of provinces and towns for public use are governed by the same
principles as properties of the same character belonging to the public domain. 46 In order to be
property of public domain an intention to devote it to public use is sufficient. 47 The, petitioners' contention
is refuted by Manresa himself who said, in his comments", on Article 344, that:
+.wph!1

Las plazas, calles y paseos publicos correspondent sin duda aiguna aldominio
publico municipal ), porque se hallan establecidos sobre suelo municipal y estan
destinadas al uso de todos Laurent presenta tratando de las plazas, una question
relativa a si deben conceptuarse como de dominio publico los lugares vacios libres,
que se encuenttan en los Municipios rurales ... Laurent opina contra Pioudhon que
toda vez que estan al servicio de todos pesos lugares, deben considerable publicos
y de dominion publico. Realmente, pala decidir el punto, bastara siempre fijarse en el
destino real y efectivo de los citados lugares, y si este destino entraa un uso comun
de todos, no hay duda que son de dominio publico municipal si no patrimoniales.
It is not necessary, therefore, that a plaza be already constructed of- laid out as a plaza in order that
it be considered property for public use. It is sufficient that it be intended to be such In the case at
bar, it has been shown that the intention of the lawmaking body in giving to the City of Manila the
extension to the Luneta was not a grant to it of patrimonial property but a grant for public use as a
plaza.
We have demonstrated ad satietatem that the Luneta extension as intended to be property of the
City of Manila for public use. But, could not said property-later on be converted, as the petitioners
contend, to patrimonial property? It could be. But this Court has already said, in Ignacio vs. The
Director of Lands, 49 the executive and possibly the legislation department that has the authority and the
power to make the declaration that said property, is no longer required for public use, and until such
declaration i made the property must continue to form paint of the public domain. In the case at bar, there
has been no such explicit or unequivocal declaration It should be noted, furthermore, anent this matter,
that courts are undoubted v not. primarily called upon, and are not in a position, to determine whether any
public land is still needed for the purposes specified in Article 4 of the Law of Waters . 50
Having disposed of the petitioners' principal arguments relative to the main issue, we now pass to
the items of circumstantial evidence which TDC claims may serve as aids in construing the

legislative intent in the enactment of Act No. 1360, as amended. It is noteworthy that all these items
of alleged circumstantial evidence are acts far removed in time from the date of the enactment of Act
No.1360 such that they cannot be considered contemporaneous with its enactment. Moreover, it is
not farfetched that this mass of circumstantial evidence might have been influenced by the
antecedent series of invalid acts, to wit: the City's having obtained over the reclaimed area OCT No.
1909 on January 20,1911; the sale made by the City of the subject property to Manila Lodge No.
761; and the issuance to the latter of T.C.T. No. 2195. It cannot gainsaid that if the subsequent acts
constituting the circumstantial evidence have been base on, or at least influenced, by those
antecedent invalid acts and Torrens titles S they can hardly be indicative of the intent of the
lawmaking body in enacting Act No. 1360 and its amendatory act.
TDC claims that Exhs. "J," "J-l" "K," "T," "U," "W" and "Y" show that the subject property is not a park.
Exhibits "J" and "J-1," the "Luneta and vicinity showing proposed development" dated May 14, 1949,
were prepared by the National Urban Planning Commission of the Office of the President. It cannot
be reasonably expected that this plan for development of the Luneta should show that the subject
property occupied by the ElksClub is a public park, for it was made 38 years after the sale to the
Elks, and after T.C.T. No. 2195 had been issued to Elks. It is to be assumed that the Office of the
President was cognizant of the Torrens title of BPOE. That the subject property was not included as
a part of the Luneta only indicated that the National Urban Planning Commission that made the plan
knew that the subject property was occupied by Elks and that Elks had a Torrens title thereto. But
this in no way proves that the subject property was originally intended to be patrimonial property of
the City of Manila or that the sale to Elks or that the Torrens-title of the latter is valid.
Exhibit "K" is the "Plan of land covered by T.C.T . No ----, as prepared for Tarlac Development
Company." It was made on November 11, 1963 by Felipe F. Cruz, private land surveyor. This
surveyor is admittedly a surveyor for TDC. 51 This plan cannot be expected to show that the subject
property is a part of the Luneta Park, for he plan was made to show the lot that "was to be sold to
petitioner." This plan must have also assumed the existence of a valid title to the land in favor of Elks.
Exhibits "T" and "U" are copies of Presidential Proclamations No. 234 issued on November 15, 1955
and No. 273 issued on October 4, 1967, respectively. The purpose of the said Proclamations was to
reserve certain parcels of land situated in the District of Ermita, City of Manila, for park site
purposes. Assuming that the subject property is not within the boundaries of the reservation, this
cannot be interpreted to mean that the subject property was not originally intended to be for public
use or that it has ceased to be such. Conversely, had the subject property been included in the
reservation, it would mean, if it really were private property, that the rights of the owners thereof
would be extinguished, for the reservations was "subject to private rights, if any there be." That the
subject property was not included in the reservation only indicates that the President knew of the
existence of the Torrens titles mentioned above. The failure of the Proclamations to include the
subject property in the reservation for park site could not change the character of the subject
property as originally for public use and to form part of the Luneta Park. What has been said here
applies to Exhibits "V", "V-1" to "V-3," and "W" which also refer to the area and location of the
reservation for the Luneta Park.

Exhibit "Y" is a copy of O.C.T. No. 7333 dated November 13, 1935, covering the lot where now
stands the American Embassy [Chancery]. It states that the property is "bounded ... on the
Northwest by properties of Army and Navy Club (Block No.321) and Elks Club (Block No. 321)."
Inasmuch as the said bounderies delineated by the Philippine Legislature in Act No. 4269, the
petitioners contend that the Legislature recognized and conceded the existence of the Elks Club
property as a primate property (the property in question) and not as a public park or plaza. This
argument is non sequitur plain and simple Said Original Certificate of Title cannot be considered as
an incontrovertible declaration that the Elks Club was in truth and in fact the owner of such boundary
lot. Such mention as boundary owner is not a means of acquiring title nor can it validate a title that is
null and void.
TDC finally claims that the City of Manila is estopped from questioning the validity of the sale it
executed on July 13,'1911 conconveying the subject property to the Manila Lodge No. 761, BPOE.
This contention cannot be seriously defended in the light of the doctrine repeatedly enunciated by
this Court that the Government is never estopped by mistakes or errors on the pan of its agents, and
estoppel does not apply to a municipal corporation to validate a contract that is prohibited by law or
its against Republic policy, and the sale of July 13, 1911 executed by the City of Manila to Manila
Lodge was certainly a contract prohibited by law. Moreover, estoppel cannot be urged even if the
City of Manila accepted the benefits of such contract of sale and the Manila Lodge No. 761 had
performed its part of the agreement, for to apply the doctrine of estoppel against the City of Manila in
this case would be tantamount to enabling it to do indirectly what it could not do directly. 52
The sale of the subject property executed by the City of Manila to the Manila Lodge No. 761, BPOE,
was void and inexistent for lack of subject matter. 53 It suffered from an incurable defect that could not
be ratified either by lapse of time or by express ratification. The Manila Lodge No. 761 therefore acquired
no right by virtue of the said sale. Hence to consider now the contract inexistent as it always has seen,
cannot be, as claimed by the Manila Lodge No. 761, an impairment of the obligations of contracts, for
there was it, contemplation of law, no contract at all.
The inexistence of said sale can be set up against anyone who asserts a right arising from it, not
only against the first vendee, the Manila Lodge No. 761, BPOE, but also against all its suceessors,
including the TDC which are not protected the doctrine of bona fide ii purchaser without notice, being
claimed by the TDC does not apply where there is a total absence of title in the vendor, and the good
faith of the purchaser TDC cannot create title where none exists. 55
The so-called sale of the subject property having been executed, the restoration or restitution of
what has been given is order 56
SECOND ISSUE
The second ground alleged in support of the instant petitions for review on certiorari is that the Court
of Appeals has departed from the accepted and usual course of judicial proceedings as to call for an
exercise of the power of supervision. TDC in L-41012, argues that the respondent Court did not
make its own findings but simply recited those of the lower court and made a general affirmance,
contrary to the requirements of the Constitution; that the respondent Court made glaring and patent
mistakes in recounting even the copied findings, palpably showing lack of deliberate consideration of

the matters involved, as, for example, when said court said that Act No. 1657 authorized the City of
Manila to set aside a portion of the reclaimed land "formed by the Luneta Extension of- to lease or
sell the same for park purposes;" and that respondent Court. further more, did not resolve or dispose
of any of the assigned errors contrary to the mandate of the Judiciary Act.. 57
The Manila Lodge No. 761, in L-41001, likewise alleges, as one of the reasons warranting review,
that the Court of Appeals departed from the accepted and usual course of Judicial proceedings by
simply making a general affirmance of the court a quo findings without bothering to resolve several
vital points mentioned by the BPOE in its assigned errors. 58
COMMENTS ON SECOND ISSUE
We have shown in our discussion of the first issue that the decision of the trial court is fully in
accordance with law. To follows that when such decision was affirmed by the Court of Appeals, the
affirmance was likewise in accordance with law. Hence, no useful purpose will be served in further
discussing the second issue.
CONCLUSION
ACCORDINGLY, the petitions in both G.R. Nos. L-41001 and L-41012 are denied for lack of merit,
and the decision of the Court of Appeals of June 30, 1975, is hereby affirmed, at petitioner's cost.
Makasiar, Munoz Palma and Martin, JJ., concur.

1wph1.t

Teehankee, concurs in the result which is wholly consistent with the basic rulings and jugdment of
this Court in its decision of July 31, 1968.

Republic of the Philippines

SUPREME COURT
Manila
FIRST DIVISION

G.R. No. 93833 September 28, 1995

SOCORRO D. RAMIREZ, petitioner,
vs.
HONORABLE COURT OF APPEALS, and ESTER S. GARCIA, respondents.

KAPUNAN, J.:
A civil case damages was filed by petitioner Socorro D. Ramirez in the Regional Trial Court of
Quezon City alleging that the private respondent, Ester S. Garcia, in a confrontation in the latter's
office, allegedly vexed, insulted and humiliated her in a "hostile and furious mood" and in a manner
offensive to petitioner's dignity and personality," contrary to morals, good customs and public
policy." 1
In support of her claim, petitioner produced a verbatim transcript of the event and sought moral
damages, attorney's fees and other expenses of litigation in the amount of P610,000.00, in addition
to costs, interests and other reliefs awardable at the trial court's discretion. The transcript on which
the civil case was based was culled from a tape recording of the confrontation made by
petitioner. 2 The transcript reads as follows:
Plaintiff Soccoro D. Ramirez (Chuchi) Good Afternoon M'am.
Defendant Ester S. Garcia (ESG) Ano ba ang nangyari sa 'yo,
nakalimot ka na kung paano ka napunta rito, porke member ka na,
magsumbong ka kung ano ang gagawin ko sa 'yo.
CHUCHI Kasi, naka duty ako noon.
ESG Tapos iniwan no. (Sic)
CHUCHI Hindi m'am, pero ilan beses na nila akong binalikan,
sabing ganoon
ESG Ito and (sic) masasabi ko sa 'yo, ayaw kung (sic) mag explain
ka, kasi hanggang 10:00 p.m., kinabukasan hindi ka na pumasok.
Ngayon ako ang babalik sa 'yo, nag-aaply ka sa States, nag-aaply ka

sa review mo, kung kakailanganin ang certification mo, kalimutan mo

na kasi hindi ka sa akin makakahingi.
CHUCHI Hindi M'am. Kasi ang ano ko talaga noon i-cocontinue ko
up to 10:00 p.m.
ESG Bastos ka, nakalimutan mo na kung paano ka pumasok dito
sa hotel. Magsumbong ka sa Union kung gusto mo. Nakalimutan mo
na kung paano ka nakapasok dito "Do you think that on your own
makakapasok ka kung hindi ako. Panunumbyoyan na kita
(Sinusumbatan na kita).
CHUCHI Itutuloy ko na M'am sana ang duty ko.
ESG Kaso ilang beses na akong binabalikan doon ng mga no (sic)
ko.
ESG Nakalimutan mo na ba kung paano ka pumasok sa hotel,
kung on your own merit alam ko naman kung gaano ka "ka bobo" mo.
Marami ang nag-aaply alam kong hindi ka papasa.
CHUCHI Kumuha kami ng exam noon.
ESG Oo, pero hindi ka papasa.
CHUCHI Eh, bakit ako ang nakuha ni Dr. Tamayo
ESG Kukunin ka kasi ako.
CHUCHI Eh, di sana
ESG Huwag mong ipagmalaki na may utak ka kasi wala kang
utak. Akala mo ba makukuha ka dito kung hindi ako.
CHUCHI Mag-eexplain ako.
ESG Huwag na, hindi ako mag-papa-explain sa 'yo, makaalala ka
kung paano ka puma-rito. "Putang-ina" sasabi-sabihin mo kamaganak ng nanay at tatay mo ang mga magulang ko.
ESG Wala na akong pakialam, dahil nandito ka sa loob, nasa
labas ka puwede ka ng hindi pumasok, okey yan nasaloob ka umalis
ka doon.
CHUCHI Kasi M'am, binbalikan ako ng mga taga Union.

ESG Nandiyan na rin ako, pero huwag mong kalimutan na hindi ka

makakapasok kung hindi ako. Kung hindi mo kinikilala yan okey lang
sa akin, dahil tapos ka na.
CHUCHI Ina-ano ko m'am na utang na loob.
ESG Huwag na lang, hindi mo utang na loob, kasi kung baga sa
no, nilapastangan mo ako.
CHUCHI Paano kita nilapastanganan?
ESG Mabuti pa lumabas ka na. Hindi na ako makikipagusap sa
'yo. Lumabas ka na. Magsumbong ka. 3
As a result of petitioner's recording of the event and alleging that the said act of secretly taping the
confrontation was illegal, private respondent filed a criminal case before the Regional Trial Court of
Pasay City for violation of Republic Act 4200, entitled "An Act to prohibit and penalize wire tapping
and other related violations of private communication, and other purposes." An information charging
petitioner of violation of the said Act, dated October 6, 1988 is quoted herewith:
INFORMATION
The Undersigned Assistant City Fiscal Accusses Socorro D. Ramirez of Violation of
Republic Act No. 4200, committed as follows:
That on or about the 22nd day of February, 1988, in Pasay City Metro
Manila, Philippines, and within the jurisdiction of this honorable court,
the above-named accused, Socorro D. Ramirez not being authorized
by Ester S. Garcia to record the latter's conversation with said
accused, did then and there willfully, unlawfully and feloniously, with
the use of a tape recorder secretly record the said conversation and
thereafter communicate in writing the contents of the said recording
to other person.
Contrary to law.
Pasay City, Metro Manila, September 16, 1988.
MARIANO M.
CUNETA
Asst. City Fiscal
Upon arraignment, in lieu of a plea, petitioner filed a Motion to Quash the Information on the ground
that the facts charged do not constitute an offense, particularly a violation of R.A. 4200. In an order
May 3, 1989, the trial court granted the Motion to Quash, agreeing with petitioner that 1) the facts
charged do not constitute an offense under R.A. 4200; and that 2) the violation punished by R.A.

4200 refers to a the taping of a communication by a personother than a participant to the

communication. 4
From the trial court's Order, the private respondent filed a Petition for Review on Certiorari with this
Court, which forthwith referred the case to the Court of Appeals in a Resolution (by the First Division)
of June 19, 1989.
On February 9, 1990, respondent Court of Appeals promulgated its assailed Decision declaring the
trial court's order of May 3, 1989 null and void, and holding that:
[T]he allegations sufficiently constitute an offense punishable under Section 1 of R.A.
4200. In thus quashing the information based on the ground that the facts alleged do
not constitute an offense, the respondent judge acted in grave abuse of discretion
correctible by certiorari. 5
Consequently, on February 21, 1990, petitioner filed a Motion for Reconsideration which respondent
Court of Appeals denied in its Resolution 6 dated June 19, 1990. Hence, the instant petition.
Petitioner vigorously argues, as her "main and principal issue" 7 that the applicable provision of
Republic Act 4200 does not apply to the taping of a private conversation by one of the parties to the
conversation. She contends that the provision merely refers to the unauthorized taping of a private
conversation by a party other than those involved in the communication. 8 In relation to this, petitioner
avers that the substance or content of the conversation must be alleged in the Information, otherwise the
facts charged would not constitute a violation of R.A. 4200. 9 Finally, petitioner agues that R.A. 4200
penalizes the taping of a "private communication," not a "private conversation" and that consequently, her
act of secretly taping her conversation with private respondent was not illegal under the said act. 10
We disagree.
First, legislative intent is determined principally from the language of a statute. Where the language
of a statute is clear and unambiguous, the law is applied according to its express terms, and
interpretation would be resorted to only where a literal interpretation would be either impossible 11 or
absurb or would lead to an injustice. 12
Section 1 of R.A. 4200 entitled, " An Act to Prohibit and Penalized Wire Tapping and Other Related
Violations of Private Communication and Other Purposes," provides:
Sec. 1. It shall be unlawfull for any person, not being authorized by all the parties to
any private communication or spoken word, to tap any wire or cable, or by using any
other device or arrangement, to secretly overhear, intercept, or record such
communication or spoken word by using a device commonly known as a dictaphone
or dictagraph or detectaphone or walkie-talkie or tape recorder, or however otherwise
described.
The aforestated provision clearly and unequivocally makes it illegal for any person, not authorized by
all the parties to any private communication to secretly record such communication by means of a
tape recorder. The law makes no distinction as to whether the party sought to be penalized by the

statute ought to be a party other than or different from those involved in the private communication.
The statute's intent to penalize all persons unauthorized to make such recording is underscored by
the use of the qualifier "any". Consequently, as respondent Court of Appeals correctly concluded,
"even a (person) privy to a communication who records his private conversation with another without
the knowledge of the latter (will) qualify as a violator" 13 under this provision of R.A. 4200.
A perusal of the Senate Congressional Records, moreover, supports the respondent court's
conclusion that in enacting R.A. 4200 our lawmakers indeed contemplated to make illegal,
unauthorized tape recording of private conversations or communications taken either by the parties
themselves or by third persons. Thus:
xxx xxx xxx
Senator Taada: That qualified only "overhear".
Senator Padilla: So that when it is intercepted or recorded, the element of secrecy
would not appear to be material. Now, suppose, Your Honor, the recording is not
made by all the parties but by some parties and involved not criminal cases that
would be mentioned under section 3 but would cover, for example civil cases or
special proceedings whereby a recording is made not necessarily by all the parties
but perhaps by some in an effort to show the intent of the parties because the
actuation of the parties prior, simultaneous even subsequent to the contract or the
act may be indicative of their intention. Suppose there is such a recording, would you
say, Your Honor, that the intention is to cover it within the purview of this bill or
outside?
Senator Taada: That is covered by the purview of this bill, Your Honor.
Senator Padilla: Even if the record should be used not in the prosecution of offense
but as evidence to be used in Civil Cases or special proceedings?
Senator Taada: That is right. This is a complete ban on tape recorded
conversations taken without the authorization of all the parties.
Senator Padilla: Now, would that be reasonable, your Honor?
Senator Taada: I believe it is reasonable because it is not sporting to record the
observation of one without his knowing it and then using it against him. It is not fair, it
is not sportsmanlike. If the purpose; Your honor, is to record the intention of the
parties. I believe that all the parties should know that the observations are being
recorded.
Senator Padilla: This might reduce the utility of recorders.
Senator Taada: Well no. For example, I was to say that in meetings of the board of
directors where a tape recording is taken, there is no objection to this if all the parties

know. It is but fair that the people whose remarks and observations are being made
should know that the observations are being recorded.
Senator Padilla: Now, I can understand.
Senator Taada: That is why when we take statements of persons, we say: "Please
be informed that whatever you say here may be used against you." That is fairness
and that is what we demand. Now, in spite of that warning, he makes damaging
statements against his own interest, well, he cannot complain any more. But if you
are going to take a recording of the observations and remarks of a person without
him knowing that it is being taped or recorded, without him knowing that what is
being recorded may be used against him, I think it is unfair.
xxx xxx xxx
(Congression Record, Vol. III, No. 31, p. 584, March 12, 1964)
Senator Diokno: Do you understand, Mr. Senator, that under Section 1 of the bill as
now worded, if a party secretly records a public speech, he would be penalized under
Section 1? Because the speech is public, but the recording is done secretly.
Senator Taada: Well, that particular aspect is not contemplated by the bill. It is the
communication between one person and another person not between a speaker
and a public.
xxx xxx xxx
(Congressional Record, Vol. III, No. 33, p. 626, March 12, 1964)
xxx xxx xxx
The unambiguity of the express words of the provision, taken together with the above-quoted
deliberations from the Congressional Record, therefore plainly supports the view held by the
respondent court that the provision seeks to penalize even those privy to the private
communications. Where the law makes no distinctions, one does not distinguish.
Second, the nature of the conversations is immaterial to a violation of the statute. The substance of
the same need not be specifically alleged in the information. What R.A. 4200 penalizes are the acts
of secretly overhearing, intercepting or recording private communications by means of the devices
enumerated therein. The mere allegation that an individual made a secret recording of a private
communication by means of a tape recorder would suffice to constitute an offense under Section 1 of
R.A. 4200. As the Solicitor General pointed out in his COMMENT before the respondent court:
"Nowhere (in the said law) is it required that before one can be regarded as a violator, the nature of
the conversation, as well as its communication to a third person should be professed." 14

