SECOND DIVISION[G.R. No. 128448. February 1, 2001]

SPOUSES ALEJANDRO MIRASOL and LILIA E. MIRASOL, petitioners, vs. THE COURT OF APPEALS, PHILIPPINENATIONAL BANK, and PHILIPPINE EXCHANGE CO., INC., respondents.

D E C I S I O NQUISUMBING, J.:

This is a petition for review on certiorari of the decision of the Court of Appeals dated July 22, 1996, in CA-G.R. CV No. 38607,as well as of its resolution of January 23, 1997, denying petitioners’ motion for reconsideration. The challenged decision reversed thejudgment of the Regional Trial Court of Bacolod City, Branch 42 in Civil Case No. 14725.

The factual background of this case, as gleaned from the records, is as follows:The Mirasols are sugarland owners and planters. In 1973-1974, they produced 70,501.08 piculs [1] of sugar, 25,662.36 of which

were assigned for export. The following crop year, their acreage planted to the same crop was lower, yielding 65,100 piculs of sugar,with 23,696.40 piculs marked for export.

Private respondent Philippine National Bank (PNB) financed the Mirasols’ sugar production venture for crop years, 1973-1974and 1974-1975 under a crop loan financing scheme. Under said scheme, the Mirasols signed Credit Agreements, a Chattel Mortgageon Standing Crops, and a Real Estate Mortgage in favor of PNB. The Chattel Mortgage empowered PNB as the petitioners’ attorney-in-fact to negotiate and to sell the latter’s sugar in both domestic and export markets and to apply the proceeds to the payment of theirobligations to it.

Exercising his law-making powers under Martial Law, then President Ferdinand Marcos issued Presidential Decree (P.D.) No.579[2] in November, 1974. The decree authorized private respondent Philippine Exchange Co., Inc. (PHILEX) to purchase sugarallocated for export to the United States and to other foreign markets. The price and quantity was determined by the Sugar QuotaAdministration, PNB, the Department of Trade and Industry, and finally, by the Office of the President. The decree further authorizedPNB to finance PHILEX’s purchases. Finally, the decree directed that whatever profit PHILEX might realize from sales of sugarabroad was to be remitted to a special fund of the national government, after commissions, overhead expenses and liabilities had beendeducted. The government offices and entities tasked by existing laws and administrative regulations to oversee the sugar exportpegged the purchase price of export sugar in crop years 1973-1974 and 1974-1975 at P180.00 per picul.

PNB continued to finance the sugar production of the Mirasols for crop years 1975-1976 and 1976-1977. These crop loans andsimilar obligations were secured by real estate mortgages over several properties of the Mirasols and chattel mortgages over standingcrops. Believing that the proceeds of their sugar sales to PNB, if properly accounted for, were more than enough to pay theirobligations, petitioners asked PNB for an accounting of the proceeds of the sale of their export sugar. PNB ignored the request.Meanwhile, petitioners continued to avail of other loans from PNB and to make unfunded withdrawals from their current accountswith said bank. PNB then asked petitioners to settle their due and demandable accounts. As a result of these demands for payment,petitioners on August 4, 1977, conveyed to PNB real properties valued at P1,410,466.00 by way of dacion en pago, leaving an unpaidoverdrawn account of P1,513,347.78.

On August 10, 1982, the balance of outstanding sugar crop and other loans owed by petitioners to PNB stood at P15,964,252.93.Despite demands, the Mirasols failed to settle said due and demandable accounts. PNB then proceeded to extrajudicially foreclose themortgaged properties. After applying the proceeds of the auction sale of the mortgaged realties, PNB still had a deficiency claimofP12,551,252.93.

Petitioners continued to ask PNB to account for the proceeds of the sale of their export sugar for crop years 1973-1974 and 1974-1975, insisting that said proceeds, if properly liquidated, could offset their outstanding obligations with the bank. PNB remainedadamant in its stance that under P.D. No. 579, there was nothing to account since under said law, all earnings from the export sales ofsugar pertained to the National Government and were subject to the disposition of the President of the Philippines for public purposes.

On August 9, 1979, the Mirasols filed a suit for accounting, specific performance, and damages against PNB with the RegionalTrial Court of Bacolod City, docketed as Civil Case No. 14725.

On June 16, 1987, the complaint was amended to implead PHILEX as party-defendant.The parties agreed at pre-trial to limit the issues to the following:

“1. The constitutionality and/or legality of Presidential Decrees numbered 338, 579, and 1192;“2. The determination of the total amount allegedly due the plaintiffs from the defendants corresponding to the allege(d) unliquidated cost price of export sugar during crop years 1973-1974 and 1974-1975.”[3]

After trial on the merits, the trial court decided as follows:“WHEREFORE, the foregoing premises considered, judgment is hereby rendered in favor of the plaintiffs and against the defendants Philippine National Bank (PNB) and Philippine Exchange Co., Inc. (PHILEX):

(1)Declaring Presidential Decree 579 enacted on November 12, 1974 and all circulars, as well as policies, orders and otherissuances issued in furtherance thereof, unconstitutional and therefore, NULL and VOID being in gross violation of theBill of Rights;

(2) Ordering defendants PNB and PHILEX to pay, jointly and severally, plaintiffs the whole amount corresponding to theresidue of the unliquidated actual cost price of 25,662 piculs in export sugar for crop year 1973-1974 at an average priceof P300.00 per picul, deducting therefrom however, the amount of P180.00 already paid in advance plus the allowabledeductions in service fees and other charges;

(3) And also, for the same defendants to pay, jointly and severally, same plaintiffs the whole amount corresponding to theunpaid actual price of 14,596 piculs of export sugar for crop year 1974-1975 at an average rate of P214.14 per piculminus however, the sum of P180.00 per picul already paid by the defendants in advance and the allowable deducting(sic) in service fees and other charges.

“The unliquidated amount of money due the plaintiffs but withheld by the defendants, shall earn the legal rate of interest at 12% per annum computed from the date this action was instituted until fully paid; and, finally –

(4) Directing the defendants PNB and PHILEX to pay, jointly and severally, plaintiffs the sum of P50,000.00 in moraldamages and the amount of P50,000.00 as attorney’s fees, plus the costs of this litigation.

“SO ORDERED.”[4]

The same was, however, modified by a Resolution of the trial court dated May 14, 1992, which added the following paragraph: “This decision should however, be interpreted without prejudice to whatever benefits that may have accrued in favor of the plaintiffs with the passage and approval of Republic Act 7202 otherwise known as the ‘Sugar Restitution Law,’ authorizing the restitution of losses suffered by the plaintiffs from Crop year 1974-1975 to Crop year 1984-1985 occasioned by the actuations of government-owned and controlled agencies. (Underscoring in the original).“SO ORDERED.”[5]

The Mirasols then filed an appeal with the respondent court, docketed as CA-G.R. CV No. 38607, faulting the trial court for notnullifying the dacion en pago and the mortgage contracts, as well as the foreclosure of their mortgaged properties. Also faulted wasthe trial court’s failure to award them the full money claims and damages sought from both PNB and PHILEX.

On July 22, 1996, the Court of Appeals reversed the trial court as follows:“WHEREFORE, this Court renders judgment REVERSING the appealed Decision and entering the following verdict:“1. Declaring the dacion en pago and the foreclosure of the mortgaged properties valid;“2. Ordering the PNB to render an accounting of the sugar account of the Mirasol[s] specifically stating the indebtedness of the latter to the former and the proceeds of Mirasols’ 1973-1974 and 1974-1975 sugar production sold pursuant to and in accordance with P.D. 579 and the issuances therefrom;“3. Ordering the PNB to recompute in accordance with RA 7202 Mirasols’ indebtedness to it crediting to the latter payments already made as well as the auction price of their foreclosed real estate and stipulated value of their properties ceded to PNB in the dacon (sic) en pago;“4. Whatever the result of the recomputation of Mirasols’ account, the outstanding balance or the excess payment shall be governed bythe pertinent provisions of RA 7202.“SO ORDERED.”[6]

On August 28, 1996, petitioners moved for reconsideration, which the appellate court denied on January 23, 1997.Hence, the instant petition, with petitioners submitting the following issues for our resolution:

“1. Whether the Trial Court has jurisdiction to declare a statute unconstitutional without notice to the Solicitor General where the parties have agreed to submit such issue for the resolution of the Trial Court.“2. Whether PD 579 and subsequent issuances[7] thereof are unconstitutional.“3. Whether the Honorable Court of Appeals committed manifest error in not applying the doctrine of piercing the corporate veil between respondents PNB and PHILEX.“4. Whether the Honorable Court of Appeals committed manifest error in upholding the validity of the foreclosure on petitioners property and in upholding the validity of the dacion en pago in this case.“5. Whether the Honorable Court of Appeals committed manifest error in not awarding damages to petitioners grounds relied upon theallowance of the petition. (Underscored in the original)”[8]

On the first issue. It is settled that Regional Trial Courts have the authority and jurisdiction to consider the constitutionality of astatute, presidential decree, or executive order.[9] The Constitution vests the power of judicial review or the power to declare a law,treaty, international or executive agreement, presidential decree, order, instruction, ordinance, or regulation not only in this Court, butin all Regional Trial Courts.[10] In J.M. Tuason and Co. v. Court of Appeals, 3 SCRA 696 (1961) we held:“Plainly, the Constitution contemplates that the inferior courts should have jurisdiction in cases involving constitutionality of any treaty or law, for it speaks of appellate review of final judgments of inferior courts in cases where such constitutionality happens to be in issue.”[11]

Furthermore, B.P. Blg. 129 grants Regional Trial Courts the authority to rule on the conformity of laws or treaties with theConstitution, thus:“SECTION 19. Jurisdiction in civil cases. – Regional Trial Courts shall exercise exclusive original jurisdiction:(1) In all civil actions in which the subject of the litigations is incapable of pecuniary estimation;”

The pivotal issue, which we must address, is whether it was proper for the trial court to have exercised judicial review.Petitioners argue that the Court of Appeals erred in finding that it was improper for the trial court to have declared P.D. No.

579[12] unconstitutional, since petitioners had not complied with Rule 64, Section 3, of the Rules of Court. Petitioners contend thatsaid Rule specifically refers only to actions for declaratory relief and not to an ordinary action for accounting, specific performance,and damages.

Petitioners’ contentions are bereft of merit. Rule 64, Section 3 of the Rules of Court provides:

“SEC. 3. Notice to Solicitor General. – In any action which involves the validity of a statute, or executive order or regulation, the Solicitor General shall be notified by the party attacking the statute, executive order, or regulation, and shall be entitled to be heard upon such question.”

This should be read in relation to Section 1 [c] of P.D. No. 478,[13] which states in part:“SECTION 1. Functions and Organizations – (1) The Office of the Solicitor General shall…have the following specific powers and functions:

xxx“[c] Appear in any court in any action involving the validity of any treaty, law, executive order or proclamation, rule or regulation when in his judgment his intervention is necessary or when requested by the court.”

It is basic legal construction that where words of command such as “shall,” “must,” or “ought” are employed, they are generallyand ordinarily regarded as mandatory.[14] Thus, where, as in Rule 64, Section 3 of the Rules of Court, the word “shall” is used, amandatory duty is imposed, which the courts ought to enforce.

The purpose of the mandatory notice in Rule 64, Section 3 is to enable the Solicitor General to decide whether or not hisintervention in the action assailing the validity of a law or treaty is necessary. To deny the Solicitor General such notice would betantamount to depriving him of his day in court. We must stress that, contrary to petitioners’ stand, the mandatory notice requirementis not limited to actions involving declaratory relief and similar remedies. The rule itself provides that such notice is required in “anyaction” and not just actions involving declaratory relief. Where there is no ambiguity in the words used in the rule, there is no room forconstruction.[15] In all actions assailing the validity of a statute, treaty, presidential decree, order, or proclamation, notice to theSolicitor General is mandatory.

In this case, the Solicitor General was never notified about Civil Case No. 14725. Nor did the trial court ever require him toappear in person or by a representative or to file any pleading or memorandum on the constitutionality of the assailed decree. Hence,the Court of Appeals did not err in holding that lack of the required notice made it improper for the trial court to pass upon theconstitutional validity of the questioned presidential decrees.

As regards the second issue, petitioners contend that P.D. No. 579 and its implementing issuances are void for violating the dueprocess clause and the prohibition against the taking of private property without just compensation. Petitioners now ask this Court toexercise its power of judicial review.

Jurisprudence has laid down the following requisites for the exercise of this power: First, there must be before the Court anactual case calling for the exercise of judicial review. Second, the question before the Court must be ripe for adjudication. Third, theperson challenging the validity of the act must have standing to challenge. Fourth, the question of constitutionality must have beenraised at the earliest opportunity, and lastly, the issue of constitutionality must be the very lis mota of the case. [16]

As a rule, the courts will not resolve the constitutionality of a law, if the controversy can be settled on other grounds. [17] Thepolicy of the courts is to avoid ruling on constitutional questions and to presume that the acts of the political departments are valid,absent a clear and unmistakable showing to the contrary. To doubt is to sustain. This presumption is based on the doctrine ofseparation of powers. This means that the measure had first been carefully studied by the legislative and executive departments andfound to be in accord with the Constitution before it was finally enacted and approved.[18]

The present case was instituted primarily for accounting and specific performance. The Court of Appeals correctly ruled thatPNB’s obligation to render an accounting is an issue, which can be determined, without having to rule on the constitutionality of P.D.No. 579. In fact there is nothing in P.D. No. 579, which is applicable to PNB’s intransigence in refusing to give an accounting. Thegoverning law should be the law on agency, it being undisputed that PNB acted as petitioners’ agent. In other words, the requisite thatthe constitutionality of the law in question be the very lis mota of the case is absent. Thus we cannot rule on the constitutionalityof P.D. No. 579.

Petitioners further contend that the passage of R.A. No. 7202 [19] rendered P.D. No. 579 unconstitutional, since R.A. No. 7202affirms that under P.D. 579, the due process clause of the Constitution and the right of the sugar planters not to be deprived of theirproperty without just compensation were violated.

A perusal of the text of R.A. No. 7202 shows that the repealing clause of said law merely reads:“SEC. 10. All laws, acts, executive orders and circulars in conflict herewith are hereby repealed or modified accordingly.”

The settled rule of statutory construction is that repeals by implication are not favored. [20] R.A. No. 7202 cannot be deemed tohave repealed P.D. No. 579. In addition, the power to declare a law unconstitutional does not lie with the legislature, but with thecourts.[21] Assuming arguendo that R.A. No. 7202 did indeed repeal P.D. No. 579, said repeal is not a legislative declaration findingthe earlier law unconstitutional.

To resolve the third issue, petitioners ask us to apply the doctrine of piercing the veil of corporate fiction with respect to PNB andPHILEX. Petitioners submit that PHILEX was a wholly-owned subsidiary of PNB prior to the latter’s privatization.

