Full citation: Benedicto v. De La Rama, 3 Phil. 34, G.R. No. L-1056,

December 8, 1903

See referring cases.

Republic of the Philippines

SUPREME COURT

Manila

EN BANC

DECISION

December 8, 1903

G.R. No. L-1056

AGUEDA BENEDICTO, plaintiff-appellee,

vs.

ESTEBAN DE LA RAMA, defendant-appellant.

Jovito Yusay and Ledesma and Sumulong for appellant.

Aylett R. Cotton and Lionel D. Hargis for appellee.

Willard, J.:

This is an action for divorce. The complaint, which was filed on October

29, 1901, alleged, as the grounds therefor, abandonment and adultery.

The answer charged the plaintiff with adultery, denied the adultery

imputed to the defendant, and asked for a divorce. Judgment was

rendered on July 5, 1902, in favor of the plaintiff, granting her divorce

and 81,042.76 pesos as her share of the conjugal property. The

defendant excepted to the judgment and moved for a new trial on the

ground that the facts were not justified by the evidence. This motion was

denied, and the defendant excepted. The record before us contains all the

evidence received at the trial.

(1) The first question which we find it necessary to decide is whether or

not the Courts of First Instance now have jurisdiction of divorce cases,

and if they have, on what law it is based.

The court below assumed that the provisions of the Civil Code relating

to divorce, contained in title 4 of book 1, are still in force. In this we

think there was error.

By the royal decree of July 31, 1889, the Civil Code as it existed in the

Peninsula was extended to the Philippines. The "cumplase" of the

governor-general was affixed to this decree on September 12, 1889. The

Code was published in the Gaceta de Manila on November 17, 1889,

and took effect as a law on December 8, 1889. On December 31, 1889,

the following order was published in the Gaceta de Manila:

-----

The partidas recognized adultery as a ground for divorce. Therefore,

according to the civil as well as the canonical law in force here on

August 13, 1898, the commission of that offense gave the injured party

the right to a divorce. That provision of the substantive civil law was not

repealed by the change of sovereignty. The complete separation under

the American Government of church and state, while it changed the

tribunal in which this right should be enforced, could not affect the right

itself. The fact that the ecclesiastical courts no longer exercise such

power is not important. The jurisdiction formerly possessed by them is

now vested in Courts of First Instance, by virtue of Act No. 136. Section

56, first and fifth paragraphs of that act, provides that "Courts of First

Instance shall have original jurisdiction, first, in all civil actions in which

the subject of litigation is not capable of pecuniary estimation; fifth, . . .

and in all such special cases and proceedings as are not otherwise

provided for."

The result is (1) that Courts of First instance have jurisdiction to

entertain a suit for divorce; (2) that the only ground therefor is adultery;

(3) that an action on that ground can be maintained by the husband

against the wife, or by the wife against the husband; and (4) that the

decree does not dissolve the marriage bond. The Court of First Instance

of Iloilo, therefore, committed no error in assuming jurisdiction of this

case.

(2) A motion for a new trial having been made in the court below on the

ground that the findings of fact contained in the decision were not

justified by the evidence, it becomes necessary to examine that evidence.

The adultery of the defendant was duly proved.

The finding that the plaintiff had not committed adultery is, however,

plainly and manifestly against the weight of the evidence. We arrive at

this result from a consideration chiefly of the admitted facts in the case,

the most important of which is the letter written by the plaintiff to the

defendant on March 6, 1899, and found at pages 168 and 195. This is in

itself practically conclusive against her. A portion of that letter is as

follows:

E., I still fell ashamed for the past, although it is seven years since we

separated. For this, then, Esteban, pardon me for pity's sake. Wipe out

the past. Remember me for the love of God. Contemplate our unhappy

fate. To you I look to assuage my sorrow. E., I have heard that you have

had some misfortunes lately. I send my sympathy, although I am

unworthy of your presence.

The significant words "I am unworthy of you presence" probably

escaped the attention of the judge below, because he has not quoted

them. The contention of the appellee is that the wrong for which the

plaintiff sought pardon was that of having asked for an allowance. This

contention can not for a moment be sustained. A woman does not asked

her husband to blot out the past, to have compassion on her, and, most

important of all, does not say that she is unworthy of his presence simply

because she has asked him for an allowance, something to which,

according to her own belief, she had at the time a perfect legal right. The

letter is a confession of guilt.

It is admitted that the plaintiff and defendant had lived happily together

from the time of their marriage in July, 1891, to August, 1892. It is also

admitted that then the defendant suddenly, without any previous

warning, took his wife to the house of her parents, left her there, and

never lived with her afterwards. There must have been some reason for

this sudden change. The court below says that it was because the

defendant had tired of his wife. There is nothing in the evidence to

support this theory. In her complaint the plaintiff charges the defendant

with having committed adultery with Gregoria Bermejo in 1892. She

produced no evidence to support this allegation as to the time. No one of

the six witnesses for the plaintiff upon this charge fix any date prior to

1894. The other two charges relate to 1899 and 1901. There is no

evidence in the case from which a judge would be justified in finding

that from the separation in 1892 to some time in 1894 the defendant had

been unfaithful to his marriage vow. And the judge below made no such

finding.

Two witnesses, Epifanio Lacson and Doroteo Garcia, who testified as to

charge in connection with Gregoria, speaks of a woman brought by the

defendant to Negros in 1892. But an examination of their evidence will

show that it is entirely insufficient to prove any illicit relations between

this woman and the defendant. In view of the evidence which the

plaintiff did present in this case, we think it safe to say that if the

conduct of the defendant during the years 1892 and 1893 had furnished

any ground for suspicion the plaintiff would have been able to produce

evidence thereof at the trial. She did not do so. The lack of this evidence

destroys the theory of the court below and of the appellee that the

defendant expelled the plaintiff from his house he was tired of her and

desired the company of other women. That theory is entirely inadequate

to explain the sudden termination of their marital relations.

The event is, however, to our minds, correctly explained by the

testimony of the defendant. The separation and the letter written by the

plaintiff from which we have quoted can only be explained on the

supposition that this testimony of the defendant is true. He stated that on

his return from an inspection of one of his estates his wife's maid gave

him a letter in the handwriting of his wife and directed to her lover, a

Spanish corporal of the civil guard, named Zabal. She admitted the

genuineness of the letter, fell upon her knees, and implored him to

pardon her. That same day he took her to the home of her parents, told

what had occurred, and left her there.

That the testimony in regard to this letter is not a fabrication of recent

date is shown by the evidence of the plaintiff's mother, one of her chief

witnesses. The mother testified that about a year after her daughter was

returned to her she heard that the defendant believed that illicit relations

existed between Zabal and the plaintiff on account of a certain letter. She

heard Zabal's name mentioned by a sergeant of police in 1893 or 1894.

This may have been the sergeant of the civil guard who, according to the

testimony of Domingo Jardelesa, was the cause why the latter did not

deliver to the plaintiff a letter intrusted to him for her by Zabal after her

separation from her husband.

The evidence showing the adultery who testified to facts conclusively

showing the adultery is severely criticized by the court below and the

counsel for the plaintiff. That criticism relates in a large degree to the

matter of time and dates. If this direct evidence were the only evidence

in the case we should not, perhaps, disturb the finding of the court. But

when it is in its essential points corroborated by the admitted facts which

we have heretofore recited, there is left, in our opinion, no doubt

whatever of the guilt of the plaintiff.

It is said that if the plaintiff is guilty the defendant has condoned the

offense. It is not necessary to determine upon this point where the truth

lies for two reasons: (1) the court below made no finding of fact on the

subject; (2) even if it had found that there was condonation this would

not have entitled the plaintiff to a divorce.

By Law 6, title 9, partida 4, the wife can defeat the husband's suit for

divorce by proving that he has pardoned her. But we have found no laws

in the partidas which say that the effect of that pardon would be so far-

reaching as to entitle her to a divorce against him in a case like the

present one. On the contrary it is expressly provided in Law 8, title

2, partida 4, as follows:

For the sin of each one of them is of itself a bar to an accusation against

the other.

Our conclusion is that neither one of the parties is entitled to a divorce.

The result makes it unnecessary to consider that part of the judgment which relates to the settlement of the conjugal partnership.

Section 497 1 authorizes us in cases of this kind "to make such findings upon the facts and render such final judgment as justice and equity require."

The judgment below is reversed, and we find from the evidence the following facts:

(1) The allegations of the complaint as to the marriage of the parties and as to the acts of adultery committed by the defendant are true as therein stated except as to the date of the adultery committed with Gregoria Bermejo.

(2) The plaintiff, in the summer of 1892, at Talisay, in the Province of Occidental Negros, committed adultery with one Zabal, a corporal of the civil guard AbOs.

As conclusion of law from the foregoing facts we hold that neither party is entitled to judgment of divorce against the other; that judgment be entered that the plaintiff take nothing by her action or the defendant by his cross demand, and that neither party recover of the other any costs either in this court or the Court of First Instance.

Judgment will be entered accordingly forty days from the filing of this decision, and the case remanded to the court below for execution. So ordered.

Arellano, C.J. Torres and Mapa, JJ., concur.McDonough, J., dissents.Johnson, J., took no part.Cooper, J., dissents. .

Republic of the PhilippinesSUPREME COURT

Manila

G.R. No. L-63915 December 29, 1986LORENZO M. TAÑ;ADA, ABRAHAM F. SARMIENTO, and

MOVEMENT OFATTORNEYS FOR BROTHERHOOD, INTEGRITY AND

NATIONALISM, INC.(MABINI),p e titio n e rs,

vs.

HON. JUAN C. TUVERA, in his capacity as Executive Assistant to the President,

HON. JOAQUIN VENUS, in his capacity as Deputy Executive Assistant to the

President, MELQUIADES P. DE LA CRUZ, ETC., ET AL.,respondents.

R E S O L U T I O N

CRUZ,J.:

Due process was invoked by the petitioners in demanding the disclosure of a number of presidential decrees which they claimed had not been published as required by law. The government argued that while publication was necessary as a rule, it was not so when it was "otherwise provided," as when the decrees themselves declared that they were to become effective immediately upon their approval. In the decision of this case on April 24, 1985, the Court affirmed the necessity for the publication of some of these decrees, declaring in the dispositive portion as follows:

WHEREFORE, the Court hereby orders respondents to publish in the Official Gazette all unpublished presidential issuances which are of general application, and unless so published, they shall have no binding force and effect.