Finally, petitioner's contention that the phrase "private communication" in Section 1 of R.A. 4200
does not include "private conversations" narrows the ordinary meaning of the word "communication"
to a point of absurdity. The word communicate comes from the latin word communicare, meaning "to
share or to impart." In its ordinary signification, communication connotes the act of sharing or
imparting signification, communication connotes the act of sharing or imparting, as in
a conversation, 15 or signifies the "process by which meanings or thoughts are shared between
individuals through a common system of symbols (as language signs or gestures)" 16 These definitions
are broad enough to include verbal or non-verbal, written or expressive communications of "meanings or
thoughts" which are likely to include the emotionally-charged exchange, on February 22, 1988, between
petitioner and private respondent, in the privacy of the latter's office. Any doubts about the legislative
body's meaning of the phrase "private communication" are, furthermore, put to rest by the fact that the
terms "conversation" and "communication" were interchangeably used by Senator Taada in his
Explanatory Note to the bill quoted below:
It has been said that innocent people have nothing to fear from
their conversations being overheard. But this statement ignores the usual nature
of conversations as well the undeniable fact that most, if not all, civilized people have
some aspects of their lives they do not wish to expose. Free conversationsare often
characterized by exaggerations, obscenity, agreeable falsehoods, and the
expression of anti-social desires of views not intended to be taken seriously. The
right to the privacy of communication, among others, has expressly been assured by
our Constitution. Needless to state here, the framers of our Constitution must have
recognized the nature of conversations between individuals and the significance of
man's spiritual nature, of his feelings and of his intellect. They must have known that
part of the pleasures and satisfactions of life are to be found in the unaudited, and
free exchange ofcommunication between individuals free from every unjustifiable
intrusion by whatever means. 17
In Gaanan vs. Intermediate Appellate Court, 18 a case which dealt with the issue of telephone
wiretapping, we held that the use of a telephone extension for the purpose of overhearing a private
conversation without authorization did not violate R.A. 4200 because a telephone extension devise was
neither among those "device(s) or arrangement(s)" enumerated therein, 19 following the principle that
"penal statutes must be construed strictly in favor of the accused." 20 The instant case turns on a different
note, because the applicable facts and circumstances pointing to a violation of R.A. 4200 suffer from no
ambiguity, and the statute itself explicitly mentions the unauthorized "recording" of private
communications with the use of tape-recorders as among the acts punishable.
WHEREFORE, because the law, as applied to the case at bench is clear and unambiguous and
leaves us with no discretion, the instant petition is hereby DENIED. The decision appealed from is
AFFIRMED. Costs against petitioner.
SO ORDERED.
Padilla, Davide, Jr. and Bellosillo JJ., concur.
Hermosisima, Jr., J., is on leave.

Republic of the Philippines

SUPREME COURT
Manila
EN BANC
G.R. No. L-6355-56

August 31, 1953

PASTOR M. ENDENCIA and FERNANDO JUGO, plaintiffs-appellees,

vs.
SATURNINO DAVID, as Collector of Internal Revenue, defendant-appellant.
Office of the Solicitor General Juan R. Liwag and Solicitor Jose P. Alejandro for appellant.
Manuel O. Chan for appellees.
MONTEMAYOR, J.:
This is a joint appeal from the decision of the Court of First Instance of Manila declaring section 13 of
Republic Act No. 590 unconstitutional, and ordering the appellant Saturnino David as Collector of
Internal Revenue to re-fund to Justice Pastor M. Endencia the sum of P1,744.45, representing the
income tax collected on his salary as Associate Justice of the Court of Appeals in 1951, and to
Justice Fernando Jugo the amount of P2,345.46, representing the income tax collected on his salary
from January 1,1950 to October 19, 1950, as Presiding Justice of the Court of Appeals, and from
October 20, 1950 to December 31,1950, as Associate Justice of the Supreme Court, without special
pronouncement as to costs.
Because of the similarity of the two cases, involving as they do the same question of law, they were
jointly submitted for determination in the lower court. Judge Higinio B. Macadaeg presiding, in a
rather exhaustive and well considered decision found and held that under the doctrine laid down by
this Court in the case of Perfecto vs. Meer, 85 Phil., 552, the collection of income taxes from the
salaries of Justice Jugo and Justice Endencia was a diminution of their compensation and therefore
was in violation of the Constitution of the Philippines, and so ordered the refund of said taxes.
We see no profit and necessity in again discussing and considering the proposition and the
arguments pro and cons involved in the case of Perfecto vs. Meer, supra, which are raised, brought
up and presented here. In that case, we have held despite the ruling enunciated by the United
States Federal Supreme Court in the case of O 'Malley vs. Woodrought 307 U. S., 277, that taxing
the salary of a judicial officer in the Philippines is a diminution of such salary and so violates the
Constitution. We shall now confine our-selves to a discussion and determination of the remaining
question of whether or not Republic Act No. 590, particularly section 13, can justify and legalize the
collection of income tax on the salary of judicial officers.
According to the brief of the Solicitor General on behalf of appellant Collector of Internal Revenue,
our decision in the case of Perfecto vs. Meer, supra, was not received favorably by Congress,
because immediately after its promulgation, Congress enacted Republic Act No. 590. To bring home
his point, the Solicitor General reproduced what he considers the pertinent discussion in the Lower
House of House Bill No. 1127 which became Republic Act No. 590.
For purposes of reference, we are reproducing section 9, Article VIII of our Constitution:.

SEC. 9. The members of the Supreme Court and all judges of inferior courts shall hold office
during good behavior, until they reach the age of seventy years, or become incapacitated to
discharge the duties of their office. They shall receive such compensation as may be fixed by
law, which shall not be diminished during their continuance in office. Until the Congress shall
provide otherwise, the Chief Justice of the Supreme Court shall receive an annual
compensation of sixteen thousand pesos, and each Associate Justice, fifteen thousand
pesos.
As already stated construing and applying the above constitutional provision, we held in the Perfecto
case that judicial officers are exempt from the payment of income tax on their salaries, because the
collection thereof by the Government was a decrease or diminution of their salaries during their
continuance in office, a thing which is expressly prohibited by the Constitution. Thereafter, according
to the Solicitor General, because Congress did not favorably receive the decision in the Perfecto
case, Congress promulgated Republic Act No. 590, if not to counteract the ruling in that decision, at
least now to authorize and legalize the collection of income tax on the salaries of judicial officers. We
quote section 13 of Republic Act No. 590:
SEC 13. No salary wherever received by any public officer of the Republic of the Philippines
shall be considered as exempt from the income tax, payment of which is hereby declared not
to be dimunition of his compensation fixed by the Constitution or by law.
So we have this situation. The Supreme Court in a decision interpreting the Constitution, particularly
section 9, Article VIII, has held that judicial officers are exempt from payment of income tax on their
salaries, because the collection thereof was a diminution of such salaries, specifically prohibited by
the Constitution. Now comes the Legislature and in section 13, Republic Act No. 590, says that "no
salary wherever received by any public officer of the Republic (naturally including a judicial officer)
shall be considered as exempt from the income tax," and proceeds to declare that payment of said
income tax is not a diminution of his compensation. Can the Legislature validly do this? May the
Legislature lawfully declare the collection of income tax on the salary of a public official, specially a
judicial officer, not a decrease of his salary, after the Supreme Court has found and decided
otherwise? To determine this question, we shall have to go back to the fundamental principles
regarding separation of powers.
Under our system of constitutional government, the Legislative department is assigned the power to
make and enact laws. The Executive department is charged with the execution of carrying out of the
provisions of said laws. But the interpretation and application of said laws belong exclusively to the
Judicial department. And this authority to interpret and apply the laws extends to the Constitution.
Before the courts can determine whether a law is constitutional or not, it will have to interpret and
ascertain the meaning not only of said law, but also of the pertinent portion of the Constitution in
order to decide whether there is a conflict between the two, because if there is, then the law will
have to give way and has to be declared invalid and unconstitutional.
Defining and interpreting the law is a judicial function and the legislative branch may not limit
or restrict the power granted to the courts by the Constitution. (Bandy vs. Mickelson et al.,
44N. W., 2nd 341, 342.)
When it is clear that a statute transgresses the authority vested in the legislature by the
Constitution, it is the duty of the courts to declare the act unconstitutional because they
cannot shrink from it without violating their oaths of office. This duty of the courts to maintain
the Constitution as the fundamental law of the state is imperative and unceasing; and, as
Chief Justice Marshall said, whenever a statute is in violation of the fundamental law, the
courts must so adjudge and thereby give effect to the Constitution. Any other course would

lead to the destruction of the Constitution. Since the question as to the constitutionality of a
statute is a judicial matter, the courts will not decline the exercise of jurisdiction upon the
suggestion that action might be taken by political agencies in disregard of the judgment of
the judicial tribunals. (11 Am. Jur., 714-715.)
Under the American system of constitutional government, among the most important
functions in trusted to the judiciary are the interpreting of Constitutions and, as a closely
connected power, the determination of whether laws and acts of the legislature are or are not
contrary to the provisions of the Federal and State Constitutions. (11 Am. Jur., 905.).
By legislative fiat as enunciated in section 13, Republic Act NO. 590, Congress says that taxing the
salary of a judicial officer is not a decrease of compensation. This is a clear example of interpretation
or ascertainment of the meaning of the phrase "which shall not be diminished during their
continuance in office," found in section 9, Article VIII of the Constitution, referring to the salaries of
judicial officers. This act of interpreting the Constitution or any part thereof by the Legislature is an
invasion of the well-defined and established province and jurisdiction of the Judiciary.
The rule is recognized elsewhere that the legislature cannot pass any declaratory act, or act
declaratory of what the law was before its passage, so as to give it any binding weight with
the courts. A legislative definition of a word as used in a statute is not conclusive of its
meaning as used elsewhere; otherwise, the legislature would be usurping a judicial function
in defining a term. (11 Am. Jur., 914, emphasis supplied)
The legislature cannot, upon passing a law which violates a constitutional provision, validate
it so as to prevent an attack thereon in the courts, by a declaration that it shall be so
construed as not to violate the constitutional inhibition. (11 Am. Jur., 919, emphasis supplied)
We have already said that the Legislature under our form of government is assigned the task and
the power to make and enact laws, but not to interpret them. This is more true with regard to the
interpretation of the basic law, the Constitution, which is not within the sphere of the Legislative
department. If the Legislature may declare what a law means, or what a specific portion of the
Constitution means, especially after the courts have in actual case ascertain its meaning by
interpretation and applied it in a decision, this would surely cause confusion and instability in judicial
processes and court decisions. Under such a system, a final court determination of a case based on
a judicial interpretation of the law of the Constitution may be undermined or even annulled by a
subsequent and different interpretation of the law or of the Constitution by the Legislative
department. That would be neither wise nor desirable, besides being clearly violative of the
fundamental, principles of our constitutional system of government, particularly those governing the
separation of powers.
So much for the constitutional aspect of the case. Considering the practical side thereof, we believe
that the collection of income tax on a salary is an actual and evident diminution thereof. Under the
old system where the in-come tax was paid at the end of the year or sometime thereafter, the
decrease may not be so apparent and clear. All that the official who had previously received his full
salary was called upon to do, was to fulfill his obligation and to exercise his privilege of paying his
income tax on his salary. His salary fixed by law was received by him in the amount of said tax
comes from his other sources of income, he may not fully realize the fact that his salary had been
decreased in the amount of said income tax. But under the present system of withholding the income
tax at the source, where the full amount of the income tax corresponding to his salary is computed in
advance and divided into equal portions corresponding to the number of pay-days during the year
and actually deducted from his salary corresponding to each payday, said official actually does not
receive his salary in full, because the income tax is deducted therefrom every payday, that is to say,

twice a month. Let us take the case of Justice Endencia. As Associate Justice of the Court of
Appeals, his salary is fixed at p12,000 a year, that is to say, he should receive P1,000 a month or
P500 every payday, fifteenth and end of month. In the present case, the amount collected by the
Collector of Internal Revenue on said salary is P1,744.45 for one year. Divided by twelve (months)
we shall have P145.37 a month. And further dividing it by two paydays will bring it down to P72.685,
which is the income tax deducted form the collected on his salary each half month. So, if Justice
Endencia's salary as a judicial officer were not exempt from payment of the income tax, instead of
receiving P500 every payday, he would be actually receiving P427.31 only, and instead of receiving
P12,000 a year, he would be receiving but P10,255.55. Is it not therefor clear that every payday, his
salary is actually decreased by P72.685 and every year is decreased by P1,744.45?
Reading the discussion in the lower House in connection with House Bill No. 1127, which became
Republic Act No. 590, it would seem that one of the main reasons behind the enactment of the law
was the feeling among certain legislators that members of the Supreme Court should not enjoy any
exemption and that as citizens, out of patriotism and love for their country, they should pay income
tax on their salaries. It might be stated in this connection that the exemption is not enjoyed by the
members of the Supreme Court alone but also by all judicial officers including Justices of the Court
of Appeals and judges of inferior courts. The exemption also extends to other constitutional officers,
like the President of the Republic, the Auditor General, the members of the Commission on
Elections, and possibly members of the Board of Tax Appeals, commissioners of the Public Service
Commission, and judges of the Court of Industrial Relations. Compares to the number of all these
officials, that of the Supreme Court Justices is relatively insignificant. There are more than 990 other
judicial officers enjoying the exemption, including 15 Justices of the Court of Appeals, about 107
Judges of First Instance, 38 Municipal Judges and about 830 Justices of the Peace. The reason
behind the exemption in the Constitution, as interpreted by the United States Federal Supreme Court
and this Court, is to preserve the independence of the Judiciary, not only of this High Tribunal but of
the other courts, whose present membership number more than 990 judicial officials.
The exemption was not primarily intended to benefit judicial officers, but was grounded on public
policy. As said by Justice Van Devanter of the United States Supreme Court in the case of Evans vs.
Gore (253 U. S., 245):
The primary purpose of the prohibition against diminution was not to benefit the judges, but,
like the clause in respect of tenure, to attract good and competent men to the bench and to
promote that independence of action and judgment which is essential to the maintenance of
the guaranties, limitations and pervading principles of the Constitution and to the
administration of justice without respect to person and with equal concern for the poor and
the rich. Such being its purpose, it is to be construed, not as a private grant, but as a
limitation imposed in the public interest; in other words, not restrictively, but in accord with its
spirit and the principle on which it proceeds.
Having in mind the limited number of judicial officers in the Philippines enjoying this exemption,
especially when the great bulk thereof are justices of the peace, many of them receiving as low as
P200 a month, and considering further the other exemptions allowed by the income tax law, such as
P3,000 for a married person and P600 for each dependent, the amount of national revenue to be
derived from income tax on the salaries of judicial officers, were if not for the constitutional
exemption, could not be large or substantial. But even if it were otherwise, it should not affect, much
less outweigh the purpose and the considerations that prompted the establishment of the
constitutional exemption. In the same case of Evans vs. Gore, supra, the Federal Supreme Court
declared "that they (fathers of the Constitution) regarded the independence of the judges as far as
greater importance than any revenue that could come from taxing their salaries.

When a judicial officer assumed office, he does not exactly ask for exemption from payment of
income tax on his salary, as a privilege . It is already attached to his office, provided and secured by
the fundamental law, not primarily for his benefit, but based on public interest, to secure and
preserve his independence of judicial thought and action. When we come to the members of the
Supreme Court, this excemption to them is relatively of short duration. Because of the limited
membership in this High Tribunal, eleven, and due to the high standards of experience, practice and
training required, one generally enters its portals and comes to join its membership quite late in life,
on the aver-age, around his sixtieth year, and being required to retire at seventy, assuming that he
does not die or become incapacitated earlier, naturally he is not in a position to receive the benefit of
exemption for long. It is rather to the justices of the peace that the exemption can give more benefit.
They are relatively more numerous, and because of the meager salary they receive, they can less
afford to pay the income tax on it and its diminution by the amount of the income tax if paid would be
real, substantial and onerous.
Considering exemption in the abstract, there is nothing unusual or abhorrent in it, as long as it is
based on public policy or public interest. While all other citizens are subject to arrest when charged
with the commission of a crime, members of the Senate and House of Representatives except in
cases of treason, felony and breach of the peace are exempt from arrest, during their attendance in
the session of the Legislature; and while all other citizens are generally liable for any speech, remark
or statement, oral or written, tending to cause the dishonor, discredit or contempt of a natural or
juridical person or to blacken the memory of one who is dead, Senators and Congressmen in making
such statements during their sessions are extended immunity and exemption.
And as to tax exemption, there are not a few citizens who enjoy this exemption. Persons, natural and
juridical, are exempt from taxes on their lands, buildings and improvements thereon when used
exclusively for educational purposes, even if they derive income therefrom. (Art. VI, Sec. 22 [3].)
Holders of government bonds are exempted from the payment of taxes on the income or interest
they receive therefrom (sec. 29 (b) [4], National Internal Revenue Code as amended by Republic Act
No. 566). Payments or income received by any person residing in the Philippines under the laws of
the United States administered by the United States Veterans Administration are exempt from
taxation. (Republic Act No. 360). Funds received by officers and enlisted men of the Philippine Army
who served in the Armed Forces of the United States, allowances earned by virtue of such services
corresponding to the taxable years 1942 to 1945, inclusive, are exempted from income tax.
(Republic Act No. 210). The payment of wages and allowances of officers and enlisted men of the
Army Forces of the Philippines sent to Korea are also exempted from taxation. (Republic Act No.
35). In other words, for reasons of public policy and public interest, a citizen may justifiably by
constitutional provision or statute be exempted from his ordinary obligation of paying taxes on his
income. Under the same public policy and perhaps for the same it not higher considerations, the
framers of the Constitution deemed it wise and necessary to exempt judicial officers from paying
taxes on their salaries so as not to decrease their compensation, thereby insuring the independence
of the Judiciary.
In conclusion we reiterate the doctrine laid down in the case of Perfecto vs. Meer, supra, to the effect
that the collection of income tax on the salary of a judicial officer is a diminution thereof and so
violates the Constitution. We further hold that the interpretation and application of the Constitution
and of statutes is within the exclusive province and jurisdiction of the Judicial department, and that in
enacting a law, the Legislature may not legally provide therein that it be interpreted in such a way
that it may not violate a Constitutional prohibition, thereby tying the hands of the courts in their task
of later interpreting said statute, specially when the interpretation sought and provided in said statute
runs counter to a previous interpretation already given in a case by the highest court of the land.

