G.R. No. 72005 May 29, 1987

PHILIPPINE BRITISH ASSURANCE CO., INC., petitioner, vs.HONORABLE INTERMEDIATE APPELLATE COURT; SYCWIN COATING & WIRES, INC., and DOMINADOR CACPAL, CHIEF DEPUTY SHERRIF OF MANILA, respondents.

 

GANCAYCO, J.:

This is a Petition for Review on certiorari of the Resolution dated September 12, 1985 of the Intermediate Appellate Court in AC-G.R. No. CR-05409 1 granting private respondent's motion for execution pending appeal and ordering the issuance of the corresponding writ of execution on the counterbond to lift attachment filed by petitioner. The focal issue that emerges is whether an order of execution pending appeal of a judgment maybe enforced on the said bond. In the Resolution of September 25, 1985 2 this Court as prayed for, without necessarily giving due course to the petition, issued a temporary restraining order enjoining the respondents from enforcing the order complaint of.

The records disclose that private respondent Sycwin Coating & Wires, Inc., filed a complaint for collection of a sum of money against Varian Industrial Corporation before the Regional Trial Court of Quezon City. During the pendency of the suit, private respondent succeeded in attaching some of the properties of Varian Industrial Corporation upon the posting of a supersedeas bond. 3 The latter in turn posted a counterbond in the sum of P1,400, 000.00 4 thru petitioner Philippine British Assurance Co., Inc., so the attached properties were released.

On December 28, 1984, the trial court rendered a Decision, the dispositive portion of which reads:

WHEREFORE, plaintiff's Motion for Summary Judgment is hereby GRANTED, and judgment is rendered in favor of the plaintiff and against the defendant Varian Industrial Corporation, and the latter is hereby ordered:

1. To pay plaintiff the amount of P1,401,468.00, the principal obligation with 12% interest per annum from the date of default until fully paid;

2. To pay plaintiff 5% of the principal obligation as liquidated damages;

3. To pay plaintiff P30,000.00 as exemplary damages;

4. To pay plaintiff 15% of P1,401,468.00, the principal obligation, as and for attorney's fees; and

5. To pay the costs of suit.

Accordingly, the counterclaim of the defendant is hereby DISMISSED for lack of merit.

SO ORDERED. 5

Varian Industrial Corporation appealed the decision to the respondent Court. Sycwin then filed a petition for execution pending appeal against the properties of Varian in respondent Court. Varian was required to file its comment but none was filed. In the Resolution of July 5, 1985, respondent Court ordered the execution pending appeal as prayed for. 6 However, the writ of execution was returned unsatisfied as Varian failed to deliver the previously attached personal properties upon demand. In a Petition dated August 13, 1985 filed with respondent Court Sycwin prayed that the surety (herein petitioner) be ordered to pay the value of its bond. 7 In compliance with the Resolution of August 23, 1985 of the respondent Court herein petitioner filed its comment. 8 In the Resolution of September 12, 1985, 9 the respondent Court granted the petition. Hence this action.

It is the submission of private respondent Sycwin that without a previous motion for reconsideration of the questioned resolution, certiorari would not lie. While as a general rule a motion for reconsideration has been considered a condition sine qua non for the granting of a writ of certiorari, this rule does not apply when special circumstances warrant immediate or more direct action. 10 It has been held further that a motion for reconsideration may be dispensed with in cases like this where execution had been ordered and the need for relief was extremely urgent. 11

The counterbond provides:

WHEREAS, in the above-entitled case pending in the Regional Trial Court, National Capital Judicial Region, Branch LXXXV, Quezon City, an order of Attachment was issued against abovenamed Defendant;

WHEREAS, the Defendant, for the purpose of lifting and/or dissolving the order of attachment issued against them in the above-en-titled case, have offered to file a counterbond in the sum of PESOS ONE MILLION FOUR HUNDRED THOUSAND ONLY (P1,400,000.00), Philippine Currency, as provided for in Section 5, Rule 57 of the Revised Rules of Court.

NOW, THEREFORE, we, VARIAN INDUSTRIAL CORPORATION, as Principal and the PHILIPPINE BRITISH ASSURANCE COMPANY, INC., a corporation duly organized and existing under and by virtue of the laws of the Philippines, as Surety, in consideration of the above and of the lifting or dissolution of the order of attachment, hereby jointly and severally, bind ourselves in favor of the above Plaintiff in the sum of PESOS ONE MILLION FOUR HUNDRED THOUSAND

ONLY (P1,400,000.00), Philippine Currency, under the condition that in case the Plaintiff recovers judgment in the action, and Defendant will, on demand, re-deliver the attached property so released to the Officer of the Court and the same shall be applied to the payment of the judgment, or in default thereof, the defendant and Surety will, on demand, pay to the Plaintiff the full value of the property released.

EXECUTED at Manila, Philippines, this 28th day of June, 1984. 12

Sections 5, 12, and 17 of Rule 57 of the Revised Rules of Court also provide:

SEC. 5. Manner of attaching property. — The officer executing the order shall without delay attach, to await judgment and execution in the action, all the properties of the party against whom the order is issued in the province, not exempt from execution, or so much thereof as may be sufficient to satisfy the applicant's demand, unless the former makes a deposit with the clerk or judge of the court from which the order issued, or gives a counter-bond executed to the applicant, in an amount sufficient to satisfy such demand besides costs, or in an amount equal to the value of the property which is about to be attached, to secure payment to the applicant of any judgement ment which he may recover in the action. The officer shall also forthwith serve a copy of the applicant's affidavit and bond, and of the order of attachment, on the adverse party, if he be found within the province.

SEC. 12. Discharge of attachment upon giving counterbond. — At any time after an order of attachment has been granted, the party whose property has been attached, or the person appearing on his behalf, may, upon reasonable notice to the applicant, apply to the judge who granted the order, or to the judge of the court in which the action is pending, for an order discharging the attachment wholly or in part on the security given. The judge shall, after hearing, order the discharge of the attachment if a cash deposit is made, or a counter-bond executed to the attaching creditor is filed, on behalf of the adverse party, with the clerk or judge of the court where the application is made, in an amount equal to the value of the property attached as determined by the judge, to secure the payment of any judgment that the attaching creditor may recover in the action. Upon the filing of such counter-bond, copy thereof shall forthwith be served on the attaching creditor or his lawyer. Upon the discharge of an attachment in accordance with the provisions of this section the property attached, or the proceeds of any sale thereof, shall be delivered to the party making the deposit or giving the counterbond aforesaid standing in place of the property so released. Should such counterbond for any reason be found to be, or become, insufficient, and the party furnishing the same fail to file an additional counterbond, the attaching creditor may apply for a new order of attachment.

SEC. 17. When execution returned unsatisfied, recovery had upon bond. — If the execution be returned unsatisfied in whole or in part, the surety or sureties on any

counter-bond given pursuant to the provisions of this rule to secure the payment of the judgment shall become charged on such counter- bond, and bound to pay to the judgement creditor upon demand, the amount due under the judgment, which amount may be recovered from such surety or sureties after notice and summary hearing in the same action. (Emphasis supplied.)

Under Sections 5 and 12, Rule 57 above reproduced it is provided that the counterbond is intended to secure the payment of "any judgment" that the attaching creditor may recover in the action. Under Section 17 of same rule it provides that when "the execution be returned unsatisfied in whole or in part" it is only then that "payment of the judgment shall become charged on such counterbond."

The counterbond was issued in accordance with the provisions of Section 5, Rule 57 of the Rules of Court as provided in the second paragraph aforecited which is deemed reproduced as part of the counterbond. In the third paragraph it is also stipulated that the counterbond is to be "applied for the payment of the judgment." Neither the rules nor the provisions of the counterbond limited its application to a final and executory judgment. Indeed, it is specified that it applies to the payment of any judgment that maybe recovered by plaintiff. Thus, the only logical conclusion is that an execution of any judgment including one pending appeal if returned unsatisfied maybe charged against such a counterbond.

It is well recognized rule that where the law does not distinguish, courts should not distinguish. Ubi lex non distinguish nec nos distinguere debemos. 13 "The rule, founded on logic, is a corollary of the principle that general words and phrases in a statute should ordinarily be accorded their natural and general significance. 14 The rule requires that a general term or phrase should not be reduced into parts and one part distinguished from the other so as to justify its exclusion from the operation of the law. 15 In other words, there should be no distinction in the application of a statute where none is indicated.16 For courts are not authorized to distinguish where the law makes no distinction. They should instead administer the law not as they think it ought to be but as they find it and without regard to consequences. 17

A corollary of the principle is the rule that where the law does not make any exception, courts may not except something therefrom, unless there is compelling reason apparent in the law to justify it. 18 Thus where a statute grants a person against whom possession of "any land" is unlawfully withheld the right to bring an action for unlawful detainer, this Court held that the phrase "any land" includes all kinds of land, whether agricultural, residential, or mineral.19 Since the law in this case does not make any distinction nor intended to make any exception, when it speaks of "any judgment" which maybe charged against the counterbond, it should be interpreted to refer not only to a final and executory judgment in the case but also a judgment pending appeal.

All that is required is that the conditions provided for by law are complied with, as outlined in the case of Towers Assurance Corporation v. Ororama Supermart, 20

Under Section 17, in order that the judgment creditor might recover from the surety on the counterbond, it is necessary (1) that the execution be first issued against the

principal debtor and that such execution was returned unsatisfied in whole or in part; (2) that the creditor make a demand upon the surety for the satisfaction of the judgment, and (3) that the surety be given notice and a summary hearing on the same action as to his liability for the judgment under his counterbond.

The rule therefore, is that the counterbond to lift attachment that is issued in accordance with the provisions of Section 5, Rule 57, of the Rules of Court, shall be charged with the payment of any judgment that is returned unsatisfied. It covers not only a final and executory judgement but also the execution of a judgment pending appeal.

WHEREFORE, the petition is hereby DISMISSED for lack of merit and the restraining order issued on September 25, 1985 is hereby dissolved with costs against petitioner.

SO ORDERED.

G.R. No. 115245 July 11, 1995

JUANITO C. PILAR, petitioner, vs.COMMISSION ON ELECTIONS, respondent.

 

QUIASON, J.:

This is a petition for certiorari under Rule 65 of the Revised Rules of Court assailing the Resolution dated April 28, 1994 of the Commission on Elections (COMELEC) in UND No. 94-040.

I

On March 22, 1992, petitioner Juanito C. Pilar filed his certificate of candidacy for the position of member of the Sangguniang Panlalawigan of the Province of Isabela.

On March 25, 1992, petitioner withdrew his certificate of candidacy.

In M.R. Nos. 93-2654 and 94-0065 dated November 3, 1993 and February 13, 1994 respectively, the COMELEC imposed upon petitioner the fine of Ten Thousand Pesos (P10,000.00) for failure to file his statement of contributions and expenditures.

In M.R. No. 94-0594 dated February 24, 1994, the COMELEC denied the motion for reconsideration of petitioner and deemed final M.R. Nos. 93-2654 and 94-0065 (Rollo, p. 14).

Petitioner went to the COMELEC En Banc (UND No. 94-040), which denied the petition in a Resolution dated April 28, 1994 (Rollo, pp. 10-13).

Hence, this petition for certiorari.

We dismiss the petition.

II

Section 14 of R.A. No. 7166 entitled "An Act Providing for Synchronized National and Local Elections and for Electoral Reforms, Authorizing Appropriations Therefor, and for Other Purposes" provides as follows:

Statement of Contributions and Expenditures: Effect of Failure to File Statement. Every candidate and treasurer of the political party shall, within thirty (30) days after the day of the election, file in duplicate with the offices of the Commission the full, true and itemized statement of all contributions and expenditures in connection with the election.

No person elected to any public office shall enter upon the duties of his office until he has filed the statement of contributions and expenditures herein required.

The same prohibition shall apply if the political party which nominated the winning candidate fails to file the statement required herein within the period prescribed by this Act.

Except candidates for elective barangay office, failure to file the statements or reports in connection with electoral contributions and expenditures as required herein shall constitute an administrative offense for which the offenders shall be liable to pay an administrative fine ranging from One Thousand Pesos ( P1,000.00) to Thirty Thousand Pesos (P30,000.00), in the discretion of the Commission.

The fine shall be paid within thirty (30) days from receipt of notice of such failure; otherwise, it shall be enforceable by a writ of execution issued by the Commission against the properties of the offender.

It shall be the duty of every city or municipal election registrar to advise in writing, by personal delivery or registered mail, within five (5) days from the date of election all candidates residing in his jurisdiction to comply with their obligation to file their statements of contributions and expenditures.

For the commission of a second or subsequent offense under this Section, the administrative fine shall be from Two Thousand Pesos (P2,000.00) to Sixty Thousand Pesos (P60,000.00), in the discretion of the Commission. In addition, the offender shall be subject to perpetual disqualification to hold public office (Emphasis supplied).

To implement the provisions of law relative to election contributions and expenditures, the COMELEC promulgated on January 13, 1992 Resolution No. 2348 (Re: Rules and Regulations Governing Electoral Contributions and Expenditures in Connection with the National and Local Elections onMay 11, 1992). The pertinent provisions of said Resolution are:

Sec. 13. Statement of contributions and expenditures: Reminders to candidates to file statements. Within five (5) days from the day of the election, the Law Department of the Commission, the regional election director of the National Capital

Region, the provincial election supervisors and the election registrars shall advise in writing by personal delivery or registered mail all candidates who filed their certificates of candidacy with them to comply with their obligation to file their statements of contributions and expenditures in connection with the elections. Every election registrar shall also advise all candidates residing in his jurisdiction to comply with said obligation (Emphasis supplied).

Sec. 17. Effect of failure to file statement. (a) No person elected to any public office shall enter upon the duties of his office until he has filed the statement of contributions and expenditures herein required.

The same prohibition shall apply if the political party which nominated the winning candidates fails to file the statement required within the period prescribed by law.

(b) Except candidates for elective barangay office, failure to file statements or reports in connection with the electoral contributions and expenditures as required herein shall constitute an administrative offense for which the offenders shall be liable to pay an administrative fine ranging from One Thousand Pesos (P1,000) to Thirty Thousand Pesos (P30,000), in the discretion of the Commission.

The fine shall be paid within thirty (30) days from receipt of notice of such failure; otherwise, it shall be enforceable by a writ of execution issued by the Commission against the properties of the offender.

For the commission of a second or subsequent offense under this section, the administrative fine shall be from Two Thousand Pesos (P2,000) to Sixty Thousand Pesos (P60,000), in the discretion of the Commission. In addition, the offender shall be subject to perpetual disqualification to hold public office.

Petitioner argues that he cannot be held liable for failure to file a statement of contributions and expenditures because he was a "non-candidate," having withdrawn his certificates of candidacy three days after its filing. Petitioner posits that "it is . . . clear from the law that candidate must have entered the political contest, and should have either won or lost" (Rollo, p. 39).

Petitioner's argument is without merit.

Section 14 of R.A. No. 7166 states that "every candidate" has the obligation to file his statement of contributions and expenditures.

Well-recognized is the rule that where the law does not distinguish, courts should not distinguish, Ubi lex non distinguit nec nos distinguere debemos (Philippine British Assurance Co. Inc. v. Intermediate Appellate Court, 150 SCRA 520 [1987]; cf Olfato v. Commission on Elections, 103 SCRA 741 [1981]).

No distinction is to be made in the application of a law where none is indicated (Lo Cham v. Ocampo, 77 Phil. 636 [1946]).

In the case at bench, as the law makes no distinction or qualification as to whether the candidate pursued his candidacy or withdrew the same, the term "every candidate" must be deemed to refer not only to a candidate who pursued his campaign, but also to one who withdrew his candidacy.

The COMELEC, the body tasked with the enforcement and administration of all laws and regulations relative to the conduct of an election, plebiscite, initiative, referendum, and recall (The Constitution of the Republic of the Philippines, Art. IX(C), Sec. 2[1]), issued Resolution No. 2348 in implementation or interpretation of the provisions of Republic Act No. 7166 on election contributions and expenditures. Section 13 of Resolution No. 2348 categorically refers to "all candidates who filed their certificates of candidacy."

Furthermore, Section 14 of the law uses the word "shall." As a general rule, the use of the word "shall" in a statute implies that the statute is mandatory, and imposes a duty which may be enforced , particularly if public policy is in favor of this meaning or where public interest is involved. We apply the general rule (Baranda v. Gustilo, 165 SCRA 757 [1988]; Diokno v. Rehabilitation Finance Corporation, 91 Phil. 608 [1952]).

The state has an interest in seeing that the electoral process is clean, and ultimately expressive of the true will of the electorate. One way of attaining such objective is to pass legislation regulating contributions and expenditures of candidates, and compelling the publication of the same. Admittedly, contributions and expenditures are made for the purpose of influencing the results of the elections (B.P. Blg. 881, Sec. 94; Resolution No. 2348, Sec. 1). Thus, laws and regulations prescribe what contributions are prohibited (B.P. Blg. 881, Sec. 95, Resolution No. 2348, Sec. 4), or unlawful (B.P. Blg. 881, Sec. 96), and what expenditures are authorized (B.P. Blg. 881, Sec. 102; R.A. No. 7166, Sec. 13; Resolution No. 2348, Sec. 7) or lawful (Resolution No. 2348, Sec. 8).

Such statutes are not peculiar to the Philippines. In "corrupt and illegal practices acts" of several states in the United States, as well as in federal statutes, expenditures of candidates are regulated by requiring the filing of statements of expenses and by limiting the amount of money that may be spent by a candidate. Some statutes also regulate the solicitation of campaign contributions (26 Am Jur 2d, Elections § 287). These laws are designed to compel publicity with respect to matters contained in the statements and to prevent, by such publicity, the improper use of moneys devoted by candidates to the furtherance of their ambitions (26 Am Jur 2d, Elections § 289). These statutes also enable voters to evaluate the influences exerted on behalf of candidates by the contributors, and to furnish evidence of corrupt practices for annulment of elections (Sparkman v. Saylor [Court of Appeals of Kentucky], 180 Ky. 263, 202 S.W. 649 [1918]).

State courts have also ruled that such provisions are mandatory as to the requirement of filing (State ex rel. Butchofsky v. Crawford [Court of Civil Appeals of Texas], 269 S.W. 2d 536 [1954]; Best v. Sidebottom, 270 Ky. 423,109 S.W. 2d 826 [1937]; Sparkman v. Saylor, supra.)

It is not improbable that a candidate who withdrew his candidacy has accepted contributions and incurred expenditures, even in the short span of his campaign. The evil sought to be prevented by the law is not all too remote.

It is notesworthy that Resolution No. 2348 even contemplates the situation where a candidate may not have received any contribution or made any expenditure. Such a candidate is not excused from filing a statement, and is in fact required to file a statement to that effect. Under Section 15 of Resolution No. 2348, it is provided that "[i]f a candidate or treasurer of the party has received no contribution, made no expenditure, or has no pending obligation, the statement shall reflect such fact."

Lastly, we note that under the fourth paragraph of Section 73 of the B.P. Blg. 881 or the Omnibus Election Code of the Philippines, it is provided that "[t]he filing or withdrawal of certificate of candidacy shall not affect whatever civil, criminal or administrative liabilities which a candidate may have incurred." Petitioner's withdrawal of his candidacy did not extinguish his liability for the administrative fine.

WHEREFORE, the petition is DISMISSED.

Narvasa, C.J., Feliciano, Regalado, Davide, Jr., Romero, Bellosillo, Puno, Vitug, Mendoza and Francisco, JJ., concur.

Kapunan, J., is on leave.

G.R. No. 110898             February 20, 1996

PEOPLE OF THE PHILIPPINES, petitioner, vs.HON. JUDGE ANTONIO C. EVANGELISTA, as Presiding Judge of Branch XXI, 10th Judicial Region, RTC of Misamis Oriental, Cagayan de Oro City, and GRILDO S. TUGONON, respondents.