The petitioners are now before us again, this time to move for reconsideration/clarification of that decision.1 Specifically, they ask the following questions:

1. What is meant by "law of public nature" or "general applicability"?2. Must a distinction be made between laws of general applicability and laws which are not?3. What is meant by "publication"?4. Where is the publication to be made?5. When is the publication to be made?

Resolving their own doubts, the petitioners suggest that there should be no distinction between laws of general applicability and those which are not; that publication means complete publication; and that the publication must be made forthwith in the Official Gazette.2

In the Comment3 required of the then Solicitor General, he claimed first that the motion was a request for an advisory opinion and should therefore be dismissed, and, on the merits, that the clause "unless it is otherwise provided" in Article 2 of the Civil Code meant that the publication required therein was not always imperative; that publication,when necessary, did not have to be made in the Official Gazette; and that in any case the subject decision was concurred in only by three justices and consequently not binding. This elicited a Reply4 refuting these arguments. Came next the February Revolution and the Court required the new Solicitor General to file a Rejoinder in view of the supervening events, under Rule 3, Section 18, of the Rules of Court. Responding,

he submitted that issuances intended only for the internal administration of a government agency or for particular persons did not have to be 'Published; that publication when necessary must be in full and in the Official Gazette; and that, however, the decision under reconsideration was not binding because it was not supported by eight members of this Court.5

The subject of contention is Article 2 of the Civil Code providing as follows:ART. 2. Laws shall take effect after fifteen days following the completion of their publication in the Official Gazette, unless it is otherwise provided. This Code shall take effect one year after such publication. After a careful study of this provision and of the arguments of the parties, both on the original petition and on the instant motion, we have come to the conclusion and so hold, that the clause "unless it is otherwise provided" refers to the date of effectivity and not to the requirement of publication itself, which cannot in any event be omitted.

This clause does not mean that the legislature may make the law effective immediately upon approval, or on any other date, without its previous publication. Publication is indispensable in every case, but the legislature may in its discretion provide that the usual fifteen-day period shall be shortened or extended. An example, as pointed out by the present Chief Justice in his separate concurrence in the original decision,6 is the Civil Code which did not become effective after fifteen days from itspublication in the Official Gazette but "one year after such publication."

The general rule did not apply because it was "otherwise provided. "It is not correct to say that under the disputed clause publication may be dispensed with altogether. The reason. is that such omission would offend due process insofar as it would deny the public knowledge of the laws that are supposed to govern the legislature could validly provide that a law e effective immediately upon its approval notwithstanding the

lack of publication (or after an unreasonably short period after publication), it is not unlikely that persons not aware of it would be prejudiced as a resultand they would be so not because of a failure to comply with but simply because they did not know of its existence, Significantly, this is not true only of penal laws as is commonly supposed. One can think of many non-penal measures, like a law on prescription, which must also be communicated to the persons they may affect before they can begin to operate.

We note at this point the conclusive presumption that every person knows the law, which of course presupposes that the law has been published if the presumption is to have any legal justification at all. It is no less important to remember that Section 6 of the Bill of Rights recognizes "the right of the people to information on matters of public concern," and this certainly applies to, among others, and indeed especially, the legislative enactments of the government.

The term "laws" should refer to all laws and not only to those of general application, for strictly speaking all laws relate to the people in general albeit there are some that do not apply to them directly. An example is a law granting citizenship to a particular individual, like a relative of President Marcos who was decreed instant naturalization. It surely cannot be said that such a law does not affect the public although it unquestionably does not apply directly to all the people. The subject of such law is a matter of public interest which any member of the body politic may question in the political forums or, if he is a proper party, even in the courts of justice. In fact, a law without any bearing on the public would be invalid as an intrusion of privacy or as class legislation or as an ultra vires act of the legislature. To be valid, the law must invariably affect the public interest even if it might be directly applicable only to one individual, or some of the people only,and to the public as a whole.

We hold therefore that all statutes, including those of local application and private laws, shall be published as a condition for their effectivity, which shall begin fifteen days after publication unless a different effectivity date is fixed by the legislature.

Covered by this rule are presidential decrees and executive orders promulgated by the President in the exercise of legislative powers whenever the same are validly delegated by the legislature or, at present, directly conferred by the Constitution.

Administrative rules and regulations must a also be published if their purpose is to enforce or implement existing law pursuant also to a valid delegation. Interpretative regulations and those merely internal in nature, that is, regulating only the personnel of the administrative agency and not the public, need not be published. Neither is publication required of the so-called letters of instructions issued by administrative superiors concerning the rules or guidelines to be followed by their subordinates in the performance of their duties.

Accordingly, even the charter of a city must be published notwithstanding that it applies to only a portion of the national territory and directly affects only the inhabitants of that place. All presidential decrees must be published, including even, say, those naming apublic place after a favored individual or exempting him from certain prohibitions or requirements. The circulars issued by the Monetary Board must be published if they are meant not merely to interpret but to "fill in the details" of the Central Bank Act which that body is supposed to enforce. However, no publication is required of the instructions issued by, say, the Minister of Social Welfare on the case studies to be made in petitions for adoption or the rules laid down by the head of a government agency on the assignments or workload of his personnel or the wearing of office uniforms. Parenthetically, municipal ordinances are not covered by this rule but by the Local Government Code.

We agree that publication must be in full or it is no publication at all since its purpose is to inform the public of the contents of the laws. As correctly pointed out by the petitioners, the mere mention of the number of the presidential decree, the title of such decree, its whereabouts (e.g., "with Secretary Tuvera"), the supposed date of effectivity, and in a mere supplement of the Official Gazette cannot satisfy the publicationrequirement. This is not even substantial compliance. This was the manner, incidentally, in which the General Appropriations Act for FY 1975, a presidential decree undeniably of general applicability and interest, was "published" by the Marcos administration.7 Theevident purpose was to withhold rather than disclose information on this vital law.

Coming now to the original decision, it is true that only four justices were categorically for publication in the Official Gazette8 and that six others felt that publication could be made elsewhere as long as the people were sufficiently informed.9 One reserved his vote10 and another merely acknowledged the need for due publication without indicating where it should be made.11 It is therefore necessary for the presentmembership of this Court to arrive at a clear consensus on this matter and to lay down a binding decision supported by the necessary vote.

There is much to be said of the view that the publication need not be made in the Official Gazette, considering its erratic releases and limited readership. Undoubtedly, newspapers of general circulation could better perform the function of communicating, the laws to the people as such periodicals are more easily available, have a wider readership, and come out regularly. The trouble, though, is that this kind of publicationis not the one required or authorized by existing law. As far as we know, no amendment has been made of Article 2 of the Civil Code. The Solicitor General has not pointed to such a law, and we have no information that it exists. If it does, it obviously has not yetbeen published.

At any rate, this Court is not called upon to rule upon the wisdom of a law or to repeal or modify it if we find it impractical. That is not our function. That function belongs to the legislature. Our task is merely to interpret and apply the law as conceived and approved by the political departments of the government in accordance with the prescribedprocedure. Consequently, we have no choice but to pronounce that under Article 2 of the Civil Code, the publication of laws must be made in the Official Gazette and not elsewhere, as a requirement for their effectivity after fifteen days from such publication or after a different period provided by the legislature.

We also hold that the publication must be made forthwith or at least as soon as possible, to give effect to the law pursuant to the said Article 2. There is that possibility, of course, although not suggested by the parties that a law could be rendered unenforceable by a mere refusal of the executive, for whatever reason, to cause its publication as required. This is a matter, however, that we do not need to examine at this time.

Finally, the claim of the former Solicitor General that the instant motion is a request for an advisory opinion is untenable, to say the least, and deserves no further comment.

The days of the secret laws and the unpublished decrees are over. This is once again an open society, with all the acts of the government subject to public scrutiny and available always to public cognizance. This has to be so if our country is to remain democratic, with sovereignty residing in the people and all government authority emanating from them.

Although they have delegated the power of legislation, they retain the authority to review the work of their delegates and to ratify or reject it according to their lights, through their freedom of expression and their right of suffrage. This they cannot do if the acts of the legislature are concealed. Laws must come out in the open in the clear light of the sun instead of skulking in the shadows with their dark, deep secrets.

Mysterious pronouncements and rumored rules cannot be recognized as binding unless their existence and contents are confirmed by a valid publication intended to make full disclosure and give proper notice to the people. The furtive law is like a scabbarded saber that cannot feint parry or cut unless the naked blade is drawn.

WHEREFORE, it is hereby declared that all laws as above defined shall immediately upon their approval, or as soon thereafter as possible, be published in full in the Official Gazette, to become effective only after fifteen days from their publication, or on another date specified by the

legislature, in accordance with Article 2 of the Civil Code.

SO ORDERED.

Teehankee, C.J., Feria, Yap, Narvasa, Melencio-Herrera, Alampay, Gutierrez, Jr., andParas, JJ., concur.

Separate Opinions

FERNAN,J.,concurring:

While concurring in the Court's opinion penned by my distinguished colleague, Mr. Justice Isagani A. Cruz, I would like to add a few observations. Even as a Member of the defunct Batasang Pambansa, I took a strong stand against the insidious manner by which the previous dispensation had promulgated and made effective thousands of decrees, executive orders, letters of instructions, etc. Never has the law-making power which traditionally belongs to the legislature been used and abused to satisfy the whims and caprices of a one-man legislative mill as it happened in the past regime. Thus, in those days, it was not surprising to witness the sad spectacle of two presidential decrees bearing the same number, although covering two different subject matters. In point is the

case of two presidential decrees bearing number 1686 issued on March 19, 1980, one granting Philippine citizenship to Michael M. Keon the then President's nephew and the other imposing a tax on every motor vehicle equipped with airconditioner. This was further exacerbated by the issuance of PD No. 1686-A also on March 19, 1980 granting Philippine citizenship to basketball players Jeffrey Moore andDennis George Still.

The categorical statement by this Court on the need for publication before any law may be made effective seeks prevent abuses on the part of the lawmakers and, at the same time, ensures to the people their constitutional right to due process and to information on matters of public concern.

FELICIANO, J.,co n currin g:I agree entirely with the opinion of the court so eloquently written by Mr. Justice Isagani A. Cruz. At the same time, I wish to add a few statements to reflect my understanding of what the Court is saying.A statute which by its terms provides for its coming into effect immediately upon approval thereof, is properly interpreted as coming into effect immediately upon publication thereof in the Official Gazette as provided in Article 2 of the Civil Code. Such statute, in other words, should not be regarded as purporting literally to come into effectimmediately upon its approval or enactment and without need of publication. For so to interpret such statute would be to collide with the constitutional obstacle posed by the due process clause. The enforcement of prescriptions which are both unknown to and unknowable by those subjected to the statute, has been throughout history a common tool of tyrannical governments. Such application and enforcement constitutes at bottom a negation of the fundamental principle of legality in the relations between a governmentand its people.

