CHAPTER V

PRESUMPTIONS IN AID OF CONSTRUCTION AND

INTERPRETATION
PRESUMPTIONS

In construing a doubtful or ambiguous statute, the Courts will presume that it was the
intention of the legislature to enact a valid, sensible and just law, and one which should
change the prior law no further than may be necessary to effectuate the specific purpose
of the act in question.

PRESUMPTION AGAINST UNCONSTITUTIONALITY

Laws are presumed constitutional. To justify nullification of law, there must be a clear
and unequivocal breach of the constitution.

The theory is that, as the joint act of the legislative and executive authorities, a law is
supposed to have been carefully studied and determined to be constitutional before it
was finally enacted.

All laws are presumed valid and constitutional until or unless otherwise ruled by the
Court.

1. ARIS (PHIL.) INC., petitioner, vs. NATIONAL LABOR RELATIONS COMMISSION, LABOR ARBITER FELIPE
GARDUQUE III, LEODEGARIO DE GUZMAN, LILIA PEREZ, ROBERTO BESTAMONTE, AIDA OPENA,
REYNALDO TORIADO, APOLINARIO GAGAHINA, RUFINO DE CASTRO, FLORDELIZA RAYOS DEL SOL,
STEVE SANCHO, ESTER CAIRO, MARIETA MAGALAD, and MARY B. NADALA, respondents.

Petitioner Aris Philippines assails the constitutionality of the amendment introduced by Section 12 of
Republic Act No. 6715 to Article 223 of the Labor Code of the Philippines (PD No. 442, as amended) allowing
execution pending appeal of the reinstatement aspect of a decision of a labor arbiter reinstating a
dismissed or separated employee and of Section 2 of the NLRC Interim Rules on Appeals under R.A. No.
6715 implementing the same. It also questions the validity of the Transitory Provision (Section 17) of the
said Interim Rules.

The challenged portion of Section 12 of Republic Act No. 6715, which took effect on 21 March 1989, reads as
follows:

Yung dati: SEC 12. Article 223 of the same code is amended to read as follows:

ART. 223. Appeal.

x x x           x x x          x x x

In any event, the decision of the Labor Arbiter reinstating a dismissed or separated employee, in so far
as the reinstatement aspect is concerned, shall immediately be executory, even pending appeal. The
employee shall either be admitted back to work under the same terms and conditions prevailing prior to his
dismissal or separation or, at the option of the employer, merely reinstated in the payroll. The posting of a
bond by the employer shall not stay the execution for reinstatement provided therein.

Ito yun amendment : This is a new paragraph ingrafted into the Article.

Sections 2 and 17 of the "NLRC Interim Rules On Appeals Under R.A. No. 6715, Amending the Labor Code",
which the National Labor Relations Commission (NLRC) promulgated on 8 August 1989, provide as follows:

Section 2. Order of Reinstatement and Effect of Bond. — In so far as the reinstatement aspect is
concerned, the decision of the Labor Arbiter reinstating a dismissed or separated employee shall
immediately be executory even pending appeal. The employee shall either be admitted back to work under
the same terms and conditions prevailing prior to his dismissal or separation, or, at the option of the
employer, merely be reinstated in the payroll.

The posting of a bond by the employer shall not stay the execution for reinstatement.

x x x           x x x          x x x

Section 17. Transitory provision. — Appeals filed on or after March 21, 1989, but prior to the
effectivity of these Interim Rules must conform to the requirements as herein set forth or as may be
directed by the Commission.

The antecedent facts and proceedings which gave rise to this petition are not disputed:
FACTS:

On 11 April 1988, private respondents, who were employees of petitioner Aris Philippines, aggrieved by
because of their management's failure to attend to their complaints in relation to their working environment
which became dangerous had become detrimental and hazardous,they requested for a grievance conference.

However , petitioner did not arrange any. As none was arranged, and believing that their appeal would be
fruitless, they grouped together afterwork the end of their work that day with other employees and marched
directly to the management's office to protest its long silence and inaction on their complaints.

On 12 April 1988, the management issued a memorandum to each of the private respondents, who were
identified by the petitioner's supervisors as the most active participants in the rally requiring them to explain why
they should not be terminated from the service for their conduct. Despite their explanation, private
respondents were dismissed for violation of company rules and regulations, more specifically of the
provisions on security and public order and on inciting or participating in illegal strikes or concerted actions.

Private respondents lost no time in filed a complaint for illegal dismissal against petitioner and Mr. Gavino
Bayan with the regional office of the NLRC at the National Capital Region, Manila, which was docketed therein as
NLRC-NCR-00-0401630-88.

After due trial, Labor Arbiter RENDERED A DECISION ORDERING Felipe Garduque III handed down on 22 June
1989 a decision' the dispositive portion of which reads:

ACCORDINGLY, respondent Aris (Phils.), Inc. is hereby ordered to reinstate within ten (10) days THE
RESPONDENTS from receipt hereof, herein complainants Leodegario de Guzman, Rufino de Castro, Lilia
M. Perez, Marieta Magalad, Flordeliza Rayos del Sol, Reynaldo Toriado, Roberto Besmonte, Apolinario
Gagahina, Aidam (sic) Opena, Steve C. Sancho Ester Cairo, and Mary B. Nadala to their former respective
positions or any substantial equivalent positions if already filled up, without loss of seniority right and
privileges but with limited backwages of six (6) months except complainant Leodegario de Guzman.

All other claims and prayers are hereby denied for lack of merit.

SO ORDERED.

On 19 July 1989, complainants (herein private respondents) filed a Motion For Issuance of a Writ of Execution
pursuant to the above-quoted Section 12 of R.A. No. 6715.

On 21 July 1989, petitioner filed its Appeal. 3

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

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

On 29 August 1989, petitioner filed an Opposition  to the motion for execution alleging that Section 12 of R.A.
6

No. 6715 on execution pending appeal cannot be applied retroactively to cases pending at the time of its
effectivity because it does not expressly provide that it shall be given retroactive effect  and to give
7

retroactive effect to Section 12 thereof to pending cases would not only result in the imposition of an additional
obligation on petitioner but would also dilute its right to appeal since it would be burdened with the
consequences of reinstatement without the benefit of a final judgment. In their Reply  filed on 1 September
8

1989,

On the other hand, private respondents argued that R.A. No. 6715 will not actually be given a retroactive
effect since is not sought to be given retroactive effect in this case since the decision to be executed pursuant to
it was rendered after the effectivity of the Act. The said law took effect on 21 March 1989, while the decision
was rendered on 22 June 1989.

Petitioner submitted a Rejoinder to the Reply on 5 September 1989. 9

On 5 October 1989, the Labor Arbiter issued an Order granted the motion for execution pursuant to Sec. 2 of
NLRC interim rules on appeals and the issuance of a partial writ of execution  as far as reinstatement of
10

herein complainants is concerned in consonance with the provision of Section 2 of the rules particularly the last
sentence thereof.

In this Order, the Labor Arbiter also made reference to Section 17 of the NLRC Interim Rules in this wise:

Since Section 17 of the said rules made mention of appeals filed on or after March 21, 1989, but prior to the
effectivity of these interim rules which must conform with the requirements as therein set forth (Section 9) or
as may be directed by the Commission, it obviously treats of decisions of Labor Arbiters before March
21,1989. With more reason these interim rules be made to apply to the instant case since the decision
hereof (sic) was rendered thereafter. 11

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

adverted to in the introductory portion of this decision under the following assignment of errors:
 A. THE LABOR ARBITER A QUO AND THE NLRC, IN ORDERING THE REINSTATEMENT OF THE
PRIVATE RESPONDENTS PENDING APPEAL AND IN PROVIDING FOR SECTION 2 OF THE INTERIM
RULES, RESPECTIVELY, ACTED WITHOUT AND IN EXCESS OF JURISDICTION SINCE THE BASIS
FOR SAID ORDER AND INTERIM RULE, i.e., SECTION 12 OF R.A. 6715 IS VIOLATIVE OF THE
CONSTITUTIONAL GUARANTY OF DUE PROCESS IT BEING OPPRESSIVE AND UNREASONABLE.

B. GRANTING ARGUENDO THAT THE PROVISION IN(SIC) REINSTATEMENT PENDING APPEAL IS

VALID, NONETHELESS, THE LABOR ARBITER A QUO AND THE NLRC STILL ACTED IN EXCESS AND
WITHOUT JURISDICTION IN RETROACTIVELY APPLYING SAID PROVISION TO PENDING LABOR
CASES.

Petitioner Aris Philippines assails the constitutionality of the amendment introduced by Section 12 of
Republic Act No. 6715 to Article 223 of the Labor Code of the Philippines (PD No. 442, as amended) allowing
execution pending appeal of the reinstatement aspect of a decision of a labor arbiter reinstating a
dismissed or separated employee for being violative of due process, oppressive and unreasonable; and of
Section 2 of the NLRC Interim Rules on Appeals under R.A. No. 6715 implementing the same. It also
questions the validity of the Transitory Provision (Section 17) of the said Interim Rules.

ISSUE: WON AMENDMENT INTRODUCED BY SECTION 12 OF REPUBLIC ACT NO. 6715 TO ARTICLE 223
OF THE LABOR CODE OF THE PHILIPPINES IS UNCONSTITUTIONAL---

RULING: NO-

The validity of the questioned law is not only supported and sustained by the foregoing considerations. As
contended by the Solicitor General, it is a valid exercise of the police power of the State. Certainly, if the right of
an employer to freely discharge his employees is subject to regulation by the State, basically in the exercise of its
permanent police power on the theory that the preservation of the lives of the citizens is a basic duty of the
State, that is more vital than the preservation of corporate profits.  hence, by and pursuant to the same
23

power, the State may authorize an immediate implementation, pending appeal, of a decision reinstating a
dismissed or separated employee since that saving act it is designed to stop, although temporarily since
the appeal may be decided in favor of the appellant, a continuing threat or danger to the survival or even the
life of the dismissed or separated employee and its family.

Likewise, The charge then that the challenged law as well as the implementing rule are unconstitutional is
absolutely baseless.  Laws are presumed constitutional.  in order To justify nullification of a law, there must
1âwphi1
24

be a clear and unequivocal breach of the Constitution, not a doubtful and argumentative implication; a law
shall not be declared invalid unless the conflict with the constitution is clear beyond reasonable
doubt.  In Parades, et al. vs. Executive Secretary  We stated:
25 26

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

Ratio:

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

As regards retroactive effect:

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

remedial statute may be made applicable to cases pending at the time of its enactment. 31

WHEREFORE, the petition is hereby DISMISSED for lack of merit. Costs against petitioner.
In Our resolution of 7 March 1989, We required the respondents to comment on the petition.

Respondent NLRC, through the Office of the Solicitor General, filed its Comment on 20 November 1989.  Meeting13

squarely the issues raised by petitioner, it submits that the provision concerning the mandatory and
automatic reinstatement of an employee whose dismissal is found unjustified by the labor arbiter is a
valid exercise of the police power of the state and the contested provision "is then a police
legislation."

As regards the retroactive application thereof, it maintains that being merely procedural in nature, it can apply to
cases pending at the time of its effectivity on the theory that no one can claim a vested right in a rule of
procedure. Moreover, such a law is compatible with the constitutional provision on protection to labor.

On 11 December 1989, private respondents filed a Manifestation  informing the Court that they are adopting the
14

Comment filed by the Solicitor General and stressing that petitioner failed to comply with the requisites for a valid
petition for certiorari under Rule 65 of the Rules of Court.

On 20 December 1989, petitioner filed a Rejoinder  to the Comment of the Solicitor General.
15

In the resolution of 11 January 1990,  We considered the Comments as respondents' Answers, gave due course to
16

the petition, and directed that the case be calendared for deliberation.

Petitioner: In urging Us to declare as unconstitutional that portion of Section 223 of the Labor Code introduced by
Section 12 of R.A. No. 6715, as well as the implementing provision covered by Section 2 of the NLRC Interim Rules,
allowing immediate execution, even pending appeal, of the reinstatement aspect of a decision of a labor arbiter
reinstating a dismissed or separated employee, petitioner submits that said portion violates the due process clause
of the Constitution in that it is oppressive and unreasonable. It argues that a reinstatement pending appeal
negates the right of the employer to self-protection for it has been ruled that an employer cannot be
compelled to continue in employment an employee guilty of acts inimical to the interest of the employer; the
right of an employer to dismiss is consistent with the legal truism that the law, in protecting the rights of the
laborer, authorizes neither the oppression nor the destruction of the employer. For, social justice should be
implemented not through mistaken sympathy for or misplaced antipathy against any group, but even-handedly and
fairly.
17

To clinch its case, petitioner tries to demonstrate the oppressiveness of reinstatement pending appeal by
portraying the following consequences: (a) the employer would be compelled to hire additional employees
or adjust the duties of other employees simply to have someone watch over the reinstated employee to
prevent the commission of further acts prejudicial to the employer, (b) reinstatement of an undeserving, if
not undesirable, employee may demoralize the rank and file, and (c) it may encourage and embolden not
only the reinstated employees but also other employees to commit similar, if not graver infractions.

These rationalizations and portrayals are misplaced and are purely conjectural which, unfortunately,
proceed from a misunderstanding of the nature and scope of the relief of execution pending appeal.

Execution pending appeal is interlinked with the right to appeal. One cannot be divorced from the other. The
latter may be availed of by the losing party or a party who is not satisfied with a judgment, while the former
may be applied for by the prevailing party during the pendency of the appeal. The right to appeal, however, is
not a constitutional, natural or inherent right. It is a statutory privilege of statutory origin  and, therefore,
18

available only if granted or provided by statute. The law may then validly provide limitations or qualifications
thereto or relief to the prevailing party in the event an appeal is interposed by the losing party. Execution pending
appeal is one such relief long recognized in this jurisdiction. The Revised Rules of Court allows execution pending
appeal and the grant thereof is left to the discretion of the court upon good reasons to be stated in a special order. 19

Before its amendment by Section 12 of R.A. No. 6715, Article 223 of the Labor Code already allowed execution
of decisions of the NLRC pending their appeal to the Secretary of Labor and Employment.

In authorizing execution pending appeal of the reinstatement aspect of a decision of the Labor Arbiter reinstating a
dismissed or separated employee, the law itself has laid down a compassionate policy which, once more, vivifies
and enhances the provisions of the 1987 Constitution on labor and the working-man.

These provisions are the quintessence of the aspirations of the workingman for recognition of his role in the social
and economic life of the nation, for the protection of his rights, and the promotion of his welfare. Thus, in the Article
on Social Justice and Human Rights of the Constitution,  which principally directs Congress to give highest
20

priority to the enactment of measures that protect and enhance the right of all people to human dignity, reduce
social, economic, and political inequalities, and remove cultural inequities by equitably diffusing wealth and political
power for the common good, the State is mandated to afford full protection to labor, local and overseas, organized
and unorganized, and promote full employment and equality of employment opportunities for all; to guarantee the
rights of all workers to self-organization, collective bargaining and negotiations, and peaceful concerted activities,
including the right to strike in accordance with law, security of tenure, human conditions of work, and a living wage,
to participate in policy and decision-making processes affecting their rights and benefits as may be provided by law;
and to promote the principle of shared responsibility between workers and employers and the preferential use of
voluntary modes in settling disputes. Incidentally, a study of the Constitutions of various nations readily reveals that
it is only our Constitution which devotes a separate article on Social Justice and Human Rights. Thus, by no less
than its fundamental law, the Philippines has laid down the strong foundations of a truly just and humane society.
This Article addresses itself to specified areas of concern labor, agrarian and natural resources reform, urban land
reform and housing, health, working women, and people's organizations and reaches out to the underprivileged
sector of society, for which reason the President of the Constitutional Commission of 1986, former Associate Justice
of this Court Cecilia Muñoz-Palma, aptly describes this Article as the "heart of the new Charter." 21

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

stability.

If in ordinary civil actions execution of judgment pending appeal is authorized for reasons the determination of which
is merely left to the discretion of the judge, We find no plausible reason to withhold it in cases of decisions
reinstating dismissed or separated employees. In such cases, the poor employees had been deprived of their
only source of livelihood, their only means of support for their family their very lifeblood. To Us, this special
circumstance is far better than any other which a judge, in his sound discretion, may determine. In short, with
respect to decisions reinstating employees, the law itself has determined a sufficiently overwhelming
reason for its execution pending appeal.

G.R. No. 115044 January 27, 1995

HON. ALFREDO S. LIM, in his capacity as Mayor of Manila, and the City of Manila, petitioners, 
vs.
HON. FELIPE G. PACQUING, as Judge, branch 40, Regional Trial Court of Manila and ASSOCIATED
CORPORATION, respondents.

G.R. No. 117263 January 27, 1995

TEOFISTO GUINGONA, JR. and DOMINADOR R. CEPEDA, petitioners, 

vs.
HON. VETINO REYES and ASSOCIATED DEVELOPMENT CORPORATION, respondents.

Jai alai is a sport involving bouncing a ball off a walled space by accelerating it to high speeds 

FACTS: nasa baba grabe

RTC Judge issued orders assailed by Mayor Lim with regard the immediate issuance of thepermit/license to
Associated Development Corporation (ADC) pursuant to Manila Ordinance No. 7065.

The Municipal Board of Manila passed Ordinance No. 7065 pursuant to Section 18(jj) of the Revised Charter
of Manila, granting Associated Development Corporation a franchise to operate a jai-alai in the city.

These two (2) cases which are inter-related actually involve simple issues. if these issues have apparently become
complicated, it is not by reason of their nature because of the events and dramatis personae involved.

The petition in G.R. No. 115044 was dismissed by the First Division of this Court on 01 September 1994 based on a
finding that there was "no abuse of discretion, much less lack of or excess of jurisdiction, on the part of respondent
judge [Pacquing]", in issuing the questioned orders. Judge Pacquing had earlier issued in Civil Case No. 88-45660,
RTC of Manila, Branch 40, the following orders which were assailed by the Mayor of the City of Manila, Hon. Alfredo
S. Lim, in said G.R. No. 115044:

a. order dated 28 March 1994 directing Manila mayor Alfredo S. Lim to issue the permit/ç

b. order dated 11 April 1994 directing mayor Lim to explain why he should not be cited for contempt
for non-compliance with the order dated 28 March 1994.

c. order dated 20 April 1994 reiterating the previous order directing Mayor Lim to immediately issue
thepermit/license to Associated Development Corporation (ADC).