In the views of the foregoing considerations, the decision appealed from is hereby affirmed, with no
pronouncement as to costs.
Pablo, Bengzon, Padilla, Tuason, Reyes, and Labrador, JJ., concur.

Separate Opinions
BAUTISTA ANGELO, J., concurring:
Without expressing any opinion on the doctrine laid down by this Court in the case of Perfecto vs.
Meer, G. R. No. L-2314, in view of the part I had in that case as former Solicitor General, I wish
however to state that I concur in the opinion of the majority to the effect that section 13, Republic Act
No. 590, in so far as it provides that taxing of the salary of a judicial officer shall be considered "not
to be a diminution of his compensation fixed by the Constitution or by law", constitutes an invasion of
the province and jurisdiction of the judiciary. In this sense, I am of the opinion that said section is null
and void, it being a transgression of the fundamental principle underlying the separation of powers.
PARAS, C.J., concurring and dissenting:
I dissent for the same reasons stated in the dissenting opinion of Mr. Justice Ozaeta in Perfecto vs.
Meer, 85 Phil., 552, in which I concurred. But I disagree with the majority in ruling that no legislation
may provide that it be held valid although against a provision of the Constitution.

Republic of the Philippines

SUPREME COURT
Manila
SECOND DIVISION
G.R. No. 70443 September 15, 1986
BRAULIO CONDE, RUFINA CONDE, GERARDO CONDE, CONCHITA C. LUNDANG, and
ALFREDO VENTURA,petitioners,
vs.
INTERMEDIATE APPELLATE COURT, HON. CESAR C. PERALEJO, in his capacity as
Presiding Judge, Regional Trial Court, Branch LXVI, Third Judicial Region, Capas, Tarlac, and
MARCELO GUTIERREZ,respondents.
Tomas P. Matic, Jr. for petitioners.
Adelaido G. Rivera for private respondent.

GUTIERREZ, JR., J.:

On January 16, 1984, the petitioners filed an action to annul the judgment of the Court of Appeals
dated September 23, 1981, which reversed the decision of the Regional Trial Court and ordered the
petitioners and/or their successors-in-interest to deliver immediately the ownership and possession
of the property in question to the then plaintiff-appellant Marcelo Gutierrez. In their complaint filed
before the Regional Trial Court of Capas, Tarlac, the petitioners alleged that through fraud, Gutierrez
was able to make it appear that he was the son of Esteban Gutierrez and Fermina Ramos and as a
necessary consequence of such filiation, was the absolute owner by succession of the property in
question.
On February 27, 1984, the trial court dismissed the petitioners' complaint on the ground that it had
no jurisdiction to annul the judgment of the Court of Appeals. Upon the denial of their motion for
reconsideration, the petitioners filed a petition for certiorari, mandamus and a writ of injunction
before the appellate court. The said court in turn, dismissed the petition and a subsequent motion for
reconsideration on the grounds that a Regional Trial Court is without jurisdiction to annul the
judgment of the Court of Appeals and that only the Supreme Court is empowered to review the
judgment of said appellate court. Hence, the petitioners elevated the case before this Court.
On August 31, 1984, we issued a resolution dated August 22, 1984, remanding the case to the
appellate court for decision on the merits.
The resolution reads as follows:

The respondent intermediate Appellate Court erred when it declared that the
complaint for annulment of judgment in this case should be filed with the Supreme
Court. This Court has no original jurisdiction to look into allegations of fraud upon
which the complaint for annulment is based. In January, 1984, the petitioners filed a
complaint with the Regional Trial Court of Tarlac seeking among other things the
annulment of a decision which had already passed, on appeal, the Court of Appeals
in CA-G.R. No. 60139-R. On February 17, 1984, the lower court dismissed the
petitioners' complaint for annulment of judgment. The petitioners appealed the
dismissal to the respondent Intermediate Appellate Court which denied due course to
the petition stating that what is sought to be annulled is a decision of the Court of
Appeals over which the regional trial court is obviously without jurisdiction. The
decision sought to be annulled calls for the turning over of possession to the original
respondent of the disputed properties. While the judgment being enforced may have
been that of the Court of Appeals, it was actually an appellate judgment rendered on
a review of the trial court's decision. Considering that Section 9 of the Judiciary
Reorganization Act of 1980-B.P. No. 129 gives the Intermediate Appellate Court
exclusive jurisdiction over actions for annulment of judgments of regional trial courts,
the COURT RESOLVED to REMAND this case to the Intermediate Appellate Court
for it to hear and decide the action.
On January 29, 1985, the appellate court rendered a decision dismissing the petition for lack of
jurisdiction and for lack of merit. In its decision on the issue of jurisdiction, the respondent court ruled
that since the decision of the Metropolitan Trial Court can be annulled by the Regional Trial Court
and a decision of the latter is annullable by the Court of Appeals, then logically the decision of the
appellate court should be annullable only by the Supreme Court. Moreover, the appellate court ruled
that it is but logical to conclude that it cannot annul its own decision unless there is an express grant
under the Judiciary Reorganization Act of 1980. Finding none, it stated that it must perforce dismiss
the case for lack of jurisdiction.
On the merits of the petition, the appellate court ruled that the fraud relied upon by the petitioners is
only intrinsic and thus, even on the assumption that it has jurisdiction to decide the case, still the
same has no merit. It dismissed the petition. The petitioners elevated this decision to us.
On June 5, 1985, we resolved to require the respondents to comment on the petition.
Notwithstanding proof that a copy of the petition was served on the respondents' counsel on June
24, 1985, no comment has been filed.
We decide the petition.
We need not emphasize the rule that this Court decides appeals which only involve questions of law
and that "it is not the function of the Supreme Court to analyze or weigh such evidence all over
again, its jurisdiction being limited to receiving errors of law that might have been committed by the
lower court." (Baniqued v. Court of Appeals, 127 SCRA 596, 601; citing Tiongco v. de la Merced, 58
SCRA 89). It was, thus, totally pointless for the Intermediate Appellate Court to delve into the
question of whether or not it has jurisdiction to pass upon the merits of the petition which then
alleged the perpetration of fraud by one of the parties in the original case, and which thereby called

for a review of the factual findings of the court. Furthermore, the fact that this Court already
remanded the case to the appellate court for decision on the merits should have prompted the latter
to limit its decision only to the merits of the case.
There are instances when this Court desires a further review of facts or a detailed analysis and
systematic presentation of issues which the appellate court is in a more favored position to
accomplish. Standing between the trial courts and the Supreme Court, the appellate court was
precisely created to take over much of the work that used to be previously done by this Court. It has
been of great help to the Supreme Court in synthesizing facts, issues, and rulings in an orderly and
intelligible manner and in Identifying errors which ordinarily might have escaped detection. Statistics
will show that the great majority of petitions to review the decisions of the appellate court have been
denied due course for lack of merit in minute resolutions. The appellate court has, therefore, freed
this Court to better discharge its constitutional duties and perform its most important work which, in
the words of Dean Vicente G. Sinco, "is less concerned with the decision of cases that begin and
end with the transient rights and obligations of particular individuals but is more intertwined with the
direction of national policies, momentous economic and social problems, the delimitation of
governmental authority and its impact upon fundamental rights." (Philippine Political Law, 10th
Edition, p. 323). It is, therefore, difficult to understand why a Division of the Intermediate Appellate
Court should hesitate to help the Supreme Court and to act on an action which it was specifically
ordered to hear and decide.
If its initial hesitation was due to doubts about the correctness of our action, then it should recall the
admonition inTugade v. Court of Appeals (85 SCRA 226, 230-231) that:
xxx xxx xxx
Respondent Court of Appeals really was devoid of any choice at all It could not have
ruled in any other way on the legal question raised. This Tribunal having spoken, its
duty was to obey. It is as simple as that. There is relevance to this excerpt
from Barrera v. Barrera (34 SCRA 98): 'The delicate task of ascertaining the
significance that attaches to a constitutional or statutory provision, an executive
order, a procedural norm or a municipal ordinance is committed to the judiciary. It
thus discharges a role no less crucial than that appertaining to the other two
departments in the maintenance of the rule of law. To assure stability in legal
relations and avoid confusion, it has to speak with one voice. It does so with finality,
logically and rightly, through the highest judicial organ, this Court. What it says then
should be definitive and authoritative, binding on those occupying the lower ranks in
the judicial hierarchy. They have to defer and to submit.' (Ibid. 107. The opinion of
Justice Laurel in People v. Vera, 65 Phil. 56 [1937] was cited.) The ensuing
paragraphs of the opinion in Barrera further emphasizes the point: 'Such a thought
was reiterated in an opinion of Justice J.B.L. Reyes and further emphasized in these
words: 'Judge Gaudencio Cloribel need not be reminded that the Supreme Court, by
tradition and in our system of judicial administration, has the last word on what the
law is it is the final arbiter of any justifiable controversy. There is only one Supreme
Court from whose decisions an other courts should take their bearings. (Justice

J.B.L. Reyes spoke thus in Albert v. Court of First Instance of Manila [Br. VI], 23
SCRA 948, 961).
The fault of the Intermediate Appellate Court is mitigated by the fact that it still decided the remanded
case on the merits. It stated:
On February of 1950 an original complaint for recovery of possession of a parcel of
land was filed before the Court of First Instance of Tarlac, which was subsequently
amended on March 19, 1951.
On May 20, 1976, after a full blown trial the Regional Trial Court Branch 64 (formerly
Court of First Instance) of Tarlac, rendered a decision dismissing the complaint and
ordering plaintiff Marcelo Gutierrez to pay the defendants the costs of the suit. The
dispositive portion of which reads as follows:
WHEREFORE, judgment is hereby rendered dismissing the complaint and ordering
plaintiff Marcelo Gutierrez to pay the defendants the costs of this suit. He (sic)
pronouncement as to damages for want of proof.
From the above judgment an appeal was filed with the Court of Appeals.
On September 23, 1981, the then Court of Appeals reversed the decision of the
Regional Trial Court, Branch 64, this time ordering the ten appellees (now
petitioners) to deliver the ownership and possession of the litigated property to then
appellant (now respondent Marcelo Gutierrez), which decision became final and
executory on December 20, 1982, the dispositive portion of which reads, as follows:
WHEREFORE, in the light of the foregoing, the decision appealed from, not being in
accordance with the applicable law and evidence and finding validity in the errors
assigned, is hereby reversed and set aside. In lieu thereof, another one is entered
ordering defendants-appellees and/or their successors-in-interest to deliver
immediately the ownership and possession of the property described under par. 3 of
the complaint to herein plaintiff- appellant Marcelo Gutierrez. With costs.
On January 16, 1984, an action to annul the judgment of the former Court of Appeals
was filed before the Regional Trial Court, Branch 56, Third Judicial Region in Capas,
Tarlac.
On February 27, 1984, the respondent Court (Regional Trial Court), dismissed the
case for annulment of judgment on the ground that it has no jurisdiction to annul the
judgment of the Court of Appeals.
On March 19, 1984, the motion for reconsideration filed by herein petitioner was
denied by the respondent court. Accordingly, a petition for certiorari, mandamus and
a writ of injunction was filed before the Intermediate Appellate Court and raffled to the
Third Special Cases Division, The court dismissed the petition for lack of merit on the

ground that a Regional Trial Court is without jurisdiction to annul a judgment of the
Intermediate Appellate Court, the dispositive portion of which reads:
WHEREFORE, this case should be, as it is hereby DISMISSED OUTRIGHT. With
costs against the petitioners.
On June 14, 1984, the motion for reconsideration filed by herein petitioner was
denied by this Court.
xxx xxx xxx
Finally, a judgment based on alleged false testimony is not an extrinsic fraud by
which an action for annulment of judgment could be grounded. The Supreme Court
in Ilacad v. Court of Appeals (supra, p. 302), declared that:
xxx xxx xxx
... and speaking of extrinsic fraud, it is that fraudulent scheme of the prevailing litigant which
prevents a party from having his day in court from presenting his case. Fraud has been regarded as
extrinsic or collateral, within the meaning of the rule 'where it is one of the effect of which prevents a
party from having a trial, or real contests, or from presenting all of his case to the court, or where it
operates upon matters pertaining not to the judgment itself, but to the manner by which it was
procured so that there is not a fair submission of the controversy. In other words, extrinsic fraud
refers to any fraudulent act of the prevailing party in the litigation which is committed outside of the
trial of the case, where the defeated party has been prevented from presenting fully his side of the
case, by fraud or deception practiced on him by his opponent.
The resort to fraud in introducing fabricated evidence is definitely an intrinsic fraud,
hence false testimony being a matter of evidence is definitely intrinsic and not
extrinsic. Fraud consisting in acting fictitious cause of false testimony is intrinsic (sic)
(Francisco v. David, 38 CG 714). Intrinsic fraud takes the form of acts of a party in a
litigation during the trial such as the use of forged instruments or perjured testimony,
which did not affect the presentation of the case, but did prevent a fair and just
determination of the case (Libudan v. Palma, [S1, 45 SCRA 17]). Intrinsic fraud is not
sufficient to attack a judgment (Yatco v. Sumagui, 44623-R, July 31, 1971).
Petitioners stand that extrinsic fraud was employed by the respondents, is bereft of
any factual basis, hence, even on the assumption that this court has jurisdiction to
decide this issue, still the petitioners cause of action must fail.
A careful review of the present petition and of the records of the appellate court on this case shows
that even on the assumption that all the facts alleged in the petition are true, the petition should be
dismissed for lack of merit because the fraud allegedly perpetrated by the private respondent in ACG.R. SP No. 03301 is only intrinsic in nature and not extrinsic. Fraud is regarded as extrinsic or
collateral where it has prevented a party from having a trial or from presenting an of his case to the
court. (Asian Surety and Insurance Co. v. Island Steel, Inc., 118 SCRA 233, 239; citing Amuran v.

Aquino, 38 Phil. 29). In the case at bar, the fraud was in the nature of documents allegedly
manufactured by Marcelo Gutierrez to make it appear that he was the rightful heir of the disputed
property, Hence, the Intermediate Appellate Court is correct in finding the fraud to be intrinsic in
nature.
WHEREFORE, the petition is hereby DISMISSED for lack of merit. The respondents' counsel, Atty.
Adelaido G. Rivera is fined Five Hundred Pesos (P500.00) for his failure to act on the order to file
comment.
SO ORDERED.
Feria (Chairman), Fernan, Alampay and Paras, JJ., concur,

Republic of the Philippines

SUPREME COURT
Manila
EN BANC
G.R. No. L-19190

November 29, 1922

THE PEOPLE OF THE PHILIPPINE ISLANDS, plaintiff-appellee,

vs.
VENANCIO CONCEPCION, defendant-appellant.
Recaredo Ma. Calvo for appellant.
Attorney-General Villa-Real for appellee.

MALCOLM, J.:
By telegrams and a letter of confirmation to the manager of the Aparri branch of the Philippine
National Bank, Venancio Concepcion, President of the Philippine National Bank, between April 10,
1919, and May 7, 1919, authorized an extension of credit in favor of "Puno y Concepcion, S. en C."
in the amount of P300,000. This special authorization was essential in view of the memorandum
order of President Concepcion dated May 17, 1918, limiting the discretional power of the local
manager at Aparri, Cagayan, to grant loans and discount negotiable documents to P5,000, which, in
certain cases, could be increased to P10,000. Pursuant to this authorization, credit aggregating
P300,000, was granted the firm of "Puno y Concepcion, S. en C.," the only security required
consisting of six demand notes. The notes, together with the interest, were taken up and paid by July
17, 1919.
"Puno y Concepcion, S. en C." was a copartnership capitalized at P100,000. Anacleto Concepcion
contributed P5,000; Clara Vda. de Concepcion, P5,000; Miguel S. Concepcion, P20,000; Clemente
Puno, P20,000; and Rosario San Agustin, "casada con Gral. Venancio Concepcion," P50,000.
Member Miguel S. Concepcion was the administrator of the company.
On the facts recounted, Venancio Concepcion, as President of the Philippine National Bank and as
member of the board of directors of this bank, was charged in the Court of First Instance of Cagayan
with a violation of section 35 of Act No. 2747. He was found guilty by the Honorable Enrique V.
Filamor, Judge of First Instance, and was sentenced to imprisonment for one year and six months, to
pay a fine of P3,000, with subsidiary imprisonment in case of insolvency, and the costs.
Section 35 of Act No. 2747, effective on February 20, 1918, just mentioned, to which reference must
hereafter repeatedly be made, reads as follows: "The National Bank shall not, directly or indirectly,
grant loans to any of the members of the board of directors of the bank nor to agents of the branch
banks." Section 49 of the same Act provides: "Any person who shall violate any of the provisions of
this Act shall be punished by a fine not to exceed ten thousand pesos, or by imprisonment not to

exceed five years, or by both such fine and imprisonment." These two sections were in effect in 1919
when the alleged unlawful acts took place, but were repealed by Act No. 2938, approved on January
30, 1921.
Counsel for the defense assign ten errors as having been committed by the trial court. These errors
they have argued adroitly and exhaustively in their printed brief, and again in oral argument.
Attorney-General Villa-Real, in an exceptionally accurate and comprehensive brief, answers the
proposition of appellant one by one.
The question presented are reduced to their simplest elements in the opinion which follows:
I. Was the granting of a credit of P300,000 to the copartnership "Puno y Concepcion, S. en C." by
Venancio Concepcion, President of the Philippine National Bank, a "loan" within the meaning of
section 35 of Act No. 2747?
Counsel argue that the documents of record do not prove that authority to make a loan was given,
but only show the concession of a credit. In this statement of fact, counsel is correct, for the exhibits
in question speak of a "credito" (credit) and not of a " prestamo" (loan).
The "credit" of an individual means his ability to borrow money by virtue of the confidence or trust
reposed by a lender that he will pay what he may promise. (Donnell vs. Jones [1848], 13 Ala., 490;
Bouvier's Law Dictionary.) A "loan" means the delivery by one party and the receipt by the other
party of a given sum of money, upon an agreement, express or implied, to repay the sum loaned,
with or without interest. (Payne vs. Gardiner [1864], 29 N. Y., 146, 167.) The concession of a "credit"
necessarily involves the granting of "loans" up to the limit of the amount fixed in the "credit,"
II. Was the granting of a credit of P300,000 to the copartnership "Puno y Concepcion, S. en C.," by
Venancio Concepcion, President of the Philippine National Bank, a "loan" or a "discount"?
Counsel argue that while section 35 of Act No. 2747 prohibits the granting of a "loan," it does not
prohibit what is commonly known as a "discount."
In a letter dated August 7, 1916, H. Parker Willis, then President of the National Bank, inquired of the
Insular Auditor whether section 37 of Act No. 2612 was intended to apply to discounts as well as to
loans. The ruling of the Acting Insular Auditor, dated August 11, 1916, was to the effect that said
section referred to loans alone, and placed no restriction upon discount transactions. It becomes
material, therefore, to discover the distinction between a "loan" and a "discount," and to ascertain if
the instant transaction comes under the first or the latter denomination.
Discounts are favored by bankers because of their liquid nature, growing, as they do, out of an
actual, live, transaction. But in its last analysis, to discount a paper is only a mode of loaning money,
with, however, these distinctions: (1) In a discount, interest is deducted in advance, while in a loan,
interest is taken at the expiration of a credit; (2) a discount is always on double-name paper; a loan
is generally on single-name paper.