At the same time, it is clear that the requirement of publication of a statute in the Official Gazette, as distinguished from any other medium such as a newspaper of general circulation, is embodied in a statutory norm and is not a constitutional command. The statutory norm is set out in Article 2 of the Civil Code and is supported and reinforced bySection 1 of Commonwealth Act No. 638 and Section 35 of the Revised Administrative Code. A specification of the Official Gazette as the prescribed medium of publication may therefore be changed. Article 2 of the Civil Code could, without creating a constitutional problem, be amended by a subsequent statute providing, for instance, forpublication either in the Official Gazette or in a newspaper of general circulation in the country. Until such an amendatory statute is in fact enacted, Article 2 of the Civil Code must be obeyed and publication effected in the Official Gazette and not in any other medium.

________________

Summary: Tanada v. Tuvera (GR L-63915, 29 December 1986)

Tanada v. Tuvera

[GR L-63915, 29 December 1986]

Resolution En Banc, Cruz (J) : 8 concur

Facts: On 24 April 1985, the Court affirmed the necessity for the

publication to the Official Gazette all unpublished presidential issuances

which are of general application, and unless so published, they shall

have no binding force and effect. Decision was concurred only by 3

judges. Tanada, et al. moved for reconsideration / clarification of the

decision on various questions.

Issue: Whether the clause "unless it is otherwise provided," in Article 2

of the Civil Code, refers to the date of effectivity or to the requirement

of publication itself.

Held: The clause "unless it is otherwise provided," in Article 2 of the

Civil Code, refers to the date of effectivity and not to the requirement of

publication itself, which cannot in any event be omitted. This clause

does not mean that the legislature may make the law effective

immediately upon approval, or on any other date, without its previous

publication. The legislature may in its discretion provide that the usual

fifteen-day period shall be shortened or extended. The term "laws"

should refer to all laws and not only to those of general application, for

strictly speaking all laws relate to the people in general albeit there are

some that do not apply to them directly. To be valid, the law must

invariably affect the public interest even if it might be directly applicable

only to one individual, or some of the people only, and not to the public

as a whole. Publication requirements applies to (1) all statutes, including

those of local application and private laws; (2) presidential decrees and

executive orders promulgated by the President in the exercise of

legislative powers whenever the same are validly delegated by the

legislature or directly conferred by the Constitution; (3) Administrative

rules and regulations for the purpose of enforcing or implementing

existing law pursuant also to a valid delegation; (4) Charter of a city

notwithstanding that it applies to only a portion of the national territory

and directly affects only the inhabitants of that place; (5) Monetary

Board circulars to "fill in the details" of the Central Bank Act which that

body is supposed to enforce. Publication requirements does not apply to

(1) interpretative regulations and those merely internal in nature, i.e.

regulating only the personnel of the administrative agency and not the

public; (2) Letters of Instructions issued by administrative superiors

concerning the rules or guidelines to be followed by their subordinates in

the performance of their duties; and (3) instructions of Ministry heads on

case studies, assignments of personnel, etc. Municipal ordinances are not

covered by this rule but by the Local Government Code. Publication

must be in full or it is no publication at all since its purpose is to inform

the public of the contents of the laws. As correctly pointed out by the

petitioners, the mere mention of the number of the presidential decree,

the title of such decree, its whereabouts (e.g., "with Secretary Tuvera"),

the supposed date of effectivity, and in a mere supplement of the Official

Gazette cannot satisfy the publication requirement. It should be

published in the Official Gazette and not elsewhere. Even if newspapers

of general circulation could better perform the function of

communicating the laws to the people as such periodicals are more

easily available, have a wider readership, and come out regularly, this

kind of publication is not the one required or authorized by existing law.

Republic of the PhilippinesSUPREME COURT

Manila

EN BANC

G.R. No. L-6791             March 29, 1954

THE PEOPLE OF THE PHILIPPINES, plaintiff-appellee, vs.QUE PO LAY, defendant-appellant.

Prudencio de Guzman for appellant.First Assistant Solicitor General Ruperto Kapunan, Jr., and Solicitor Lauro G. Marquez for appellee.

MONTEMAYOR, J.:

Que Po Lay is appealing from the decision of the Court of First Instance of Manila, finding him guilty of violating Central Bank Circular No. 20 in connection with section 34 of Republic Act No. 265, and sentencing him to suffer six months imprisonment, to pay a fine of P1,000 with subsidiary imprisonment in case of insolvency, and to pay the costs.

The charge was that the appellant who was in possession of foreign exchange consisting of U.S. dollars, U.S. checks and U.S. money orders amounting to about $7,000 failed to sell the same to the Central Bank through its agents within one day following the receipt of such foreign exchange as required by Circular No. 20. the appeal is based on the claim that said circular No. 20 was not published in the Official Gazette prior to the act or omission imputed to the appellant, and that consequently, said circular had no force and effect. It is contended that Commonwealth Act. No., 638 and Act 2930 both require said circular to be published in the Official Gazette, it being an order or notice of general applicability. The Solicitor General answering this contention says that Commonwealth Act. No. 638 and 2930 do not require the publication in the Official Gazette of said circular issued for the implementation of a law in order to have force and effect.

We agree with the Solicitor General that the laws in question do not require the publication of the circulars, regulations and notices therein mentioned in order to become binding and effective. All that said two laws provide is that laws, resolutions, decisions of the Supreme Court and Court of Appeals, notices and documents required by law to be of no force and effect. In other words, said two Acts merely enumerate and make a list of what should be published in the Official Gazette, presumably, for the guidance of the different branches of the Government issuing same, and of the Bureau of Printing.

However, section 11 of the Revised Administrative Code provides that statutes passed by Congress shall, in the absence of special provision, take effect at the beginning of the fifteenth day after the completion of the publication of the statute in the Official Gazette. Article 2 of the new Civil Code (Republic Act No. 386) equally provides that laws shall take effect after fifteen days following the completion of their publication in the Official Gazette, unless it is otherwise provided. It is true that Circular No. 20 of the Central Bank is not a statute or law but being issued for the implementation of the law authorizing its issuance, it has the force and effect of law according to settled jurisprudence. (See U.S. vs. Tupasi Molina, 29 Phil., 119 and authorities cited therein.) Moreover, as a rule, circulars and regulations especially like the Circular No. 20 of the Central Bank in question which prescribes a penalty for its violation should be published before becoming effective, this, on the general principle and theory that before the public is bound by its contents, especially its penal provisions, a law, regulation or circular must first be published and the people officially and specifically informed of said contents and its penalties.

Our Old Civil code, ( Spanish Civil Code of 1889) has a similar provision about the effectivity of laws, (Article 1 thereof), namely, that laws shall be binding twenty days after their promulgation, and that their promulgation shall be understood as made on the day of the termination of the publication of the laws in the Gazette. Manresa, commenting on this article is of the opinion that the word "laws" include regulations and circulars issued in accordance with the same. He says:

El Tribunal Supremo, ha interpretado el articulo 1. del codigo Civil en Sentencia de 22 de Junio de 1910, en el sentido de que bajo la denominacion generica de leyes, se comprenden tambien los Reglamentos, Reales decretos, Instrucciones, Circulares y Reales ordenes dictadas de conformidad con las mismas por el Gobierno en uso de su potestad. Tambien el poder ejecutivo lo ha venido entendiendo asi, como lo prueba el hecho de que muchas de sus disposiciones contienen la advertencia de que empiezan a regir el mismo dia de su publicacion en la Gaceta, advertencia que seria perfectamente inutil si no fuera de aplicacion al caso el articulo 1.o del Codigo Civil. (Manresa, Codigo Civil Español, Vol. I. p. 52).

In the present case, although circular No. 20 of the Central Bank was issued in the year 1949, it was not published until November 1951, that is, about 3 months after appellant's conviction of its violation. It is clear that said circular, particularly its penal provision, did not have any legal effect and bound no one until its publication in the Official Gazzette or after November 1951. In other words, appellant could not be held liable for its violation, for it was not binding at the time he was found to have failed to sell the foreign exchange in his possession thereof.

But the Solicitor General also contends that this question of non-publication of the Circular is being raised for the first time on appeal in this Court, which cannot be done by appellant. Ordinarily, one may raise on appeal any question of law or fact that has been raised in the court below and which is within the issues made by the parties in their pleadings. (Section 19, Rule 48 of the Rules of Court). But the question of non-publication is fundamental and decisive. If as a matter of fact Circular No. 20 had not been published as required by law before its violation, then in the eyes of the law there was no such circular to be violated and consequently appellant committed no violation of the circular or committed any offense, and the trial court may be said to have had no jurisdiction. This question may be raised at any stage of the proceeding whether or not raised in the court below.

In view of the foregoing, we reverse the decision appealed from and acquit the appellant, with costs de oficio.

Paras, C.J., Bengzon, Padilla, Reyes, Bautista Angelo, Labrador, Concepcion and Diokno, JJ., concur.

EN BANC

G.R. No. L-16704             March 17, 1962

VICTORIAS MILLING COMPANY, INC., petitioner-appellant, -versus-

SOCIAL SECURITY COMMISSION, respondent-appellee.

Ross, Selph and Carrascoso for petitioner-appellant.Office of the Solicitor General and Ernesto T. Duran for respondent-

appellee.

BARRERA, J.:

On October 15, 1958, the Social Security Commission issued its Circular No. 22 of the following tenor: .

Effective November 1, 1958, all Employers in computing the premiums due the System, will take into consideration and

include in the Employee's remuneration all bonuses and overtime pay, as well as the cash value of other media of remuneration.

All these will comprise the Employee's remuneration or earnings, upon which the 3-1/2% and 2-1/2% contributions will be based,

up to a maximum of P500 for any one month.

Upon receipt of a copy thereof, petitioner Victorias Milling Company, Inc., through counsel, wrote the Social Security Commission in effect protesting against the circular as contradictory to a previous Circular No. 7, dated October 7, 1957 expressly excluding overtime pay and bonus in the computation of the employers' and employees' respective monthly premium contributions, and submitting, "In order to assist your System in arriving at a properinterpretation of the term 'compensation' for the purposes of" such computation, their observations on Republic Act 1161 and its amendment and on the general interpretation of the words "compensation", "remuneration" and "wages". Counsel further questioned the validity of the circular for lack of authority on the part of

the Social Security Commission to promulgate it without the approval of the President and for lack of publication in the Official Gazette.