The order dated 28 march 1994 was in turn issued upon motion by ADC for execution of a final judgment rendered
on 9 September 1988 which ordered the Manila Mayor to immediately issue to ADC the permit/license to operate
the jai-alai in Manila, under Manila Ordinance No. 7065.

On 13 September 1994, petitioner Guingona (as executive secretary) issued a directive to then chairman of
the Games and Amusements Board (GAB) Francisco R. Sumulong, jr. to hold in abeyance the grant of
authority, or if any had been issued, to withdraw such grant of authority, to Associated Development
Corporation to operate the jai-alai in the City of Manila, until the following legal questions are properly
resolved:

1. Whether P.D. 771 which revoked all existing Jai-Alai franchisers issued by local
governments as of 20 August 1975 is unconstitutional.

2. Assuming that the City of Manila had the power on 7 September 1971 to issue a Jai-Alai franchise
to Associated Development Corporation, whether the franchise granted is valid considering that
the franchise has no duration, and appears to be granted in perpetuity.
 3. Whether the City of Manila had the power to issue a Jai-Alai franchise to Associated
Development Corporation on 7 September 1971 in view of executive Order No. 392 dated 1
January 1951 which transferred from local governments to the Games and Amusements
Board the power to regulate Jai-Alai. 1

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

FACTS:

1. The Charter of the City of Manila was enacted by Congress on 18 June 1949. Section 18 thereof provides:

Sec. 18. Legislative Powers. — The Municipal Board shall have the following legislative powers:

xxx xxx xxx

(jj) To tax, license, permit and regulate wagers or betting by the public on boxing, sipa,
bowling, billiards, pools, horse and dog races, cockpits, jai-alai, roller or ice-skating on any
sporting or athletic contests, as well as grant exclusive rights to establishments for this
purpose, notwithstanding any existing law to the contrary.

2. On 1 January 1951, Executive Order No. 392 was issued transferring the authority to regulate jai-alais from
local government to the Games and Amusements Board (GAB).

3. On 20 June 1953, Congress enacted Republic Act No. 954, entitled "An Act to Prohibit With Horse Races
and Basque Pelota Games (Jai-Alai), And To Prescribe Penalties For Its Violation". The provisions of Republic
Act No. 954 relating to jai-alai are as follows:

Sec. 4. No person, or group of persons other than the operator or maintainer of a fronton with

legislative franchise to conduct basque pelota games (Jai-alai), shall offer, to take or arrange bets on
any basque pelota game or event, or maintain or use a totalizator or other device, method or system
to bet or gamble on any basque pelota game or event. (emphasis supplied).

Sec. 5. No person, operator or maintainer of a fronton with legislative franchise to conduct basque
pelota games shall offer, take, or arrange bets on any basque pelota game or event, or maintain or
use a totalizator or other device, method or system to bet or gamble on any basque pelota game or
event outside the place, enclosure, or fronton where the basque pelota game is held. (emphasis
supplied).

4. On 07 September 1971, however, the Municipal Board of Manila nonetheless passed Ordinance No. 7065
entitled "An Ordinance Authorizing the Mayor To Allow And Permit The Associated Development
Corporation To Establish, Maintain And Operate A Jai-Alai In The City Of Manila, Under Certain Terms And
Conditions And For Other Purposes."

5. On 20 August 1975, Presidential Decree No. 771 was issued by then President Marcos. The decree, entitled
"Revoking All Powers and Authority of Local Government(s) To Grant Franchise, License or Permit And
Regulate Wagers Or Betting By The Public On Horse And Dog Races, Jai-Alai Or Basque Pelota, And Other
Forms Of Gambling", in Section 3 thereof, expressly revoked all existing franchises and permits issued by
local governments.

In the present case, the resulting injustice and injury, should the national government's allegations be proven
correct, are manifest, since the latter has squarely questioned the very existence of a valid franchise to maintain and
operate the jai-alai (which is a gambling operation) in favor of ADC. As will be more extensively discussed later,
the national government contends that Manila Ordinance No. 7065 which purported to grant to ADC a
franchise to conduct jai-alai operations is void and ultra vires since Republic Act No. 954, approved on 20
June 1953, or very much earlier than said Ordinance No. 7065, the latter approved 7 September 1971, in Section
4 thereof, which requires a legislative franchise, not a municipal franchise, for the operation of jai-alai.
Additionally, the national government argues that even assuming, arguendo, that the abovementioned
ordinance is valid, ADC's franchise was nonetheless effectively revoked by Presidential decree No. 771,
issued on 20 August 1975, Sec. 3 of which expressly revoked all existing franchises and permits to operate
all forms of gambling facilities (including the jai-alai) issued by local governments.

On the other hand, ADC's position is that Ordinance No. 7065 was validly enacted by the City of Manila
pursuant to its delegated powers under it charter, Republic Act No. 409. ADC also squarely assails the
constitutionality of PD No. 771 as violative of the equal protection and non-impairment clauses of the
Constitution. In this connection, counsel for ADC contends that this Court should really rule on the validity of PD
No. 771 to be able to determine whether ADC continues to possess a valid franchise.
ISSUE: WON PD 771 IS UNCONSTITUTIONAL—

RULING: NO- CONSTITUTIONAL

It will undoubtedly be a grave injustice to both parties in this case if this Court were to shirk from ruling on the issue
of constitutionality of PD No. 771. Such issue has, in our view, become the very lis mota in resolving the present
controversy, in view of ADC's insistence that it was granted a valid and legal franchise by Ordinance No. 7065 to
operate the jai-alai.

The time-honored doctrine is that all laws (PD No. 771 included) are presumed valid and constitutional until
or unless otherwise ruled by this Court. LIKEWISE, Article 18 Section 3 of the Constitution states:

Sec. 3. All existing laws, decrees, executive orders, proclamations, letters of instructions and
other executive issuances not inconsistent with this Constitution shall remain operative until
amended, repealed or revoked.

There is nothing SHOws that PD No. 771 has been repealed, altered or amended by any subsequent law or
presidential issuance (when the executive still exercised legislative powers).

While jai-alai as a sport is not illegal per se, the accepting of bets or wagers on the results of jai-alai games
is undoubtedly gambling and, therefore, a criminal offense punishable under Articles 195-199 of the
Revised Penal Code, unless it is shown that a later or special law had been passed allowing it. ADC has not shown
any such special law

Neither can it be tenably stated that the issue of the continued existence of ADC's franchise by reason of the
unconstitutionality of PD No. 771 was settled in G.R. No. 115044, for the decision of the Court's First Division in
said case, aside from not being final, cannot have the effect of nullifying PD No. 771 as unconstitutional,
since only the Court En Banc has that power under Article VIII, Section 4(2) of the Constitution. 4

And on the question of whether or not the government is estopped from contesting ADC's possession of a valid
franchise, the well-settled rule is that the State cannot be put in estoppel by the mistakes or errors, if any, of
its officials or agents (Republic v. Intermediate Appellate Court, 209 SCRA 90)

Consequently, in the light of the foregoing expostulation, we conclude that the republic (in contra distinction to the
City of Manila) may be allowed to intervene in G.R. No. 115044. The Republic is intervening in G.R. No. 115044 in
the exercise, not of its business or proprietary functions, but in the exercise of its governmental functions to protect
public morals and promote the general welfare.

A perusal of the powers enumerated under Section 18 shows that these powers are basically regulatory in
nature.  The regulatory nature of these powers finds support not only in the plain words of the
5

enumerations under Section 28 but also in this Court's ruling in People v. Vera (65 Phil. 56).

however, since the rule is that laws must be presumed valid, constitutional and in harmony with other laws.
Thus, the relevant provisions of Rep. Acts Nos. 409 and 954 and Ordinance No. 7065 should be taken
together and it should then be clear that the legislative powers of the Municipal Board should be
understood to be regulatory in nature and that Republic Act No. 954 should be understood to refer
to congressional franchises, as a necessity for the operation of jai-alai.

WHEREFORE, for the foregoing reasons, judgment is hereby rendered:

1. allowing the Republic of the Philippines to intervene in G.R. No. 115044.

2. declaring Presidential Decree No. 771 valid and constitutional.

3. declaring that respondent Associated Development corporation (ADC) does not possess the
required congressional franchise to operate and conduct the jai-alai under Republic Act No. 954 and
Presidential Decree No. 771.

4. setting aside the writs of preliminary injunction and preliminary mandatory injunction issued by
respondent Judge Vetino Reyes in civil Case No. 94-71656.

II

WHETHER ADC HAS A VALID FRANCHISE TO OPERATE THE JAI-ALAI DE MANILA, A STATEMENT OF THE
PERTINENT LAWS IS IN ORDER.

6. On 16 October 1975, Presidential Decree No. 810, entitled "An Act granting The Philippine Jai-Alai And
Amusement Corporation A Franchise To Operate, Construct And Maintain A Fronton For Basque Pelota And Similar
Games of Skill In THE Greater Manila Area," was promulgated.

7 On 08 May 1987, then President Aquino, by virtue of Article XVIII, Section 6, of the Constitution, which
allowed the incumbent legislative powers until the first Congress was convened, issued Executive Order No. 169
expressly repealing PD 810 and revoking and cancelling the franchise granted to the Philippine Jai-Alai and
Amusement Corporation.

Petitioners in G.R. No. 117263 argue that Republic Act No. 954 effectively removed the power of the Municipal
Board of Manila to grant franchises for gambling operations. It is argued that the term "legislative franchise" in Rep.
Act No. 954 is used to refer to franchises issued by Congress.

On the other hand, ADC contends that Republic Act N. 409 (Manila Chapter) gives legislative powers to the
Municipal Board to grant franchises, and since Republic Act No. 954 does not specifically qualify the word
"legislative" as referring exclusively to Congress, then Rep. Act No. 954 did not remove the power of the Municipal
Board under Section 18(jj) of Republic Act No. 409 and consequently it was within the power of the City of Manila to
allow ADC to operate the jai-alai in the City of Manila.

On this point, the government counter-argues that the term "legislative powers" is used in Rep. Act No. 409 merely
to distinguish the powers under Section 18 of the law from the other powers of the Municipal Board, but that the
term "legislative franchise" in Rep. Act No. 954 refers to a franchise granted solely by Congress.

Further, the government argues that Executive Order No. 392 dated 01 January 1951 transferred even the power to
regulate Jai-Alai from the local governments to the Games and Amusements Board (GAB), a national government
agency.

It is worthy of note that neither of the authorities relied upon by ADC to support its alleged possession of a valid
franchise, namely the Charter of the City of Manila (Rep. Act No. 409) and Manila Ordinance No. 7065 uses the
word "franchise". Rep. Act No. 409 empowers the Municipal Board of Manila to "tax, license,
permit and regulatewagers or betting" and to "grant exclusive rights to establishments", while Ordinance No. 7065
authorized the Manila City Mayor to "allow and permit" ADC to operate jai-alai facilities in the City of Manila.

It is clear from the foregoing that Congress did not delegate to the City of Manila the power "to franchise"
wagers or betting, including the jai-alai, but retained for itself such power "to franchise". What Congress
delegated to the City of Manila in Rep. Act No. 409, with respect to wagers or betting, was the power to
"license, permit, or regulate" which therefore means that a license or permit issued by the City of Manila to
operate a wager or betting activity, such as the jai-alai where bets are accepted, would not amount to something
meaningful UNLESS the holder of the permit or license was also FRANCHISED by the national government to so
operate. Moreover, even this power to license, permit, or regulate wagers or betting on jai-alai was removed from
local governments, including the City of Manila, and transferred to the GAB on 1 January 1951 by Executive Order
No. 392. The net result is that the authority to grant franchises for the operation of jai-alai frontons is in
Congress, while the regulatory function is vested in the GAB.

In relation, therefore, to the facts of this case, since ADC has no franchise from Congress to operate the jai-alai, it
may not so operate even if its has a license or permit from the City Mayor to operate the jai-alai in the City of Manila.

It cannot be overlooked, in this connection, that the Revised Penal Code punishes gambling and betting
under Articles 195 to 199 thereof. Gambling is thus generally prohibited by law, unless another law is
enacted by Congress expressly exempting or excluding certain forms of gambling from the reach of
criminal law. Among these form the reach of criminal law. Among these forms of gambling allowed by special law
are the horse races authorized by Republic Acts Nos. 309 and 983 and gambling casinos authorized under
Presidential Decree No. 1869.

While jai-alai as a sport is not illegal per se, the accepting of bets or wagers on the results of jai-alai games
is undoubtedly gambling and, therefore, a criminal offense punishable under Articles 195-199 of the
Revised Penal Code, unless it is shown that a later or special law had been passed allowing it. ADC has not shown
any such special law.

Republic Act No. 409 (the Revised Charter of the City of Manila) which was enacted by Congress on 18 June 1949
gave the Municipal Board certain delegated legislative powers under Section 18. A perusal of the powers
enumerated under Section 18 shows that these powers are basically regulatory in nature.  The regulatory
5

nature of these powers finds support not only in the plain words of the enumerations under Section 28 but
also in this Court's ruling in People v. Vera (65 Phil. 56).

In Vera, this Court declared that a law which gives the Provincial Board the discretion to determine whether or not a
law of general application (such as, the Probation law-Act No. 4221) would or would not be operative within the
province, is unconstitutional for being an undue delegation of legislative power.

From the ruling in Vera, it would be logical to conclude that, if ADC's arguments were to prevail, this Court would
likewise declare Section 18(jj) of the Revised Charter of Manila unconstitutional for the power it would
delegate to the Municipal Board of Manila would give the latter the absolute and unlimited discretion to
render the penal code provisions on gambling inapplicable or inoperative to persons or entities issued
permits to operate gambling establishments in the City of Manila.

We need not go to this extent, however, since the rule is that laws must be presumed valid, constitutional and
in harmony with other laws. Thus, the relevant provisions of Rep. Acts Nos. 409 and 954 and Ordinance No.
7065 should be taken together and it should then be clear that the legislative powers of the Municipal Board
should be understood to be regulatory in nature and that Republic Act No. 954 should be understood to
refer to congressional franchises, as a necessity for the operation of jai-alai.
We need not, however, again belabor this issue further since the task at hand which will ultimately, and with finality,
decide the issues in this case is to determine

WHETHER PD NO. 771 VALIDLY REVOKED ADC'S FRANCHISE TO OPERATE THE JAI-ALAI, ASSUMING
(WITHOUT CONCEDING) THAT IT INDEED POSSESSED SUCH FRANCHISE UNDER ORDINANCE NO. 7065.--
YES

ADC argues that PD No. 771 is unconstitutional for being violative of the equal protection and non-impairment
provisions of the Constitution. On the other hand, the government contends that PD No. 771 is a valid exercise of
the inherent police power of the State.

The police power has been described as the least limitable of the inherent powers of the State. It is based on the
ancient doctrine — salus populi est suprema lex (the welfare of the people is the supreme law.) In the early case
of Rubi v. Provincial Board of Mindoro (39 Phil. 660), this Court through Mr. Justice George A. Malcolm stated thus:

The police power of the State . . . is a power co-extensive with self-protection, and is not inaptly
termed the "law of overruling necessity." It may be said to be that inherent and plenary power in the
State which enables it to prohibit all things hurtful to the comfort, safety and welfare of society.
Carried onward by the current of legislation, the judiciary rarely attempts to dam the onrushing power
of legislative discretion, provided the purposes of the law do not go beyond the great principles that
mean security for the public welfare or do not arbitrarily interfere with the right of the individual.

In the matter of PD No. 771, the purpose of the law is clearly stated in the "whereas clause" as follows:

WHEREAS, it has been reported that in spite of the current drive of our law enforcement agencies
against vices and illegal gambling, these social ills are still prevalent in many areas of the country;

WHEREAS, there is need to consolidate all the efforts of the government to eradicate and minimize
vices and other forms of social ills in pursuance of the social and economic development program
under the new society;

WHEREAS, in order to effectively control and regulate wagers or betting by the public on horse and
dog races, jai-alai and other forms of gambling there is a necessity to transfer the issuance of permit
and/or franchise from local government to the National Government.

It cannot be argued that the control and regulation of gambling do not promote public morals and welfare.
Gambling is essentially antagonistic and self-reliance. It breeds indolence and erodes the value of good,
honest and hard work. It is, as very aptly stated by PD No. 771, a vice and a social ill which government must
minimize (if not eradicate) in pursuit of social and economic development.

In Magtajas v. Pryce Properties Corporation (20 July 1994, G.R. No. 111097), this Court stated thru Mr. Justice
Isagani A. Cruz:

In the exercise of its own discretion, the legislative power may prohibit gambling altogether or allow it
without limitation or it may prohibit some forms of gambling and allow others for whatever reasons it
may consider sufficient. Thus, it has prohibited jueteng and monte but permits lotteries, cockfighting
and horse-racing. In making such choices, Congress has consulted its own wisdom, which this Court
has no authority to review, much less reverse. Well has it been said that courts do not sit to resolve
the merits of conflicting theories. That is the prerogative of the political departments. It is settled that
questions regarding wisdom, morality and practicability of statutes are not addressed to the judiciary
but may be resolved only by the executive and legislative departments, to which the function belongs
in our scheme of government. (Emphasis supplied)

Talks regarding the supposed vanishing line between right and privilege in American constitutional law has no
relevance in the context of these cases since the reference there is to economic regulations. On the other hand, jai-
alai is not a mere economic activity which the law seeks to regulate. It is essentially gambling and whether it
should be permitted and, if so, under what conditions are questions primarily for the lawmaking authority to
determine, talking into account national and local interests. Here, it is the police power of the State that is
paramount.