D E C I S I O N

MENDOZA, J.:

Private respondent Grildo S. Tugonan was charged with frustrated homicide in the Regional Trial Court of Misamis Oriental (Branch 21), the information against him alleging

That on or about the 26th day of May, 1988, at more or less 9:00 o'clock in the evening at Barangay Publican+.3, Municipality of Villanueva, Province of Misamis Oriental, Republic of the Philippines and within the jurisdiction of this Honorable Court, the above-named accused with intent to kill and with the use of a knife, which he was then conveniently provided of, did then and there willfully, unlawfully and feloniously assault, attack and stab Roque T. Bade thereby inflicting upon him the following injuries, to wit:

Stab wound, right iliac area,0.5 cm. penetrating nonperforating lacerating posteriorperitoneum, 0,5 cm.

thus performing all the acts of execution which would produce the crime of Homicide as a consequence but which, nevertheless, did not produce it by reason of causes independent of the will of the accused, that is by timely medical attendance which prevented his death.

CONTRARY TO and in violation of Article 249 in relation to Article 6 of the Revised Penal Code.

After trial he was found guilty and sentenced to one year of prision correccional in its minimum period and ordered to pay to the offended party P5,000.00 for medical expense, without subsidiary imprisonment, and the costs. The RTC appreciated in his favor the privileged mitigating circumstances of incomplete self-defense and the mitigating circumstance of voluntary surrender.

On appeal the Court of Appeals affirmed private respondent's conviction but modified his sentence by imposing on him an indeterminate penalty of 2 months of arresto mayor, as minimum, to 2 years and 4 months of prision correccional, as maximum.1

On December 21, 1992, respondent Judge Antonio C. Evangelista of the RTC set the case for repromulgation on January 4, 1993.

On December 28, 1992, private respondent filed a petition for probation,2 alleging that (1) he possessed all the qualifications and none of the disqualifications for probation under P.D. No. 968, as amended; (2) the Court of Appeals has in fact reduced the penalty imposed on him by the trial court; (3) in its resolution, the Court of Appeals took no action on a petition for probation which he had earlier filed with it so that the petition could be filed with the trial court; (4) in the trial court's decision, two mitigating circumstances of incomplete self-defense and voluntarily surrender were appreciated in his favor; and (5) in Santos To v. Paño,3 the Supreme Court upheld the right of the accused to probation notwithstanding the fact that he had appealed from his conviction by the trial court.

On February 2, 1993, the RTC ordered private respondent to report for interview to the Provincial Probation Officer. The Provincial Probation Officer on the other hand was required to submit his report with recommendation to the court within 60 days.4

On February 18, 1993, Chief Probation and Parole Officer Isias B. Valdehueza recommended denial of private respondent's application for probation on the ground that by appealing the sentence of the trial court, when he could have then applied for probation, private respondent waived the right to make his application. The Probation Officer thought the present case to be distinguishable from Santos To v. Paño in the sense that in this case the original sentence imposed on private respondent by the trial court (1 year of imprisonment) was probationable and there was no reason for private respondent not to have filed his application for probation then, whereas in Santos To v. Paño the penalty only became probationable after it had been reduced as a result of the appeal.

On April 16, 1993 Valdehueza reiterated5 his "respectful recommendation that private respondent's application for probation be denied and that a warrant of arrest be issued for him to serve his sentence in jail."

The RTC set aside the Probation Officer's recommendation and granted private respondent's application for probation in its order of April 23, 1993,6 Hence this petition by the prosecution.

The issue in this case is whether the RTC committed a grave abuse of its discretion by granting private respondent's application for probation despite the fact that he had appealed from the judgment of his conviction of the trial court.

The Court holds that it did.

Until its amendment by P.D. No. 1990 in 1986, it was possible under P.D. No. 986, otherwise known as the Probation Law, for the accused to take his chances on appeal by allowing probation to be granted even after an accused had appealed his sentence and failed to obtain an acquittal, just so long as he had not yet started to serve the sentence.7 Accordingly, in Santos To v. Paño, it was held that the fact that the accused had appealed did not bar him from applying for probation especially because it was as a result of the appeal that his sentence was reduced and made the probationable limit.

The law was, however, amended by P.D. No. 1990 which took effect on January 15, 19868 precisely to put a stop to the practice of appealing from judgments of conviction even if the sentence is probationable for the purpose of securing an acquittal and applying for probation only if the accused fails in his bid. Thus, as amended by P.D. No, 1990, §4 of the Probation Law now reads:

§4. Grant of Probation. Subject to the provisions of this Decree, the trial court may, after it shall have convicted and sentenced a defendant, and upon application by said defendant within the period for perfecting an appeal, suspend the execution of the sentence and place the defendant on probation for such period and upon such terms and conditions as it may deem best; Provided, That no application for probation shall be entertained or granted if the defendant has perfected the appeal from the judgment of conviction.

Probation may be granted whether the sentence imposes a term of imprisonment or a fine only. An application for probation shall be filed with the trial court. The filing of the application shall be deemed a waiver of the right to appeal.

An order granting or denying probation shall not be appealable. (Emphasis added).

Since private respondent filed his application for probation on December 28, 1992, after P.D. No. 1990 had taken effect,9 it is covered by the prohibition that "no application for probation shall be entertained or granted if the defendant has perfected the appeal from the judgment of conviction" and that "the filing of the application shall be deemed a waiver of the right to appeal," Having appealed from the judgment of the trial court and having applied for probation only after the Court of Appeals had affirmed his conviction, private respondent was clearly precluded from the benefits of probation.

Private respondent argues, however, that a distinction should be drawn between meritorious appeals (like his appeal notwithstanding the appellate court's affirmance of his conviction) and unmeritorious appeals. But the law does not make any distinction and so neither should the Court. In fact if an appeal is truly meritorious the accused would be set free and not only given probation. Private respondent's original sentence (1 year of prision correccional in its minimum period) and the modified sentence imposed by the Court of Appeals (2 months of arresto mayor, as minimum, to 2 years and 4 months of prision correccional, as maximum) are probationable. Thus the fact that he appealed meant that private respondent was taking his chances which the law precisely frowns upon. This is precisely the evil that the amendment in P.D. No. 1990 sought to correct, since in the words of the preamble to the amendatory law, "probation was not intended as an escape hatch and should not be used to obstruct and delay the

administration of justice, but should be availed of at the first opportunity by offenders who are willing to be reformed and rehabilitated."

The ruling of the RTC that "[h]aving not perfected an appeal against the Court of Appeals decision, [private respondent] is, therefore, not covered by [the amendment in] P.D. 1990" is an obvious misreading of the law. The perfection of the appeal referred in the law refers to the .appeal taken from a judgment of conviction by the trial court and not that of the appellate court, since under the law an application for probation is filed with the trial court which can only grant the same "after it shall have convicted and sentenced [the] defendant, and upon application by said defendant within the period for perfecting an appeal. "Accordingly, in Llamado v. Court of Appeals, 10 it was held that the petitioner who had appealed his sentence could not subsequently apply for probation.

WHEREFORE, the petition is GRANTED and the order of April 23, 1993 of the Regional Trial Court of Misamis Oriental (Branch 21) granting probation to private respondent Grildo S. Tugonon is SET ASIDE.

SO ORDERED.

Regalado, Romero and Puno, JJ., concur.

G.R. No. 87416 April 8, 1991

CECILIO S. DE VILLA, petitioner, vs.THE HONORABLE COURT OF APPEALS, PEOPLE OF THE PHILIPPINES, HONORABLE JOB B. MADAYAG, and ROBERTO Z. LORAYES, respondents.

San Jose Enriquez, Lacas Santos & Borje for petitioner.

Eduardo R. Robles for private respondent.

 

PARAS, J.:p

This petition for review on certiorari seeks to reverse and set aside the decision * of the Court of Appeals promulgated on February 1, 1989 in CA-G.R. SP No. 16071 entitled "Cecilio S. de Villa vs. Judge Job B. Madayag, etc. and Roberto Z. Lorayes," dismissing the petition for certiorari filed therein.

The factual backdrop of this case, as found by the Court of Appeals, is as follows:

On October 5, 1987, petitioner Cecilio S. de Villa was charged before the Regional Trial Court of the National Capital Judicial Region (Makati, Branch 145) with violation of Batas Pambansa Bilang 22, allegedly committed as follows:

That on or about the 3rd day of April 1987, in the municipality of Makati, Metro Manila, Philippines and within the jurisdiction of this Honorable Court, the above-named accused, did, then and there willfully, unlawfully and feloniously make or draw and issue to ROBERTO Z. LORAYEZ, to apply on account or for value a Depositors Trust Company Check No. 3371 antedated March 31, 1987, payable to herein complainant in the total amount of U.S. $2,500.00 equivalent to P50,000.00, said accused well knowing that at the time of issue he had no sufficient funds in or credit with drawee bank for payment of such check in full upon its presentment which check when presented to the drawee bank within ninety (90) days from the date thereof was subsequently dishonored for the reason "INSUFFICIENT FUNDS" and despite receipt of notice of such dishonor said accused failed to pay said ROBERTO Z. LORAYEZ the amount of P50,000.00 of said check or to make

arrangement for full payment of the same within five (5) banking days after receiving said notice.

After arraignment and after private respondent had testified on direct examination, petitioner moved to dismiss the Information on the following grounds: (a) Respondent court has no jurisdiction over the offense charged; and (b) That no offense was committed since the check involved was payable in dollars, hence, the obligation created is null and void pursuant to Republic Act No. 529 (An Act to Assure Uniform Value of Philippine Coin and Currency).

On July 19, 1988, respondent court issued its first questioned orders stating:

Accused's motion to dismiss dated July 5, 1988, is denied for lack of merit.

Under the Bouncing Checks Law (B.P. Blg. 22), foreign checks, provided they are either drawn and issued in the Philippines though payable outside thereof, or made payable and dishonored in the Philippines though drawn and issued outside thereof, are within the coverage of said law. The law likewise applied to checks drawn against current accounts in foreign currency.

Petitioner moved for reconsideration but his motion was subsequently denied by respondent court in its order dated September 6, 1988, and which reads:

Accused's motion for reconsideration, dated August 9, 1988, which was opposed by the prosecution, is denied for lack of merit.

The Bouncing Checks Law is applicable to checks drawn against current accounts in foreign currency (Proceedings of the Batasang Pambansa, February 7, 1979, p. 1376, cited in Makati RTC Judge (now Manila City Fiscal) Jesus F. Guerrero's The Ramifications of the Law on Bouncing Checks, p. 5). (Rollo, Annex "A", Decision, pp. 20-22).

A petition for certiorari seeking to declare the nullity of the aforequoted orders dated July 19, 1988 and September 6, 1988 was filed by the petitioner in the Court of Appeals wherein he contended:

(a) That since the questioned check was drawn against the dollar account of petitioner with a foreign bank, respondent court has no jurisdiction over the same or with accounts outside the territorial jurisdiction of the Philippines and that Batas

Pambansa Bilang 22 could have not contemplated extending its coverage over dollar accounts;

(b) That assuming that the subject check was issued in connection with a private transaction between petitioner and private respondent, the payment could not be legally paid in dollars as it would violate Republic Act No. 529; and

(c) That the obligation arising from the issuance of the questioned check is null and void and is not enforceable with the Philippines either in a civil or criminal suit. Upon such premises, petitioner concludes that the dishonor of the questioned check cannot be said to have violated the provisions of Batas Pambansa Bilang 22. (Rollo, Annex "A", Decision, p. 22).

On February 1, 1989, the Court of Appeals rendered a decision, the decretal portion of which reads:

WHEREFORE, the petition is hereby dismissed. Costs against petitioner.

SO ORDERED. (Rollo, Annex "A", Decision, p. 5)

A motion for reconsideration of the said decision was filed by the petitioner on February 7, 1989 (Rollo, Petition, p. 6) but the same was denied by the Court of Appeals in its resolution dated March 3, 1989 (Rollo, Annex "B", p. 26).

Hence, this petition.

In its resolution dated November 13, 1989, the Second Division of this Court gave due course to the petition and required the parties to submit simultaneously their respective memoranda (Rollo, Resolution, p. 81).

The sole issue in this case is whether or not the Regional Trial Court of Makati has jurisdiction over the case in question.

The petition is without merit.

Jurisdiction is the power with which courts are invested for administering justice, that is, for hearing and deciding cases (Velunta vs. Philippine Constabulary, 157 SCRA 147 [1988]).

Jurisdiction in general, is either over the nature of the action, over the subject matter, over the person of the defendant, or over the issues framed in the pleadings (Balais vs. Balais, 159 SCRA 37 [1988]).

Jurisdiction over the subject matter is determined by the statute in force at the time of commencement of the action (De la Cruz vs. Moya, 160 SCRA 538 [1988]).

The trial court's jurisdiction over the case, subject of this review, can not be questioned.

Sections 10 and 15(a), Rule 110 of the Rules of Court specifically provide that:

Sec. 10. Place of the commission of the offense. The complaint or information is sufficient if it can be understood therefrom that the offense was committed or some of the essential ingredients thereof occured at some place within the jurisdiction of the court, unless the particular place wherein it was committed constitutes an essential element of the offense or is necessary for identifying the offense charged.

Sec. 15. Place where action is to be instituted. (a) Subject to existing laws, in all criminal prosecutions the action shall be instituted and tried in the court of the municipality or territory where the offense was committed or any of the essential ingredients thereof took place.

In the case of People vs. Hon. Manzanilla (156 SCRA 279 [1987] cited in the case of Lim vs. Rodrigo, 167 SCRA 487 [1988]), the Supreme Court ruled "that jurisdiction or venue is determined by the allegations in the information."

The information under consideration specifically alleged that the offense was committed in Makati, Metro Manila and therefore, the same is controlling and sufficient to vest jurisdiction upon the Regional Trial Court of Makati. The Court acquires jurisdiction over the case and over the person of the accused upon the filing of a complaint or information in court which initiates a criminal action (Republic vs. Sunga, 162 SCRA 191 [1988]).

Moreover, it has been held in the case of Que v. People of the Philippines (154 SCRA 160 [1987] cited in the case of People vs. Grospe, 157 SCRA 154 [1988]) that "the determinative factor (in determining venue) is the place of the issuance of the check."

On the matter of venue for violation of Batas Pambansa Bilang 22, the Ministry of Justice, citing the case of People vs. Yabut (76 SCRA 624 [1977], laid down the following guidelines in Memorandum Circular No. 4 dated December 15, 1981, the pertinent portion of which reads:

(1) Venue of the offense lies at the place where the check was executed and delivered; (2) the place where the check was written, signed or dated does not necessarily fix the place where it was executed, as what is of decisive importance is the delivery thereof which is the final act essential to its consummation as an obligation; . . . (Res. No. 377, s. 1980, Filtex Mfg. Corp. vs. Manuel Chua, October 28, 1980)." (See The Law on Bouncing Checks Analyzed by Judge Jesus F.

Guerrero, Philippine Law Gazette, Vol. 7. Nos. 11 & 12, October-December, 1983, p. 14).

It is undisputed that the check in question was executed and delivered by the petitioner to herein private respondent at Makati, Metro Manila.

However, petitioner argues that the check in question was drawn against the dollar account of petitioner with a foreign bank, and is therefore, not covered by the Bouncing Checks Law (B.P. Blg. 22).

But it will be noted that the law does not distinguish the currency involved in the case. As the trial court correctly ruled in its order dated July 5, 1988:

Under the Bouncing Checks Law (B.P. Blg. 22), foreign checks, provided they are either drawn and issued in the Philippines though payable outside thereof . . . are within the coverage of said law.

It is a cardinal principle in statutory construction that where the law does not distinguish courts should not distinguish. Parenthetically, the rule is that where the law does not make any exception, courts may not except something unless compelling reasons exist to justify it (Phil. British Assurance Co., Inc. vs. IAC, 150 SCRA 520 [1987]).

More importantly, it is well established that courts may avail themselves of the actual proceedings of the legislative body to assist in determining the construction of a statute of doubtful meaning (Palanca vs. City of Manila, 41 Phil. 125 [1920]). Thus, where there is doubts as to what a provision of a statute means, the meaning put to the provision during the legislative deliberation or discussion on the bill may be adopted (Arenas vs. City of San Carlos, 82 SCRA 318 [1978]).

The records of the Batasan, Vol. III, unmistakably show that the intention of the lawmakers is to apply the law to whatever currency may be the subject thereof. The discussion on the floor of the then Batasang Pambansa fully sustains this view, as follows:

xxx xxx xxx

THE SPEAKER. The Gentleman from Basilan is recognized.

MR. TUPAY. Parliamentary inquiry, Mr. Speaker.

THE SPEAKER. The Gentleman may proceed.

MR. TUPAY. Mr. Speaker, it has been mentioned by one of the Gentlemen who interpellated that any check may be involved, like U.S. dollar checks, etc. We are talking about checks in our country. There are U.S. dollar checks, checks, in our currency, and many others.

THE SPEAKER. The Sponsor may answer that inquiry.

MR. MENDOZA. The bill refers to any check, Mr. Speaker, and this check may be a check in whatever currency. This would not even be limited to U.S. dollar checks. The check may be in French francs or Japanese yen or deutschunorhs. (sic.) If drawn, then this bill will apply.

MR TUPAY. So it include U.S. dollar checks.

MR. MENDOZA. Yes, Mr. Speaker.

xxx xxx xxx

(p. 1376, Records of the Batasan, Volume III; Emphasis supplied).

PREMISES CONSIDERED, the petition is DISMISSED for lack of merit.

Melencio-Herrera, Padilla, Sarmiento and Regalado, JJ., concur.

G.R. No. L-14787             January 28, 1961

COLGATE-PALMOLIVE PHILIPPINE, INC., petitioner, vs.HON. PEDRO M. GIMENEZ as Auditor General and ISMAEL MATHAY as AUDITOR OF THE CENTRAL BANK OF THE PHILIPPINES, respondents.

Ross, Selph and Carrascoso for petitioner.Office of the Solicitor General for respondents.

GUTIERREZ DAVID, J.:

The petitioner Colgate-Palmolive Philippines, Inc. is a corporation duly organized and existing under Philippine laws engaged in the manufacture of toilet preparations and household remedies. On several occasions, it imported from abroad various materials such as irish moss extract, sodium benzoate, sodium saccharinate precipitated calcium carbonate and dicalcium phosphate, for use as stabilizers and flavoring of the dental cream it manufactures. For every importation made of these materials, the petitioner paid to the Central Bank of the Philippines the 17% special excise tax on the foreign exchange used for the payment of the cost, transportation and other charges incident thereto, pursuant to Republic Act No. 601, as amended, commonly known as the Exchange Tax Law.

On March 14, 1956, the petitioner filed with the Central Bank three applications for refund of the 17% special excise tax it had paid in the aggregate sum of P113,343.99. The claim for refund was based on section 2 of Republic Act 601, which provides that "foreign exchange used for the payment of the cost, transportation and/or other charges incident to the importation into the Philippines of . . . stabilizer and flavors . . . shall be refunded to any importer making application therefor, upon satisfactory proof of actual importation under the rules and regulations to be promulgated pursuant to section seven thereof." After the applications were processed by the officer-in-charge of the Exchange Tax Administration of the Central Bank, that official advised, the petitioner that of the total sum of P113,343.99 claimed by it for refund, the amount of P23,958.13 representing the 17% special excise tax on the foreign exchange used to import irish moss extract, sodium benzoate and precipitated calcium carbonate had been approved. The auditor of the Central Bank, however, refused to pass in audit its claims for refund even for the reduced amount fixed by the Officer-in-Charge of the Exchange Tax Administration, on the theory that toothpaste stabilizers and flavors are not exempt under section 2 of the Exchange Tax Law.

Petitioner appealed to the Auditor General, but the latter or, December 4, 1958 affirmed the ruling of the auditor of the Central Bank, maintaining that the term "stabilizer and flavors" mentioned in section 2 of the Exchange Tax Law refers only to those used in the preparation or manufacture of food or food products. Not satisfied, the petitioner brought the case to this Court thru the present petition for review.