We note, however, that the appellate court made the following finding of fact:“1. PNB and PHILEX are separate juridical persons and there is no reason to pierce the veil of corporate personality. Both existed by virtue of separate organic acts. They had separate operations and different purposes and powers.”[22]

Findings of fact by the Court of Appeals are conclusive and binding upon this Court unless said findings are not supported by theevidence.[23] Our jurisdiction in a petition for review under Rule 45 of the Rules of Court is limited only to reviewing questions of lawand factual issues are not within its province.[24] In view of the aforequoted finding of fact, no manifest error is chargeable to therespondent court for refusing to pierce the veil of corporate fiction.

On the fourth issue, the appellate court found that there were two sets of accounts between petitioners and PNB, namely:“1. The accounts relative to the loan financing scheme entered into by the Mirasols with PNB (PNB’s Brief, p. 16) On the question of how much the PNB lent the Mirasols for crop years 1973-1974 and 1974-1975, the evidence recited by the lower court in its decision was deficient. We are offered (sic) PNB the amount of FIFTEEN MILLION NINE HUNDRED SIXTY FOUR THOUSAND TWO HUNDRED FIFTY TWO PESOS and NINETY THREE Centavos (Ps15,964,252.93) but this is the alleged balance the Mirasols owe PNB covering the years 1975 to 1982.“2. The account relative to the Mirasol’s current account Numbers 5186 and 5177 involving the amount of THREE MILLION FOUR HUNDRED THOUSAND Pesos (P3,400,000.00) PNB claims against the Mirasols. (PNB’s Brief, p. 17)“In regard to the first set of accounts, besides the proceeds from PNB’s sale of sugar (involving the defendant PHILEX in relation to the export portion of the stock), the PNB foreclosed the Mirasols’ mortgaged properties realizing therefrom in 1982 THREE MILLION FOUR HUNDRED THIRTEEN THOUSAND Pesos (P3,413,000.00), the PNB itself having acquired the properties as the highest bidder.“As to the second set of accounts, PNB proposed, and the Mirasols accepted, a dacion en pago scheme by which the Mirasols conveyed to PNB pieces of property valued at ONE MILLION FOUR HUNDRED TEN THOUSAND FOUR HUNDRED SIXTY-SIX Pesos (Ps1,410,466.00) (PNB’s Brief, pp. 16-17).”[25]

Petitioners now claim that the dacion en pago and the foreclosure of their mortgaged properties were void for want ofconsideration. Petitioners insist that the loans granted them by PNB from 1975 to 1982 had been fully paid by virtue of legalcompensation. Hence, the foreclosure was invalid and of no effect, since the mortgages were already fully discharged. It is alsoaverred that they agreed to thedacion only by virtue of a martial law Arrest, Search, and Seizure Order (ASSO).

We find petitioners’ arguments unpersuasive. Both the lower court and the appellate court found that the Mirasols admitted thatthey were indebted to PNB in the sum stated in the latter’s counterclaim.[26] Petitioners nonetheless insist that the same can be offset bythe unliquidated amounts owed them by PNB for crop years 1973-74 and 1974-75. Petitioners’ argument has no basis in law. For legalcompensation to take place, the requirements set forth in Articles 1278 and 1279 of the Civil Code must be present. Said articles readas follows:“Art. 1278. Compensation shall take place when two persons, in their own right, are creditors and debtors of each other.“Art. 1279. In order that compensation may be proper, it is necessary:

(1) That each one of the obligors be bound principally, and that he be at the same time a principal creditor of the other;(2) That both debts consist in a sum of money, or if the things due are consumable, they be of the same kind, and also of the same quality if the latter has been stated;(3) That the two debts are due;(4) That they be liquidated and demandable;(5) That over neither of them there be any retention or controversy, commenced by third persons and communicated in due time to the debtor.”In the present case, set-off or compensation cannot take place between the parties because:First, neither of the parties are mutually creditors and debtors of each other. Under P.D. No. 579, neither PNB nor PHILEX could

retain any difference claimed by the Mirasols in the price of sugar sold by the two firms. P.D. No. 579 prescribed where the profitsfrom the sales are to be paid, to wit:“SECTION 7. x x x After deducting its commission of two and one-half (2-1/2%) percent of gross sales, the balance of the proceeds ofsugar trading operations for every crop year shall be set aside by the Philippine Exchange Company, Inc,. as profits which shall be paid to a special fund of the National Government subject to the disposition of the President for public purposes.”

Thus, as correctly found by the Court of Appeals, “there was nothing with which PNB was supposed to have off-set Mirasols’admitted indebtedness.”[27]

Second, compensation cannot take place where one claim, as in the instant case, is still the subject of litigation, as the samecannot be deemed liquidated.[28]

With respect to the duress allegedly employed by PNB, which impugned petitioners’ consent to the dacion en pago, both the trialcourt and the Court of Appeals found that there was no evidence to support said claim. Factual findings of the trial court, affirmed bythe appellate court, are conclusive upon this Court.[29]

On the fifth issue, the trial court awarded petitioners P50,000.00 in moral damages and P50,000.00 in attorney’s fees. Petitionersnow theorize that it was error for the Court of Appeals to have deleted these awards, considering that the appellate court found PNBbreached its duty as an agent to render an accounting to petitioners.

An agent’s failure to render an accounting to his principal is contrary to Article 1891 of the Civil Code. [30] The erring agent isliable for damages under Article 1170 of the Civil Code, which states:“Those who in the performance of their obligations are guilty of fraud, negligence, or delay, and those who in any manner contravene the tenor thereof, are liable for damages.”

Article 1170 of the Civil Code, however, must be construed in relation to Article 2217 of said Code which reads:“Moral damages include physical suffering, mental anguish, fright, serious anxiety, besmirched reputation, wounded feelings, moral shock, social humiliation, and similar injury. Though incapable of pecuniary computation, moral damages may be recovered if they are the proximate result of the defendant’s wrongful act or omission.”

Moral damages are explicitly authorized in breaches of contract where the defendant acted fraudulently or in bad faith. [31] Goodfaith, however, is always presumed and any person who seeks to be awarded damages due to the acts of another has the burden ofproving that the latter acted in bad faith, with malice, or with ill motive. In the instant case, petitioners have failed to show malice orbad faith[32]on the part of PNB in failing to render an accounting. Absent such showing, moral damages cannot be awarded.

Nor can we restore the award of attorney’s fees and costs of suit in favor of petitioners. Under Article 2208 (5) of the Civil Code,attorney’s fees are allowed in the absence of stipulation only if “the defendant acted in gross and evident bad faith in refusing tosatisfy the plaintiff’s plainly valid, just, and demandable claim.” As earlier stated, petitioners have not proven bad faith on the part ofPNB and PHILEX.

WHEREFORE, the instant petition is DENIED and the assailed decision of the respondent court in CA-G.R. CV 38607AFFIRMED. Costs against petitioners.

SO ORDERED.Bellosillo, (Chairman), Mendoza, Buena, and De Leon, Jr., JJ., concur.

G.R. No. 112099 February 21, 1995ACHILLES C. BERCES, SR., petitioner, vs.HON. EXECUTIVE SECRETARY TEOFISTO T. GUINGONA, JR., CHIEF PRESIDENTIAL LEGAL COUNSEL ANTONIOCARPIO and MAYOR NAOMI C. CORRAL OF TIWI, ALBAY, respondents. QUIASON, J.:This is a petition for certiorari and prohibition under Rule 65 of the Revised Rules of Court with prayer for mandatory preliminary injunction, assailing the Orders of the Office of the President as having been issued with grave abuses of discretion. Said Orders directed the stay of execution of the decision of the Sangguniang Panlalawigan suspending the Mayor of Tiwi, Albay from office.

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

(1) Administrative Case No. 02-92 for abuse of authority and/or oppression for non-payment of accrued leave benefits due the petitioner amounting to P36,779.02.(2) Administrative Case No. 05-92 for dishonesty and abuse of authority for installing a water pipeline which is being operated, maintained and paid for by the municipality to service respondent's private residence and medical clinic.

On July 1, 1993, the Sangguniang Panlalawigan disposed the two Administrative cases in the following manner:(1) Administrative Case No. 02-92ACCORDINGLY, respondent Mayor Naomi C. Corral of Tiwi, Albay, is hereby ordered to pay Achilles Costo Berces, Sr. the sum of THIRTY-SIX THOUSAND AND SEVEN HUNDRED SEVENTY-NINE PESOS and TWO CENTAVOS (P36,779.02) per Voucher No. 352, plus legal interest due thereon from the time it was approved in audit up to final payment, it being legally due the Complainant representing the money value of his leave credits accruing for services rendered in the municipality from 1988 to 1992 as a duly elected Municipal Councilor. IN ADDITION, respondent Mayor NAOMI C. CORRAL is hereby ordered SUSPENDED from office as Municipal Mayor of Tiwi, Albay, for a period of two (2) months, effective upon receipt hereof for her blatant abuse of authority coupled with oppression as a public example to deter others similarly inclined from using public office as a tool for personal vengeance, vindictiveness and oppression at the expense of the Taxpayer (Rollo, p. 14).(2) Administrative Case No. 05-92WHEREFORE, premises considered, respondent Mayor NAOMI C. CORRAL of Tiwi, Albay, is hereby sentenced to suffer the penalty of SUSPENSION from office as Municipal Mayor thereof for a period of THREE (3) MONTHS beginning after her service of the first penalty of suspension ordered in Administrative Case No. 02-92. She is likewise ordered to reimburse the Municipality of Tiwi One-half of the amount the latter have paid for electric and water bills from July to December 1992, inclusive (Rollo, p. 16).

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

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

xxx xxx xxx

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

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

xxx xxx xxxThe stay of the execution is governed by Section 68 of R.A. No. 7160 and Section 6 of Administrative Order No. 18 dated 12 February 1987, quoted below:Sec. 68. Execution Pending Appeal. — An appeal shall not prevent a decision from becoming final or executory. The respondent shall be considered as having been placed under preventive suspension during the pendency of an appeal in the events he wins such appeal. In the event the appeal results in an exoneration, he shall be paid his salary and such other emoluments during the pendency of the appeal (R.A. No. 7160).Sec. 6 Except as otherwise provided by special laws, the execution of the decision/resolution/order appealed from is stayed upon filing of the appeal within the period prescribed herein. However, in all cases, at any time during the pendency of the appeal, the Office of the President may direct or stay the execution of the decision/resolution/order appealed from upon such terms and conditions as it may deem just and reasonable (Adm. Order No. 18).

xxx xxx xxxAfter due consideration, and in the light of the Petition for Review filed before this Office, we find that a stay of execution pending appeal would be just and reasonable to prevent undue prejudice to public interest.WHEREFORE, premises considered, this Office hereby orders the suspension/stay of execution of:

a) the Decision of the Sangguniang Panlalawigan of Albay in Administrative Case No. 02-92 dated 1 July 1993 suspending Mayor Naomi C. Corral from office for a period of two (2) months, andb) the Resolution of the Sangguniang Panlalawigan of Albay in Administrative Case. No. 05-92 dated 5 July 1993 suspending Mayor Naomi C. Corral from office for a period of three (3) months (Rollo, pp. 55-56).

Petitioner then filed a Motion for Reconsideration questioning the aforesaid Order of the Office of the President.On September 13, 1990, the Motion for Reconsideration was denied.Hence, this petition.

IIPetitioner claims that the governing law in the instant case is R.A. No. 7160, which contains a mandatory provision that anappeal "shall not prevent a decision from becoming final and executory." He argues that administrative Order No. 18 datedFebruary 12, 1987, (entitle "Prescribing the Rules and Regulations Governing Appeals to Office the President") authorizing the President to stay the execution of the appealed decision at any time during the pendency of the appeal, was repealed by R.A. No. 7160, which took effect on January 1, 1991 (Rollo, pp. 5-6).The petition is devoid of merit.Petitioner invokes the repealing clause of Section 530 (f), R.A. No. 7160, which provides:

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

The aforementioned clause is not an express repeal of Section 6 of Administrative Order No. 18 because it failed to identify or designate the laws or executive orders that are intended to be repealed (cf. I Sutherland, Statutory Construction467 [1943]).If there is any repeal of Administrative Order No. 18 by R.A. No. 7160, it is through implication though such kind of repeal is not favored (The Philippine American Management Co., Inc. v. The Philippine American Management Employees Association, 49 SCRA 194 [1973]). There is even a presumption against implied repeal.An implied repeal predicates the intended repeal upon the condition that a substantial conflict must be found between the new and prior laws. In the absence of an express repeal, a subsequent law cannot be construed as repealing a prior law unless an irreconcible inconsistency and repugnancy exists in the terms of the new and old laws (Iloilo Palay and Corn Planters Association, Inc. v. Feliciano, 13 SCRA 377 [1965]). The two laws must be absolutely incompatible (Compania General de Tabacos v. Collector of Customs, 46 Phil. 8 [1924]). There must be such a repugnancy between the laws that they cannot be made to stand together (Crawford, Construction of Statutes 631 [1940]).We find that the provisions of Section 68 of R.A. No. 7160 and Section 6 of Administrative Order No. 18 are not irreconcillably inconsistent and repugnant and the two laws must in fact be read together.The first sentence of Section 68 merely provides that an "appeal shall not prevent a decision from becoming final or executory." As worded, there is room to construe said provision as giving discretion to the reviewing officials to stay the

execution of the appealed decision. There is nothing to infer therefrom that the reviewing officials are deprived of the authority to order a stay of the appealed order. If the intention of Congress was to repeal Section 6 of Administrative OrderNo. 18, it could have used more direct language expressive of such intention.The execution of decisions pending appeal is procedural and in the absence of a clear legislative intent to remove from the reviewing officials the authority to order a stay of execution, such authority can provided in the rules and regulations governing the appeals of elective officials in administrative cases.The term "shall" may be read either as mandatory or directory depending upon a consideration of the entire provisions in which it is found, its object and the consequences that would follow from construing it one way or the other (cf. De Mesa v.Mencias, 18 SCRA 533 [1966]). In the case at bench, there is no basis to justify the construction of the word as mandatory.The Office of the President made a finding that the execution of the decision of the Sagguniang Panlalawigan suspending respondent Mayor from office might be prejudicial to the public interest. Thus, in order not to disrupt the rendition of service by the mayor to the public, a stay of the execution of the decision is in order.WHEREFORE, the petition is DISMISSED.SO ORDERED.Narvasa, C.J., Feliciano, Padilla, Bidin, Regalado, Davide, Jr., Romero, Bellosillo, Melo, Puno, Vitug, Kapunan, Mendoza and Francisco, JJ., concur.