Overruling these objections, the Social Security Commission ruled that Circular No. 22 is not a rule or regulation that needed the approval of the President and publication in the Official Gazette to be effective, but a mere administrative interpretation of the statute, a mere statement of general policy or opinion as to how the law should be construed.

Not satisfied with this ruling, petitioner comes to this Court on appeal.

The single issue involved in this appeal is whether or not Circular No. 22 is a rule or regulation, as contemplated in Section 4(a) of Republic Act 1161 empowering the Social Security Commission "to adopt, amend and repeal subject to the approval of the President such rules and regulations as may be necessary to carry out the provisions and purposes of this Act."

There can be no doubt that there is a distinction between an administrative rule or regulation and an administrative interpretation of a law whose enforcement is entrusted to an administrative body. When an administrative agency promulgates rules and regulations, it "makes" a new law with the force and effect of a valid law, while when it renders an opinion or gives a statement of policy, it merely interprets a pre-existing law (Parker, Administrative Law, p. 197; Davis, Administrative Law, p. 194). Rules and regulations when promulgated in pursuance of the procedure or authority conferred upon the administrative agency by law, partake of the nature of a statute, and compliance therewith may be enforced by a penal sanction provided in the law. This is so because statutes are usually couched in general terms, after expressing the policy, purposes, objectives, remedies and sanctions intended by the legislature. The details and the manner of carrying out the law are often times left to the administrative agency entrusted with its enforcement. In this sense, it has been said that rules and regulations are the product of a delegated power to create new or additional legal provisions that have the effect of law. (Davis, op. cit., p. 194.) .

A rule is binding on the courts so long as the procedure fixed for its promulgation is followed and its scope is within the statutory authority

granted by the legislature, even if the courts are not in agreement with the policy stated therein or its innate wisdom (Davis, op. cit., 195-197). On the other hand, administrative interpretation of the law is at best merely advisory, for it is the courts that finally determine what the law means.

Circular No. 22 in question was issued by the Social Security Commission, in view of the amendment of the provisions of the Social Security Law defining the term "compensation" contained in Section 8 (f) of Republic Act No. 1161 which, before its amendment, reads as follows: .

(f) Compensation — All remuneration for employment include the cash value of any remuneration paid in any medium other than cash except (1) that part of the remuneration in excess of P500 received during the month; (2) bonuses, allowances or overtime pay; and (3) dismissal and all other payments which the employer may make, although not legally required to do so.

Republic Act No. 1792 changed the definition of "compensation" to:

(f) Compensation — All remuneration for employment include the cash value of any remuneration paid in any medium other than cash except that part of the remuneration in excess of P500.00 received during the month.

It will thus be seen that whereas prior to the amendment, bonuses, allowances, and overtime pay given in addition to the regular or base pay were expressly excluded, or exempted from the definition of the term "compensation", such exemption or exclusion was deleted by the amendatory law. It thus became necessary for the Social Security Commission to interpret the effect of such deletion or elimination. Circular No. 22 was, therefore, issued to apprise those concerned of the interpretation or understanding of the Commission, of the law as amended, which it was its duty to enforce. It did not add any duty or detail that was not already in the law as amended. It merely stated and circularized the opinion of the Commission as to how the law should be construed.

The case of People v. Jolliffe (G.R. No. L-9553, promulgated on May 30, 1959) cited by appellant, does not support its contention that the circular in question is a rule or regulation. What was there said was merely that a regulation may be incorporated in the form of a circular. Such statement simply meant that the substance and not the form of a regulation is decisive in determining its nature. It does not lay down a general proposition of law that any circular, regardless of its substance and even if it is only interpretative, constitutes a rule or regulation which must be published in the Official Gazette before it could take effect.

The case of People v. Que Po Lay (50 O.G. 2850) also cited by appellant is not applicable to the present case, because the penalty that may be incurred by employers and employees if they refuse to pay the corresponding premiums on bonus, overtime pay, etc. which the employer pays to his employees, is not by reason of non-compliance with Circular No. 22, but for violation of the specific legal provisions contained in Section 27(c) and (f) of Republic Act No. 1161.

We find, therefore, that Circular No. 22 purports merely to advise employers-members of the System of what, in the light of the amendment of the law, they should include in determining the monthly compensation of their employees upon which the social security contributions should be based, and that such circular did not require presidential approval and publication in the Official Gazette for its effectivity.

It hardly need be said that the Commission's interpretation of the amendment embodied in its Circular No. 22, is correct. The express elimination among the exemptions excluded in the old law, of all bonuses, allowances and overtime pay in the determination of the "compensation" paid to employees makes it imperative that such bonuses and overtime pay must now be included in the employee's remuneration in pursuance of the amendatory law. It is true that in previous cases, this Court has held that bonus is not demandable because it is not part of the wage, salary, or compensation of the employee. But the question in the instant case is not whether bonus is demandable or not as part of compensation, but whether, after the employer does, in fact, give or pay bonus to his employees, such bonuses shall be considered compensation under the Social Security Act after they have

been received by the employees. While it is true that terms or words are to be interpreted in accordance with their well-accepted meaning in law, nevertheless, when such term or word is specifically defined in a particular law, such interpretation must be adopted in enforcing that particular law, for it can not be gainsaid that a particular phrase or term may have one meaning for one purpose and another meaning for some other purpose. Such is the case that is now before us. Republic Act 1161 specifically defined what "compensation" should mean "For the purposes of this Act". Republic Act 1792 amended such definition by deleting same exemptions authorized in the original Act. By virtue of this express substantial change in the phraseology of the law, whatever prior executive or judicial construction may have been given to the phrase in question should give way to the clear mandate of the new law.

IN VIEW OF THE FOREGOING, the Resolution appealed from is hereby affirmed, with costs against appellant. So ordered.

Bengzon, C.J., Padilla, Bautista Angelo, Labrador, Concepcion, Reyes, J.B.L., Paredes, Dizon and De Leon, JJ., concur.

__________________

EN BANC

Adm. Matter No. 2268-MJ November 7, 1980

RICARDO ESCARDA, complainant, -versus-

Judge JACINTO MANALO of Coron, Palawan, respondent.

 

FERNANDO, C.J.:

This administrative complaint for improper conduct by complainant Ricardo Escarda against respondent Municipal Judge Jacinto Manalo of Coron, Palawan affords this Court an opportunity to set forth the guiding principle as to when the Lupon Tagapayapa under the Katarungan

Pambarangay Decree 1 should take cognizance of a case. Respondent Judge refused the referral of a complaint for slight physical injuries to the Lupon Tagapayapa. That was the basis of this charge against him. As the Decree was intended to remedy the clogged state of the dockets through the amicable settlement of minor disputes relying on what was aptly referred to by President Marcos as "the good sense and civic spirit of our citizenry and our community leaders," respondent Judge should be held accountable, if, as alleged, he did not comply with its provisions. His refusal, however, finds support in Circular No. 12 2 of the late Chief Justice Castro, as amended by Circular No. 22. 3 It reads as follows,. "Effective upon your receipt of the certification by the Minister of Local Government and Community Development that an the barangays within your respective jurisdictions have organized their Lupons provided for in Presidential Decree No. 1508, otherwise known as the Katarungang Pambarangay Law, in implementation of the barangay system of settlement of disputes, you are hereby directed to desist from receiving complaints, petitions, actions or proceedings in cases falling within the authority of said Lupons. Circular No. 12 dated October 30, 1978, issued by the late Chief Justice Fred Ruiz Castro is to that extent modified." 4

 

Circular No. 22 was noted in a Letter of Implementation 5 of President Ferdinand E. Marcos, dated November 12, 1979, the first paragraph of which reads as follows: "with a view to easing up the log-jam of cases and solving the problem of backlogs in the case of dockets of an government offices involved in the investigation, trial and adjudication of cases, it is hereby ordered that immediate implementation be made by all government officials and offices concerned of the system of amicably settling disputes at the barangay level as provided for in the Katarungang Pambarangay Law (Presidential Decree No. 1508)." 6 It then ordered "effective compliance" with certain directives one of which is the aforesaid Circular No. 22. 7 Then came this paragraph: "For this purpose, all City and Municipal Development Officers of the Ministry of Local Government and Community Development are hereby ordered to certify the fact of organization of the Lupong Tagapayapa in their respective barangays within five (5) days from the publication of this order, and to send such certification to the Ministry of Justice and the Supreme Court, as well as to the fiscals and judges concerned." 8 Prior to such

certification of the organization of the Lupon Tagapayapa then, a municipal judge must comply with the Rules of Court applicable to any complaint or judicial proceeding properly cognizable by him. That is his bounden duty. Since there is no question as to the particular case of physical injuries falling within the jurisdiction of respondent Judge, he acted in accordance with law. As noted in the memorandum of Court Administrator Relova: "In the case at bar, Criminal Case No. 2041 was filed before any such certification. Therefore, respondent need not refer the case to the barangay captain or the Lupon." 9

The complaint for improper judicial conduct is therefore without merit. Accordingly, it should be dismissed. As mentioned at the outset of this opinion, this resolution is intended to provide guidance for the actuation of the judges concerned, more specifically as to the date when in accordance with Presidential Decree No. 1508 the system of conciliation provide ed for therein should be followed before the judiciary could act on the matter.

WHEREFORE, this administrative complaint is dismissed for lack of merit. Let a copy of this resolution be spread on the record of respondent Judge Jacinto Manalo.

Teehankee, Barredo, Makasiar, Aquino, Concepcion, Jr., Fernandez, Guerrero, Abad Santos, De Castro and Melencio-Herrera, JJ., concur.

 Endnotes

1 Presidential Decree No. 1508 (1978).2 Dated October 30, 1978.3 Dated November 9, 1979.4 Circular No. 22. This Circular was issued by the ponente as Chief Justice.5 Letter of Implementation No. 105.6 Ibid., par. 1.7 Ibid., par. 2.8 Ibid, par. 3.9 Memorandum of Court Administrator Lorenzo Relova dated November 4, 1980, 2.

EN BANC

G.R. No. 101279 August 6, 1992

PHILIPPINE ASSOCIATION OF SERVICE EXPORTERS, INC., petitioner, -versus-HON. RUBEN D. TORRES, as Secretary of the Department of Labor & Employment, and JOSE N. SARMIENTO, as Administrator of the PHILIPPINE OVERSEAS EMPLOYMENT ADMINISTRATION, respondents.

De Guzman, Meneses & Associates for petitioner.

