THE COLLECTOR OF INTERNAL REVENUE, PETITIONER, VS. AURELIO P.

REYES AND COURT OF TAX APPEALS, RESPONDENTS.

100 Phil. 822 [ G. R. No. L-8685, January 31, 1957 ]

DECISION
FELIX, J.:

This is a petition for certiorari filed by the Collector of Internal Revenue wherein
he seeks to nullify the resolution of the Court of Tax Appeals restraining him from
collecting, through summary administrative methods, taxes allegedly due from Dr.
Aurelio P. Reyes. The facts of the case may be summarized as follows:

In a letter dated October 13, 1954, petitioner, the Collector of Internal Revenue
demanded from Aurelio P. Reyes payment of his alleged deficiency income taxes,
surcharges, interests and penalties for the tax years 1946 to 1950 amounting to
P641,470.04 as of October 31, 1954, with the suggestion that the aforesaid tax
liabilities be paid either to the Bureau of Internal Revenue or the City Treasurer of
Manila. Together with said letter of assessment, respondent Aurelio P. Reyes received
a warrant of distraint and levy on his properties in the event that he should fail to pay
the alleged deficiency income taxes on or before October 31, 1954. Being informed by
the City Treasurer of Manila by a letter dated November 4, 1954, that said Treasurer
was instructed by petitioner to execute the warrant of distraint and levy in the amount
demanded is not settled on or before November 10, 1954, Aurelio P. Reyes filed with
the Court of Tax Appeals on November 15, 1954, a petition for review of the Collector's
assessment of his alleged deficiency income tax liabilities. This was followed by an
urgent petition, filed on November 16, 1954, to restrain the Collector of Internal
Revenue from executing the warrant of distraint and levy on his properties, alleging
among others, that the right of respondent to collect by summary proceedings the tax
demanded had already prescribed in accordance with section 51 (d) of the National
Internal Revenue Code, as his income tax returns for the tax years 1946 to 1950 had
been filed more than three years ago, the last one being on April 27, 1951; that a
distraint and levy on his properties would work injustice or irreparable injury to him and
would tend to render any judgment of the Court in the main case meaningless and
ineffectual; that the requisite of Section 11 of Republic Act No. 1125 for the filing of a
bond or deposit before a writ of distraint and levy may be suspended is not applicable
in this case; and that the greater portion of his assets consists of real properties located
in Manila and shares of stock in the Philippine Racing Club which are all encumbered
in various financial institutions and therefore there is no possibility that he would
abscond with his property or remove or conceal the same.

The Collector of Internal Revenue opposed said petition on November 19,

1954, on the ground that the Court of Tax Appeals has no authority to restrain {lim
from executing the warrant of distraint and levy on the properties of Aurelio P. Reyes
in connection with the collection of the latter's deficiency income taxes; that said
taxpayer has an adequate remedy in law by paying first and then seek for the recovery
thereof; and that section 51 (d) does not preclude distraint and levy. By resolution of
January 8, 1955, the Court of Tax Appeals upheld the stand of Aurelio P. Reyes and
ordered the Collector of Internal Revenue to desist from collecting by administrative
method the taxes allegedly due from Reyes pending the outcome of his appeal,
without prejudice to other judicial remedy or remedies which the Collector may desire
to pursue for the protection of the interest of the Government, pending the final
decision of the case on the merits. On January 21, 1955, the Solicitor General filed a
notice of appeal from said Resolution and instituted in this Court the instant certiorari
case on January 22, 1955.

It is not disputed that respondent Reyes filed his income tax returns for the
years 1946 to 1950, and that the warrant of distraint and levy against the properties of
said respondent was issued only on October 13, 1954, or 3 years, 5 months and 16
days after the respondent taxpayer had filed his returns for the tax year 1950, which
he made on April 27, 1951. Therefore, the issues in this instances are: (1) whether the
Court of Tax Appeals could restrain the Collector of Internal Revenue from enforcing
collection of income tax deficiency by summary proceedings after the expiration of the
three-year period provided for in section 51 (d) of the National Internal Revenue Code;
and (2) granting that the Collector could be restrained, whether the Court of Tax
Appeals had any power to grant an injunction without requiring the filing of a bond or
making a deposit as prescribed by section 11 of Republic Act No. 1125.

(d) Refusal or neglect to make return; fraudulent returns, etc.- In cases of refusal or
neglect to make a return or in cases of erroneous, false or fraudulent returns, the
Collector of Internal Revenue shall, upon discovery thereof, at any time within three
years after said return is due, or has been made, make a return upon information
obtained as provided for in this Code or by existing law, or require the necesary
corrections to be made, and the assessment made by the Collector of Internal
Revenue thereon shall be paid by such person or corporation immediately upon
notification of the amount of such assessment." and in a long line of cases this Court
has already construed this just quoted provision to mean that the three-year
prescriptive period provided therein constituted a limitation to the right of the
Government to enforce the collection of income taxes by the summary proceedings of
distraint and levythough it could proceed to recover the taxes due by the institution of
the corresponding civil action (Collector of Internal Revenue vs. Villegas, 56 Phil., 554,
citing Holmes, Federal Income Tax 2d, p. 581; Collector of Internal Revenue vs.
Haygood, 65 Phil., 520; and Juan de la Vina vs. El Gobierno de las Filipinas, G. R. No.
42669, January 29, 1938). This doctrine was reiterated in the case of Philippine Sugar
Estate Development Co., Inc., vs. Juan Ppsadas, 68 Phil., 216, wherein it was held
that:

"* * * after the three years have elapsed from the date to which income tax returns
which have been found to be false,
fraudulent or erroneous, may have been rrtade, the Collector of Internal Revenue
cannot make any summary collection through administrative methods, but must do so
through judicial proceedings."

In the recent case of the Collector of Internal Revenue vs. Jose Avelino et al.,
supra, p. 327, promulgated November 19, 1956, this Court held: "It therefore appears
that when it refers to the Collection of income tax it is mandatory that the right of the
Collector of Internal Revenue to collect it by the summary methods of distraint and
levy be exercised within the period of thtee years from the time the. income tax return
is filed, otherwise the right can only be enforced by judicial action. Since, admittedly,
the deficiency taxes in question were assessed and the warrants for their collection by
distraint and levy were issued after the period of three years from the filing of the
returns, it is evident that said warrants, as well as the steps taken in connection with
the sale of the properties of the taxpayer, were issued without authority of the law and,
hence, the Court of Tax Appeals acted properly in enjoining their enforcement as
prayed for by petitioner."

It is, however, contended by petitioner that the respondent Court of Tax Appeals
acted in complete disregard of the prohibition of section 305 of the National Internal
Revenue Code when it restrained the former from executing the warrant of distraint
and levy against the properties of respondent Aurelio P. Reyes. Said provision reads
as follows:

"Sec. 305. Injunction not Available to Restrain the Collection of Tax. No court
shall have authority to grant an injunction to restrain the collection of any internal
revenue tax, fee, or charge imposed by this Code" (National Internal Revenue Code).
However, Section 11 of Republic Act No. 1125 prescribes the following:

"Sec. 11.-Who may appeal; effect of appeal.-Any person, association or corporation

adversely affected by a decision or ruling of the Collector of Internal Revenue, * * •
may file an appeal in the Court of Tax Appeals within thirty days after receipt of such
decision or ruling.

No appeal taken to the Court of Tax Appeals from the decision of the Collector of
Internal Revenue * * * shall suspend the payment, levy, distraint, and/or sale of any
property of the taxpayer for the satisfaction of his tax liability as provided by existing
law: Provided, however, That when in the opinion of the Court the collection by the
Bureau of Internal Revenue * * * may jeopardize the interest of the Government
and/or the taxpayer the Court at any stage of the proceeding may suspend the said
collection and require the taxpayer either to deposit the amount claimed or to file a
surety bond for not more than double the amount with the Court."

It can be inferred from the aforequoted provision that there may be instances
like the one at bar, when the Collector of Internal Revenue could be restrained from
proceeding with the collection, levy, distraint and/or sale of any property of the
taxpayer. In this respect, this Court said in the case of Collector of Internal Revenue
vs. Avelino et al., supra:

"This section (Sec. 11 of Rep. Act No. 1125) must be deemed to have modified
section 305 of the National Internal Revenue Code in view of the repealing clause
contained in said Act to the effect that 'any law or part of law, or any executive order,
rule or regulation or part thereof, inconsistent with the provisions of this Act is hereby
repealed' (Section 21)".

But petitioner asserts that even assuming that under Section 11 of Republic Act
No. 1125 respondent Court is empowered to order him to desist from the collection of
said taxes by extra-judicial methods, yet the Court erred in issuing the injunction
without requiring the taxpayer either to deposit the amount claimed or file a surety
bond for an amount not more than double the tax sought to be collected. We disagree
with this contention. At first blush it might be as contended by the Solicitor General,
but a careful analysis of the second paragraph of said Section 11 will lead us to the
conclusion that the requirement of the bond as a condition precedent to the issuance
of the writ of injunction applies only in cases where the processes by which the
collection sought to be made by means thereof are carried out in consonance with the
law for such cases provided and not when said processes are obviously in violation of
the law to the extreme that they have to be SUSPENDED for jeopardizing the interests
of the taxpayer.

Section 11 of Republic Act No. 1125 is therefore premised on the assumption

that the collection by summary proceedings is by itself in accordance with existing law;
and then what is suspended is the act of collecting, whereas, in the case at bar what
the respondent Court suspended was the use of the method employed to verify the
collection which was evidently illegal after the lapse of the three-year limitation period.
The respondent Court issued the injunction in question on the basis of its findings that
the means intended to be used by petitioner in the collection of the alleged deficiency
taxes were in violation of law. It certainly would be an absurdity on the part of the Court
of Tax Appeals to declare that the collection by the summary methods of distraint and
levy was violative of the law,-and then, on the same breath, require the petitioner to
deposit or file a bond as a prerequisite for the issuance of a writ of injunction. Let us
suppose, for the sake of argument, that the Court a quo would have required the
petitioner to post the bond in question and that the taxpayer would refuse or fail to
furnish said bond, would the Court a quo be obliged to authorize or allow the Collector
of Internal Revenue to proceed with the collection from the petitioner of the taxes due
by a means it previously declared to be contrary to law?