G.R. No. L-4712 July 11, 1952RAMON DIOKNO, plaintiff-appellant, vs.REHABILITATION FINANCE CORPORATION, defendant-appellee.Sixto de la Costa for appellee.LABRADOR, J.:Plaintiff is the holder of a backpay certificate of indebtedness issued by the Treasurer of the Philippines under the provisions of Republic Act No. 304 of a face value of P75,857.14 dated August 30, 1948. On or about November 10, 1050,when the action was brought, he had an outstanding loan with the Rehabilitation Finance Corporation, contracted therewith on January 27, 1950, in the total sum of P50,000, covered by a mortgage on his property situated at 44 Alhambra, Ermita, Manila, with interest at 4 per cent per annum, of which P47,355.28 was still unpaid. In this action he seeks to compel the defendant corporation to accept payment of the balance of his indebted with his backpay certificate. The defendant resists the suit on the ground that plaintiffs' demand is not only not authorized by section 2 of Republic Act No. 304 but contrary to the provisions thereof, and furthermore because plaintiff's loan was obtain on January 27, 1950, much after the passage of Republic Act No. 304, and because the law permits only "acceptance or discount of backpay certificates," not the repayment of loans. The court a quo held that section 2 of Republic Act No. 304 is permissive merely, and that even if where mandatory, plaintiff's case can not fall thereunder because he is not acquiring property for a home or construing a residential house, but compelling the acceptance of his backpay certificate to pay a debt he contracted after the enactment of Republic Act No. 304. It, therefore, dismissed the complaint with costs.The appeal involves the interpretation of section 2 of Republic Act No. 302, which provides:

. . . And provided, also, That investment funds or banks or other financial institutions owned or controlled by the Government shall, subject to the availability of loanable funds, and any provision of the their charters, articles of incorporation's, by-laws, or rules and regulations to the contrary notwithstanding, accept or discount at not more than two per centum per annum for ten years such certificate for the following purposes only: (1) the acquisition ofreal property for use as the applicant's home, or (2) the building or construction of the residential house of the payee of said certificate: . . .

It is first contended by the appellant that the above provision is mandatory, not only because it employs the word "shall", which in its ordinary signification is mandatory, not permissive, but also because the provision is applicable to institutions of credit under the control of the Government, and because otherwise the phrases "subject to availability of loanable funds" and "any provisions of this charter, . . . and regulations to the contrary notwithstanding" would be superfluous.It is true that its ordinary signification the word "shall" is imperative.

In common or ordinary parlance, and in its ordinary signification, the term "shall" is a word of command, and one which has always or which must be given compulsory meaning; as denoting obligation. It has a preemptory meaning, and it is generally imperative or mandatory. It has the invariable significance of operating to impose a duty which may be enforced, particularly if public policy is in favor of this meaning or when addressed to public officials, or where a public interest is involved, or where the public or persons have rights which ought to be exercised or enforced, unless a contrary intent appears. People vs. O'Rourke, 13 P. 2d. 989, 992, 124 Cal. App. 752. (39 Words and Phrases, Permanent Ed., p. 90.)The presumption is that the word "shall" in a statute is used is an imperative, and not in a directory, sense. If a different interpretation is sought, it must rest upon something in the character of the legislation or in the context which will justify a different meaning. Haythorn vs. Van Keuren & Son, 74 A. 502, 504, 79 N. J. L. 101; Board of

Finance of School City of Aurora vs. People's Nat. Bank of Lawrenceburg, 89 N. E. 904, 905 44 Ind. App. 578. (39Words and Phrases, Permanent Ed., p. 93.)

However, the rule is not absolute; it may be construed as "many", when so required by the context or by the intention of the statute.

In the ordinary signification, "shall" is imperative, and not permissive, though it may have the latter meaning when required by the context. Town of Milton vs. Cook, 138 N.E. 589, 590, 244 Mass. 93. (39 Words and Phrases, Permanent Ed., p. 89.)"Must" or "shall" in a statute is not always imperative, but may be consistent with an exercise of discretion. In re O'Hara, 82 N.Y.S. 293, 296, 40 Misc. 355, citing In re Thurber's Estate, 162 N.Y. 244, 252, 56 N.E. 638, 639. (Ibid.p. 92.)The word "shall" is generally regarded as imperative, but in some context it is given a permissive meaning, the intended meaning being determined by what is intended by the statute. National Transit Corporation Co.vs. Boardman, 197 A. 239, 241, 328, Pa. 450.The word "shall" is to be construed as merely permissive, where no public benefit or private right requires it to be given an imperative meaning Sheldon vs. Sheldon, 134 A. 904, 905, 100 N.J. Ex. 24.Presumption is that word "shall" in ordinance, is mandatory; but, where it is necessary to give effect to legislative intent, the word will be construed as "may." City of Colorado Springs vs. Street, 254 p. 440, 441, 81 Colo. 181.The word "shall" does not necessarily indicate a mandatory behest. Grimsrud vs. Johnson, 202 N. W. 72, 73, 162 Minn. 98.Words like "may," "must," "shall" etc., are constantly used in statutes without intending that they shall be taken literally, and in their construction the object evidently designed to be reached limits and controls the literal import of the terms and phrases employed. Fields vs. United States, 27 App. D. C. 433, 440. (39 Words and Phrases, Permanent Ed., 89, 92).

In this jurisdiction the tendency has been to interpret the word "shall" as the context or a reasonable construction of the statute in which it is used demands or requires. Thus the provision of section 11 of Rule 4 of the Rules requiring a municipal judge or a justice of the peace to render judgment of the conclusion of the trial has been held in the directory. (Alejandro vs. Judge of First Instance1 40 Off. Gaz., 9th Supp., 261). In like manner section 178 of the Election Law, in so far a it requires that appeals shall be decided in three months, has been to the directory for the Court of Appeals. (Querubin vs. The Court of Appeals,2 46 Off. Gaz., 155).In the provision subject controversy, it is to be noted that the verb-phrase "shall accept or discount" has two modifiers, namely, "subject to availability of loanable funds" and "at not more that two per centum per annum for ten years." As to thesecond modifier, the interest to be charged, there seems to be no question that the verb phrase is mandatory, because notonly does the law use "at not more" but the legislative purpose and intent, to conserve the value of the backpay certificate for the benefit of the holders, for whose benefit the same have been issued, can be carried out by fixing a maximum limit for discounts. But as to when the discounting or acceptance shall be made, the context and the sense demand a contrary interpretation. The phrase "subject" means "being under the contingency of" (Webster's Int. Dict.) a condition. If the acceptance or discount of the certificates to be "subject" to the condition of the availability of a loanable funds, it is evidentthat the Legislature intended that the acceptance shall be allowed on the condition that there are "available loanable funds." In other words, acceptance or discount is to be permitted only if there are loanable funds.Let us now consider the meaning of the condition imposed for accepting or discounting certificates, the "availability of loanable funds." On this issue the appellant contends that the mere fact that P50,000 was loaned to him and that the Rehabilitation Finance Corporation has been granting loans up to the time plaintiff offered to pay the loan with his certificate — these prove that there are "available loanable funds". As the court a quo did not pass on such availability, he also contends that this is a question of fact to be determined by the courts. The defendant denies the existence of "available loanable funds." The gist of plaintiffs' contention is that any and all funds of the Rehabilitation Finance Corporation are subject to the provision of the discount or acceptance of the certificates; that of defendant-appellee is thatonly funds made available for the purpose of discounting backpay certificates may be used for such purpose and that at the time the action was filed there was no such funds.The Rehabilitation Finance Corporation was created by Republic Act No. 85, which was approved on October 29, 1946. The corporation was created "to provide credit facilities for the rehabilitation and development of agriculture, commerce, and industry, the reconstruction of property damaged by war, and the broadening and diversification of the national economy" (section 1), and to achieve the above aims it was granted the following powers:

SEC. 2. Corporate powers. — The Rehabilitation Finance Corporation shall have the power:(a) To grant loans for home building and for the rehabilitation, establishment or development of any agricultural, commercial or industrial enterprise, including public utilities;(b) To grant loans to provincial, city and municipal governments for the rehabilitation, construction or reconstruction of public markets, waterworks, toll bridges, slaughterhouses, and other self-liquidating or income-producing services;(c) To grant loans to agencies and corporations owned or controlled by the Government of the Republic of the Philippines for the production and distribution of electrical power, for the purchase and subdivision of rural and

urban estates, for housing projects, for irrigation and waterworks systems, and for other essential industrial and agricultural enterprises;(d) To grant loans to cooperative associations to facilitate production, the marketing of crops, and the acquisition of essential commodities;(e) To underwrite, purchase, own, sell, mortgage or otherwise dispose of stocks, bonds, debentures, securities and other evidences of indebtedness issued for or in connection with any project or enterprise referred to in the proceeding paragraphs;(f) To issue bonds, debentures, securities, collaterals, and other obligations with the approval of the President, butin no case to exceed at any one time an aggregate amount equivalent to one hundred per centum of its subscribed capital and surplus. . . .

If the Rehabilitation Finance Corporation is to carry out the aims and purposes for which it was created, It must evolve a definite plan of the industries or activities which it should be rehabilitate, establish, or develop, and apportion its available funds and resources among these, consistent with the policies outlined in its charter.As of May 31, 1948, immediately prior to the passage of the Backpay Law, it had granted the following classes of loans:

Agricultural loans ........................................................ P23,610,350.74

Industrial loans ............................................................ 22,717,565.87

Real Estate Loans ........................................................ 34,601,258.29

Loans for purchase, Subdivision and Resale of Landed Estates ......................................................... 7,271,258.78

Loans to Provinces, Cities, and Municipalitiesfor Self-liquidating Projects .............................................. 1,889,763.00

Total Loans ..................................................(Exhibit 2)

P90,090,77.68

As of February 2, 1951, the corporation had accepted in payment of loans granted before June 18, 1948, the total amountof P8,225,229.96, as required by section 2 of the Backpay Law. (See Exhibit 11, p.4.).The third anniversary report of the Rehabilitation Finance Corporation dated January 2, 1950 (Exhibit 1,), shows that the funds originally available to the corporation came from the following sources:

Funds made available:

Initial cash capital ................................................................ P50,000,000,00

Cash Transferred from Financial Rehabilitation Funds.... 2,423,079.94

Cash received from Surplus Property Commission ....... 26,350,000.00

Cash received from Phil. Shipping Adm. ........................... 3,700,000.00

Cash payment of capital .................................................. 82,473,079.74

Proceeds of bond issues .................................................. 58,909,148.18

Advances from the Central Bank ....................................... 10,000,000.00

There was also collectible from the loans the total amount of P28,659,442.12, so that the total cash available to the corporation from January 2, 1947, to November 30, 1949, was P180,041,670.04. But the Total amount of loans already approved as of the last date was P203,667,403.78 and the total of approved loans pending release was P25,342,020.78, and the only cash balance available in November, 1949, to meet these approved loans was P1,716,286.71.

It may readily be seen from the above data that were we to follow appellant's theory and contention that the law is mandatory, the loan he had applied for, as well as that of any holder of a backpay certificate, would have to be paid out of this available cash, pursuant to the alleged mandate of section 2 of the Backpay Law. The compulsory acceptance and discount of certificates will bring about, as a direct and necessary consequence, the suspension of all, if not of most, of the activities of the Rehabilitation Finance Corporation; and no agricultural or industrial loans, or loans to financial institutions and local governments for their markets, waterworks, etc., would be granted until all the backpay certificates (amounting to some hundred millions of pesos) shall heave been accepted or discounted. And as the defendant-appellant forcefully argues, even funds obtained by the Rehabilitation Finance Corporation by the issue of the bonds, at rates of interest of more than 2 per cent, the rate fixed for the discount of the backpay certificates, will have to be loaned to holders of backpay certificates at a loss, to the prejudice of the corporation. There would be loans for holders of backpay certificates, but none for rehabilitation or reconstruction, or development of industries, or of the national economy; there would be funds for employees' loans, but none for the improvements of public services, etc., as all Rehabilitation Finance Corporation funds will be necessary to meet the demands of holders of backpay certificates. And if it be remembered that the provision is intended for all financial institutions controlled by the Government, the consequences would be felt by all industries and activities, and the whole scheme of national financial organization and development disrupted. It seems evident that the legislature never could have intended such absurd consequences, even with all the sympathy that it is showing for holders of backpay certificates.But while we agree with the appellee that it could not have been the intention of Congress to disrupt the whole scheme of rehabilitation, reconstruction, and development envisioned in the Rehabilitation Act, by its passage of section 2 of the Backpay Law, neither we are prepared to follow appellee's insinuation that the section is impracticable or impossible of execution by the Rehabilitation Finance Corporation in the situation in which its funds and resources were at the time of the trial. In our opinion, what the Legislature intended by the provision in dispute is that the Rehabilitation Finance Corporation, through its Board of Directors, should from time to time set aside some reasonable amount for the discount of backpay certificates, when this can be done without unduly taxing its resources, or unduly prejudicing the plan of rehabilitation and development that it has mapped out, or that which the corresponding authority has laid down as a policy.This legislative intention can be inferred from the fact that Congress itself expressly ordered that all financial institutions accept or discount backpay certificates in payment of those loans, evidently laying down an example to be followed by financial institutions under its control. The loans granted under section 2 of the law by the Rehabilitation Finance Corporation amounted to P8,225,229.96. It is shown or even presented that the payment of this considerable amount has impaired or disrupted the activities of the Rehabilitation Finance Corporation. It is not claimed, either, that at the time of the filing of appellant's action the Rehabilitation Finance Corporation was in no position to set aside a modest sum, in a manner similar to the creation of a sinking fund, for the discount of backpay certificates to help the Government comply with its financial commitments. We are convinced that the Rehabilitation Finance Corporation may, without impairment of its activities, set aside from time to time, say, half a million pesos or a considerable part thereof, for the payment of backpay certificates. But these circumstances notwithstanding, we are of the opinion that the law in question (section 2 of the Backpay Law), in so far as the discount and acceptance of backpay certificates are concerned, should be interpreted to be directory merely, not mandatory, as claimed by plaintiff-appellant, the same to be construed as a directive for the Rehabilitation Finance Corporation to invest a reasonable portion of its funds for the discount of backpay certificates, fromtime to time and in its sound discretion, as circumstances and its resources may warrant.Having come to the conclusion that section 2 of the Backpay Law is directly merely, we now address ourselves to the propriety of the action, which the plaintiff and appellant labels specific performance. As the action is not based on any contractual relation between the plaintiff and appellant and the defendant and appellee, it may be one for specific performance; it is in effect predicated on a supposed legal duty imposed by law and is properly the designated as a special civil action of mandamus because the appellant seeks to compel the appellee to accept his backpay certificate in payment of his outstanding obligation. We are not impressed by the defense technical in a sense, that the Rehabilitation Finance Corporation is not expressly authorized to accept certificates in payment of outstanding loans. There is no provision expressly authorizing this procedure or system; but neither is there one prohibiting it. The legislature has once ordered it; the Rehabilitation Finance Corporation has once authorized it. We believe the legislature could not have intended to discriminate against those who have already built their houses, who have contracted obligations in so doing. We prefer to predicate court ruling that this special action does not lie on the ground that the duty imposed by the BackpayLaw upon the appellee as to the acceptance or discount of backpay certificates is neither clear nor ministerial, but discretionary merely and that mandamus does not issue to control the exercise of discretion of public officer. (Viuda e hijos de Crispulo Zamora vs. Wright and Segado, 53 Phil., 613, 621; Blanco vs. Board of Medical Examiners, 46 Phil., 190192, citing Lamb vs. Phipps, 22 Phil., 456; Gonzales vs. Board of Pharmacy, 20 Phil., 367, etc.) It is, however, argued on behalf of the appellant that inasmuch as the Board of Directors of the Rehabilitation Finance Corporation has seen fit to approve a resolution accepting backpay certificates amounting to P151,000 (Exhibit H), law and equity demand that the same privilege should be accorded him. The trial court held that the above resolution was illegal and that its unauthorized enactment (which he called a "wrong") does not justify its repetition for the benefit of appellant. As we have indicated above, we believe that its approval (not any supposed discrimination on behalf of some special holders) can be defended under the law, but that the passage of a similar resolution can not be enjoined by an action of mandamus.We must admit, however, that appellant's case is not entirely without any merit or justification; similar situations have already been favorably acted upon by the Congress, when it ordered that certificates be accepted in payment of

outstanding obligations, and by the Rehabilitation Finance Corporation in its above-mentioned resolution. But we feel we are powerless to enforce his claim, as the acceptance and discount to backpay certificates has been placed within the sound discretion of the rehabilitation Finance Corporation, and subject to the availability of loanable funds, and said discretion may not be reviewed or controlled by us. It is clear that this remedy must be available in other quarters, not in the courts of justice.For all the foregoing considerations, we are constrained to dismiss the appeal, with coasts against the appellant.Paras, C.J., Feria, Pablo, Padilla, Tuason, Montemayor, and Bautista Angelo, JJ., concur.G.R. No. 168617 February 19, 2007BERNADETTE L. ADASA, petitioner, vs.CECILLE S. ABALOS, Respondent.