WON VIOLATION OF EQUAL PROTECTION--NO

ADC questions the motive for the issuance of PD Nos. 771. Clearly, however, this Court cannot look into allegations
that PD No. 771 was enacted to benefit a select group which was later given authority to operate the jai-alai under
PD No. 810. The examination of legislative motivation is generally prohibited. (Palmer v. Thompson, 403 U.S. 217,
29 L. Ed. 2d 438 [1971] per Black, J.) There is, the first place, absolute lack of evidence to support ADC's allegation
of improper motivation in the issuance of PD No. 771. In the second place, as already averred, this Court cannot go
behind the expressed and proclaimed purposes of PD No. 771, which are reasonable and even laudable.

It should also be remembered that PD No. 771 provides that the national government can subsequently grant
franchises "upon proper application and verification of the qualifications of the applicant." ADC has not
alleged that it filed an application for a franchise with the national government subsequent to the enactment of PD
No. 771; thus, the allegations abovementioned (of preference to a select group) are based on conjectures,
speculations and imagined biases which do not warrant the consideration of this Court.

On the other hand, it is noteworthy that while then president Aquino issued Executive Order No. 169 revoking PD
No. 810 (which granted a franchise to a Marcos-crony to operate the jai-alai), she did not scrap or repeal PD No.
771 which had revoked all franchises to operate jai-alais issued by local governments, thereby re-affirming
the government policy that franchises to operate jai-alais are for the national government (not local
governments) to consider and approve.

On the alleged violation of the non-impairment and equal protection clauses of the Constitution, it should be
remembered that a franchise is not in the strict sense a simple contract but rather it is more importantly, a mere
privilege specially in matters which are within the government's power to regulate and even prohibit through the
exercise of the police power. Thus, a gambling franchise is always subject to the exercise of police power for the
public welfare.

In RCPI v. NTC (150 SCRA 450), we held that:

A franchise started out as a "royal privilege or (a) branch of the King's prerogative, subsisting in the
hands of a subject." This definition was given by Finch, adopted by Blackstone, and accepted by
every authority since . . . Today, a franchise being merely a privilege emanating from the sovereign
power of the state and owing its existence to a grant, is subject to regulation by the state itself by
virtue of its police power through its administrative agencies.

There is a stronger reason for holding ADC's permit to be a mere privilege because jai-alai, when played for bets, is
pure and simple gambling. To analogize a gambling franchise for the operation of a public utility, such as public
transportation company, is to trivialize the great historic origin of this branch of royal privilege.

As earlier noted, ADC has not alleged ever applying for a franchise under the provisions of PD No. 771. and yet, the
purpose of PD No. 771 is quite clear from its provisions, i.e., to give to the national government the exclusive power
to grant gambling franchises. Thus, all franchises then existing were revoked but were made subject to reissuance
by the national government upon compliance by the applicant with government-set qualifications and requirements.

There was no violation by PD No. 771 of the equal protection clause since the decree revoked all franchises issued
by local governments without qualification or exception. ADC cannot allege violation of the equal protection clause
simply because it was the only one affected by the decree, for as correctly pointed out by the government, ADC was
not singled out when all jai-alai franchises were revoked. Besides, it is too late in the day for ADC to seek
redress for alleged violation of its constitutional rights for it could have raised these issues as early as 1975, almost
twenty 920) years ago.

Finally, we do not agree that Section 3 of PD No. 771 and the requirement of a legislative franchise in Republic Act
No. 954 are "riders" to the two 92) laws and are violative of the rule that laws should embrace one subject which
shall be expressed in the title, as argued by ADC. In Cordero v. Cabatuando (6 SCRA 418), this Court ruled that the
requirement under the constitution that all laws should embrace only one subject which shall be expressed
in the title is sufficiently met if the title is comprehensive enough reasonably to include the general object
which the statute seeks to effect, without expressing each and every end and means necessary or
convenient for the accomplishing of the objective.

III

On the issue of whether or not there was grave abuse of discretion committed by respondent Judge Reyes in
issuing the temporary restraining order (later converted to a writ of preliminary injunction) and the writ of
preliminary mandatory injunction, we hold and rule there was.

Section 3, Rule 58 of the rules of Court provides for the grounds for the issuance of a preliminary injunction. While
ADC could allege these grounds, respondent judge should have taken judicial notice of Republic Act No. 954 and
PD 771, under Section 1 rule 129 of the Rules of court. These laws negate the existence of any legal right on the
part of ADC to the reliefs it sought so as to justify the issuance of a writ of preliminary injunction. since PD No. 771
and Republic Act No. 954 are presumed valid and constitutional until ruled otherwise by the Supreme Court after
due hearing, ADC was not entitled to the writs issued and consequently there was grave abuse of discretion in
issuing them.

WHEREFORE, for the foregoing reasons, judgment is hereby rendered:

1. allowing the Republic of the Philippines to intervene in G.R. No. 115044.

2. declaring Presidential Decree No. 771 valid and constitutional.

3. declaring that respondent Associated Development corporation (ADC) does not possess the
required congressional franchise to operate and conduct the jai-alai under Republic Act No. 954 and
Presidential Decree No. 771.

4. setting aside the writs of preliminary injunction and preliminary mandatory injunction issued by
respondent Judge Vetino Reyes in civil Case No. 94-71656.
SO ORDERED.

JOVENCIO LIM and TERESITA LIM, Petitioners, v. THE PEOPLE OF THE PHILIPPINES, THE
REGIONAL TRIAL COURT OF QUEZON CITY, BRANCH 217, THE CITY PROSECUTOR OF
QUEZON CITY, AND WILSON CHAM, Respondents.

DECISION

CORONA, J.:

The constitutionality of PD 818, a decree which amended Article 315 of the Revised Penal Code by
increasing the penalties for estafa committed by means of bouncing checks, is being challenged in
this petition for certiorari, for being violative of the due process clause, the right to bail and the
provision against cruel, degrading or inhuman punishment enshrined under the Constitution. chanrob1es virtua1 1aw 1ibrary

The antecedents of this case, as gathered from the parties’ pleadings and documentary proofs,
follow.

In December 1991, petitioner spouses Lim issued to private respondent Wilson Cham two
postdated checks, namely, Metrobank check no. 464728 dated January 15, 1992 in the amount of
P365,750 and Metrobank check no. 464743 dated January 22, 1992 in the amount of P429,000.
Check no. 464728 1st check was dishonored upon presentment for having been drawn against due
to insufficiency funds while the other check no. 464743 was not presented for payment upon
request of Sps Lim who promised to replace the dishonored check.

When petitioners Sps. failed on their promise to cover the amount of check no. 464728, the
private respondent Wilson Cham filed a complaint-affidavit before the Office of the City
Prosecutor of Quezon City charging petitioner spouses with the crime of estafa under Article
315, par. 2 (d) of the Revised Penal Code, as amended by PD 818. An information w/ no
bail recommended was filed in the RTC and warrant of arrest were issued.

On February 16, 2001, the City Prosecutor issued a resolution finding probable cause against
petitioners and recommending the filing of an information for estafa with no bail recommended. On
the same day, an information for the crime of estafa was filed with Branch 217 of the Regional Trial
Court of Quezon City against petitioners. The case was docketed as Criminal Case No. Q-01-101574.
Thereafter, the trial court issued a warrant for the arrest of herein petitioners, thus:chanrob1es virtual 1aw library

It appearing on the face of the information and from supporting affidavit of the complaining witness
and its annexes that probable cause exists, that the crime charged was committed and accused is
probably guilty thereof, let a warrant for the arrest of the accused be issued.

No Bail Recommended.

SO ORDERED. 1 

On July 18, 2001, petitioners Sps filed an "Urgent Motion to Quash Information & Warrant of
Arrest" and Motion for bail which were denied by the trial court. Likewise, petitioners’ motion
for bail filed on July 24, 2001 was denied by the trial court on the same day. Petitioner Jovencio
Lim was arrested by virtue of the warrant of arrest issued by the trial court and was detained at
the Quezon City Jail. However, petitioner Teresita Lim remained at large.

On August 22, 2001, petitioners filed the instant petition for certiorari imputing grave abuse of
discretion on the part of the lower court and the Office of the City Prosecutor of Quezon City, argued
that PD 818 violates the constitutional provisions on due process, bail and imposition of
cruel, degrading or inhuman punishment. Sections 1 & 19 of Art 3 of the COnstitution

In a resolution dated February 26, 2002, this Court granted the petition of Jovencio Lim to post
bail pursuant to Department of Justice Circular No. 74 dated November 6, 2001 which
amended the 2000 Bail Bond Guide involving estafa under Article 315, par. 2 (d), and qualified
theft. Said Circular specifically provides as follows: chanrob1es virtual 1aw library

x          x           x

3) Where the amount of fraud is P32,000.00 or over in which the imposable penalty is reclusion
temporal to reclusion perpetua, bail shall be based on reclusion temporal maximum, pursuant to Par.
2 (a) of the 2000 Bail Bond Guide, multiplied by P2,000.00, plus an additional of P2,000.00 for every
P10,000.00 in excess of P22,000.00; Provided, however, that the total amount of bail shall not
exceed P60,000.00.
In view of the aforementioned resolution, the matter concerning bail shall no longer be discussed.
Thus, this decision will focus on

Petitioners contend that, inasmuch as the amount of the subject check is P365,750, they
can be penalized with reclusion perpetua or 30 years of imprisonment. This penalty,
according to petitioners, is too severe and disproportionate to the crime they committed
and infringes on the express mandate of Article III, Section 19 of the Constitution which
prohibits the infliction of cruel, degrading and inhuman punishment.

ISSUE: WHETHER OR NOT PD 818 VIOLATES THE CONSTITUTION:--NO, it is constitutional

RULING:

Moreover, when a law is questioned before the Court, the presumption is in favor of its
constitutionality. To justify its nullification, there must be a clear and unmistakable breach
of the Constitution, not a doubtful and argumentative one. The burden of proving the
invalidity of a law is upon who challenges it. In this case, petitioners failed to present clear
and convincing proof to defeat the presumption of constitutionality of PD 818.—hanggang
dito muna

Clearly, the increase in the penalty, far from being cruel and degrading, it’s main purpose,
is TO REPRESS an evil that undermines the country’s commercial and economic growth,
and to serve as a necessary precaution to warn people from issuing bouncing checks. The
fact that PD 818 did not increase the amounts corresponding to the new penalties only
proves that the amount is immaterial and inconsequential. What the law sought to prevent
was the proliferation of estafa cases committed by means of bouncing checks. Taking into
account the salutary purpose for which said law was decreed, we conclude that PD 818 does
not violate Section 19 of Article III of the Constitution.

With respect to the issue of whether PD 818 infringes on Section 1 of Article III of the Constitution,
petitioners claim that PD 818 is violative of the due process clause of the Constitution as it was not
published in the Official Gazette. This claim is incorrect and must be rejected. Publication,
being an indispensable part of due process, is imperative to the validity of laws,
presidential decrees and executive orders. 5 PD 818 was published in the Official Gazette
on December 1, 1975. 6 

Sections 1 and 19 of Article III of the Constitution, which respectively provide: chanrob1es virtual 1aw library

Section 1. No person shall be deprived of life, liberty or property without due process of
law, nor shall any person be denied the equal protection of the laws.

x           x           x

Section 19 (1) Excessive fines shall not be imposed, nor cruel, degrading or inhuman
punishment inflicted. . . .

We shall deal first with the issue of whether PD 818 was enacted in contravention of Section 19 of
Article III of the Constitution. In this regard, the impugned provision of PD 818 reads as follows:
1aw library
chanrob1es virtual

SECTION 1. Any person who shall defraud another by means of false pretenses or
fraudulent acts as defined in paragraph 2(d) of Article 315 of the Revised Penal Code, as
amended by Republic Act No. 4885, shall punished by: chanrob1es virtual 1aw library

1st. The penalty of reclusion temporal if the amount of the fraud is over 12,000 pesos but
does not exceed 22,000 pesos, and if such amount exceeds the later sum, the penalty provided in
this paragraph shall be imposed in its maximum period, adding one year for each additional
10,000 pesos but the total penalty which may be imposed shall in no case exceed thirty
years. In such cases, and in connection with the accessory penalties which may be imposed under
the Revised Penal Code, the penalty shall be termed reclusion perpetua;

2nd. The penalty of prision mayor in its maximum period, if the amount of the fraud is over
6,000 pesos but does not exceed 12,000 pesos.

3rd. The penalty of prision mayor in its medium period, if such amount is over 200 pesos but
does not exceed 6,000 pesos; and

4th. By prision mayor in its minimum period, if such amount does not exceed 200 pesos.

THE PUNISHMENT IS NOT CRUEL

Settled is the rule that a punishment authorized by statute is not cruel, degrading or
disproportionate to the nature of the offense unless it is flagrantly and plainly oppressive
and wholly disproportionate to the nature of the offense as to shock the moral sense of the
community. It takes more than merely being harsh, excessive, out of proportion or severe for a
penalty to be obnoxious to the Constitution. 2 Based on this principle, the Court has consistently
overruled contentions of the defense that the penalty of fine or imprisonment authorized by the
statute involved is cruel and degrading.

In People v. Tongko, 3 this Court held that the prohibition against cruel and unusual
punishment is generally aimed at the form or character of the punishment rather than its
severity in respect of its duration or amount, and applies to punishments which never existed in
America or which public sentiment regards as cruel or obsolete. This refers, for instance, to those
inflicted at the whipping post or in the pillory, to burning at the stake, breaking on the
wheel, disemboweling and the like. The fact that the penalty is severe provides insufficient
basis to declare a law unconstitutional and does not, by that circumstance alone, make it
cruel and inhuman.

PURPOSE OF THE INCREASED IMPOSITION OF PENALTY ON ESTAFA

Petitioners also argue that while PD 818 increased the imposable penalties for estafa
committed under Article 315, par. 2 (d) of the Revised Penal Code, it did not increase the
amounts corresponding to the said new penalties. Thus, the original amounts provided for in
the Revised Penal Code have remained the same notwithstanding that they have become
negligible and insignificant compared to the present value of the peso.

This argument is without merit. The primary purpose of PD 818 is emphatically and categorically
stated in the following: chanrob1es virtual 1aw library

WHEREAS, reports received of late indicate an upsurge of estafa (swindling) cases

committed by means of bouncing checks;

WHEREAS, if not checked at once, these criminal acts would erode the people’s confidence
in the use of negotiable instruments as a medium of commercial transaction and
consequently result in the retardation of trade and commerce and the undermining of the
banking system of the country;

WHEREAS, it is vitally necessary to arrest and curb the rise in this kind of estafa cases by
increasing the existing penalties provided therefor.

With the foregoing considerations in mind, this Court upholds the constitutionality of PD 818. chanrob1es virtua1 1aw 1ibrary

WHEREFORE, the petition is hereby DISMISSED.

PRESUMPTION AGAINST INJUSTICE

The law should never be interpreted in such a way as to cause injustice as this never
within the legislative intent.

We interpret and apply the law in consonance with justice.

Judges do not and must not unfeelingly apply the law as it is worded, yielding like robots
to the literal command without regard to its cause and consequence.

G.R. No. 94723 August 21, 1997

KAREN E. SALVACION, minor, thru Federico N. Salvacion, Jr., father and Natural Guardian, and Spouses
FEDERICO N. SALVACION, JR., and EVELINA E. SALVACION, petitioners, 
vs.
CENTRAL BANK OF THE PHILIPPINES, CHINA BANKING CORPORATION and GREG BARTELLI y
NORTHCOTT, respondents.

In our predisposition to discover the "original intent" of a statute, courts become the unfeeling pillars of the status
quo. Ligle do we realize that statutes or even constitutions are bundles of compromises thrown our way by their
framers. Unless we exercise vigilance, the statute may already be out of tune and irrelevant to our day.

The petition is for declaratory relief. It prays for the following reliefs:

a.) Immediately upon the filing of this petition, an Order be issued restraining the respondents from
applying and enforcing Section 113 of Central Bank Circular No. 960;
 b.) After hearing, judgment be rendered:

1.) Declaring the respective rights and duties of petitioners and respondents;

2.) Adjudging Section 113 of Central Bank Circular No. 960 as contrary to the provisions of
the Constitution, hence void; because its provision that "Foreign currency deposits shall be
exempt from attachment, garnishment, or any other order or process of any court, legislative
body, government agency or any administrative body whatsoever

i.) has taken away the right of petitioners to have the bank deposit of defendant Greg
Bartelli y Northcott garnished to satisfy the judgment rendered in petitioners' favor in
violation of substantive due process guaranteed by the Constitution;

ii.) has given foreign currency depositors an undue favor or a class privilege in
violation of the equal protection clause of the Constitution;

iii.) has provided a safe haven for criminals like the herein respondent Greg Bartelli y
Northcott since criminals could escape civil liability for their wrongful acts by merely
converting their money to a foreign currency and depositing it in a foreign currency
deposit account with an authorized bank.

The antecedent facts:

On February 4, 1989, Greg Bartelli y Northcott, an American tourist, coaxed and lured petitioner Karen
Salvacion, then 12 years old to go with him to his apartment. Therein, Greg Bartelli detained Karen Salvacion
for four days, or up to February 7, 1989 and was able to rape the child once on February 4, and three times
each day on February 5, 6, and 7, 1989. On February 7, 1989, after policemen and people living nearby, rescued
Karen, Greg Bartelli was arrested and detained at the Makati Municipal Jail. The policemen recovered from
Bartelli the following items: 1.) Dollar Check No. 368, Control No. 021000678-1166111303, US 3,903.20; 2.)
COCOBANK Bank Book No. 104-108758-8 (Peso Acct.); 3.) Dollar Account — China Banking Corp.,
US$/A#54105028-2; 4.) ID-122-30-8877; 5.) Philippine Money (P234.00) cash; 6.) Door Keys 6 pieces; 7.) Stuffed
Doll (Teddy Bear) used in seducing the complainant.