The pronouncement made by the respondent Court, after due hearing, to the
effect that the summary methods of collection by distraint and levy would be improper
in the instant case, was done in the exercise of its power to pass judgment on all
matters brought before it. It was a lawful exercise of the jurisdiction vested in said
Court which is well-provided for in section 7 of Republic Act No. 1125:

"Sec. 7. Jurisdiction. The Court of Tax Appeals shall exercise exclusive appellate
jurisdiction to review by appeal, as herein provided
(1) Decisions of the Collector of Internal Revenue in cases involving disputed
assessments, refunds of internal revenue taxes, fees or other charges, penalties
imposed in relation thereto, or other matters arising under the National Internal
Revenue Code or other law or part of law administered by Bureau of Internal
Revenue."

There is another issue raised by respondent Aurelio P. Reyes that merits

consideration. It does not appear from the records that a, motion for reconsideration
was ever filed by counsel for petitioner, although a notice of appeal, dated January 21,
1955, was filed in the court below. It is an established doctrine in this jurisdiction that
the attention of the Court should first be called to its supposed error, and its correction
asked for on. a motion for reconsideration (Herrera vs. Barretto,^25 Phil. 245; Uy Chua
vs. Imperial, 44 Phil. 27; Manila Post Publishing Co. vs. Sanchez, 81 Phil., 614 46 Off.,
Suppl. (1) 412; Alvarez vs. Ibanez, 83 Phil., 104, 46 Off. Gaz., 4233).

That failure of the petitioner to file with the court below a motion for
reconsideration of the order subject of the certiorari proceedings is a fatal and
unsurmount-able barrier, is further stressed in the case of Valeriano Nicolas et al. vs.
The Hon. Modesto Castillo et al., (97 Phil., 336) wherein this Court held:
"No motion for reconsideration was ever filed by petitioners in the court below, calling
its attention to the alleged errors and irregularities now raised in this petition, to give it
an opportunity to correct such errors and irregularities, if indeed any were committed.
For this reason alone if not for any other, the writ applied for should be denied."

Wherefore, the petition for certiorari is denied and the resolution of the
respondent Court of Tax Appeals is hereby affirmed, without pronouncement as to
costs. It is so ordered.

Paras, C. J., Bengzon, Padilla, Montemayor, Reyes, A., Bautista Angelo,

Labrador, and Endenda, JJ., concur.
 Republic of the Philippines
SUPREME COURT
Manila

SECOND DIVISION
G.R. No. L-37737 February 27, 1979
MAXIMO NOCNOC, petitioner,
vs.
HON. ISIDORO A. VERA District Judge of the Court of First Instance of
Camarines Norte and ERNESTO MANARANG, respondents.
Jose Lozada Lapak for petitioner.
Edwin Z. Ferrer for private respondent.

SANTOS, J.:
In this petition for certiorari and prohibition filed on October 30, 1973, petitioner,
a claimant for death compensation benefit, assails the order of respondent Judge of
the Court of First Instance dated September 18, 1973 which enjoined the execution
of the order of the Workmen's Compensation Unit (WCU) Regional District No. 6,
dated March 14, 1973, directing inter alia private respondent to pay petitioner-claimant
the sum of P3,910.00 for the death of his son, as well as the order of the same Court
dated October 10, 1973 which denied the motion for reconsideration of above order of
September 18, 1973. The issue raised in this petition is whether respondent court of
First Instance had jurisdiction to entertain a case impugning the validity of an
award/decision of the WCU and, in the process, enjoin its execution.

In our resolution of November 5, 1973, petitioner-claimant's motion to litigate

as pauper was granted, respondent was required to file an answer to the petition —
not to move to dismiss the same — and a temporary restraining order was issued
enjoining respondent Judge from further proceedings effective immediately and until
further orders from this court. On December 11, 1973, respondent CFI Judge filed his
answer, and on January 2, 1974, petitioner-claimant filed his reply thereto. In a
manifestation and motion filed on January 9. 1974, petitioner-claimant prayed that the
case be set fir oral argument before final resolution of the same by the Court. On
January 11, 1974, private respondent Ernesto Manarang adopted respondent Judge
Vera's answer.

The records show that on September 19, 1972, petitioner-claimant filed a claim
for compensation under Act 3842, i.e., the Workmen's Compensation Act as amended,
with the Workmen's Compensation Unit (WCU), Regional District No. 6, at Naga City,
for the death of his son, Norberto Nocnoc, single, who died in an accident on June 9,
1970, while employed as a bus conductor in the transportation business of private
respondent, Ernest Manarang. Private respondent received a copy of the claim on
February 2, 1973. On March 7, 1973, after the period to controv ert the claim expired,
private respodent moved to dismiss the claim on the ground that petitioner had
previously entered into an amicable setlement of the claim and that petitioner-claimant
had in fact received the sum of P2,330.00. In its order of March 14, 1973, the WCU
through its Chief Referee, Estanislao D. Sarto, denied the motion to dismiss, and
instead awarded to petitioner-claimant the sum of P6,240.00, but deducted thereform
the aforesaid amount of P2,330.00 which was deemed as advance and/or partial
payment on the claim. The dispositive portion of the award, therefore, directed private
respondent Manarang —

1. To pay to claimant father Maxino Nocnoc ... the sum of P3,910 as full compensation
for the death of the late Roberto Nocnoc; and,
2. To pay to the Workmen's Compensation Fund ... the sum of P61.00 as
administrative fee under Section 55 of the aforesaid law.

Respondent Manarang moved to have the award reconsidered, but his Motion
for Reconsideration was denied for lack of merit in the WCU Order of April 24,
1973. Upon the finality of the award, claimant-petitioner filed a petition for the
issuance of a writ of execution which was opposed by respondent on the ground that
he already filed on May 25, 1973, a petition for certiorari with this Court, the resolution
of which " is a prejudicial question,"

The "Petition for Review on Certiorari" adverted to was, per resolution of this
court dated June 8, 1973, considered "NOT FILED" for failure of peitioner Manarang
to pay docket and legal fees. It does not appear that he filed motion for reconsideration
of the said resolution, but thereafter or on July 20, 1973, the writ of execution was
issued by the WCU.

On August 4, 1973, respodent filed a complaint, entitled "Ernesto Manarang v.

Estanislao Sarto, et al." Civil Case No. 2438, for injunction with the Court of First
Instance, branch II at camarines Norte, presided by respondent Judge to enjoin the
enforcement of the writ of execution so issued, upon his filing of a bond, to be fixed by
the Court. On August 7, 1973 respondent Judge ordered defendants, WCU Chief
Referee and the Provincial Sheriff to "cease and desist from further orders." In a
motion for intervention dated August 9, 1973, petitioner-claimant moved to be allowed
to intervene as "the real Party-in-interest", with prayer that his "Motion to Dismiss",
which he attached, predicated on lack of jurisdiction on the part of respondent Judge,
be admitted. In its order of August 13, 1973, respondent Judge granted the motion for
in. intervention but denied the motion to dismissed.

In their answer, with counterclaim, dated August 23, 1973 defendants (Chief
Referee and Provincial Sheriff and intervenor (petitioner-claimant) prayed for the
dismissal of the complaint. Upon the other hand, plaintiff — now private respondent
— in his reply prayed for the dismissal of the counter-claim and that the injunction
already issued be made permanent. The questioned orders of September 18, 1973
and October 19, 1973 were thereafter issued. Hence, this petition for certiorari and
prohibition.

As adverted to earlier, the question now before Us is whether the Court of First
Instance, as a court of general jurisdiction, can entertain a case impugning the validity
of award of the Workmen's Compensation Unit and, in the process restrain the
enforcement of a writ of execution is issued by its Chief Referee.

Petitioner-claimant contends that the Court of First Instance had been

jurisdiction to entertain a Workmen's Compensation case since it has no jurisdiction
whatsoever over the same. Neither can it enjoin the execution of an award by the
Workmen's Compensation Unit, an independent administrative body fully clothed by
law with authority to adjudicate matters relative to Workmens Compensation cases.
On the other hand, respondent Judge insists that "in issuing the injunctive order in
Civil Case No. 2438 (he) did so, not in the exercise of any appellate jurisdiction over
the Workmen's Compensation Commission because he has none, but in the exercise
of his power as a court of general jurisdiction in a case file before him. For according
to respondent judge, "he cannot evade his solemn duty of giving redress to a litigant
who claims, that his constitutional right to a day in court has been denied." Respondent
Judge's position, therefore, is that while he has no appellate jurisdiction over the
Workmen's Compensation case, he may "... in the exercise of his power as a court of
general jurisdiction ... (gives) redress to a litigant who that his constitutional right to a
day in court has been denied".

Respondent Judge's position is not well-taken. This petition is invested with

merit.
1. Respondent Judge's disclaimer of appellate jurisdiction over Workmen's
Compensation cases is well-taken pursuant to Sec. 46, Act 3428 or the Workmen's
Compensation Act as amended by RA 772, to wit:

SEC. 46. Jurisdiction The Workmen's Compensation Commission shall have

exclusive jurisdiction to hear and decide claims for compensation under the
Workmen's Compensation Act subject to appeal to the Supreme Court, in the same
manner and in the same period provided by law and by Rules of Court for appeal from
the Court of Industrial Relations to the Supreme Court. (Emphasis supplied.)