D E C I S I O NCHICO-NAZARIO, J.:This Petition for Review under Rule 45 of the Rules of Court, filed by petitioner Bernadette L. Adasa, seeks to nullify and set aside the 21 July 2004 Decision1 and 10 June 2005 Resolution2 of the Court of Appeals in CA-G.R. SP No. 76396 which nullified the Resolutions of the Department of Justice (DOJ). The Resolutions of the DOJ reversed and set aside theResolution of the Office of the City Prosecutor of Iligan City, which found on reinvestigation probable cause against petitioner, and directed the Office of the City Prosecutor of Iligan City to withdraw the information for Estafa against petitioner.The instant case emanated from the two complaints-affidavits filed by respondent Cecille S. Abalos on 18 January 2001 before the Office of the City Prosecutor of Iligan City, against petitioner for Estafa.Respondent alleged in the complaints-affidavits that petitioner, through deceit, received and encashed two checks issued in the name of respondent without respondent’s knowledge and consent and that despite repeated demands by the latter, petitioner failed and refused to pay the proceeds of the checks.On 23 March 2001, petitioner filed a counter-affidavit admitting that she received and encashed the two checks issued in favor of respondent.In her Supplemental Affidavit filed on 29 March 2001, petitioner, however, recanted and alleged instead that it was a certain Bebie Correa who received the two checks which are the subject matter of the complaints and encashed the same; and that said Bebie Correa left the country after misappropriating the proceeds of the checks.On 25 April 2001, a resolution was issued by the Office of the City Prosecutor of Iligan City finding probable cause againstpetitioner and ordering the filing of two separate Informations for Estafa Thru Falsification of Commercial Document by a Private Individual, under Article 315 in relation to Articles 171 and 172 of the Revised Penal Code, as amended.Consequently, two separate criminal cases were filed against petitioner docketed as Criminal Cases No. 8781 and No. 8782, raffled to Branches 4 and 5, Regional Trial Court of Iligan City, respectively.This instant petition pertains only to Criminal Case No. 8782.On 8 June 2001, upon motion of the petitioner, the trial court in Criminal Case No. 8782 issued an order directing the Office of the City Prosecutor of Iligan City to conduct a reinvestigation.After conducting the reinvestigation, the Office of the City Prosecutor of Iligan City issued a resolution dated 30 August 2001, affirming the finding of probable cause against petitioner.Meanwhile, during her arraignment on 1 October 2001 in Criminal Case No. 8782, petitioner entered an unconditional plea of not guilty.3

Dissatisfied with the finding of the Office of the City Prosecutor of Iligan City, petitioner filed a Petition for Review before the DOJ on 15 October 2001.In a Resolution dated 11 July 2002, the DOJ reversed and set aside the 30 August 2001 resolution of the Office of the CityProsecutor of Iligan City and directed the said office to withdraw the Information for Estafa against petitioner.The said DOJ resolution prompted the Office of the City Prosecutor of Iligan City to file a "Motion to Withdraw Information"on 25 July 2002.On 26 July 2002, respondent filed a motion for reconsideration of said resolution of the DOJ arguing that the DOJ should have dismissed outright the petition for review since Section 7 of DOJ Circular No. 70 mandates that when an accused has already been arraigned and the aggrieved party files a petition for review before the DOJ, the Secretary of Justice cannot, and should not take cognizance of the petition, or even give due course thereto, but instead deny it outright. Respondent claimed Section 12 thereof mentions arraignment as one of the grounds for the dismissal of the petition for review before the DOJ.In a resolution dated 30 January 2003, the DOJ denied the Motion for Reconsideration opining that under Section 12, in relation to Section 7, of DOJ Circular No. 70, the Secretary of Justice is not precluded from entertaining any appeal taken to him even where the accused has already been arraigned in court. This is due to the permissive language "may" utilized in Section 12 whereby the Secretary has the discretion to entertain an appealed resolution notwithstanding the fact that the accused has been arraigned.

Meanwhile, on 27 February 2003, the trial court issued an order granting petitioner’s "Motion to Withdraw Information" anddismissing Criminal Case No. 8782. No action was taken by respondent or any party of the case from the said order of dismissal.Aggrieved by the resolution of the DOJ, respondent filed a Petition for Certiorari before the Court of Appeals. Respondent raised the following issues before the appellate court:

1. Whether or not the Department of Justice gravely abused its discretion in giving due course to petitioner’s petition for review despite its having been filed after the latter had already been arraigned;2. Whether or not there is probable cause that the crime of estafa has been committed and that petitioner is probably guilty thereof;3. Whether or not the petition before the Court of Appeals has been rendered moot and academic by the order of the Regional Trial Court dismissing Criminal Case No. 8782.

The Court of Appeals in a Decision dated 21 July 2004 granted respondent’s petition and reversed the Resolutions of the DOJ dated 11 July 2002 and 30 January 2003.In resolving the first issue, the Court of Appeals, relying heavily on Section 7 of DOJ Circular No. 70 which states "[i]f an information has been filed in court pursuant to the appealed resolution, the petition shall not be given due course if the accused had already been arraigned," ruled that since petitioner was arraigned before she filed the petition for review withthe DOJ, it was imperative for the DOJ to dismiss such petition. It added that when petitioner pleaded to the charge, she was deemed to have waived her right to reinvestigation and right to question any irregularity that surrounds it.Anent the second issue, the Court of Appeals declared that the existence of probable cause or the lack of it, cannot be dealt with by it since factual issues are not proper subjects of a Petition for Certiorari.In disposing of the last issue, the Court of Appeals held that the order of the trial court dismissing the subject criminal casepursuant to the assailed resolutions of the DOJ did not render the petition moot and academic. It said that since the trial court’s order relied solely on the resolutions of the DOJ, said order is void as it violated the rule which enjoins the trial court to assess the evidence presented before it in a motion to dismiss and not to rely solely on the prosecutor’s avermentthat the Secretary of Justice had recommended the dismissal of the case.Dissatisfied by the Court of Appeals’ ruling, petitioner filed a Motion for Reconsideration setting forth the following grounds:

1. that the over-all language of Sections 7 and 12 of Department Circular No. 70 is permissive and directory such that the Secretary of Justice may entertain an appeal despite the fact that the accused had been arraigned;2. that the contemporaneous construction by the Secretary of Justice should be given great weight and respect;3. that Section 7 of the Circular applies only to resolutions rendered pursuant to a preliminary investigation, not ona reinvestigation;4. that the trial court’s order of dismissal of the criminal case has rendered the instant petition moot and academic;5. that her arraignment was null and void it being conducted despite her protestations; and6. that despite her being arraigned, the supposed waiver of her right to preliminary investigation has been nullifiedor recalled by virtue of the trial court’s order of reinvestigation.4

The Court of Appeals stood firm by its decision. This time, however, it tried to construe Section 7 side by side with Section 12 of DOJ Circular No. 70 and attempted to reconcile these two provisions. According to the appellate court, the phrase "shall not" in paragraph two, first sentence of Section 7 of subject circular, to wit:If an information has been filed in court pursuant to the appealed resolution, the petition shall not be given due course if the accused had already been arraigned. x x x. (Emphasis supplied.)employed in the circular denotes a positive prohibition. Applying the principle in statutory construction - that when a statuteor provision contains words of positive prohibition, such as "shall not," "cannot," or "ought not" or which is couched in negative terms importing that the act shall not be done otherwise than designated, that statute or provision is mandatory, thus rendering the provision mandatory – it opined that the subject provision simply means that the Secretary of Justice has no other course of action but to deny or dismiss a petition before him when arraignment of an accused had already taken place prior to the filing of the petition for review.On the other hand, reading Section 12 of the same circular which reads:The Secretary may reverse, affirm or modify the appealed resolution. He may, motu proprio or upon motion, dismiss the petition for review on any of the following grounds:

x x x x(e) That the accused had already been arraigned when the appeal was taken; x x x.the Court of Appeals opined that the permissive word "may" in Section 12 would seem to imply that the Secretary of Justice has discretion to entertain an appeal notwithstanding the fact that the accused has been arraigned. This provision should not be treated separately, but should be read in relation to Section 7. The two provisions, taken together, simply meant that when an accused was already arraigned when the aggrieved party files a petition for review, the Secretary of Justice cannot, and should not take cognizance of the petition, or even give due course thereto, but instead dismiss or deny it outright. The appellate court added that the word "may" in Section 12 should be read as "shall" or "must" since such construction is absolutely necessary to give effect to the apparent intention of the rule as gathered from the context.

As to the contemporaneous construction of the Secretary of Justice, the Court of Appeals stated that the same should not be given weight since it was erroneous.Anent petitioner’s argument that Section 7 of the questioned circular applies only to original resolutions that brought aboutthe filing of the corresponding informations in court, but not to resolutions rendered pursuant to a motion for reinvestigation, the appellate court simply brushed aside such contention as having no basis in the circular questioned.It also rejected petitioner’s protestation that her arraignment was forced upon her since she failed to present any evidenceto substantiate the same.It is petitioner’s contention that despite her being arraigned, the supposed waiver of her right to preliminary investigation has been nullified by virtue of the trial court’s order or reinvestigation. On this score, the Court of Appeals rebuffed such argument stating that there was no "supposed waiver of preliminary investigation" to speak of for the reason that petitionerhad actually undergone preliminary investigation.Petitioner remained unconvinced with the explanations of the Court of Appeals.Hence, the instant petition.Again, petitioner contends that the DOJ can give due course to an appeal or petition for review despite its having been filed after the accused had already been arraigned. It asserts that the fact of arraignment of an accused before the filing ofan appeal or petition for review before the DOJ "is not at all relevant" as the DOJ can still take cognizance of the appeal orPetition for Review before it. In support of this contention, petitioner set her sights on the ruling of this Court in Crespo v. Mogul,5 to wit:The rule therefore in this jurisdiction is that once a complaint or information is filed in Court any disposition of the case as to its dismissal or the conviction or acquittal of the accused rests in the sound discretion of the Court. Although the fiscal retains the direction and control of the prosecution of criminal cases even while the case is already in Court he cannot impose his opinion on the trial court. The Court is the best and sole judge on what to do with the case before it. The determination of the case is within its exclusive jurisdiction and competence. A motion to dismiss the case filed by the fiscal should be addressed to the Court who has the option to grant or deny the same. It does not matter if this is done before or after the arraignment of the accused or that the motion was filed after a reinvestigation or upon instructions of the Secretary of Justice who reviewed the records of the investigation. (Emphasis supplied.)To bolster her position, petitioner cites Roberts v. Court of Appeals,6 which stated:There is nothing in Crespo vs. Mogul which bars the DOJ from taking cognizance of an appeal, by way of a petition for review, by an accused in a criminal case from an unfavorable ruling of the investigating prosecutor. It merely advised the DOJ to, "as far as practicable, refrain from entertaining a petition for review or appeal from the action of the fiscal, when the complaint or information has already been filed in Court. x x x. (Emphasis supplied.)Petitioner likewise invokes Marcelo v. Court of Appeals7 where this Court declared:Nothing in the said ruling forecloses the power or authority of the Secretary of Justice to review resolutions of his subordinates in criminal cases. The Secretary of Justice is only enjoined to refrain as far as practicable from entertaining apetition for review or appeal from the action of the prosecutor once a complaint or information is filed in court. In any case,the grant of a motion to dismiss, which the prosecution may file after the Secretary of Justice reverses an appealed resolution, is subject to the discretion of the court.The Court is unconvinced.A cursory reading of Crespo v. Mogul reveals that the ruling therein does not concern the issue of an appeal or petition for review before the DOJ after arraignment. Verily, the pronouncement therein has to do with the filing of a motion to dismiss and the court’s discretion to deny or grant the same. As correctly pointed out by respondent, the emphasized portion in theCrespo ruling is a parcel of the entire paragraph which relates to the duty and jurisdiction of the trial court to determine for itself whether or not to dismiss a case before it, and which states that such duty comes into play regardless of whether such motion is filed before or after arraignment and upon whose instructions. The allusion to the Secretary of Justice as reviewing the records of investigation and giving instructions for the filing of a motion to dismiss in the cited ruling does nottake into consideration of whether the appeal or petition before the Secretary of Justice was filed after arraignment. Significantly, in the Crespo case, the accused had not yet been arraigned when the appeal or petition for review was filed before the DOJ. Undoubtedly, petitioner’s reliance on the said case is misplaced.Also unavailing is petitioner’s invocation of the cases of Roberts v. Court of Appeals and Marcelo v. Court of Appeals. As inCrespo v. Mogul, neither Roberts v. Court of Appeals nor Marcelo v. Court of Appeals took into account of whether the appeal or petition before the Secretary of Justice was filed after arraignment. Just like in the Crespo case, the accused in both Roberts v. Court of Appeals and Marcelo v. Court of Appeals had not yet been arraigned when the appeal or petition for review was filed before the DOJ.Moreover, petitioner asserts that the Court of Appeals’ interpretation of the provisions of DOJ Circular No. 70 violated three basic rules in statutory construction. First, the rule that the provision that appears last in the order of position in the rule or regulation must prevail. Second, the rule that the contemporaneous construction of a statute or regulation by the officers who enforce it should be given weight. Third, petitioner lifted a portion from Agpalo’s Statutory Construction8 where the word "shall" had been construed as a permissive, and not a mandatory language.The all too-familiar rule in statutory construction, in this case, an administrative rule9 of procedure, is that when a statute or rule is clear and unambiguous, interpretation need not be resorted to.10 Since Section 7 of the subject circular clearly

and categorically directs the DOJ to dismiss outright an appeal or a petition for review filed after arraignment, no resort to interpretation is necessary.Petitioner’s reliance to the statutory principle that "the last in order of position in the rule or regulation must prevail" is not applicable. In addition to the fact that Section 7 of DOJ Circular No. 70 needs no construction, the cited principle cannot apply because, as correctly observed by the Court of Appeals, there is no irreconcilable conflict between Section 7 and Section 12 of DOJ Circular No. 70. Section 7 of the circular provides:SECTION 7. Action on the petition. – The Secretary of Justice may dismiss the petition outright if he finds the same to be patently without merit or manifestly intended for delay, or when the issues raised therein are too unsubstantial to require consideration. If an information has been filed in court pursuant to the appealed resolution, the petition shall not be given due course if the accused had already been arraigned. Any arraignment made after the filing of the petition shall not bar the Secretary of Justice from exercising his power of review. (Italics supplied.)On the other hand, Section 12 of the same circular states:SECTION 12. Disposition of the Appeal. – The Secretary may reverse, affirm or modify the appealed resolution. He may, motu proprio or upon motion, dismiss the petition for review on any of the following grounds:

(a) That the petition was filed beyond the period prescribed in Section 3 hereof;(b) That the procedure or any of the requirements herein provided has not been complied with;(c) That there is no showing of any reversible error;(d) That the appealed resolution is interlocutory in nature, except when it suspends the proceedings based on the alleged existence of a prejudicial question;(e) That the accused had already been arraigned when the appeal was taken;(f) That the offense has already prescribed; and(g) That other legal or factual grounds exist to warrant a dismissal. (Emphases supplied.)