On February 16, 1989, Makati Investigating Fiscal Edwin G. Condaya filed against Greg Bartelli was charged
with, Criminal Case No. 801 for Serious Illegal Detention and Criminal Cases Nos. 802, 803, 804, and 805 for
four (4) counts of Rape. On the same day, petitioners filed with the Regional Trial Court of Makati Civil Case
No. 89-3214 for damages with preliminary attachment against Greg Bartelli. On February 24, 1989, the day there
was a on the scheduled hearing for Bartelli's petition for bail the latter escaped from jail.

On February 28, 1989, the court granted the fiscal's Urgent Ex-Parte Motion for the Issuance of Warrant of Arrest
and Hold Departure Order. Pending the arrest of the accused Greg Bartelli y Northcott, the criminal cases were
archived in an Order dated February 28, 1989.

Meanwhile, in Civil Case No. 89-3214, the Judge issued an Order dated February 22, 1989 RTC granted the
application of herein petitioners, for the issuance of the writ of preliminary attachment. After petitioners gave
Bond No. JCL (4) 1981 by FGU Insurance Corporation in the amount of P100,000.00, a Writ of Preliminary
Attachment was issued by the trial court on February 28, 1989.

On March 1, 1989, the Deputy Sheriff of Makati served a Notice of Garnishment on China Banking
Corporation. In a letter dated March 13, 1989 to the Deputy Sheriff of Makati, China Banking Corporation
invoked Republic Act No. 1405 as its answer to the notice of garnishment served on it. On March 15, 1989,
Deputy Sheriff of Makati Armando de Guzman sent his reply to China Banking Corporation saying responded that
the garnishment did not violate the secrecy of bank deposits since the disclosure is merely incidental to a
garnishment properly and legally made by virtue of a court order which has placed the subject deposits
in custodia legis. In answer to this letter of the Deputy Sheriff of Makati, China Banking Corporation, in a letter
dated March 20, 1989, invoked Section 113 of Central Bank Circular No. 960 to the effect that the dollar
deposits or defendant Greg Bartelli are exempt from attachment, garnishment, or any other order or process
of any court, legislative body, government agency or any administrative body, whatsoever.

This prompted the counsel for petitioners to made an inquiry with the Central Bank in a letter dated April 25,
1989 on whether Section 113 of CB Circular No. 960 has any exception or whether said section has been
repealed or amended since said section has rendered nugatory the substantive right of the plaintiff to have
the claim sought to be enforced by the civil action secured by way of the writ of preliminary attachment as
granted to the plaintiff under Rule 57 of the Revised Rules of Court. The Central Bank responded in negative as
follows:

May 26, 1989

Ms. Erlinda S. Carolino

12 Pres. Osmena Avenue
South Admiral Village
Paranaque, Metro Manila

Dear Ms. Carolino:

 This is in reply to your letter dated April 25, 1989 regarding your inquiry on Section 113, CB Circular
No. 960 (1983).

The cited provision is absolute in application. It does not admit of any exception, nor has the
same been repealed nor amended.

The purpose of the law is to encourage dollar accounts within the country's banking system
which would help in the development of the economy. There is no intention to render futile the
basic rights of a person as was suggested in your subject letter. The law may be harsh as some
perceive it, but it is still the law. Compliance is, therefore, enjoined.

Very truly yours,

(SGD) AGAPITO S. FAJARDO

Director1

Meanwhile, on April 10, 1989, the trial court granted petitioners' motion for leave to serve summons by publication in
the Civil Case No. 89-3214 entitled "Karen Salvacion, et al. vs. Greg Bartelli y Northcott." Summons with the
complaint was a published in the Manila Times once a week for three consecutive weeks. Greg Bartelli failed to file
his answer to the complaint and was declared in default on August 7, 1989. After hearing the case ex-parte, the
court rendered judgment in favor of petitioners on March 29, 1990, the dispositive portion of which reads:

WHEREFORE, judgment is hereby rendered in favor of plaintiffs and against defendant, ordering the
latter:

1. To pay plaintiff Karen E. Salvacion the amount of P500,000.00 as moral damages;

2. To pay her parents, plaintiffs spouses Federico N. Salvacion, Jr., and Evelina E. Salvacion the
amount of P150,000.00 each or a total of P300,000.00 for both of them;

3. To pay plaintiffs exemplary damages of P100,000.00; and

4. To pay attorney's fees in an amount equivalent to 25% of the total amount of damages herein
awarded;

5. To pay litigation expenses of P10,000.00; plus

6. Costs of the suit.

SO ORDERED.

Thus, petitioners decided to seek relief from this Court.

Petitioners’ contention:

aver as heretofore stated that Section 113 of Central Bank Circular No. 960 providing that "Foreign currency
deposits shall be exempt from attachment, garnishment, or any other order or process of any court,
legislative body, government agency or any administrative body whatsoever." should be declared
unconstitutional on the grounds that:

1.) it has taken away the right of petitioners to have the bank deposit of accused Greg Bartelli y Northcott
garnished to satisfy the judgment rendered in petitioners' favor in violation of substantive due process
guaranteed by the Constitution; 2.) it has given foreign currency depositors an undue favor or a class
privilege in violation of the equal protection clause of the Constitution; 3.) it has provided a safe haven for
criminals like the herein respondent Greg Bartelli y Northcott since criminals could escape civil liability for their
wrongful acts by merely converting their money to a foreign currency and depositing it in a foreign currency
deposit account with an authorized bank; and 4.) The Monetary Board, in issuing Section 113 of Central Bank
Circular No. 960 has exceeded its delegated quasi-legislative power when it took away: a.) the plaintiffs substantive
right to have the claim sought to be enforced by the civil action secured by way of the writ of preliminary attachment
as granted by Rule 57 of the Revised Rules of Court; b.) the plaintiffs substantive right to have the judgment credit
satisfied by way of the writ of execution out of the bank deposit of the judgment debtor as granted to the judgment
creditor by Rule 39 of the Revised Rules of Court, which is beyond its power to do so.

On the other hand, respondent Central Bank, in its Comment alleges that the Monetary Board in issuing Section
113 of CB Circular No. 960 did not exceed its power or authority because the subject Section is copied verbatim
from a portion of R.A. No. 6426 as amended by P.D. 1246. Hence, it was not the Monetary Board that grants
exemption from attachment or garnishment to foreign currency deposits, but the law (R.A. 6426 as amended) itself;
that it does not violate the substantive due process guaranteed by the Constitution because a.) it was based
on a law; b.) the law seems to be reasonable; c.) it is enforced according to regular methods of procedure;
and d.) it applies to all members of a class.

PURPOSE OF THE CIRCULAR ACCORDING TO THE BANK:

Expanding, the Central Bank said; that one reason for exempting the foreign currency deposits from attachment,
garnishment or any other order or process of any court, is to assure the development and speedy growth of the
Foreign Currency Deposit System and the Offshore Banking System in the Philippines; that another reason is
to encourage the inflow of foreign currency deposits into the banking institutions thereby placing such
institutions more in a position to properly channel the same to loans and investments in the Philippines, thus directly
contributing to the economic development of the country; that the subject section is being enforced according to the
regular methods of procedure; and that it applies to all foreign currency deposits made by any person and
therefore does not violate the equal protection clause of the Constitution.

Respondent Central Bank further avers that the questioned provision is needed to promote the public interest
and the general welfare; that the State cannot just stand idly by while a considerable segment of the society
suffers from economic distress; that the State had to take some measures to encourage economic development;
and that in so doing persons and property may be subjected to some kinds of restraints or burdens to secure the
general welfare or public interest. Respondent Central Bank also alleges that Rule 39 and Rule 57 of the
Revised Rules of Court provide that some properties are exempted from execution/attachment especially
provided by law and R.A. No. 6426 as amended is such a law, in that it specifically provides, among others,
that foreign currency deposits shall be exempted from attachment, garnishment, or any other order or
process of any court, legislative body, government agency or any administrative body whatsoever.

For its part, respondent China Banking Corporation, aside from giving reasons similar to that of respondent Central
Bank, also stated that respondent China Bank is not unmindful of the inhuman sufferings experienced by the minor
Karen E. Salvacion from the beastly hands of Greg Bartelli; that it is only too willing to release the dollar deposit of
Bartelli which may perhaps partly mitigate the sufferings petitioner has undergone; but it is restrained from doing so
in view of R.A. No. 6426 and Section 113 of Central Bank Circular No. 960; and that despite the harsh effect of
these laws on petitioners, CBC has no other alternative but to follow the same.

The issues raised and the arguments articulated by the parties boil down to two:

ISSUE: WON SECTION 113 OF CENTRAL BANK CIRCULAR NO. 960 AND SECTION 8 OF R.A. 6426 AND PD
1246, AS UNCONSTITUTIONAL/ TRANSIENT?—NO , however inapplicable in this case

RULING-the provisions of Section 113 of CB Circular No. 960 and PD No. 1246, insofar as it amends Section 8
of R.A. No. 6426 are hereby held to be INAPPLICABLE to this case because of its peculiar circumstances,
hence, Respondents are hereby REQUIRED to COMPLY with the writ of execution

This Court finds the petition to be partly meritorious.

Petitioner deserves to receive the damages awarded to her by the court. But this petition for declaratory relief can
only be entertained and treated as a petition for mandamus to require respondents to honor and comply with the writ
of execution in Civil Case No. 89-3214.

This Court has no original and exclusive jurisdiction over a petition for declaratory relief.  However, exceptions to this
2

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

Here is a child, a 12-year old girl, who in her belief that all Americans are good and in her gesture of
kindness by teaching his alleged niece the Filipino language as requested by the American, trustingly went
with said stranger to his apartment, and there she was raped by said American tourist Greg Bartelli. Not
once, but ten times. She was detained therein for four (4) days. This American tourist was able to escape
from the jail and avoid punishment. On the other hand, the child, having received a favorable judgment in the
Civil Case for damages in the amount of more than P1,000,000.00, which amount could alleviate the humiliation,
anxiety, and besmirched reputation she had suffered and may continue to suffer for a long, long time; and knowing
that this person who had wronged her has the money, could not, however get the award of damages
because of this unreasonable law. This questioned law, therefore makes futile the favorable judgment and
award of damages that she and her parents fully deserve. As stated by the trial court in its decision,

Indeed, after hearing the testimony of Karen, the Court believes that it was undoubtedly a shocking
and traumatic experience she had undergone which could haunt her mind for a long, long time, the
mere recall of which could make her feel so humiliated, as in fact she had been actually
humiliated once when she was refused admission at the Abad Santos High School, Arellano
University, where she sought to transfer from another school, simply because the school
authorities of the said High School learned about what happened to her and allegedly feared
that they might be implicated in the case.

xxx xxx xxx

The reason for imposing exemplary or corrective damages is due to the wanton and bestial
manner defendant had committed the acts of rape during a period of serious illegal detention
of his hapless victim, the minor Karen Salvacion whose only fault was in her being so naive
and credulous to believe easily that defendant, an American national, could not have such a
bestial desire on her nor capable of committing such a heinous crime. Being only 12 years old when
that unfortunate incident happened, she has never heard of an old Filipino adage that in every forest
there is a
snake, . . . .
4
If Karen's sad fate had happened to anybody's own relative, it would be difficult for him to fathom how the
incentive for foreign currency deposit could be more important than his child's rights to said award of
damages; in this case, the victim's claim for damages from this alien who had the gall to wrong a child of tender
years of a country where he is a mere visitor. This further illustrates the flaw in the questioned provisions.

ETO SAGOT: In fine, the application of the law depends on the extent of its justice. Eventually, if we rule that
the questioned Section 113 of Central Bank Circular No. 960 which exempts from attachment, garnishment, or
any other order or process of any court, legislative body, government agency or any administrative body
whatsoever, is applicable to a foreign transient, injustice would result especially to a citizen aggrieved by a
foreign guest like accused Greg Bartelli. This would contradict Article 10 of the New Civil Code which
provides that "in case of doubt in the interpretation or application of laws, it is presumed that the
lawmaking body intended right and justice to prevail. "Ninguno non deue enriquecerse tortizeramente con
dano de otro." Simply stated, when the statute is silent or ambiguous, this is one of those fundamental
solutions that would respond to the vehement urge of conscience. (Padilla vs. Padilla, 74 Phil. 377).

It would be unthinkable, that the questioned Section 113 of Central Bank No. 960 would be used as a device by
accused Greg Bartelli for wrongdoing, and in so doing, acquitting the guilty at the expense of the innocent.

Call it what it may — but is there no conflict of legal policy here? Dollar against Peso? Upholding the final and
executory judgment of the lower court against the Central Bank Circular protecting the foreign depositor? Shielding
or protecting the dollar deposit of a transient alien depositor against injustice to a national and victim of a crime?
This situation calls for fairness against legal tyranny.

We definitely cannot have both ways and rest in the belief that we have served the ends of justice.

PURPOSE OF THE ENACTMENT: Offshore Banking System and the Foreign Currency Deposit System were
designed to draw deposits from foreign lenders and investors (Vide second Whereas of PD No. 1034; third
Whereas of PD No. 1035). It is these deposits that are induced by the two laws and given protection and
incentives by them.

to assure the development and speedy growth of the Foreign Currency Deposit system and the Offshore
Banking in the Philippines"

It is worth mentioning that R.A. No. 6426 was enacted in 1983 or at a time when the country's economy was in a
shambles; when foreign investments were minimal and presumably, this was the reason why said statute was
enacted. But the realities of the present times show that the country has recovered economically; and even if not,
the questioned law still denies those entitled to due process of law for being unreasonable and oppressive. The
intention of the questioned law may be good when enacted. The law failed to anticipate the iniquitous effects
producing outright injustice and inequality such as the case before us.

It has thus been said that —

But I also know,  that laws and institutions must go hand in hand with the progress of the human
5

mind. As that becomes more developed, more enlightened, as new discoveries are made, new
truths are disclosed and manners and opinions change with the change of circumstances,
institutions must advance also, and keep pace with the times. . . We might as well require a man to
wear still the coat which fitted him when a boy, as civilized society to remain ever under the regimen
of their barbarous ancestors.

In his Comment, the Solicitor General correctly opined, thus:

The present petition has far-reaching implications on the right of a national to obtain redress for a
wrong committed by an alien who takes refuge under a law and regulation promulgated for a
purpose which does not contemplate the application thereof envisaged by the alien. More
specifically, the petition raises the question whether the protection against attachment, garnishment
or other court process accorded to foreign currency deposits by PD No. 1246 and CB Circular No.
960 applies when the deposit does not come from a lender or investor but from a mere
transient or tourist who is not expected to maintain the deposit in the bank for long.

The resolution of this question is important for the protection of nationals who are victimized in the
forum by foreigners who are merely passing through.

xxx xxx xxx

. . . Respondents China Banking Corporation and Central Bank of the Philippines refused to honor
the writ of execution issued in Civil Case No. 89-3214 on the strength of the following provision of
Central Bank Circular No. 960:

Sec. 113. Exemption from attachment. — Foreign currency deposits shall be

exempt from attachment, garnishment, or any other order or process of any
court, legislative body, government agency or any administrative body
whatsoever.

Central Bank Circular No. 960 was issued pursuant to Section 7 of Republic Act No. 6426:
 Sec. 7. Rules and Regulations. The Monetary Board of the Central Bank shall
promulgate such rules and regulations as may be necessary to carry out the
provisions of this Act which shall take effect after the publication of such rules and
regulations in the Official Gazette and in a newspaper of national circulation for at
least once a week for three consecutive weeks. In case the Central Bank
promulgates new rules and regulations decreasing the rights of depositors, the rules
and regulations at the time the deposit was made shall govern.

The aforecited Section 113 was copied from Section 8 of Republic Act NO. 6426, as amended by
P.D. 1246, thus:

Sec. 8. Secrecy of Foreign Currency Deposits. — All foreign currency deposits

authorized under this Act, as amended by Presidential Decree No. 1035, as well as
foreign currency deposits authorized under Presidential Decree No. 1034, are hereby
declared as and considered of an absolutely confidential nature and, except upon the
written permission of the depositor, in no instance shall such foreign currency
deposits be examined, inquired or looked into by any person, government official,
bureau or office whether judicial or administrative or legislative or any other entity
whether public or private: Provided, however, that said foreign currency deposits
shall be exempt from attachment, garnishment, or any other order or process
of any court, legislative body, government agency or any administrative body
whatsoever.

The purpose of PD 1246 in according protection against attachment, garnishment and other court
process to foreign currency deposits is stated in its whereases, viz.:

WHEREAS, under Republic Act No. 6426, as amended by Presidential Decree No.
1035, certain Philippine banking institutions and branches of foreign banks are
authorized to accept deposits in foreign currency;

WHEREAS, under the provisions of Presidential Decree No. 1034 authorizing the
establishment of an offshore banking system in the Philippines, offshore banking
units are also authorized to receive foreign currency deposits in certain cases;

WHEREAS, in order to assure the development and speedy growth of the Foreign
Currency Deposit System and the Offshore Banking System in the Philippines,
certain incentives were provided for under the two Systems such as confidentiality of
deposits subject to certain exceptions and tax exemptions on the interest income of
depositors who are nonresidents and are not engaged in trade or business in the
Philippines;

WHEREAS, making absolute the protective cloak of confidentiality over such foreign
currency deposits, exempting such deposits from tax, and guaranteeing the vested
rights of depositors would better encourage the inflow of foreign currency deposits
into the banking institutions authorized to accept such deposits in the Philippines
thereby placing such institutions more in a position to properly channel the same to
loans and investments in the Philippines, thus directly contributing to the economic
development of the country;

Thus, one of the principal purposes of the protection accorded to foreign currency deposits
is "to assure the development and speedy growth of the Foreign Currency Deposit system
and the Offshore Banking in the Philippines" (3rd Whereas).

The Offshore Banking System was established by PD No. 1034. In turn, the purposes of PD No.
1034 are as follows:

WHEREAS, conditions conducive to the establishment of an offshore banking

system, such as political stability, a growing economy and adequate communication
facilities, among others, exist in the Philippines;

WHEREAS, it is in the interest of developing countries to have as wide access as

possible to the sources of capital funds for economic development;

WHEREAS, an offshore banking system based in the Philippines will be

advantageous and beneficial to the country by increasing our links with foreign
lenders, facilitating the flow of desired investments into the Philippines, creating
employment opportunities and expertise in international finance, and contributing to
the national development effort.