But his assertion of jurisdiction over private respondent Manarang's complaint

for injunction — arising from proceedings before the Workmen's Compensation Unit,
on the ground that his court "is one of general jurisdiction" — is contrary to his court's
admitted lack of jurisdiction — whether original or appellate — over Workmen's
Compensation cases. For, in reviewing the alleged nullity of the award and enjoining
its execution, respondent Judge assumed jurisdiction over a matter which could have
been elevated from the Workmen's Compensation Unit to the Workmen's
Compensation Commission, and thereafter, on appeal, to this Court. This, he cannot
do, for "... the decisions, orders and awards entered by the Workmen's Compensation
Commission are appealable to the Supreme Court. ... The Court of First Instance is
not empowered or clothed with jurisdiction to review or modify, much less, annul an
award or order of execution issued by the Workmen's Compensation Commission."

The law and jurisprudence are thus clear, unequivocal. No further interpretation
is necessary. The proper forum to thresh out the validity of the WCU's award — which
is allegedly null and void because it was rendered without giving the private
respondent his consitutional right to due process, as well as the validity of the ensuing
writ of execution to enforce the same — is the Workmen's Compensation Commission,
and, on appeal, this court and not any other, much less respondent's court. In point of
fact, respondent Manarang filed a Petition for Review on certiorari earlier with this
court on May 25, 1973. This, however, was considered "NOT FILED" per this Court's
resolution of June 8, 1973 for his failure to pay docket and legal fees. Since he did not
pursue the said remedy by seeking the reconsideration of this Court's resolution and/or
paying the required fees, and, instead, went to respondent Judge's court and filed the
complaint for injunction, he may be deemed to have abandoned the appropriate
recourse of appeal to the Workmen's Compensation Commission and to this Court.

2. Now, as to private respondent's claim that he was denied his day in court. The WCU
correctly found that the claim was not controverted by private respondent within the
period prescribed by the Workmen's Compensation Act, as amended, and the
Commission Rules, which require controversion of the claim within fourteen (14) days
from the date of the disability or within ten (10) days after the employer or his
representative first acquired knowledge of the disability resulting from the accident or
illness. This finding was not disputed by private respondent. And, as a matter of fact,
private respondent paid petitioner-claimant P2,330.00 in an attempt to settle the case
amicably. The failure to controvert is fatal to the defense of the claim. The Commission
Rules specifically provides that failure to controvert within the period "may result in the
issuance of an award, if warranted by substantial evidence, without necessity of any
formal hearings." 34 We have recognized this right of the Labor Regional
Administrator (now Chief of Workmen's Compensation Unit) to immediately issue an
award without notice and hearing where the employer failed to seasonably submit the
employer's report or notice of controversion in accordance with and in the manner
provided for under Sections 37 and 45 of the Workmen's Compensation
Act. Specifically, it has been held that after the failure to controvert, an emoployer
cannot raise the question of being denied its day in court.

Respondent Judge assumed jurisdiction over the private respondent's

complaint in Civil Case No. 2438 on the basis of private respondents claim that he was
denied his day in court and on his (respondent Judge's) impression that as a "court of
general jurisdiction", the Court of First Instance has jurisdiction over the case and give
the relief prayed for — as he did. Respondent Judge lost sight of the fact that the
phrase "court of general jurisdiction" is merely descriptive of court of First Instance
(CFI) which have original jurisdiction over civil, criminal and other cases in contra-
distinction to courts of special, limited jurisdiction, e.g., the Court of Agrarian Relations
(CAR), the Court of Tac Appeals (CTA), the Circuit Criminal Courts (CCC), the
Juvenile and Domestic Relations Courts (JDRC) and so forth. The descriptive phrase,
however, does not and cannot confer CFI's with power to entertain an incident
involving a Workmen's Compensation case, which within the exclusive jurisdiction of
the Workmen's Compensation Commission (WCC), and of this Court, in case of an
appeal. For jurisdiction to be properly vested in a court or body, it must be expressly
provided by law, and, in the case of Courts of First Instance, by the Judiciary Act, as
amended, not by a phrase descriptive of the extent and scope of the Court's
competence.

IN VIEW OF THE FOREGOING, the orders of respondent Judge dated

September 18 and October 10, 1973, are hereby ANNULLED and SET ASIDE. By this
court on November 5, 1973, is hereby MADE PERMANENT. This decision and the
award of the Workmen's Compensation Unit are immediately executory.

Separate Opinions

Barredo, J., concurring:

Indeed, We did not have to rule on the allegation of petitioner about denial of due
process because that is a matter deemed resolved already in the certiorari case the
Court had dismissed.
Fernando (Chairman), Antonio, Aquino and Concepcion, Jr., JJ., concur.

# Separate Opinions
Barredo, J., concurring:
Indeed, We did not have to rule on the allegation of petitioner about denial of due
process because that is a matter deemed resolved already in the certiorari case the
Court had dismissed.
Fernando (Chairman), Antonio, Aquino and Concepcion, Jr., JJ., concur.
 Republic of the Philippines
SUPREME COURT
Manila
EN BANC

G.R. No. L-19547 January 31, 1967

SERAPIO DAUAN, petitioner and appellee,

vs.
THE SECRETARY OF AGRICULTURE and NATURAL RESOURCES and the
DIRECTOR OF LANDS,respondents and appellees.
SIMON ILARDE, ROMUALDO ILARDE, LORD CALANGAN, SANTOS BAYSA
and BASILIA TOMAS,respondents and appellants.
Asterio T. Saquing for respondents-appellants.
Office of the Solicitor General for respondents-appellees.
Pedro C. Flores for petitioner-appellee.

REGALA, J.:
This case involves claims to 14.25 hectares of public land in Bambang, Sto.
Domingo, Nueva Vizcaya. The land was originally applied for as homestead by Jose
Aquino. Upon his death, Aquino was succeeded by his children who sold their rights
to the land to the present appellee, Serapio Dauan.

Appellee himself filed an application H.A. No. 206623) for a homestead of the
land on February 14, 1935, but there is considerable dispute as to whether this
application was approved by the Director of Lands. This point became a crucial issue
between the parties as appellee subsequently sold his rights to various portions of the
homestead to the appellants without securing the approval of the Secretary of
Agriculture and Natural Resources and both parties took the view that, if appellee's
application had been approved, then the transfer of rights to appellants must be
approved by the Secretary; otherwise, no such approval was necessary. Thus, it
appears that on December 16, 1943, appellee sold his rights to one-half of the land to
appellant Simon Ilarde and that on July 24, 1951, he sold his rights to 4 hectares to
appellant Lord Calangan and to 3 hectares to appellant Basilia Tomas. On March 28,
1955, Calangan and Tomas in turn sold their rights to some part of the land to Santos
Baysa. These sales were all made without the previous approval of the Secretary of
Agriculture and Natural Resources. The basis of contention of both parties is the
following provision of the Public Land Act (Com. Act No. 141):

SEC. 20. If at any time after the approval of the application and before the
patent is issued, the applicant shall prove to the satisfaction of the Director of Lands
that he has complied with all requirements of the law, but cannot continue with his
homestead, through no fault of his own, and there is a bona fide purchaser for the
rights and improvements of the applicant on the land, and that the conveyance is not
made for purposes of speculation, then the applicant, with the previous approval of the
Secretary of Agriculture and Commerce, may transfer his rights to the land and
improvements to any person legally qualified to apply for a homestead, and
immediately after such transfer, the purchaser shall file a homestead application to the
land so acquired and shall succeed the original homesteader in his rights and
obligations beginning with the date of the approval of said application of the purchaser.
Any person who has so transferred his rights may again apply for a new homestead.
Every transfer made without the previous approval of the Secretary of Agriculture and
Commerce shall be null and void and shall result in the cancellation of the entry and
the refusal of the patent.

The dispute arose when appellee asked the Bureau of Lands to cancel the
application for free patents which the appellants filed, covering the portions of the
homestead sold to them. Appellee questioned the validity of the sales, claiming that
the, agreement was that of a loan and that at any rate the supposed sales were void
for having been made without the prior approval of the Secretary of Agriculture and
Natural Resources. On the other hand, appellants maintained that their agreement
with the appellee was that of a sale and, that as the homestead application of appellee
himself had not been approved by the Director of Lands, no approval by the Secretary
of the subsequent sales to them was necessary.

The Director of Lands held the transactions to be sales and sustained their
validity on a finding that the homestead application of appellee had not been approved.
His decision was subsequently affirmed on appeal by the Secretary of Agriculture and
Natural Resources. Said the Secretary:

The records ... do not reveal that appellant's H.A. No. 206623 has ever been
approved, inspite of the fact that it was filed as early as 1935. Over the allegation of
the appellant (appellee herein) that his homestead application was approved but the
records thereof were lost during the war is the verity that there are no reconstituted
records to point to such approval of application nor is there any evidence to show that
he has ever attempted to reconstitute the documents relative to the said approval.
xxx xxx xxx

Of course, in all these transfers none ever secured any prior approval of the
Director of Lands, required in Section 20 of the Public Land Law, as amended by
Republic Act No. 1242, but it should be noted that the said provision of law demands
such approval only when transfer of rights is executed after the approval of a
homestead application and, in the present case, there is no showing that the
homestead application of the appellant, basis of the rights so transferred, had ever
been approved at the time the transfers in question were executed.

Appellee did not appeal to the President. Instead, he filed this petition for
certiorari in the Court of First Instance of Nueva Vizcaya, charging that both Director
of Lands and Secretary of Agriculture and Natural Resources gravely abuse their
discretion in finding that his application had not been approved and, consequently, in
ruling that prior approval of the transfers to them was not required.

The court granted appellee's petition, stating:

The court has noticed that the past war has caused the disappearance of the
prewar records of the homestead in question, but the papers pertinent thereto
presented by the petitioner are, in the opinion of this Court, more than sufficient to
bring us to a legitimate conclusion that the petitioner is a holder of a perfected
homestead entitled to grant from the government, and having said petitioner remained
in the possession for a period of more than 23 years, he is entitled to the protection of
the law; the sales application of Romualdo Ilarde is null and void with respect to the
portion which embraces or includes a portion of the homestead of the petitioner [the
court having found no evidence at all that the portion was conveyed to Romualdo Ilarde
by the appellee] ; the free patent applications of the respondent Simon Ilarde, Basilia
Tomas and Lord Calangan having not been previously approved by the Secretary of
Agriculture and Natural Resources are null and void, and as respondent Santos Baysa
derives his alleged rights from Basilia Tomas and Lord Calangan, necessarily his
application is also null and void.