It is noteworthy that the principle cited by petitioner reveals that, to find application, the same presupposes that "one part of the statute cannot be reconciled or harmonized with another part without nullifying one in favor of the other." In the instant case, however, Section 7 is neither contradictory nor irreconcilable with Section 12. As can be seen above, Section7 pertains to the action on the petition that the DOJ must take, while Section 12 enumerates the options the DOJ has with regard to the disposition of a petition for review or of an appeal.As aptly observed by respondent, Section 7 specifically applies to a situation on what the DOJ must do when confronted with an appeal or a petition for review that is either clearly without merit, manifestly intended to delay, or filed after an accused has already been arraigned, i.e., he may dismiss it outright if it is patently without merit or manifestly intended to delay, or, if it was filed after the acccused has already been arraigned, the Secretary shall not give it due course.Section 12 applies generally to the disposition of an appeal. Under said section, the DOJ may take any of four actions when disposing an appeal, namely:

1. reverse the appealed resolution;2. modify the appealed resolution;3. affirm the appealed resolution;4. dismiss the appeal altogether, depending on the circumstances and incidents attendant thereto.

As to the dismissal of a petition for review or an appeal, the grounds are provided for in Section 12 and, consequently, the DOJ must evaluate the pertinent circumstances and the facts of the case in order to determine which ground or grounds shall apply.Thus, when an accused has already been arraigned, the DOJ must not give the appeal or petition for review due course and must dismiss the same. This is bolstered by the fact that arraignment of the accused prior to the filing of the appeal orpetition for review is set forth as one of the grounds for its dismissal. Therefore, in such instance, the DOJ, noting that the arraignment of an accused prior to the filing of an appeal or petition for review is a ground for dismissal under Section 12, must go back to Section 7 and act upon as mandated therein. In other words, the DOJ must not give due course to, and must necessarily dismiss, the appeal.Likewise, petitioner’s reliance on the principle of contemporary construction, i.e., the DOJ is not precluded from entertaining appeals where the accused had already been arraigned, because it exercises discretionary power, and because it promulgated itself the circular in question, is unpersuasive. As aptly ratiocinated by the Court of Appeals:True indeed is the principle that a contemporaneous interpretation or construction by the officers charged with the enforcement of the rules and regulations it promulgated is entitled to great weight by the court in the latter’s construction of such rules and regulations. That does not, however, make such a construction necessarily controlling or binding. For equally settled is the rule that courts may disregard contemporaneous construction in instances where the law or rule construed possesses no ambiguity, where the construction is clearly erroneous, where strong reason to the contrary exists, and where the court has previously given the statute a different interpretation.If through misapprehension of law or a rule an executive or administrative officer called upon to implement it has erroneously applied or executed it, the error may be corrected when the true construction is ascertained. If a contemporaneous construction is found to be erroneous, the same must be declared null and void. Such principle should be as it is applied in the case at bar.11

Petitioner’s posture on a supposed exception to the mandatory import of the word "shall" is misplaced. It is petitioner’s view that the language of Section 12 is permissive and therefore the mandate in Section 7 has been transformed into a matter within the discretion of the DOJ. To support this stance, petitioner cites a portion of Agpalo’s Statutory Construction which reads:For instance, the word "shall" in Section 2 of Republic Act 304 which states that "banks or other financial institutions owned or controlled by the Government shall, subject to availability of funds xxx, accept at a discount at not more than twoper centum for ten years such (backpay) certificate" implies not a mandatory, but a discretionary, meaning because of the phrase "subject to availability of funds." Similarly, the word "shall" in the provision to the effect that a corporation violating the corporation law "shall, upon such violation being proved, be dissolved by quo warranto proceedings" has been construed as "may."12

After a judicious scrutiny of the cited passage, it becomes apparent that the same is not applicable to the provision in question. In the cited passage, the word "shall" departed from its mandatory import connotation because it was connectedto certain provisos/conditions: "subject to the availability of funds" and "upon such violation being proved." No such proviso/condition, however, can be found in Section 7 of the subject circular. Hence, the word "shall" retains its mandatory import.At this juncture, the Court of Appeals’ disquisition in this matter is enlightening:Indeed, if the intent of Department Circular No. 70 were to give the Secretary of Justice a discretionary power to dismiss or to entertain a petition for review despite its being outrightly dismissible, such as when the accused has already been arraigned, or where the crime the accused is being charged with has already prescribed, or there is no reversible error that has been committed, or that there are legal or factual grounds warranting dismissal, the result would not only be incongruous but also irrational and even unjust. For then, the action of the Secretary of Justice of giving due course to the petition would serve no purpose and would only allow a great waste of time. Moreover, to give the second sentence of Section 12 in relation to its paragraph (e) a directory application would not only subvert the avowed objectives of the Circular, that is, for the expeditious and efficient administration of justice, but would also render its other mandatory provisions - Sections 3, 5, 6 and 7, nugatory.13

In her steadfast effort to champion her case, petitioner contends that the issue as to whether the DOJ rightfully entertainedthe instant case, despite the arraignment of the accused prior to its filing, has been rendered moot and academic with the order of dismissal by the trial court dated 27 February 2003. Such contention deserves scant consideration.It must be stressed that the trial court dismissed the case precisely because of the Resolutions of the DOJ after it had, in grave abuse of its discretion, took cognizance of the petition for review filed by petitioner. Having been rendered in grave abuse of its discretion, the Resolutions of the DOJ are void. As the order of dismissal of the trial court was made pursuant to the void Resolutions of the DOJ, said order was likewise void. The rule in this jurisdiction is that a void judgment is a complete nullity and without legal effect, and that all proceedings or actions founded thereon are themselves regarded as invalid and ineffective for any purpose.14 That respondent did not file a motion for reconsideration or appeal from the dismissal order of the trial court is of no moment. Since the dismissal was void, there was nothing for respondent to oppose.Petitioner further asserts that Section 7 of DOJ Circular No. 70 applies only to appeals from original resolution of the City Prosecutor and does not apply in the instant case where an appeal is interposed by petitioner from the Resolution of the City Prosecutor denying her motion for reinvestigation. This claim is baseless.1avvphi1.netA reading of Section 7 discloses that there is no qualification given by the same provision to limit its application to appeals from original resolutions and not to resolutions on reinvestigation. Hence, the rule stating that "when the law does not distinguish, we must not distinguish"15 finds application in this regard.Petitioner asserts that her arraignment was null and void as the same was improvidently conducted. Again, this contentionis without merit. Records reveal that petitioner’s arraignment was without any restriction, condition or reservation.16 In fact she was assisted by her counsels Atty. Arthur Abudiente and Atty. Maglinao when she pleaded to the charge.17

Moreover, the settled rule is that when an accused pleads to the charge, he is deemed to have waived the right to preliminary investigation and the right to question any irregularity that surrounds it.18 This precept is also applicable in cases of reinvestigation as well as in cases of review of such reinvestigation. In this case, when petitioner unconditionally pleaded to the charge, she effectively waived the reinvestigation of the case by the prosecutor as well as the right to appeal the result thereof to the DOJ Secretary. Thus, with the arraignment of the petitioner, the DOJ Secretary can no longer entertain the appeal or petition for review because petitioner had already waived or abandoned the same.Lastly, while there is authority19 permitting the Court to make its own determination of probable cause, such, however, cannot be made applicable in the instant case. As earlier stated, the arraignment of petitioner constitutes a waiver of her right to preliminary investigation or reinvestigation. Such waiver is tantamount to a finding of probable cause. For this reason, there is no need for the Court to determine the existence or non-existence of probable cause.Besides, under Rule 45 of the Rules of Court, only questions of law may be raised in, and be subject of, a petition for review on certiorari since this Court is not a trier of facts. This being the case, this Court cannot review the evidence adduced by the parties before the prosecutor on the issue of the absence or presence of probable cause.20

WHEREFORE, the petition is DENIED. The Decision of the Court of Appeals dated 21 July 2004 and its Resolution dated 10 June 2005 in CA-G.R. SP No. 76396 are AFFIRMED. Costs against petitioner.

SO ORDERED.

G.R. No. L-49983 April 20, 1992FEDERATION OF FREE WORKERS, GERARDO ROSANA, FE DIVINA, PATRICIO MIRANDA, ARTURO GUEVARRA, PURIFICACION CABRERA, ANGELINA GAVIOLA, TITO MARQUEZ, ELPIDIO ORINION, DELIA ABUEG, TERESITA GARCIA, ELENA PADILLA, DOLORES DAILEG, CRESCELIA YBAÑES, ELENA ORTILLA, MARIETA SALONGA, RODOLFO LABARINTO, AURELIA SAN JUAN AND LOURDES LUNA, petitioners, vs.HON. AMADO G. INCIONG AND ARIS (PHILIPPINES), INC., respondents. MEDIALDEA, J.:This petition for certiorari with prayer for the issuance of a writ of preliminary injunction seeks to annul and set aside two decisions issued by the respondent Amado G. Inciong, Deputy Minister of Labor and Employment in Re: Illegal Strike Staged by Federation of Free Workers at Aris Philippines and docketed as AJML-009-78, entitled "Aris (Philippines) Inc., v. Federation of Free Workers, Gerardo Rosana, et al." The decision dated April 11, 1978 declared the illegality of the strike; ordered all striking employees except the union officers to return to work within twenty four (24) hours from the receipt of the order; revoked the previous order dated April 2, 1978; granted the application for clearance to place all unionofficers under preventive suspension and placed the administration of the union and the collective bargaining agreement directly under the Federation of Free Workers. The second assailed decision dated January 29, 1979 granted the application for clearance to terminate the services of eighteen (18) union officers and members of the FFW local union.The antecedent facts are as follows:Petitioner Federation of Free Workers (FFW) is a legitimate labor organization duly registered with the Ministry of Labor while petitioners Gerardo Rosana, Fe Divina, Patricio Miranda, Arturo Guevarra, Purificacion Cabrera, Angelina Gaviola, Tito Marquez, Elpidio Orinion, Delia Abueg, Teresita Garcia, Elena Padilla, Dolores Daileg, Crescelia Ybañes, Elena Ortilla, Marietta Salonga, Rodolfo Labarinto and Aurelio San Juan are union officers of the FFW local union and Lourdes Luna is a member of the union at private respondent Aris (Philippines), Incorporated. Private respondent Aris (Philippines), Incorporated (company) is a duly Organized domestic corporation engaged in the manufacture of leather gloves exclusively for export.On September 17, 1977, a certification election was held in private respondent company under the supervision of the Bureau of Labor Relations. Petitioner FFW garnered the highest number of votes and was subsequently declared the authorized bargaining representative.Consequently, private respondent company and petitioner FFW executed a memorandum of agreement on February 3, 1978 wherein (a) the company recognized FFW as the bargaining representative of the rank and file employees in the bargaining unit as of February 1, 1978; (b) the company and FFW shall negotiate for a new collective bargaining agreement, but in the meantime FFW will continue to administer the then existing CBA which expired on December 31, 1977 until a new CBA is executed; and (c) FFW will be entitled to all union dues starting February 1, 1978. The same hold-over CBA contained a "no strike –– no lockout clause."Pursuant to the aforementioned memorandum of agreement, the company and FFW met on February 7, 13, 15, 22 and 25, 1978 to negotiate for a new CBA that would govern the terms and conditions of employment of the rank and file employees in the company. However, the parties failed to reach any agreement and a deadlock ensued.On February 28, 1978, the FFW through its president, petitioner Gerardo Rosana filed with the MOLE (now DOLE) a notice of strike.The company and FFW met on March 7, 13, 27 and 29, 1978 at the Bureau of Labor Relations for conciliation upon summons by Director Carmelo Noriel. However, the parties still failed to reach any accord, so on March 29, 1978, FFW requested respondent Amado G. Inciong (then Acting Secretary) to assume jurisdiction over the labor dispute and undertake to terminate the case within two weeks (see Rollo, p. 19).On April 1, 1978, after the required thirty (30) days notice, the FFW staged a strike on all the three (3) plants of the company (see Rollo, pp. 19-20).The private respondent company having been classified as a vital industry pursuant to Letter of Instruction No. 368 and thus protected by Presidential Decree No. 823, as amended, against any strike, the respondent Deputy Minister assumed jurisdiction over the dispute.A marathon conference was held on April 2, 1978 between the company and FFW in Camp Crame with the active mediation of respondent Inciong and Brig. Gen. Prospero Olivas.During the conference, an order dated April 2, 1978 was issued by respondent Inciong directing the company to give a wage increase of P3.00 for three years and to give one day additional vacation and one day additional sick leave each and ordered the strikers to immediately return to work (see Rollo, pp. 32-33).Notwithstanding the FFW's commitment to abide by the aforesaid order of April 2, 1978, the strikers not only failed to lift the picket lines and return to work but intensified further the barricades.

On April 4, 1978, the company filed with the Secretary of Labor an urgent motion to declare the strike illegal and to revokethe order of April 2. 1978 at the same time it applied for clearance to terminate the employment of the illegal strikers with the Regional Office of the Department of Labor and Employment for violation of Presidential Decree No. 823, as amendedand General Order No. 5.In the meantime, the illegal strikers were placed under preventive suspension,The respondent Deputy Minister rendered a decision on April 11, 1978, to wit:

Based on the foregoing and by virtue of the powers of the Secretary of Labor under PD 823 as amended, and in order to serve as a warning to all other who violate or disregard the law and the authorities duly empowered to enforce it, the following are hereby ordered;1. The strike and the strike activities undertaken by the union are hereby declared illegal;2. All striking employees except the union officers are hereby ordered to return to work within 24 hours from the receipt of this order by the parties. The company may hire new employees to replace those employees who fail to report for work without any valid reason within the prescribed period.3. The Order of 2 April 1978 is hereby revoke(d). Instead, the last position of management under pressurefrom the government and the strikers in the amount of P2.25 is hereby adopted, but alloted (sic) as follows:

(a) P1.00 for the first eighteen (18) months; and(b) P1.25 for the second eighteen (18) months.