WHEREAS, the geographical location, physical and human resources, and other
positive factors provide the Philippines with the clear potential to develop as another
financial center in Asia;

On the other hand, the Foreign Currency Deposit system was created by PD. No. 1035. Its purposes
are as follows:
 WHEREAS, the establishment of an offshore banking system in the Philippines has
been authorized under a separate decree;

WHEREAS, a number of local commercial banks, as depository bank under the

Foreign Currency Deposit Act (RA No. 6426), have the resources and managerial
competence to more actively engage in foreign exchange transactions and
participate in the grant of foreign currency loans to resident corporations and firms;

WHEREAS, it is timely to expand the foreign currency lending authority of the said
depository banks under RA 6426 and apply to their transactions the same taxes as
would be applicable to transaction of the proposed offshore banking units;

It is evident from the above [Whereas clauses] that the Offshore Banking System and the Foreign
Currency Deposit System were designed to draw deposits from
foreign lenders and investors (Vide second Whereas of PD No. 1034; third Whereas of PD No.
1035). It is these deposits that are induced by the two laws and given protection and
incentives by them.

Obviously, the foreign currency deposit made by a transient or a tourist is not the kind of deposit
encouraged by PD Nos. 1034 and 1035 and given incentives and protection by said laws because
such depositor stays only for a few days in the country and, therefore, will maintain his deposit in the
bank only for a short time.

Respondent Greg Bartelli, as stated, is just a tourist or a transient. He deposited his dollars with
respondent China Banking Corporation only for safekeeping during his temporary stay in the
Philippines.

For the reasons stated above, the Solicitor General thus submits that the dollar deposit of
respondent Greg Bartelli is not entitled to the protection of Section 113 of Central Bank Circular No.
960 and PD No. 1246 against attachment, garnishment or other court processes. 6

IN VIEW WHEREOF, the provisions of Section 113 of CB Circular No. 960 and PD No. 1246, insofar as it amends
Section 8 of R.A. No. 6426 are hereby held to be INAPPLICABLE to this case because of its peculiar
circumstances. Respondents are hereby REQUIRED to COMPLY with the writ of execution issued in Civil Case No.
89-3214, "Karen Salvacion, et al. vs. Greg Bartelli y Northcott, by Branch CXLIV, RTC Makati and to RELEASE to
petitioners the dollar deposit of respondent Greg Bartelli y Northcott in such amount as would satisfy the judgment.

SO ORDERED.

G.R. No. 72873 May 28, 1987

CARLOS ALONZO and CASIMIRA ALONZO, petitioners, 

vs.
INTERMEDIATE APPELLATE COURT and TECLA PADUA, respondents. 

The question is sometimes asked, in serious inquiry or in curious conjecture, whether we are a court of law or a
court of justice. Do we apply the law even if it is unjust or do we administer justice even against the law? Thus
queried, we do not equivocate. The answer is that we do neither because we are a court both of law and of
justice. We apply the law with justice for that is our mission and purpose in the scheme of our Republic.
This case is an illustration. 

Five brothers and sisters inherited in equal pro indiviso shares a parcel of land registered in 'the name of their
deceased parents under OCT No. 10977 of the Registry of Deeds of Tarlac. 1

On March 15, 1963, one of them, Celestino Padua, transferred his undivided share to petitioners Alonzo for
the sum of P550.00 by way of absolute sale.( 2 One year later, on April 22, 1964, Eustaquia Padua, likewise his
sister, sold her own share to the same vendees, in an instrument denominated " Con Pacto de Retro Sale," sale
with stipulation for repurchase for the sum of P 440.00. 3

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

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

The trial court * also dismiss this complaint, now on the ground that the right had lapsed, not having been
exercised within thirty days from notice of the sale, there was a lapsed FOR thirteen years after the first sale
and fourteen years after the second sale in 1963 and 1964. Although there was no written notice, it was held
that actual knowledge of the sales by the co-heirs satisfied the requirement of the law in Art 1088 of the
Civil Code . 7
In truth, such actual notice as acquired by the co-heirs cannot be plausibly denied. The other co-heirs, including
Tecla Padua, lived on the same lot, which consisted of only 604 square meters, including the portions sold to the
petitioners . 8 Eustaquia herself, who had sold her portion, was staying in the same house with her sister Tecla, who
later claimed redemption petition. 9 Moreover, the petitioners and the private respondents were close friends and
neighbors whose children went to school together. 10

It is highly improbable that the other co-heirs were unaware of the sales and that they thought, as they alleged, that
the area occupied by the petitioners had merely been mortgaged by Celestino and Eustaquia. In the circumstances
just narrated, it was impossible for Tecla not to know that the area occupied by the petitioners had been purchased
by them from the other. co-heirs. Especially significant was the erection thereon of the permanent semi-concrete
structure by the petitioners' son, which was done without objection on her part or of any of the other co-heirs. 

The only real question in this case, therefore, is the correct interpretation and application of the pertinent law as
invoked, interestingly enough, by both the petitioners and the private respondents. This is Article 1088 of the Civil
Code, providing as follows: 

Art. 1088. Should any of the heirs sell his hereditary rights to a stranger before the partition,
any or all of the co-heirs may be subrogated to the rights of the purchaser by reimbursing
him for the price of the sale, provided they do so within the period of one month from the
time they were notified in writing of the sale by the vendor.

IAC reversed the trial court, the respondent court ** declared that the notice required by the said article
was written notice and that actual notice would not suffice as a substitute. Citing the same case of De
Conejero v. Court of Appeals 11 applied by the trial court, the respondent court held that that decision,
interpreting a like rule in Article 1623, stressed the need for written notice although no particular form was
required. 

ISSUE; WON THERE WAS A VALID NOTICE ALTHOUGH NOT IN WRITING---YES

Was there a valid notice? Granting that the law requires the notice to be written, would such notice be necessary in
this case? Assuming there was a valid notice although it was not in writing. would there be any question that the 30-
day period for redemption had expired long before the complaint was filed in 1977? 

RULING: But as has also been aptly observed, we test a law by its results; and likewise, we may add, by its
purposes. It is a cardinal rule that, in seeking the meaning of the law, the first concern of the judge should be to
discover in its provisions the intent of the lawmaker. Unquestionably, the law should never be interpreted in such
a way as to cause injustice as this is never within the legislative intent. An indispensable part of that intent
is to render justice. , THERE IS A PRESUMPTION OF the good motives of the legislature,

Thus, we interpret and apply the law not independently of but in consonance with justice. Law and justice are
inseparable, and we must keep them so. To be sure, there are some laws that, while generally valid, may
seem arbitrary when applied in a particular case because of its peculiar circumstances. In such a situation,
we are not bound, because only of our nature and functions, to apply them just the same, in slavish obedience to
their language. What we do instead is find a balance between the word and the will, that justice may be done
even as the law is obeyed. 

In the face of the established facts, we cannot accept the private respondents' contention that they were
unaware of the sales made by their brother and sister is unacceptable in 1963 and 1964. By requiring
written proof of such notice, we would be closing our eyes to the obvious truth in favor of their palpably
false claim of ignorance, thus exalting the letter of the law over its purpose. The purpose is clear enough: to
make sure that the redemptioners are duly notified. We are satisfied that in this case the other brothers and
sisters were actually informed, although not in writing, of the sales made in 1963 and 1964, and that such
notice was sufficient. 

It was the perfectly natural thing for the co-heirs to wonder why the spouses Alonzo, who were not among
them, should enclose a portion of the inherited lot and build thereon a house of strong materials. This
definitely was not the act of a temporary possessor or a mere mortgagee. This certainly looked like an act of
ownership. Yet, given this unseemly situation,however none of the co-heirs saw fit to object or at least
inquire, to ascertain the facts, which were readily available. It took all of thirteen years before one of them
chose to claim the right of redemption, but then it was already too late. 

More than twenty centuries ago, Justinian defined justice "as the constant and perpetual wish to render every one
his due." 16 That wish continues to motivate this Court when it assesses the facts and the law in every case brought
to it for decision. Justice is always an essential ingredient of its decisions. Thus when the facts warrants, we
interpret the law in a way that will render justice, presuming that it was the intention of the lawmaker, to
begin with, that the law be dispensed with justice. So we have done in this case. 

NOW, WHEN DID THE 30-DAY PERIOD OF REDEMPTION BEGIN? 

While we do not here declare that this period started from the dates of such sales in 1963 and 1964, we do say that
sometime between 1963 and 1964 and 1976, when the first complaint for redemption was filed, the other co-
heirs were actually informed of the sale and that thereafter the 30-day period started running and ultimately
expired. This could have happened any time during the interval of thirteen years, when none of the co-heirs made a
move to redeem the properties sold. Hence, By 1977, in other words, when Tecla Padua filed her complaint, the
right of redemption had already been extinguished because the period for its exercise had already expired. 

The following doctrine is also worth noting: 

While the general rule is, that to charge a party with laches in the assertion of an alleged right it is
essential that he should have knowledge of the facts upon which he bases his claim, yet if the
circumstances were such as should have induced inquiry, and the means of ascertaining the truth
were readily available upon inquiry, but the party neglects to make it, he will be chargeable with
laches, the same as if he had known the facts. 15 

It was the perfectly natural thing for the co-heirs to wonder why the spouses Alonzo, who were not among
them, should enclose a portion of the inherited lot and build thereon a house of strong materials. This
definitely was not the act of a temporary possessor or a mere mortgagee. This certainly looked like an act of
ownership. Yet, given this unseemly situation,however none of the co-heirs saw fit to object or at least
inquire, to ascertain the facts, which were readily available. It took all of thirteen years before one of them
chose to claim the right of redemption, but then it was already too late. 

More than twenty centuries ago, Justinian defined justice "as the constant and perpetual wish to render every one
his due." 16 That wish continues to motivate this Court when it assesses the facts and the law in every case brought
to it for decision. Justice is always an essential ingredient of its decisions. Thus when the facts warrants, we
interpret the law in a way that will render justice, presuming that it was the intention of the lawmaker, to
begin with, that the law be dispensed with justice. So we have done in this case. 

We realize that in arriving at our conclusion today, we are deviating from the strict letter of the law, which
the respondent court understandably applied pursuant to existing jurisprudence. The said court acted
properly as it had no competence to reverse the doctrines laid down by this Court in the above-cited cases.
In fact, and this should be clearly stressed, we ourselves are not abandoning the De Conejero and Buttle doctrines.
What we are doing simply is adopting an exception to the general rule, in view of the peculiar
circumstances of this case. 

The co-heirs in this case were undeniably informed of the sales although no notice in writing was given them. And
there is no doubt either that the 30-day period began and ended during the 14 years between the sales in question
and the filing of the complaint for redemption in 1977, without the co-heirs exercising their right of redemption.
These are the justifications for this exception. 

WHEREFORE, the petition is granted. The decision of the respondent court is REVERSED and that of the trial court
is reinstated, without any pronouncement as to costs. It is so ordered.

Thus, according to Justice J.B.L. Reyes, who was the ponente of the Court, furnishing the co-heirs with a copy of
the deed of sale of the property subject to redemption would satisfy the requirement for written notice. "So long,
therefore, as the latter (i.e., the redemptioner) is informed in writing of the sale and the particulars thereof," he
declared, "the thirty days for redemption start running. " 

In the earlier decision of Butte v. UY, 12 " the Court, speaking through the same learned jurist, emphasized that the
written notice should be given by the vendor and not the vendees, conformably to a similar requirement under
Article 1623, reading as follows: 

Art. 1623. The right of legal pre-emption or redemption shall not be exercised except within
thirty days from the notice in writing by the prospective vendor, or by the vendors, as the case
may be. The deed of sale shall not be recorded in the Registry of Property, unless accompanied by
an affidavit of the vendor that he has given written notice thereof to all possible redemptioners. 

The right of redemption of co-owners excludes that of the adjoining owners. 

As "it is thus apparent that the Philippine legislature in Article 1623 deliberately selected a particular method of
giving notice, and that notice must be deemed exclusive," the Court held that notice given by the vendees and not
the vendor would not toll the running of the 30-day period. 

The petition before us appears to be an illustration of the Holmes dictum that "hard cases make bad laws" as the
petitioners obviously cannot argue against the fact that there was really no written notice given by the vendors to
their co-heirs. Strictly applied and interpreted, Article 1088 can lead to only one conclusion, to wit, that in view of
such deficiency, the 30 day period for redemption had not begun to run, much less expired in 1977. 

As judges, we are not automatons. We do not and must not unfeelingly apply the law as it is worded, yielding like
robots to the literal command without regard to its cause and consequence. "Courts are apt to err by sticking too
closely to the words of a law," so we are warned, by Justice Holmes again, "where these words import a policy that
goes beyond them." 13 While we admittedly may not legislate, we nevertheless have the power to interpret the
law in such a way as to reflect the will of the legislature. While we may not read into the law a purpose that is
not there, we nevertheless have the right to read out of it the reason for its enactment. In doing so, we defer not to
"the letter that killeth" but to "the spirit that vivifieth," to give effect to the law maker's will. 

The spirit, rather than the letter of a statute determines its construction, hence, a statute must be
read according to its spirit or intent. For what is within the spirit is within the letter but although it is
not within the letter thereof, and that which is within the letter but not within the spirit is not within the
statute. Stated differently, a thing which is within the intent of the lawmaker is as much within the
statute as if within the letter; and a thing which is within the letter of the statute is not within the
statute unless within the intent of the lawmakers. 14 

In requiring written notice, Article 1088 seeks to ensure that the redemptioner is properly notified of
the sale and to indicate the date of such notice as the starting time of the 30-day period of
redemption. Considering the shortness of the period, it is really necessary, as a general rule, to
pinpoint the precise date it is supposed to begin, to obviate any problem of alleged delays,
sometimes consisting of only a day or two. 

The instant case presents no such problem because the right of redemption was invoked
not days but years after the sales were made in 1963 and 1964. The complaint was filed by Tecla Padua in
1977, thirteen years after the first sale and fourteen years after the second sale. The delay invoked by the
petitioners extends to more than a decade, assuming of course that there was a valid notice that tolled the running
of the period of redemption. 

PRESUMPTION AGAINST IMPLIED REPEALS

The two laws must be absolutely incompatible, and clear finding thereof must surface,
before the inference of implied repeal may be drawn.

In the absence of an express repeal, a subsequent law cannot be construed as repealing

a prior law unless an irreconcilable inconsistency and repugnancy exists in terms of the
new and old laws.

G.R. No. 112099 February 21, 1995

ACHILLES C. BERCES, SR., petitioner, 

vs.
HON. EXECUTIVE SECRETARY TEOFISTO T. GUINGONA, JR., CHIEF PRESIDENTIAL LEGAL COUNSEL
ANTONIO CARPIO and MAYOR NAOMI C. CORRAL OF TIWI, ALBAY, respondents.

This is a petition for certiorari and prohibition under Rule 65 of the Revised Rules of Court with prayer for mandatory
preliminary injunction, assailing the Orders of the Office of the President as having been issued with grave abuses
of discretion. Said Orders directed the stay of execution of the decision of the Sangguniang Panlalawigan
suspending the Mayor of Tiwi, Albay from office.

Petitioner filed two administrative cases against respondent Naomi C. Corral, the incumbent Mayor of Tiwi,
Albay with the Sangguniang Panlalawigan of Albay, to wit:

(1) Administrative Case No. 02-92 for abuse of authority and/or oppression for non-payment of
accrued leave benefits due the petitioner amounting to P36,779.02.

(2) Administrative Case No. 05-92 for dishonesty and abuse of authority for installing a water
pipeline which is being operated, maintained and paid for by the municipality to service
respondent's private residence and medical clinic.

On July 1, 1993, the Sangguniang Panlalawigan rendered judgment in favor of the petitioner Berces, to pay
the petitioner and and seuspended Mayor Corral from office disposed the two Administrative cases in the
following manner:

(1) Administrative Case No. 02-92

ACCORDINGLY, respondent Mayor Naomi C. Corral of Tiwi, Albay, is hereby ordered to pay
Achilles Costo Berces, Sr. the sum of THIRTY-SIX THOUSAND AND SEVEN HUNDRED
SEVENTY-NINE PESOS and TWO CENTAVOS (P36,779.02) per Voucher No. 352, plus legal
interest due thereon from the time it was approved in audit up to final payment, it being legally due
the Complainant representing the money value of his leave credits accruing for services rendered in
the municipality from 1988 to 1992 as a duly elected Municipal Councilor. IN ADDITION, respondent
Mayor NAOMI C. CORRAL is hereby ordered SUSPENDED from office as Municipal Mayor of Tiwi,
Albay, for a period of two (2) months, effective upon receipt hereof for her blatant abuse of authority
coupled with oppression as a public example to deter others similarly inclined from using public
 office as a tool for personal vengeance, vindictiveness and oppression at the expense of the
Taxpayer (Rollo, p. 14).

(2) Administrative Case No. 05-92

WHEREFORE, premises considered, respondent Mayor NAOMI C. CORRAL of Tiwi, Albay, is

hereby sentenced to suffer the penalty of SUSPENSION from office as Municipal Mayor thereof for a
period of THREE (3) MONTHS beginning after her service of the first penalty of suspension ordered
in Administrative Case No. 02-92. She is likewise ordered to reimburse the Municipality of Tiwi One-
half of the amount the latter have paid for electric and water bills from July to December 1992,
inclusive (Rollo, p. 16).

Consequently, respondent Mayor appealed to the Office of the President questioning the decision and at the
same time prayed for the stay of execution thereof in accordance with Section 67(b) of the Local Government
Code, which provides:

Administrative Appeals. — Decision in administrative cases may, within thirty (30) days from receipt
thereof, be appealed to the following:

x x x           x x x          x x x

(b) The Office of the President, in the case of decisions of the sangguniang
panlalawigan and the sangguniang panglungsod of highly urbanized cities and
independent component cities.