Appellants asked for a reconsideration of this decision and, failing to secure

one, brought this matter before us on appeal. They contend that the decision of the
Director of Lands, which was affirmed by the Secretary of Agriculture and Natural
Resources, became final for failure of the appellee to appeal to the President, with the
result that this petition for certiorari should not have been entertained. Moreover, it is
claimed that the trial court erred in ruling that appellee's application had been approved
after it had once been found by the Director and the Secretary that no such approval
had been given.

While the rule of exhaustion of administrative remedies would indeed require

an appeal to be taken to the President before resort to the courts can be made,2 it is
equally true that the rule is not without exception. For instance, the rule does not apply
where the question in dispute is purely a legal one, and nothing of an administrative
nature is to be or can be done.

Here the question was whether from the evidence submitted by the parties it
could fairly be concluded that appellee's homestead application had been granted.
Were the matter a simple process of ascertaining from the records whether the
application had been granted, we would agree with appellants that it is a question of
fact. But precisely because the records of the Bureau of Lands had been destroyed
during the war that circumstantial evidence had to be introduced and it is a rule now
settled that the conclusion drawn from the facts is a conclusion of law which the courts
may review."

And now to the main question: Is there warrant for the lower court's conclusion
that appellee's application for a homestead had been approved? We believe there is:
First, it appears that sometime in 1936, a certain Teodocia Escobedo claimed in the
Bureau of Lands (Claim No. 103) the land in question and its improvements and
contested appellee's application for this purpose. In a decision dated January 28,
1941, dismissing the claim, the Director of Lands made a statement from which it may
fairly be inferred that appellee had been allowed to enter the land and that his
application had been granted, since under section 13 of the Public Land Act entry is
allowed only after the approval of the application.

Second, the documents entitled "Transfer of Homestead Rights," whereby

appellee transferred his rights to 4 hectares to appellant Calangan and 3 hectares to
Basilia Tomas, recite in the first "WHEREAS" that "by virtue of Homestead Application
No. 206623 approved on January 28, 1941 in accordance with Chapter IV of Com. Act
No. 141, as amended, the Director of Lands allowed SERAPIO DAUAN to enter upon,
occupy, cultivate, and reside on the tract of land described as follows ...." Incidentally,
these documents are in the form prescribed by the Bureau of Lands. The date given
(January 28, 1941) as date of approval of the application is the date of the decision in
Claim No. 103.

Third, if appellee's application had not been approved then he obviously had
no right to transfer to the appellants, since as already pointed out, under section 13 of
the statute, only after the approval of his application can an applicant enter and
cultivate the land being applied for.

Fourth, appellee had all qualifications prescribed by the statute5 and the
presumption is that in the performance of his duty, the Director granted appellee's
application. Indeed, section 13 of the statute commands the Director to approve the
application "upon the filing (thereof) ... if he finds that the application should be
approved ... and authorize the applicant to take possession of the land upon payment
of five pesos, Philippine currency, as entry fee." The fact that appellee was in
possession of the homestead at the time of the conveyances to the appellants,
coupled by the lack of anything to show that he was not in possession of the requisite
qualifications, fairly indicates that his application had been approved by the Director
of Lands.

These are circumstances strongly favoring the inference that appellee's

application had been granted. In disregarding them and in insisting instead on the
presentation of the records or reconstituted records to prove the grant of appellee's
application, respondent land officials acted in excess of jurisdiction. This is not the first
time circumstantial evidence is admitted to prove the grant of official sanction.
In Garcia v. Valera, 88 Phil. 472 (1951), the question was whether the sale of a
homestead had been previously approved by the Secretary of Agriculture and Natural
Resources. The trial court held that as defendant failed to prove that the sale was
approved, the same was void. In reversing the lower court's ruling, the Supreme Court
held:

It is significant that appellee's witness did not definitely declare that the sale in
question did not carry the requisite approval when it was presented for registration;
that the appellant at least testified, and this is uncontradicted, that he took to the office
of the register of deeds of Nueva Vizcaya a letter obtained from the Bureau of Lands
in connection with his sale; and that the corresponding transfer certificate of title (No.
3313) was issued in the name of appellant by the register of deeds of Nueva Vizcaya
in virtue of the sale made by Marcelo Uson. All these, coupled with the fact that the
record does not show any constitutional or legal ground for not approving the sale in
question and with the legal presumptions that official duty has been regularly
performed and the law has been obeyed, fairly lead to the conclusion that the sale
from Marcelo Uson to the appellant was made in conformity with Commonwealth Act
No. 456 ....

We hold, therefore, that the conveyances to the appellants, which were

admittedly made without the previous approval of the Secretary of Agriculture and
Natural Resources, are void and, consequently, that appellants return the possession
of the land in question to the appellee upon the return to them of the purchase price
they had paid to the appellee.6 We do not forget, of course, that a transfer of rights
without the previous approval of the Secretary of Agriculture and Natural Resources
"shall result in the cancellation of the entry and the refusal of the patent" of the appellee
but the cancellation is not automatic and as long as the Government has not chosen
to act, the rights of appellee must stand.

Wherefore, the decision appealed from is affirmed, without pronouncement as

to costs.

Concepcion, C.J., Reyes, J.B.L., Dizon, Makalintal, Bengzon, J.P., Zaldivar, Sanchez
and Castro, JJ., concur.
 Republic of the Philippines
SUPREME COURT
Manila
EN BANC

G.R. No. L-21335 December 17, 1966

ABOITIZ SHIPPING CORPORATION, petitioner,

vs.
VIVENCIA ANDO PEPITO, and the minors, LOLITA, ALBERTO, NELSON,
MARYLEN and MARIA, all surnamed PEPITO represented by their mother, the
respondent Vivencia Ando Pepito, respondents.
P. B. Uy Calderon for petitioner.
G. C. Arriesgado for respondents.

SANCHEZ, J.:
Between the night of November 30, and the early morning of December 1,
1961, Demetrio Pepito, a crew member of m/v P. Aboitiz, disappeared therefrom while
said vessel was on voyage.

On December 26, 1961, petitioner received from respondent Vivencia Ando

Pepito a letter dated December 21, 1961, stating —
You are hereby notified that one of your employees, Mr. Demetrio Pepito, a crew
member of M/V P. Aboitiz, one of your vessels, was reported missing as per record of
the Deck Log Book of the M/V P. Aboitiz while said vessel was navigating from Surigao
to Tandag. It is our belief that Mr. Pepito is already dead. A diligent search has been
made but the same is rendered futile.

On January 12, 1962, Vivencia Ando Pepito, for herself and in behalf of her
children, the other respondents, filed with Regional Office No. 8, Department of Labor,
Cebu City, a notice and claim for compensation, asking for death benefits, and
describing the circumstances of the alleged death of Demetrio Pepito on the night of
November 30, 1961 in the following manner, viz: "While the vessel was navigating
from Surigao to Tandag, the herein deceased was lost or reported missing as per
record of the deck log of the M/V P. Aboitiz".

Having received on February 15, 1962 from the chief, labor operations section
of said regional office, a letter enclosing the foregoing claim, petitioner, on February
16, 1962, sent to that office the employer's report of accident or sickness, controverting
the claim for compensation and alleging that Demetrio Pepito was found missing on
December 1, 1961 and giving its own version of the incident as follows: "Pepito
disappeared while off duty, and when the vessel was near Bucas Grande Island while
the ship was in navigation on a calm sea and good weather. We do not know if he
purposely jumped and swam ashore".

On March 21, 1962, without hearing, the Regional Administrator issued an

award for death benefits to respondents, planted upon the ground that "the right to
compensation of the claimant has not been controverted by respondent within the
period provided for by law."
Motion to reconsider was of no avail. Petition sought review from the Workmen's
Compensation Commission. In a decision dated March 8, 1963, said Commission
affirmed. The reconsideration sought was thwarted in the Commission's en
banc resolution of April 5, 1963.

We are now called upon to review on certiorari the Commission's decision of

March 8, 1963 and its resolution of April 5, 1963.

1. There should be no quarrel as to the fact that petitioner came to know of the
disappearance of Demetrio Pepito on December 1, 1961. Petitioner so admits in its
report of accident or sickness. And then, on December 26, 1961 petitioner received
from respondent Vivencia Ando Pepito a letter informing it of the fact that Demetrio
Pepito was reported missing on December 1, 1961, as per record of the deck log book
of m/v P. Aboitiz.

Decidedly, the purported controversion — filed on February 16, 1962 — was

made beyond the periods set forth in the law and the rules and regulations of the
Workmen's Compensation Commission, namely, 14 days from the date of accident or
10 days from knowledge thereof.

2. Logically, the next problem we face is the scope of the non-controversion which
may be clamped upon petitioner.

By Section 2, Rule 7 of the Rules of the Workmen's Compensation

Commission, "[A]ll the general rules of procedure in the Courts of First Instance shall
be suppletory to the Rules of the Workmen's Compensation Commission but the
commission shall not be bound by the technical rules of procedure".

We go deep into the recitals of the notice and claim for compensation. It simply
says that while the vessel was navigating, "the herein deceased was lost or reported
missing". This claim was filed on January 12, 1962, or barely 42 days after the event
took place. At that time, no presumption existed that Demetrio Pepito was dead. The
boat was not lost. This opens up a number of possibilities. Because nothing is certain.
Nobody knows what has happened to him. He could have transferred to another
vessel or watercraft. He could even have swam to safety. Or he could have died. Or
worse, he could have taken his own life. Legal implications — such as right to
compensation, succession, the legal status of the wife — are so important that courts
should not so easily be carried to the conclusion that the man is dead. The result is
that death cannot be taken as a fact.