The P1.00 increase is retroactive to January 1, 1978, but the new 3-year collective bargaining agreement shall be effective upon signing. In addition, the company shall give one additional vacation and sick leave each. All other provisions of the collective agreement which expired in December 1977 are deemed retained for incorporation into the new CBA.4. Clearance is hereby granted to the company to place all union officers under preventive suspension. However, the individual accountability of the union officers and members for the illegal strike and other illegal activities of the union shall be the subject of further hearing by the Secretary of Labor. Atty. Virgilio Sy of the Bureau of Labor Relations is hereby designated as hearing officer and he shall submit this report and recommendation to the Secretary of Labor within 20 working days from start of hearing.5. Pending determination of the accountability of the union officers, the administration of the union and thecollective bargaining agreement is hereby placed directly under the Federation of Free Workers (FFW).SO ORDERED. (Rollo, pp. 23-25)

On the same date, the company and FFW, through the mediation of respondent Inciong entered into a memorandum of agreement to end their dispute and the strike.Pursuant to the aforementioned memorandum of agreement, the company and FFW executed a CBA on April 12, 1978 before respondent Inciong.Anent the application for clearance to terminate the employment of the illegal strikers, the respondent Deputy Minister rendered a decision on January 29, 1979 granting or approving the application for clearance to terminate, the dispositive portion of which provides as follows:

WHEREFORE, in view of the foregoing, the application for clearance to terminate the services of GerardoRosana, Fe Divina, Patricio Miranda, Arturo Guevarra, Purificacion Cabrera, Angelina Gaviola, Tito Marquez, Elpidio Orinion, Delia Abueg, Teresita Garcia, Elena Padilla, Dolores Daileg, Crescelia Ybañes, Elena Ortilla, Marietta Salonga, Rodolfo Labarinto, Aurelio San Juan and Lourdes Luna is hereby granted and/or approved.SO ORDERED. (Rollo, pp. 30-31)

Hence, this present petition.This Court in a resolution dated March 30, 1979 issued a temporary restraining order enjoining respondents from enforcing or executing the order dated April 11, 1978 and the decision dated January 29, 1979 (see Rollo, pp. 44-45).Petitioners stress that the respondent's order dated April 2, 1978 had become final and executory and therefore his subsequent decision dated April 11, 1978 could not legally revoke the said final order.The law invoked by the petitioners is section 10 of Presidential Decree No 823 as amended, to wit:

Sec. 10. Where a labor dispute has not been resolved by the Regional Offices, the Bureau of Labor Relations, the National Labor Relation, Commission and the voluntary arbitrators within the reglementary period, the Secretary of Labor is hereby authorized to assume jurisdiction over and summarily decide such dispute which poses an emergency or is critical to the national interest as determined by him on advise and recommendation of the Undersecretary of Labor, the Chairman of the National Labor Relations Commission and the Director of the Bureau of Labor Relations. Where the Labor Dispute Involves A Notice Of Strike Or Lockout, the secretary of Labor May, At Any Time, Assume Jurisdiction AndSummarily Decide It. The decision of the Secretary of Labor shall be final and executory unless stayed bythe President of the Philippines. (Rollo, pp. 13-14)

In sum, petitioners insist that respondent Deputy Minister gravely abused his discretion and acted in total lack or in excessof his jurisdiction when he issued his decisions dated April 11, 1978 and January 29, 1979.On the contrary, private respondent company emphasizes that the fact that the order dated April 2, 1978 declared on its face that the awards given therein are the "final and complete resolution of the issues" in the case does not mean that the said order may no longer be revoked or modified by the Minister (now Secretary) of Labor. It notes that the aforequoted phrase simply means that all the issues raised by the collective bargaining deadlock between the parties are already resolved and completely settled but did not make the order final and executory as of the date of issuance. Hence, the respondent Deputy Minister has the authority to modify and/or revoke his former order.Furthermore, private respondent maintains that petitioners' failure to seasonably move for reconsideration or appeal the decision dated April 11, 1978 made it final and therefore may no longer be reviewed by the Supreme Court. It also underscores the fact that the petitioners are already estopped from questioning the assailed decisions because the partiesalready executed a memorandum of agreement on April 11, 1978 and subsequently, a collective bargaining agreement on April 12, 1958.In conformity with the private respondent's stand, the respondent Deputy Minister through the Solicitor General argues that since the order dated April 2, 1978 was not appealed to the Office of the President, it is still well within the power of. the respondent Deputy Minister to reconsider and revoke the same (see Rollo, p. 128).Furthermore, the Solicitor General stresses that the remedy of appeal was not pursued by the petitioners but instead they allowed the decision dated April 11, 1978 to lapse into finality, hence, they cannot now contest the correctness of the said decision through a petition for certiorari eleven (11) months after its promulgation (seeRollo, p. 127).The pivotal issue therefore, is whether or not the respondent Deputy Minister gravely abused his discretion when he revoked his former order dated April 2, 1978.After a careful review of the records of this case, the Court finds the petition devoid of merit and holds that the respondent Deputy Minister did not gravely abuse his discretion when he revoked his previous order dated April 2, 1978 and subsequently issued his decisions dated April 11, 1978 and January 29, 1979.The order dated April 2, 1978 of the Minister of Labor never assumed finality by the very own acts of petitioner union who broke its commitment to lift the strike when it resumed its blockades on the plant gates, erected tents, posted new placards and circulated new leaflets, The narration of the incidents of the controversy by the Deputy Minister of Labor in his decision dated April 11, 1978 shows that he even made a commitment to recommend affirmation by the Office of the President of his April 2 order and to ask management not to raise the illegality of the strike before the Department of Laborif only petitioner union would accept the same upon the opening of working hours on the following Monday, April 4. He renewed this commitment on April 4, 1978 when the union officials promised before General Prospero Olivas at Camp Crame and Mayor Joseph Estrada to dismantle their pickets and return to work immediately. However, petitioner union again backed out and continued their massive picketing. This Court is perplexed why petitioner union would now have the temerity to claim that said order of April 2, 1978 had attained finality.Besides, it is very clear that the remedy of petitioners against the decision dated April 11, 1978 revoking his previous orderdated April 2. 1978 is appeal to the Office of the President.While the special civil action of certiorari may be availed of in the alternative situation where an appeal would not constitute a plain, speedy and adequate remedy, this is on the theoretical assumption that the right to appeal is still available in the case. If, however, the remedy by appeal had already been lost and the loss was occasioned by petitioner'sown neglect or error in the choice of remedies, certiorari cannot lie is a substitute or a tool to shield the petitioner from the adverse consequences of such neglect or error. The two remedies are mutually exclusive and not alternative or successive (Manila Electric Company v. Court of Appeals, G.R. No. 88396, July 4, 1990, 187 SCRA 200, 205).Applying this fundamental principle to the case at bar, it is readily evident that the petitioners had ample opportunity to appeal the decision of the respondent Deputy Minister revoking his previous order dated April 2, 1978. The remedy of appeal to the Office of the President was not pursued by the petitioners. They nevertheless deliberately allowed the periodfor appeal to pass without interposing one. Worse, despite the then availability of the remaining period for appeal, the petitioners allowed the decision to lapse into finality. Hence, they cannot now contest the legality of the decision through the present petition for certiorari.It is noteworthy that the present petition hardly assailed the correctness of the decision dated January 29, 1979 despite petitioners supplemental petition seeking the reinstatement of the individual petitioners with full backwages and without loss of seniority.The respondent Deputy Minister already declared the strike staged by the union illegal in his decision dated April 11, 1978,the pertinent portion of which provides:

It should be noted that the strike and the strike activities undertaken by the union were patently illegal. First, the employer is engaged in a vital industry and, therefore, protected by PD 823 as amended from strikes and lockouts. Second, the Secretary of Labor had already assumed jurisdiction over the dispute and therefore, the parties are enjoined against strikes and lockouts. Third, the parties themselves have voluntarily agreed to maintain the status quo while waiting for the summary decision of the Secretary of Labor. Moreover, even if the strike were not illegal per se, the strike activities staged by the union, especially the establishment of massive human barricades at all entrances to the company and the use ofcoercive methods to keep company officials aid other personnel out, were definitely illegal. (Rollo, p. 20)

We already ruled in the case of Union of Filipro Employees v. Nestle Philippines, Inc. (G.R. Nos. 88710-13, December 19,1990, 192 SCRA 396, 411) that "[a] strike that is undertaken despite the issuance by the Secretary of Labor of an assumption or certification order becomes a prohibited activity and thus illegal, pursuant to the second paragraph of Art. 264 of the Labor Code its amended (Zamboanga Wood Products, Inc. v. NLRC, G.R. 82088, October 13, 1969; 178 SCRA 482). The Union officers and members, as a result, are deemed to have lost their employment status for having knowingly participated in an illegal act."Unrebutted evidence shows that the individual petitioners actively participated in the illegal strike staged by the union (see Rollo, pp. 27-26, 30). Hence, the termination of the services of the individual petitioners is justified.All premises considered, the Court is convinced that the assailed decisions of the respondent Deputy Minister are not tainted with arbitrariness that would amount to grave abuse of discretion or lack of jurisdiction and therefore, We find no reason to disturb the same.ACCORDINGLY, the petition is DISMISSED for lack of merit and the decisions of the Deputy Minister of Labor dated April 11, 1978 and January 29, 1979 are hereby AFFIRMED. The temporary restraining order issued by this Court on March 30,1979 is hereby LIFTED.SO ORDERED.Narvasa, C.J., Cruz, Griño-Aquino, JJ., concur.Bellosillo, J., is on leave.

G.R. No. L-33487 May 31, 1971THE PEOPLE OF THE PHILIPPINES, plaintiff-appellant, vs.MAXIMO MARTIN, CANDIDO MARTIN and RODOLPO HIGASHI, defendants-appellees.Office of the Solicitor General Felix V. Makasiar, Assistant Solicitor General Isidro C. Borromeo and Solicitor Dominador L.Quiroz for plaintiff-appellant.Marianito Licudan for defendants-appellees. CASTRO, J.:This appeal by the People of the Philippines from the order dated August 2, 1968 of the Court of First Instance of La Union dismissing criminal case A-392 on the ground of lack of jurisdiction, was certified by the Court of Appeals to this Court, the issues raised being purely of law.The central issue is the proper interpretation of the provisions Section 46 of Commonwealth Act 613, as amended by Rep.Act 144 and Rep. Act 327, otherwise known as the Philippine Immigration Act.The defendants Maximo Martin, Candido Martin and Rodolfo Higashi were charged in criminal case A-392 of the CFI of LaUnion with a violation of section 46 of Com. Act 613, as amended. The information dated January 12, 1968 recites as follows:

The undersigned Acting State Prosecutor, and Asst. Provincial Fiscal accuse MAXIMO MARTIN, CANDIDO MARTIN and RODOLFO HIGASHI of Sec. 46 of Commonwealth Act NO. 613 otherwise knownas Philippine Immigration Act of 1940, as amended by Republic Act No. 827, committed as follows:That on or about the 22nd day of September, 1966, in the Municipality of Sto. Tomas, Province of La Union, Philippines, and within the jurisdiction of this Honorable court, the above-named accused, conspiring and confederating together and mutually helping one another and in active aid with Filipino nationals who are presently charged before the Court of First Instance of Bulacan in Crim. Case No. 6252-M, did then and there wilfully, unlawfully and feloniously bring in and carry into the Philippines thirty nine (39) Chinese aliens who traveled by the Chinese vessel "Chungking" from the port of Hongkong and who are not duly admitted by any immigration officer or not lawfully entitled to enter the Philippines, and from the Chinese vessel "Chungking," accused took delivery, loaded, and ferried the Chinese aliens in thevessel "MARU XI" owned, operated, under the charge and piloted by all the herein accused from outside into the Philippines, sureptitiously landing the said aliens at Barrio Damortis, Sto. Tomas, La Union, Philippines which place of landing is not a duly authorized port of entry in the Philippines.

After the thirty-nine (39) illegal entrants were landed in barrio Damortis, as charged in the indictment, they were loaded in a car and two jeepneys for transport to Manila. They did not however reach their destination because they were intercepted by Philippine Constabulary agents in Malolos, Bulacan.For concealing and harboring these thirty-nine aliens, Jose Pascual, Filipinas Domingo, Jose Regino, Alberto Bunyi, Emerdoro Santiago and Ibarra Domingo were charged before the Court of First Instance of Bulacan in criminal case 6258-M. The amended information in the said criminal case reads as follows:

The undersigned Provincial Fiscal accuses Jose Pascual, Filipinas Domingo, Jose Regino, Alberto Bunyi, Emerdoro Santiago and Ibarra Domingo of the violation of Section 46 of Commonwealth Act No. 613, otherwise known as the Philippine Immigration Act of 1940, as amended by Republic Act No. 827, committed as follows:

That on or about the 22nd day of September, 1966, in the municipality of Malolos, Province of Bulacan, Philippines, and within the jurisdiction of this Honorable Court, the above named accused and several others whose identities are still unknown, conspiring and confederating and aiding one another, did then and there wilfully, unlawfully and, feloniously, bring conceal and harbor 39 Chinese aliens not duly admitted by any immigration officer or not lawfully entitled to enter or reside within the Philippines under the terms of the Immigration Laws, whose names are as follows: Hung Chang Cheong, Hung Ling Choo, Sze Lin Chuk, Chian Giok Eng, Mung Bun Bung, Lee Chin Kuo, Gan Kee Chiong, See Sei Hong Chun, Go Kian Sim, Kho Ming Jiat, See Lee Giok, Uy Chin Chu, Go Su Kim, Go Chu, Chiang Tian, Chua Tuy Tee, Sy Jee Chi, Sy Sick Bian, Sy Kang Liu, Ang Chi Hun, Kho Chu, Chua Hong, Lim Chin Chin, Ang Lu Him, William Ang, Sy Siu Cho, Ang Puy Hua, Sy Chi Tek, Lao Sing Tee, Cua Tiong Bio, Kho Lee Fun, KhoLee Fong, Ang Giok, Sy Si Him, Sy Lin Su, Lee Hun, Sy SiongGo and Sy Cho Lung, who previously earlier on the same day, thru the aid, help and manipulation of the abovenamed accused, were loaded and ferried to the shore from the Chinese vessel "CHIUNG HING" in a fishing vessel known as the "MARU Xl" and landed at barrio Damortis, Sto. Tomas, La Union, and immediately upon landing were loaded in 3 vehicles an automobile bearing plate No. H-3812-Manila driven and operated by Emerdoro Santiago and 2 jeepneys with plates Nos. S-27151- Philippines, 1966 and S-26327-Philippines, 1966 driven and operated by Jose Regino and Alberto Bunyi, respectively, and brought southwards along the MacArthur highway and upon reaching Malolos, Bulacan, were apprehended by the agents of the Philippine Constabulary, the latter confiscating and impounding the vehicles used in carrying and transporting the aid aliens and including the sum of P15,750.00 found in the possession of the accused Jose Pascual which was used and/or to be used in connection with the commission of the crime charged.