The decisive issue to be resolved is whether or not the foreign exchange used by petitioner for the importation of dental cream stabilizers and flavors is exempt from the 17% special excise tax imposed

by the Exchange Tax Law, (Republic Act No. 601) so as to entitle it to refund under section 2 thereof, which reads as follows:

SEC, 2. The tax collected under the preceding section on foreign exchange used for the payment of the cost, transportation and/or other charges incident to importation into the Philippines of rice, flour, canned milk, cattle and beef, canned fish, soya beans, butterfat, chocolate, malt syrup, tapioca, stabilizer and flavors, vitamin concentrate, fertilizer, poultry feed; textbooks, reference books, and supplementary readers approved by the Board of Textbooks and/or established public or private educational institutions; newsprint imported by or for publishers for use in the publication of books, pamphlets, magazines and newspapers; book paper, book cloth, chip board imported for the printing of supplementary readers (approved by the Board of Textbooks) to be supplied to the Government under contracts perfected before the approval of this Act, the quantity thereof to be certified by the Director of Printing; anesthetics, anti-biotics, vitamins, hormones, x-ray films, laboratory reagents, biologicals, dental supplies, and pharmaceutical drugs necessary for compounding medicines; medical and hospital supplies listed in the appendix to this Act, in quantities to be certified by the Director of Hospitals as actually needed by the hospitals applying therefor; drugs and medicines listed in the said appendix; and such other drugs and medicines as may be certified by the Secretary of Health from time to time to promote and protect the health of the people of the Philippines shall be refunded to any importer making application therefor, upon satisfactory proof of actual importation under the rules and regulations to be promulgated pursuant to section seven thereof." (Emphasis supplied.)

The ruling of the Auditor General that the term "stabilizer and flavors" as used in the law refers only to those materials actually used in the preparation or manufacture of food and food products is based, apparently, on the principle of statutory construction that "general terms may be restricted by specific words, with the result that the general language will be limited by the specific language which indicates the statute's object and purpose." (Statutory Construction by Crawford, 1940 ed. p. 324-325.) The rule, however, is, in our opinion, applicable only to cases where, except for one general term, all the items in an enumeration belong to or fall under one specific class. In the case at bar, it is true that the term "stabilizer and flavors" is preceded by a number of articles that may be classified as food or food products, but it is likewise true that the other items immediately following it do not belong to the same classification. Thus "fertilizer" and "poultry feed" do not fall under the category of food or food products because they are used in the farming and poultry industries, respectively. "Vitamin concentrate" appears to be more of a medicine than food or food product, for, as matter of fact, vitamins are among those enumerated in the list of medicines and drugs appearing in the appendix to the law. It should also here be stated that "cattle", which is among those listed preceding the term in question, includes not only those intended for slaughter but also those for breeding purposes. Again, it is noteworthy that under, Republic Act No. 814 amending the above-quoted section of Republic Act No. 601, "industrial starch", which does not always refer to food for human consumption, was added among the items grouped with "stabilizer and flavors". Thus, on the basis of the grouping of the articles alone, it cannot validly be maintained that the term "stabilizer and flavors" as used in the above-quoted provision of the Exchange Tax Law refers only to those used in the manufacture of food and food products. This view is supported by the principle "Ubi lex non distinguish nec nos distinguire debemos", or "where the law does not

distinguish, neither do we distinguish". (Ligget & Myers Tobacco Company vs. Collector of Internal Revenue, 53 Off. Gaz. No. 15, page 4831). Since the law does not distinguish between "stabilizer and flavors" used in the preparation of food and those used in the manufacture of toothpaste or dental cream, we are not authorized to make any distinction and must construe the words in their general sense. The rule of construction that general and unlimited terms are restrained and limited by particular recitals when used in connection with them, does not require the rejection of general terms entirely. It is intended merely as an aid in ascertaining the intention of the legislature and is to be taken in connection with other rules of construction. (See Handbook of the Construction and Interpretation of Laws by Black, p. 215.216, 2nd ed.)

Having arrived at the above conclusion, we deem it now idle to pass upon the other questions raised by the parties.

WHEREFORE, the decision under review is reversed and the respondents are hereby ordered to audit petitioners applications for refund which were approved by the Officer-in-Charge of the Exchange Tax Administration in the total amount of P23,958.13.

Bengzon, Bautista Angelo, Concepcion, Reyes, J.B.L., Barrera, Paredes and Dizon, JJ., concur.Labrador, J., reserves his vote.

G.R. No. L-47757-61 January 28, 1980

THE PEOPLE OF THE PHILIPPINES, ABUNDIO R. ELLO, As 4th Assistant of Provincial Bohol VICENTE DE LA SERNA. JR., as complainant all private prosecutor, petitioners, vs.HON. VICENTE B. ECHAVES, JR., as Judge of the Court of First Instance of Bohol Branch II, ANO DACULLO, GERONIMO OROYAN, MARIO APARICI, RUPERTO CAJES and MODESTO S SUELLO, respondents.

 

AQUINO, J.:p

The legal issue in this case is whether Presidential Decree No. 772, which penalizes squatting and similar acts, applies to agricultural lands. The decree (which took effect on August 20, 1975) provides:

SECTION 1. Any person who, with the use of force, intimidation or threat, or taking advantage of the absence or tolerance of the landowner, succeeds in occupying or possessing the property of the latter against his will for residential, commercial or any other purposes, shall be punished by an imprisonment ranging from six months to one year or a fine of not less than one thousand nor more than five thousand pesos at the discretion of the court, with subsidiary imprisonment in case of insolvency. (2nd paragraph is omitted.)

The record shows that on October 25, 1977 Fiscal Abundio R. Ello filed with the lower court separate informations against sixteen persons charging them with squatting as penalized by Presidential Decree No. 772. The information against Mario Aparici which is similar to the other fifteen informations, reads:

That sometime in the year 1974 continuously up to the present at barangay Magsaysay, municipality of Talibon, province of Bohol, Philippines and within the jurisdiction of this Honorable Court, the above-named accused, with stealth and strategy, enter into, occupy and cultivate a portion of a grazing land physically occupied, possessed and claimed by Atty. Vicente de la Serna, Jr. as successor to the pasture applicant Celestino de la Serna of Pasture Lease Application No. 8919, accused's entrance into the area has been and is still against the win of the offended party; did then and there willfully, unlawfully, and feloniously squat and cultivate a portion of the said grazing land; said cultivating has rendered a nuisance to and has deprived the pasture applicant from the full use thereof for which the land applied for has been intended, that is preventing applicant's cattle from grazing the whole area, thereby causing damage and prejudice to the said applicant-possessor-occupant, Atty. Vicente de la Serna, Jr. (sic)

Five of the informations, wherein Ano Dacullo, Geronimo Oroyan, Mario Aparici, Ruperto Cajes and Modesto Suello were the accused, were raffled to Judge Vicente B. Echaves, Jr. of Branch II (Criminal Cases Nos. 1824, 1828, 1832, 1833 and 1839, respectively).

Before the accused could be arraigned, Judge Echaves motu proprio issued an omnibus order dated December 9, 1977 dismissing the five informations on the grounds (1) that it was alleged that the accused entered the land through "stealth and strategy", whereas under the decree the entry should be effected "with the use of force, intimidation or threat, or taking advantage of the absence or tolerance of the landowner", and (2) that under the rule of ejusdem generis the decree does not apply to the cultivation of a grazing land.

Because of that order, the fiscal amended the informations by using in lieu of "stealth and strategy" the expression "with threat, and taking advantage of the absence of the ranchowner and/or tolerance of the said ranchowner". The fiscal asked that the dismissal order be reconsidered and that the amended informations be admitted.

The lower court denied the motion. It insisted that the phrase "and for other purposes" in the decree does not include agricultural purposes because its preamble does not mention the Secretary of Agriculture and makes reference to the affluent class.

From the order of dismissal, the fiscal appealed to this Court under Republic Act No. 5440. The appeal is devoid of merit.

We hold that the lower court correctly ruled that the decree does not apply to pasture lands because its preamble shows that it was intended to apply to squatting in urban communities or more particularly to illegal constructions in squatter areas made by well-to-do individuals. The squating complained of involves pasture lands in rural areas.

The preamble of the decree is quoted below:

WHEREAS, it came to my knowledge that despite the issuance of Letter of Instruction No. 19 dated October 2, 1972, directing the Secretaries of National Defense, Public Work. 9 and communications, Social Welfare and the Director of Public Works, the PHHC General Manager, the Presidential Assistant on Housing and Rehabilitation Agency, Governors, City and Municipal Mayors, and City and District Engineers, "to remove an illegal constructions including buildings on and along esteros and river banks, those along railroad tracks and those built without permits on public and private property." squatting is still a major problem in urban communities all over the country;

WHEREAS, many persons or entities found to have been unlawfully occupying public and private lands belong to the affluent class;

WHEREAS, there is a need to further intensify the government's drive against this illegal and nefarious practice.

It should be stressed that Letter of Instruction No. 19 refers to illegal constructions on public and private property. It is complemented by Letter of Instruction No. 19-A which provides for the relocation of squatters in the interest of public health, safety and peace and order.

On the other hand, it should be noted that squatting on public agricultural lands, like the grazing lands involved in this case, is punished by Republic Act No. 947 which makes it unlawful for any person, corporation or association to forcibly enter or occupy public agricultural lands. That law provides:

SECTION 1. It shall be unlawful for any person corporation or association to enter or occupy, through force, intimidation, threat, strategy or stealth, any public agriculture land including such public lands as are granted to private individuals under the provision of the Public Land Act or any other laws providing for the of public agriculture lands in the Philippines and are duly covered by the corresponding applications for the notwithstanding standing the fact that title thereto still remains in the Government or for any person, natural or judicial to investigate induce or force another to commit such acts.

Violations of the law are punished by a fine of not exceeding one thousand or imprisonment for not more than one year, or both such fine and imprisonment in the discretion of the court, with subsidiary imprisonment in case of insolvency. (See People vs. Lapasaran 100 Phil. 40.)

The rule of ejusdem generis (of the same kind or species) invoked by the trial court does not apply to this case. Here, the intent of the decree is unmistakable. It is intended to apply only to urban communities, particularly to illegal constructions. The rule of ejusdem generis is merely a tool of statutory construction which is resorted to when the legislative intent is uncertain (Genato Commercial Corp. vs. Court of Tax Appeals, 104 Phil. 615,618; 28 C.J.S. 1049-50).

WHEREFORE, the trial court's order of dismissal is affirmed. No costs.

SO ORDERED.

Barredo, Antonio, Concepcion Jr. and Abad Santos, J., concur.

G.R. No. L-33693-94 May 31, 1979

MISAEL P. VERA, as Commissioner of Internal Revenue, and THE FAIR TRADE BOARD, petitioner, vs.HON. SERAFIN R. CUEVAS, as Judge of the Court of First Instance of Manila, Branch IV, INSTITUTE OF EVAPORATED FILLED MILK MANUFACTURERS OF THE PHILIPPINES, INC., CONSOLIDATED MILK COMPANY (PHIL.) INC., and MILK INDUSTRIES, INC., respondents.

Solicitor General Felix Q. Antonio and Solicitor Bernardo P. Pardo for petitioners.

Sycip, Salazar, Luna, Manalo & Feliciano for private respondents.

 

DE CASTRO, J.:

This is a petition for certiorari with preliminary injunction to review the decision rendered by respondent judge, in Civil Case No. 52276 and in Special Civil Action No. 52383 both of the Court of First Instance of Manila.

Plaintiffs, in Civil Case No. 52276 private respondents herein, are engaged in the manufacture, sale and distribution of filled milk products throughout the Philippines. The products of private respondent, Consolidated Philippines Inc. are marketed and sold under the brand Darigold whereas those of private respondent, General Milk Company (Phil.), Inc., under the brand "Liberty;" and those of private respondent, Milk Industries Inc., under the brand "Dutch Baby." Private respondent, Institute of Evaporated Filled Milk Manufacturers of the Philippines, is a corporation organized for the principal purpose of upholding and maintaining at its highest the standards of local filled milk industry, of which all the other private respondents are members.

Civil Case No. 52276 is an action for declaratory relief with ex-parte petition for preliminary injunction wherein plaintiffs pray for an adjudication of their respective rights and obligations in relation to the enforcement of Section 169 of the Tax Code against their filled milk products.

The controversy arose from the order of defendant, Commissioner of Internal Revenue now petitioner herein, requiring plaintiffs- private respondents to withdraw from the market all of their filled milk products which do not bear the inscription required by Section 169 of the Tax Code within fifteen (15) days from receipt of the order with the explicit warning that failure of plaintiffs' private respondents to comply with said order will result in the institution of the necessary action against any violation of the aforesaid order. Section 169 of the Tax Code reads as follows:

Section 169. Inscription to be placed on skimmed milk. — All condensed skimmed milk and all milk in whatever form, from which the fatty part has been removed totally or in part, sold or put on sale in the Philippines shall be clearly and legibly marked on its immediate containers, and in all the language in which such containers are marked, with the words, "This milk is not suitable for nourishment for infants less than one year of age," or with other equivalent words.

The Court issued a writ of preliminary injunction dated February 16, 1963 restraining the Commissioner of Internal Revenue from requiring plaintiffs' private respondents to print on the labels of their rifled milk products the words, "This milk is not suitable for nourishment for infants less than one year of age or words of similar import, " as directed by the above quoted provision of Law, and from taking any action to enforce the above legal provision against the plaintiffs' private respondents in connection with their rifled milk products, pending the final determination of the case, Civil Case No. 52276, on the merits.

On July 25, 1969, however, the Office of the Solicitor General brought an appeal from the said order by way of certiorari to the Supreme Court. 1 In view thereof, the respondent court in the meantime suspended disposition of these cases but in view of the absence of any injunction or restraining order from the Supreme Court, it resumed action on them until their final disposition therein.

Special Civil Action No. 52383, on the other hand, is an action for prohibition and injunction with a petition for preliminary injunction. Petitioners therein pray that the respondent Fair Trade Board desist from further proceeding with FTB I.S. No. I . entitled "Antonio R. de Joya vs. Institute of Evaporated Milk Manufacturers of the Philippines, etc." pending final determination of Civil Case No. 52276. The facts of this special civil action show that on December 7, 1962, Antonio R. de Joya and Sufronio Carrasco, both in their individual capacities and in their capacities as Public Relations Counsel and President of the Philippine Association of Nutrition, respectively, filed FTB I.S. No. 1 with Fair Trade Board for misleading advertisement, mislabeling and/or misbranding. Among other things, the complaint filed include the charge of omitting to state in their labels any statement sufficient to Identify their filled milk products as "imitation milk" or as an imitation of genuine cows milk. and omitting to mark the immediate containers of their filled milk products with the words: "This milk is not suitable for nourishment for infants less than one year of age or with other equivalent words as required under Section 169 of the Tax Code. The Board proceeded to hear the complaint until it received the writ of preliminary injunction issued by the Court of First Instance on March 19, 1963.

Upon agreement of the parties, Civil Case No. 52276 and Special Civil Action No. 52383 were heard jointly being intimately related with each other, with common facts and issues being also involved therein. On April 16, 1971, the respondent court issued its decision, the dispositive part of which reads as follows:

Wherefore, judgment is hereby rendered:

In Civil Case No. 52276:

(a) Perpetually restraining the defendant, Commissioner of Internal Revenue, his agents, or employees from requiring plaintiffs to print on the labels of their filled milk products the words: "This milk is not suitable for nourishment for infants less than one year of age" or words with equivalent import and declaring as nun and void and without authority in law, the order of said defendant dated September 28, 1961, Annex A of the complaint, and the Ruling of the Secretary of Finance, dated November 12, 1962, Annex G of the complaint; and

In Special Civil Action No. 52383:

(b) Restraining perpetually the respondent Fair Trade Board, its agents or employees from continuing in the investigation of the complaints against petitioners docketed as FTB I.S. No. 2, or any charges related to the manufacture or sale by the petitioners of their filled milk products and declaring as null the proceedings so far undertaken by the respondent Board on said complaints. (pp. 20- 21, Rollo).

From the above decision of the respondent court, the Commissioner of Internal Revenue and the Fair Trade Board joined together to file the present petition for certiorari with preliminary injunction, assigning the following errors:

I. THE LOWER COURT ERRED IN RULING THAT SEC. TION 169 OF THE TAX CODE HAS BEEN REPEALED BY IMPLICATION.

II. THE LOWER COURT ERRED IN RULING THAT SECTION 169 OF THE TAX CODE HAS LOST ITS TAX PURPOSE, AND THAT COMMISSIONER NECESSARILY LOST HIS AUTHORITY TO ENFORCE THE SAME AND THAT THE PROPER AUTHORITY TO PROMOTE THE HEALTH OF INFANTS IS THE FOOD AND DRUG ADMINISTRATION, THE SECRETARY OF HEALTH AND THE SECRETARY OF JUSTICE, AS PROVIDED FOR IN RA 3720, NOT THE COMMISSIONER OF INTERNAL REVENUE.

III. THE LOWER COURT ERRED IN RULING THAT THE POWER TO INVESTIGATE AND TO PROSECUTE VIOLATIONS OF FOOD LAWS IS ENTRUSTED TO THE FOOD AND DRUG INSPECTION, THE FOOD AND DRUG ADMINISTRATION, THE SECRETARY OF HEALTH AND THE SECRETARY OF JUSTICE, AND THAT THE FAIR TRADE BOARD IS WITHOUT JURISDICTION TO INVESTIGATE AND PROSECUTE ALLEGED MISBRANDING, MISLABELLING AND/OR MISLEADING ADVERTISEMENT OF FILLED MILK PRODUCTS. (pp, 4-5, Rollo).

The lower court did not err in ruling that Section 169 of the Tax Code has been repealed by implication. Section 169 was enacted in 1939, together with Section 141 (which imposed a Specific tax on skimmed

milk) and Section 177 (which penalized the sale of skimmed milk without payment of the specific tax and without the legend required by Section 169). However, Section 141 was expressly repealed by Section 1 of Republic Act No. 344, and Section 177, by Section 1 of Republic Act No. 463. By the express repeal of Sections 141 and 177, Section 169 became a merely declaratory provision, without a tax purpose, or a penal sanction.

Moreover, it seems apparent that Section 169 of the Tax Code does not apply to filled milk. The use of the specific and qualifying terms "skimmed milk" in the headnote and "condensed skimmed milk" in the text of the cited section, would restrict the scope of the general clause "all milk, in whatever form, from which the fatty pat has been removed totally or in part." In other words, the general clause is restricted by the specific term "skimmed milk" under the familiar rule of ejusdem generis that general and unlimited terms are restrained and limited by the particular terms they follow in the statute.

Skimmed milk is different from filled milk. According to the "Definitions, Standards of Purity, Rules and Regulations of the Board of Food Inspection," skimmed milk is milk in whatever form from which the fatty part has been removed. Filled milk, on the other hand, is any milk, whether or not condensed, evaporated concentrated, powdered, dried, dessicated, to which has been added or which has been blended or compounded with any fat or oil other than milk fat so that the resulting product is an imitation or semblance of milk cream or skim milk." The difference, therefore, between skimmed milk and filled milk is that in the former, the fatty part has been removed while in the latter, the fatty part is likewise removed but is substituted with refined coconut oil or corn oil or both. It cannot then be readily or safely assumed that Section 169 applies both to skimmed milk and filled milk.

The Board of Food Inspection way back in 1961 rendered an opinion that filled milk does not come within the purview of Section 169, it being a product distinct from those specified in the said Section since the removed fat portion of the milk has been replaced with coconut oil and Vitamins A and D as fortifying substances (p. 58, Rollo). This opinion bolsters the Court's stand as to its interpretation of the scope of Section 169. Opinions and rulings of officials of the government called upon to execute or implement administrative laws command much respect and weight. (Asturias Sugar Central Inc. vs. Commissioner of Customs, G. R. No. L-19337, September 30, 1969, 29 SCRA 617; Tan, et. al. vs. The Municipality of Pagbilao et. al., L-14264, April 30, 1963, 7 SCRA 887; Grapilon vs. Municipal Council of Carigara L-12347, May 30, 1961, 2 SCRA 103).

This Court is, likewise, induced to the belief that filled milk is suitable for nourishment for infants of all ages. The Petitioners themselves admitted that: "the filled milk products of the petitioners (now private respondents) are safe, nutritious, wholesome and suitable for feeding infants of all ages" (p. 44, Rollo) and that "up to the present, Filipino infants fed since birth with filled milk have not suffered any defects, illness or disease attributable to their having been fed with filled milk." (p. 45, Rollo).

There would seem, therefore, to be no dispute that filled milk is suitable for feeding infants of all ages. Being so, the declaration required by Section 169 of the Tax Code that filled milk is not suitable for nourishment for infants less than one year of age would, in effect, constitute a deprivation of property without due. process of law.