Non-controversion in compensation cases, as in the case of pleadings in

ordinary civil cases, simply means admission of facts, not conclusions of law.
As applied to the case before us, the mere failure to controvert the statement that
Demetrio Pepito is believed to be "dead" or "deceased" because he "was lost"
or was "reported missing", does not import an admission that the man is actually dead,
but that he was just lost or missing.

We, therefore, rule that petitioner's non-controversion admits but the fact that
Demetrio Pepito was lost or missing, but certainly is not an admission of the actual
fact of death.
3. But petitioner was directed to pay compensation without inquiry into the fact and
circumstances of death. This trenches upon petitioner's right to due process enshrined
in Section 1 (1) of Article Ill of the Constitution that "[N]o person shall be deprived of
life, liberty, or property without due process of law." The award having been made
before petitioner was given an opportunity to be heard on the debatable fact and
circumstances of death, that award has no leg to stand on. We nullify that award as a
violation of a constitutional prescription.

4. But the Commission would want to downgrade petitioner's cry of denial of due
process by a reference to a certain investigation report dated January 12, 1962, made
— barely 42 days after the incident — by one Anselmo M. Morales, a constabulary
sergeant, to the effect that Demetrio Pepito was "on board said boat on her maiden
voyage to Tandag, Surigao del Sur; that at about 2:00 o'clock a.m. on December 1,
1961, Francisco Ygot, a watchman on duty, noticed that Demetrio Pepito was not in
the crews' sleeping quarters; that when a thorough search of the boat failed to locate
the missing crew member, the boat's course was reversed upon instruction of its
captain in order to look for him; that because no trace of Demetrio Pepito or his body
could be found, the search was abandoned and the boat then proceeded to Tandag;
and that no one knew what happened to Demetrio Pepito because he disappeared at
midnight on a rough sea (big waves)". This report does not prove death. At best, it
confirms a known fact — disappearance, with the circumstance that "no one knew
what happened to Demetrio Pepito". Besides, said report was not brought up at any
hearing. It was but the result of an investigation. Whatever the investigator said would
not rise above the level of hearsay twice removed. By Section 7 of the Workmen's
Compensation Law "[A]ll ex parte evidence received by the Commissioner shall be
reduced to writing and any party in interest shall have the opportunity to examine and
rebut the same". Petitioner was not afforded an opportunity to as much as examine or
contradict this report. It thus results that said report is of no value as evidence.

5. The employer-employee relationship is conceded. The event arose out of, and took
place in the course of, employment. It matters not that the disappearance occurred,
as alleged by petitioner, while Demetrio Pepito was off-duty. For, that incident
happened while the boat was on a sea voyage. He had no choice. He had to be in the
vessel.

6. From the time the event took place, i.e., from the night of November 30, 1961, to
this date, more than 4 years have elapsed. It is because of this that we approach this
problem with a practical end in view. By this time, it cannot be gainsaid that the case
of the disappearance of Demetrio Pepito could come within the coverage of paragraph
3, Article 391 of the Civil Code, which reads:

ART. 391. The following shall be presumed dead for all purposes, including the
division of estate among the heirs:
xxx xxx xxx
xxx xxx xxx
(3) A person who has been in danger of death under other circumstances and his
existence has not been known for four years.

With the known facts, namely, that Demetrio Pepito was lost or missing while
the boat was navigating, he could have been in danger of death. But of course,
evidence must be taken that his existence has not been known for four years or
thereafter.

Upon the view we take of this case, we vote to set aside the appealed decision
of March 8, 1963 and the resolution of April 5, 1963, and to direct that the record hereof
be returned to the Workmen's Compensation Commission with instructions —

1. To hold a hearing, with notice to the parties, to determine (a) whether Demetrio
Pepito is alive; or (b) whether he should be presumed dead, under the provisions of
paragraph 3, Article 391 of the Civil Code; and (c) the circumstances of death if it be
found or presumed that he died; and

2. To render judgment accordingly.

No costs. So ordered.

Concepcion, C.J., Reyes, J.B.L., Barrera, Dizon, Regala, Makalintal, Bengzon, J.P.,
Zaldivar and Castro, JJ.,concur.
 [ GR No. 39919, Jan 30, 1934 ]
FORTUNATO ORTUA v. VICENTE SINGSON ENCARNACION
59 Phil. 440

MALCOLM, J.:

In this case the petitioner and appellant seeks the issuance of a writ of
mandamus directed against the Secretary of Agriculture and Commerce and the
Director of Lands, for the purpose of compelling them to give due course to his sale's
application for a tract of public land. The demurrers interposed to the complaint by the
respondents and appellees were sustained in the trial court, and on the failure of the
petitioner further to amend his complaint, the action was dismissed, without costs.

The principal facts admitted by the pleadings may be stated as follows: In

January, 1920, the petitioner Fortunato Ortua filed an application with the Bureau of
Lands for the purchase of a tract of public land situated in the municipality of San Jose,
Province of Camarines Sur. Following an investigation conducted by the Bureau of
Lands, Ortua's application was rejected, allowing him, however, to file a sale or lease
application for the portion of the land classified to be suitable for commercial purposes,
within a period of sixty days from the date of the decision and upon payment of P3,000
for accrued rents. Two motions for reconsideration of the decision were filed and
denied. On appeal to the then Secretary of Agriculture and Natural Resources
(Agriculture and Commerce), the decision was affirmed, except that the sum of P3,000
was reduced to P400.

It should be explained that one condition for the purchase of a tract of public
agricultural land, provided by the Public Land Law, Act No. 2874, in its sections 23
and 88, is that the purchaser shall be a citizen of lawful age of the Philippine Islands
or of the United States. Fortunato Ortua in his application stated that he was a Filipino
citizen, but the Director of Lands held that on the contrary, Ortua was a Chinese
citizen. On this question, the Director of Lands found established the following facts:
Fortunato Ortua was born in 1885 in Lagonoy, Camarines Sur, Philippine Islands,
being the natural son of Irene Demesa, a Filipina, and Joaquin Ortua, a Chinese. In
1896 Fortunato was sent to China to study. While he was in China his father and
mother were legally married. Fortunato returned to the Philippines in 1906, that is,
when he was twenty-one years of age.

It was conceded by the Director of Lands that presumptively Fortunato Ortua

was a Philippine citizen, but certain acts of Ortua were pointed to as demonstrating
that he had forfeited his Philippine citizenship. Thus it was stated that Ortua voluntarily
applied for a landing certificate of residence which was issued by the Insular Collector
of Customs and which is only given to Chinese persons. Also, when Ortua applied for
the registration of a boat, and it was denied by the Insular Collector of Customs on the
ground that the appellant was a Chinese citizen, Ortua submitted to the ruling.

The Director of Lands performs his functions pursuant to the provisions of the
Public Land Law. In accordance with this law, the Secretary of Agriculture and
Commerce is made the executive officer charged with carrying out the provisions of
the Public Land Law, and he performs this duty through the Director of Lands (sec. 3).
Subject to the control of the executive head, the Director of Lands is by law vested
with direct executive control over land matters, "and his decisions as to questions of
fact shall be conclusive when approved by the Secretary of Agriculture and
Commerce." (Sec. 4.)

The foregoing analysis of the pertinent provisions of the Public Land Law will
show why in the opening paragraphs of this decision, .we accepted the decision of the
Director of Lands on questions of facts as conclusive. We would even go farther and
would hold that the Director of Lands has been made by law a quasi-judicial officer.
As such officer he makes findings of fact, even passes upon questions of mixed fact
and law, and considers and decides the qualifications of applicants for the purchase
of public lands. A discretion is lodged by law in the Director of Lands which should not
be interfered with. The decisions of the Director of Lands on the construction of the
Public Land Law are entitled to great respect by the courts.

Accordingly, to paraphrase the authorities and decisions coming principally

from the United States Supreme Court, we deduce the rule on the subject to be, that
a decision rendered by the Director of Lands and approved by the Secretary of
Agriculture and Commerce, upon a question of fact is conclusive and not subject to be
reviewed by the courts, in the absence of a showing that such decision was rendered
in consequence of fraud, imposition, or mistake, other than error of judgment in
estimating the value or effect of evidence, regardless of whether or not it is consistent
with the preponderance of the evidence, so long as there is some evidence upon which
the finding in question could be made. (Vargas and Manalac, The Philippine Land
Registration Law, pp. 738-740; Julian vs. Apostol [1928], 52 Phil., 422; 50 C. J.,
1089 et seq.; Johnson vs. Riddle [1916], 240 U. S., 467.)

There is, however, another side to the case. It certainly was not intended by the
legislative body to remove from the jurisdiction of courts all right to review decisions of
the Bureau of Lands, for to do so would be to attempt something which could not be
done legally. Giving force to all possible intendments regarding the facts as found by
the Director of Lands, yet so much of the decision of the Director of Lands as relates
to a question of law is in no sense conclusive upon the courts, but is subject to review.
In other words, any action of the Director of Lands which is based upon a
misconstruction of the law can be corrected by the courts. (Shepley vs. Cowan [1876],
91 U. S., 330; Moore vs. Robbins [1878], 96 U. S., 530; Marquez vs. Frisbie [1879],
101 U. S., 473; Black vs. Jackson [1900], 177 U. S., 349; Johnson vs. Riddle, supra.)
Having adjusted this fundamental matter, it is now for the court to determine if the
question of law arising from the undisputed evidence was correctly decided by the
Director of Lands. This question is, if the petitioner Fortunato Ortua should be
considered to be a Philippine citizen or a Chinese citizen. Presumptively it is admitted
that he is a Philippine citizen. More correctly stated, Fortunato Ortua had a sort of a
dual citizenship, and had it within his power either to elect to become a Philippine
citizen or a Chinese citizen. Predicated on these assumptions, we doubt very much if
it could be found that Ortua has by his own acts repudiated his Philippine citizenship
and chosen Chinese citizenship. The Director of Lands gave too much prominence,
we think, to two minor facts, susceptible of explanation. When Ortua returned from
China at the age of twenty-one, it was the most natural thing in the world for him to
land as a Chinese, for this would facilitate entry and obviate complications. Again,
when Ortua applied for the registration of a boat, there may have been any number of
reasons why he did not care to appeal from the decision of the Insular Collector of
Customs. On the other hand, some consideration should be given to the intention of
the petitioner, and he vigorously insists that it is his desire to be considered a Philippine
citizen. He has taken a Filipino name. He has gone into business and has improved
the property here in question to a great extent. There has been no implied renunciation
of citizenship, because the petitioner has been domiciled in these Islands except for a
short period during his infancy when he temporarily sojourned in China for study. On
the contrary, he states that he has always considered himself to be a Filipino, and that
he has elected to remain as a Philippine citizen. Therefore, on the facts found by the
Director of Lands, we hold that clear error of law resulted in not considering petitioner
a Philippine citizen and so qualified under the Public Land Law to purchase public
agricultural lands.