 

GRIÑO-AQUINO, J.:

This petition for prohibition with temporary restraining order was filed by the Philippine Association of Service Exporters (PASEI, for short), to prohibit and enjoin the Secretary of the Department of Labor and Employment (DOLE) and the Administrator of the Philippine Overseas Employment Administration (or POEA) from enforcing and implementing DOLE Department Order No. 16, Series of 1991 and POEA Memorandum Circulars Nos. 30 and 37, Series of 1991, temporarily suspending the recruitment by private employment agencies of Filipino domestic helpers for Hong Kong and vesting in the DOLE, through the facilities of the POEA, the task of processing and deploying such workers.

PASEI is the largest national organization of private employment and recruitment agencies duly licensed and authorized by the POEA, to engaged in the business of obtaining overseas employment for Filipino landbased workers, including domestic helpers.

On June 1, 1991, as a result of published stories regarding the abuses suffered by Filipino housemaids employed in Hong Kong, DOLE Secretary Ruben D. Torres issued Department Order No. 16, Series of

1991, temporarily suspending the recruitment by private employment agencies of "Filipino domestic helpers going to Hong Kong" (p. 30, Rollo). The DOLE itself, through the POEA took over the business of deploying such Hong Kong-bound workers.

In view of the need to establish mechanisms that will enhance the protection for Filipino domestic helpers going to Hong Kong, the recruitment of the same by private employment agencies is hereby temporarily suspended effective 1 July 1991. As such, the DOLE through the facilities of the Philippine Overseas Employment Administration shall take over the processing and deployment of household workers bound for Hong Kong, subject to guidelines to be issued for said purpose.

In support of this policy, all DOLE Regional Directors and the Bureau of Local Employment's regional offices are likewise directed to coordinate with the POEA in maintaining a manpower pool of prospective domestic helpers to Hong Kong on a regional basis.

For compliance. (Emphasis ours; p. 30, Rollo.)

Pursuant to the above DOLE circular, the POEA issued Memorandum Circular No. 30, Series of 1991, dated July 10, 1991, providing GUIDELINES on the Government processing and deployment of Filipino domestic helpers to Hong Kong and the accreditation of Hong Kong recruitment agencies intending to hire Filipino domestic helpers.

Subject: Guidelines on the Temporary Government Processing and Deployment of Domestic Helpers to Hong Kong.

Pursuant to Department Order No. 16, series of 1991 and in order to operationalize the temporary government processing and deployment of domestic helpers (DHs) to Hong Kong resulting from the temporary suspension of recruitment by private employment agencies for said skill

and host market, the following guidelines and mechanisms shall govern the implementation of said policy.

I. Creation of a joint POEA-OWWA Household Workers Placement Unit (HWPU)

An ad hoc, one stop Household Workers Placement Unit [or HWPU] under the supervision of the POEA shall take charge of the various operations involved in the Hong Kong-DH industry segment:

The HWPU shall have the following functions in coordination with appropriate units and other entities concerned:

1. Negotiations with and Accreditation of Hong Kong Recruitment Agencies

2. Manpower Pooling

3. Worker Training and Briefing

4. Processing and Deployment

5. Welfare Programs

II. Documentary Requirements and Other Conditions for Accreditation of Hong Kong Recruitment Agencies or Principals

Recruitment agencies in Hong Kong intending to hire Filipino DHs for their employers may negotiate with the HWPU in Manila directly or through the Philippine Labor Attache's Office in Hong Kong.

xxx   xxx   xxx

X. Interim Arrangement

All contracts stamped in Hong Kong as of June 30 shall continue to be processed by POEA until 31 July 1991 under the name of the Philippine agencies concerned. Thereafter, all contracts shall be processed with the HWPU.

Recruitment agencies in Hong Kong shall submit to the Philippine Consulate General in Hong kong a list of their accepted applicants in their pool within the last week of July. The last day of acceptance shall be July 31 which shall then be the basis of HWPU in accepting contracts for processing. After the exhaustion of their respective pools the only source of applicants will be the POEA manpower pool.

For strict compliance of all concerned. (pp. 31-35, Rollo.)

On August 1, 1991, the POEA Administrator also issued Memorandum Circular No. 37, Series of 1991, on the processing of employment contracts of domestic workers for Hong Kong.

TO: All Philippine and Hong Kong Agencies engaged in the recruitment of Domestic helpers for Hong Kong

Further to Memorandum Circular No. 30, series of 1991 pertaining to the government processing and deployment of domestic helpers (DHs) to Hong Kong, processing of employment contracts which have been attested by the Hong Kong Commissioner of Labor up to 30 June 1991 shall be processed by the POEA Employment Contracts Processing Branch up to 15 August 1991 only.

Effective 16 August 1991, all Hong Kong recruitment agent/s hiring DHs from the Philippines shall recruit under the new scheme which requires prior accreditation which the POEA.

Recruitment agencies in Hong Kong may apply for accreditation at the Office of the Labor Attache, Philippine Consulate General where a POEA team is posted until 31 August 1991. Thereafter, those who failed to have themselves accredited in Hong Kong may proceed to the POEA-OWWA Household Workers Placement Unit in Manila for accreditation before their recruitment and processing of DHs shall be allowed.

Recruitment agencies in Hong Kong who have some accepted applicants in their pool after the cut-off period shall submit this list of workers upon accreditation. Only those DHs in said list will be allowed processing outside of the HWPU manpower pool.

For strict compliance of all concerned. (Emphasis supplied, p. 36, Rollo.)

On September 2, 1991, the petitioner, PASEI, filed this petition for prohibition to annul the aforementioned DOLE and POEA circulars and to prohibit their implementation for the following reasons:

1. that the respondents acted with grave abuse of discretion and/or in excess of their rule-making authority in issuing said circulars;

2. that the assailed DOLE and POEA circulars are contrary to the Constitution, are unreasonable, unfair and oppressive; and

3. that the requirements of publication and filing with the Office of the National Administrative Register were not complied with.

There is no merit in the first and second grounds of the petition.

Article 36 of the Labor Code grants the Labor Secretary the power to restrict and regulate recruitment and placement activities.

Art. 36. Regulatory Power. — The Secretary of Labor shall have the power to restrict and regulate the recruitment and placement activities of all agencies within the coverage of this title [Regulation of Recruitment and Placement Activities] and is hereby authorized to issue orders and promulgate rules and regulations to carry out the objectives and implement the provisions of this title. (Emphasis ours.)

On the other hand, the scope of the regulatory authority of the POEA, which was created by Executive Order No. 797 on May 1, 1982 to take over the functions of the Overseas Employment Development Board, the National Seamen Board, and the overseas employment functions of the Bureau of Employment Services, is broad and far-ranging for:

1. Among the functions inherited by the POEA from the defunct Bureau of Employment Services was the power and duty:

"2. To establish and maintain a registration and/or licensing system to regulate private sector participation in the recruitment and placement of workers, locally and overseas, . . ." (Art. 15, Labor Code, Emphasis supplied). (p. 13, Rollo.)

2. It assumed from the defunct Overseas Employment Development Board the power and duty:

3. To recruit and place workers for overseas employment of Filipino contract workers on a government to government arrangement and in such other sectors as policy may dictate . . . (Art. 17, Labor Code.) (p. 13, Rollo.)

3. From the National Seamen Board, the POEA took over:

2. To regulate and supervise the activities of agents or representatives of shipping companies in the hiring of seamen for overseas employment; and secure the best possible terms of employment for contract seamen workers and secure compliance therewith. (Art. 20, Labor Code.)

The vesture of quasi-legislative and quasi-judicial powers in administrative bodies is not unconstitutional, unreasonable and oppressive. It has been necessitated by "the growing complexity of the modern society" (Solid Homes, Inc. vs. Payawal, 177 SCRA 72, 79). More and more administrative bodies are necessary to help in the regulation of society's ramified activities. "Specialized in the particular field assigned to them, they can deal with the problems thereof with more expertise and dispatch than can be expected from the legislature or the courts of justice" (Ibid.).

It is noteworthy that the assailed circulars do not prohibit the petitioner from engaging in the recruitment and deployment of Filipino landbased workers for overseas employment. A careful reading of the challenged administrative issuances discloses that the same fall within the "administrative and policing powers expressly or by necessary implication conferred" upon the respondents (People vs. Maceren, 79 SCRA 450). The power to "restrict and regulate conferred by Article 36 of the Labor Code involves a grant of police power (City of Naga vs. Court of Appeals, 24 SCRA 898). To "restrict" means "to confine, limit or stop" (p. 62, Rollo) and whereas the power to "regulate" means "the power to protect, foster, promote, preserve, and control with due regard for the interests, first and foremost, of the public, then of the utility and of its patrons" (Philippine Communications Satellite Corporation vs. Alcuaz, 180 SCRA 218).

The Solicitor General, in his Comment, aptly observed:

. . . Said Administrative Order [i.e., DOLE Administrative Order No. 16] merely restricted the scope or area of petitioner's business operations by excluding therefrom recruitment and deployment of domestic

helpers for Hong Kong till after the establishment of the "mechanisms" that will enhance the protection of Filipino domestic helpers going to Hong Kong. In fine, other than the recruitment and deployment of Filipino domestic helpers for Hongkong, petitioner may still deploy other class of Filipino workers either for Hongkong and other countries and all other classes of Filipino workers for other countries.

Said administrative issuances, intended to curtail, if not to end, rampant violations of the rule against excessive collections of placement and documentation fees, travel fees and other charges committed by private employment agencies recruiting and deploying domestic helpers to Hongkong. [They are reasonable, valid and justified under the general welfare clause of the Constitution, since the recruitment and deployment business, as it is conducted today, is affected with public interest.

xxx   xxx   xxx

The alleged takeover [of the business of recruiting and placing Filipino domestic helpers in Hongkong] is merely a remedial measure, and expires after its purpose shall have been attained. This is evident from the tenor of Administrative Order No. 16 that recruitment of Filipino domestic helpers going to Hongkong by private employment agencies are hereby "temporarily suspended effective July 1, 1991."

The alleged takeover is limited in scope, being confined to recruitment of domestic helpers going to Hongkong only.

xxx   xxx   xxx

. . . the justification for the takeover of the processing and deploying of domestic helpers for Hongkong resulting from the restriction of the scope of petitioner's business is

confined solely to the unscrupulous practice of private employment agencies victimizing applicants for employment as domestic helpers for Hongkong and not the whole recruitment business in the Philippines. (pp. 62-65, Rollo.)