Section 169 is being enforced only against respondent manufacturers of filled milk product and not as against manufacturers, distributors or sellers of condensed skimmed milk such as SIMILAC, SMA, BREMIL, ENFAMIL, OLAC, in which, as admitted by the petitioner, the fatty part has been removed and substituted with vegetable or corn oil. The enforcement of Section 169 against the private respondents only but not against other persons similarly situated as the private respondents amounts to an unconstitutional denial of the equal pro petition of the laws, for the law, equally enforced, would similarly offend against the Constitution. Yick Wo vs. Hopkins, 118 U.S. 356,30 L. ed. 220).

As stated in the early part of this decision, with the repeal of Sections 141 and 177 of the Tax Code, Section 169 has lost its tax purpose. Since Section 169 is devoid of any tax purpose, petitioner Commissioner necessarily lost his authority to enforce the same. This was so held by his predecessor immediately after Sections 141 and 177 were repealed in General Circular No. V-85 as stated in paragraph IX of the Partial Stipulation of facts entered into by the parties, to wit:

... As the act of sewing skimmed milk without first paying the specific tax thereon is no longer unlawful and the enforcement of the requirement in regard to the placing of the proper legend on its immediate containers is a subject which does not come within the jurisdiction of the Bureau of Internal Revenue, the penal provisions of Section 177 of the said Code having been repealed by Republic Act No. 463. (p. 102, Rollo).

Petitioner's contention that he still has jurisdiction to enforce Section 169 by virtue of Section 3 of the Tax Code which provides that the Bureau of Internal Revenue shall also "give effect to and administer the supervisory and police power conferred to it by this Code or other laws" is untenable. The Bureau of Internal Revenue may claim police power only when necessary in the enforcement of its principal powers and duties consisting of the "collection of all national internal revenue taxes, fees and charges, and the enforcement of all forfeitures, penalties and fines connected therewith." The enforcement of Section 169 entails the promotion of the health of the nation and is thus unconnected with any tax purpose. This is the exclusive function of the Food and Drug Administration of the Department of Health as provided for in Republic Act No. 3720. In particular, Republic Act No. 3720 provides:

Section 9. ... It shall be the duty of the Board (Food and Drug Inspection), conformably with the rules and regulations, to hold hearings and conduct investigations relative to matters touching the Administration of this Act, to investigate processes of food, drug and cosmetic manufacture and to subject reports to the Food and Drug Administrator, recommending food and drug standards for adoption. Said Board shall also perform such additional functions, properly within the scope of the administration thereof, as maybe assigned to it by the Food and Drug Administrator. The decisions of the Board shall be advisory to the Food and Drug Administrator.

Section 26. ...

xxx xxx xxx

(c) Hearing authorized or required by this Act shall be conducted by the Board of Food and Drug Inspection which shall submit recommendation to the Food and Drug Administrator.

(d) When it appears to the Food and Drug Administrator from the reports of the Food and Drug Laboratory that any article of food or any drug or cosmetic secured pursuant to Section 28 of this Act is adulterated or branded he shall cause notice thereof to be given to the person or persons concerned and such person or persons shall be given an opportunity to subject evidence impeaching the correctness of the finding or charge in question.

(e) When a violation of any provisions of this Act comes to the knowledge of the Food and Drug Administrator of such character that a criminal prosecution ought to be instituted against the offender, he shall certify the facts to the Secretary of Justice through the Secretary of Health, together with the chemists' report, the findings of the Board of Food and Drug Inspection, or other documentary evidence on which the charge is based.

(f) Nothing in this Act shall be construed as requiring the Food and Drug Administrator to certify for prosecution pursuant to subparagraph (e) hereof, minor violations of this Act whenever he believes that public interest will be adequately served by a suitable written notice or warning.

The aforequoted provisions of law clearly show that petitioners, Commissioner of Internal Revenue and the Fair Trade Board, are without jurisdiction to investigate and to prosecute alleged misbranding, mislabeling and/or misleading advertisements of filled milk. The jurisdiction on the matters cited is vested upon the Board of Food and Drug inspection and the Food and Drug Administrator, with the Secretary of Health and the Secretary of Justice, also intervening in case criminal prosecution has to be instituted. To hold that the petitioners have also jurisdiction as would be the result were their instant petition granted, would only cause overlapping of powers and functions likely to produce confusion and conflict of official action which is neither practical nor desirable.

WHEREFORE, the decision appealed from is hereby affirmed en toto. No costs.

SO ORDERED.

Teehankee, (Chairman), Fernandez, Melencio-Herrera, JJ., concur.

G.R. No. 147749             June 22, 2006

SAN PABLO MANUFACTURING CORPORATION, Petitioner, vs.COMMISSIONER OF INTERNAL REVENUE,* Respondent.

D E C I S I O N

CORONA, J.:

In this petition for review under Rule 45 of the Rules of Court, San Pablo Manufacturing Corporation (SPMC) assails the July 19, 20001 and April 3, 2001 resolutions of the Court of Appeals in CA-G.R. SP No. 59139.

SPMC is a domestic corporation engaged in the business of milling, manufacturing and exporting of coconut oil and other allied products. It was assessed and ordered to pay by the Commissioner of Internal Revenue the total amount of P8,182,182.852 representing deficiency miller’s tax and manufacturer’s sales tax,3 among other deficiency taxes,4 for taxable year 1987. The deficiency miller’s tax was imposed on SPMC’s sales of crude oil to United Coconut Chemicals, Inc. (UNICHEM) while the deficiency sales tax was applied on its sales of corn and edible oil as manufactured products.

SPMC opposed the assessments but the Commissioner denied its protest. SPMC appealed the denial of its protest to the Court of Tax Appeals (CTA) by way of a petition for review docketed as CTA Case No. 5423.

In its March 10, 2000 decision, the CTA cancelled SPMC’s liability for deficiency manufacturer’s tax on the sales of corn and edible oils but upheld the Commissioner’s assessment for the deficiency miller’s tax. SPMC moved for the partial reconsideration of the CTA affirmation of the miller’s tax assessment but it was denied.

SPMC elevated the case to the Court of Appeals via a petition for review of the CTA decision insofar as it upheld the deficiency miller’s tax assessment. In its July 19, 2000 resolution, the appellate court dismissed the petition on the principal ground5 that the verification attached to it was signed merely by SPMC’s chief financial officer ― without the corporate secretary’s certificate, board resolution or power of attorney authorizing him to sign the verification and certification against forum shopping. SPMC sought a reconsideration of the resolution but the same was denied. Hence, this petition.

Did the Court of Appeals err when it dismissed SPMC’s appeal?

SPMC contends that its appeal should have been given due course since it substantially complied with the requirements on verification and certification against forum shopping. It insists on the liberal

application of the rules because, on the merits of the petition, SPMC was not liable for the 3% miller’s tax. It maintains that the crude oil which it sold to UNICHEM was actually exported by UNICHEM as an ingredient of fatty acid and glycerine, hence, not subject to miller’s tax pursuant to Section 168 of the 1987 Tax Code.

For SPMC, Section 168 of the 1987 Tax Code contemplates two exemptions from the miller’s tax: (a) the milled products in their original state were actually exported by the miller himself or by another person, and (b) the milled products sold by the miller were actually exported as an ingredient or part of any manufactured article by the buyer or manufacturer of the milled products. The exportation may be effected by the miller himself or by the buyer or manufacturer of the milled products. Since UNICHEM, the buyer of SPMC’s milled products, subsequently exported said products, SPMC should be exempted from the miller’s tax.

The petition must fail.

Under Rule 43, Section 5 of the Rules of Court, appeals from the CTA and quasi-judicial agencies to the Court of Appeals should be verified. A pleading required to be verified which lacks proper verification shall be treated as an unsigned pleading.6

Moreover, a petition for review under Rule 43 requires a sworn certification against forum shopping.7

Failure of the petitioner to comply with any of the requirements of a petition for review is sufficient ground for the dismissal of the petition.8

A corporation may exercise the powers expressly conferred upon it by the Corporation Code and those that are implied by or are incidental to its existence through its board of directors and/or duly authorized officers and agents.9 Hence, physical acts, like the signing of documents, can be performed only by natural persons duly authorized for the purpose by corporate by-laws or by specific act of the board of directors.10 In the absence of authority from the board of directors, no person, not even the officers of the corporation, can bind the corporation.11

SPMC’s petition in the Court of Appeals did not indicate that the person who signed the verification/certification on non-forum shopping was authorized to do so. SPMC merely relied on the alleged inherent power of its chief financial officer to represent SPMC in all matters regarding the finances of the corporation including, among others, the filing of suits to defend or protect it from assessments and to recover erroneously paid taxes. SPMC even admitted that no power of attorney, secretary’s certificate or board resolution to prove the affiant’s authority was attached to the petition. Thus, the petition was not properly verified. Since the petition lacked proper verification, it was to be treated as an unsigned pleading subject to dismissal.12

In PET Plans, Inc. v. Court of Appeals,13 the Court upheld the dismissal by the Court of Appeals of the petition on the ground that the verification and certification against forum shopping was signed by PET

Plans, Inc.’s first vice-president for legal affairs/corporate secretary without any certification that he was authorized to sign in behalf of the corporation.

In BPI Leasing Corporation v. Court of Appeals,14 the Court ruled that the petition should be dismissed outright on the ground that the verification/certification against forum shopping was signed by BPI Leasing Corporation’s counsel with no specific authority to do so. Since the counsel was purportedly acting for the corporation, he needed a resolution issued by the board of directors that specifically authorized him to institute the petition and execute the certification. Only then would his actions be legally binding on the corporation.15

In this case, therefore, the appellate court did not commit an error when it dismissed the petition on the ground that it was signed by a person who had not been issued any authority by the board of directors to represent the corporation.

Neither can the Court subscribe to SPMC’s claim of substantial compliance or to its plea for a liberal application of the rules. Save for the most persuasive of reasons, strict compliance with procedural rules is enjoined to facilitate the orderly administration of justice.16 Substantial compliance will not suffice in a matter involving strict observance such as the requirement on non-forum shopping,17 as well as verification. Utter disregard of the rules cannot justly be rationalized by harping on the policy of liberal construction.18

But even if the fatal procedural infirmity were to be disregarded, the petition must still fail for lack of merit.

As the CTA correctly ruled, SPMC’s sale of crude coconut oil to UNICHEM was subject to the 3% miller’s tax. Section 168 of the 1987 Tax Code provided:

Sec. 168. Percentage tax upon proprietors or operators of rope factories, sugar central mills, coconut oil mills, palm oil mills, cassava mills and desiccated coconut factories . Proprietors or operators of rope factories, sugar central and mills, coconut oil mills, palm oil mills, cassava mills and desiccated coconut factories, shall pay a tax equivalent to three percent (3%) of the gross value in money of all the rope, sugar, coconut oil, palm oil, cassava flour or starch, dessicated coconut, manufactured, processed or milled by them, including the by-product of the raw materials from which said articles are produced, processed or manufactured, such tax to be based on the actual selling price or market value of these articles at the time they leave the factory or mill warehouse: Provided, however, That this tax shall not apply to rope, coconut oil, palm oil and the by-product of copra from which it is produced or manufactured and dessicated coconut, if such rope, coconut oil, palm oil, copra by-products and dessicated coconuts, shall be removed for exportation by the proprietor or operator of the factory or the miller himself, and are actually exported without returning to the Philippines, whether in their original state or as an ingredient or part of any manufactured article or products : Provided further, That where the planter or the owner of the raw materials is the exporter of the aforementioned milled or manufactured products, he shall be entitled to a tax credit of the miller's taxes withheld by the proprietor or operator of the factory or mill, corresponding to the quantity exported, which may be used

against any internal revenue tax directly due from him: and Provided, finally, That credit for any sales, miller's or excise taxes paid on raw materials or supplies used in the milling process shall not be allowed against the miller's tax due, except in the case of a proprietor or operator of a refined sugar factory as provided hereunder. (emphasis supplied)

The language of the exempting clause of Section 168 of the 1987 Tax Code was clear. The tax exemption applied only to the exportation of rope, coconut oil, palm oil, copra by-products and dessicated coconuts, whether in their original state or as an ingredient or part of any manufactured article or products, by the proprietor or operator of the factory or by the miller himself.

The language of the exemption proviso did not warrant the interpretation advanced by SPMC. Nowhere did it provide that the exportation made by the purchaser of the materials enumerated in the exempting clause or the manufacturer of products utilizing the said materials was covered by the exemption. Since SPMC’s situation was not within the ambit of the exemption, it was subject to the 3% miller’s tax imposed under Section 168 of the 1987 Tax Code.

SPMC’s proposed interpretation unduly enlarged the scope of the exemption clause. The rule is that the exemption must not be so enlarged by construction since the reasonable presumption is that the State has granted in express terms all it intended to grant and that, unless the privilege is limited to the very terms of the statute, the favor would be intended beyond what was meant.19

Where the law enumerates the subject or condition upon which it applies, it is to be construed as excluding from its effects all those not expressly mentioned. Expressio unius est exclusio alterius. Anything that is not included in the enumeration is excluded therefrom and a meaning that does not appear nor is intended or reflected in the very language of the statute cannot be placed therein. 20 The rule proceeds from the premise that the legislature would not have made specific enumerations in a statute if it had the intention not to restrict its meaning and confine its terms to those expressly mentioned.21

The rule of expressio unius est exclusio alterius is a canon of restrictive interpretation.22 Its application in this case is consistent with the construction of tax exemptions in strictissimi juris against the taxpayer. To allow SPMC’s claim for tax exemption will violate these established principles and unduly derogate sovereign authority.

WHEREFORE, the petition is hereby DENIED.

Costs against petitioner.

SO ORDERED.

G.R. No. 106719 September 21, 1993

DRA. BRIGIDA S. BUENASEDA, Lt. Col. ISABELO BANEZ, JR., ENGR. CONRADO REY MATIAS, Ms. CORA S. SOLIS and Ms. ENYA N. LOPEZ, petitioners, vs.SECRETARY JUAN FLAVIER, Ombudsman CONRADO M. VASQUEZ, and NCMH NURSES ASSOCIATION, represented by RAOULITO GAYUTIN, respondents.

Renato J. Dilag and Benjamin C. Santos for petitioners.

Danilo C. Cunanan for respondent Ombudsman.

Crispin T. Reyes and Florencio T. Domingo for private respondent.

 

QUIASON, J.:

This is a Petition for Certiorari, Prohibition and Mandamus, with Prayer for Preliminary Injunction or Temporary Restraining Order, under Rule 65 of the Revised Rules of Court.

Principally, the petition seeks to nullify the Order of the Ombudsman dated January 7, 1992, directing the preventive suspension of petitioners, Dr. Brigida S. Buenaseda, Chief of Hospital III; Isabelo C. Banez, Jr., Administrative Officer III; Conrado Rey Matias, Technical Assistant to the Chief of Hospital; Cora C. Solis, Accountant III; and Enya N. Lopez, Supply Officer III, all of the National Center for Mental Health. The petition also asks for an order directing the Ombudsman to disqualify Director Raul Arnaw and Investigator Amy de Villa-Rosero, of the Office of the Ombudsman, from participation in the preliminary investigation of the charges against petitioner (Rollo, pp. 2-17; Annexes to Petition, Rollo, pp. 19-21).

The questioned order was issued in connection with the administrative complaint filed with the Ombudsman (OBM-ADM-0-91-0151) by the private respondents against the petitioners for violation of the Anti-Graft and Corrupt Practices Act.

According to the petition, the said order was issued upon the recommendation of Director Raul Arnaw and Investigator Amy de Villa-Rosero, without affording petitioners the opportunity to controvert the charges filed against them. Petitioners had sought to disqualify Director Arnaw and Investigator Villa-Rosero for manifest partiality and bias (Rollo, pp. 4-15).

On September 10, 1992, this Court required respondents' Comment on the petition.

On September 14 and September 22, 1992, petitioners filed a "Supplemental Petition (Rollo, pp. 124-130); Annexes to Supplemental Petition; Rollo pp. 140-163) and an "Urgent Supplemental Manifestation" (Rollo, pp. 164-172; Annexes to Urgent Supplemental Manifestation; Rollo, pp. 173-176), respectively, averring developments that transpired after the filing of the petition and stressing the urgency for the issuance of the writ of preliminary injunction or temporary restraining order.

On September 22, 1992, this Court ". . . Resolved to REQUIRE the respondents to MAINTAIN in the meantime, the STATUS QUO pending filing of comments by said respondents on the original supplemental manifestation" (Rollo, p. 177).

On September 29, 1992, petitioners filed a motion to direct respondent Secretary of Health to comply with the Resolution dated September 22, 1992 (Rollo, pp. 182-192, Annexes, pp. 192-203). In a Resolution dated October 1, 1992, this Court required respondent Secretary of Health to comment on the said motion.

On September 29, 1992, in a pleading entitled "Omnibus Submission," respondent NCMH Nurses Association submitted its Comment to the Petition, Supplemental Petition and Urgent Supplemental Manifestation. Included in said pleadings were the motions to hold the lawyers of petitioners in contempt and to disbar them (Rollo, pp. 210-267). Attached to the "Omnibus Submission" as annexes were the orders and pleadings filed in Administrative Case No. OBM-ADM-0-91-1051 against petitioners (Rollo, pp. 268-480).

The Motion for Disbarment charges the lawyers of petitioners with: (1) unlawfully advising or otherwise causing or inducing their clients — petitioners Buenaseda, et al., to openly defy, ignore, disregard, disobey or otherwise violate, maliciously evade their preventive suspension by Order of July 7, 1992 of the Ombudsman . . ."; (2) "unlawfully interfering with and obstructing the implementation of the said order (Omnibus Submission, pp. 50-52; Rollo, pp. 259-260); and (3) violation of the Canons of the Code of Professional Responsibility and of unprofessional and unethical conduct "by foisting blatant lies, malicious falsehood and outrageous deception" and by committing subornation of perjury, falsification and fabrication in their pleadings (Omnibus Submission, pp. 52-54; Rollo, pp. 261-263).

On November 11, 1992, petitioners filed a "Manifestation and Supplement to 'Motion to Direct Respondent Secretary of Health to Comply with 22 September 1992 Resolution'" (Manifestation attached to Rollo without pagination between pp. 613 and 614 thereof).

On November 13, 1992, the Solicitor General submitted its Comment dated November 10, 1992, alleging that: (a) "despite the issuance of the September 22, 1992 Resolution directing respondents to maintain the status quo, respondent Secretary refuses to hold in abeyance the implementation of petitioners' preventive suspension; (b) the clear intent and spirit of the Resolution dated September 22, 1992 is to hold in abeyance the implementation of petitioners' preventive suspension, the status quo obtaining the time of the filing of the instant petition; (c) respondent Secretary's acts in refusing to hold

in abeyance implementation of petitioners' preventive suspension and in tolerating and approving the acts of Dr. Abueva, the OIC appointed to replace petitioner Buenaseda, are in violation of the Resolution dated September 22, 1992; and (d) therefore, respondent Secretary should be directed to comply with the Resolution dated September 22, 1992 immediately, by restoring the status quo ante contemplated by the aforesaid resolution" (Comment attached to Rollo without paginations between pp. 613-614 thereof).

In the Resolution dated November 25, 1992, this Court required respondent Secretary to comply with the aforestated status quo order, stating inter alia, that:

It appearing that the status quo ante litem motam, or the last peaceable uncontested status which preceded the present controversy was the situation obtaining at the time of the filing of the petition at bar on September 7, 1992 wherein petitioners were then actually occupying their respective positions, the Court hereby ORDERS that petitioners be allowed to perform the duties of their respective positions and to receive such salaries and benefits as they may be lawfully entitled to, and that respondents and/or any and all persons acting under their authority desist and refrain from performing any act in violation of the aforementioned Resolution of September 22, 1992 until further orders from the Court (Attached to Rollo after p. 615 thereof).

On December 9, 1992, the Solicitor General, commenting on the Petition, Supplemental Petition and Supplemental Manifestation, stated that (a) "The authority of the Ombudsman is only to recommend suspension and he has no direct power to suspend;" and (b) "Assuming the Ombudsman has the power to directly suspend a government official or employee, there are conditions required by law for the exercise of such powers; [and] said conditions have not been met in the instant case" (Attached to Rollo without pagination).