Conceding, without deciding, that, as ruled by the Insular Auditor, the law covers loans and not
discounts, yet the conclusion is inevitable that the demand notes signed by the firm "Puno y
Concepcion, S. en C." were not discount paper but were mere evidences of indebtedness, because
(1) interest was not deducted from the face of the notes, but was paid when the notes fell due; and
(2) they were single-name and not double-name paper.
The facts of the instant case having relation to this phase of the argument are not essentially
different from the facts in the Binalbagan Estate case. Just as there it was declared that the
operations constituted a loan and not a discount, so should we here lay down the same ruling.
III. Was the granting of a credit of P300,000 to the copartnership, "Puno y Concepcion, S. en C." by
Venancio Concepcion, President of the Philippine National Bank, an "indirect loan" within the
meaning of section 35 of Act No. 2747?
Counsel argue that a loan to the partnership "Puno y Concepcion, S. en C." was not an "indirect
loan." In this connection, it should be recalled that the wife of the defendant held one-half of the
capital of this partnership.
In the interpretation and construction of statutes, the primary rule is to ascertain and give effect to
the intention of the Legislature. In this instance, the purpose of the Legislature is plainly to erect a
wall of safety against temptation for a director of the bank. The prohibition against indirect loans is a
recognition of the familiar maxim that no man may serve two masters that where personal interest
clashes with fidelity to duty the latter almost always suffers. If, therefore, it is shown that the husband
is financially interested in the success or failure of his wife's business venture, a loan to partnership
of which the wife of a director is a member, falls within the prohibition.
Various provisions of the Civil serve to establish the familiar relationship called a conjugal
partnership. (Articles 1315, 1393, 1401, 1407, 1408, and 1412 can be specially noted.) A loan,
therefore, to a partnership of which the wife of a director of a bank is a member, is an indirect loan to
such director.
That it was the intention of the Legislature to prohibit exactly such an occurrence is shown by the
acknowledged fact that in this instance the defendant was tempted to mingle his personal and family
affairs with his official duties, and to permit the loan P300,000 to a partnership of no established
reputation and without asking for collateral security.
In the case of Lester and Wife vs. Howard Bank ([1870], 33 Md., 558; 3 Am. Rep., 211), the
Supreme Court of Maryland said:
What then was the purpose of the law when it declared that no director or officer should
borrow of the bank, and "if any director," etc., "shall be convicted," etc., "of directly or
indirectly violating this section he shall be punished by fine and imprisonment?" We say to
protect the stockholders, depositors and creditors of the bank, against the temptation to
which the directors and officers might be exposed, and the power which as such they must
necessarily possess in the control and management of the bank, and the legislature unwilling
to rely upon the implied understanding that in assuming this relation they would not acquire

any interest hostile or adverse to the most exact and faithful discharge of duty, declared in
express terms that they should not borrow, etc., of the bank.
In the case of People vs. Knapp ([1912], 206 N. Y., 373), relied upon in the Binalbagan Estate
decision, it was said:
We are of opinion the statute forbade the loan to his copartnership firm as well as to himself
directly. The loan was made indirectly to him through his firm.
IV. Could Venancio Concepcion, President of the Philippine National Bank, be convicted of a
violation of section 35 of Act No. 2747 in relation with section 49 of the same Act, when these
portions of Act No. 2747 were repealed by Act No. 2938, prior to the finding of the information and
the rendition of the judgment?
As noted along toward the beginning of this opinion, section 49 of Act No. 2747, in relation to section
35 of the same Act, provides a punishment for any person who shall violate any of the provisions of
the Act. It is contended, however, by the appellant, that the repeal of these sections of Act No. 2747
by Act No. 2938 has served to take away the basis for criminal prosecution.
This same question has been previously submitted and has received an answer adverse to such
contention in the cases of United Stated vs. Cuna ([1908], 12 Phil., 241); People vs.
Concepcion ([1922], 43 Phil., 653); and Ong Chang Wing and Kwong Fok vs. United States ([1910],
218 U. S., 272; 40 Phil., 1046). In other words, it has been the holding, and it must again be the
holding, that where an Act of the Legislature which penalizes an offense, such repeals a former Act
which penalized the same offense, such repeal does not have the effect of thereafter depriving the
courts of jurisdiction to try, convict, and sentenced offenders charged with violations of the old law.
V. Was the granting of a credit of P300,000 to the copartnership "Puno y Concepcion, S. en C." by
Venancio Concepcion, President of the Philippine National Bank, in violation of section 35 of Act No.
2747, penalized by this law?
Counsel argue that since the prohibition contained in section 35 of Act No. 2747 is on the bank, and
since section 49 of said Act provides a punishment not on the bank when it violates any provisions of
the law, but on a personviolating any provisions of the same, and imposing imprisonment as a part of
the penalty, the prohibition contained in said section 35 is without penal sanction.
lawph!l.net

The answer is that when the corporation itself is forbidden to do an act, the prohibition extends to the
board of directors, and to each director separately and individually. (People vs. Concepcion, supra.)
VI. Does the alleged good faith of Venancio Concepcion, President of the Philippine National Bank,
in extending the credit of P300,000 to the copartnership "Puno y Concepcion, S. en C." constitute a
legal defense?
Counsel argue that if defendant committed the acts of which he was convicted, it was because he
was misled by rulings coming from the Insular Auditor. It is furthermore stated that since the loans

made to the copartnership "Puno y Concepcion, S. en C." have been paid, no loss has been suffered
by the Philippine National Bank.
Neither argument, even if conceded to be true, is conclusive. Under the statute which the defendant
has violated, criminal intent is not necessarily material. The doing of the inhibited act, inhibited on
account of public policy and public interest, constitutes the crime. And, in this instance, as previously
demonstrated, the acts of the President of the Philippine National Bank do not fall within the purview
of the rulings of the Insular Auditor, even conceding that such rulings have controlling effect.
Morse, in his work, Banks and Banking, section 125, says:
It is fraud for directors to secure by means of their trust, and advantage not common to the
other stockholders. The law will not allow private profit from a trust, and will not listen to any
proof of honest intent.
JUDGMENT
On a review of the evidence of record, with reference to the decision of the trial court, and the errors
assigned by the appellant, and with reference to previous decisions of this court on the same
subject, we are irresistibly led to the conclusion that no reversible error was committed in the trial of
this case, and that the defendant has been proved guilty beyond a reasonable doubt of the crime
charged in the information. The penalty imposed by the trial judge falls within the limits of the
punitive provisions of the law.
Judgment is affirmed, with the costs of this instance against the appellant. So ordered.

Republic of the Philippines

SUPREME COURT
Manila
EN BANC
G.R. No. L-43575

May 31, 1935

JUAN TAADA, petitioner,

vs.
JOSE YULO, Secretary of Justice,
EDUARDO GUTIERREZ DAVID, Judge of First Instance of the Thirteenth Judicial District,
and SANTIAGO TAADA, Justice of the Peace of Alabat, Tayabas, respondents.
Pedro Ynsua for petitioner.
Office of the Solicitor-General Hilado for respondents.
MALCOLM, J.:
For the second time the court is called upon to determine the right of a justice of the peace
appointed prior to the approval of Act No. 3899, but who completed sixty-five years of age
subsequent to the approval of the Act and to the date, January 1, 1933, specified in the Act, to
continue in office. The answer of the Solicitor-General presents two questions, the first predicated on
the contention that Act No. 3899 applies to all justices of the peace who reach the age of sixty-five
years, and the second on the acceptance of a transfer by the petitioner as denoting a new
appointment bringing him within the purview of the cited law.
Juan Taada, the petitioner, was appointed justice of the peace of Alabat, Tayabas, by the GovernorGeneral with the advice and consent of the Philippine Commission on December 4, 1911. He
continued in that position until September 8, 1934, when at his own request, "Pursuant to the
provisions of section 206 of the Revised Administrative Code", he was "transferred from the position
of justice of the peace for the municipality of Alabat, Province of Tayabas, of the same position in the
municipality of Perez, same province", by a communication signed by the Governor-General from
which the foregoing is quoted. Taada completed the age of sixty-five years on October 5, 1934.
Thereupon the Judge of First Instance of Tayabas, acting in accordance with instructions from the
Department of Justice, directed Taada to cease to act as justice of the peace of Perez, Tayabas.
Taada surrendered his office under protest, and thereafter instituted this original action of quo
warranto.
The applicable law is found in the last proviso to section 203 of the Administrative Code, as inserted
by Act No. 3899, and in the proviso to section 206 of the same Code as last amended by Act No.
2768, which read as follows:
SEC. 203. Appointment and distribution of justices of the peace. * * * Provided, further,
That the present justice and auxiliary justice of the peace who shall, at the time this Act takes
effect, have completed sixty-five years of age, shall cease to hold office on January first,

nineteen hundred and thirty-three; and the Governor-General, with the advise and consent of
the Philippine Senate, shall make new appointments to cover the vacancies occurring by
operation of this Act.
SEC 206. Tenure of office Transfer from one municipality of another. A justice of the
peace having the requisite legal qualifications shall hold office during good behavior unless
his office be lawfully abolished or merged in the jurisdiction of some other justice: Provided,
That in case the public interest requires it, a justice of the peace of one municipality may be
transferred to another.
The first question raised by the Solicitor-General was considered in the recent case of Felipe
Regalado, petitioner, vs. Jose Yulo, Secretary of Justice, Juan G. Lesaca, Judge of First Instance of
Albay, and Esteban T. Villar, respondents (page 173, ante). It was there decided that the natural and
reasonable meaning of the language used in Act No. 3899, leaves room for no other deducting than
that a justice of the peace appointed prior to the approval of the Act and who completed sixty-five
years of age on September 13, 1934, subsequent to the approval of the Act, which was on
November 16, 1931, and to the date fixed for cessation from office which was on January 1, 1933, is
not affected by the said Act. The law officer of the Government has indicated that the above cited
decision came from a Division of Five and has requested a reconsideration of the issue therein
resolved.
Acceding to this petition, we have again examined microscopically word for word the terminology
used in Act No. 3899. Having done so, all of us are agreed that a justice of the peace like the
petitioner who became sixty-five years of age on October 5, 1934, was not included in a law which
required justice of the peace sixty-five years of age to cease to hold office on January 1, 1933. That
result is now arrived at in banc.
In substantiation of what has just been said, it is of course fundamental that the determination of the
legislative intent is the primary consideration. However, it is equally fundamental that that legislative
intent must be determined from the language of the statute itself. This principle must be adhered to
even though the court be convinced by extraneous circumstances that the Legislature intended to
enact something very different from that which it did enact. An obscurity cannot be created to be
cleared up by construction and hidden meanings at variance with the language used cannot be
sought out. To attempt to do so is a perilous undertaking, and is quite apt to lead to an amendment
of a law by judicial construction. To depart from the meaning expressed by the words is to alter the
statute, is to legislate not to interpret.
As corroborative authority it is only necessary to advert to a decision coming from the United States
Supreme Court, in which the court was asked to insert the word "lawfully", but the court declined to
do so, saying that there is no authority to import a word into a statute in order to change its meaning.
(Newhall vs. Sanger, 92, U.S., 761.) The thought was expressed by the same court in another case,
when it said that court are bound to follow the plain words of a statute as to which there is no room
for construction regardless of the consequences. (Commissioner of Immigration vs. Gottlieb, 265
U.S., 310; see 25 R.C.L., 961 et seq.)

Counsel in effect urges us to adopt a liberal construction of the statute. That in this instance, as in
the past, we aim to do. But counsel in his memorandum concedes "that the language of the proviso
in question is somewhat defective and does not clearly convey the legislative intent", and at the
hearing in response to questions was finally forced to admit that what the Government desired was
for the court to insert words and phrases in the law in order to supply an intention for the legislature.
That we cannot do. By liberal construction of statutes, courts from the language use, the subject
matter, and the purposes of those framing them are able to find their true meaning. There is a sharp
distinction, however, between construction of this nature and the act of a court in engrafting upon a
law something that has been omitted which someone believes ought to have been embraced. The
former is liberal construction and is a legitimate exercise of judicial power. The latter is judicial
legislation forbidden by the tripartite division of powers among the three departments of government,
the executive, the legislative, and the judicial.
We give application to the decision of this court in Regalado vs. Yulo, supra, and as a result overrule
the first defense of the Government.
Passing to the second phase of the case, counsel has endeavoured to draw a distinction between
the Regalado case above cited and the present case. On the facts there is admittedly one
difference. In the Regalado case the petitioner had not been transferred from one municipality to
another, while in the present case, Taada accepted a transfer from one municipality to another. Did
the transfer amount to a new appointment bringing Taada under the purview of the law relating to
relinquishment of office on attaining the age of sixty-five?
The effect of the Organic Act is that an appointment of a justice of the peace by the GovernorGeneral must be consented to by the Philippine Senate. In consonance with this provision, the
method of appointment and distribution of justices of the peace are outlined in section 203 of the
Administrative Code, a portion of which is hereinbefore quoted. The transfer from one municipality to
another, however, is accomplished by the Governor-General without the advise and consent of the
Philippine Senate, in accordance with codal section 206.
In the case of Nicolas vs. Alberto (51 Phil., 370), the issue was the legal right of the GovernorGeneral to transfer a justice of the peace from one municipality to another, without the consent of the
Philippine Senate. This court held that the consent of the Philippine Senate was a necessary
attribute of the transfer. As the basis for this holding, it was stated that the appointing power consists
of the Governor-General acting in conjunction with the Philippine Senate. But that case was taken to
the United States Supreme Court, and there is was held that the consent of the Senate was
unnecessary to make the transfer legal. (Alberto vs. Nicolas, 279 U.S., 139.) The holding of the
higher court, to follow the language of the syllabus, was that in view of the plenary legislative powers
of the Philippine Legislature regarding justice of the peace, Act No. 2768 of the Philippine Legislature
is valid as applied to justice of the peace whose appointment was made by the Governor-General,
and confirmed by the Senate, after its enactment. In the body of the decision appeared the following:
. . . When the Senate confirmed Severino Alberto to be a justice of the peace for San Jose
del Monte, sec. 206, with the proviso, was in force; and when the Senate confirmed him, it
confirmed him with the knowledge of the possibility declared in the law that his power and his
functions as a justice of the peace upon designation of the Governor-General might be

performed and exercised in another jurisdiction, if the Governor-General should think it wise
in the public interest in his regulation of the conduct of justice of the peace. There is no such
necessary difference between the duties of a justice of the peace in one part of the Islands
and those to be performed in another part as to make such enlargement or change of his
jurisdiction already provided for in existing law unreasonably beyond the scope of the
consent to the original appointment.
It is to be deduced from what has been stated above that according to the United States Supreme
Court, the transfer simply amounted to an enlargement or change of jurisdiction grounded on the
original appointment and thus did not require a new appointment. Whatever our view s might have
been to the contrary, it now becomes out duty to follow the decision of the higher court. It also seems
evident that a transfer as applied to officers amounts merely to a change of position or to another
grade of service. (Cliff vs. Wentworth, 220 Mass., 393.)
We give application to the decision of the Supreme Court of the United States in Nicolas vs.
Alberto, supra, and as a result overrule the second defense of the Government.
Before closing it is incumbent upon us to observe that this case was heard in banc because of the
suggestion of the Solicitor-General that the principal issue raised by the pleadings is the validity of
Act No. 3899 of the Philippine Legislature. Our review of the case has convinced us that this
allegation overstates the matter. It is unnecessary to discuss petitioner's contention that Act No.
3899 is unconstitutional because of a defective title. On the other hand, the allegation in the answer
that the law is discriminatory and class legislation, and, consequently, unconstitutional has
apparently been abandoned. Finally it is to be observed that the fear of disorder in the affairs of the
Department of Justice and the Office of the Governor-General on account of the displacement of
incumbent justices of the peace, is unfounded, for as is well known, acquiescence or voluntary
surrender of an office precludes the maintenance of a quo warranto proceeding.
Giving effect to the decisions of this court in the Regalado case and of the Supreme Court of the
United States in the Alberto vs. Nicolas case, and as a consequence ruling that Act No. 3899 does
not apply to a justice of the peace appointed prior to the approval of the Act who completed sixty-five
years of age after January 1, 1933, and that a transfer of a justice of the peace does not amount to
an appointment, we reach the conclusion that the special defenses interposed by the SolicitorGeneral must be overruled. Accordingly, the writ will be granted and the petitioner Juan Taada will
be placed in possession of the office of justice of the peace of Perez, Tayabas. So ordered, without
special pronouncement as to the costs.
Abad Santos, Hull, Vickers, Butte, Goddard, and Diaz, JJ., concur.

Republic of the Philippines

SUPREME COURT
Manila
EN BANC
G.R. No. L-30642 April 30, 1985
PERFECTO S. FLORESCA, in his own behalf and on behalf of the minors ROMULO and
NESTOR S. FLORESCA; and ERLINDA FLORESCA-GABUYO, PEDRO S. FLORESCA, JR.,
CELSO S. FLORESCA, MELBA S. FLORESCA, JUDITH S. FLORESCA and CARMEN S.
FLORESCA;
LYDIA CARAMAT VDA. DE MARTINEZ in her own behalf and on behalf of her minor children
LINDA, ROMEO, ANTONIO JEAN and ELY, all surnamed Martinez; and DANIEL MARTINEZ and
TOMAS MARTINEZ;
SALUSTIANA ASPIRAS VDA. DE OBRA, in her own behalf and on behalf of her minor children
JOSE, ESTELA, JULITA SALUD and DANILO, all surnamed OBRA;
LYDIA CULBENGAN VDA. DE VILLAR, in her own behalf and on behalf of her minor children
EDNA, GEORGE and LARRY III, all surnamed VILLAR;
DOLORES LOLITA ADER VDA. DE LANUZA, in her own behalf and on behalf of her minor
children EDITHA, ELIZABETH, DIVINA, RAYMUNDO, NESTOR and AURELIO, JR. all surnamed
LANUZA;
EMERENCIANA JOSE VDA. DE ISLA, in her own behalf and on behalf of her minor children
JOSE, LORENZO, JR., MARIA, VENUS and FELIX, all surnamed ISLA, petitioners,
vs.
PHILEX MINING CORPORATION and HON. JESUS P. MORFE, Presiding Judge of Branch XIII,
Court of First Instance of Manila, respondents.
Rodolfo C. Pacampara for petitioners.
Tito M. Villaluna for respondents.