Acting on the prayer to stay execution during the pendency of the appeal, the Office of the President issued an
Order on July 28, 1993, the pertinent portions of which read as follows:

xxx xxx xxx

accdg to OP: The stay/suspension of the execution is governed by Section 68 of R.A. No.
7160 and Section 6 of Administrative Order No. 18 dated 12 February 1987, quoted below:

Sec. 68. Execution Pending Appeal. — An appeal shall not prevent a decision from becoming
final or executory. The respondent shall be considered as having been placed under preventive
suspension during the pendency of an appeal in the events he wins such appeal. In the event the
appeal results in an exoneration, he shall be paid his salary and such other emoluments during the
pendency of the appeal (R.A. No. 7160).

Sec. 6 Except as otherwise provided by special laws, the execution of the

decision/resolution/order appealed from is stayed upon filing of the appeal within the period
prescribed herein. However, in all cases, at any time during the pendency of the appeal, the
Office of the President may direct or stay the execution of the decision/resolution/order
appealed from upon such terms and conditions as it may deem just and reasonable (Adm.
Order No. 18).

xxx xxx xxx

After due consideration, and in the light of the Petition for Review filed before this Office, we find that
a stay of execution pending appeal would be just and reasonable to prevent undue prejudice to
public interest.

WHEREFORE, premises considered, this Office hereby orders the suspension/stay of

execution of:

a) the Decision and resolution of the Sangguniang Panlalawigan of Albay in

Administrative Cases No. 02-92 dated 1 July 1993 suspending Mayor Naomi C.
Corral from office for a period of two (2) months, and

b) the Resolution of the Sangguniang Panlalawigan of Albay in Administrative Case.

No. 05-92 dated 5 July 1993 suspending Mayor Naomi C. Corral from office for a
period of three (3) months (Rollo, pp. 55-56).

Petitioner then filed a Motion for Reconsideration questioning the aforesaid Order of the Office of the President.

On September 13, 1990, the Motion for Reconsideration was denied.

Hence, this petition.

II

Petitioner claims that the governing law in the instant case is R.A. No. 7160, which contains a mandatory
provision that an appeal "shall not prevent a decision from becoming final and executory." He argues that
administrative Order No. 18 dated February 12, 1987, (entitle "Prescribing the Rules and Regulations Governing
Appeals to Office the President") authorizing the President to stay the execution of the appealed decision at
any time during the pendency of the appeal, was repealed by R.A. No. 7160, which took effect on January 1,
1991 (Rollo, pp. 5-6).

The petition is devoid of merit.

Petitioner invokes the repealing clause of Section 530 (f), R.A. No. 7160, which provides:

All general and special laws, acts, city charters, decrees, executive orders, administrative
regulations, part or parts thereof, which are incosistent with any of the provisions of this
Code, are hereby repealed or modified accordingly.

ISSUE: WON ADMINISTRATIVE ORDER NO. 18 AUTHORIZING THE PRESIDENT TO SUSPEND AN

EXECUTION OF AN APPEALED DECISION, PENDING APPEAL, WAS REPEALED BY RA 7610/LOCAL GOVT.
CODE.----NO

RULING: THERE IS NO EXPRESSED NOR IMPLIED REPEAL RA 7610/LOCAL GOVT. CODE

The aforementioned clause is not an express repeal of Section 6 of Administrative Order No. 18 because it
failed to identify or designate the laws or executive orders that are intended to be repealed (cf. I Sutherland,
Statutory Construction 467 [1943]).

If there is any repeal of Administrative Order No. 18 by R.A. No. 7160, it is through implication though such
kind of repeal is not favored (The Philippine American Management Co., Inc. v. The Philippine American
Management Employees Association, 49 SCRA 194 [1973]). HOWEVER, There is even a presumption against
implied repeal.

We find that furthermore, the provisions of Section 68 of R.A. No. 7160 and Section 6 of Administrative
Order No. 18 are not irreconcillably inconsistent and repugnant and the two laws must in fact be read
together

An implied repeal predicates the intended repeal upon the condition that a substantial conflict must be
found between the new and prior laws. In the absence of an express repeal, a subsequent law cannot be
construed as repealing a prior law unless an irreconcible inconsistency and repugnancy exists in the terms
of the new and old laws (Iloilo Palay and Corn Planters Association, Inc. v. Feliciano, 13 SCRA 377 [1965]). The
two laws must be absolutely incompatible (Compania General de Tabacos v. Collector of Customs, 46 Phil. 8
[1924]). There must be such a repugnancy between the laws that they cannot be made to stand together
(Crawford, Construction of Statutes 631 [1940]).

The first sentence of Section 68 merely provides that an "appeal shall not prevent a decision from becoming final or
executory." As worded, there is room to construe said provision as giving discretion to the reviewing officials to stay
the execution of the appealed decision. There is nothing to infer therefrom that the reviewing officials are
deprived of the authority to order a stay of the appealed order. If the intention of Congress was to repeal
Section 6 of Administrative Order No. 18, it could have used more direct language expressive of such
intention.

The execution of decisions pending appeal is procedural and in the absence of a clear legislative intent to remove
from the reviewing officials the authority to order a stay of execution, such authority can provided in the rules and
regulations governing the appeals of elective officials in administrative cases.

The term "shall" may be read either as mandatory or directory depending upon a consideration of the entire
provisions in which it is found, its object and the consequences that would follow from construing it one
way or the other (cf. De Mesa v. Mencias, 18 SCRA 533 [1966]). In the case at bench, there is no basis to
justify the construction of the word as mandatory.

The Office of the President made a finding that the execution of the decision of the Sagguniang
Panlalawigan suspending respondent Mayor from office might be prejudicial to the public interest. Thus, in
order not to disrupt the rendition of service by the mayor to the public, a stay of the execution of the
decision is in order.

WHEREFORE, the petition is DISMISSED.

G.R. No. 103982 December 11, 1992

ANTONIO A. MECANO, petitioner, 
vs.
COMMISSION ON AUDIT, respondent.

Antonio A. Mecano, through a petition for certiorari, seeks to nullify the decision of the Commission on Audit (COA,
for brevity) embodied in its 7th Indorsement, dated January 16, 1992, denying his claim for reimbursement under
Section 699 of the Revised Administrative Code (RAC), as amended, in the total amount of P40,831.00.
Petitioner Antonio Mecano is a Director II of the National Bureau of Investigation (NBI). He was hospitalized
for cholecystitis from March 26, 1990 to April 7, 1990, on account of which he incurred medical and
hospitalization expenses, the total amount of which he is claiming from the COA.

On May 11, 1990, in a memorandum to the NBI Director, Alfredo S. Lim (Director Lim, for brevity), he requested
reimbursement for his expenses on the ground that he is entitled to the benefits under Section 699  of the 1

Revised Administrative Code, the pertinent provisions of which read:

Sec. 699. Allowances in case of injury, death, or sickness incurred in performance of duty. —

When a person in the service of the national government of a province, city, municipality or
municipal district is so injured in the performance of duty as thereby to receive some actual physical
hurt or wound, the proper Head of Department may direct that absence during any period of
disability thereby occasioned shall be on full pay, though not more than six months, and in such case
he may in his discretion also authorize the payment of the medical attendance, necessary
transportation, subsistence and hospital fees of the injured person. Absence in the case
contemplated shall be charged first against vacation leave, if any there be.

xxx xxx xxx

In case of sickness caused by or connected directly with the performance of some act in the line of
duty, the Department head may in his discretion authorize the payment of the necessary
hospital fees.

Director Lim then forwarded petitioner's claim, in a 1st Indorsement dated June 22, 1990, to the Secretary of
Justice, along with the comment, bearing the same date, of Gerarda Galang, Chief, LED of the NBI, "recommending
favorable action thereof". Finding petitioner's illness to be service-connected, the Committee on Physical
Examination of the Department of Justice favorably recommended the payment of petitioner's claim.

However, then Undersecretary of Justice Silvestre H. Bello III, in a 4th Indorsement dated November 21, 1990,
returned petitioner's claim to Director Lim, having considered the statements of the Chairman of the COA in its
5th Indorsement dated 19 September 1990, to the effect that the RAC being relied upon was repealed by the
Administrative Code of 1987.

Petitioner then re-submitted his claim to Director Lim, with a copy of Opinion No. 73, S. 1991  dated April 26,
2

1991 of then Secretary of Justice Franklin M. Drilon (Secretary Drilon, for brevity) stating that "the issuance of the
Administrative Code did not operate to repeal or abregate in its entirety the Revised Administrative Code,
including the particular Section 699 of the latter".

On May 10, 1991, Director Lim, under a 5th Indorsement transmitted anew Mecano's claim to then Undersecretary
Bello for favorable consideration. Under a 6th Indorsement, dated July 2, 1991, Secretary Drilon forwarded
petitioner's claim to the COA Chairman, recommending payment of the same. COA Chairman Eufemio C. Domingo,
in his 7th Indorsement of January 16, 1992, however, denied petitioner's claim on the ground that Section 699
of the RAC had been repealed by the Administrative Code of 1987, solely for the reason that the same section
was not restated nor re-enacted in the Administrative Code of 1987. He commented, however, that the claim may
be filed with the Employees' Compensation Commission, considering that the illness of Director Mecano
occurred after the effectivity of the Administrative Code of 1987.

Eventually, petitioner's claim was returned by Undersecretary of Justice Eduardo Montenegro to Director Lim under
a 9th Indorsement dated February 7, 1992, with the advice that petitioner "elevated the matter to the Supreme
Court if he so desires".

Petitioner (not repealed) anchors his claim on Section 699 of the RAC, as amended, and on the aforementioned
Opinion No. 73, S. 1991 of Secretary Drilon. He further maintains that in the event that a claim is filed with the
Employees' Compensation Commission, as suggested by respondent, he would still not be barred from filing a claim
under the subject section. Thus, the resolution of whether or not there was a repeal of the Revised Administrative
Code of 1917 would decide the fate of petitioner's claim for reimbursement.

The COA (repealed), on the other hand, strongly maintains that the enactment of the Administrative Code of
1987 (Exec. Order No. 292) operated to revoke or supplant in its entirety the Revised Administrative Code of 1917.
The COA claims that from the "whereas" clauses of the new Administrative Code, it can be gleaned that it was the
intent of the legislature to repeal the old Code. Moreover, the COA questions the applicability of the aforesaid
opinion of the Secretary of Justice in deciding the matter. Lastly, the COA contends that employment-related
sickness, injury or death is adequately covered by the Employees' Compensation Program under P.D. 626, such
that to allow simultaneous recovery of benefits under both laws on account of the same contingency would be unfair
and unjust to the Government.

ISSUE: WHETHER OR NOT THE ADMINISTRATIVE CODE OF 1987 REPEALED OR ABROGATED SECTION
699 OF THE RAC, --NO, NOT REPEALED

The question of whether a particular law has been repealed or not by a subsequent law is a matter of legislative
intent. The lawmakers may expressly repeal a law by incorporating therein a repealing provision which expressly
and specifically cites the particular law or laws, and portions thereof, that are intended to be repealed.  A declaration
3

in a statute, usually in its repealing clause, that a particular and specific law, identified by its number or title, is
repealed is an express repeal; all others are implied repeals. 4
In the case of the two Administrative Codes in question, the ascertainment of whether or not it was the intent of the
legislature to supplant the old Code with the new Code partly depends on the scrutiny of the repealing clause of the
new Code. This provision is found in Section 27, Book VII (Final Provisions) of the Administrative Code of 1987
which reads:

Sec. 27. Repealing Clause. — All laws, decrees, orders, rules and regulations, or portions
thereof, inconsistent with this Code are hereby repealed or modified accordingly.

The question that should be asked is: What is the nature of this repealing clause? It is certainly not an express
repealing clause since it fails to identify or designate the act or acts that are intended to be
repealed.  Rather, it is an example of a general repealing provision, as stated in Opinion No. 73, S. 1991. It is a
5

clause which grounds the intended repeal under the condition that substantial conflict must be found in
existing and prior acts. The failure to provide a specific repealing clause indicates that the intent was not to
repeal any existing law, unless an irreconcilable inconcistency and repugnancy exist in the terms of the new
and old laws.  This latter situation falls under the category of an implied repeal.
6

Repeal by implication proceeds on the premise that where a statute of later date clearly reveals an intention on the
part of the legislature to abrogate a prior act on the subject, that intention must be given effect.  Hence, before there
7

can be a repeal, there must be a clear showing on the part of the lawmaker that the intent in enacting the
new law was to abrogate /repeal the old one. There is also no implied repeal, The intention to repeal must be
clear and manifest;  otherwise, at least, as a general rule, the new act/law is to be construed as a
8

continuation of, and not a substitute for, the prior law/ act and will continue so far as the two acts are the
same from the time of the first enactment

There are two categories of repeal by implication:

1. where provisions in the two laws/ acts on the same subject matter are in an irreconcilable conflict,
the new law/act to the extent of the conflict constitutes an implied repeal of the prior one.
2.
3. the new law/ act covers the whole subject of the prior one and is clearly intended as a substitute, it
will operate to repeal the earlier law. 10

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

Comparing the two Codes, it is apparent that the new Code does not cover nor attempt to cover the entire
subject matter of the old Code. There are several matters treated in the old Code which are not found in the
new Code, such as the provisions on notaries public, the leave law, the public bonding law, military reservations,
claims for sickness benefits under Section 699, and still others.

Moreover, the COA failed to demonstrate that the provisions of the two Codes on the matter of the subject claim are
in an irreconcilable conflict. In fact, there can be no such conflict because the provision on sickness benefits
of the nature being claimed by petitioner has not been restated in the Administrative Code of 1987. However,
the COA would have Us consider that the fact that Section 699 was not restated in the Administrative Code of 1987
meant that the same section had been repealed. It further maintained that to allow the particular provisions not
restated in the new Code to continue in force argues against the Code itself. The COA anchored this argument on
the whereas clause of the 1987 Code, which states:

WHEREAS, the effectiveness of the Government will be enhanced by a new Administrative Code
which incorporate in a unified document the major structural, functional and procedural principles
and rules of governance; and

x x x           x x x          x x x

it is a well-settled rule of statutory construction that repeals of statutes by implication are not favored.  The 20

presumption is against inconsistency and repugnancy, for the legislature is presumed to know the existing
laws on the subject and not to have enacted inconsistent or conflicting statutes. 21

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

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

It argues, in effect, that what is contemplated is only one Code — the Administrative Code of 1987. This contention
is untenable.

The fact that a later enactment may relate to the same subject matter as that of an earlier statute is not of
itself sufficient to cause an implied repeal of the prior act, since the new statute may merely be cumulative
or a continuation of the old one.   What is necessary is a manifest indication of legislative purpose to
12

repeal.13

We come now to the second category of repeal — the enactment of a statute revising or codifying the former laws
on the whole subject matter. This is only possible if the revised statute or code was intended to cover the whole
subject to be a complete and perfect system in itself. It is the rule that a subsequent statute is deemed to repeal
a prior law if the former revises the whole subject matter of the former statute.  When both intent and scope
14

clearly evidence the idea of a repeal, then all parts and provisions of the prior act that are omitted from the revised
act are deemed repealed.  Furthermore, before there can be an implied repeal under this category, it must be the
15

clear intent of the legislature that the later act be the substitute to the prior act.
16

According to Opinion No. 73, S. 1991 of the Secretary of Justice, what appears clear is the intent to cover only
those aspects of government that pertain to administration, organization and procedure, understandably
because of the many changes that transpired in the government structure since the enactment of the RAC
decades of years ago. The COA challenges the weight that this opinion carries in the determination of this
controversy inasmuch as the body which had been entrusted with the implementation of this particular provision has
already rendered its decision. The COA relied on the rule in administrative law enunciated in the case of Sison
vs. Pangramuyen  that in the absence of palpable error or grave abuse of discretion, the Court would be loathe to
17

substitute its own judgment for that of the administrative agency entrusted with the enforcement and implementation
of the law. This will not hold water. This principle is subject to limitations. Administrative decisions may be
reviewed by the courts upon a showing that the decision is vitiated by fraud, imposition or mistake.  It has 18

been held that Opinions of the Secretary and Undersecretary of Justice are material in the construction of
statutes in pari materia. 19

G.R. No. 141667             July 17, 2006

REPUBLIC OF THE PHILIPPINES, represented by NATIONAL ELECOMMUNICATIONS COMMISSION

(NTC),petitioner, 
vs.
INTERNATIONAL COMMUNICATIONS CORPORATION (ICC), respondent.

DECISION

GARCIA, J.:

In this petition for review under Rule 45 of the Rules of Court, petitioner Republic, through the National
Telecommunications Commission (NTC), seeks the annulment and setting aside of the Amended Decision1 dated
September 30, 1999 of the Court of Appeals (CA), setting aside the orders dated June 4, 1996 and June 25, 1997 of
the NTC insofar as said orders required respondent International Communications Corporation (ICC) to pay the
amount of P1,190,750.50 by way of permit fee as a condition for the grant of a provisional authority to operate an
international telecommunications leased circuit service, and the Resolution2 dated January 24, 2000, denying NTC's
motion for reconsideration.

There is no dispute as to the facts:

On April 4, 1995, respondent INTERNATIONAL COMMUNICATIONS CORPORATION (ICC), holder of a

legislative franchise under Republic Act (RA) No. 7633 to operate domestic telecommunications, filed with
the Telecommunications Commission (NTC), an application for a Certificate of Public Convenience and
Necessity to install, operate, and maintain an international telecommunications leased circuit service
between the Philippines and other countries, and to charge rates therefor, with provisional authority for the
purpose.

In an Order3 dated June 4, 1996, the NTC approved the application for a provisional authority subject, among
others, to the condition:

2. That applicant [ICC] shall pay a permit fee in the amount of P1,190,750.00, in accordance with
section 40(g) of the Public Service Act,4 as amended;

Respondent ICC filed a motion for partial reconsideration of the Order insofar as the same required the
payment of a permit fee. In a subsequent Order dated June 25, 1997, the NTC denied the motion.