In the pleading filed on January 25, 1993, petitioners adopted the position of the Solicitor General that the Ombudsman can only suspend government officials or employees connected with his office. Petitioners also refuted private respondents' motion to disbar petitioners' counsel and to cite them for contempt (Attached to Rollo without pagination).

The crucial issue to resolve is whether the Ombudsman has the power to suspend government officials and employees working in offices other than the Office of the Ombudsman, pending the investigation of the administrative complaints filed against said officials and employees.

In upholding the power of the Ombudsman to preventively suspend petitioners, respondents (Urgent Motion to Lift Status Quo, etc, dated January 11, 1993, pp. 10-11), invoke Section 24 of R.A. No. 6770, which provides:

Sec. 24. Preventive Suspension. — The Ombudsman or his Deputy may preventively suspend any officer or employee under his authority pending an

investigation, if in his judgment the evidence of guilt is strong, and (a) the charge against such officer or employee involves dishonesty, oppression or grave misconduct or neglect in the performance of duty; (b) the charge would warrant removal from the service; or (c) the respondent's continued stay in office may prejudice the case filed against him.

The preventive suspension shall continue until the case is terminated by the Office of Ombudsman but not more than six months, without pay, except when the delay in the disposition of the case by the Office of the Ombudsman is due to the fault, negligence or petition of the respondent, in which case the period of such delay shall not be counted in computing the period of suspension herein provided.

Respondents argue that the power of preventive suspension given the Ombudsman under Section 24 of R.A. No. 6770 was contemplated by Section 13 (8) of Article XI of the 1987 Constitution, which provides that the Ombudsman shall exercise such other power or perform such functions or duties as may be provided by law."

On the other hand, the Solicitor General and the petitioners claim that under the 1987 Constitution, the Ombudsman can only recommend to the heads of the departments and other agencies the preventive suspension of officials and employees facing administrative investigation conducted by his office. Hence, he cannot order the preventive suspension himself.

They invoke Section 13(3) of the 1987 Constitution which provides that the Office of the Ombudsman shall have inter alia the power, function, and duty to:

Direct the officer concerned to take appropriate action against a public official or employee at fault, and recommend his removal, suspension, demotion, fine, censure or prosecution, and ensure compliance therewith.

The Solicitor General argues that under said provision of the Constitutions, the Ombudsman has three distinct powers, namely: (1) direct the officer concerned to take appropriate action against public officials or employees at fault; (2) recommend their removal, suspension, demotion fine, censure, or prosecution; and (3) compel compliance with the recommendation (Comment dated December 3, 1992, pp. 9-10).

The line of argument of the Solicitor General is a siren call that can easily mislead, unless one bears in mind that what the Ombudsman imposed on petitioners was not a punitive but only a preventive suspension.

When the constitution vested on the Ombudsman the power "to recommend the suspension" of a public official or employees (Sec. 13 [3]), it referred to "suspension," as a punitive measure. All the words associated with the word "suspension" in said provision referred to penalties in administrative cases, e.g.

removal, demotion, fine, censure. Under the rule of Noscitor a sociis, the word "suspension" should be given the same sense as the other words with which it is associated. Where a particular word is equally susceptible of various meanings, its correct construction may be made specific by considering the company of terms in which it is found or with which it is associated (Co Kim Chan v. Valdez Tan Keh, 75 Phil. 371 [1945]; Caltex (Phils.) Inc. v. Palomar, 18 SCRA 247 [1966]).

Section 24 of R.A. No. 6770, which grants the Ombudsman the power to preventively suspend public officials and employees facing administrative charges before him, is a procedural, not a penal statute. The preventive suspension is imposed after compliance with the requisites therein set forth, as an aid in the investigation of the administrative charges.

Under the Constitution, the Ombudsman is expressly authorized to recommend to the appropriate official the discipline or prosecution of erring public officials or employees. In order to make an intelligent determination whether to recommend such actions, the Ombudsman has to conduct an investigation. In turn, in order for him to conduct such investigation in an expeditious and efficient manner, he may need to suspend the respondent.

The need for the preventive suspension may arise from several causes, among them, the danger of tampering or destruction of evidence in the possession of respondent; the intimidation of witnesses, etc. The Ombudsman should be given the discretion to decide when the persons facing administrative charges should be preventively suspended.

Penal statutes are strictly construed while procedural statutes are liberally construed (Crawford, Statutory Construction, Interpretation of Laws, pp. 460-461; Lacson v. Romero, 92 Phil. 456 [1953]). The test in determining if a statute is penal is whether a penalty is imposed for the punishment of a wrong to the public or for the redress of an injury to an individual (59 Corpuz Juris, Sec. 658; Crawford, Statutory Construction, pp. 496-497). A Code prescribing the procedure in criminal cases is not a penal statute and is to be interpreted liberally (People v. Adler, 140 N.Y. 331; 35 N.E. 644).

The purpose of R.A. No. 6770 is to give the Ombudsman such powers as he may need to perform efficiently the task committed to him by the Constitution. Such being the case, said statute, particularly its provisions dealing with procedure, should be given such interpretation that will effectuate the purposes and objectives of the Constitution. Any interpretation that will hamper the work of the Ombudsman should be avoided.

A statute granting powers to an agency created by the Constitution should be liberally construed for the advancement of the purposes and objectives for which it was created (Cf. Department of Public Utilities v. Arkansas Louisiana Gas. Co., 200 Ark. 983, 142 S.W. (2d) 213 [1940]; Wallace v. Feehan, 206 Ind. 522, 190 N.E., 438 [1934]).

In Nera v. Garcia, 106 Phil. 1031 [1960], this Court, holding that a preventive suspension is not a penalty, said:

Suspension is a preliminary step in an administrative investigation. If after such investigation, the charges are established and the person investigated is found guilty of acts warranting his removal, then he is removed or dismissed. This is the penalty.

To support his theory that the Ombudsman can only preventively suspend respondents in administrative cases who are employed in his office, the Solicitor General leans heavily on the phrase "suspend any officer or employee under his authority" in Section 24 of R.A. No. 6770.

The origin of the phrase can be traced to Section 694 of the Revised Administrative Code, which dealt with preventive suspension and which authorized the chief of a bureau or office to "suspend any subordinate or employee in his bureau or under his authority pending an investigation . . . ."

Section 34 of the Civil Service Act of 1959 (R.A. No. 2266), which superseded Section 694 of the Revised Administrative Code also authorized the chief of a bureau or office to "suspend any subordinate officer or employees, in his bureau or under his authority."

However, when the power to discipline government officials and employees was extended to the Civil Service Commission by the Civil Service Law of 1975 (P.D. No. 805), concurrently with the President, the Department Secretaries and the heads of bureaus and offices, the phrase "subordinate officer and employee in his bureau" was deleted, appropriately leaving the phrase "under his authority." Therefore, Section 41 of said law only mentions that the proper disciplining authority may preventively suspend "any subordinate officer or employee under his authority pending an investigation . . ." (Sec. 41).

The Administrative Code of 1987 also empowered the proper disciplining authority to "preventively suspend any subordinate officer or employee under his authority pending an investigation" (Sec. 51).

The Ombudsman Law advisedly deleted the words "subordinate" and "in his bureau," leaving the phrase to read "suspend any officer or employee under his authority pending an investigation . . . ." The conclusion that can be deduced from the deletion of the word "subordinate" before and the words "in his bureau" after "officer or employee" is that the Congress intended to empower the Ombudsman to preventively suspend all officials and employees under investigation by his office, irrespective of whether they are employed "in his office" or in other offices of the government. The moment a criminal or administrative complaint is filed with the Ombudsman, the respondent therein is deemed to be "in his authority" and he can proceed to determine whether said respondent should be placed under preventive suspension.

In their petition, petitioners also claim that the Ombudsman committed grave abuse of discretion amounting to lack of jurisdiction when he issued the suspension order without affording petitioners the opportunity to confront the charges against them during the preliminary conference and even after petitioners had asked for the disqualification of Director Arnaw and Atty. Villa-Rosero (Rollo, pp. 6-13). Joining petitioners, the Solicitor General contends that assuming arguendo that the Ombudsman has the power to preventively suspend erring public officials and employees who are working in other

departments and offices, the questioned order remains null and void for his failure to comply with the requisites in Section 24 of the Ombudsman Law (Comment dated December 3, 1992, pp. 11-19).

Being a mere order for preventive suspension, the questioned order of the Ombudsman was validly issued even without a full-blown hearing and the formal presentation of evidence by the parties. In Nera, supra, petitioner therein also claimed that the Secretary of Health could not preventively suspend him before he could file his answer to the administrative complaint. The contention of petitioners herein can be dismissed perfunctorily by holding that the suspension meted out was merely preventive and therefore, as held in Nera, there was "nothing improper in suspending an officer pending his investigation and before tho charges against him are heard . . . (Nera v. Garcia., supra).

There is no question that under Section 24 of R.A. No. 6770, the Ombudsman cannot order the preventive suspension of a respondent unless the evidence of guilt is strong and (1) the charts against such officer or employee involves dishonesty, oppression or grave misconduct or neglect in the performance of duty; (2) the charge would warrant removal from the service; or (3) the respondent's continued stay in office may prejudice the case filed against him.

The same conditions for the exercise of the power to preventively suspend officials or employees under investigation were found in Section 34 of R.A. No. 2260.

The import of the Nera decision is that the disciplining authority is given the discretion to decide when the evidence of guilt is strong. This fact is bolstered by Section 24 of R.A. No. 6770, which expressly left such determination of guilt to the "judgment" of the Ombudsman on the basis of the administrative complaint. In the case at bench, the Ombudsman issued the order of preventive suspension only after: (a) petitioners had filed their answer to the administrative complaint and the "Motion for the Preventive Suspension" of petitioners, which incorporated the charges in the criminal complaint against them (Annex 3, Omnibus Submission, Rollo, pp. 288-289; Annex 4, Rollo, pp. 290-296); (b) private respondent had filed a reply to the answer of petitioners, specifying 23 cases of harassment by petitioners of the members of the private respondent (Annex 6, Omnibus Submission, Rollo, pp. 309-333); and (c) a preliminary conference wherein the complainant and the respondents in the administrative case agreed to submit their list of witnesses and documentary evidence.

Petitioners herein submitted on November 7, 1991 their list of exhibits (Annex 8 of Omnibus Submission, Rollo, pp. 336-337) while private respondents submitted their list of exhibits (Annex 9 of Omnibus Submission, Rollo, pp. 338-348).

Under these circumstances, it can not be said that Director Raul Arnaw and Investigator Amy de Villa-Rosero acted with manifest partiality and bias in recommending the suspension of petitioners. Neither can it be said that the Ombudsman had acted with grave abuse of discretion in acting favorably on their recommendation.

The Motion for Contempt, which charges the lawyers of petitioners with unlawfully causing or otherwise inducing their clients to openly defy and disobey the preventive suspension as ordered by the Ombudsman and the Secretary of Health can not prosper (Rollo, pp. 259-261). The Motion should be filed, as in fact such a motion was filed, with the Ombudsman. At any rate, we find that the acts alleged to constitute indirect contempt were legitimate measures taken by said lawyers to question the validity and propriety of the preventive suspension of their clients.

On the other hand, we take cognizance of the intemperate language used by counsel for private respondents hurled against petitioners and their counsel (Consolidated: (1) Comment on Private Respondent" "Urgent Motions, etc.; (2) Adoption of OSG's Comment; and (3) Reply to Private Respondent's Comment and Supplemental Comment, pp. 4-5).

A lawyer should not be carried away in espousing his client's cause. The language of a lawyer, both oral or written, must be respectful and restrained in keeping with the dignity of the legal profession and with his behavioral attitude toward his brethren in the profession (Lubiano v. Gordolla, 115 SCRA 459 [1982]). The use of abusive language by counsel against the opposing counsel constitutes at the same time a disrespect to the dignity of the court of justice. Besides, the use of impassioned language in pleadings, more often than not, creates more heat than light.

The Motion for Disbarment (Rollo, p. 261) has no place in the instant special civil action, which is confined to questions of jurisdiction or abuse of discretion for the purpose of relieving persons from the arbitrary acts of judges and quasi-judicial officers. There is a set of procedure for the discipline of members of the bar separate and apart from the present special civil action.

WHEREFORE, the petition is DISMISSED and the Status quo ordered to be maintained in the Resolution dated September 22, 1992 is LIFTED and SET ASIDE.

SO ORDERED.

Narvasa, C.J., Cruz, Padilla, Bidin, Griño-Aquino, Regalado, Davide, Jr., Romero, Nocon, Melo, Puno and Vitug, JJ., concur.

Feliciano, J., is on leave.

G.R. No. 79094 June 22, 1988

MANOLO P. FULE, petitioner, vs.THE HONORABLE COURT OF APPEALS, respondent.

Balagtas P. Ilagan for petitioner.

The Solicitor General for respondent.

 

MELENCIO-HERRERA, J.:

This is a Petition for Review on certiorari of the Decision of respondent Appellate Court, which affirmed the judgment of the Regional Trial Court, Lucena City, Branch LIV, convicting petitioner (the accused-appellant) of Violation of Batas Pambansa Blg. 22 (The Bouncing Checks Law) on the basis of the Stipulation of Facts entered into between the prosecution and the defense during the pre-trial conference in the Trial Court. The facts stipulated upon read:

a) That this Court has jurisdiction over the person and subject matter of this case;

b) That the accused was an agent of the Towers Assurance Corporation on or before January 21, 1981;

c) That on January 21, 1981, the accused issued and made out check No. 26741, dated January 24, 1981 in the sum of P2,541.05;

d) That the said check was drawn in favor of the complaining witness, Roy Nadera;

e) That the check was drawn in favor of the complaining witness in remittance of collection;

f) That the said check was presented for payment on January 24, 1981 but the same was dishonored for the reason that the said checking account was already closed;

g) That the accused Manolo Fule has been properly Identified as the accused party in this case.

At the hearing of August 23, 1985, only the prosecution presented its evidence consisting of Exhibits "A," "B" and "C." At the subsequent hearing on September 17, 1985, petitioner-appellant waived the right to present evidence and, in lieu thereof, submitted a Memorandum confirming the Stipulation of Facts. The Trial Court convicted petitioner-appellant.

On appeal, respondent Appellate Court upheld the Stipulation of Facts and affirmed the judgment of conviction. 1

Hence, this recourse, with petitioner-appellant contending that:

The Honorable Respondent Court of Appeals erred in the decision of the Regional Trial Court convicting the petitioner of the offense charged, despite the cold fact that the basis of the conviction was based solely on the stipulation of facts made during the pre-trial on August 8, 1985, which was not signed by the petitioner, nor by his counsel.

Finding the petition meritorious, we resolved to give due course.

The 1985 Rules on Criminal Procedure, which became effective on January 1, 1985, applicable to this case since the pre-trial was held on August 8, 1985, provides:

SEC. 4. Pre-trial agreements must be signed. — No agreement or admission made or entered during the pre-trial conference shall be used in evidence against the accused unless reduced to writing and signed by him and his counsel. (Rule 118) [Emphasis supplied]

By its very language, the Rule is mandatory. Under the rule of statutory construction, negative words and phrases are to be regarded as mandatory while those in the affirmative are merely directory (McGee vs. Republic, 94 Phil. 820 [1954]). The use of the term "shall" further emphasizes its mandatory character and means that it is imperative, operating to impose a duty which may be enforced (Bersabal vs. Salvador, No. L-35910, July 21, 1978, 84 SCRA 176). And more importantly, penal statutes whether substantive and remedial or procedural are, by consecrated rule, to be strictly applied against the government and liberally in favor of the accused (People vs. Terrado No. L-23625, November 25, 1983, 125 SCRA 648).

The conclusion is inevitable, therefore, that the omission of the signature of the accused and his counsel, as mandatorily required by the Rules, renders the Stipulation of Facts inadmissible in evidence. The fact that the lawyer of the accused, in his memorandum, confirmed the Stipulation of Facts does not cure the defect because Rule 118 requires both the accused and his counsel to sign the Stipulation of Facts. What the prosecution should have done, upon discovering that the accused did not sign the Stipulation of Facts, as required by Rule 118, was to submit evidence to establish the elements of the crime, instead of relying solely on the supposed admission of the accused in the Stipulation of Facts. Without said

evidence independent of the admission, the guilt of the accused cannot be deemed established beyond reasonable doubt.

Consequently, under the circumstances obtaining in this case, the ends of justice require that evidence be presented to determine the culpability of the accused. When a judgment has been entered by consent of an attorney without special authority, it will sometimes be set aside or reopened (Natividad vs. Natividad, 51 Phil. 613 [1928]).

WHEREFORE, the judgment of respondent Appellate Court is REVERSED and this case is hereby ordered RE-OPENED and REMANDED to the appropriate Branch of the Regional Trial Court of Lucena City, for further reception of evidence.

SO ORDERED.

G.R. No. L-35910 July 21, 1978

PURITA BERSABAL, petitioner, vs.HONORABLE JUDGE SERAFIN SALVADOR, as Judge of the Court of First Instance of Caloocan City, Branch XIV, TAN THAT and ONG PIN TEE, respondents.

 

MAKASIAR, J.:

On March 23, 1972, petitioner Purita Bersabal seeks to annul the orders of respondent Judge of August 4, 1971, October 30, 1971 and March 15, 1972 and to compel said respondent Judge to decide petitioner's perfected appeal on the basis of the evidence and records of the case submitted by the City Court of Caloocan City plus the memorandum already submitted by the petitioner and respondents.

Since only questions of law were raised therein, the Court of Appeals, on October 13, 1972, issued a resolution certifying said case to this Court pursuant to Section 17, paragraph (4) of the Judiciary Act of 1948, as amended.

As found by the Court of Appeals, the facts of this case are as follows:

It appears that private respondents Tan That and Ong Pin Tee filed an ejectment suit, docketed as Civil Case No. 6926 in the City Court of Caloocan City, against the petitioner. A decision was rendered by said Court on November 25, 1970, which decision was appealed by the petitioner to the respondent Court and docketed therein as Civil Case No. C-2036.

During the pendency of the appeal the respondent court issued on March 23, 1971 an order which reads:

Pursuant to the provisions of Rep. Act No. 6031, the Clerk of Court of Caloocan City, is hereby directed to transmit to this Court within fifteen (15) days from receipt hereof the transcripts of stenographic notes taken down during the hearing of this case before the City Court of Caloocan City, and likewise, counsels for both parties are given thirty (30) days from receipt of this order within which to file their respective memoranda, and thereafter, this case shall be deemed submitted for decision by this Court.

which order was apparently received by petitioner on April 17, 1971.

The transcript of stenographic notes not having yet been forwarded to the respondent court, petitioner filed on May 5, 1971 a 'MOTION EX-PARTE TO SUBMIT MEMORANDUM WITHIN 30 DAYS FROM RECEIPT OF NOTICE OF SUBMISSION OF THE TRANSCRIPT OF STENOGRAPHIC NOTES TAKEN DURING THE HEARING OF THE CASE BEFORE THE CITY COURT OF CALOOCAN CITY' which was granted by respondent court on May 7, 1971. However, before the petitioner could receive any such notice from the respondent court, the respondent Judge issued an order on August 4, 1971 which says:

For failure of the defendant-appellant to prosecute her appeal the same is hereby ordered DISMISSED with costs against her.

Petitioner filed a motion for reconsideration of the order on September 28, 1971, citing as a ground the granting of his ex-parte motion to submit memorandum within 30 days from notice of the submission of the stenographic notes taken before the City Court. Private respondents filed their opposition to the motion on September 30,1971. In the meantime, on October 20,1971, petitioner filed her memorandum dated October 18, 1971. On October 30, 1971 the respondent Court denied the motion for reconsideration. Then on January 25, 1972, petitioner filed a motion for leave to file second motion for reconsideration which was likewise denied by the respondent court on March 15, 1972. Hence this petition.

The sole inquiry in the case at bar can be stated thus: Whether, in the light of the provisions of the second paragraph of Section 45 of Republic Act No. 296, as amended by R.A. No. 6031, the mere failure of an appellant to submit on nine the memorandum mentioned in the same paragraph would empower the Court of First Instance to dismiss the appeal on the ground of failure to Prosecute; or, whether it is mandatory upon said Court to proceed to decide the appealed case on the basis of the evidence and records transmitted to it, the failure of the appellant to submit a memorandum on time notwithstanding.