Sustaining the assigned errors, the order of the trial court will be set aside, and
the record will be remanded to the court of origin for further proceedings in accordance
with law. No pronouncement as to costs in this instance.

Villa-Real, Hull, Imperial, and Goddard, JJ., concur.

 U.S. Supreme Court
O'Keefe v. Smith, 380 U.S. 359 (1965)
O'Keefe v. Smith
No. 307
Decided March 29, 1965
380 U.S. 359
ON PETITION FOR WRIT OF CERTIORARI TO THE UNITED STATES
COURT OF APPEALS FOR THE FIFTH CIRCUIT

PER CURIAM.
Robert C. Ecker drowned during a Saturday outing while boating on a South
Korean lake. At the time of his death, he was employed at a defense base in South
Korea by the respondent, Smith, Hinchman & Grylls Associates, a government
contractor.

The decedent had been hired in the United States under an oral contract the
terms of which provided that he was to be transported to South Korea at his employer's
expense, remain there for two years, and then, at his employer's expense, be
transported back to the United States. The employer paid his rent and provided him
with a per diem expense allowance for each day of the year, including weekends and
holidays, to cover "the necessary living expenditures in the Korean economy." He
worked on a "365-day per year basis . . . subject to call to the job site at any time." He
"quite often" worked on Saturdays and Sundays and at other times outside the normal
work day. The employer considered all its employees to be "in the course of regular
occupation from the time they leave the United States until their return." The employer
expected the decedent and its other employees to seek recreation away from the job
site on weekends and holidays.

Based upon the above stipulated facts, the Deputy Commissioner of the Bureau
of Employees' Compensation, United States Department of Labor, petitioner herein,
determined "that the accident and the subsequent death of the decedent arose out of
and in the course of employment." 222 F.Supp. 4, 6. He therefore awarded death
benefits to the decedent's widow and a minor child in accordance with the terms of the
Longshoremen's and Harbor Workers' Compensation Act, 44 Stat. 1424, as amended,
33 U.S.C. § 901 et seq. (1958 ed.), as extended by the Defense Base Act, 55 Stat.
622, as amended, 42 U.S.C. § 1651 et seq.(1958 ed.). The employer and its insurance
carrier, respondents herein, then brought this action in the United States District Court
for the Middle District of Florida to set aside and enjoin the enforcement of this
compensation award. The District Court affirmed the compensation award and granted
the Deputy Commissioner's motion for summary judgment. 222 F.Supp. 4.

A panel of the Court of Appeals for the Fifth Circuit summarily reversed and set
aside the award. 327 F.2d 1003. But compare the later decision of another panel of
the Fifth Circuit in O'Keeffe v. Pan American World Airways, Inc., 338 F.2d 319.

The petition for writ of certiorari is granted, and the judgment of the Court of
Appeals is reversed. Section 2(2) of the Act, 33 U.S.C. § 902(2) (1958 ed.), provides
workmen's compensation for any "accidental injury or death arising out of and in the
course of employment." Section 19(a), 33 U.S.C. § 919(a) (1958 ed.), provides for the
filing of a "claim for compensation," and specifies that "the deputy commissioner shall
have full power and authority to hear and determine all questions in respect of such
claim." Section 20(a), 33 U.S.C. § 920(a) (1958 ed.), provides that, "in any proceeding
for the enforcement of a claim for compensation under this chapter, it shall be
presumed, in the absence of substantial evidence to the contrary . . . that the claim
comes within the provisions of this chapter."

Finally, § 21(b), 33 U.S.C. § 921(b) (1958 ed.), provides that the Deputy
Commissioner's compensation order may be suspended and set aside by a reviewing
court only "if not in accordance with law."

In cases decided both before and after the passage of the Administrative
Procedure Act, 60 Stat. 237, as amended, 5 U.S.C. § 1001 et seq. (1958 ed.), the
Court has held that the foregoing statutory provisions limit the scope of judicial review
of the Deputy Commissioner's determination that a "particular injury arose out of and
in the course of employment." Cardillo v. Liberty Mutual Ins. Co., 330 U. S. 469, 330
U. S. 477-478; O'Leary v. Brown-Pacific-Maxon, Inc., 340 U. S. 504, 340 U. S. 507-
508.

"It matters not that the basic facts from which the Deputy Commissioner draws
this inference are undisputed, rather than controverted. . . . It is likewise immaterial
that the facts permit the drawing of diverse inferences. The Deputy Commissioner
alone is charged with the duty of initially selecting the inference which seems most
reasonable, and his choice, if otherwise sustainable, may not be disturbed by a
reviewing court. . . . Moreover, the fact that the inference of the type here made by the
Deputy Commissioner involves an application of a broad statutory term or phrase to a
specific set of facts gives rise to no greater scope of judicial review. . . ."
Cardillo v. Liberty Mutual Ins. Co., supra, at 330 U. S. 478.

The rule of judicial review has therefore emerged that the inferences drawn by
the Deputy Commissioner are to be accepted unless they are irrational or
"unsupported by substantial evidence on the record . . . as a whole." O'Leary v. Brown-
Pacific-Maxon, Inc., supra, at 340 U. S. 508.

The Brown-Pacific-Maxon case held that the standard to be applied by the

Deputy Commissioner does not require "a causal relation between the nature of
employment of the injured person and the accident. Thom v. Sinclair, [1917] A.C. 127,
142. Nor is it necessary that the employee be engaged at the time of the injury in
activity of benefit to his employer. All that is required is that the 'obligations or
conditions' of employment create the 'zone of special danger' out of which the injury
arose."

Id. at 340 U. S. 507. And, borrowing from language in Matter of Waters v. Taylor
Co., 218 N.Y. 248, 252, 112 N.E. 727, 728, the Court in Brown-Pacific-Maxon drew
the line only at cases where an employee had become "so thoroughly disconnected
from the service of his employer that it would be entirely unreasonable to say that
injuries suffered by him arose out of and in the course of his employment."

340 U.S. at 340 U. S. 507. This standard is in accord with the humanitarian
nature of the Act as exemplified by the statutory command that "in any proceeding for
the enforcement of a claim for compensation under this chapter it shall be presumed,
in the absence of substantial evidence to the contrary . . . [t]hat the claim comes within
the provisions of this chapter." § 20(a), 33 U.S.C. § 920(a).

In this case, the Deputy Commissioner, applying the Brown-Pacific-

Maxon standard to the undisputed facts, concluded "that the accident and the
subsequent death of the decedent arose out of and in the course of employment." 222
F.Supp. 4, 6. The District Court, likewise applying the Brown-Pacific-Maxon standard,
held "that the Deputy Commissioner was correct in his finding that the conditions of
the deceased's employment created a zone where the deceased Ecker had to seek
recreation under exacting and unconventional conditions, and that, therefore, the
accident and death of the decedent arose out of and in the course of employment."
222 F.Supp. at 9.

We agree that the District Court correctly affirmed the finding of the Deputy
Commissioner. While this Court may not have reached the same conclusion as the
Deputy Commissioner, it cannot be said that his holding that the decedent's death, in
a zone of danger, arose out of and in the course of his employment is irrational or
without substantial evidence on the record as a whole. The decedent was hired to
work in the exacting and unconventional conditions of Korea. His transportation over
and back was to be at the employer's expense, and, while there, he was considered
to be working on a 365-day per year basis, subject to call at the job site at any time,
and quite often he worked Saturdays and Sundays and at other times outside the
working day. The employer considered decedent and all other employees at this
hazardous overseas base to be "in the course of regular occupation from the time they
leave the United States until their return." Finally, the employer provided neither
housing nor recreational activities for its employees, but expected them to live, while
necessarily in the country to perform its work, under the exacting and dangerous
conditions of Korea. The employer paid decedent's rent and provided him with a per
diem expense allowance for each day of the year, including weekends and holidays,
to cover the necessary living expenses in the Korean economy. The accident here
occurred on an outing for a short period of time on a lake located only 30 miles from
the employer's job site. In the words of the District Court,

"It was reasonable to conclude that recreational activities contributed to a higher

efficiency of the employer's work, and that, when conducted in the restricted area of
employment, on a work day, so to speak, and in a manner not prohibited by the
employer, such activity was an incident of the employment." 222 F.Supp. 4, 9.

The dissent, while giving lip service to the Brown-Pacific-Maxon standards,

would reverse the determination of the Deputy Commissioner and District Court here,
as well as the Deputy Commissioner and the Courts of Appeals in other cases, that
the several accidents involved were within the "zone of special danger." As Brown-
Pacific-Maxon made clear, it is just this type of determination which the statute leaves
to the Deputy Commissioner subject only to limited judicial review. Indeed, this type of
determination, depending as it does on an analysis of the many factors involved in the
area of the employment, would seem to be one peculiarly for the Deputy
Commissioner.
 The District Court therefore correctly upheld the determination of the Deputy
Commissioner, and the Court of Appeals erred in summarily reversing its
judgment. Cf. O'Keeffe v. Pan American World Airways, Inc., 338 F.2d 319 (C.A.5th
Cir. 1964); Pan-American World Airways, Inc. v. O'Hearne, 335 F.2d 70 (C.A.4th Cir.
1964); Self v. Hanson, 305 F.2d 699 (C.A.9th Cir. 1962); Hastorf-Nettles, Inc. v.
Pillsbury, 203 F.2d 641 (C.A.9th Cir. 1953).