The questioned circulars are therefore a valid exercise of the police power as delegated to the executive branch of Government.

Nevertheless, they are legally invalid, defective and unenforceable for lack of power publication and filing in the Office of the National Administrative Register as required in Article 2 of the Civil Code, Article 5 of the Labor Code and Sections 3(1) and 4, Chapter 2, Book VII of the Administrative Code of 1987 which provide:

Art. 2. Laws shall take effect after fifteen (15) days following the completion of their publication in the Official Gazatte, unless it is otherwise provided. . . . (Civil Code.)

Art. 5. Rules and Regulations. — The Department of Labor and other government agencies charged with the administration and enforcement of this Code or any of its parts shall promulgate the necessary implementing rules and regulations. Such rules and regulations shall become effective fifteen (15) days after announcement of their adoption in newspapers of general circulation. (Emphasis supplied, Labor Code, as amended.)

Sec. 3. Filing. — (1) Every agency shall file with the University of the Philippines Law Center, three (3) certified copies of every rule adopted by it. Rules in force on the date of effectivity of this Code which are not filed within three (3) months shall not thereafter be the basis of any sanction against any party or persons. (Emphasis supplied, Chapter 2, Book VII of the Administrative Code of 1987.)

Sec. 4. Effectivity. — In addition to other rule-making requirements provided by law not inconsistent with this Book, each rule shall become effective fifteen (15) days from the date of filing as above provided unless a different date is fixed by law, or specified in the rule in cases of imminent danger to public health, safety and welfare, the existence of which must be expressed in a statement accompanying the rule. The agency shall take appropriate measures to make emergency rules known to persons who may be affected by them. (Emphasis supplied, Chapter 2, Book VII of the Administrative Code of 1987).

Once, more we advert to our ruling in Tañada vs. Tuvera, 146 SCRA 446 that:

. . . Administrative rules and regulations must also be published if their purpose is to enforce or implement existing law pursuant also to a valid delegation. (p. 447.)

Interpretative regulations and those merely internal in nature, that is, regulating only the personnel of the administrative agency and not the public, need not be published. Neither is publication required of the so-called letters of instructions issued by administrative superiors concerning the rules or guidelines to be followed by their subordinates in the performance of their duties. (p. 448.)

We agree that publication must be in full or it is no publication at all since its purpose is to inform the public of the content of the laws. (p. 448.)

For lack of proper publication, the administrative circulars in question may not be enforced and implemented.

WHEREFORE, the writ of prohibition is GRANTED. The implementation of DOLE Department Order No. 16, Series of 1991, and POEA Memorandum Circulars Nos. 30 and 37, Series of 1991, by the public respondents is hereby SUSPENDED pending compliance with

the statutory requirements of publication and filing under the aforementioned laws of the land.

SO ORDERED.

Narvasa, C.J., Gutierrez, Jr., Cruz, Feliciano, Padilla, Bidin, Medialdea, Regalado, Davide, Jr., Romero, Nocon and Bellosillo, JJ., concur.

____________________________________

SECOND DIVISION

G.R. No. L-46158 November 28, 1986

TAYUG RURAL BANK, plaintiff-appellee, -versus-CENTRAL BANK OF THE PHILIPPINES, defendant-appellant.

Bengzon, Bengzon, Villaroman & De Vera Law Office for plaintiff-appellee.

Evangelista, Bautista & Valdehuesa Law Office for defendant-appellant.

 

PARAS, J.:p

Submitted on May 20, 1977 for decision by this Court is this appeal from the decision dated January 6, 1971 rendered by the Court of First Instance of Manila, Branch III in Civil Case No. 76920, the decretal portion of which states as follows:

WHEREFORE, judgment is rendered for the plaintiff on the complaint and the defendant is ordered to further credit the plaintiff the amounts collected as 10% penalty in the sum of P19,335.88 or up to July 15, 1969 and to

refrain from collecting the said 10% penalty on the remaining past due loans of plaintiff with the defendant.

With respect to defendant's counterclaim, judgment is hereby rendered against the plaintiff and the defendant is ordered to pay the Central Bank of the Philippines the outstanding balance of its past overdue accounts in the sum of P444,809,45 plus accrued interest at the rate of 1/2 of 1 % per annum with respect to the promissory notes (Annexes 1 to 1-E of defendant's Answer) and 2-1/2% per annum with respect to the promissory notes (Annexes 1-f to 1-i of the Answer). From this amount shall be deducted the sum of P19,335.88 collected as 10% penalty.

The facts of the case based on the parties' stipulation of facts (Record on Appeal p. 67), are as follows:

Plaintiff-Appellee, Tayug Rural Bank, Inc., is a banking corporation in Tayug, Pangasinan. During the period from December 28, 1962 to July 30, 1963, it obtained thirteen (13) loans from Defendant-Appellant, Central Bank of the Philippines, by way of rediscounting, at the rate of 1/2 of 1% per annum from 1962 to March 28, 1963 and thereafter at the rate of 2-1/2% per anum. The loans, amounting to P813,000.00 as of July 30, 1963, were all covered by corresponding promissory notes prescribing the terms and conditions of the aforesaid loans (Record on Appea, pp. 15-53). As of July 15, 1969, the outstanding balance was P 444,809.45 (Record on Appeal, p. 56).

On December 23, 1964, Appellant, thru the Director of the Department of Loans and Credit, issued Memorandum Circular No. DLC-8, informing all rural banks that an additional penalty interest rate of ten per cent (10%) per annum would be assessed on all past due loans beginning January 4, 1965. Said Memorandum Circular was actually enforced on all rural banks effective July 4, 1965.

On June 27, 1969, Appellee Rural Bank sued Appellant in the Court of First Instance of Manila, Branch III, to recover the 10% penalty imposed by Appellant amounting to P16,874.97, as of September 27, 1968 and to

restrain Appellant from continuing the imposition of the penalty. Appellant filed a counterclaim for the outstanding balance and overdue accounts of Appellee in the total amount of P444,809.45 plus accrued interest and penalty at 10% per annum on the outstanding balance until full payment. (Record on Appeal, p. 13). Appellant justified the imposition of the penalty by way of affirmative and special defenses, stating that it was legally imposed under the provisions of Section 147 and 148 of the Rules and Regulations Governing Rural Banks promulgated by the Monetary Board on September 5, 1958, under authority of Section 3 of Republic Act No. 720, as amended (Record on Appeal, p. 8, Affirmative and Special Defenses Nos. 2 and 3).

In its answer to the counterclaim, Appellee prayed for the dismissal of the counterclaim, denying Appellant's allegations stating that if Appellee has any unpaid obligations with Appellant, it was due to the latter's fault on account of its flexible and double standard policy in the granting of rediscounting privileges to Appellee and its subsequent arbitrary and illegal imposition of the 10% penalty (Record on Appeal, p. 57). In its Memorandum filed on November 11, 1970, Appellee also asserts that Appellant had no basis to impose the penalty interest inasmuch as the promissory notes covering the loans executed by Appellee in favor of Appellants do not provide for penalty interest rate of 10% per annum on just due loans beginning January 4, 1965 (Record on Appeal p. 96).

The lower court, in its Order dated March 3, 1970, stated that "only a legal question has been raised in the pleadings" and upholding the stand of plaintiff Rural Bank, decided the case in its favor. (Rollo, p. 34).

Appellant appealed the decision of the trial court to the Court of Appeals, for determination of questions of facts and of law. However, in its decision promulgated April 13, 1977, the Court of Appeals, finding no controverted facts and taking note of the statement of the lower court in its pre-trial Order dated March 3, 1970 that only a legal question has been raised in the pleadings, (Record on Appeal, p. 61), ruled that the resolution of the appeal will solely depend on the legal issue of whether or not the Monetary Board had authority to authorize Appellant Central Bank to impose a penalty rate of 10% per annum on past due loans of rural banks which had failed to pay their accounts on time and ordered

the certification of this case to this Court for proper determination (Rollo, pp. 34-35).

On April 20, 1977, the entire record of the case was forwarded to this Court (Rollo, p. 36). In the resolution of May 20, 1977, the First Division of this Court, ordered the case docketed and as already stated declared the same submitted for decision (Rollo, p. 38).

In its Brief, Appellant assigns the following errors:

I. THE LOWER COURT ERRED IN HOLDING THAT IT IS BEYOND THE REACH OF THE MONETARY BOARD TO METE OUT PENALTIES ON PAST DUE LOANS OF RURAL BANKS ESPECIALLY SINCE NO PENAL CLAUSE HAS BEEN INCLUDED IN THE PROMISSORY NOTES.

II. THE LOWER COURT ERRED IN HOLDING THAT THE IMPOSITION OF THE PENALTY IS AN IMPAIRMENT OF THE OBLIGATION OF CONTRACT WITHOUT DUE PROCESS.

III. THE LOWER COURT ERRED IN NOT FINDING JUDGMENT AGAINST PLAINTIFF FOR 10% COST OF COLLECTION OF THE PROMISSORY NOTE AS PROVIDED THEREIN.

It is undisputed that no penal clause has been included in the promissory notes. For this reason, the trial court is of the view that Memorandum Circular DLC-8 issued on December 23, 1964 prescribing retroactive effect on all past due loans, impairs the obligation of contract and deprives the plaintiff of its property without due process of law. (Record on Appel, p. 40).

On the other hand appellant without opposing appellee's right against impairment of contracts, contends that when the promissory notes were signed by appellee, it was chargeable with knowledge of Sections 147 and 148 of the rules and regulations authorizing the Central Bank to impose additional reasonable penalties, which became part of the agreement. (ibid).

Accordingly, the issue is reduced to the sole question as to whether or not the Central Bank can validly impose the 10% penalty on Appellee's past overdue loans beginning July 4, 1965, by virtue of Memorandum Circular No. DLC-8 dated December 23, 1964.

The answer is in the negative.

Memorandum Circular No. DLC-8 issued by the Director of Appellant's Department of Loans and Credit on December 23, 1964, reads as follows:

Pursuant to Monetary Board Resolution No. 1813 dated December 18, 1964, and in consonance with Section 147 and 148 of the Rules and Regulations Governing Rural Banks concerning the responsibility of a rural bank to remit immediately to the Central Bank payments received on papers rediscounted with the latter including the loan value of rediscounted papers as they mature, and to liquidate fully its maturing loan obligations with the Central Bank, personal checks, for purposes of repayment, shall considered only after such personal checks shall have been honored at clearing.