The second paragraph of Section 45 of R.A. No. 296, otherwise known as the Philippine Judiciary Act of 1948, as amended by R.A. No. 6031 provides, in part, as follows:

Courts of First Instance shall decide such appealed cases on the basis of the evidence and records transmitted from the city or municipal courts: Provided, That the parties may submit memoranda and/or brief with oral argument if so requested ... . (Emphasis supplied).

The foregoing provision is clear and leaves no room for doubt. It cannot be interpreted otherwise than that the submission of memoranda is optional on the part of the parties. Being optional on the part of the

parties, the latter may so choose to waive submission of the memoranda. And as a logical concomitant of the choice given to the Parties, the Court cannot dismiss the appeal of the party waiving the submission of said memorandum the appellant so chooses not to submit the memorandum, the Court of First Instance is left with no alternative but to decide the case on the basis of the evidence and records transmitted from the city or municipal courts. In other words, the Court is not empowered by law to dismiss the appeal on the mere failure of an appellant to submit his memorandum, but rather it is the Court's mandatory duty to decide the case on the basis of the available evidence and records transmitted to it.

As a general rule, the word "may" when used in a statute is permissive only and operates to confer discretion; while the word "shall" is imperative, operating to impose a duty which may be enforced (Dizon vs. Encarnacion, L-18615, Dec. 24, 1963, 9 SCRA 714, 716-717). The implication is that the Court is left with no choice but to decide the appealed case either on the basis of the evidence and records transmitted to it, or on the basis of the latter plus memoranda and/or brief with oral argument duly submitted and/or made on request.

Moreover, memoranda, briefs and oral arguments are not essential requirements. They may be submitted and/or made only if so requested.

Finally, a contrary interpretation would be unjust and dangerous as it may defeat the litigant's right to appeal granted to him by law. In the case of Republic vs. Rodriguez (L-26056, May 29, 1969, 28 SCRA 378) this Court underscored "the need of proceeding with caution so that a party may not be deprived of its right to appeal except for weighty reasons." Courts should heed the rule in Municipality of Tiwi, Albay vs. Cirujales (L-37520, Dec. 26, 1973, 54 SCRA 390, 395), thus:

The appellate court's summary dismissal of the appeal even before receipt of the records of the appealed case as ordered by it in a prior mandamus case must be set aside as having been issued precipitously and without an opportunity to consider and appreciate unavoidable circumstances of record not attributable to petitioners that caused the delay in the elevation of the records of the case on appeal.

In the instant case, no notice was received by petitioner about the submission of the transcript of the stenographic notes, so that his 30-day period to submit his memorandum would commence to run. Only after the expiration of such period can the respondent Judge act on the case by deciding it on the merits, not by dismissing the appeal of petitioner.

WHEREFORE, THE CHALLENGED ORDERS OF RESPONDENT JUDGE DATED AUGUST 4, 1971, OCTOBER 30, 1971 AND MARCH 15, 1971 ARE HEREBY SET ASIDE AS NULL AND VOID AND THE RESPONDENT COURT IS HEREBY DIRECTED TO DECIDE CIVIL CASE NO. C-2036 ON THE MERITS. NO COSTS.

Muñoz Palma, Fernandez and Guerrero, JJ., concur.

Jenette Marie B. Crisologo,   G.R. No. 167631                             Petitioner,        Present:                        - versus -       PUNO, Chairman,        AUSTRIA-MARTINEZ,        CALLEJO, SR.,         TINGA, andGLOBE TELECOM INC.       CHICO-NAZARIO, JJ.and CESAR M. MAUREAL,    Vice President for Human   Promulgated:Resources,                                 Respondents.        December 16, 2005

x - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - x

 

RESOLUTION

 

AUSTRIA-MARTINEZ, J.:

 

Petitioner was an employee of respondent company.  When she was promoted as Director of

Corporate Affairs and Regulatory Matters, she became entitled to an executive car, and she procured a

1997 Toyota Camry.  In April 2002, she was separated from the company.  Petitioner filed a complaint

for illegal dismissal and reinstatement with the National Labor Relations Commission (NLRC), which

later dismissed the complaint.  Petitioner filed, on August 12, 2004, a petition for certiorari with the

Court of Appeals, docketed as CA-G.R. SP No. 85679 assailing the NLRC’s dismissal.

 

Pending said petition, respondent company filed with the Regional Trial Court of

Mandaluyong (Branch 213) an action for recovery of possession of a motor vehicle with application for

a writ of replevin with damages, docketed as Civil Case No. MC04-2480.  Petitioner filed a motion to

dismiss on the ground of litis pendentia and forum shopping but this was denied by the trial court.  Thus,

petitioner filed a petition for certiorari with the Court of Appeals, docketed as CA-G.R. SP No. 85927.

[1]  Petitioner also filed with the Court of Appeals a motion for the issuance of a writ of prohibition to

enjoin proceedings in the replevin case before the trial court.

 

Thereafter, respondent company filed a motion to declare defendant in default in Civil Case

No. MC04-2480, which was granted by the trial court.  Respondent company was thus allowed to

present its evidence ex-parte.  Petitioner filed a motion for reconsideration of the order of default but it

was denied by the trial court.  On April 5, 2005, the trial court rendered a judgment by default, the

dispositive portion of which reads:

 

WHEREFORE, finding merit in all the foregoing uncontroverted facts supported by documentary exhibits, judgment is hereby rendered declaring plaintiff to have the right of possession over the subject motor vehicle and ordering defendant plaintiff to pay plaintiff the following:

 

1.  The amount of TWO MILLION FIVE HUNDRED FIFTY SIX THOUSAND FOUR HUNDRED SIXTY PESOS (P2,556,460.00) as damages in the form of unpaid daily car rental for 730 (From 15 August 2002 until 22 June 2004) days at THREE THOUSAND FIVE HUNDRED TWO PESOS (P3,502.00) per day;

 2.  The sum of TWO HUNDRED THOUSAND PESOS

(P200,000.00) AS AND BY WAY OF Attorney’s fee; 3.  The sum of TWO HUNDRED THOUSAND PESOS

(P200,000.00) as exemplary damages in order to deter others from doing similar act in withholding possession of a property to another to which he/she has no right to possess; and

 4.  Costs of suit.

 SO ORDERED.

 

Petitioner then filed with the Court a petition for review on certiorari under Rule 45 of the

Rules of Court, which was denied by the Court in a Resolution dated May 16, 2005, for being the wrong

remedy under the 1997 Rules of Civil Procedure, as amended.

 

          Petitioner thus filed the present motion for reconsideration, alleging that the filing of said petition

is the proper recourse, citing Matute vs. Court of Appeals, 26 SCRA 798 (1969), wherein it was ruled

that a defendant declared in default has the remedy set forth in Section 2, paragraph 3 of Rule 41 of the

old Rules of Court.[2]  Petitioner then cited in her motion, “Section 2, paragraph 3 or (c) of the Rules of

Civil Procedure.”[3]

 

Evidently, petitioner misread the provision cited in the Matute case as that pertaining to

Section 2(c), Rule 41 of the 1997 Rules of Civil Procedure, as amended, which states: “(c) Appeal by

certiorari. - In all cases where only questions of law are raised or involved, the appeal shall be to the

Supreme Court by petition for review on certiorari in accordance with Rule 45.”  Hence, she directly

filed her petition for review on certiorari with the Court.

 

Petitioner should be reminded that the Matute case is of 1969 vintage and pertained to the old

Rules of Court.  As stated in the Matute case, a defendant validly declared in default has the remedy set

forth in Section 2, paragraph 3 of Rule 41.  Note that under the old Rules, Section 2, paragraph 3 of Rule

41 governed appeals from Courts of First Instance, the Social Security Commission and the Court of

Agrarian Relations TO THE COURT OF APPEALS, and reads:

 

A party who has been declared in default may likewise appeal from the judgment rendered against him as contrary to the evidence or to the law, even if no petition for relief to set aside the order of default has been presented by him in accordance with Rule 38.  (Emphasis supplied) 

 

 

Had petitioner been more circumspect, she would have easily ascertained that said Section 2,

paragraph 3 of Rule 41 of the old Rules of Court, as cited in the Matute case, had already been

superseded by the 1997 Rules of Civil Procedure, as amended, and under these new rules, the different

modes of appeal are clearly laid down. 

 

The decision sought to be reviewed in this case is a judgment by default rendered by the trial

court in Civil Case No. MC04-2480.  As such, the applicable rule is Section 2, Rule 41 of the 1997

Rules of Civil Procedure, as amended, which provides for the different modes of appeal from a

Regional Trial Court’s judgment or final order, to wit:

 

Section 2.  Modes of appeal. —

(a)     Ordinary appeal. — The appeal to the Court of Appeals in cases decided by the Regional Trial Court in the exercise of its original jurisdiction shall be taken by filing a notice of appeal with the court which rendered the judgment or final order appealed from and serving a copy thereof upon the adverse party.  No record on appeal shall be required except in special

proceedings and other cases of multiple or separate appeals where the law or these Rules so require.  In such cases, the record on appeal shall be filed and served in like manner.

(b)     Petition for review. — The appeal to the Court of Appeals in cases decided by the Regional Trial Court in the exercise of its appellate jurisdiction shall be by petition for review in accordance with Rule 42.

(c)     Appeal by certiorari. — In all cases where only questions of law are raised or involved, the appeal shall be to the Supreme Court by petition for review on certiorari in accordance with Rule 45. (Emphasis supplied)

 

 

          In Cerezo vs. Tuazon,[4] the Court reiterated the remedies available to a party declared in default:

 

a)  The defendant in default may, at any time after discovery thereof and before judgment, file a motion under oath to set aside the order of default on the ground that his failure to answer was due to fraud, accident, mistake or excusable negligence, and that he has a meritorious defense (Sec. 3, Rule 18 [now Sec. 3(b), Rule 9]);

 

b)  If the judgment has already been rendered when the defendant discovered the default, but before the same has become final and executory, he may file a motion for new trial under Section 1 (a) of Rule 37;

 

c)  If the defendant discovered the default after the judgment has become final and executory, he may file a petition for relief under Section 2 [now Section 1] of Rule 38; and

 

d)  He may also appeal from the judgment rendered against him as contrary to the evidence or to the law, even if no petition to set aside the order of default has been presented by him (Sec. 2, Rule 41).

 

Moreover, a petition for certiorari to declare the nullity of a judgment by default is also

available if the trial court improperly declared a party in default, or even if the trial court properly

declared a party in default, if grave abuse of discretion attended such declaration.[5]

 

The filing of the present petition is clearly not the proper remedy to assail the default judgment

rendered by the trial court.  Petitioner still has the available remedy of filing with the Regional Trial

Court a motion for new trial or an ordinary appeal to the Court of Appeals from the trial court’s default

judgment.  Note that petitioner admits that she was “properly declared in default.”[6]  Thus, there is no

question of any improvident or improper declaration of default by the trial court, and the remedy of

filing a special civil action for certiorari has been effectively foreclosed on petitioner.  Her only

recourse then is to file an ordinary appeal with the Court of Appeals under Section 2(a), Rule 41 of the

1997 Rules of Civil Procedure, as amended. 

 

Instead, she came directly to this Court via petition for review on certiorari, without setting

forth substantial reasons why the ordinary remedies under the law should be disregarded and the petition

entertained.    Petitioner cannot even find solace in the Matute case as the old Rules of Court then

applicable explicitly laid down the remedy of an ordinary appeal to the Court of Appeals, and not appeal

by certiorari to this Court, by a defendant declared in default.

 

Petitioner further argues that the petition involved questions of law, and the Court should have

taken cognizance of the case.  The grounds set forth in her petition prove otherwise, viz.:

 

GROUNDS

 

I

 

THE COMPLAINT FOR REPLEVIN FILED BY RESPONDENTS AGAINST PETITIONER SHOULD HAVE BEEN DISMISSED ON THE GROUND OF LITIS PENDENTIA AND FOR RESPONDENTS’ VIOLATION OF THE RULES AGAINST FORUM-SHOPPING

 

II

 

THE TRIAL COURT WENT AHEAD WITH THE EX-PARTE PRESENTATION OF RESPONDENT’S EVIDENCE DESPITE THE PETITIONER’S PENDING MOTION FOR RECONSIDERATION

 

 

III

 

THE MONETARY AWARDS FOR DAMAGES AND ATTORNEY’S FEES ARE UNWARRANTED AND UNJUSTIFIABLE CONSIDERING THAT SUCH ARE NOT SUPPORTED BY LAW AND JURISPRUDENCE

 

IV

 

THE COURT A QUO ISSUED THE ASSAILED DECISION IN A WAY THAT IT IS NOT IN ACCORD WITH LAW OR APPLICABLE DECISIONS OF THE SUPREME COURT AND HAS SO FAR DEPARTED FROM THE USUAL COURSE OF JUDICIAL PROCEEDINGS AS TO CALL FOR THE EXERCISE BY THE SUPREME COURT OF ITS POWER OF SUPERVISION

 

 

          The test of whether a question is one of law or of fact is not the appellation given to such question

by the party raising the same; rather, it is whether the appellate court can determine the issue raised

without reviewing or evaluating the evidence, in which case, it is a question of law; otherwise, it is a

question of fact.[7]   The issues on the award of damages call for a re-evaluation of the evidence before

the trial court, which is obviously a question of fact.  Cases where an appeal involved questions of fact,

of law, or both fall within the exclusive appellate jurisdiction of the Court of Appeals. [8] (Emphasis

supplied)

 

          It is on this score that the Court is inclined to concur with petitioner’s argument that even if the

remedy resorted to was wrong, the Court may refer the case to the Court of Appeals under Rule 56,

Section 6, paragraph 2 of the 1997 Rules of Civil Procedure, as amended, which provides: “(A)n appeal

by certiorari taken to the Supreme Court from the Regional Trial Court submitting issues of fact may be

referred to the Court of Appeals for decision or appropriate action.”   This despite the express provision

in Section 5(f) of the same Rule, which provides that an appeal may be dismissed when there is error in

the choice or mode of appeal. 

 

Both Sections 5(f) and 6 of Rule 57 use the term “may,” denoting discretion on the part of the

Court in dismissing the appeal or referring the case to the Court of Appeals.   The question of fact

involved in the appeal and substantial ends of justice warrant a referral of this case to the Court of

Appeals for further appropriate proceedings.  

 

          WHEREFORE, the motion for reconsideration is GRANTED.  The petition is reinstated and the

case is REFERRED to the Court of Appeals for appropriate action.

 

          SO ORDERED.

G.R. No. 117188 August 7, 1997

LOYOLA GRAND VILLAS HOMEOWNERS (SOUTH) ASSOCIATION, INC., petitioner, vs.HON. COURT OF APPEALS, HOME INSURANCE AND GUARANTY CORPORATION, EMDEN ENCARNACION and HORATIO AYCARDO, respondents.

 

ROMERO, J.:

May the failure of a corporation to file its by-laws within one month from the date of its incorporation, as mandated by Section 46 of the Corporation Code, result in its automatic dissolution?

This is the issue raised in this petition for review on certiorari of the Decision 1 of the Court of Appeals affirming the decision of the Home Insurance and Guaranty Corporation (HIGC). This quasi-judicial body recognized Loyola Grand Villas Homeowners Association (LGVHA) as the sole homeowners' association in Loyola Grand Villas, a duly registered subdivision in Quezon City and Marikina City that was owned and developed by Solid Homes, Inc. It revoked the certificates of registration issued to Loyola Grand Villas homeowners (North) Association Incorporated (the North Association for brevity) and Loyola Grand Villas Homeowners (South) Association Incorporated (the South Association).

LGVHAI was organized on February 8, 1983 as the association of homeowners and residents of the Loyola Grand Villas. It was registered with the Home Financing Corporation, the predecessor of herein respondent HIGC, as the sole homeowners' organization in the said subdivision under Certificate of Registration No. 04-197. It was organized by the developer of the subdivision and its first president was Victorio V. Soliven, himself the owner of the developer. For unknown reasons, however, LGVHAI did not file its corporate by-laws.

Sometime in 1988, the officers of the LGVHAI tried to register its by-laws. They failed to do so. 2 To the officers' consternation, they discovered that there were two other organizations within the subdivision — the North Association and the South Association. According to private respondents, a non-resident and Soliven himself, respectively headed these associations. They also discovered that these associations had five (5) registered homeowners each who were also the incorporators, directors and officers thereof. None of the members of the LGVHAI was listed as member of the North Association while three (3) members of LGVHAI were listed as members of the South Association. 3

The North Association was registered with the HIGC on February 13, 1989 under Certificate of Registration No. 04-1160 covering Phases West II, East III, West III and East IV. It submitted its by-laws on December 20, 1988.

In July, 1989, when Soliven inquired about the status of LGVHAI, Atty. Joaquin A. Bautista, the head of the legal department of the HIGC, informed him that LGVHAI had been automatically dissolved for

two reasons. First, it did not submit its by-laws within the period required by the Corporation Code and, second, there was non-user of corporate charter because HIGC had not received any report on the association's activities. Apparently, this information resulted in the registration of the South Association with the HIGC on July 27, 1989 covering Phases West I, East I and East II. It filed its by-laws on July 26, 1989.

These developments prompted the officers of the LGVHAI to lodge a complaint with the HIGC. They questioned the revocation of LGVHAI's certificate of registration without due notice and hearing and concomitantly prayed for the cancellation of the certificates of registration of the North and South Associations by reason of the earlier issuance of a certificate of registration in favor of LGVHAI.

On January 26, 1993, after due notice and hearing, private respondents obtained a favorable ruling from HIGC Hearing Officer Danilo C. Javier who disposed of HIGC Case No. RRM-5-89 as follows:

WHEREFORE, judgment is hereby rendered recognizing the Loyola Grand Villas Homeowners Association, Inc., under Certificate of Registration No. 04-197 as the duly registered and existing homeowners association for Loyola Grand Villas homeowners, and declaring the Certificates of Registration of Loyola Grand Villas Homeowners (North) Association, Inc. and Loyola Grand Villas Homeowners (South) Association, Inc. as hereby revoked or cancelled; that the receivership be terminated and the Receiver is hereby ordered to render an accounting and turn-over to Loyola Grand Villas Homeowners Association, Inc., all assets and records of the Association now under his custody and possession.

The South Association appealed to the Appeals Board of the HIGC. In its Resolution of September 8, 1993, the Board 4 dismissed the appeal for lack of merit.

Rebuffed, the South Association in turn appealed to the Court of Appeals, raising two issues. First, whether or not LGVHAI's failure to file its by-laws within the period prescribed by Section 46 of the Corporation Code resulted in the automatic dissolution of LGVHAI. Second, whether or not two homeowners' associations may be authorized by the HIGC in one "sprawling subdivision." However, in the Decision of August 23, 1994 being assailed here, the Court of Appeals affirmed the Resolution of the HIGC Appeals Board.

In resolving the first issue, the Court of Appeals held that under the Corporation Code, a private corporation commences to have corporate existence and juridical personality from the date the Securities and Exchange Commission (SEC) issues a certificate of incorporation under its official seal. The requirement for the filing of by-laws under Section 46 of the Corporation Code within one month from official notice of the issuance of the certificate of incorporation presupposes that it is already incorporated, although it may file its by-laws with its articles of incorporation. Elucidating on the effect of a delayed filing of by-laws, the Court of Appeals said:

We also find nothing in the provisions cited by the petitioner, i.e., Section 46 and 22, Corporation Code, or in any other provision of the Code and other laws which provide or at least imply that failure to file the by-laws results in an automatic dissolution of the corporation. While Section 46, in prescribing that by-laws must be adopted within the period prescribed therein, may be interpreted as a mandatory provision, particularly because of the use of the word "must," its meaning cannot be stretched to support the argument that automatic dissolution results from non-compliance.