Since we believe that the Deputy Commissioner and District Court properly
applied the Brown-Pacific-Maxon standard, and since we deem it necessary to
preserve the integrity of the administrative process established by Congress to
effectuate the statutory scheme, the judgment of the Court of Appeals is Reversed.

MR. JUSTICE HARLAN, whom MR. JUSTICE CLARK and MR. JUSTICE WHITE join,
dissenting.

Ecker was employed in Seoul, Korea, as an assistant administrative officer for Smith,
Hinchman & Grylls Associates, Inc., an engineering management concern working
under contracts with the United States and Korean Governments. His duties were
restricted to Seoul, where he was responsible for personnel in the stenographic and
clerical departments. He was subject to call at the job site at any time, but the usual
work week was 44 hours, and employees were accustomed to travel far from the job
site on weekends and holidays for recreational purposes. Ecker did not live at the job
site; he was given an allowance to live on the economy in Seoul. On his Memorial Day
weekend, he went to a lake 30 miles east of Seoul where a friend of his (not a co-
employee) had a house. Ecker intended to spend the holiday there with his friend and
another visitor. Their Saturday afternoon project was to fill in the beach in front of the
house with sand, but none was readily available. In order to obtain it, the three crossed
the lake in a small aluminum boat to a sandy part of the shore. There, they filled the
boat with a load of sand, intending to transport it back to the house. The return trip,
however, put Archimedes' Principle to the test; in the middle of the lake, the boat
capsized and sank. Two of the three men drowned, including Ecker.

The Longshoremen's and Harbor Workers' Compensation Act, [Footnote 1] as

extended by the Defense Bases Act, [Footnote 2] provides workmen's compensation
for any "accidental injury or death arising out of and in the course of employment, and
such occupational disease or infection as arises naturally out of such employment or
as naturally or unavoidably results from such accidental injury, and includes an injury
caused by the willful act of a third person directed against an employee because of his
employment." 33 U.S.C. § 902(2).

The Court holds, per curiam, that Ecker died in the course of his employment.
I see no meaningful interpretation of the statute which will support this result except a
rule that any decision made by a Deputy Commissioner must be upheld (compare
Rogers v. Missouri Pac. R. Co., 352 U. S. 500). That interpretation, although
meaningful, is unsupportable.

O'Leary v. Brown-Pacific-Maxon, Inc., 340 U. S. 504, relied upon by the Court,

did not establish such a rule. The Court there upheld a compensation award arising
from the accidental death of an employee of a government contractor on the island of
Guam. The employer maintained for its employees a recreation center near the
shoreline along which ran a very dangerous channel. After spending the afternoon at
the employer's recreation center, and while waiting for the employer's bus, the
employee heard cries for help from two men in trouble in the channel. He drowned in
his attempt to rescue them. Mr. Justice Frankfurter, writing for the Court, stated the
standard of coverage as: "All that is required is that the 'obligations or conditions' of
employment create the 'zone of special danger' out of which the injury arose."
340 U.S. at 340 U. S. 507.

That language was intended to mean only that, where the employer had placed
a facility for employees in an especially dangerous location, and thus had created a
danger of accidents, a "reasonable rescue attempt" could be "one of the risks of the
employment." This was made crystal clear by the caveat: "We hold only that rescue
attempts such as that before us are not necessarily excluded from the coverage of the
Act as the kind of conduct that employees engage in as frolics of their own."
Ibid.

He went on to state that the standard of review to be applied to the Deputy

Commissioner's finding that the employee died in the course of his employment was
the same as that set out in Universal Camera Corp. v. Labor Board, 340 U. S. 474, for
review of Labor Board decisions. Mr. Justice Frankfurter wrote both Universal
Camera and Brown-Pacific-Maxon, and delivered the opinions on the same day.
Reliance upon Universal Camera in Brown-Pacific-Maxon shows beyond doubt that
the Court was not establishing a rule that any compensation award by a Deputy
Commissioner would be automatically upheld, for it was the whole purpose
of Universal Camera to effectuate congressional intent that the courts expand their
scope of review over administrative decisions. That opinion defined judicial
responsibility for examining the whole record in Labor Board cases, and not just those
parts of the record which tended to support the Board. It remains today as the leading
judicial guide for administrative review, and the most prominent directive to lower
courts not to underestimate their responsibilities in this regard. I think it untenable to
read a case which purports to apply the Universal Camera standard of review as
embodying a philosophy of judicial abdication.

I read Brown-Pacific-Maxon to mean that some questions of application of

"arising out of and in the course of employment" to the facts of a case will be left to the
discretion of the administrator, and review of his decision treated as review of a finding
of fact. The cases in which this limited review of the administrator's decision is
appropriate are those in which one application of the statute to the external facts of
the case effectuates the judicially recognizable purpose of the statute, as well as
another. Dominion over the broad or clear purposes of the statute thus remains firmly
in the courts' hands, while, within the confines of such statutory purposes,
administrators are left discretion to provide the intimate particularizations of statutory
application. [Footnote 3] Brown-Pacific-Maxon is illustrative. The employee drowned
in a particularly treacherous channel with which his job brought him into proximity. The
danger was not great that circumstance would force him to swim in the channel, but
the danger existed, and was peculiar to the locality to which his job brought him; and
it was out of this special danger that the employee's injury arose. This, taken together
with the other elements of job connection which the administrator thought relevant,
rendered an award in the case consistent with the broad purposes of the
compensation statute. Yet, had the Deputy Commissioner come out the other way, I
think that his decision would have been equally supportable. Although it was true that
the injury was related to an especially dangerous channel with which the employee's
job brought him into proximity, the administrator could have ruled that the danger,
although special, was so remote that the connection between the job and the injury
was not sufficient to justify compensation. Either result would have been consistent
with the statutory purpose of compensating all job-connected injuries on the actual job
site and, additionally, those injuries off the job site which result from the "special"
dangers of the employment. In the sense that both results would have been
supportable, the review of the choice actually made by the Deputy Commissioner was
treated as review of a finding of fact.

In the case before us, the Deputy Commissioner's ruling is not consistent with
the statutory purpose. The injury did not take place on the actual job site, and it did not
arise out of any special danger created by the job. In no sense can it be said that
Ecker's job created any "special" danger of his drowning in a lake, or, more particularly,
of his loading a small boat with sand and capsizing it. Nothing indicates that the lake
was rougher, the boat tipper, or the sand heavier than their counterparts in the United
States. If there were "exacting and unconventional conditions" in Korea, it does not
appear that the lake, boat, or sand was one of them. There is nothing more than a "but
for" relationship between the accident and the employment. To permit the award of
compensation to stand reads the "job-connected" emphasis right out of the statute, an
emphasis which is clearly there. Only injuries "arising out of" the employment are
compensated. A disease or infection is covered if it arises "naturally out of such
employment." Injuries willfully inflicted by third persons upon an employee are covered
only if inflicted "because of his employment." A "but for" relationship between the injury
and the employment should not, in itself, be sufficient to bring about coverage.

Whether the injury is compensable should depend to some degree on the cause
of the injury, as well as the time of day, location, and momentary activity of the
employee at the time of the accident. I would distinguish between a case in which
Ecker smashed his hand in a filing cabinet while at the office and one in which he
tripped over a pebble while off on a weekend hike. In the first case, Ecker's injury
would have arisen out of and in the course of his employment, whereas the statute
would not apply to the second case unless the injury were traceable to some special
danger peculiar to the employment, which was clearly not the case. Thus, if, while off
on that same weekend hike, Ecker stepped on a mine left over from the Korean
conflict, a different result could follow.

This view of the statute makes far more sense to me than the view adopted by
the Court as indicated by the result in this case and its approving citation of such cases
as Self v. Hanson, 305 F.2d 699, and Pan American World Airways, Inc. v.
O'Hearne, 335 F.2d 70, cert. denied, 380 U.S. 950. It is difficult to determine just what
such cases stand for. In Self v. Hanson, for instance, Miss Williams was in the
company of a gentleman in a pick-up truck parked at the end of a breakwater on Guam
Island at 11 o'clock in the evening. The gentleman said that he wanted to show her a
ship in the harbor. Apparently they had been looking at it for over half an hour when
the driver of another vehicle on the breakwater lost control and ran into the pick-up
truck, causing Miss Williams spinal injuries. The Ninth Circuit upheld the Deputy
Commissioner's ruling that she was injured in the course of her employment as a
secretary on a Guam defense project.
 To permit compensation for such injuries is to impose absolute liability upon the
employer for any and all injuries, whatever their nature, whatever their cause, just so
long as the Deputy Commissioner makes an award and the job location is one to which
the reviewing judge would not choose to go if he had his choice of vacation spots.
Before setting its stamp of approval on such an interpretation of the statute, the Court,
at the very least, should hear argument and receive briefs on the merits. The Solicitor
General has pointed out that "there are several thousands of injury cases reported
annually" under this Act. [Footnote 4] He urged that this question be definitively
resolved by this Court. Because of the importance placed by all parties upon resolution
of the proper application of the Act to these cases, and because I do not
believe Brown-Pacific-Maxon, supra, dictates the Court's result, I respectfully dissent
from its decision to treat O'Keeffe v. Smith, Hinchman & Grylls Associates,
Inc., summarily, from its decision on the merits in that case, and from its denial of
certiorari in Pan-American World Airways, Inc. v. O'Hearne, 380 U.S. 950, and Pan
American World Airways, Inc. v. O'Keeffe, 380 U.S. 951.
[Footnote 1]
44 Stat. 1424, as amended, 33 U.S.C. § 901 et seq. (1958 ed.).
[Footnote 2]
55 Stat. 622, as amended, 42 U.S.C. § 1651 et seq. (1958 ed.).
[Footnote 3]
See generally, Jaffe, Judicial Review: Question of Law, 69 Harv.L.Rev. 239 (1955).
[Footnote 4]
Petition for certiorari in No. 307, p. 11.