On July 1, 1968 the three accused in criminal case A-392 filed a "motion to dismiss" [quash] on the ground that the CFI of La Union has no jurisdiction over the offense charged in the said indictment as the court had been pre-empted from takingcognizance of the case by the dependency in the CFI of Bulacan of criminal case 6258-M. This motion was opposed by the prosecution.On August 2, 1968 the Court of First Instance of La Union dismissed the case, with costs de oficio. The Government's motion for reconsideration was denied; hence the present recourse.In this appeal the Government contends that the lower court erred (1) "in declaring that the information in the instant case [A-392] alleges conspiracy between the accused herein and the persons accused in criminal case 6258-M of the Court of First Instance of Bulacan;" (2) "in holding that by reason of said allegation of conspiracy in the information in this case [A-3921], the act of one of the accused in both criminal cases is deemed the act of all the accused and that as a consequence all those accused in the two cases are liable and punishable for one offense or violation of section 46 of Commonwealth Act 613, as amended, although committed by and through the different means specified in said section;" (3) "in holding that the violation of section 46 of Commonwealth Act 613, as amended, committed by the accused in both criminal cases partakes of the nature of a transitory or continuing offense;" and (4) "in declaring that it lacks jurisdiction and is now excluded from taking cognizance of this case [A-392] and in dismissing it."Section 46 of Commonwealth Act 613, as amended, reads as follows:

Any individual who shall bring into or land in the Philippines or conceal or harbor any alien not duly admitted by any immigration officer or not lawfully entitled to enter or reside within the Philippines under the terms of the immigration laws, or attempts, conspires with, or aids another to commit any such act, and any alien who enters the Philippines without inspection of admission by the immigration officials, or obtains entry into the Philippines by wilful, false, or misleading representation or wilful concealment of a material fact, shall be guilty of an offense and upon conviction thereof, shall be fined not more than ten thousand pesos, imprisoned for not more than ten years, and deported if he is an alien.If the individual who brings into or lands in the Philippines or conceals or harbors any alien not duly admitted by any immigration officer or not lawfully entitled to enter or reside herein, or who attempts, conspires with or aids another to commit any such act, is the pilot, master, agent, owner, consignee, or any person in charge of the vessel or aircraft which brought the alien into the Philippines from any place outside thereof, the fine imposed under the first paragraph hereof shall constitute a lien against the vesselor aircraft and may be enforced in the same manner as fines are collected and enforced against vessels under the customs laws: Provided, however, That if the court shall in its discretion consider forfeiture to be justified by the circumstances of the case, it shall order, in lieu of the fine imposed, the forfeiture of the vessel or aircraft in favor of the Government, without prejudice to the imposition to the penalty of imprisonment provided in the preceding paragraph.

To be stressed at the outset is the significant repetition, in the second paragraph above-quoted, of basic words and concepts set forth in the first paragraph. Thus, the first paragraph begins with: "Any individual who shall bring into or land in the Philippines or conceal or harbor any alien ...;" the second paragraph starts with "If the individual who brings into or lands in the Philippines or conceals or harbors any alien ..." (emphasis supplied) Scanning section 46 in its entire context, it is at once apparent, there being no indication to the contrary, that the act ofbringing into, the act of landing, the act of concealing, the act of harboring, are four separate acts, each act possessing its own distinctive, different and disparate meaning. "Bring into" has reference to the act of placing an alien within the territorial waters of the Philippines. "Land"

refers to the act of putting ashore an alien. "Conceal" refers to the act of hiding an alien. "Harbor" refers to the act of givingshelter and aid to an alien. It is of course understood that the alien brought into or landed in the Philippines, or concealed or harbored, is an "alien not duly admitted by any immigration officer or not lawfully entitled to enter or reside within the Philippines under the terms of the immigration laws." 1

The rule is too well-settled to require any citation of authorities that the word "or" is a disjunctive term signifying dissociation and independence of one thing from each of the other things enumerated unless the context requires a different interpretation. While in the interpretation of statutes, 'or' may read 'and' and vice versa, it is so only when the context so requires. 2

A reading of section 46 above-quoted does not justify giving the word "or" a non-disjunctive meaning.Bringing into and landing in the Philippines of the 39 aliens were completed when they were placed ashore in the barrio ofDamortis on September 22, 1966. The act of the six accused in criminal case 6258-M before the CFI of Bulacan of transporting the aliens constitutes the offenses of "concealing" and "harboring," as the terms are used in section 46 of our Immigration Laws. The court a quo in point of fact accepted this interpretation when it observed that "it could happen that different individuals, acting separately from, and independently of each other could violate and be criminally liable for violation of the immigration Act, if each individual independently commits any of the means specified under said section 46of Commonwealth Act 613, as amended by Republic Act 827. For example, an individual act independently, with the use of a motor boat, brings into the country and lands several Chinese aliens and after doing so he goes away. There is no question that said individual violated said section 46 of the Immigration Act, for bringing into and landing in the Philippines some alien. Now, after the said landing of the said aliens another individual also acting independently, without connection whatsoever with the one who brought and landed the said aliens, and knowing that the Chinese aliens have no right to enter the country or unlawfully conceals or harbors the said aliens. There is no doubt that this is also liable and punishablefor another separate violation of said section 46 of Commonwealth Act 613."This notwithstanding, the court dismissed this case on the ground that there is an express allegation in the information of connivance between the three defendant-appellees herein and the six accused in criminal case 6258-M of the CFI of Bulacan. In our view the court a quo incurred in error in reading this conclusion. This error, which is one of misinterpretation of the phraseology of the information, was induced by a reading of the first of the said information which states as follows:

That on or about the 22nd day of September, 1966, in the Municipality of Sto. Tomas, Province of La Union, Philippines, and within the jurisdiction of this Honorable Court, the abovenamed accused, conspiring and confederating together and mutually helping one another and in active aid with Filipino nationals who are presently charged before the CFI of Bulacan in Crim. Case No. 6258-M, did then and there wilfully, unlawfully and feloniously bring in and ferry into the Philippines thirty-nine (39) Chinese aliens who traveled by the Chinese vessel 'Chungking' from the port of Hongkong ... (Emphasis ours)

It is crystal-clear that the words, "the above-named accused, conspiring and confederating together and mutually helping one another," can refer only and exclusively to the three persons accused in this case, namely Maximo Martin, Candido Martin and Rodolfo Higashi. While the unfortunate insertion in the information of the clause reading, "and in active aid withFilipino nationals who are presently charged before the CFI of Bulacan in Criminal Case No. 6258-M," may yield the implication that the three defendants-appellees and the six accused in criminal case 6258-M before the CFI of Bulacan may have agreed on the sequence of the precise steps to be taken in the smuggling of the Chinese aliens and on the identities of the persons charged with consummating each step, still there seems to be no question that the three defendants-appellees are charged only with bringing in and landing on Philippine soil the thirty-nine aliens, whereas the six accused in criminal case 6258-M are charged only with concealing and harboring the said aliens. It is technically absurd to draw a conclusion of conspiracy among the three defendants-appellees and the six accused in the criminal case6258-M before the CFI of Bulacan who are not named defendants in this case.At all events, the words, "and in active aid with Filipino nationals who are presently charged before the CFI of Bulacan in Crim. Case No. 6258-M," can and should be considered as a surplusage, and may be omitted from the information without doing violence to or detracting from the intendment of the said indictment. These words should therefore be disregarded.Finally, the court a quo erred in maintaining the view that the acts of bringing into and landing aliens in the Philippines illegally and the acts of concealing and harboring them constitute one "transitory and continuing violation". We here repeatand emphasize that the acts of bringing into and landing an alien in the Philippines are completed once the alien is brought ashore on Philippine territory, and are separate and distinct from the acts of concealing and harboring such alien. If the aliens in this case were apprehended immediately after landing, there would be no occasion for concealing and harboring them. Upon the other hand, one set of persons may actually accomplish the act of bringing in and/or landing aliens in the Philippines, and another completely different set of persons may conceal and/or harbor them. The general concept of a continuing offense is that the essential ingredients of the crime are committed in different provinces. An example is the complex offense of kidnapping with murder if the victim is transported through different provinces before heis actually killed. In such case the CFI of any province in which any one of the essential elements of said complex offense has been committed, has jurisdiction to take cognizance of the offense. 3

The conclusion thus become ineluctable that the court a quo erred in refusing to take cognizance of the case at bar.

ACCORDINGLY, the order of the Court of First Instance of La Union of August 2, 1968, dismissing this case and cancelling the bail bond posted by the three defendants-appellees, is set aside, and this case is remanded for further proceedings in accordance with law.Concepcion, C.J., Reyes, J.B.L., Dizon, Makalintal, Zaldivar, Fernando, Teehankee, Barredo and Villamor, JJ., concur.Makasiar, J., took no part.

rks, except the following:(a) Maintenance of existing and/or completed public works project: Provided, that not more than the average number of laborers or employees already employed therein during the sixth- month period immediately prior to thebeginning of the forty-five day period before election day shall be permitted to work during such time:Provided, further, That no additional laborer shall be employed for maintenance work within the said period of forty-five days;(b) Work undertaken by contract through public bidding held, or negotiated contract awarded, before the forty-five day period before election: Provided, That work for the purpose of this section undertaken under the so-called "takay" or "paquiao" system shall not be considered as work by contract;(c) Payment for the usual cost of preparation for working drawings, specifications, bills of materials and equipment, and all incidental expenses for wages of watchmen and other laborers employed for such work in the central office and field storehouses before the beginning of such period: Provided, That the number of such laborers shall not be increased over the number hired when the project or projects were commenced; and(d) Emergency work necessitated by the occurrence of a public calamity, but such work shall be limited to the restoration of the damaged facility.

No payment shall be made within five days before the date of election to laborers who have rendered services in projects or works except those falling under subparagraphs (a), (b), (c), and (d), of this paragraph.This prohibition shall not apply to ongoing public works projects commenced before the campaign period or similar projects under foreign agreements. For purposes of this provision, it shall be the duty of the government officials or agencies concerned to report to the Commission the list of all such projects being undertaken by them.

(2) The Ministry of Social Services and Development and any other office in other ministries of the government performing functions similar to the said ministry, except for salaries of personnel and for such other expenses as the Commission may authorize after due and necessary hearing. Should a calamity or disaster occur, all releases normally or usually coursed through the said ministries shall be turned over to, and administered and disbursed by, the Philippine National Red Cross, subject to the supervision of the Commission on Audit or its representatives, and no candidate or his or her spouse or member of his family within the second civil degree of affinity or consanguinity shall participate, directly or indirectly, in the distribution of any relief or other goods to the victims of the calamity or disaster; and(3) The Ministry of Human Settlements and any other office in any other ministry of the government performing functions similar to the said ministry, except for salaries of personnel and for such other necessary administrative or other expenses as the Commission may authorize after due notice and hearing.

As the legal provision shows, the prohibition of the release, disbursement or expenditure of public funds for any and all kinds of public works depends on the following elements: (a) a public official or employee releases, disburses or spends public funds; (b) the release, disbursement and expenditure is made within 45 days before a regular election or 30 days before a special election; and (c) the public funds are intended for any and all kinds of public works except the four situations enumerated in paragraph (v) of Section 261.It is decisive to determine, therefore, whether the purchase of the lots for use as a public cemetery constituted public works within the context of the prohibition under the Omnibus Election Code.We first construe the term public works − which the Omnibus Election Code does not define − with the aid of extrinsic sources.The Local Government Code of 1991 considers public works to be the fixed infrastructures and facilities owned and operated by the government for public use and enjoyment. According to the Code, cities have the responsibility of providing infrastructure facilities intended primarily to service the needs of their residents and funded out of city funds, such as, among others, roads and bridges; school buildings and other facilities for public elementary and secondary schools; and clinics, health centers and other health facilities necessary to carry out health services.10

Likewise, the Department of Public Works and Highways (DPWH), the engineering and construction arm of the government, associates public works with fixed infrastructures for the public. In the declaration of policy pertinent to the DPWH, Sec. 1, Chapter 1, Title V, Book IV, Administrative Code of 1987, states:Sec. 1. Declaration of Policy. - The State shall maintain an engineering and construction arm and continuously develop its technology, for the purposes of ensuring the safety of all infrastructure facilities and securing for all public works and highways the highest efficiency and the most appropriate quality in construction. The planning, design, construction and maintenance of infrastructure facilities, especially national highways, flood control and water resources development systems, and other public works in accordance with national development objectives, shall be the responsibility of such an

engineering and construction arm. However, the exercise of this responsibility shall be decentralized to the fullest extent feasible.The enumeration in Sec. 1, supra − "infrastructure facilities, especially national highways, flood control and water resources development systems, and other public works in accordance with national development objectives" − means that only the fixed public infrastructures for use of the public are regarded as public works. This construction conforms to the rule of ejusdem generis, which Professor Black has restated thuswise:11

It is a general rule of statutory construction that where general words follow an enumeration of persons or things, by words of a particular and specific meaning, such general words are not to be construed in their widest extent, but are to be held as applying only to persons or things of the same general kind or class as those specifically mentioned. But this rule must be discarded where the legislative intention is plain to the contrary.Accordingly, absent an indication of any contrary legislative intention, the term public works as used in Section 261 (v) of the Omnibus Election Code is properly construed to refer to any building or structure on land or to structures (such as roads or dams) built by the Government for public use and paid for by public funds. Public works are clearly works, whether of construction or adaptation undertaken and carried out by the national, state, or municipal authorities, designed to subserve some purpose of public necessity, use or convenience, such as public buildings, roads, aqueducts, parks, etc.; or, in other words, all fixed works constructed for public use.12

It becomes inevitable to conclude, therefore, that the petitioner's insistence − that the acquisition of Lots 5860 and 5881 for use as a public cemetery be considered a disbursement of the public funds for public works in violation of Section 261(v) of the Omnibus Election Code − was unfounded and unwarranted.