We realize that Section 46 or other provisions of the Corporation Code are silent on the result of the failure to adopt and file the by-laws within the required period. Thus, Section 46 and other related provisions of the Corporation Code are to be construed with Section 6 (1) of P.D. 902-A. This section empowers the SEC to suspend or revoke certificates of registration on the grounds listed therein. Among the grounds stated is the failure to file by-laws (see also II Campos: The Corporation Code, 1990 ed., pp. 124-125). Such suspension or revocation, the same section provides, should be made upon proper notice and hearing. Although P.D. 902-A refers to the SEC, the same principles and procedures apply to the public respondent HIGC as it exercises its power to revoke or suspend the certificates of registration or homeowners association. (Section 2 [a], E.O. 535, series 1979, transferred the powers and authorities of the SEC over homeowners associations to the HIGC.)

We also do not agree with the petitioner's interpretation that Section 46, Corporation Code prevails over Section 6, P.D. 902-A and that the latter is invalid because it contravenes the former. There is no basis for such interpretation considering that these two provisions are not inconsistent with each other. They are, in fact, complementary to each other so that one cannot be considered as invalidating the other.

The Court of Appeals added that, as there was no showing that the registration of LGVHAI had been validly revoked, it continued to be the duly registered homeowners' association in the Loyola Grand Villas. More importantly, the South Association did not dispute the fact that LGVHAI had been organized and that, thereafter, it transacted business within the period prescribed by law.

On the second issue, the Court of Appeals reiterated its previous ruling 5 that the HIGC has the authority to order the holding of a referendum to determine which of two contending associations should represent the entire community, village or subdivision.

Undaunted, the South Association filed the instant petition for review on certiorari. It elevates as sole issue for resolution the first issue it had raised before the Court of Appeals, i.e., whether or not the LGVHAI's failure to file its by-laws within the period prescribed by Section 46 of the Corporation Code had the effect of automatically dissolving the said corporation.

Petitioner contends that, since Section 46 uses the word "must" with respect to the filing of by-laws, noncompliance therewith would result in "self-extinction" either due to non-occurrence of a suspensive condition or the occurrence of a resolutory condition "under the hypothesis that (by) the issuance of the

certificate of registration alone the corporate personality is deemed already formed." It asserts that the Corporation Code provides for a "gradation of violations of requirements." Hence, Section 22 mandates that the corporation must be formally organized and should commence transaction within two years from date of incorporation. Otherwise, the corporation would be deemed dissolved. On the other hand, if the corporation commences operations but becomes continuously inoperative for five years, then it may be suspended or its corporate franchise revoked.

Petitioner concedes that Section 46 and the other provisions of the Corporation Code do not provide for sanctions for non-filing of the by-laws. However, it insists that no sanction need be provided "because the mandatory nature of the provision is so clear that there can be no doubt about its being an essential attribute of corporate birth." To petitioner, its submission is buttressed by the facts that the period for compliance is "spelled out distinctly;" that the certification of the SEC/HIGC must show that the by-laws are not inconsistent with the Code, and that a copy of the by-laws "has to be attached to the articles of incorporation." Moreover, no sanction is provided for because "in the first place, no corporate identity has been completed." Petitioner asserts that "non-provision for remedy or sanction is itself the tacit proclamation that non-compliance is fatal and no corporate existence had yet evolved," and therefore, there was "no need to proclaim its demise." 6 In a bid to convince the Court of its arguments, petitioner stresses that:

. . . the word MUST is used in Sec. 46 in its universal literal meaning and corollary human implication — its compulsion is integrated in its very essence — MUST is always enforceable by the inevitable consequence — that is, "OR ELSE". The use of the word MUST in Sec. 46 is no exception — it means file the by-laws within one month after notice of issuance of certificate of registration OR ELSE. The OR ELSE, though not specified, is inextricably a part of MUST . Do this or if you do not you are "Kaput". The importance of the by-laws to corporate existence compels such meaning for as decreed the by-laws is "the government" of the corporation. Indeed, how can the corporation do any lawful act as such without by-laws. Surely, no law is indeed to create chaos. 7

Petitioner asserts that P.D. No. 902-A cannot exceed the scope and power of the Corporation Code which itself does not provide sanctions for non-filing of by-laws. For the petitioner, it is "not proper to assess the true meaning of Sec. 46 . . . on an unauthorized provision on such matter contained in the said decree."

In their comment on the petition, private respondents counter that the requirement of adoption of by-laws is not mandatory. They point to P.D. No. 902-A as having resolved the issue of whether said requirement is mandatory or merely directory. Citing Chung Ka Bio v. Intermediate Appellate Court, 8

private respondents contend that Section 6(I) of that decree provides that non-filing of by-laws is only a ground for suspension or revocation of the certificate of registration of corporations and, therefore, it may not result in automatic dissolution of the corporation. Moreover, the adoption and filing of by-laws is a condition subsequent which does not affect the corporate personality of a corporation like the LGVHAI. This is so because Section 9 of the Corporation Code provides that the corporate existence and juridical personality of a corporation begins from the date the SEC issues a certificate of

incorporation under its official seal. Consequently, even if the by-laws have not yet been filed, a corporation may be considered a de facto corporation. To emphasize the fact the LGVHAI was registered as the sole homeowners' association in the Loyola Grand Villas, private respondents point out that membership in the LGVHAI was an "unconditional restriction in the deeds of sale signed by lot buyers."

In its reply to private respondents' comment on the petition, petitioner reiterates its argument that the word " must" in Section 46 of the Corporation Code is mandatory. It adds that, before the ruling in Chung Ka Bio v. Intermediate Appellate Court could be applied to this case, this Court must first resolve the issue of whether or not the provisions of P.D. No. 902-A prescribing the rules and regulations to implement the Corporation Code can "rise above and change" the substantive provisions of the Code.

The pertinent provision of the Corporation Code that is the focal point of controversy in this case states:

Sec. 46. Adoption of by-laws. — Every corporation formed under this Code, must within one (1) month after receipt of official notice of the issuance of its certificate of incorporation by the Securities and Exchange Commission, adopt a code of by-laws for its government not inconsistent with this Code. For the adoption of by-laws by the corporation, the affirmative vote of the stockholders representing at least a majority of the outstanding capital stock, or of at least a majority of the members, in the case of non-stock corporations, shall be necessary. The by-laws shall be signed by the stockholders or members voting for them and shall be kept in the principal office of the corporation, subject to the stockholders or members voting for them and shall be kept in the principal office of the corporation, subject to inspection of the stockholders or members during office hours; and a copy thereof, shall be filed with the Securities and Exchange Commission which shall be attached to the original articles of incorporation.

Notwithstanding the provisions of the preceding paragraph, by-laws may be adopted and filed prior to incorporation; in such case, such by-laws shall be approved and signed by all the incorporators and submitted to the Securities and Exchange Commission, together with the articles of incorporation.

In all cases, by-laws shall be effective only upon the issuance by the Securities and Exchange Commission of a certification that the by-laws are not inconsistent with this Code.

The Securities and Exchange Commission shall not accept for filing the by-laws or any amendment thereto of any bank, banking institution, building and loan association, trust company, insurance company, public utility, educational institution or other special corporations governed by special laws, unless accompanied by a certificate of the appropriate government agency to the effect that such by-laws or amendments are in accordance with law.

As correctly postulated by the petitioner, interpretation of this provision of law begins with the determination of the meaning and import of the word "must" in this section Ordinarily, the word "must" connotes an imperative act or operates to impose a duty which may be enforced. 9 It is synonymous with "ought" which connotes compulsion or mandatoriness. 10 However, the word "must" in a statute, like "shall," is not always imperative. It may be consistent with an exercise of discretion. In this jurisdiction, the tendency has been to interpret "shall" as the context or a reasonable construction of the statute in which it is used demands or requires. 11 This is equally true as regards the word "must." Thus, if the languages of a statute considered as a whole and with due regard to its nature and object reveals that the legislature intended to use the words "shall" and "must" to be directory, they should be given that meaning. 12

In this respect, the following portions of the deliberations of the Batasang Pambansa No. 68 are illuminating:

MR. FUENTEBELLA. Thank you, Mr. Speaker.

On page 34, referring to the adoption of by-laws, are we made to understand here, Mr. Speaker, that by-laws must immediately be filed within one month after the issuance? In other words, would this be mandatory or directory in character?

MR. MENDOZA. This is mandatory.

MR. FUENTEBELLA. It being mandatory, Mr. Speaker, what would be the effect of the failure of the corporation to file these by-laws within one month?

MR. MENDOZA. There is a provision in the latter part of the Code which identifies and describes the consequences of violations of any provision of this Code. One such consequences is the dissolution of the corporation for its inability, or perhaps, incurring certain penalties.

MR. FUENTEBELLA. But it will not automatically amount to a dissolution of the corporation by merely failing to file the by-laws within one month. Supposing the corporation was late, say, five days, what would be the mandatory penalty?

MR. MENDOZA. I do not think it will necessarily result in the automatic or ipso facto dissolution of the corporation. Perhaps, as in the case, as you suggested, in the case of El Hogar Filipino where a quo warranto action is brought, one takes into account the gravity of the violation committed. If the by-laws were late — the filing of the by-laws were late by, perhaps, a day or two, I would suppose that might be a tolerable delay, but if they are delayed over a period of months — as is happening now — because of the absence of a clear requirement that by-laws must be completed within a specified period of time, the corporation must suffer certain consequences. 13

This exchange of views demonstrates clearly that automatic corporate dissolution for failure to file the by-laws on time was never the intention of the legislature. Moreover, even without resorting to the records of deliberations of the Batasang Pambansa, the law itself provides the answer to the issue propounded by petitioner.

Taken as a whole and under the principle that the best interpreter of a statute is the statute itself (optima statuli interpretatix est ipsum statutum), 14 Section 46 aforequoted reveals the legislative intent to attach a directory, and not mandatory, meaning for the word "must" in the first sentence thereof. Note should be taken of the second paragraph of the law which allows the filing of the by-laws even prior to incorporation. This provision in the same section of the Code rules out mandatory compliance with the requirement of filing the by-laws "within one (1) month after receipt of official notice of the issuance of its certificate of incorporation by the Securities and Exchange Commission." It necessarily follows that failure to file the by-laws within that period does not imply the "demise" of the corporation. By-laws may be necessary for the "government" of the corporation but these are subordinate to the articles of incorporation as well as to the Corporation Code and related statutes. 15 There are in fact cases where by-laws are unnecessary to corporate existence or to the valid exercise of corporate powers, thus:

In the absence of charter or statutory provisions to the contrary, by-laws are not necessary either to the existence of a corporation or to the valid exercise of the powers conferred upon it, certainly in all cases where the charter sufficiently provides for the government of the body; and even where the governing statute in express terms confers upon the corporation the power to adopt by-laws, the failure to exercise the power will be ascribed to mere nonaction which will not render void any acts of the corporation which would otherwise be valid . 16 (Emphasis supplied.)

As Fletcher aptly puts it:

It has been said that the by-laws of a corporation are the rule of its life, and that until by-laws have been adopted the corporation may not be able to act for the purposes of its creation, and that the first and most important duty of the members is to adopt them. This would seem to follow as a matter of principle from the office and functions of by-laws. Viewed in this light, the adoption of by-laws is a matter of practical, if not one of legal, necessity. Moreover, the peculiar circumstances attending the formation of a corporation may impose the obligation to adopt certain by-laws, as in the case of a close corporation organized for specific purposes. And the statute or general laws from which the corporation derives its corporate existence may expressly require it to make and adopt by-laws and specify to some extent what they shall contain and the manner of their adoption. The mere fact, however, of the existence of power in the corporation to adopt by-laws does not ordinarily and of necessity make the exercise of such power essential to its corporate life, or to the validity of any of its acts. 17

Although the Corporation Code requires the filing of by-laws, it does not expressly provide for the consequences of the non-filing of the same within the period provided for in Section 46. However, such

omission has been rectified by Presidential Decree No. 902-A, the pertinent provisions on the jurisdiction of the SEC of which state:

Sec. 6. In order to effectively exercise such jurisdiction, the Commission shall possess the following powers:

xxx xxx xxx

(1) To suspend, or revoke, after proper notice and hearing, the franchise or certificate of registration of corporations, partnerships or associations, upon any of the grounds provided by law, including the following:

xxx xxx xxx

5. Failure to file by-laws within the required period;

xxx xxx xxx

In the exercise of the foregoing authority and jurisdiction of the Commission or by a Commissioner or by such other bodies, boards, committees and/or any officer as may be created or designated by the Commission for the purpose. The decision, ruling or order of any such Commissioner, bodies, boards, committees and/or officer may be appealed to the Commission sitting en banc within thirty (30) days after receipt by the appellant of notice of such decision, ruling or order. The Commission shall promulgate rules of procedures to govern the proceedings, hearings and appeals of cases falling with its jurisdiction.

The aggrieved party may appeal the order, decision or ruling of the Commission sitting en banc to the Supreme Court by petition for review in accordance with the pertinent provisions of the Rules of Court.

Even under the foregoing express grant of power and authority, there can be no automatic corporate dissolution simply because the incorporators failed to abide by the required filing of by-laws embodied in Section 46 of the Corporation Code. There is no outright "demise" of corporate existence. Proper notice and hearing are cardinal components of due process in any democratic institution, agency or society. In other words, the incorporators must be given the chance to explain their neglect or omission and remedy the same.

That the failure to file by-laws is not provided for by the Corporation Code but in another law is of no moment. P.D. No. 902-A, which took effect immediately after its promulgation on March 11, 1976, is very much apposite to the Code. Accordingly, the provisions abovequoted supply the law governing the situation in the case at bar, inasmuch as the Corporation Code and P.D. No. 902-A are statutes in pari

materia. Interpretare et concordare legibus est optimus interpretandi. Every statute must be so construed and harmonized with other statutes as to form a uniform system of jurisprudence. 18

As the "rules and regulations or private laws enacted by the corporation to regulate, govern and control its own actions, affairs and concerns and its stockholders or members and directors and officers with relation thereto and among themselves in their relation to it," 19 by-laws are indispensable to corporations in this jurisdiction. These may not be essential to corporate birth but certainly, these are required by law for an orderly governance and management of corporations. Nonetheless, failure to file them within the period required by law by no means tolls the automatic dissolution of a corporation.

In this regard, private respondents are correct in relying on the pronouncements of this Court in Chung Ka Bio v. Intermediate Appellate Court, 20 as follows:

. . . . Moreover, failure to file the by-laws does not automatically operate to dissolve a corporation but is now considered only a ground for such dissolution.

Section 19 of the Corporation Law, part of which is now Section 22 of the Corporation Code, provided that the powers of the corporation would cease if it did not formally organize and commence the transaction of its business or the continuation of its works within two years from date of its incorporation. Section 20, which has been reproduced with some modifications in Section 46 of the Corporation Code, expressly declared that "every corporation formed under this Act, must within one month after the filing of the articles of incorporation with the Securities and Exchange Commission, adopt a code of by-laws." Whether this provision should be given mandatory or only directory effect remained a controversial question until it became academic with the adoption of PD 902-A. Under this decree, it is now clear that the failure to file by-laws within the required period is only a ground for suspension or revocation of the certificate of registration of corporations.

Non-filing of the by-laws will not result in automatic dissolution of the corporation. Under Section 6(I) of PD 902-A, the SEC is empowered to "suspend or revoke, after proper notice and hearing, the franchise or certificate of registration of a corporation" on the ground inter alia of "failure to file by-laws within the required period." It is clear from this provision that there must first of all be a hearing to determine the existence of the ground, and secondly, assuming such finding, the penalty is not necessarily revocation but may be only suspension of the charter. In fact, under the rules and regulations of the SEC, failure to file the by-laws on time may be penalized merely with the imposition of an administrative fine without affecting the corporate existence of the erring firm.

It should be stressed in this connection that substantial compliance with conditions subsequent will suffice to perfect corporate personality. Organization and commencement of transaction of corporate business are but conditions subsequent and not prerequisites for acquisition of corporate personality. The adoption and filing of by-laws is also a condition subsequent. Under Section 19 of the Corporation Code, a Corporation commences its corporate existence

and juridical personality and is deemed incorporated from the date the Securities and Exchange Commission issues certificate of incorporation under its official seal. This may be done even before the filing of the by-laws, which under Section 46 of the Corporation Code, must be adopted "within one month after receipt of official notice of the issuance of its certificate of incorporation." 21

That the corporation involved herein is under the supervision of the HIGC does not alter the result of this case. The HIGC has taken over the specialized functions of the former Home Financing Corporation by virtue of Executive Order No. 90 dated December 17, 1989. 22 With respect to homeowners associations, the HIGC shall "exercise all the powers, authorities and responsibilities that are vested on the Securities and Exchange Commission . . . , the provision of Act 1459, as amended by P.D. 902-A, to the contrary notwithstanding." 23

WHEREFORE, the instant petition for review on certiorari is hereby DENIED and the questioned Decision of the Court of Appeals AFFIRMED. This Decision is immediately executory. Costs against petitioner.

SO ORDERED.

Regalado, Puno and Mendoza, JJ., concur.

Torres, Jr., J., is on leave.

G.R. No. 109902 August 2, 1994

ALU-TUCP, Representing Members: ALAN BARINQUE, with 13 others, namely: ENGR. ALAN G. BARINQUE, ENGR. DARRELL LEE ELTAGONDE, EDUARD H. FOOKSON, JR., ROMEO R. SARONA, RUSSELL GACUS, JERRY BONTILAO, EUSEBIO MARIN, JR., LEONIDO ECHAVEZ, BONIFACIO MEJOS, EDGAR S. BONTUYAN, JOSE G. GARGUENA, JR., OSIAS B. DANDASAN, and GERRY I. FETALVERO, petitioners, vs.NATIONAL LABOR RELATIONS COMMISSION and NATIONAL STEEL CORPORATION (NSC), respondents.

Leonard U. Sawal for petitioners.

Saturnino Mejorada for private respondent.

 

FELICIANO, J.:

In this Petition for Certiorari, petitioners assail the Resolution of the National Labor Relations Commission ("NLRC") dated 8 January 1993 which declared petitioners to be project employees of private respondent National Steel Corporation ("NSC"), and the NLRC's subsequent Resolution of 15 February 1993, denying petitioners' motion for reconsideration.

Petitioners plead that they had been employed by respondent NSC in connection with its Five Year Expansion Program (FAYEP I & II) 1 for varying lengths of time when they were separated from NSC's service:

Employee Date Nature of Separated

Employed Employment

1. Alan Barinque 5-14-82 Engineer 1 8-31-912. Jerry Bontilao 8-05-85 Engineer 2 6-30-923. Edgar Bontuyan 11-03-82 Chairman to present4. Osias Dandasan 9-21-82 Utilityman 19915. Leonido Echavez 6-16-82 Eng. Assistant 6-30-926. Darrell Eltagonde 5-20-85 Engineer 1 8-31-917. Gerry Fetalvero 4-08-85 Mat. Expediter regularized8. Eduard Fookson 9-20-84 Eng. Assistant 8-31-919. Russell Gacus 1-30-85 Engineer 1 6-30-92

10. Jose Garguena 3-02-81 Warehouseman to present11. Eusebio Mejos 11-17-82 Survey Aide 8-31-9112. Bonifacio Mejos 11-17-82 Surv. Party Head 199213. Romeo Sarona 2-26-83 Machine Operator 8-31-91 2

On 5 July 1990, petitioners filed separate complaints for unfair labor practice, regularization and monetary benefits with the NLRC, Sub-Regional Arbitration Branch XII, Iligan City.

The complaints were consolidated and after hearing, the Labor Arbiter in a Decision dated 7 June 1991, declared petitioners "regular project employees who shall continue their employment as such for as long as such [project] activity exists," but entitled to the salary of a regular employee pursuant to the provisions in the collective bargaining agreement. It also ordered payment of salary differentials. 3

Both parties appealed to the NLRC from that decision. Petitioners argued that they were regular, not project, employees. Private respondent, on the other hand, claimed that petitioners are project employees as they were employed to undertake a specific project — NSC's Five Year Expansion Program (FAYEP I & II).

The NLRC in its questioned resolutions modified the Labor Arbiter's decision. It affirmed the Labor Arbiter's holding that petitioners were project employees since they were hired to perform work in a specific undertaking — the Five Years Expansion Program, the completion of which had been determined at the time of their engagement and which operation was not directly related to the business of steel manufacturing. The NLRC, however, set aside the award to petitioners of the same benefits enjoyed by regular employees for lack of legal and factual basis.