Therefrom, ICC went to the CA on a petition for certiorari with prayer for a temporary restraining order and/or writ
of preliminary injunction, questioning the NTC's imposition against it of a permit fee of P1,190,750.50 as a
condition for the grant of the provisional authority . CA at first ruled in favor of NTC but upon Motion by
ICC, CA reversed NTC’s imposition of permit fee.
CA ratiocinated that while:

Section 40(g) of the Public Service Act - allowed NTC to impose fees as reimbursement of its expenses
related to, among other things, the "authorization" of public services

Section 5(g), above, of R.A. No. 7921- no longer speaks of "authorization" but only of "regulation" and
"supervision."

CA- the omission by Section 5(g) of R.A. No. 7921 of the word "authorization" found in Section 40(g) of the
Public Service Act, as amended, meant that the fees which NTC may impose are only for reimbursement of
its expenses for regulation and supervision but no longer for authorization purposes

In its original decision5 dated January 29, 1999, the CA ruled in favor of the NTC whose challenged orders were
sustained, and accordingly denied ICC's certiorari petition, thus:

WHEREFORE, the instant petition is hereby DENIED. In view thereof, the assailed orders dated 4 June
1996 and 25 June 1997, requiring the payment of permit fees in the amount of One Million One Hundred
Ninety Thousand Seven Hundred Fifty and 50/100 Pesos (P1,190,750.50) as a condition for the grant of a
Provisional Authority to operate an International Circuit service, are hereby AFFIRMED. ACCORDINGLY,
the International Communications Corporation is hereby ordered to pay the amount of One Million One
Hundred Ninety Thousand Seven Hundred Fifty and 50/100 Pesos (P1,190,750.50) to the National
Telecommunications Commission.

SO ORDERED.

In time, ICC moved for a reconsideration. This time, the CA, in its Amended Decision dated September 30, 1999,
reversed itself, to wit:

WHEREFORE, the instant Motion for Reconsideration is hereby GRANTED. Accordingly, the Decision dated
29 January 1999 including the imposition by the public respondent of permit fees with respect to [ICC’s]
international leased circuit service is hereby REVERSED. Judgment is hereby rendered, setting aside the
questioned orders dated 04 June 1996 and 25 June 1997, insofar as they impose upon petitioner ICC the
payment of the amount of One Million One Hundred Ninety Thousand Seven Hundred Fifty and Fifty
Centavos (P1,190,750.50) by way of permit fees as a condition for the grant of a provisional authority to
operate an International Leased Circuit Service. No costs.

SO ORDERED. (Word in bracket added).

Petitioner NTC filed a motion for reconsideration, but its motion was denied by the CA in its equally challenged
Resolution dated January 24, 2000. Hence, NTC's present recourse claimed that the CA erred in ruling that:

1. NTC has arrogated upon itself the power to tax an entity;

2. Section 40(g) of the Public Service Act has been amended by Section 5(g) of R.A. 7925;6

3. The imposition of permit fees is no longer authorized by R.A. 7925; and

4. The imposed permit fee in the amount of P1,190,750.50 for respondent's provisional authority is
exorbitant.

ISSUE: WON Section 40(g) of the Public Service Act has been amended by Section 5(g) of R.A. 7925- NO

COURT: NTC is correct in saying that there is no showing of legislative intent to repeal, even impliedly,
Section 40(g), supra, of the Public Service Act, as amended. An implied repeal is predicated on a substantial
conflict between the new and prior laws. In the absence of an express repeal, a subsequent law cannot be
construed as repealing a prior law unless there’s an irreconcilable inconsistency and repugnancy exist in
the terms of the new and old laws.11 The two laws must be absolutely incompatible such that they cannot be
made to stand together.12

Courts of justice, when confronted with apparently conflicting statutes or provisions, should endeavor to
reconcile the same instead of declaring outright the validity of one as against the other. Such alacrity should
be avoided. The wise policy is for the judge to harmonize such statutes or provisions if this is possible,
bearing in mind that they are equally the handiwork of the same legislature, and so give effect to both while at
the same time also according due respect to a coordinate department of the government. It is this policy the Court
will apply in arriving at the interpretation of the laws and the conclusions that should follow therefrom.13

It is a rule of statutory construction that repeals by implication are not favored. An implied repeal will not be
allowed unless it is convincingly and unambiguously demonstrated that the two laws are so clearly
repugnant and patently inconsistent with each other that they cannot co-exist. This is based on the
rationale that the will of the legislature cannot be overturned by the judicial function of construction and
interpretation. Courts cannot take the place of Congress in repealing statutes. Their function is to try to
harmonize, as much as possible, seeming conflicts in the laws and resolve doubts in favor of their validity
and co-existence.
In this case, There’s no conflict between Section 40(g) of the Public Service Act, as amended, and Section
5(g) of R.A. 7925. In fact, the latter provision directs petitioner NTC to "continue to impose such fees and
charges as may be necessary to cover reasonable costs and expenses for the regulation and supervision of
telecommunications entities."

The absence alone of the word "authorization" in Section 5(g) of R.A. No. 7921 cannot be construed to mean
that petitioner NTC had thus been deprived of the power to collect such fees.

As pointed out by the petitioner, the words "authorization, supervision and/or regulation" used in Section
40(g) of the Public Service Act are not distinct and completely separable concepts which may be taken
singly or piecemeal. Taken in their entirety, they are the quintessence of the Commission's regulatory functions,
and must go hand-in-hand with one another. In petitioner's own words, "[t]he Commission authorizes, supervises
and regulates telecommunications entities and these functions... cannot be considered singly without destroying the
whole concept of the Commission's regulatory functions."15 Hence, petitioner NTC is correct in asserting that the
passage of R.A. 7925 did not bring with it the abolition of permit fees.

WON NTC has arrogated upon itself the power to tax an entity-- no

Clearly, Section 40(g) of the Public Service Act is not a tax measure but a simple regulatory provision for the
collection of fees imposed pursuant to the exercise of the State’s police power. A tax is imposed under the
taxing power of government principally for the purpose of raising revenues. The law in question, however,
merely authorizes and requires the collection of fees for the reimbursement of the Commission's expenses
in the authorization, supervision and/or regulation of public services. There can be no doubt then that
petitioner NTC is authorized to collect such fees. However, the amount thereof must be reasonably related
to the cost of such supervision and/or regulation.10

In its Amended Decision, the CA ruled that petitioner NTC had arrogated upon itself the power to tax an entity,
which it is not authorized to do. Petitioner disagreed, contending the fee in question is not in the nature of a tax, but
is merely a regulatory measure.

Section 40(g) of the Public Service Act provides:

Sec. 40. The Commission is authorized and ordered to charge and collect from any public service or
applicant, as the case may be, the following fees as reimbursement of its expenses in the authorization,
supervision and/or regulation of the public services:

xxx       xxx       xxx

g) For each permit, authorizing the increase in equipment, the installation of new units or authorizing the
increase of capacity, or the extension of means or general extensions in the services, twenty centavos for
each one hundred pesos or fraction of the additional capital necessary to carry out the permit. (Emphasis
supplied)

Petitioner NTC also assails the CA's ruling that Section 40(g) of the Public Service Act had been amended by
Section 5(g) of R.A. No. 7925, which reads:

Sec. 5. Responsibilities of the National Telecommunications Commission. - The National

Telecommunications Commission (Commission) shall be the principal administrator of this Act and
as such shall take the necessary measures to implement the policies and objectives set forth in this
Act. Accordingly, in addition to its existing functions, the Commission shall be responsible for the
following:

xxx       xxx       xxx

g) In the exercise of its regulatory powers, continue to impose such fees and charges as may be
necessary to cover reasonable costs and expenses for the regulation and supervision of the
operations of telecommunications entities. (Emphasis supplied)

WON The imposition of permit fees is no longer authorized by R.A. 7925-- YES

However, while petitioner had made some valid points of argument, its position must, of necessity, crumble on the
fourth issue raised in its petition. Petitioner itself admits that the fees imposed are precisely regulatory and
supervision fees, and not taxes. This necessarily implies, however, that such fees must be commensurate to the
costs and expenses involved in discharging its supervisory and regulatory functions.

In the words of Section 40(g) of the Public Service Act PROVIDES that the fees and charges which petitioner
NTC is authorized to collect from any public service or applicant are limited to the "reimbursement of its
expenses in the authorization, supervision and/or regulation of public services."

however, the amount imposed as permit fee is exorbitant and in complete disregard of the basic limitation
that the fee should be at least approximately commensurate to the expense, i
the court said that it is difficult to comprehend how the cost of licensing, regulating, and surveillance could
amount to P1,190,750.50. The CA was correct in finding the Petitioner itself admits that it had imposed the
maximum amount possible under the Public Service Act, as amended. That is hardly taking into consideration
the actual costs of fulfilling its regulatory and supervisory functions.

Independent of the above, there is one basic consideration for the dismissal of this petition, about which petitioner
NTC did not bother to comment at all. We refer to the fact that, as respondent ICC aptly observed, the principal
ground given

Other reason: by the CA in striking down the imposition of the P1,190,750.50 fee is that respondent ICC is
entitled to the benefits of the so-called "parity clause" embodied in Section 23 of R.A. No. 7925, to wit:

Section 23. Equality of Treatment in the Telecommunications Industry. - Any advantage, favor,
privilege, exemption, or immunity granted under existing franchises, or may hereafter be granted,
shall ipso facto become part of previously granted telecommunications franchises and shall be
accorded immediately and unconditionally to the grantees of such franchises x x x.

In this connection, it is significant to note that the subsequent congressional franchise granted to the
Domestic Satellite Corporation under Presidential Decree No. 947, states:

Section 6. In consideration of the franchise and rights hereby granted, the grantee shall pay to the
Republic of the Philippines during the life of this franchise a tax of one-half percent of gross
earnings derived by the grantee from its operation under this franchise and which originate from the
Philippines. Such tax shall be due and payable annually within ten days after the audit and approval of the
accounts by the Commission on Audit as prescribed in Section 11 hereof and shall be in lieu of all taxes,
assessments, charges, fees, or levies of any kind, nature, or description levied, established or
collected by any municipal, provincial, or national authority x x x (Emphasis supplied)

The CA was correct in ruling that the above-quoted provision is, by law, considered as ipso facto part of ICC's
franchise due to the "parity clause" embodied in Section 23 of R.A. No. 7925. Accordingly, respondent ICC
cannot be made subject to the payment of the subject fees because its payment of the franchise tax is "in
lieu" of all other taxes and fees.

WHEREFORE, the petition is hereby DENIED and the assailed Amended Decision and Resolution of the CA
are AFFIRMED.

PROCEDURAL ISSUES:

WON THE PETITION SHOULD BE DISMISSED OUTRIGHT FOR HAVING BEEN FILED OUT OF TIME.

It is respondent's posture that petitioner's motion for reconsideration filed with the CA vis-a-vis the latter's Amended
Decision is a pro forma motion and, therefore, did not toll the running of the reglementary period to come to this
Court via this petition for review.

Under Section 2 of Rule 45 of the Rules of Court, a recourse to this Court by way of a petition for review
must be filed within fifteen (15) days from notice of the judgment or final order or resolution appealed
from, or of the denial of the petitioner's motion for new trial or reconsideration filed in due time after notice
of the judgment. While a motion for reconsideration ordinarily tolls the period for appeal, one that fails to point out
the findings or conclusions which were supposedly contrary to law or the evidence does not have such an effect on
the reglementary period as it is merely a pro forma motion.7

In arguing for the outright dismissal of this petition, respondent ICC claims that the motion for reconsideration filed
by petitioner NTC in connection with the CA’s Amended Decision failed to point out specifically the findings or
conclusions of the CA which were supposedly contrary to law. Respondent contends that the issues raised by the
petitioner in its motion for reconsideration were mere reiterations of the same issues which had already been
considered and passed upon by the CA when it promulgated its Amended Decision. On this premise, respondent
maintains that petitioner’s aforementioned motion for reconsideration is a mere pro forma motion that did not toll the
period for filing the present petition.

Under established jurisprudence, the mere fact that a motion for reconsideration reiterates issues already
passed upon by the court does not, by itself, make it a pro forma motion.8 Among the ends to which a
motion for reconsideration is addressed is precisely to convince the court that its ruling is erroneous and
improper, contrary to the law or evidence; and in so doing, the movant has to dwell of necessity on issues
already passed upon. If a motion for reconsideration may not discuss those issues, the consequence would
be that after a decision is rendered, the losing party would be confined to filing only motions for reopening
and new trial.9

Where there is no apparent intent to employ dilatory tactics, courts should be slow in declaring outright a motion for
reconsideration as pro forma. The doctrine relating to pro forma motions has a direct bearing upon the movant's
valuable right to appeal. Hence, if petitioner's motion for reconsideration was indeed pro forma, it would still
be in the interest of justice to review the Amended Decision a quo on the merits, rather than to abort the
appeal due to a technicality, especially where, as here, the industry involved (telecommunications) is vested
with public interest. All the more so given that the instant petition raises some arguments that are well-
worth resolving for future reference.

[G.R. NO. 147192 : June 27, 2006]

GOVERNMENT SERVICE INSURANCE SYSTEM, Petitioner, v. THE CITY ASSESSOR OF ILOILO

CITY, THE REGISTER OF DEEDS OF ILOILO CITY and ROSALINA FRANCISCO, represented
by her attorney-in-fact, SALVADOR PAJA I,* Respondents.

DECISION

CORONA, J.:

Assailed in this present Petition for Review under Rule 45 of the Rules of Court are the decision 1 and
resolution2 of the Court of Appeals (CA) dismissing a petition for annulment of judgment 3 filed by
petitioner, the Government Service Insurance System (GSIS), in Cadastral Case No. 84 and another
unnumbered cadastral case decided by the Regional Trial Court (RTC), Branches 36 and 31, of Iloilo
City, respectively.

In the two cadastral cases, private respondent Rosalina Francisco petitioned for the
issuance of new transfer certificates of title (TCTs) in her name over two parcels of land, to
wit:

TCT No. 41681

A parcel of land known as Lot No. 6, Block 2, of the Subdivision Plan (LRC) Psd-184005 being a
portion of Lot 2214-B, Jaro Cadastre, LRC (GLRO) Record No. 8 situated in the District of Jaro, Iloilo
City, Island of Panay, registered in the name of GSIS c/o Baldomero Dagdag, of legal age, Filipino
citizen and resident of Jaro, Iloilo City, Philippines on June 28, 1991.

TCT No. 48580

A parcel of land known as Lot No. 22, Block 2, of the Subdivision Record No. 8 situated in the District
of Jaro, Iloilo City, Island of Panay, registered in the name of GSIS c/o Rodolfo Ceres, of legal age,
Filipino Citizen and a resident of Iloilo City, Philippines, with an area of Two Hundred Ninety Four
(294) square meters, more or less.

Private respondent Francisco purchased the these subject properties in the auction sales
held for the satisfaction of delinquent real property taxes. After the lapse of the one-year
redemption period and the failure of the registered owner or any interested person to redeem the
properties, the Iloilo City Treasurer issued the corresponding final bill of sale to private respondent.
The sales were later on duly annotated on the certificates of title on file with the Register of Deeds.
However, the final bill of sale could not be registered because the owner's duplicate
certificate of title was unavailable at that time. 

To register the lands in her name, private respondent instituted separate petitions for the
entry of title in her name over the two lots with the RTCs of Iloilo City. Both petitions were
unopposed. 

Finding merit in her petitions, the RTCs, in separate orders issued on separate dates, directed
the issuance of new duplicate TCTs. The dispositive portion of the April 29, 1993 order of RTC
Branch 36 in Cadastral Case No. 84 read:

WHEREFORE, premises considered, the Register of Deeds of the City of Iloilo is hereby ordered to
issue new owner's duplicate copy of Transfer Certificate of Title No. T-41681 in the name of GSIS c/o
Baldomero Dagdag, upon payment of the required legal fees. Accordingly, the lost copy of the
subject title is hereby declared as NULL and VOID. 4

On the other hand, RTC Branch 31 also issued an order, dated November 8, 1994, in the other
(unnumbered) cadastral case, the dispositive portion of which read:

WHEREFORE, as prayed for, the Register of Deeds, City of Iloilo is hereby directed to issue a new
owner's duplicate certificate of Title No. T-48580 in the name of the G.S.I.S. C/O RODOLFO CERES,
the registered owner, basing the same on the Original Certificate of Title found intact and existing in
the Office of the Register of Deeds and the latter to cancel Transfer Certificate of Title No. T-48580
together with the encumbrances therein and to issue a new Transfer Certificate of Title in the name
of ROSALINA FRANCISCO of legal age, single, Filipino Citizen and resident of Brgy. Tacas, Jaro, Iloilo
City, Philippines. The owner's duplicate certificate of title No. T-48580 which was not surrendered is
hereby declared null and void.5
No appeal was made from both orders of the courts a quo, hence, they became final and
executory.

GSIS file a petition to annul the judgment of the trial court, petitioner, as the alleged
previous owner of the parcels of land sold at public auction, assailed the orders of the RTCs of
Iloilo City before the CA. It claimed that the assessment of real property taxes on it (GSIS)
was void since, under its charter Section 39 of RA 8291, it was exempt from all forms of
taxes (including real property taxes on the properties held by it) that were due to the local
governments where such properties were located. Furthermore, it claimed that the proceedings
in the assessment and levy of said taxes, as well as the sale of the properties at public
auction, were held without notice to it, hence, its right to due process was violated.

CA denied GSIS’ petition gave no credence to the arguments of petitioner and dismissed its
petition. According to the CA, the exemption of GSIS under its charter was not applicable
pursuant to Section 234(a) of RA 7160, otherwise known as The Local Government Code of
1991 (LGC). Under that law, the tax-exempt status of GSIS cannot be invoked where the
actual use or beneficial ownership of the properties under its title has been conveyed to
another person.6 The CA added that there was also no basis for GSIS's claim that it was denied due
process.7

Petitioner filed a motion for reconsideration but this was denied by the CA, hence, it brought this
case to us via a Petition for Review on Certiorari under Rule 45 of the Rules of Court.