In addition, rural banks which shall default in their loan obligations, thus incurring past due accounts with the Central Bank, shall be assessed an additional penalty interest rate of ten per cent (10%) per annum on such past due accounts with the Central Bank over and above the customary interest rate(s) at which such loans were originally secured from the Central Bank. (Record on Appeal, p. 135).

The above-quoted Memorandum Circular was issued on the basis of Sections 147 and 148 of the Rules and Regulations Governing Rural Banks of the Philippines approved on September 5, 1958, which provide:

Section 147. Duty of Rural Bank to turn over payment received for papers discounted or used for collateral. — A Rural Bank receiving any payment on account of papers discounted or used for collateral must turn the same over to the creditor bank before

the close of the banking day next following the receipt of payment, as long as the aggregate discounting on loan amount is not fully paid, unless the Rural Bank substitutes the same with another eligible paper with at least the same or earlier maturity and the same or greater value.

A Rural Bank failing to comply with the provisions of the preceding paragraph shall ipso facto lose its right to the rediscounting or loan period, without prejudice to the Central Bank imposing additional reasonable penalties, including curtailment or withdrawal of financial assistance.

Sec. 148. Default and other violations of obligation by Rural Bank, effect. — A Rural Bank becomes in default upon the expiration of the maturity period of its note, or that of the papers discounted or used as collateral, without the necessity of demand.

A Rural Bank incurring default, or in any other manner, violating any of the stipulations in its note, shall suffer the consequences provided in the second paragraph of the preceding section. (Record on Appeal, p. 136.)

The "Rules and Regulations Governing Rural Banks" was published in the Official Gazette, 55 O.G., on June 13, 1959, pp. 5186-5289. It is by virtue of these same Rules that Rural Banks re-discount their loan papers with the Central Bank at 2-1/2% interest per annum and in turn lend the money to the public at 12% interest per annum (Defendant's Reply to Plaintiff's Memorandum, Record on Appeal, p. 130).

Appellant maintains that it is pursuant to Section 3 of R.A. No. 720, as amended, that the Monetary Board has adopted the set of Rules and Regulations Governing Rural Banks. It reads:

SEC. 3. In furtherance of this policy, the Monetary Board of the Central Bank of the Philippines shall formulate the necessary rules and regulations governing the establishment and operatives of Rural Banks for the purpose of providing adequate credit facilities to small farmers and merchants, or to cooperatives of

such farmers or merchants and to supervise the operation of such banks.

The specific provision under the law claimed as basis for Sections 147 and 148 of the Rules and Regulations Governing Rural Banks, that is, on Appellant's authority to extend loans to Rural Banks by way of rediscounting is Section 13 of R.A. 720, as amended, which provides:

SEC. 13. In an emergency or when a financial crisis is imminent the Central Bank may give a loan to any Rural Bank against assets of the Rural Bank which may be considered acceptable by a concurrent vote of at least, five members of the Monetary Board.

In normal times, the Central Bank may re-discount against papers evidencing a loan granted by a Rural Bank to any of its customers which can be liquefied within a period of two hundred and seventy days: PROVIDED, HOWEVER, That for the purpose of implementing a nationwide program of agricultural and industrial development, Rural Banks are hereby authorized under such terms and conditions as the Central Bank shall prescribe to borrow on a medium or long term basis, funds that the Central Bank or any other government financing institutions shall borrow from the International Bank for Reconstruction and Development or other international or foreign lending institutions for the specific purpose of financing the above stated agricultural and industrial program. Repayment of loans obtained by the Central Bank of the Philippines or any other government financing institution from said foreign lending institutions under this section shall be guaranteed by the Republic of the Philippines.

As to the supervising authority of the Monetary Board of the Central Bank over Rural Banks, the same is spelled-out under Section 10 of R.A. 720, as follows:

SEC. 10. The power to supervise the operation of any Rural Bank by the Monetary Board of the Central Bank as herein indicated, shall consist in placing limits to the maximum credit

allowed any individual borrower; in prescribing the interest rate; in determining the loan period and loan procedure; in indicating the manner in which technical assistance shall be extended to Rural Banks; in imposing a uniform accounting system and manner of keeping the accounts and records of the Rural Banks; in undertaking regular credit examination of the Rural Banks: in instituting periodic surveys of loan and lending procedures, audits, test check of cash and other transactions of the Rural Banks; in conducting training courses for personnel of Rural Banks; and, in general in supervising the business operation of the Rural Banks.

Nowhere in any of the above-quoted pertinent provisions of R.A. 720 nor in any other provision of R.A. 720 for that matter, is the monetary Board authorized to mete out on rural banks an additional penalty rate on their past due accounts with Appellant. As correctly stated by the trial court, while the Monetary Board possesses broad supervisory powers, nonetheless, the retroactive imposition of administrative penalties cannot be taken as a measure supervisory in character. (Record on Appeal, p. 141).

Administrative rules and regulations have the force and effect of law (Valerio v. Hon. Secretary of Agriculture and Natural Resources, 7 SCRA 719; Commissioner of Civil Service v. Cruz, 15 SCRA 638; R.B. Industrial Development Company, Ltd. v. Enage, 24 SCRA 365; Director of Forestry v. Munoz, 23 SCRA 1183; Gonzalo Sy v. Central Bank of the Philippines, 70 SCRA 570).

There are, however, limitations to the rule-making power of administrative agencies. A rule shaped out by jurisprudence is that when Congress authorizes promulgation of administrative rules and regulations to implement given legislation, all that is required is that the regulation be not in contradiction with it, but conform to the standards that the law prescribes (Director of Forestry v. Munoz, 23 SCRA 1183). The rule delineating the extent of the binding force to be given to administrative rules and regulations was explained by the Court in Teoxon v. Member of the Board of Administrators (33 SCRA 588), thus: "The recognition of the power of administrative officials to promulgate rules in the implementation of the statute, as necessarily

limited to what is provided for in the legislative enactment, may be found as early as 1908 in the case of United States v. Barrias (11 Phil. 327) in 1914 U.S. v. Tupasi Molina (29 Phil. 119), in 1936 People v. Santos (63 Phil. 300), in 1951 Chinese Flour Importers Ass. v. Price Stabilization Board (89 Phil. 439), and in 1962 Victorias Milling Co., Inc. v. Social Security Commission (4 SCRA 627). The Court held in the same case that "A rule is binding on the courts so long as the procedure fixed for its promulgation is followed and its scope is within the statute granted by the legislature, even if the courts are not in agreement with the policy stated therein or its innate wisdom ...." On the other hand, "administrative interpretation of the law is at best merely advisory, for it is the courts that finally determine what the law means." Indeed, it cannot be otherwise as the Constitution limits the authority of the President, in whom all executive power resides, to take care that the laws be faithfully executed. No lesser administrative, executive office, or agency then can, contrary to the express language of the Constitution, assert for itself a more extensive prerogative. Necessarily, it is bound to observe the constitutional mandate. There must be strict compliance with the legislative enactment. The rule has prevailed over the years, the latest restatement of which was made by the Court in the case of Bautista v. Junio (L-50908, January 31, 1984, 127 SCRA 342).

In case of discrepancy between the basic law and a rule or regulation issued to implement said law, the basic law prevails because said rule or regulation cannot go beyond the terms and provisions of the basic law (People v. Lim, 108 Phil. 1091). Rules that subvert the statute cannot be sanctioned (University of St. Tomas v. Board of Tax Appeals, 93 Phil. 376; Del Mar v. Phil. Veterans Administration, 51 SCRA 340). Except for constitutional officials who can trace their competence to act to the fundamental law itself, a public official must locate in the statute relied upon a grant of power before he can exercise it. Department zeal may not be permitted to outrun the authority conferred by statute (Radio Communications of the Philippines, Inc. v. Santiago, L-29236, August 21, 1974, 58 SCRA 493).

When promulgated in pursuance of the procedure or authority conferred upon the administrative agency by law, the rules and regulations partake of the nature of a statute, and compliance therewith may be enforced by a penal sanction provided in the law (Victorias Milling Co., Inc. v.

Social Security Commission, 114 Phil. 555; People v. Maceren, L-32166, October 18, 1977, 79 SCRA 462; Daza v. Republic, L-43276, September 28, 1984, 132 SCRA 267). Conversely, the rule is likewise clear. Hence an administrative agency cannot impose a penalty not so provided in the law authorizing the promulgation of the rules and regulations, much less one that is applied retroactively.

The records show that DLC Form No. 11 (Folder of Exhibits, p. 16) was revised December 23, 1964 to include the penal clause, as follows:

In the event that this note becomes past due, the undersigned shall pay a penalty at the rate of _____ per cent ( ) per annum on such past due account over and above the interest rate at which such loan was originally secured from the Central Bank.

Such clause was not a part of the promissory notes executed by Appellee to secure its loans. Appellant inserted the clause in the revised DLC Form No. 11 to make it a part of the contractual obligation of rural banks securing loans from the Central Bank, after December 23, 1964. Thus, while there is now a basis for the imposition of the 10% penalty rate on overdue accounts of rural banks, there was none during the period that Appellee contracted its loans from Appellant, the last of which loan was on July 30, 1963. Surely, the rule cannot be given retroactive effect.

Finally, on March 31, 1970, the Monetary Board in its Resolution No. 475 effective April 1, 1970, revoked its Resolution No. 1813, dated December 18, 1964 imposing the questioned 10% per annum penalty rate on past due loans of rural banks and amended sub-paragraph (a), Section 10 of the existing guidelines governing rural banks' applications for a loan or rediscount, dated May 7, 1969 (Folder of Exhibits, p. 19). As stated by the trial court, this move on the part of the Monetary Board clearly shows an admission that it has no power to impose the 10% penalty interest through its rules and regulations but only through the terms and conditions of the promissory notes executed by the borrowing rural banks. Appellant evidently hoped that the defect could be adequately accomplished by the revision of DLC Form No. 11.

The contention that Appellant is entitled to the 10% cost of collection in case of suit and should therefore, have been awarded the same by the court below, is well taken. It is provided in all the promissory notes signed by Appellee that in case of suit for the collection of the amount of the note or any unpaid balance thereof, the Appellee Rural Bank shall pay the Central Bank of the Philippines a sum equivalent to ten (10%) per cent of the amount unpaid not in any case less than five hundred (P500.00) pesos as attorney's fees and costs of suit and collection. Thus, Appellee cannot be allowed to come to Court seeking redress for an wrong done against it and then be allowed to renege on its corresponding obligations.

PREMISES CONSIDERED, the decision of the trial court is hereby AFFIRMED with modification that Appellee Rural Bank is ordered to pay a sum equivalent to 10% of the outstanding balance of its past overdue accounts, but not in any case less than P500.00 as attorney's fees and costs of suit and collection.