MAKASIAR, J.:
This is a petition to review the order of the former Court of First Instance of Manila, Branch XIII,
dated December 16, 1968 dismissing petitioners' complaint for damages on the ground of lack of
jurisdiction.

Petitioners are the heirs of the deceased employees of Philex Mining Corporation (hereinafter
referred to as Philex), who, while working at its copper mines underground operations at Tuba,
Benguet on June 28, 1967, died as a result of the cave-in that buried them in the tunnels of the
mine. Specifically, the complaint alleges that Philex, in violation of government rules and regulations,
negligently and deliberately failed to take the required precautions for the protection of the lives of its
men working underground. Portion of the complaint reads:
xxx xxx xxx
9. That for sometime prior and up to June 28,1967, the defendant PHILEX, with
gross and reckless negligence and imprudence and deliberate failure to take the
required precautions for the due protection of the lives of its men working
underground at the time, and in utter violation of the laws and the rules and
regulations duly promulgated by the Government pursuant thereto, allowed great
amount of water and mud to accumulate in an open pit area at the mine above Block
43-S-1 which seeped through and saturated the 600 ft. column of broken ore and
rock below it, thereby exerting tremendous pressure on the working spaces at its
4300 level, with the result that, on the said date, at about 4 o'clock in the afternoon,
with the collapse of all underground supports due to such enormous pressure,
approximately 500,000 cubic feet of broken ores rocks, mud and water, accompanied
by surface boulders, blasted through the tunnels and flowed out and filled in, in a
matter of approximately five (5) minutes, the underground workings, ripped timber
supports and carried off materials, machines and equipment which blocked all
avenues of exit, thereby trapping within its tunnels of all its men above referred to,
including those named in the next preceding paragraph, represented by the plaintiffs
herein;
10. That out of the 48 mine workers who were then working at defendant PHILEX's
mine on the said date, five (5) were able to escape from the terrifying holocaust; 22
were rescued within the next 7 days; and the rest, 21 in number, including those
referred to in paragraph 7 hereinabove, were left mercilessly to their fate,
notwithstanding the fact that up to then, a great many of them were still alive,
entombed in the tunnels of the mine, but were not rescued due to defendant
PHILEX's decision to abandon rescue operations, in utter disregard of its bounden
legal and moral duties in the premises;
xxx xxx xxx
13. That defendant PHILEX not only violated the law and the rules and regulations
duly promulgated by the duly constituted authorities as set out by the Special
Committee above referred to, in their Report of investigation, pages 7-13, Annex 'B'
hereof, but also failed completely to provide its men working underground the
necessary security for the protection of their lives notwithstanding the fact that it had
vast financial resources, it having made, during the year 1966 alone, a total operating
income of P 38,220,254.00, or net earnings, after taxes of P19,117,394.00, as per its

llth Annual Report for the year ended December 31, 1966, and with aggregate assets
totalling P 45,794,103.00 as of December 31, 1966;
xxx xxx xxx
(pp. 42-44, rec.)
A motion to dismiss dated May 14, 1968 was filed by Philex alleging that the causes of action of
petitioners based on an industrial accident are covered by the provisions of the Workmen's
Compensation Act (Act 3428, as amended by RA 772) and that the former Court of First Instance
has no jurisdiction over the case. Petitioners filed an opposition dated May 27, 1968 to the said
motion to dismiss claiming that the causes of action are not based on the provisions of the
Workmen's Compensation Act but on the provisions of the Civil Code allowing the award of actual,
moral and exemplary damages, particularly:
Art. 2176. Whoever by act or omission causes damage to another, there being fault
or negligence, is obliged to pay for the damage done. Such fault or negligence, if
there is no pre- existing contractual relation between the parties, is called a quasidelict and is governed by the provisions of this Chapter.
Art. 2178. The provisions of articles 1172 to 1174 are also applicable to a quasidelict.
(b) Art. 1173The fault or negligence of the obligor consists in the omission of that
diligence which is required by the nature of the obligation and corresponds with the
circumstances of the persons, of the time and of the place. When negligence shows
bad faith, the provisions of Articles 1171 and 2201, paragraph 2 shall apply.
Art. 2201. x x x x x x x x x
In case of fraud, bad faith, malice or wanton attitude, the obligor shall be responsible
for all damages which may be reasonably attributed to the non-performance of the
obligation.
Art. 2231. In quasi-delicts, exemplary damages may be granted if the defendant
acted with gross negligence.
After a reply and a rejoinder thereto were filed, respondent Judge issued an order dated June 27,
1968 dismissing the case on the ground that it falls within the exclusive jurisdiction of the Workmen's
Compensation Commission. On petitioners' motion for reconsideration of the said order, respondent
Judge, on September 23, 1968, reconsidered and set aside his order of June 27, 1968 and allowed
Philex to file an answer to the complaint. Philex moved to reconsider the aforesaid order which was
opposed by petitioners.
On December 16, 1968, respondent Judge dismissed the case for lack of jurisdiction and ruled that
in accordance with the established jurisprudence, the Workmen's Compensation Commission has

exclusive original jurisdiction over damage or compensation claims for work-connected deaths or
injuries of workmen or employees, irrespective of whether or not the employer was negligent, adding
that if the employer's negligence results in work-connected deaths or injuries, the employer shall,
pursuant to Section 4-A of the Workmen's Compensation Act, pay additional compensation equal to
50% of the compensation fixed in the Act.
Petitioners thus filed the present petition.
In their brief, petitioners raised the following assignment of errors:
I
THE LOWER COURT ERRED IN DISMISSING THE PLAINTIFFS- PETITIONERS'
COMPLAINT FOR LACK OF JURISDICTION.
II
THE LOWER COURT ERRED IN FAILING TO CONSIDER THE CLEAR
DISTINCTION BETWEEN CLAIMS FOR DAMAGES UNDER THE CIVIL CODE AND
CLAIMS FOR COMPENSATION UNDER THE WORKMEN'S COMPENSATION ACT.
A
In the first assignment of error, petitioners argue that the lower court has jurisdiction over the cause
of action since the complaint is based on the provisions of the Civil Code on damages, particularly
Articles 2176, 2178, 1173, 2201 and 2231, and not on the provisions of the Workmen's
Compensation Act. They point out that the complaint alleges gross and brazen negligence on the
part of Philex in failing to take the necessary security for the protection of the lives of its employees
working underground. They also assert that since Philex opted to file a motion to dismiss in the
court a quo, the allegations in their complaint including those contained in the annexes are deemed
admitted.
In the second assignment of error, petitioners asseverate that respondent Judge failed to see the
distinction between the claims for compensation under the Workmen's Compensation Act and the
claims for damages based on gross negligence of Philex under the Civil Code. They point out that
workmen's compensation refers to liability for compensation for loss resulting from injury, disability or
death of the working man through industrial accident or disease, without regard to the fault or
negligence of the employer, while the claim for damages under the Civil Code which petitioners
pursued in the regular court, refers to the employer's liability for reckless and wanton negligence
resulting in the death of the employees and for which the regular court has jurisdiction to adjudicate
the same.
On the other hand, Philex asserts that work-connected injuries are compensable exclusively under
the provisions of Sections 5 and 46 of the Workmen's Compensation Act, which read:

SEC. 5. Exclusive right to compensation.The rights and remedies granted by this

Act to an employee by reason of a personal injury entitling him to compensation shall
exclude all other rights and remedies accruing to the employee, his personal
representatives, dependents or nearest of kin against the employer under the Civil
Code and other laws because of said injury ...
SEC. 46. Jurisdiction. The Workmen's Compensation Commissioner shall have
exclusive jurisdiction to hear and decide claims for compensation under the
Workmen's Compensation Act, subject to appeal to the Supreme Court, ...
Philex cites the case of Manalo vs. Foster Wheeler (98 Phil. 855 [1956]) where it was held that "all
claims of workmen against their employer for damages due to accident suffered in the course of
employment shall be investigated and adjudicated by the Workmen's Compensation Commission,"
subject to appeal to the Supreme Court.
Philex maintains that the fact that an employer was negligent, does not remove the case from the
exclusive character of recoveries under the Workmen's Compensation Act; because Section 4-A of
the Act provides an additional compensation in case the employer fails to comply with the
requirements of safety as imposed by law to prevent accidents. In fact, it points out that Philex
voluntarily paid the compensation due the petitioners and all the payments have been accepted in
behalf of the deceased miners, except the heirs of Nazarito Floresca who insisted that they are
entitled to a greater amount of damages under the Civil Code.
In the hearing of this case, then Undersecretary of Labor Israel Bocobo, then Atty. Edgardo Angara,
now President of the University of the Philippines, Justice Manuel Lazaro, as corporate counsel and
Assistant General Manager of the GSIS Legal Affairs Department, and Commissioner on Elections,
formerly UP Law Center Director Froilan Bacungan, appeared as amici curiae and thereafter,
submitted their respective memoranda.
The issue to be resolved as WE stated in the resolution of November 26, 1976, is:
Whether the action of an injured employee or worker or that of his heirs in case of his
death under the Workmen's Compensation Act is exclusive, selective or cumulative,
that is to say, whether his or his heirs' action is exclusively restricted to seeking the
limited compensation provided under the Workmen's Compensation Act or whether
they have a right of selection or choice of action between availing of the worker's
right under the Workmen's Compensation Act and suing in the regular courts under
the Civil Code for higher damages (actual, moral and/or exemplary) from the
employer by virtue of negligence (or fault) of the employer or of his other employees
or whether they may avail cumulatively of both actions, i.e., collect the limited
compensation under the Workmen's Compensation Act and sue in addition for
damages in the regular courts.
There are divergent opinions in this case. Justice Lazaro is of the opinion that an injured employee
or worker, or the heirs in case of his death, may initiate a complaint to recover damages (not
compensation under the Workmen's Compensation Act) with the regular court on the basis of

negligence of an employer pursuant to the Civil Code provisions. Atty. Angara believes otherwise. He
submits that the remedy of an injured employee for work-connected injury or accident is exclusive in
accordance with Section 5 of the Workmen's Compensation Act, while Atty. Bacungan's position is
that the action is selective. He opines that the heirs of the employee in case of his death have a right
of choice to avail themselves of the benefits provided under the Workmen's Compensation Act or to
sue in the regular court under the Civil Code for higher damages from the employer by virtue of
negligence of the latter. Atty. Bocobo's stand is the same as that of Atty. Bacungan and adds that
once the heirs elect the remedy provided for under the Act, they are no longer entitled to avail
themselves of the remedy provided for under the Civil Code by filing an action for higher damages in
the regular court, and vice versa.
On August 3, 1978, petitioners-heirs of deceased employee Nazarito Floresca filed a motion to
dismiss on the ground that they have amicably settled their claim with respondent Philex. In the
resolution of September 7, 1978, WE dismissed the petition only insofar as the aforesaid petitioners
are connected, it appearing that there are other petitioners in this case.
WE hold that the former Court of First Instance has jurisdiction to try the case,
It should be underscored that petitioners' complaint is not for compensation based on the Workmen's
Compensation Act but a complaint for damages (actual, exemplary and moral) in the total amount of
eight hundred twenty-five thousand (P825,000.00) pesos. Petitioners did not invoke the provisions of
the Workmen's Compensation Act to entitle them to compensation thereunder. In fact, no allegation
appeared in the complaint that the employees died from accident arising out of and in the course of
their employments. The complaint instead alleges gross and reckless negligence and deliberate
failure on the part of Philex to protect the lives of its workers as a consequence of which a cave-in
occurred resulting in the death of the employees working underground. Settled is the rule that in
ascertaining whether or not the cause of action is in the nature of workmen's compensation claim or
a claim for damages pursuant to the provisions of the Civil Code, the test is the averments or
allegations in the complaint (Belandres vs. Lopez Sugar Mill, Co., Inc., 97 Phil. 100).
In the present case, there exists between Philex and the deceased employees a contractual
relationship. The alleged gross and reckless negligence and deliberate failure that amount to bad
faith on the part of Philex, constitute a breach of contract for which it may be held liable for damages.
The provisions of the Civil Code on cases of breach of contract when there is fraud or bad faith,
read:
Art. 2232. In contracts and quasi-contracts, the court may award exemplary damages
if the defendant acted in a wanton, fraudulent, reckless, oppressive or malevolent
manner.
Art. 2201. In contracts and quasi-contracts, the damages for which the obligor who
acted in good faith is able shall be those that are the natural and probable
consequences of the breach of the obligation, and which the parties have foreseen or
could have reasonably foreseen at the time the obligation was constituted.

In cases of fraud, bad faith, malice or wanton attitude, the obligor shall be
responsible for all damages which may be reasonably attributed to the nonperformance of the obligation.
Furthermore, Articles 2216 et seq., Civil Code, allow the payment of all kinds of damages, as
assessed by the court.
The rationale in awarding compensation under the Workmen's Compensation Act differs from that in
giving damages under the Civil Code. The compensation acts are based on a theory of
compensation distinct from the existing theories of damages, payments under the acts being made
as compensation and not as damages (99 C.J.S. 53). Compensation is given to mitigate the
harshness and insecurity of industrial life for the workman and his family. Hence, an employer is
liable whether negligence exists or not since liability is created by law. Recovery under the Act is not
based on any theory of actionable wrong on the part of the employer (99 C.J.S. 36).
In other words, under the compensation acts, the employer is liable to pay compensation benefits for
loss of income, as long as the death, sickness or injury is work-connected or work-aggravated, even
if the death or injury is not due to the fault of the employer (Murillo vs. Mendoza, 66 Phil. 689). On
the other hand, damages are awarded to one as a vindication of the wrongful invasion of his rights. It
is the indemnity recoverable by a person who has sustained injury either in his person, property or
relative rights, through the act or default of another (25 C.J.S. 452).
The claimant for damages under the Civil Code has the burden of proving the causal relation
between the defendant's negligence and the resulting injury as well as the damages suffered. While
under the Workmen's Compensation Act, there is a presumption in favor of the deceased or injured
employee that the death or injury is work-connected or work-aggravated; and the employer has the
burden to prove otherwise (De los Angeles vs. GSIS, 94 SCRA 308; Carino vs. WCC, 93 SCRA 551;
Maria Cristina Fertilizer Corp. vs. WCC, 60 SCRA 228).
The claim of petitioners that the case is not cognizable by the Workmen's Compensation
Commission then, now Employees Compensation Commission, is strengthened by the fact that
unlike in the Civil Code, the Workmen's Compensation Act did not contain any provision for an award
of actual, moral and exemplary damages. What the Act provided was merely the right of the heirs to
claim limited compensation for the death in the amount of six thousand (P6,000.00) pesos plus burial
expenses of two hundred (P200.00) pesos, and medical expenses when incurred (Sections 8, 12
and 13, Workmen's Compensation Act), and an additional compensation of only 50% if the complaint
alleges failure on the part of the employer to "install and maintain safety appliances or to take other
precautions for the prevention of accident or occupational disease" (Section 4-A, Ibid.). In the case
at bar, the amount sought to be recovered is over and above that which was provided under the
Workmen's Compensation Act and which cannot be granted by the Commission.
Moreover, under the Workmen's Compensation Act, compensation benefits should be paid to an
employee who suffered an accident not due to the facilities or lack of facilities in the industry of his
employer but caused by factors outside the industrial plant of his employer. Under the Civil Code, the
liability of the employer, depends on breach of contract or tort. The Workmen's Compensation Act
was specifically enacted to afford protection to the employees or workmen. It is a social legislation

designed to give relief to the workman who has been the victim of an accident causing his death or
ailment or injury in the pursuit of his employment (Abong vs. WCC, 54 SCRA 379).
WE now come to the query as to whether or not the injured employee or his heirs in case of death
have a right of selection or choice of action between availing themselves of the worker's right under
the Workmen's Compensation Act and suing in the regular courts under the Civil Code for higher
damages (actual, moral and exemplary) from the employers by virtue of that negligence or fault of
the employers or whether they may avail themselves cumulatively of both actions, i.e., collect the
limited compensation under the Workmen's Compensation Act and sue in addition for damages in
the regular courts.
In disposing of a similar issue, this Court in Pacana vs. Cebu Autobus Company, 32 SCRA 442,
ruled that an injured worker has a choice of either to recover from the employer the fixed amounts
set by the Workmen's Compensation Act or to prosecute an ordinary civil action against the
tortfeasor for higher damages but he cannot pursue both courses of action simultaneously.
In Pacaa WE said:
In the analogous case of Esguerra vs. Munoz Palma, involving the application of
Section 6 of the Workmen's Compensation Act on the injured workers' right to sue
third- party tortfeasors in the regular courts, Mr. Justice J.B.L. Reyes, again speaking
for the Court, pointed out that the injured worker has the choice of remedies but
cannot pursue both courses of action simultaneously and thus balanced the relative
advantage of recourse under the Workmen's Compensation Act as against an
ordinary action.
As applied to this case, petitioner Esguerra cannot maintain his action for damages
against the respondents (defendants below), because he has elected to seek
compensation under the Workmen's Compensation Law, and his claim (case No.
44549 of the Compensation Commission) was being processed at the time he filed
this action in the Court of First Instance. It is argued for petitioner that as the
damages recoverable under the Civil Code are much more extensive than the
amounts that may be awarded under the Workmen's Compensation Act, they should
not be deemed incompatible. As already indicated, the injured laborer was initially
free to choose either to recover from the employer the fixed amounts set by the
Compensation Law or else, to prosecute an ordinary civil action against the
tortfeasor for higher damages. While perhaps not as profitable, the smaller indemnity
obtainable by the first course is balanced by the claimant's being relieved of the
burden of proving the causal connection between the defendant's negligence and the
resulting injury, and of having to establish the extent of the damage suffered; issues
that are apt to be troublesome to establish satisfactorily. Having staked his fortunes
on a particular remedy, petitioner is precluded from pursuing the alternate course, at
least until the prior claim is rejected by the Compensation Commission. Anyway,
under the proviso of Section 6 aforequoted, if the employer Franklin Baker Company
recovers, by derivative action against the alleged tortfeasors, a sum greater than the

compensation he may have paid the herein petitioner, the excess accrues to the
latter.
Although the doctrine in the case of Esguerra vs. Munoz Palma (104 Phil. 582), applies to third-party
tortfeasor, said rule should likewise apply to the employer-tortfeasor.
Insofar as the heirs of Nazarito Floresca are concerned, as already stated, the petition has been
dismissed in the resolution of September 7, 1978 in view of the amicable settlement reached by
Philex and the said heirs.
With regard to the other petitioners, it was alleged by Philex in its motion to dismiss dated May 14,
1968 before the court a quo, that the heirs of the deceased employees, namely Emerito Obra, Larry
Villar, Jr., Aurelio Lanuza, Lorenzo Isla and Saturnino Martinez submitted notices and claims for
compensation to the Regional Office No. 1 of the then Department of Labor and all of them have
been paid in full as of August 25, 1967, except Saturnino Martinez whose heirs decided that they be
paid in installments (pp. 106-107, rec.). Such allegation was admitted by herein petitioners in their
opposition to the motion to dismiss dated May 27, 1968 (pp. 121-122, rec.) in the lower court, but
they set up the defense that the claims were filed under the Workmen's Compensation Act before
they learned of the official report of the committee created to investigate the accident which
established the criminal negligence and violation of law by Philex, and which report was forwarded
by the Director of Mines to the then Executive Secretary Rafael Salas in a letter dated October 19,
1967 only (p. 76, rec.).
WE hold that although the other petitioners had received the benefits under the Workmen's
Compensation Act, such may not preclude them from bringing an action before the regular court
because they became cognizant of the fact that Philex has been remiss in its contractual obligations
with the deceased miners only after receiving compensation under the Act. Had petitioners been
aware of said violation of government rules and regulations by Philex, and of its negligence, they
would not have sought redress under the Workmen's Compensation Commission which awarded a
lesser amount for compensation. The choice of the first remedy was based on ignorance or a
mistake of fact, which nullifies the choice as it was not an intelligent choice. The case should
therefore be remanded to the lower court for further proceedings. However, should the petitioners be
successful in their bid before the lower court, the payments made under the Workmen's
Compensation Act should be deducted from the damages that may be decreed in their favor.
B
Contrary to the perception of the dissenting opinion, the Court does not legislate in the instant case.
The Court merely applies and gives effect to the constitutional guarantees of social justice then
secured by Section 5 of Article 11 and Section 6 of Article XIV of the 1935 Constitution, and now by
Sections 6, 7, and 9 of Article 11 of the DECLARATION OF PRINCIPLES AND STATE POLICIES of
the 1973 Constitution, as amended, and as implemented by Articles 2176, 2177, 2178, 1173, 2201,
2216, 2231 and 2232 of the New Civil Code of 1950.
To emphasize, the 1935 Constitution declares that:

Sec. 5. The promotion of social justice to insure the well-being and economic security
of all the people should be the concern of the State (Art. II).
Sec. 6. The State shall afford protection to labor, especially to working women, and
minors, and shall regulate the relations between landowner and tenant, and between
labor and capital in industry and in agriculture. The State may provide for compulsory
arbitration (Art. XIV).
The 1973 Constitution likewise commands the State to "promote social justice to insure the dignity,
welfare, and security of all the people "... regulate the use ... and disposition of private property and
equitably diffuse property ownership and profits "establish, maintain and ensure adequate social
services in, the field of education, health, housing, employment, welfare and social security to
guarantee the enjoyment by the people of a decent standard of living" (Sections 6 and 7, Art. II, 1973
Constitution); "... afford protection to labor, ... and regulate the relations between workers and
employers ..., and assure the rights of workers to ... just and humane conditions of work"(Sec. 9, Art.
II, 1973 Constitution, emphasis supplied).
The foregoing constitutional guarantees in favor of labor institutionalized in Section 9 of Article 11 of
the 1973 Constitution and re-stated as a declaration of basic policy in Article 3 of the New Labor
Code, thus:
Art. 3. Declaration of basic policy.The State shall afford protection to labor,
promote full employment,ensure equal work opportunities regardless of sex, race or
creed, and regulate the relations between workers and employers. The State
shall assure the rights of workers to self-organization, collective bargaining, security
of tenure, and just and humane conditions of work. (emphasis supplied).
The aforestated constitutional principles as implemented by the aforementioned articles of the New
Civil Code cannot be impliedly repealed by the restrictive provisions of Article 173 of the New Labor
Code. Section 5 of the Workmen's Compensation Act (before it was amended by R.A. No. 772 on
June 20, 1952), predecessor of Article 173 of the New Labor Code, has been superseded by the
aforestated provisions of the New Civil Code, a subsequent law, which took effect on August 30,
1950, which obey the constitutional mandates of social justice enhancing as they do the rights of the
workers as against their employers. Article 173 of the New Labor Code seems to diminish the rights
of the workers and therefore collides with the social justice guarantee of the Constitution and the
liberal provisions of the New Civil Code.
The guarantees of social justice embodied in Sections 6, 7 and 9 of Article II of the 1973 Constitution
are statements of legal principles to be applied and enforced by the courts. Mr. Justice Robert
Jackson in the case of West Virginia State Board of Education vs. Barnette, with characteristic
eloquence, enunciated:
The very purpose of a Bill of Rights was to withdraw certain subjects from the
vicissitudes of political controversy, to place them beyond the reach of majorities and
officials and to establish them as legal principles to be applied by the courts. One's
right to life, liberty, and property, to free speech, a free press, freedom of worship and

assembly, and other fundamental rights may not be submitted to vote; they depend
on the outcome of no elections (319 U.S. 625, 638, 87 L.ed. 1638, emphasis
supplied).
In case of any doubt which may be engendered by Article 173 of the New Labor Code, both the New
Labor Code and the Civil Code direct that the doubts should be resolved in favor of the workers and
employees.
Thus, Article 4 of the New Labor Code, otherwise known as Presidential Decree No. 442, as
amended, promulgated on May 1, 1974, but which took effect six months thereafter, provides that
"all doubts in the implementation and interpretation of the provisions of this Code, including its
implementing rules and regulations, shall be resolved in favor of labor" (Art. 2, Labor Code).
Article 10 of the New Civil Code states: "In case of doubt in the interpretation or application of laws, it
is presumed that the law-making body intended right and justice to prevail. "
More specifically, Article 1702 of the New Civil Code likewise directs that. "In case of doubt, all labor
legislation and all labor contracts shall be construed in favor of the safety and decent living of the
laborer."
Before it was amended by Commonwealth Act No. 772 on June 20, 1952, Section 5 of the
Workmen's Compensation Act provided:
Sec. 5. Exclusive right to compensation.- The rights and remedies granted by this Act
to an employee by reason of a personal injury entitling him to compensation shall
exclude all other rights and remedies accruing to the employee, his personal
representatives, dependents or nearest of kin against the employer under the Civil
Code and other laws, because of said injury (emphasis supplied).
Employers contracting laborecsrs in the Philippine Islands for work outside the same
may stipulate with such laborers that the remedies prescribed by this Act shall apply
exclusively to injuries received outside the Islands through accidents happening in
and during the performance of the duties of the employment; and all service
contracts made in the manner prescribed in this section shall be presumed to include
such agreement.
Only the second paragraph of Section 5 of the Workmen's Compensation Act No. 3428, was
amended by Commonwealth Act No. 772 on June 20, 1952, thus:
Sec. 5. Exclusive right to compensation.- The rights and remedies granted by this Act
to an employee by reason of a personal injury entitling him to compensation shall
exclude all other rights and remedies accruing to the employee, his personal
representatives, dependents or nearest of kin against the employer under the Civil
Code and other laws, because of said injury.

Employers contracting laborers in the Philippine Islands for work outside the same
shall stipulate with such laborers that the remedies prescribed by this Act shall apply
to injuries received outside the Island through accidents happening in and during the
performance of the duties of the employment. Such stipulation shall not prejudice the
right of the laborers to the benefits of the Workmen's Compensation Law of the place
where the accident occurs, should such law be more favorable to them (As amended
by section 5 of Republic Act No. 772).
Article 173 of the New Labor Code does not repeal expressly nor impliedly the applicable provisions
of the New Civil Code, because said Article 173 provides:
Art. 173. Exclusiveness of liability.- Unless otherwise provided, the liability of the
State Insurance Fund under this Title shall be exclusive and in place of all other
liabilities of the employer to the employee, his dependents or anyone otherwise
entitled to receive damages on behalf of the employee or his dependents. The
payment of compensation under this Title shall bar the recovery of benefits as
provided for in Section 699 of the Revised Administrative Code, Republic Act
Numbered Eleven hundred sixty-one, as amended, Commonwealth Act Numbered
One hundred eighty- six, as amended, Commonwealth Act Numbered Six hundred
ten, as amended, Republic Act Numbered Forty-eight hundred Sixty-four, as
amended, and other laws whose benefits are administered by the System during the
period of such payment for the same disability or death, and conversely (emphasis
supplied).
As above-quoted, Article 173 of the New Labor Code expressly repealed only Section 699 of the
Revised Administrative Code, R.A. No. 1161, as amended, C.A. No. 186, as amended, R.A. No. 610,
as amended, R.A. No. 4864, as amended, and all other laws whose benefits are administered by the
System (referring to the GSIS or SSS).
Unlike Section 5 of the Workmen's Compensation Act as aforequoted, Article 173 of the New Labor
Code does not even remotely, much less expressly, repeal the New Civil Code provisions heretofore
quoted.
It is patent, therefore, that recovery under the New Civil Code for damages arising from negligence,
is not barred by Article 173 of the New Labor Code. And the damages recoverable under the New
Civil Code are not administered by the System provided for by the New Labor Code, which defines
the "System" as referring to the Government Service Insurance System or the Social Security
System (Art. 167 [c], [d] and [e] of the New Labor Code).
Furthermore, under Article 8 of the New Civil Code, decisions of the Supreme Court form part of the
law of the land.
Article 8 of the New Civil Code provides:
Art. 8. Judicial decisions applying or interpreting the laws or the Constitution shall
form a part of the legal system of the Philippines.

The Court, through the late Chief Justice Fred Ruiz Castro, in People vs. Licera ruled:
Article 8 of the Civil Code of the Philippines decrees that judicial decisions applying
or interpreting the laws or the Constitution form part of this jurisdiction's legal system.
These decisions, although in themselves not laws, constitute evidence of what the
laws mean. The application or interpretation placed by the Court upon a law is part of
the law as of the date of the enactment of the said law since the Court's application
or interpretation merely establishes the contemporaneous legislative intent that the
construed law purports to carry into effect" (65 SCRA 270, 272-273 [1975]).
WE ruled that judicial decisions of the Supreme Court assume the same authority as the statute
itself (Caltex vs. Palomer, 18 SCRA 247; 124 Phil. 763).
The aforequoted provisions of Section 5 of the Workmen's Compensation Act, before and after it was
amended by Commonwealth Act No. 772 on June 20, 1952, limited the right of recovery in favor of
the deceased, ailing or injured employee to the compensation provided for therein. Said Section 5
was not accorded controlling application by the Supreme Court in the 1970 case of Pacana vs. Cebu
Autobus Company (32 SCRA 442) when WE ruled that an injured worker has a choice of either to
recover from the employer the fixed amount set by the Workmen's Compensation Act or to prosecute
an ordinary civil action against the tortfeasor for greater damages; but he cannot pursue both
courses of action simultaneously. Said Pacana case penned by Mr. Justice Teehankee, applied
Article 1711 of the Civil Code as against the Workmen's Compensation Act, reiterating the 1969
ruling in the case of Valencia vs. Manila Yacht Club (28 SCRA 724, June 30,1969) and the 1958
case of Esguerra vs. Munoz Palma (104 Phil. 582), both penned by Justice J.B.L. Reyes. Said
Pacana case was concurred in by Justices J.B.L. Reyes, Dizon, Makalintal, Zaldivar, Castro,
Fernando and Villamor.
Since the first sentence of Article 173 of the New Labor Code is merely a re-statement of the first
paragraph of Section 5 of the Workmen's Compensation Act, as amended, and does not even refer,
neither expressly nor impliedly, to the Civil Code as Section 5 of the Workmen's Compensation Act
did, with greater reason said Article 173 must be subject to the same interpretation adopted in the
cases of Pacana, Valencia and Esguerra aforementioned as the doctrine in the aforesaid three (3)
cases is faithful to and advances the social justice guarantees enshrined in both the 1935 and 1973
Constitutions.
It should be stressed likewise that there is no similar provision on social justice in the American
Federal Constitution, nor in the various state constitutions of the American Union. Consequently, the
restrictive nature of the American decisions on the Workmen's Compensation Act cannot limit the
range and compass of OUR interpretation of our own laws, especially Article 1711 of the New Civil
Code, vis-a-vis Article 173 of the New Labor Code, in relation to Section 5 of Article II and Section 6
of Article XIV of the 1935 Constitution then, and now Sections 6, 7 and 9 of the Declaration of
Principles and State Policies of Article II of the 1973 Constitution.
The dissent seems to subordinate the life of the laborer to the property rights of the employer. The
right to life is guaranteed specifically by the due process clause of the Constitution. To relieve the
employer from liability for the death of his workers arising from his gross or wanton fault or failure to

provide safety devices for the protection of his employees or workers against the dangers which are
inherent in underground mining, is to deprive the deceased worker and his heirs of the right to
recover indemnity for the loss of the life of the worker and the consequent loss to his family without
due process of law. The dissent in effect condones and therefore encourages such gross or wanton
neglect on the part of the employer to comply with his legal obligation to provide safety measures for
the protection of the life, limb and health of his worker. Even from the moral viewpoint alone, such
attitude is un-Christian.
It is therefore patent that giving effect to the social justice guarantees of the Constitution, as
implemented by the provisions of the New Civil Code, is not an exercise of the power of law-making,
but is rendering obedience to the mandates of the fundamental law and the implementing legislation
aforementioned.
The Court, to repeat, is not legislating in the instant case.
It is axiomatic that no ordinary statute can override a constitutional provision.
The words of Section 5 of the Workmen's Compensation Act and of Article 173 of the New Labor
Code subvert the rights of the petitioners as surviving heirs of the deceased mining employees.
Section 5 of the Workmen's Compensation Act and Article 173 of the New Labor Code are
retrogressive; because they are a throwback to the obsolete laissez-faire doctrine of Adam Smith
enunciated in 1776 in his treatise Wealth of Nations (Collier's Encyclopedia, Vol. 21, p. 93, 1964),
which has been discarded soon after the close of the 18th century due to the Industrial Revolution
that generated the machines and other mechanical devices (beginning with Eli Whitney's cotton gin
of 1793 and Robert Fulton's steamboat of 1807) for production and transportation which are
dangerous to life, limb and health. The old socio-political-economic philosophy of live-and-let-live is
now superdesed by the benign Christian shibboleth of live-and-help others to live. Those who
profess to be Christians should not adhere to Cain's selfish affirmation that he is not his brother's
keeper. In this our civilization, each one of us is our brother's keeper. No man is an island. To assert
otherwise is to be as atavistic and ante-deluvian as the 1837 case of Prisley vs. Fowler (3 MN 1,150
reprint 1030) invoked by the dissent, The Prisley case was decided in 1837 during the era of
economic royalists and robber barons of America. Only ruthless, unfeeling capitalistics and egoistic
reactionaries continue to pay obeisance to such un-Christian doctrine. The Prisley rule humiliates
man and debases him; because the decision derisively refers to the lowly worker as "servant" and
utilizes with aristocratic arrogance "master" for "employer." It robs man of his inherent dignity and
dehumanizes him. To stress this affront to human dignity, WE only have to restate the quotation from
Prisley, thus: "The mere relation of the master and the servant never can imply an obligation on the
part of the master to take more care of the servant than he may reasonably be expected to do
himself." This is the very selfish doctrine that provoked the American Civil War which generated so
much hatred and drew so much precious blood on American plains and valleys from 1861 to 1864.
"Idolatrous reverence" for the letter of the law sacrifices the human being. The spirit of the law
insures man's survival and ennobles him. In the words of Shakespeare, "the letter of the law killeth;
its spirit giveth life."
C

It is curious that the dissenting opinion clings to the myth that the courts cannot legislate.
That myth had been exploded by Article 9 of the New Civil Code, which provides that "No judge or
court shall decline to render judgment by reason of the silence, obscurity or insufficiency of the laws.
"
Hence, even the legislator himself, through Article 9 of the New Civil Code, recognizes that in certain
instances, the court, in the language of Justice Holmes, "do and must legislate" to fill in the gaps in
the law; because the mind of the legislator, like all human beings, is finite and therefore cannot
envisage all possible cases to which the law may apply Nor has the human mind the infinite capacity
to anticipate all situations.
But about two centuries before Article 9 of the New Civil Code, the founding fathers of the American
Constitution foresaw and recognized the eventuality that the courts may have to legislate to supply
the omissions or to clarify the ambiguities in the American Constitution and the statutes.
'Thus, Alexander Hamilton pragmatically admits that judicial legislation may be justified but denies
that the power of the Judiciary to nullify statutes may give rise to Judicial tyranny (The Federalist,
Modern Library, pp. 503-511, 1937 ed.). Thomas Jefferson went farther to concede that the court is
even independent of the Nation itself (A.F.L. vs. American Sash Company, 1949 335 US 538).
Many of the great expounders of the American Constitution likewise share the same view. Chief
Justice Marshall pronounced: "It is emphatically the province and duty of the Judicial department to
say what the law is (Marbury vs. Madison I Cranch 127 1803), which was re-stated by Chief Justice
Hughes when he said that "the Constitution is what the judge says it is (Address on May 3, 1907,
quoted by President Franklin Delano Roosevelt on March 9, 1937). This was reiterated by Justice
Cardozo who pronounced that "No doubt the limits for the judge are narrower. He legislates only
between gaps. He fills the open spaces in the law. " (The Nature of the Judicial Process, p. 113). In
the language of Chief Justice Harlan F. Stone, "The only limit to the judicial legislation is the restraint
of the judge" (U.S. vs. Butler 297 U.S. 1 Dissenting Opinion, p. 79), which view is also entertained by
Justice Frankfurter and Justice Robert Jackson. In the rhetoric of Justice Frankfurter, "the courts
breathe life, feeble or strong, into the inert pages of the Constitution and all statute books."
It should be stressed that the liability of the employer under Section 5 of the Workmen's
Compensation Act or Article 173 of the New Labor Code is limited to death, ailment or injury caused
by the nature of the work, without any fault on the part of the employers. It is correctly termed no
fault liability. Section 5 of the Workmen's Compensation Act, as amended, or Article 173 of the New
Labor Code, does not cover the tortious liability of the employer occasioned by his fault or culpable
negligence in failing to provide the safety devices required by the law for the protection of the life,
limb and health of the workers. Under either Section 5 or Article 173, the employer remains liable to
pay compensation benefits to the employee whose death, ailment or injury is work-connected, even
if the employer has faithfully and diligently furnished all the safety measures and contrivances
decreed by the law to protect the employee.
The written word is no longer the "sovereign talisman." In the epigrammatic language of Mr. Justice
Cardozo, "the law has outgrown its primitive stage of formalism when the precise word was the

sovereign talisman, and every slip was fatal" (Wood vs. Duff Gordon 222 NW 88; Cardozo, The
Nature of the Judicial Process 100). Justice Cardozo warned that: "Sometimes the conservatism of
judges has threatened for an interval to rob the legislation of its efficacy. ... Precedents established in
those items exert an unhappy influence even now" (citing Pound, Common Law and Legislation 21
Harvard Law Review 383, 387).
Finally, Justice Holmes delivered the coup de grace when he pragmatically admitted, although with a
cautionary undertone: "that judges do and must legislate, but they can do so only interstitially they
are confined from molar to molecular motions" (Southern Pacific Company vs. Jensen, 244 US 204
1917). And in the subsequent case of Springer vs. Government (277 US 188, 210-212, 72 L.ed. 845,
852- 853), Justice Holmes pronounced:
The great ordinances of the Constitution do not establish and divide fields of black
and white. Even the more specific of them are found to terminate in a penumbra
shading gradually from one extreme to the other. x x x. When we come to the
fundamental distinctions it is still more obvious that they must be received with a
certain latitude or our government could not go on.
To make a rule of conduct applicable to an individual who but for such action would
be free from it is to legislate yet it is what the judges do whenever they determine
which of two competing principles of policy shall prevail.
xxx xxx xxx
It does not seem to need argument to show that however we may disguise it by
veiling words we do not and cannot carry out the distinction between legislative and
executive action with mathematical precision and divide the branches into waterlight
compartments, were it ever so desirable to do so, which I am far from believing that it
is, or that the Constitution requires.
True, there are jurists and legal writers who affirm that judges should not legislate, but grudgingly
concede that in certain cases judges do legislate. They criticize the assumption by the courts of such
law-making power as dangerous for it may degenerate into Judicial tyranny. They include
Blackstone, Jeremy Bentham, Justice Black, Justice Harlan, Justice Roberts, Justice David Brewer,
Ronald Dworkin, Rolf Sartorious, Macklin Fleming and Beryl Harold Levy. But said Justices, jurists or
legal commentators, who either deny the power of the courts to legislate in-between gaps of the law,
or decry the exercise of such power, have not pointed to examples of the exercise by the courts of
such law-making authority in the interpretation and application of the laws in specific cases that gave
rise to judicial tyranny or oppression or that such judicial legislation has not protected public interest
or individual welfare, particularly the lowly workers or the underprivileged.
On the other hand, there are numerous decisions interpreting the Bill of Rights and statutory
enactments expanding the scope of such provisions to protect human rights. Foremost among them
is the doctrine in the cases of Miranda vs. Arizona (384 US 436 1964), Gideon vs. Wainright (372 US
335), Escubedo vs. Illinois (378 US 478), which guaranteed the accused under custodial
investigation his rights to remain silent and to counsel and to be informed of such rights as even as it