In this petition, petitioner essentially faults the CA for ruling that its properties were not exempt from
all forms of taxes under its charter (RA 8291) and that the proceedings on the assessment and levy
of its properties were legal. 

In support of its position, petitioner points to Section 39 of RA 8291 which reads: 

Section 39. Exemption from Tax, Legal Process and Lien. - It is hereby declared that the
actuarial solvency of the funds of the GSIS shall be preserved and maintained at all times and that
the contribution rates are necessary to sustain the benefits under this Act shall be kept low as
possible in order not to burden the member of the GSIS and their employers. Taxes imposed on the
GSIS tend to impair the actuarial solvency of its funds and increase the contribution rate necessary
to sustain the benefits of this Act. Accordingly, notwithstanding any laws to the contrary, the GSIS,
its assets, revenues, including all accruals thereto, and benefits paid shall be exempt from
all taxes, assessment fees, charges or duties of all kinds. These exemptions shall continue
unless expressly and specifically revoked and any assessment against the GSIS as of the approval of
this Act are hereby considered paid. Consequently, all laws, ordinances, regulations, issuances,
opinions, or jurisprudence contrary to or in derogation of this provision are hereby deemed repealed,
superseded and rendered ineffective and without legal force and effect. 

xxx

The funds and/or properties referred to herein as well as the benefits, sums or monies corresponding
to the benefits under this Act shall be exempt from attachment, garnishment, execution, levy or
other processes issued by the courts, quasi-judicial agencies or administrative bodies including the
Commission on Audit (COA) disallowances and from all financial obligations of the members,
including his pecuniary accountability arising from or caused or occasioned by his exercise or
performance of his official functions or duties, or incurred relative to or in connection with his position
or otherwise, is in favor of GSIS.8(italics supplied) 

ISSUE: WON GSIS IS EXEMPT FROM REAL PROPERTY TAX UNDER ITS CHARTER, Section 39
of RA 8291---NO

We find no reversible error in the decision and resolution of the CA.

Even if the charter of the GSIS generally exempts it from tax liabilities, the prescription is not so
encompassing as to make the tax exemption applicable to the properties in dispute here. 

In the early case of City of Baguio v. Busuego,9 COURT held that the tax-exempt status of the
GSIS could not prevent the accrual of the real estate tax liability on properties transferred
by it to a private buyer through a contract to sell.

In the present case, GSIS had already conveyed the properties to private persons, making
them subject to assessment and payment of real property taxes. 10 The alienation of the
properties sold by GSIS was the proximate cause and necessary consequence of the
delinquent taxes due. 

The doctrine laid down in City of Baguio is reflected in Section 234 (a) of the LGC,11 which states:
Section 234. Exemptions from Real Property Tax. - The following are exempted from
payment of the real property tax:

(a) Real property owned by the Republic of the Philippines or any of its political
subdivisions are exempted from payment of real property tax except when the
beneficial use thereof has been granted, for consideration or otherwise, to a
taxable person. (emphasis supplied)

WON RA 8291 (GSIS CHARTER) REPEALED SEC. 234 OF THE LGC---NO

Petitioner, however, claims that RA 8291, which took effect in 1997, abrogated Section 234 (a) of the
LGC of 1991.

We disagree.

COURT: THE repeal of a law cannot be assumed; the intention to revoke must be clear and
manifest. RA 8291 made no express repeal or abrogation of the provisions of Section 234
(a)OF RA 7160/LGC.

Repeal by implication in this case is not at all convincing either. To bring about an implied
repeal, the two laws must be absolutely incompatible. They must be clearly repugnant in a
way that the later law (RA 8291) cannot exist without nullifying the prior law (RA 7160). 13

Indeed, there is nothing in RA 8291 which abrogates, expressly or impliedly, that particular
provision of the LGC. The two statutes are not inconsistent on that specific point, let alone
so irreconcilable as to compel us to uphold one and strike down the other. 

The rule is that every statute must be interpreted and brought into accord with other laws
in a way that will form a uniform system of jurisprudence.14 The legislature is presumed to
have known existing laws on the subject and not to have enacted conflicting laws. 15 Thus,
the legislature cannot be presumed to have intended Section 234 (a) to run counter to
Section 39 of RA 8291. 

This conclusion is buttressed by the Court's 2003 decision in National Power Corporation v. City of
Cabanatuan16 where we declared that the tax provisions of the LGC were the most significant
provisions therein insofar as they removed the blanket exclusion of instrumentalities and agencies of
the national government (like petitioner) from the coverage of local taxation. In that case, petitioner
National Power Corporation (NPC) claimed that it was an instrumentality of the government exempt
under its charter from paying franchise tax. The Court overruled NPC and upheld the right of
respondent city government to impose the franchise tax on its privilege to transact
business in its area.

Again, in the 2004 case of Rubia v. Government Service Insurance System,17 the Court declared that
any interpretation that gave Section 39 an expansive construction to exempt all GSIS assets and
properties from legal processes was unwarranted. These processes included the levy and
garnishment of its assets for taxes or claims enforced against it. The Court there ruled that the
exemption under Section 39 of the GSIS Charter should be read consistently with its avowed purpose
- the maintenance of its actuarial solvency to finance the retirement, disability and life insurance
benefits of its members. The Court meant that the tax-exempt properties and assets of GSIS referred
to those that remained at its disposal and use, either for investment or for income-generating
purposes. Properties whose actual and beneficial use had been transferred to private
taxable persons, for consideration or otherwise, were excluded and were thus taxable. 

In Mactan Cebu International Airport Authority v. Marcos,18 the Court ruled that the exemption of a
government-owned or controlled corporation from taxes and other charges was not absolute and
could be withdrawn, as in fact certain provisions of the LGC, including Section 234 (a), were deemed
to have expressly withdrawn the tax-exempt privilege of petitioner as a government-owned
corporation. 

Lastly, even if we were to construe that RA 8291 abrogated Section 234(a) of the LGC, still
it cannot be made to apply retroactively without impairing the vested rights of private
respondent. The appellate court thus correctly stated:

xxx it has been the courts' consistent ruling that a repealing statute must not interfere with vested
rights or impair the obligation of contracts; that if any other construction is possible, the act should
not be construed so as to affect rights which have vested under the old law. Private respondent[s],
we reiterate, have become the private owner[s] of the properties in question in the regular course of
proceedings established by law, and after the decisions granting such rights have become final and
executory. The enactment of the new GSIS Charter cannot be applied in a retroactive manner as to
divest the Section 39 of RA 8291N ]
ownership.19 (citations omitted)
WHEREFORE, the petition is hereby DENIED.

PRESUMPTION AGAINST INEFFECTIVENESS

In the interpretation of a statute, the Court should start with the assumption that the
legislature intended to enact an effective statute.

PRESUMPTION AGAINST ABSURDITY

Statutes must receive a sensible construction such as will give effect to the legislative
intention so as to avoid an unjust and absurd conclusion.

Presumption against undesirable consequences were never intended by a legislative

measure.

G.R. No. 112170 April 10, 1996

CESARIO URSUA, petitioner, 
vs.
COURT OF APPEALS AND PEOPLE OF THE PHILIPPINES, respondents.

BELLOSILLO, J.:p

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

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

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

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

Before petitioner could leave the premises he was greeted by an acquaintance, Josefa Amparo, who also worked in
the same office. They conversed for a while then he left. When Loida learned that the person who introduced
himself as "Oscar Perez" was actually petitioner Cesario Ursua, a customer of Josefa Amparo in her gasoline
station, Loida reported the matter to the Deputy Ombudsman who recommended that petitioner be accordingly
charged.

On 18 December 1990, after the prosecution had completed the presentation of its evidence, petitioner without
leave of court filed a demurrer to evidence alleging that the failure of the prosecution to prove that his
supposed alias was different from his registered name in the local civil registry was fatal to its cause. Petitioner
argued that no document from the local civil registry was presented to show the registered name of accused which
according to him was a condition sine qua non for the validity of his conviction.

The trial court rejected his contentions and found him guilty of violating Sec. 1 of C.A. No. 142 as amended by R.A.
No. 6085. He was sentenced to suffer a prison term of one (1) year and one (1) day of prision correccional minimum
as minimum, to four (4) years of prision correccional medium as maximum, with all the accessory penalties provided
for by law, and to pay a fine of P4,000.00 plus costs.

Petitioner appealed to the Court of Appeals.

On 31 May 1993 the Court of Appeals affirmed the conviction of petitioner but modified the penalty by imposing an
indeterminate term of one (1) year as minimum to three (3) years as maximum and a fine of P5,000.00.
Petitioner now comes to us for review of his conviction as he reasserts his innocence. He contends that he has not
violated C.A. No. 142 as amended by R.A. No. 6085 as he never used any alias name; neither is "Oscar Perez"
his alias. An alias, according to him, is a term which connotes the habitual use of another name by which a person is
also known. He claims that he has never been known as "Oscar Perez" and that he only used such name on one
occasion and it was with the express consent of Oscar Perez himself. It is his position that an essential requirement
for a conviction under C.A. No. 142 as amended by R.A. No. 6085 has not been complied with when the
prosecution failed to prove that his supposed alias was different from his registered name in the Registry of Births.
He further argues that the Court of Appeals erred in not considering the defense theory that he was charged under
the wrong law.5

Time and again we have decreed that statutes are to be construed in the light of the purposes to be achieved and
the evils sought to be remedied. Thus in construing a statute the reason for its enactment should be kept in mind
and the statute should be construed with reference to the intended scope and purpose.  The court may consider the
6

spirit and reason of the statute, where a literal meaning would lead to absurdity, contradiction, injustice, or would
defeat the clear purpose of the lawmakers. 7

For a clear understanding of the purpose of C.A. No. 142 as amended, which was allegedly violated by petitioner,
and the surrounding circumstances under which the law was enacted, the pertinent provisions thereof, its
amendments and related statutes are herein cited. C.A. No. 142, which was approved on 7 November 1936, and
before its amendment by R.A. No. 6085, is entitled An Act to Regulate the Use of Aliases. It provides as follows:

Sec. 1. Except as a pseudonym for literary purposes, no person shall use any name different from
the one with which he was christened or by which he has been known since his childhood, or such
substitute name as may have been authorized by a competent court. The name shall comprise the
patronymic name and one or two surnames.

Sec. 2. Any person desiring to use an alias or aliases shall apply for authority therefor in
proceedings like those legally provided to obtain judicial authority for a change of name. Separate
proceedings shall be had for each alias, and each new petition shall set forth the original name and
the alias or aliases for the use of which judicial authority has been, obtained, specifying the
proceedings and the date on which such authority was granted. Judicial authorities for the use
of aliases shall be recorded in the proper civil register . . . .

The above law was subsequently amended by R.A. No. 6085, approved on 4 August 1969. As amended, C.A. No.
142 now reads:

Sec. 1. Except as a pseudonym solely for literary, cinema, television, radio or other entertainment
purposes and in athletic events where the use of pseudonym is a normally accepted practice, no
person shall use any name different from the one with which he was registered at birth in the office
of the local civil registry or with which he was baptized for the first time, or in case of all alien, with
which he was registered in the bureau of immigration upon entry; or such substitute name as may
have been authorized by a competent court: Provided, That persons whose births have not been
registered in any local civil registry and who have not been baptized, have one year from the
approval of this act within which to register their names in the civil registry of their residence. The
name shall comprise the patronymic name and one or two surnames.

Sec. 2. Any person desiring to use an alias shall apply for authority therefor in proceedings like those
legally provided to obtain judicial authority for a change of name and no person shall be allowed to
secure such judicial authority for more than one alias. The petition for an alias shall set forth the
person's baptismal and family name and the name recorded in the civil registry, if different, his
immigrant's name, if an alien, and his pseudonym, if he has such names other than his original or
real name, specifying the reason or reasons for the desired alias. The judicial authority for the use
of alias, the Christian name and the alien immigrant's name shall be recorded in the proper local civil
registry, and no person shall use any name or names other than his original or real name unless the
same is or are duly recorded in the proper local civil registry.

The objective and purpose of C.A. No. 142 have their origin and basis in Act No. 3883, An Act to Regulate the Use
in Business Transactions of Names other than True Names, Prescribing the Duties of the Director of the Bureau of
Commerce and Industry in its Enforcement, Providing Penalties for Violations thereof, and for other purposes, which
was approved on 14 November 1931 and amended by Act No. 4147, approved on 28 November 1934.  The 8

pertinent provisions of Act No. 3883 as amended follow —

Sec. 1. It shall be unlawful for any person to use or sign, on any written or printed receipt including
receipt for tax or business or any written or printed contract not verified by a notary public or on any
written or printed evidence of any agreement or business transactions, any name used in connection
with his business other than his true name, or keep conspicuously exhibited in plain view in or at the
place where his business is conducted, if he is engaged in a business, any sign announcing a firm
name or business name or style without first registering such other name, or such firm name, or
business name or style in the Bureau of Commerce together with his true name and that of any other
person having a joint or common interest with him in such contract, agreement, business
transaction, or business . . . .

For a bit of history, the enactment of C.A. No. 142 as amended was made primarily to curb the common practice
among the Chinese of adopting scores of different names and aliases which created tremendous confusion in the
field of trade. Such a practice almost bordered on the crime of using fictitious names which for obvious reasons
could not be successfully maintained against the Chinese who, rightly or wrongly, claimed they possessed a
thousand and one names. C.A. No. 142 thus penalized the act of using an alias name, unless such alias was duly
authorized by proper judicial proceedings and recorded in the civil register. 9

In Yu Kheng Chiau v. Republic   the Court had occasion to explain the meaning, concept and ill effects of the use of
10

an alias within the purview of C.A. No. 142 when we ruled —

There can hardly be any doubt that petitioner's use of alias "Kheng Chiau Young" in addition to his
real name "Yu Cheng Chiau" would add to more confusion. That he is known in his business, as
manager of the Robert Reid, Inc., by the former name, is not sufficient reason to allow him its use.
After all, petitioner admitted that he is known to his associates by both names. In fact, the Anselmo
Trinidad, Inc., of which he is a customer, knows him by his real name. Neither would the fact that he
had encountered certain difficulties in his transactions with government offices which required him to
explain why he bore two names, justify the grant of his petition, for petitioner could easily avoid said
difficulties by simply using and sticking only to his real name "Yu Kheng Chiau."

The fact that petitioner intends to reside permanently in the Philippines, as shown by his having filed
a petition for naturalization in Branch V of the above-mentioned court, argues the more against the
grant of his petition, because if naturalized as a Filipino citizen, there would then be no necessity for
his further using said alias, as it would be contrary to the usual Filipino way and practice of using
only one name in ordinary as well as business transactions. And, as the lower court correctly
observed, if he believes (after he is naturalized) that it would be better for him to write his name
following the Occidental method, "he can easily file a petition for change of name, so that in lieu of
the name "Yu Kheng Chian," he can, abandoning the same, ask for authority to adopt the name
Kheng Chiau Young."

All things considered, we are of the opinion and so hold, that petitioner has not shown satisfactory
proper and reasonable grounds under the aforequoted provisions of Commonwealth Act No. 142
and the Rules of Court, to warrant the grant of his petition for the use of an alias name.

Clearly therefore an alias is a name or names used by a person or intended to be used by him publicly and
habitually usually in business transactions in addition to his real name by which he is registered at birth or baptized
the first time or substitute name authorized by a competent authority. A man's name is simply the sound or sounds
by which he is commonly designated by his fellows and by which they distinguish him but sometimes a man is
known by several different names and these are known as aliases.   Hence, the use of a fictitious name or a
11

different name belonging to another person in a single instance without any sign or indication that the user intends
to be known by this name in addition to his real name from that day forth does not fall within the prohibition
contained in C.A. No. 142 as amended. This is so in the case at bench.

It is not disputed that petitioner introduced himself in the Office of the Ombudsman as "Oscar Perez," which was the
name of the messenger of his lawyer who should have brought the letter to that office in the first place instead of
petitioner. He did so while merely serving the request of his lawyer to obtain a copy of the complaint in which
petitioner was a respondent. There is no question then that "Oscar Perez" is not an alias name of petitioner. There
is no evidence showing that he had used or was intending to use that name as his second name in addition to his
real name. The use of the name "Oscar Perez" was made by petitioner in an isolated transaction where he was not
even legally required to expose his real identity. For, even if he had identified himself properly at the Office of the
Ombudsman, petitioner would still be able to get a copy of the complaint as a matter of right, and the Office of the
Ombudsman could not refuse him because the complaint was part of public records hence open to inspection and
examination by anyone under the proper circumstances.

While the act of petitioner may be covered by other provisions of law, such does not constitute an offense within the
concept of C.A. No. 142 as amended under which he is prosecuted. The confusion and fraud in business
transactions which the anti-alias law and its related statutes seek to prevent are not present here as the
circumstances are peculiar and distinct from those contemplated by the legislature in enacting C.A. No. 142 as
amended. There exists a valid presumption that undesirable consequences were never intended by a legislative
measure and that a construction of which the statute is fairly susceptible is favored, which will avoid all
objectionable, mischievous, indefensible, wrongful, evil and injurious consequences.   Moreover, as C.A. No. 142 is
12

a penal statute, it should be construed strictly against the State and in favor of the accused.   The reason for this
13

principle is the tenderness of the law for the rights of individuals and the object is to establish a certain rule by
conformity to which mankind would be safe, and the discretion of the court limited.   Indeed, our mind cannot rest
14

easy on the proposition that petitioner should be convicted on a law that does not clearly penalize the act done by
him.

WHEREFORE, the questioned decision of the Court of Appeals affirming that of the Regional Trial Court of Davao
City is REVERSED and SET ASIDE and petitioner CESARIO URSUA is ACQUITTED of the crime charged.

SO ORDERED.

PRESUMPTION AGAINST VIOLATION OF INTERNATIONAL LAW

Philippines as democratic and republican state adopts the generally accepted principles
of international law as part of the law of the land and adheres to the policy of peace,
equality, justice, freedom, cooperation, and amity with all nations. (Art. II, Sec. 2, Phil.
Constitution).