Deliberating on the present Petition for Certiorari, the Court considers that petitioners have failed to show any grave abuse of discretion or any act without or in excess of jurisdiction on the part of the NLRC in rendering its questioned resolutions of 8 January 1993 and 15 February 1993.

The law on the matter is Article 280 of the Labor Code which reads in full:

Art. 280. Regular and Casual Employment — The provisions of the written agreement to the contrary notwithstanding and regardless of the oral agreement of the parties, and employment shall be deemed to be regular where the employee has been engaged to perform activities which are usually necessary or desirable in the usual business or trade of the employer, except where the employment has been fixed for a specific project or undertaking the completion or termination of which has been determined at the time of the engagement of the employee or where the work or services to be performed is seasonal in nature and the employment is for the duration of the season.

An employment shall be deemed to be casual if it is not covered by the preceding paragraph: Provided, That, any employee who has rendered at least one year service, whether such service is continuous or broken, shall be considered a regular employee with respect to the activity in which he is employed and his employment shall continue while such actually exists. (Emphasis supplied)

Petitioners argue that they are "regular" employees of NSC because: (i) their jobs are "necessary, desirable and work-related to private respondent's main business, steel-making"; and (ii) they have rendered service for six (6) or more years to private respondent NSC. 4

The basic issue is thus whether or not petitioners are properly characterized as "project employees" rather than "regular employees" of NSC. This issue relates, of course, to an important consequence: the services of project employees are co-terminous with the project and may be terminated upon the end or completion of the project for which they were hired. 5 Regular employees, in contract, are legally entitled to remain in the service of their employer until that service is terminated by one or another of the recognized modes of termination of service under the Labor Code. 6

It is evidently important to become clear about the meaning and scope of the term "project" in the present context. The "project" for the carrying out of which "project employees" are hired would ordinarily have some relationship to the usual business of the employer. Exceptionally, the "project" undertaking might not have an ordinary or normal relationship to the usual business of the employer. In this latter case, the determination of the scope and parameeters of the "project" becomes fairly easy. It is unusual (but still conceivable) for a company to undertake a project which has absolutely no relationship to the usual business of the company; thus, for instance, it would be an unusual steel-making company which would undertake the breeding and production of fish or the cultivation of vegetables. From the viewpoint, however, of the legal characterization problem here presented to the Court, there should be no difficulty in designating the employees who are retained or hired for the purpose of undertaking fish culture or the production of vegetables as "project employees," as distinguished from ordinary or "regular employees," so long as the duration and scope of the project were determined or specified at the time of engagement of the "project employees." 7 For, as is evident from the provisions of Article 280 of the Labor Code, quoted earlier, the principal test for determining whether particular employees are properly characterized as "project employees" as distinguished from "regular employees," is whether or not the "project employees" were assigned to carry out a "specific project or undertaking," the duration (and scope) of which were specified at the time the employees were engaged for that project.

In the realm of business and industry, we note that "project" could refer to one or the other of at least two (2) distinguishable types of activities. Firstly, a project could refer to a particular job or undertaking that is within the regular or usual business of the employer company, but which is distinct and separate, and identifiable as such, from the other undertakings of the company. Such job or undertaking begins and ends at determined or determinable times. The typical example of this first type of project is a particular construction job or project of a construction company. A construction company ordinarily carries out two or more discrete identifiable construction projects: e.g., a twenty-five- storey hotel in Makati; a residential condominium building in Baguio City; and a domestic air terminal in Iloilo City.

Employees who are hired for the carrying out of one of these separate projects, the scope and duration of which has been determined and made known to the employees at the time of employment, are properly treated as "project employees," and their services may be lawfully terminated at completion of the project.

The term "project" could also refer to, secondly, a particular job or undertaking that is not within the regular business of the corporation. Such a job or undertaking must also be identifiably separate and distinct from the ordinary or regular business operations of the employer. The job or undertaking also begins and ends at determined or determinable times. The case at bar presents what appears to our mind as a typical example of this kind of "project."

NSC undertook the ambitious Five Year Expansion Program I and II with the ultimate end in view of expanding the volume and increasing the kinds of products that it may offer for sale to the public. The Five Year Expansion Program had a number of component projects: e.g., (a) the setting up of a "Cold Rolling Mill Expansion Project"; (b) the establishment of a "Billet Steel-Making Plant" (BSP); (c) the acquisition and installation of a "Five Stand TDM"; and (d) the "Cold Mill Peripherals Project." 8 Instead of contracting out to an outside or independent contractor the tasks of constructing the buildings with related civil and electrical works that would house the new machinery and equipment, the installation of the newly acquired mill or plant machinery and equipment and the commissioning of such machinery and equipment, NSC opted to execute and carry out its Five Yeear Expansion Projects "in house," as it were, by administration. The carrying out of the Five Year Expansion Program (or more precisely, each of its component projects) constitutes a distinct undertaking identifiable from the ordinary business and activity of NSC. Each component project, of course, begins and ends at specified times, which had already been determined by the time petitioners were engaged. We also note that NSC did the work here involved — the construction of buildings and civil and electrical works, installation of machinery and equipment and the commissioning of such machinery — only for itself. Private respondent NSC was not in the business of constructing buildings and installing plant machinery for the general business community, i.e., for unrelated, third party, corporations. NSC did not hold itself out to the public as a construction company or as an engineering corporation.

Which ever type of project employment is found in a particular case, a common basic requisite is that the designation of named employees as "project employees" and their assignment to a specific project, are effected and implemented in good faith, and not merely as a means of evading otherwise applicable requirements of labor laws.

Thus, the particular component projects embraced in the Five Year Expansion Program, to which petitioners were assigned, were distinguishable from the regular or ordinary business of NSC which, of course, is the production or making and marketing of steel products. During the time petitioners rendered services to NSC, their work was limited to one or another of the specific component projects which made up the FAYEP I and II. There is nothing in the record to show that petitioners were hired for, or in fact assigned to, other purposes, e.g., for operating or maintaining the old, or previously installed and commissioned, steel-making machinery and equipment, or for selling the finished steel products.

We, therefore, agree with the basic finding of the NLRC (and the Labor Arbiter) that the petitioners were indeed "project employees:"

It is well established by the facts and evidence on record that herein 13 complainants were hired and engaged for specific activities or undertaking the period of which has been determined at time of hiring or engagement. It is of public knowledge and which this Commission can safely take judicial notice that the expansion program (FAYEP) of respondent NSC consist of various phases [of] project components which are being executed or implemented independently or simultaneously from each other . . .

In other words, the employment of each "project worker" is dependent and co-terminous with the completion or termination of the specific activity or undertaking [for which] he was hired which has been pre-determined at the time of engagement. Since, there is no showing that they (13 complainants) were engaged to perform work-related activities to the business of respondent which is steel-making, there is no logical and legal sense of applying to them the proviso under the second paragraph of Article 280 of the Labor Code, as amended.

xxx xxx xxx

The present case therefore strictly falls under the definition of "project employees" on paragraph one of Article 280 of the Labor Code, as amended. Moreover, it has been held that the length of service of a project employee is not the controlling test of employment tenure but whether or not "the employment has been fixed for a specific project or undertaking the completion or termination of which has been determined at the time of the engagement of the employee". (See Hilario Rada v. NLRC, G.R. No. 96078, January 9, 1992; and Sandoval Shipping, Inc. v. NLRC, 136 SCRA 674 (1985). 9

Petitioners next claim that their service to NSC of more than six (6) years should qualify them as regular employees. We believe this claim is without legal basis. The simple fact that the employment of petitioners as project employees had gone beyond one (1) year, does not detract from, or legally dissolve, their status as project employees. 10 The second paragraph of Article 280 of the Labor Code, quoted above, providing that an employee who has served for at least one (1) year, shall be considered a regular employee, relates to casual employees, not to project employees.

In the case of Mercado, Sr. vs. National Labor Relations Commission, 11 this Court ruled that the proviso in the second paragraph of Article 280 relates only to casual employees and is not applicable to those who fall within the definition of said Article's first paragraph, i.e., project employees. The familiar grammatical rule is that a proviso is to be construed with reference to the immediately preceding part of the provision to which it is attached, and not to other sections thereof, unless the clear legislative intent is to restrict or qualify not only the phrase immediately preceding the proviso but also earlier provisions

of the statute or even the statute itself as a whole. No such intent is observable in Article 280 of the Labor Code, which has been quoted earlier.

ACCORDINGLY, in view of the foregoing, the Petition for Certiorari is hereby DISMISSED for lack of merit. The Resolutions of the NLRC dated 8 January 1993 and 15 February 1993 are hereby AFFIRMED. No pronouncement as to costs.

SO ORDERED.

G.R. No. L-23623 June 30, 1977

ACTING COMMISSIONER OF CUSTOMS, petitioner, vs.MANILA ELECTRIC COMPANY and COURT OF TAX APPEALS, respondents.

Solicitor General Arturo A. Alafriz Assistant Solicitor General Felicisimo R. Rosete and Solicitor Alejandro B. Afurong for petitioner.

Ross, Selph Salcedo, Del Rosario Bito & Misa for private respondent.

 

FERNANDO, J.:

The reversal by respondent Court of Tax Appeals of a determination by the then Acting Commissioner of Customs, the late Norberto Romualdez, Jr., that private respondent Manila Electric Company was not exempt from the payment of the special import tax under Republic Act No. 1394 1 for shipment to it of insulating oil, respondent Court entertaining the contrary view 2 led to this petition for review. The contention pressed in support of the petition is that as a tax exemption is to be construed strictly, the decision of the respondent Court, which assumed that insulating oil can be considered as insulators must be reversed and set aside. The appealed decision of respondent Court in the light of applicable authorities supplies the best refutation of such contention. It must be sustained.

The appealed decision 3 set forth that petitioner Manila Electric Co., nor private respondent, in appealing from a determination by the then Acting Commissioner of Customs, now petitioner, "claims that it is exempt from the special import tax not only by virtue of Section 6 of Republic Act No. 1394, which exempts from said tax equipment and spare parts for use in industries, but also under Paragraph 9, Part Two, of its franchise, which expressly exempts is insulators from all taxes of whatever kind and nature. 4

It then made reference to the franchise of private respondent Manila Electric Co.: "Par. 9. The grantee shall be liable to pay the same taxes upon its real estate, buildings, plant (not including poles, wires, transformers, and insulators), machinery and personal property as other persons are or may be hereafter required by law to pay. In consideration of Part Two of the franchise herein granted, to wit, the right to build and maintain in the City of Manila and its suburbs a plant for the conveying and furnishing of electric current for light, heat, and power, and to charge for the same, the grantee shall pay to the City of Manila two and one-half per centum of the gross earnings received from the business under this franchise in the city and its suburbs: ... and shall be in lieu of all taxes and assessments of whatsoever nature, and by whatsoever authority upon the privileges, earnings, income, franchise, and poles, wires, transformers, and insulators of the grantee, from which taxes and assessments the grantee is hereby expressly exempted." 5 It noted that the above "exempts it from all taxes of whatever nature, and by whatever authority, with respect to its insulators in consideration for the payment of the percentage tax on its gross earnings." 6

The question then, according to such decision of respondent Court is: "Does the insulating oil in question come within the meaning of the term 'insulator '?" 7 Then it went on: "insulating oils are mineral oils of high di-electrics strength and high flash point employed in circuit breakers, switches, transformers and other electric apparatus. An oil with a flash point of 285 º F and fire point of 310 º F is considered safe. A clean, well- refined oil will have a minimum dielectric of 22,00 volts, but the presence of a slow as 0.01% water will reduce the di-electric strength drastically. The insulating oils, therefore, cannot be stored for long periods because of the danger of absorbing moisture. Impurities such as acids or alkalies also detract from the strength of the oil. Since insulating oils are used for cooling as well as for insulating, the viscosity should be low enough for free circulation, and they should not gum. (Materials Handbook by George J. Brady, 8th Edition 1956, pp. 421-423.) ... ." 8

The last portion of the appealed decision explained why the determination of the Acting Commissioner of Customs must be reversed: "There is no question that insulating oils of the type imported by petitioner are 'used for cooling as well as for insulating,' and when used in oil circuit breakers, they are 'required to maintain insulation between the contacts inside the tank and the tank itself.' ... The decision appealed from not being in accordance with law, the same is hereby reversed. Respondent is ordered to refund to petitioner the sum of P995.00 within thirty days from the date this decision becomes final, without pronouncement as to costs." 9 It was therein made clear that private respondent was not liable for the payment of the special import tax under Republic Act No. 1394.

As noted at the outset, the decision speaks for itself. It cannot be stigmatized as suffering from any flaw that would call for its reversal.

1. It is to be admitted, as contended by petitioner, that this Court is committed to the principle that an exemption from taxation must be justified by words too clear to be misread. As set forth in Commissioner of Internal Revenue v. Guerrero: 10 "From 1906, in Catholic Church v. Hastings to 1966, in Esso Standard Eastern, Inc. v. Acting Commissioner of Customs, it has been the constant and uniform holding that exemption from taxation is not favored and is never presumed, so that if granted it must be strictly construed against the taxpayer. Affirmatively put, the law frowns on exemption from taxation, hence, an exempting provision should be construed strictissimi juris." 11 Such a ruling was reaffirmed in subsequent decisions. 12 It does not mean, however, that petitioner should prevail, for as was unequivocally set forth in the leading ease of Republic Flour Mills v. Commissioner of Internal Revenue, 13 this Court speaking through Justice J.B.L. Reyes. "It is true that in the construction of tax statutes tax exemptions (and deductions are of this nature) are not favored in the law, and are construed strictissimi juris against the taxpayer. However, it is equally a recognized principle that where the provision of the law is clear and unambiguous, so that there is no occasion for the court's seeking the legislative intent, the law must be taken as it is, devoid of judicial addition or subtraction. In this ease, we find the provision of Section 186-A -whenever a tax free product is utilized, ... — all encompassing to comprehend tax-free raw materials, even if imported. Where the law provided no qualification for the granting of the privilege, the court is not at liberty to supply any. 14 That is what was done by respondent Court of Tax Appeals. It showed fealty to this equally well. settled doctrine. It construed the statutory provision as it is written. It is precluded, in the language of ;the Republic Flour Mills opinion, considering that the law is clear and ambiguous, to look further for any legislative intent, as "the law

must be taken as it is, devoid of judicial addition or subtraction." 15 If there is an extended discussion of this point, it is due solely to the emphasis placed on the matter by petitioner.

2. Moreover, the decision of respondent Court under review finds support in Balbas v. Domingo. 16

Thus: "No other conclusion is possible in view of the well-settled principle that this Court is bound by the finding of facts of the Court of Tax Appeals, only questions of law being open to it for determination. As stated in another decision, 'only errors of law, and not rulings on the weight of evidence, are reviewable by this Court.' The facts then as above ascertained cannot be disturbed. In our latest decision, there is a categorical assertion that where the question is one of fact, it is no longer reviewable. 17 Such a doctrine is not of limited application. It is a recognition of the wide discretion enjoyed by the Court of Tax Appeals in construing tax statutes. So it was categorically held in Alhambra Cigar and Cigarette Manufacturing Co. v. Commissioner of Internal Revenue: 18 "Nor as a matter of principle is it advisable for this Court to set aside the conclusion reached by an agency such as the Court of Tax Appeals which is, by the very nature of its function, dedicated exclusively to the study and consideration of tax problems and has necessarily developed an expertice on the subject, unless, as did not happen here, there has been an abuse or improvident exercise of its authority. 19 That same approach was reflected in Reyes v. Commissioner of Internal Revenue, 20 Chu Hoi Horn v. Court of Tax Appeals, 21

Vi Ve Chemical Products v. Commissioner of Customs, 22 and Nasiad v. Court of Tax Appeals. 23 The Vi Ve decision has some relevance. There the stand of the state that the Court of Tax Appeals could rightfully determine that '"priopionic glycine" is the same as glutamic acid" 24 was considered as well within the authority of respondent Court. It would be an affront to the sense of fairness and of justice if in another case, respondent Court, in the exercise of its discretionary authority, after determining that insulating oil comes within the term insulator, is not be upheld.

WHEREFORE, the petition for review is dismissed. No costs.

G.R. No. 123169 November 4, 1996

DANILO E. PARAS, petitioner, vs.COMMISSION ON ELECTIONS, respondent.

R E S O L U T I O N

 

FRANCISCO, J.:

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

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

Petitioner's argument is simple and to the point. Citing Section 74 (b) of Republic Act No. 7160, otherwise known as the Local Government Code, which states that "no recall shall take place within one (1) year from the date of the official's assumption to office or one (1) year immediately preceding a regular local election", petitioner insists that the scheduled January 13, 1996 recall election is now barred as the Sangguniang Kabataan (SK) election was set by Republic Act No. 7808 on the first Monday of May 1996, and every three years thereafter. In support thereof, petitioner cites Associated Labor Union v. Letrondo-Montejo, 237 SCRA 621, where the Court considered the SK election as a regular local election. Petitioner maintains that as the SK election is a regular local election, hence no

recall election can be had for barely four months separate the SK election from the recall election. We do not agree.

The subject provision of the Local Government Code provides:

Sec. 74. Limitations on Recall. — (a) Any elective local official may be the subject of a recall election only once during his term of office for loss of confidence.

(b) No recall shall take place within one (1) year from the date of the official's assumption to office or one (1) year immediately preceding a regular local election.

[Emphasis added]

It is a rule in statutory construction that every part of the statute must be interpreted with reference to the context, i.e., that every part of the statute must be considered together with the other parts, and kept subservient to the general intent of the whole enactment. 4 The evident intent of Section 74 is to subject an elective local official to recall election once during his term of office. Paragraph (b) construed together with paragraph (a) merely designates the period when such elective local official may be subject of a recall election, that is, during the second year of his term of office. Thus, subscribing to petitioner's interpretation of the phrase regular local election to include the SK election will unduly circumscribe the novel provision of the Local Government Code on recall, a mode of removal of public officers by initiation of the people before the end of his term. And if the SK election which is set by R.A No. 7808 to be held every three years from May 1996 were to be deemed within the purview of the phrase "regular local election", as erroneously insisted by petitioner, then no recall election can be conducted rendering inutile the recall provision of the Local Government Code.

In the interpretation of a statute, the Court should start with the assumption that the legislature intended to enact an effective law, and the legislature is not presumed to have done a vain thing in the enactment of a statute. 5 An interpretation should, if possible, be avoided under which a statute or provision being construed is defeated, or as otherwise expressed, nullified, destroyed, emasculated, repealed, explained away, or rendered insignificant, meaningless, inoperative or nugatory. 6

It is likewise a basic precept in statutory construction that a statute should be interpreted in harmony with the Constitution. 7 Thus, the interpretation of Section 74 of the Local Government Code, specifically paragraph (b) thereof, should not be in conflict with the Constitutional mandate of Section 3 of Article X of the Constitution to "enact a local government code which shall provide for a more responsive and accountable local government structure instituted through a system of decentralization with effective mechanism of recall, initiative, and referendum . . . ."

Moreover, petitioner's too literal interpretation of the law leads to absurdity which we cannot countenance. Thus, in a case, the Court made the following admonition:

We admonish against a too-literal reading of the law as this is apt to constrict rather than fulfill its purpose and defeat the intention of its authors. That intention is usually found not in "the letter that killeth but in the spirit that vivifieth". . . 8

The spirit, rather than the letter of a law determines its construction; hence, a statute, as in this case, must be read according to its spirit and intent.

Finally, recall election is potentially disruptive of the normal working of the local government unit necessitating additional expenses, hence the prohibition against the conduct of recall election one year immediately preceding the regular local election. The proscription is due to the proximity of the next regular election for the office of the local elective official concerned. The electorate could choose the official's replacement in the said election who certainly has a longer tenure in office than a successor elected through a recall election. It would, therefore, be more in keeping with the intent of the recall provision of the Code to construe regular local election as one referring to an election where the office held by the local elective official sought to be recalled will be contested and be filled by the electorate.

Nevertheless, recall at this time is no longer possible because of the limitation stated under Section 74 (b) of the Code considering that the next regular election involving the barangay office concerned is barely seven (7) months away, the same having been scheduled on May 1997. 9

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

SO ORDERED.