MR. JUSTICE DOUGLAS, dubitante.

The problems under this Act should rest mainly with the Courts of
Appeals. * What we said in Universal Camera Corp. v. Labor Board, 340 U. S.
474, 340 U. S. 490, of review by Courts of Appeals of decisions of the National Labor
Relations Board, should be applicable here:

"Reviewing courts must be influenced by a feeling that they are not to abdicate
the conventional judicial function. Congress has imposed on them responsibility for
assuring that the Board keeps within reasonable grounds. That responsibility is not
less real because it is limited to enforcing the requirement that evidence appear
substantial when viewed, on the record as a whole, by courts invested with the
authority and enjoying the prestige of the Courts of Appeals. The Board's findings are
entitled to respect, but they must nonetheless be set aside when the record before a
Court of Appeals clearly precludes the Board's decision from being justified by a fair
estimate of the worth of the testimony of witnesses or its informed judgment on matters
within its special competence or both."

Applying that test, I would not be inclined to reverse a Court of Appeals that
disagreed with a Deputy Commissioner over findings as exotic as we have here.
* These problems are unlike those under the Federal Employers' Liability Act, where
suits can be brought both in state and in federal courts (45 U.S.C. § 56) and where the
law, poorly received by the judiciary, has been severely eroded. See Wilkerson v.
McCarthy, 336 U. S. 53, 336 U. S. 68 et seq. (concurring opinion).
 Republic of the Philippines
SUPREME COURT
Manila
EN BANC

G.R. No. L-23256, October 31, 1969

JOSE MA. GONZALES petitioner,

vs.
VICTORY LABOR UNION (VlCLU), JULIAN BELTRAN, SEVERINO APAWAN,
PONCIANO SAYAN, and QUIRICO MENDEZ, respondents.
Erasmo M. Diola for petitioner.
Loreto G. Campos and Alberto F. Montefalcon for respondents.

MAKALINTAL, J.:
This case is before us on review by certiorari of the decision of the Court of
Industrial Relations dated May 8, 1963, and of its resolution of July 19, 1963, in Case
No. 303-ULP-Cebu, Victory Labor Union (VICLU), et al. vs. Jose M. Gonzales.

Herein petitioner Gonzalez was engaged in trawl fishing, and among his
employees were Julian Beltran, Severino Apawan, Ponciano Sayan, Quirico Mendez
and Virgilio Baes — all of them working in petitioner's fishing boat, the M/L Emiliana.
On March 31, 1962 the Acting Prosecutor of the Court of Industrial Relations filed a
complaint against petitioner, charging him with unfair labor practice in dismissing said
employees without just cause but by reason of their membership in VICLU and thereby
interfering and coercing them in the exercise of their right to self-organization.

Gonzales admitted in his answer that the complainants, except Virgilio Baes,
were his employees, but denied that he dismissed them for their union affiliation, and
alleged that their dismissal was for cause, they having been found to have connived
with each other in pilfering the catch of the fishing boat and selling the same to the
public for their personal benefit. Petitioner further denied that he had knowledge, prior
to the filing of the complaint, of the complainants' membership in the labor union.

After trial, the court below, in a decision penned by Presiding Judge Jose S.
Bautista, held herein petitioner guilty of unfair labor practice, ordered him to cease and
desist from the acts complained of and directed the reinstatement of the complainants
with back wages from February 7, 1962, which was the date of their dismissal.
Petitioner filed a motion for reconsideration before the Court en banc, but the motion
was denied in a minute resolution signed by Presiding Judge Bautista and concurred
in by Associate Judges Arsenio I. Martinez and Baltazar M. Villanueva. An extended
dissent, however, was filed by Associate Judge Emiliano C. Tabigne, with the
concurrence of Associate Judge Amando C. Bugayong.

In this case we are again faced with the application of the substantial evidence
rule,1 under which the findings of fact of the Court of Industrial Relations are not
disturbed on appeal as long as they are supported by "such relevant evidence as a
reasonable mind might accept as adequate to support a conclusion."
 There is one circumstance which, at the very outset, has detained us from
accepting the findings of fact in the decision appealed from as conclusive, namely,
that the said decision was rendered by an almost evenly divided court and that the
division was precisely on the facts as borne out by the evidence. In such a situation
this Court feels called upon to go over the record and, in order to determine the
substantiality of the evidence, consider it not only in its quantitative but also in its
qualitative aspects. For to be substantial, evidence must first at all be credible.

The question then is whether or not the conclusion of the bare majority of the
Court below, that the complainants there, now respondents, were dismissed by
petitioner for their union affiliation, meets the test thus established. The only evidence
on this point is the testimony of respondents Julian Beltran, Severino Apawan and
Quirico Mendez, as well as the testimony of the union president, Attorney Loreto G.
Campos. The first three more or less uniformly declared that they became members
of VICLU on November 15,1951 by signing the corresponding membership slip (Exh.
A); that they had not violated any rule or committed any irregularity in the performance
of their duties; and that on February 7, 1962 they were called by the management and
told that they were being dismissed by reason of their union membership. Upon its
face and considered in isolation, such evidence could conceivably meet the test of
substantiality. But there is other evidence which cannot be lightly dismissed without
arbitrarily closing the door to a judicious discharge of the power of review within the
limits set down by the rule.

1. First of all, there is the membership slip signed by complainants Julian Beltran,
Severino Apawan, Ponciano Sayan and Quirico Mendez when they allegedly affiliated
to the Victory Labor Union. The slip is likewise signed by the union president, Attorney
Loreto G. Campos, and bears the handwritten date in ink, "Nov. 15, 1951." Attorney
Campos categorically affirmed on the witness stand the correctness of the date thus
written, and said that the actual signing was done in the morning of that day. Yet the
log book of the M/L Emiliana shows that the whole day of November 15, 1961 the boat
was out fishing in the sea off Bohol. Between the entries in a log book, which is
required by law to be kept by every master or captain of a registrable vessel, and a
membership slip such as that signed by respondents, the first is undoubtedly more
reliable.

2. The complaint for unfair labor practice named Virgilio Baes as one of the five
complainants, all members of VICLU. According to Attorney Campos, when examined
at the trial, Baes was not a member of the union at all, had not signed any membership
paper, and was included in the complaint only through inadvertence. His inclusion
certainly does not speak well of Attorney Campos' credibility as witness, particularly in
the light of his other testimony that before he prepared the complaint, as president and
lawyer of the union, he investigated the complainants one by one, and that there was
a preliminary hearing of the case by the prosecutor of the Court.

3. Petitioner was never officially notified that respondents were members of the Victory
Labor Union. No demand for check-off deductions from their wages was ever served
upon him. In fact, respondents themselves said that from November 15, 1961, up to
the time of their dismissal from employment on February 7, 1962, they did not pay any
monthly union dues. And although all the crew members of the M/L Emiliana were
supposedly affiliated to VICLU, no attempt whatsoever was made by the latter to
secure a collective bargaining agreement or at least a certification election.

4. A significant fact is that it was not only respondents who were dismissed by
petitioner but also the captain of the vessel himself, Ernesto Baroc, who was not a
member of the union and whose dismissal was for complicity in the pilferage of the
catch of the M/L Emiliana.

The foregoing circumstances, objective as they are, lend strong support to the
testimony of petitioner Gonzales and of his witness Felipe Jubay, to the effect that they
had received evidence, consisting of reports from different sources, that whenever the
boat arrived at Cebu after a fishing trip respondents would sell fish at very cheap
prices; that Gonzales investigated them one by one and was convinced of their guilt;
that he was not yet through with the investigation, but they failed to return after
February 7, 1962; and that he did not know they were members of any labor union.

Besides the foregoing evidence for herein petitioner the two dissenting
members of the court below also considered certain significant contradictions in the
testimony of respondents. We quote from their opinion:

Regarding their dismissal, we find that there was sufficient justification for the
action taken by the employer. It appears that these employees were found to have
sabotaged the interest of their employer. They pilfered the fish caught by them and
sold them to private parties and pocketed the proceeds thereof. This circumstance is
a clear indication of sabotage and pilferage pure and simple. And the dismissal of this
instant case should, therefore, be in order.

It is claimed that there were acts of discrimination on the part of the employer
when these employees were dismissed. We hold the contrary view. Let us take for
instance the so-called interview of the four employees by the employer on February 7,
1962. One witness (Boltron) testified that the four of them were called together to the
office of the management and told them that they were dismissed because
management did not like their membership to their union. The other witness testified
that such incident happened aboard the boat M/L Emiliana (Witness Mendez). In
another instance, Witness Apawan said that he was called alone to the office of
respondent employer and nobody was with them at the time he was told of his
dismissal. These contradictory statements clearly indicate that the employer has no
knowledge of their membership at the time except when the complaint was filed and
notified by the filing of the same and their dismissal was not, therefore, motivated by
any discriminatory act on the part of the employer. As stated above, we find that there
was justification of their dismissal because of the pilferage committed by them in
disposing a portion of the catch to private parties to the loss of their employer. When
an employee has committed an act inimical to the employer's interest, his dismissal is
just cause and may be permitted by this Court.

We conclude, in view of all the considerations above set forth, that the bare
testimony of respondents, complainants below, is insufficient to establish the charge
of unfair labor practice under the standard fixed by law and enunciated in the decisions
of this Court.
The judgment appealed from is set aside, and the complaint is dismissed, with costs.
Concepcion, C.J., Reyes, J.B.L., Dizon, Zaldivar, Sanchez, Castro, Teehankee and
Barredo, JJ., concur.

Fernando, J., concurs in the result.