protects him against the use of force or intimidation to extort confession from him. These rights are
not found in the American Bill of Rights. These rights are now institutionalized in Section 20, Article
IV of the 1973 Constitution. Only the peace-and-order adherents were critical of the activism of the
American Supreme Court led by Chief Justice Earl Warren.
Even the definition of Identical offenses for purposes of the double jeopardy provision was
developed by American judicial decisions, not by amendment to the Bill of Rights on double jeopardy
(see Justice Laurel in People vs. Tarok, 73 Phil. 260, 261-268). And these judicial decisions have
been re-stated in Section 7 of Rule 117 of the 1985 Rules on Criminal Procedure, as well as in
Section 9 of Rule 117 of the 1964 Revised Rules of Court. In both provisions, the second offense is
the same as the first offense if the second offense is an attempt to commit the first or frustration
thereof or necessarily includes or is necessarily included in the first offense.
The requisites of double jeopardy are not spelled out in the Bill of Rights. They were also developed
by judicial decisions in the United States and in the Philippines even before people vs. Ylagan (58
Phil. 851-853).
Again, the equal protection clause was interpreted in the case of Plessy vs. Ferguson (163 US 537)
as securing to the Negroes equal but separate facilities, which doctrine was revoked in the case of
Brown vs. Maryland Board of Education (349 US 294), holding that the equal protection clause
means that the Negroes are entitled to attend the same schools attended by the whites-equal
facilities in the same school-which was extended to public parks and public buses.
De-segregation, not segregation, is now the governing principle.
Among other examples, the due process clause was interpreted in the case of People vs. Pomar (46
Phil. 440) by a conservative, capitalistic court to invalidate a law granting maternity leave to working
women-according primacy to property rights over human rights. The case of People vs. Pomar is no
longer the rule.
As early as 1904, in the case of Lochner vs. New York (198 US 45, 76, 49 L. ed. 937, 949), Justice
Holmes had been railing against the conservatism of Judges perverting the guarantee of due
process to protect property rights as against human rights or social justice for the working man. The
law fixing maximum hours of labor was invalidated. Justice Holmes was vindicated finally in 1936 in
the case of West Coast Hotel vs. Parish (300 US 377-79; 81 L. ed. 703) where the American
Supreme Court upheld the rights of workers to social justice in the form of guaranteed minimum
wage for women and minors, working hours not exceeding eight (8) daily, and maternity leave for
women employees.
The power of judicial review and the principle of separation of powers as well as the rule on political
questions have been evolved and grafted into the American Constitution by judicial decisions
(Marbury vs. Madison, supra Coleman vs. Miller, 307 US 433, 83 L. ed. 1385; Springer vs.
Government, 277 US 210-212, 72 L. ed. 852, 853).
It is noteworthy that Justice Black, who seems to be against judicial legislation, penned a separate
concurring opinion in the case of Coleman vs. Miller, supra, affirming the doctrine of political question

as beyond the ambit of judicial review. There is nothing in both the American and Philippine
Constitutions expressly providing that the power of the courts is limited by the principle of separation
of powers and the doctrine on political questions. There are numerous cases in Philippine
jurisprudence applying the doctrines of separation of powers and political questions and invoking
American precedents.
Unlike the American Constitution, both the 1935 and 1973 Philippine Constitutions expressly vest in
the Supreme Court the power to review the validity or constitutionality of any legislative enactment or
executive act.
WHEREFORE, THE TRIAL COURT'S ORDER OF DISMISSAL IS HEREBY REVERSED AND SET
ASIDE AND THE CASE IS REMANDED TO IT FOR FURTHER PROCEEDINGS. SHOULD A
GREATER AMOUNT OF DAMAGES BE DECREED IN FAVOR OF HEREIN PETITIONERS, THE
PAYMENTS ALREADY MADE TO THEM PURSUANT TO THE WORKMEN'S COMPENSATION
ACT SHALL BE DEDUCTED. NO COSTS.
SO ORDERED.
Fernando, C.J., Teehankee, Plana, Escolin, De la Fuente, Cuevas and Alampay JJ., concur.
Concepcion, Jr., J., is on leave.
Abad Santos and Relova, JJ., took no part.

Separate Opinions

MELENCIO-HERRERA, J., dissenting:

A
This case involves a complaint for damages for the death of five employees of PHILEX Mining
Corporation under the general provisions of the Civil Code. The Civil Code itself, however, provides
for its non-applicability to the complaint. It is specifically provided in Article 2196 of the Code, found
in Title XVIII-Damages that:
COMPENSATION FOR WORKMEN AND OTHER EMPLOYEES IN CASE OF
DEATH, INJURY OR ILLNESS IS REGULATED BY SPECIAL LAWS.
Compensation and damages are synonymous. In Esguerra vs. Muoz Palma, etc., et al., 104 Phil.
582, 586, Justice J.B.L. Reyes had said:

Petitioner also avers that compensation is not damages. This argument is but a play
on words. The term compensation' is used in the law (Act 3812 and Republic Act
772) in the sense of indemnity for damages suffered, being awarded for a personal
injury caused or aggravated by or in the course of employment. ...
By the very provisions of the Civil Code, it is a "special law", not the Code itself, which has to apply
to the complaint involved in the instant case. That "special law", in reference to the complaint, can be
no other than the Workmen's Compensation
Even assuming, without conceding, that an employee is entitled to an election of remedies, as the
majority rules, both options cannot be exercised simultaneously, and the exercise of one will
preclude the exercise of the other. The petitioners had already exercised their option to come under
the Workmen's Compensation Act, and they have already received compensation payable to them
under that Act. Stated differently, the remedy under the Workmen's Compensation Act had already
become a "finished transaction".
There are two considerations why it is believed petitioners should no longer be allowed to exercise
the option to sue under the Civil Code. In the first place, the proceedings under the Workmen's
Compensation Act have already become the law in regards to" the "election of remedies", because
those proceedings had become a "finished transaction".
In the second place, it should be plainly equitable that, if a person entitled to an "election of
remedies" makes a first election and accepts the benefits thereof, he should no longer be allowed to
avail himself of the second option. At the very least, if he wants to make a second election, in
disregard of the first election he has made, when he makes the second election he should surrender
the benefits he had obtained under the first election, This was not done in the case before the Court.
B.
'There is full concurrence on my part with the dissenting opinion of Mr. Justice Gutierrez upholding
"the exclusory provision of the Workmen's Compensation Act." I may further add:
1. The Workmen's Compensation Act (Act No. 3428) was approved on December 10, 1927 and took
effect on June 10, 1928. It was patterned from Minnesota and Hawaii statutes.
Act No. 3428 was adopted by the Philippine legislature, in Spanish and some
sections of the law were taken from the statutes of Minnesota and Hawaii, (Chapter
209 of the Revised Laws of Hawaii, 1925). [Morabe & Inton, Workmen's
Compensation Act, p. 2]
Under the Workmen's Compensation Act of Hawaii, when the Act is applicable, the remedy under the
Act is exclusive The following is stated in 1 Schneider Workmen's Compensation Text, pp. 266, 267.
Sec. 112. Hawaii

Statutory Synopsis. The act is compulsory as to employees in 'all industrial

employment' and employees of the territory and its political subdivisions. (Sections
7480-7481, S.S., Vol. 1, p. 713.)
Compensation is not payable when injury is due to employee's willful intention to
injure himself or another or to his intoxication. (Sec. 7482, S.S., p. 713.)
When the act is applicable the remedy thereunder is exclusive (Sec. 7483, S.S., p.
714.)
2. In providing for exclusiveness of the remedy under our Workmen's Compensation Act, the
Philippine Legislature worded the first paragraph of Section 5 of the Act as follows:
SEC. 5. Exclusive right to compensation.-The rights and remedies granted by this Act
to an employee
by reason of a personal injury entitling him to compensation
shall exclude all other rights and remedies accruing to the employee, his personal
representatives, dependents or nearest of kin against the employer
under the Civil Code and other laws, because of said injury (Paragraphing and
emphasis supplied)
In regards to the intent of the Legislature under the foregoing provision:
A cardinal rule in the interpretation of statutes is that the meaning and intention of the
law-making body must be sought, first of all in the words of the statute itself, read
and considered in their natural, ordinary, commonly-accepted and most obvious
significations, according to good and approved usage and without resorting to forced
or subtle construction Courts, therefore, as a rule, cannot presume that the lawmaking body does not know the meaning of words and the rules of grammar.
Consequently, the grammatical reading of a statute must be presumed to yield its
correct sense. (Espino vs. Cleofe 52 SCRA 92, 98) [Italics supplied]
3. The original second paragraph of Section 5 provided:
Employers contracting laborers in the Philippine Islands for work outside the same
shall stipulate with such laborers that the remedies prescribed by this Act shall apply
exclusively to injuries received outside the Islands through accidents happening in
and during the performance of the duties of the employment. (Italics supplied)
The use of the word "exclusively is a further confirmation of the exclusory provision of the Act,
subject only to exceptions which may be provided in the Act itself.

4. It might be mentioned that, within the Act itself, provision is made for remedies other than within
the Act itself. Thus, Section 6, in part, provides:
SEC. 6. Liability of third parties.-In case an employee suffers an injury for which
compensation is due under this Act by any other person besides his employer, it shall
be optional with such injured employee either to claim compensation from his
employer, under this Act, or sue such other person for damages, in accordance with
law; ... (Emphasis supplied)
If the legislative intent under the first paragraph of Section 5 were to allow the injured employee to
sue his employer under the Civil Code, the legislator could very easily have formulated the said first
paragraph of Section 5 according to the pattern of Section 6. That that was not done shows the
legislative intent not to allow any option to an employee to sue the employer under the Civil Code for
injuries compensable under the Act.
5. There should be no question but that the original first paragraph of Section 5 of the Workmen's
Compensation Act, formulated in 1927, provided that an injured worker or employee, or his heirs, if
entitled to compensation under the Act, cannot have independent recourse neither to the Civil Code
nor to any other law relative to the liability of the employer. After 1927, there were occasions when
the legislator had the opportunity to amend the first paragraph of Section 5 such that the remedies
under the Act would not be exclusive; yet, the legislator refrained from doing so. That shows the
legislatives continuing intent to maintain the exclusory provision of the first paragraph of Section 5
unless otherwise provided in the Act itself.
(a) The original second paragraph of Section 5 provided:
Employers contracting laborers in the Philippine Islands for work outside the same
shall stipulate with such laborers that the remedies prescribed by this Act shall apply
(exclusively) to injuries received outside the Islands through accidents happening in
and during the performance of the duties of the employment (and all service
contracts made in the manner prescribed in this section be presumed to include such
agreement).
On June 20, 1952, through RA 772, the foregoing second paragraph was amended with the
elimination of the underlined words in parentheses, and the addition of this sentence at the end of
the paragraph:
Such stipulation shall not prejudice the right of the laborers to the benefits of the
Workmen's Compensation Law of the place where the accident occurs, should such
law be more favorable to them. (Emphasis supplied)
It will be seen that, within the Act itself, the exclusory character of the Act was amended. At that time,
if he had so desired, the legislator could have amended the first paragraph of Section 5 so that the
employee would have the option to sue the employer under the Act, or under the Civil Code, should
the latter be more favorable to him.

(b) The Workmen's Compensation Act, which took effect in 1927, grants compensation to an injured
employee without regard to the presence or absence of negligence on the part of the employer. The
compensation is deemed an expense chargeable to the industry (Murillo vs. Mendoza, 66 Phil. 689
[1938]).
In time, it must have been thought that it was inequitable to have the amount of compensation,
caused by negligence on the part of the employer, to be the same amount payable when the
employer was not negligent. Based on that thinking, Section 4-A 1 was included into the Act, on June
20, 1952, through RA 772. Said Section 4-A increased the compensation payable by 50% in case there
was negligence on the part of the employer. That additional section evidenced the intent of the legislator
not to give an option to an employee, injured with negligence on the part of the employer, to sue the latter
under the provisions of the Civil Code.
On June 20, 1964, Section 4-A was amended (insubstantially) by RA 4119. The legislator was again
given the opportunity to provide, but he did not, the option to an employee to sue under the Act or
under the Civil Code.
When a Court gives effect to a statute not in accordance with the intent of the law-maker, the Court
is unjustifiably legislating.
It is in view of the foregoing that I vote for affirmation of the trial Court's dismissal of the Complaint.
GUTIERREZ, JR., J., dissenting:
To grant the petition and allow the victims of industrial accidents to file damages suits based on torts
would be a radical innovation not only contrary to the express provisions of the Workmen's
Compensation Act but a departure from the principles evolved in the long history of workmen's
compensation. At the very least, it should be the legislature and not this Court which should remove
the exclusory provision of the Workmen's Compensation Act, a provision reiterated in the present
Labor Code on employees' compensation.
Workmen's compensation evolved to remedy the evils associated with the situation in the early years
of the industrial revolution when injured workingmen had to rely on damage suits to get recompense.
Before workmen's compensation, an injured worker seeking damages would have to prove in a tort
suit that his employer was either negligent or in bad faith, that his injury was caused by the employer
and not a fellow worker, and that he was not guilty of contributory negligence. The employer could
employ not only his wealth in defeating the claim for damages but a host of common law defenses
available to him as well. The worker was supposed to know what he entered into when he accepted
employment. As stated in the leading case of Priestley u. Fowler (3 M. & W. 1, 150 Reprint 1030)
decided in 1837 "the mere relation of the master and the servant never can imply an obligation on
the part of the master to take more care of the servant than he may reasonably be expected to do of
himself." By entering into a contract of employment, the worker was deemed to accept the risks of
employment that he should discover and guard against himself.

The problems associated with the application of the fellow servant rule, the assumption of risk
doctrine, the principle of contributory negligence, and the many other defenses so easily raised in
protracted damage suits illustrated the need for a system whereby workers had only to prove the fact
of covered employment and the fact of injury arising from employment in order to be compensated.
The need for a compensation scheme where liability is created solely by statute and made
compulsory and where the element of fault-either the fault of the employer or the fault of the
employee-disregarded became obvious. Another objective was to have simplified, expeditious,
inexpensive, and non-litigious procedures so that victims of industrial accidents could more readily, if
not automatically, receive compensation for work-related injuries.
Inspite of common law defenses to defeat a claim being recognized, employers' liability acts were a
major step in the desired direction. However, employers liability legislation proved inadequate.
Legislative reform led to the workmen's compensation.
I cite the above familiar background because workmen's compensation represents a compromise. In
return for the near certainty of receiving a sum of money fixed by law, the injured worker gives up the
right to subject the employer to a tort suit for huge amounts of damages. Thus, liability not only
disregards the element of fault but it is also a pre- determined amount based on the wages of the
injured worker and in certain cases, the actual cost of rehabilitation. The worker does not receive the
total damages for his pain and suffering which he could otherwise claim in a civil suit. The employer
is required to act swiftly on compensation claims. An administrative agency supervises the program.
And because the overwhelming mass of workingmen are benefited by the compensation system,
individual workers who may want to sue for big amounts of damages must yield to the interests of
their entire working class.
The nature of the compensation principle is explained as follows:
An appreciation of the nature of the compensation principle is essential to an
understanding of the acts and the cases interpreting them.
By the turn of the century it was apparent that the toll of industrial accidents of both
the avoidable and unavoidable variety had become enormous, and government was
faced with the problem of who was to pay for the human wreckage wrought by the
dangers of modern industry. If the accident was avoidable and could be attributed to
the carelessness of the employer, existing tort principles offered some measure of
redress. Even here, however, the woeful inadequacy of the fault principle was
manifest. The uncertainty of the outcome of torts litigation in court placed the
employee at a substantial disadvantage. So long as liability depended on fault there
could be no recovery until the finger of blame had been pointed officially at the
employer or his agents. In most cases both the facts and the law were uncertain. The
witnesses, who were usually fellow workers of the victim, were torn between
friendship or loyalty to their class, on the one hand, and fear of reprisal by the
employer, on the other. The expense and delay of litigation often prompted the
injured employee to accept a compromise settlement for a fraction of the full value of
his claim. Even if suit were successfully prosecuted, a large share of the proceeds of

the judgment were exacted as contingent fees by counsel. Thus the employer
against whom judgment was cast often paid a substantial damage bill, while only a
part of this enured to the benefit of the injured employee or his dependents. The
employee's judgment was nearly always too little and too late.
xxx xxx xxx
Workmen's Compensation rests upon the economic principle that those persons who
enjoy the product of a business- whether it be in the form of goods or servicesshould ultimately bear the cost of the injuries or deaths that are incident to the
manufacture, preparation and distribution of the product. ...
xxx xxx xxx
Under this approach the element of personal fault either disappears entirely or is
subordinated to broader economic considerations. The employer absorbs the cost of
accident loss only initially; it is expected that this cost will eventually pass down the
stream of commerce in the form of increase price until it is spread in dilution among
the ultimate consumers. So long as each competing unit in a given industry is
uniformly affected, no producer can gain any substantial competitive advantage or
suffer any appreciable loss by reason of the general adoption of the compensation
principle.
In order that the compensation principle may operate properly and with fairness to all
parties it is essential that the anticipated accident cost be predictable and that it be
fixed at a figure that will not disrupt too violently the traffic in the product of the
industry affected. Thus predictability and moderateness of cost are necessary from
the broad economic viewpoint. ....
Compensation, then, differs from the conventional damage suit in two important
respects: Fault on the part of either employer or employee is eliminated; and
compensation payable according to a definitely limited schedule is substituted for
damages. All compensation acts alike work these two major changes, irrespective of
how they may differ in other particulars.
Compensation, when regarded from the viewpoint of employer and employee
represents a compromise in which each party surrenders certain advantages in order
to gain others which are of more importance both to him and to society. The
employer gives up the immunity he otherwise would enjoy in cases where he is not at
fault, and the employee surrenders his former right to full damages and accepts
instead a more modest claim for bare essentials, represented by compensation.
The importance of the compromise character of compensation cannot be
overemphasized. The statutes vary a great deal with reference to the proper point of
balance. The amount of weekly compensation payments and the length of the period
during which compensation is to be paid are matters concerning which the acts differ

considerably. The interpretation of any compensation statute will be influenced

greatly by the court's reaction to the basic point of compromise established in the
Act. If the court feels that the basic compromise unduly favors the employer, it will be
tempted to restore what it regards as a proper balance by adopting an interpretation
that favors the worker. In this way, a compensation act drawn in a spirit of extreme
conservatism may be transformed by a sympathetic court into a fairly liberal
instrument; and conversely, an act that greatly favors the laborer may be so
interpreted by the courts that employers can have little reason to complain. Much of
the unevenness and apparent conflict in compensation decisions throughout the
various jurisdictions must be attributed to this." (Malone & Plant, Workmen's
Compensation American Casebook Series, pp. 63-65).
The schedule of compensation, the rates of payments, the compensable injuries and diseases, the
premiums paid by employers to the present system, the actuarial stability of the trust fund and many
other interrelated parts have all been carefully studied before the integrated scheme was enacted in
to law. We have a system whose parts must mesh harmonious with one another if it is to succeed.
The basic theory has to be followed.
If this Court disregards this totality of the scheme and in a spirit of generosity recasts some parts of
the system without touching the related others, the entire structure is endangered. For instance, I am
personally against stretching the law and allowing payment of compensation for contingencies never
envisioned to be compensable when the law was formulated. Certainly, only harmful results to the
principle of workmen's compensation can arise if workmen, whom the law allows to receive
employment compensation, can still elect to file damage suits for industrial accidents. It was
precisely for this reason that Section 5 of the Workmen's Compensation Act, which reads:
SEC. 5. Exclusive right to compensation.-The rights and remedies granted by this Act
to an employee by reason of a personal injury entitling him to compensation shall
exclude all other rights and remedies accruing to the employee, his personal
representatives, dependents or nearest of kin against the employer under the Civil
Code and other laws because of said injury. ...
Article 173 of the labor Code also provides:
ART. 173. Exclusivenesss of liability.Unless otherwise provided, the liability of the
State Insurance Fund under this Title shall be exclusive and in place of all other
liabilities of the employer to the employee his dependents or anyone otherwise
entitled to receive damages on behalf of the employee or his dependents.
I am against the Court assuming the role of legislator in a matter calling for actuarial studies and
public hearings. If employers already required to contribute to the State Insurance Fund will still have
to bear the cost of damage suits or get insurance for that purpose, a major study will be necessary.
The issue before us is more far reaching than the interests of the poor victims and their families. All
workers covered by workmen's compensation and all employers who employ covered employees
are affected. Even as I have deepest sympathies for the victims, I regret that I am constrained to
dissent from the majority opinion.