SO ORDERED.

Feria (Chairman), Fernan, Alampay and Gutierrez, Jr., JJ., concur.

___________________

EN BANC

G.R. No. L-6339             April 20, 1954

MANUEL LARA, ET AL., plaintiffs-appellants, -versus-

PETRONILO DEL ROSARIO, JR., defendant-appellee.

Manansala and Manansala for appellants.Ramon L. Resurreccion for appellee.

MONTEMAYOR, J.:

In 1950 defendant Petronilo del Rosario, Jr., owner of twenty-five taxi cabs or cars, operated a taxi business under the name of "Waval Taxi." He employed among others three mechanics and 49 chauffeurs or drivers, the latter having worked for periods ranging from 2 to 37 months. On September 4, 1950, without giving said mechanics and chauffeurs 30 days advance notice, Del Rosario sold his 25 units or cabs to La Mallorca, a transportation company, as a result of which, according to the mechanics and chauffeurs above-mentioned they lost their jobs because the La Mallorca failed to continue them in their employment. They brought this action against Del Rosario to recover compensation for overtime work rendered beyond eight hours and on Sundays and legal holidays, and one month salary (mesada) provided for in article 302 of the Code of Commerce because the failure of their former employer to give them one month notice. Subsequently, the three mechanics unconditionally withdrew their claims. So only the 49 drivers remained as plaintiffs. The defendant filed a motion for dismissal of the complaint on the ground that it stated no cause of action and the trial court for the time being denied the motion saying that it will be considered when the case was heard on the merits. After trial the complaint was dismissed. Plaintiffs appealed from the order of dismissal to the Court of Appeals which Tribunal after finding only questions of law are involved, certified the case to us.

The parties are agreed that the plaintiffs as chauffeurs received no fixed compensation based on the hours or the period of time that they worked. Rather, they were paid on the commission basis, that is to say, each driver received 20 per cent of the gross returns or earnings from the operation of his taxi cab. Plaintiffs claim that as a rule, each drive operated a taxi 12 hours a day with gross earnings ranging from P20 to P25, receiving therefrom the corresponding 20 per cent share ranging from P4 to P5, and that in some cases, especially during Saturdays, Sundays, and holidays when a driver worked 24 hours a day he grossed from P40 to P50, thereby receiving a share of from P8 to P10 for the period of twenty-four hours.

The reason given by the trial court in dismissing the complaint is that the defendant being engaged in the taxi or transportation business which is a

public utility, came under the exception provided by the Eight-Hour Labor Law (Commonwealth Act No. 444); and because plaintiffs did not

work on a salary basis, that is to say, they had no fixed or regular salary or remuneration other than the 20 per cent of their gross earnings "their situation was therefore practically similar to piece workers and hence,

outside the ambit of article 302 of the Code of Commerce."

For purposes of reference we are reproducing the pertinent provisions of the Eight-Hour Labor Law, namely, sections 1 to 4.

SECTION 1. The legal working day for any person employed by another shall not be more than eight hours daily. When the work

is not continuous, the time during which the laborer is not working and can leave his working place and can rest completely

shall not be counted.

SEC. 2. This Act shall apply to all persons employed in any industry or occupation, whether public or private, with the

exception of farm laborers, laborers who prefer to be paid on piece work basis, domestic servants and persons in the personal service of another and members of the family of the employer

working for him.

SEC. 3. Work may be performed beyond eight hours a day in case of actual or impending emergencies, caused by serious

accidents, fire flood, typhoon, earthquakes, epidemic, or other disaster or calamity in order to prevent loss of life and property

or imminent danger to public safety; or in case of urgent work to be performed on the machines, equipment, or installations in

order to avoid a serious loss which the employer would otherwise suffer, or some other just cause of a similar nature; but

in all cases the laborers and the employees shall be entitled to receive compensation for the overtime work performed at the same rate as their regular wages or salary, plus at least twenty-

five per centum additional.

In case of national emergency the Government is empowered to establish rules and regulations for the operation of the plants and

factories and to determine the wages to be paid the laborers.

SEC. 4. No person, firm, or corporation, business establishment or place or center of work shall compel an employee or laborer to

work during Sundays and legal holidays, unless he is paid an additional sum of at least twenty-five per centum of his regular remuneration: Provided however,That this prohibition shall not apply to public utilities performing some public service such as supplying gas, electricity, power, water, or providing means of

transportation or communication.

Under section 4, as a public utility, the defendant could have his chauffeurs work on Sundays and legal holidays without paying them an additional sum of at least 25 per cent of their regular remuneration: but that with reference only to work performed on Sundays and holidays. If the work done on such days exceeds 8 hours a day, then the Eight-Hour Labor Law would operate, provided of course that plaintiffs came under

section 2 of the said law. So that the question to be decided here is whether or not plaintiffs are entitled to extra compensation for work

performed in excess of 8 hours a day, Sundays and holidays included.

It will be noticed that the last part of section 3 of Commonwealth Act 444 provides for extra compensation for over-time work "at the same

rate as theirregular wages or salary, plus at least twenty-five per centum additional'" and that section 2 of the same act excludes application

thereof laborers who preferred to be on piece work basis. This connotes that a laborer or employee with no fixed salary, wages or remuneration

but receiving as compensation from his employer uncertain and variable amount depending upon the work done or the result of said work (piece

work) irrespective of the amount of time employed, is not covered by the Eight-Hour Labor Law and is not entitled to extra compensation should

he work in excess of 8 hours a day. And this seems to be the condition of employment of the plaintiffs. A driver in the taxi business of the

defendant, like the plaintiffs, in one day could operate his taxi cab eight hours, or less than eight hours or in excess of 8 hours, or even 24 hours on Saturdays, Sundays, and holidays, with no limit or restriction other than his desire, inclination and state of health and physical endurance.

He could drive continuously or intermittently, systematically or haphazardly, fast or slow, etc. depending upon his exclusive wish or inclination. One day when he feels strong, active and enthusiastic he

works long, continuously, with diligence and industry and makes

considerable gross returns and receives as much as his 20 per cent commission. Another day when he feels despondent, run down, weak or lazy and wants to rest between trips and works for less number of hours, his gross returns are less and so is his commission. In other words, his

compensation for the day depends upon the result of his work, which in turn depends on the amount of industry, intelligence and experience

applied to it, rather than the period of time employed. In short, he has no fixed salary or wages. In this we agree with the learned trial court presided by Judge Felicisimo Ocampo which makes the following

findings and observations of this point.

. . . As already stated, their earnings were in the form of commission based on the gross receipts of the day. Their

participation in most cases depended upon their own industry. So much so that the more hours they stayed on the road, the greater the gross returns and the higher their commissions. They have no fixed hours of labor. They can retire at pleasure, they not being

paid a fixed salary on the hourly, daily, weekly or monthly basis.

It results that the working hours of the plaintiffs as taxi drivers were entirely characterized by its irregularity, as distinguished

from the specific regular remuneration predicated on specific and regular hours of work of factories and commercial employees.

In the case of the plaintiffs, it is the result of their labor, not the labor itself, which determines their commissions. They worked under no compulsion of turning a fixed income for each given

day. . . ..

In an opinion dated June 1, 1939 (Opinion No. 115) modified by Opinion No. 22, series 1940, dated June 11, 1940, the Secretary of Justice held that chauffeurs of the Manila Yellow Taxicab Co. who

"observed in a loose way certain working hours daily," and "the time they report for work as well as the time they leave work was left to their discretion.," receiving no fixed salary but only 20 per cent of their gross earnings, may be considered as piece workers and therefore not covered

by the provisions of the Eight-Hour Labor Law.

The Wage Administration Service of the Department of Labor in its Interpretative Bulletin No. 2 dated May 28, 1953, under "Overtime

Compensation," in section 3 thereof entitled Coverage, says:

The provisions of this bulletin on overtime compensation shall apply to all persons employed in any industry or occupation,

whether public or private, with the exception of farm laborers, non-agricultural laborers or employees who are paid on piece

work, contract, pakiao, task or commission basis,domestic servants and persons in the personal service of another and members of the family of the employer working for him.

From all this, to us it is clear that the claim of the plaintiffs-appellants for overtime compensation under the Eight-Hour Labor Law has no

valid support.

As to the month pay (mesada) under article 302 of the Code of Commerce, article 2270 of the new Civil Code (Republic Act 386)

appears to have repealed said Article 302 when it repealed the provisions of the Code of Commerce governing Agency. This repeal took place on August 30, 1950, when the new Civil Code went into effect, that is, one year after its publication in the Official Gazette. The alleged termination of services of the plaintiffs by the defendant took place according to the complaint on September 4, 1950, that is to say, after the repeal of Article

302 which they invoke. Moreover, said Article 302 of the Code of Commerce, assuming that it were still in force speaks of "salary

corresponding to said month." commonly known as "mesada." If the plaintiffs herein had no fixed salary either by the day, week or month, then computation of the month's salary payable would be impossible.

Article 302 refers to employees receiving a fixed salary. Dr. Arturo M. Tolentino in his book entitled "Commentaries and Jurisprudence on the Commercial Laws of the Philippines," Vol. 1, 4th edition, p. 160, says that article 302 is not applicable to employees without fixed salary. We

quote —

Employees not entitled to indemnity. — This article refers only to those who are engaged under salary basis, and not to those who only receive compensation equivalent to whatever service they

may render. (1 Malagarriga 314, citing decision of Argentina Court of Appeals on Commercial Matters.)

In view of the foregoing, the order appealed from is hereby affirmed, with costs against appellants.

Pablo, Bengzon, Padilla, Reyes, Jugo, Bautista Angelo, Labrador, Concepcion, and Diokno, JJ., concur.

Paras, C.J., concurs in the result.

Sample digest:G.R. No. L-6339: Lara vs del rosario

Effectivity of the Civil Code

Lara et al were former taxi drivers of del Rosario. When the latter sold some of his vehicles, the plaintiffs who were no longer needed were dismissed. Del Rosario did not give them their one month salary in lieu of the notice required in Art. 302 of the Code of Commerce. Lara sued Del Rosario.

ISSUE: When did the new Civil Code take effect?

HELD: The SC in an obiter dictum held that the new civil code took effect on August 30, 1950. this date is exactly one year fter the same was released for circulation in the Official Gazette. It was released on August 30, 1949. Since Lara et al instituted the action after the new Civil Code took effect, which repealed the Code of Commerce, they are not entitled to any compensation as may be provided by the repealed law.