Separate Opinions

MELENCIO-HERRERA, J., dissenting:

A
This case involves a complaint for damages for the death of five employees of PHILEX Mining
Corporation under the general provisions of the Civil Code. The Civil Code itself, however, provides
for its non-applicability to the complaint. It is specifically provided in Article 2196 of the Code, found
in Title XVIII-Damages that:
COMPENSATION FOR WORKMEN AND OTHER EMPLOYEES IN CASE OF
DEATH, INJURY OR ILLNESS IS REGULATED BY SPECIAL LAWS.
Compensation and damages are synonymous. In Esguerra vs. Muoz Palma, etc., et al., 104 Phil.
582, 586, Justice J.B.L. Reyes had said:
Petitioner also avers that compensation is not damages. This argument is but a play
on words. The term compensation' is used in the law (Act 3812 and Republic Act
772) in the sense of indemnity for damages suffered, being awarded for a personal
injury caused or aggravated by or in the course of employment. ...
By the very provisions of the Civil Code, it is a "special law", not the Code itself, which has to apply
to the complaint involved in the instant case. That "special law", in reference to the complaint, can be
no other than the Workmen's Compensation
Even assuming, without conceding, that an employee is entitled to an election of remedies, as the
majority rules, both options cannot be exercised simultaneously, and the exercise of one will
preclude the exercise of the other. The petitioners had already exercised their option to come under
the Workmen's Compensation Act, and they have already received compensation payable to them
under that Act. Stated differently, the remedy under the Workmen's Compensation Act had already
become a "finished transaction".
There are two considerations why it is believed petitioners should no longer be allowed to exercise
the option to sue under the Civil Code. In the first place, the proceedings under the Workmen's
Compensation Act have already become the law in regards to" the "election of remedies", because
those proceedings had become a "finished transaction".
In the second place, it should be plainly equitable that, if a person entitled to an "election of
remedies" makes a first election and accepts the benefits thereof, he should no longer be allowed to

avail himself of the second option. At the very least, if he wants to make a second election, in
disregard of the first election he has made, when he makes the second election he should surrender
the benefits he had obtained under the first election, This was not done in the case before the Court.
B.
'There is full concurrence on my part with the dissenting opinion of Mr. Justice Gutierrez upholding
"the exclusory provision of the Workmen's Compensation Act." I may further add:
1. The Workmen's Compensation Act (Act No. 3428) was approved on December 10, 1927 and took
effect on June 10, 1928. It was patterned from Minnesota and Hawaii statutes.
Act No. 3428 was adopted by the Philippine legislature, in Spanish and some
sections of the law were taken from the statutes of Minnesota and Hawaii, (Chapter
209 of the Revised Laws of Hawaii, 1925). [Morabe & Inton, Workmen's
Compensation Act, p. 2]
Under the Workmen's Compensation Act of Hawaii, when the Act is applicable, the remedy under the
Act is exclusive The following is stated in 1 Schneider Workmen's Compensation Text, pp. 266, 267.
Sec. 112. Hawaii
Statutory Synopsis. The act is compulsory as to employees in 'all industrial
employment' and employees of the territory and its political subdivisions. (Sections
7480-7481, S.S., Vol. 1, p. 713.)
Compensation is not payable when injury is due to employee's willful intention to
injure himself or another or to his intoxication. (Sec. 7482, S.S., p. 713.)
When the act is applicable the remedy thereunder is exclusive (Sec. 7483, S.S., p.
714.)
2. In providing for exclusiveness of the remedy under our Workmen's Compensation Act, the
Philippine Legislature worded the first paragraph of Section 5 of the Act as follows:
SEC. 5. Exclusive right to compensation.-The rights and remedies granted by this Act
to an employee
by reason of a personal injury entitling him to compensation
shall exclude all other rights and remedies accruing to the employee, his personal
representatives, dependents or nearest of kin against the employer
under the Civil Code and other laws, because of said injury (Paragraphing and
emphasis supplied)

In regards to the intent of the Legislature under the foregoing provision:

A cardinal rule in the interpretation of statutes is that the meaning and intention of the
law-making body must be sought, first of all in the words of the statute itself, read
and considered in their natural, ordinary, commonly-accepted and most obvious
significations, according to good and approved usage and without resorting to forced
or subtle construction Courts, therefore, as a rule, cannot presume that the lawmaking body does not know the meaning of words and the rules of grammar.
Consequently, the grammatical reading of a statute must be presumed to yield its
correct sense. (Espino vs. Cleofe 52 SCRA 92, 98) [Italics supplied]
3. The original second paragraph of Section 5 provided:
Employers contracting laborers in the Philippine Islands for work outside the same
shall stipulate with such laborers that the remedies prescribed by this Act shall apply
exclusively to injuries received outside the Islands through accidents happening in
and during the performance of the duties of the employment. (Italics supplied)
The use of the word "exclusively is a further confirmation of the exclusory provision of the Act,
subject only to exceptions which may be provided in the Act itself.
4. It might be mentioned that, within the Act itself, provision is made for remedies other than within
the Act itself. Thus, Section 6, in part, provides:
SEC. 6. Liability of third parties.-In case an employee suffers an injury for which
compensation is due under this Act by any other person besides his employer, it shall
be optional with such injured employee either to claim compensation from his
employer, under this Act, or sue such other person for damages, in accordance with
law; ... (Emphasis supplied)
If the legislative intent under the first paragraph of Section 5 were to allow the injured employee to
sue his employer under the Civil Code, the legislator could very easily have formulated the said first
paragraph of Section 5 according to the pattern of Section 6. That that was not done shows the
legislative intent not to allow any option to an employee to sue the employer under the Civil Code for
injuries compensable under the Act.
5. There should be no question but that the original first paragraph of Section 5 of the Workmen's
Compensation Act, formulated in 1927, provided that an injured worker or employee, or his heirs, if
entitled to compensation under the Act, cannot have independent recourse neither to the Civil Code
nor to any other law relative to the liability of the employer. After 1927, there were occasions when
the legislator had the opportunity to amend the first paragraph of Section 5 such that the remedies
under the Act would not be exclusive; yet, the legislator refrained from doing so. That shows the
legislatives continuing intent to maintain the exclusory provision of the first paragraph of Section 5
unless otherwise provided in the Act itself.
(a) The original second paragraph of Section 5 provided:

Employers contracting laborers in the Philippine Islands for work outside the same
shall stipulate with such laborers that the remedies prescribed by this Act shall apply
(exclusively) to injuries received outside the Islands through accidents happening in
and during the performance of the duties of the employment (and all service
contracts made in the manner prescribed in this section be presumed to include such
agreement).
On June 20, 1952, through RA 772, the foregoing second paragraph was amended with the
elimination of the underlined words in parentheses, and the addition of this sentence at the end of
the paragraph:
Such stipulation shall not prejudice the right of the laborers to the benefits of the
Workmen's Compensation Law of the place where the accident occurs, should such
law be more favorable to them. (Emphasis supplied)
It will be seen that, within the Act itself, the exclusory character of the Act was amended. At that time,
if he had so desired, the legislator could have amended the first paragraph of Section 5 so that the
employee would have the option to sue the employer under the Act, or under the Civil Code, should
the latter be more favorable to him.
(b) The Workmen's Compensation Act, which took effect in 1927, grants compensation to an injured
employee without regard to the presence or absence of negligence on the part of the employer. The
compensation is deemed an expense chargeable to the industry (Murillo vs. Mendoza, 66 Phil. 689
[1938]).
In time, it must have been thought that it was inequitable to have the amount of compensation,
caused by negligence on the part of the employer, to be the same amount payable when the
employer was not negligent. Based on that thinking, Section 4-A 1 was included into the Act, on June
20, 1952, through RA 772. Said Section 4-A increased the compensation payable by 50% in case there
was negligence on the part of the employer. That additional section evidenced the intent of the legislator
not to give an option to an employee, injured with negligence on the part of the employer, to sue the latter
under the provisions of the Civil Code.
On June 20, 1964, Section 4-A was amended (insubstantially) by RA 4119. The legislator was again
given the opportunity to provide, but he did not, the option to an employee to sue under the Act or
under the Civil Code.
When a Court gives effect to a statute not in accordance with the intent of the law-maker, the Court
is unjustifiably legislating.
It is in view of the foregoing that I vote for affirmation of the trial Court's dismissal of the Complaint.
GUTIERREZ, JR., J., dissenting:
To grant the petition and allow the victims of industrial accidents to file damages suits based on torts
would be a radical innovation not only contrary to the express provisions of the Workmen's

Compensation Act but a departure from the principles evolved in the long history of workmen's
compensation. At the very least, it should be the legislature and not this Court which should remove
the exclusory provision of the Workmen's Compensation Act, a provision reiterated in the present
Labor Code on employees' compensation.
Workmen's compensation evolved to remedy the evils associated with the situation in the early years
of the industrial revolution when injured workingmen had to rely on damage suits to get recompense.
Before workmen's compensation, an injured worker seeking damages would have to prove in a tort
suit that his employer was either negligent or in bad faith, that his injury was caused by the employer
and not a fellow worker, and that he was not guilty of contributory negligence. The employer could
employ not only his wealth in defeating the claim for damages but a host of common law defenses
available to him as well. The worker was supposed to know what he entered into when he accepted
employment. As stated in the leading case of Priestley u. Fowler (3 M. & W. 1, 150 Reprint 1030)
decided in 1837 "the mere relation of the master and the servant never can imply an obligation on
the part of the master to take more care of the servant than he may reasonably be expected to do of
himself." By entering into a contract of employment, the worker was deemed to accept the risks of
employment that he should discover and guard against himself.
The problems associated with the application of the fellow servant rule, the assumption of risk
doctrine, the principle of contributory negligence, and the many other defenses so easily raised in
protracted damage suits illustrated the need for a system whereby workers had only to prove the fact
of covered employment and the fact of injury arising from employment in order to be compensated.
The need for a compensation scheme where liability is created solely by statute and made
compulsory and where the element of fault-either the fault of the employer or the fault of the
employee-disregarded became obvious. Another objective was to have simplified, expeditious,
inexpensive, and non-litigious procedures so that victims of industrial accidents could more readily, if
not automatically, receive compensation for work-related injuries.
Inspite of common law defenses to defeat a claim being recognized, employers' liability acts were a
major step in the desired direction. However, employers liability legislation proved inadequate.
Legislative reform led to the workmen's compensation.
I cite the above familiar background because workmen's compensation represents a compromise. In
return for the near certainty of receiving a sum of money fixed by law, the injured worker gives up the
right to subject the employer to a tort suit for huge amounts of damages. Thus, liability not only
disregards the element of fault but it is also a pre- determined amount based on the wages of the
injured worker and in certain cases, the actual cost of rehabilitation. The worker does not receive the
total damages for his pain and suffering which he could otherwise claim in a civil suit. The employer
is required to act swiftly on compensation claims. An administrative agency supervises the program.
And because the overwhelming mass of workingmen are benefited by the compensation system,
individual workers who may want to sue for big amounts of damages must yield to the interests of
their entire working class.
The nature of the compensation principle is explained as follows:

An appreciation of the nature of the compensation principle is essential to an understanding

of the acts and the cases interpreting them.
By the turn of the century it was apparent that the toll of industrial accidents of both the
avoidable and unavoidable variety had become enormous, and government was faced with
the problem of who was to pay for the human wreckage wrought by the dangers of modern
industry. If the accident was avoidable and could be attributed to the carelessness of the
employer, existing tort principles offered some measure of redress. Even here, however, the
woeful inadequacy of the fault principle was manifest. The uncertainty of the outcome of torts
litigation in court placed the employee at a substantial disadvantage. So long as liability
depended on fault there could be no recovery until the finger of blame had been pointed
officially at the employer or his agents. In most cases both the facts and the law were
uncertain. The witnesses, who were usually fellow workers of the victim, were torn between
friendship or loyalty to their class, on the one hand, and fear of reprisal by the employer, on
the other. The expense and delay of litigation often prompted the injured employee to accept
a compromise settlement for a fraction of the full value of his claim. Even if suit were
successfully prosecuted, a large share of the proceeds of the judgment were exacted as
contingent fees by counsel. Thus the employer against whom judgment was cast often paid
a substantial damage bill, while only a part of this enured to the benefit of the injured
employee or his dependents. The employee's judgment was nearly always too little and too
late.
xxx xxx xxx
Workmen's Compensation rests upon the economic principle that those persons who enjoy
the product of a business- whether it be in the form of goods or services- should ultimately
bear the cost of the injuries or deaths that are incident to the manufacture, preparation and
distribution of the product. ...
xxx xxx xxx
Under this approach the element of personal fault either disappears entirely or is
subordinated to broader economic considerations. The employer absorbs the cost of
accident loss only initially; it is expected that this cost will eventually pass down the stream of
commerce in the form of increase price until it is spread in dilution among the ultimate
consumers. So long as each competing unit in a given industry is uniformly affected, no
producer can gain any substantial competitive advantage or suffer any appreciable loss by
reason of the general adoption of the compensation principle.
In order that the compensation principle may operate properly and with fairness to all parties
it is essential that the anticipated accident cost be predictable and that it be fixed at a figure
that will not disrupt too violently the traffic in the product of the industry affected. Thus
predictability and moderateness of cost are necessary from the broad economic
viewpoint. ....

Compensation, then, differs from the conventional damage suit in two important respects:
Fault on the part of either employer or employee is eliminated; and compensation payable
according to a definitely limited schedule is substituted for damages. All compensation acts
alike work these two major changes, irrespective of how they may differ in other particulars.
Compensation, when regarded from the viewpoint of employer and employee represents a
compromise in which each party surrenders certain advantages in order to gain others which
are of more importance both to him and to society. The employer gives up the immunity he
otherwise would enjoy in cases where he is not at fault, and the employee surrenders his
former right to full damages and accepts instead a more modest claim for bare essentials,
represented by compensation.
The importance of the compromise character of compensation cannot be overemphasized.
The statutes vary a great deal with reference to the proper point of balance. The amount of
weekly compensation payments and the length of the period during which compensation is
to be paid are matters concerning which the acts differ considerably. The interpretation of
any compensation statute will be influenced greatly by the court's reaction to the basic point
of compromise established in the Act. If the court feels that the basic compromise unduly
favors the employer, it will be tempted to restore what it regards as a proper balance by
adopting an interpretation that favors the worker. In this way, a compensation act drawn in a
spirit of extreme conservatism may be transformed by a sympathetic court into a fairly liberal
instrument; and conversely, an act that greatly favors the laborer may be so interpreted by
the courts that employers can have little reason to complain. Much of the unevenness and
apparent conflict in compensation decisions throughout the various jurisdictions must be
attributed to this." (Malone & Plant, Workmen's Compensation American Casebook Series,
pp. 63-65).
The schedule of compensation, the rates of payments, the compensable injuries and diseases, the
premiums paid by employers to the present system, the actuarial stability of the trust fund and many
other interrelated parts have all been carefully studied before the integrated scheme was enacted in
to law. We have a system whose parts must mesh harmonious with one another if it is to succeed.
The basic theory has to be followed.
If this Court disregards this totality of the scheme and in a spirit of generosity recasts some parts of
the system without touching the related others, the entire structure is endangered. For instance, I am
personally against stretching the law and allowing payment of compensation for contingencies never
envisioned to be compensable when the law was formulated. Certainly, only harmful results to the
principle of workmen's compensation can arise if workmen, whom the law allows to receive
employment compensation, can still elect to file damage suits for industrial accidents. It was
precisely for this reason that Section 5 of the Workmen's Compensation Act, which reads:
SEC. 5. Exclusive right to compensation.-The rights and remedies granted by this Act
to an employee by reason of a personal injury entitling him to compensation shall
exclude all other rights and remedies accruing to the employee, his personal
representatives, dependents or nearest of kin against the employer under the Civil
Code and other laws because of said injury. ...

Article 173 of the labor Code also provides:

ART. 173. Exclusivenesss of liability.Unless otherwise provided, the liability of the
State Insurance Fund under this Title shall be exclusive and in place of all other
liabilities of the employer to the employee his dependents or anyone otherwise
entitled to receive damages on behalf of the employee or his dependents.
I am against the Court assuming the role of legislator in a matter calling for actuarial studies and
public hearings. If employers already required to contribute to the State Insurance Fund will still have
to bear the cost of damage suits or get insurance for that purpose, a major study will be necessary.
The issue before us is more far reaching than the interests of the poor victims and their families. All
workers covered by workmen's compensation and all employers who employ covered employees
are affected. Even as I have deepest sympathies for the victims, I regret that I am constrained to
dissent from the majority opinion.
Footnotes
1 SEC. 4-A. Right to additional compensation.- In case of the employee's death, injury or sickness due to the failure of the to
comply with any law, or with any order, rule or regulation of the Workmen's Compensation Commission or the Bureau of Labor
Standards or should the employer violate the provisions of Republic Act Numbered Six hundred seventy-nine and its amendments
or fail to install and maintain safety appliances, or take other precautions for the prevention of accidents or occupational disease,
he shall be liable to pay an additional compensation equal to fifty per centum of the compensation fixed in this Act.