IIIIssuance of the Treasury Warrant

During the Period of the Election Ban Violated Section 261 (w), Omnibus Election Code

Section 261(w) of the Omnibus Election Code reads thus:x x x

(w) Prohibition against construction of public works, delivery of materials for public works and issuance of treasury warrants and similar devices.- During the period of forty five days preceding a regular election and thirty days before a special election, any person who: (a) undertakes the construction of any public works, except for projects or works exempted in the preceding paragraph; or (b) issues, uses or avails of treasury warrants or any device undertaking future delivery of money, goods or other things of value chargeable against public funds.

x x xThe OSG posits that the foregoing provision is violated in either of two ways: (a) by any person who, within 45 days preceding a regular election and 30 days before a special election, undertakes the construction of any public works exceptthose enumerated in the preceding paragraph; or (b) by any person who issues, uses or avails of treasury warrants or anydevice undertaking future delivery of money, goods or other things of value chargeable against public funds within 45 dayspreceding a regular election and 30 days before a special election.We concur with the OSG’s position.Section 261 (w) covers not only one act but two, i.e., the act under subparagraph (a) above and that under subparagraph (b) above. For purposes of the prohibition, the acts are separate and distinct, considering that Section 261(w) uses the disjunctive or to separate subparagraphs (a) and (b). In legal hermeneutics, or is a disjunctive that expresses an alternative or gives a choice of one among two or more things.13 The word signifies disassociation and independence of one thing from another thing in an enumeration. It should be construed, as a rule, in the sense that it ordinarily implies as a disjunctive word.14 According to Black,15 too, the word and can never be read as or, or vice versa, in criminal and penal statutes, where the rule of strict construction prevails. Consequently, whether or not the treasury warrant in question was intended for public works was even of no moment in determining if the legal provision was violated.There was a probable cause to believe that Section 261(w), subparagraph (b), of the Omnibus Election Code was violatedwhen City Mayor Ting and City Treasurer Garcia issued Treasury Warrant No. 0001534514 during the election ban period.For this reason, our conclusion that the COMELEC en banc gravely abused its discretion in dismissing E.O. Case No. 06-14 for lack of merit is inevitable and irrefragable.True, the COMELEC, as the body tasked by no less than the 1987 Constitution to investigate and prosecute violations of election laws,16 has the full discretion to determine whether or not an election case is to be filed against a person and, consequently, its findings as to the existence of probable cause are not subject to review by courts. Yet, this policy of non-interference does not apply where the COMELEC, as the prosecuting or investigating body, was acting arbitrarily and capriciously, like herein, in reaching a different but patently erroneous result.17 The COMELEC was plainly guilty of grave abuse of discretion.Grave abuse of discretion is present "when there is a capricious and whimsical exercise of judgment as is equivalent to lack of jurisdiction, such as where the power is exercised in an arbitrary or despotic manner by reason of passion or personal hostility, and it must be so patent and gross as to amount to an evasion of positive duty or to a virtual refusal to perform the duty enjoined or to act at all in contemplation of law."18

WHEREFORE, WE grant the petition for certiorari and set aside the resolution dated February 18, 2008 issued in E.O. Case No. 06-14 by the Commission of Elections en banc.The Commission on Elections is ordered to file the appropriate criminal information against respondents City Mayor Randolph S. Ting and City Treasurer Salvacion Garcia of Tuguegarao City for violation of Section 261 (w), subparagraph (b), of the Omnibus Election Code.Costs of suit to be paid by the private respondents.SO ORDERED.

G.R. No. L-30761 July 11, 1973THE SAN MIGUEL CORPORATION, petitioner, vs.THE MUNICIPAL COUNCIL, THE MAYOR, and THE MUNICIPAL TREASURER OF THE MUNICIPALITY OF MANDAUE, PROVINCE OF CEBU, respondents.Gadioma and Josue for petitioner.Acting City Fiscal Lawrence A. Parawan for respondents. ANTONIO, J.:Petition for writ of certiorari to review the judgment of the Court of First Instance of Cebu, in Civil Case No. R-10631, upholding the validity of Ordinance No. 23, series of 1966, as amended by Ordinance No. 25, series of 1967, of the Municipality of Mandaue, Cebu, imposing "a graduated quarterly fixed tax based on the gross value of money or actual market value at the time of removal of the manufactured articles from their factories or other manufacture or processing establishments."In enacting the said ordinances, the municipal council of Mandaue invoked as basis of its authority Republic Act No. 2264 (Local Autonomy Act).The relevant portion of Section 1, Ordinance No. 23 (1966), as amended by Ordinance No. 25 (1967), provides as follows:

SECTION 1. — Municipal License Tax On Proprietors Or Operators Of ... Breweries, ... Proprietors or operators of ... breweries, ... within the territorial limits of this municipality shall pay a graduated quarterly fixed tax based on the gross value in money or actual market value at the time of removal, of the manufactured articles from their factories ... during the preceding quarter in accordance with the following schedules: ...:CLASS QUARTERLY LICENSE TAXP160.00 and P0.30 forQUARTERLY GROSS VALUE each P1,000.00 or fraction thereof in excess1 P37,500.00 or over of P37,500.00 gross value.2 P31.250.00 to P37,499.99 P158.00 per quarter3 25,000.00 to 31,249.99 132.00 " " 4 20,000.00 to 24,999.99 105.00 " " 5 15.000.00 to 19,999.99 83.00 " " 6 12.500.00 to 14,999.99 63.00 " " 7 10,000.00 to 12,499.99 50.00 " " 8 8,750.00 to 9,999.99 42.00 " " 9 7,500.00 to 8,749.99 37.00 " " 10 6,500.00 to 7,499.99 31.00 " " 11 5,500.00 to 6,499.99 27.00 " " 12 4,500.00 to 5,499.99 23.00 " " 13 3,750.00 to 4,499.99 19.00 " " 14 3,000.00 to 3,749.99 16.00 " " 15 2,500.00 to 2,999.99 13.00 " " 16 2,000.00 to 2,499.99 11.00 " " 17 1,750.00 to 1,999.99 9.00 " " 18 1,500.00 to 1,749.99 8.00 " " 19 1,250.00 to 1,499.99 7.00 " " 20 Less than P1,250.00 5.00 " "

The pertinent portion of Section 2 of Ordinance No. 23 which was not amended by Ordinance No. 25 states:Payment of Municipal License Tax. — A fixed tax imposed on this ordinance must first be paid before any person can engage in business and is payable for each taxable business; ...The graduated fixed tax provided in this ordinance shall be paid at the Office of the Municipal Treasurer quarterly, on or before the twentieth of January, April, July and October; ... . Provided further, That as

regards businesses already operating at the time this ordinance takes effect, the tax for the initial quarter shall be paid pursuant to the provisions of this ordinance and shall be based on the gross value in money during the quarter immediately preceding, ... .Within the time fixed for the payment of the license taxes herein imposed, the taxpayers shall prepare andfile with the Municipal Treasurer, a sworn statement of the gross value in money during the preceding quarter on the basis of which the tax shall be assessed and collected. ... .

The basic Ordinance was No. 88, 1 which took effect on September 25, 1962, but this was amended by Ordinance No. 23 (January 1, 1967), and by Ordinance No. 25 (January 1, 1968).Petitioner, a domestic corporation engaged in the business of manufacturing beer and other products with a subsidiary manufacturing plant in Mandaue, Cebu, since December, 1967, paid the taxes prescribed in the aforesaid ordinance, protest thus: P309.40 on January 22, 1968 and P5,171.80 as of July 18, 1968, computed respectively "on the basis of 70,412 and 2,203.070 cases of beer manufactured and removed from said Mandaue plant, multiplied by P7.60 which is the prevailing market price (wholesaler's price) per case of beer at the time of the removal".Claiming that it is adversely affected by the ordinance, which in its view was beyond the power and authority of the municipality to enact, petitioner brought and action in the Court of First Instance of Cebu, Branch VI, for the annulment of said ordinance.Petitioner contends that (1) the phrase "gross value in money or actual market value" employed in the questioned ordinance clearly referred to "sales or market price" of the articles or commodities manufactured thereby indicating a manifest intent to impose a tax based on sales, and (2) that to impose a tax upon the privilege of manufacturing beer, when the amount of the tax is measured by the gross receipts from its sales of beer, is the same as imposing a tax upon the product itself.Respondents upon the other hand insist that the tax imposed in the questioned ordinance (1) is not a percentage tax or a tax on the sales of beer but is a tax on the privilege to engage in the business of manufacturing beer, and the phrase "actual market value" was merely employed as a basis for the classification and graduation of the tax sought to be imposed; (2) that it is not a specific tax because it is not a tax on the beer itself, but on the privilege of manufacturing beer;and (3) that with conversion of Mandaue into a city on June 21, 1969, the appeal has become moot, because the prohibition against the imposition of any privilege tax on sales or other taxes in any form based thereon, is applicable only to municipalities.While We have heretofore announced the doctrine that the grant of power to tax to charterred cities and municipalities under Section 2 of the Local Autonomy Act is sufficiently plenary, 2 it is, however, subject to the exceptions and limitations contained in the two (2) provisos of the same statute. In other words, the municipal corporation should not transcend the limitations imposed by the statute on the basis of which the power to tax is sought to be exercised. Thus, We held in the Marinduque case, 3 that an ordinance providing for a graduated tax based on either "gross output or sales" violates the prohibition on municipalities against imposing any percentage tax on sales, or other taxes in any form based thereon, as the only standard provided for measuring the gross output is its peso value, as determined from true copies of receipts and/or invoices that the taxpayer is required to submit to the municipal treasurer.We are thus confined to the narrow issue of whether or not the challenged ordinance has transcended the exceptions and limitations imposed by section 2 of Republic Act 2264.Section 2 of the aforecited statute provides:

Provided, That municipalities and municipal districts shall, in no case, impose any percentage tax on sales or other taxes in any form based thereon nor impose taxes on articles subject to specific tax ... .

Section 1 of Ordinance No. 88 of the Municipality of Mandaue, as amended by Ordinances Nos. 23 (1967) and 25 (1968), specifically provides that the graduated quarterly tax shall be "based on the gross value in money or actual market value at the time of removal, of the manufactured products ... from their factories ... during the preceding calendar year ... .Well settled is the rule that in the absence of legislative intent to the contrary, technical or commercial terms and phrases, when used in tax statutes, are presumed to have been used in their technical sense or in their trade or commercial meaning. Thus, the phrase "gross value in money" has a well-defined meaning in our tax statutes. For instance, the term "gross value in money" of articles sold, bartered, exchanged or transferred, as used in Sections 184, 185 and 186 of the National Internal Revenue Code, has been invariably used as equivalent to "gross selling price" and has been construed as the total amount of money or its equivalent which the purchaser pays to the vendor to receive or get the goods. 4 It must be noted that the ordinance specifically provides that the basis of the tax is the "gross value in money or actual market value" of the manufactured article.The phrase "actual market value" has been construed as the price which an article "would command in the ordinary course of business, that is to say, when offered for sale by one willing to sell, but not under compulsion to sell, and purchased by another who is willing to buy, but under no obligation purchase it, 5 or the price which the property will bring in a fair market after fair and reasonable efforts have been made to find a purchaser who will give the highest price for it. 6 The "actual market value" of property, for purposes of taxation, therefore means the selling price of the article in the course of ordinary business.

Considering that the phrase "gross value in money" is followed by the words "or actual market value", it is evident that the latter was intended to explain and clarify the preceding phrase. For the word "or" may be used as the equivalent of "that isto say" and gives that which precedes it the same significance as that which follows it. It is not always disjunctive and is sometimes interpretative or expository of the preceding word. 7 Certainly We cannot assume that the phrase "or actual market value" was a mere surplusage, for it serves to clarify and explain the meaning and import of the preceding phrase. In any event, it is the duty of the courts, so far reasonably practicable, to read and interpret a statute as to give life and effect to its provisions, so as to render it a harmonious whole.It is also significant to note, that there is a set ratio between the amount of the tax and the volume of sales. Thus if the "gross value in money or actual market value" of the beer removed from the factory exceeds P37,500.00 per quarter, the taxpayer is required to pay a quarterly license tax of P160.00 plus P0.30 for every P1,000.00 or fraction of the excess. In other words in excess of P37,500.00, the taxpayer will pay to the municipality a certain amount of tax measured by a percentage of the sales. It is therefore evident that the challenged ordinance was a transparent attempt on the part of the municipality to impose a tax based on sales.Although section 2 of the ordinance in question provides in a vague manner that the tax shall be assessed and collected on the basis of the sworn statement of the manager of a firm or corporation "of the gross value in money during the preceding quarter," in actual practice the quarterly tax levied upon the petitioner, was computed on the basis of the total market of the beer, per quarter, as shown by the shipping memorandum certified to by the storekeeper of the Bureau Internal Revenue assigned to the brewery. Thus the amounting to P309.40 and P5,171.80, paid by petition January 22, 1968 and July 18, 1968, were actually determined respectively on the basis of 70,412 and 2,203.070 cases manufactured and removed from the Mandaue plant, multiplied by P7.60 which is the prevailing market price (wholesaler's price) per case of beer.In Laoag Producers' Cooperative Marketing Association, Inc. vs. Municipality of Laoag, 8 We held that the challenged ordinance imposed a tax based on sales, although the ordinance merely imposed a "municipal tax or inspection fee of on one-half (1/2) centavo on every kilo of Virginia leaf tobacco, garlic and onion on all wholesale dealers and vendors" because, in its application, it does impose a tax based on sales, as it is based the number of kilos sold and purchased by him and when the wholesaler or vendor accumulates his stock, he does so for only one purpose, to sell the same at the appropriate time, and "he cannot by its very nature, carry on his business unless he sells what he has bought." Similarly, in the case at bar, the circumstance that the tax is imposed upon petitioner at time of removal from the factory of the manufactured beer, and not on the date of actual sale, is not of important consequence since petitioner will, in the end, sell the beer removed from the factory, because by the nature of its business, it has no alternative but to sell what it has manufactured.We therefore hold that the questioned ordinance imposed tax based on sales and therefore beyond the authority of the municipality to enact.Having reached this conclusion, it becomes unnecessary to pass upon the additional question posed, i.e., whether or not the challenged ordinance imposes a tax on a product subject to specific tax.Respondents however claim that with the conversion Mandaue into a city pursuant to Republic Act No. 5519, which was approved on June 21, 1969, the issue has already become moot, since the prohibition contained in section 2 of Republic Act 2264 applies only to municipalities and not to chartered cities. The same contention has been rejected in City of Naga v. Court of Appeals, 9 and Laoag Producers' Cooperative Marketing Association, Inc. v. Municipality of Laoag, supra, where We ruled that the legality of an ordinance depends upon the power of the municipality at the time of the enactment the challenged ordinance. Since the municipality of Mandaue had no authority to enact the said ordinance, the subsequent approval of Republic Act No. 5519 which became effective June 21, 1969, did not remove the original infirmityof the ordinance. Indeed there is no provision in the aforecited statute which invests a curative effect upon the ordinances of the municipality which when enacted were beyond its statutory authority.IN VIEW WHEREOF, the appealed judgment is hereby reversed and Ordinance No. 23, series of 1966, as amended by Ordinance No. 23, series of 1966, which became effective January 1, 1968, of the Municipality of Mandaue, Cebu, is hereby declared null and void. Respondents are also ordered to refund the taxes paid by Petitioners under the said ordinance, with legal interest thereon. No costs.Makalintal, Actg. C.J., Zaldivar, Castro, Teehankee Makasiar and Esguerra, JJ., concur.Fernando and Barredo, JJ., took no part.

G.R. No. 164152 January 21, 2010COMMISSIONER OF INTERNAL REVENUE, Petitioner, vs.JULIETA ARIETE, Respondent.

D E C I S I O NCARPIO, J.:

The Case

The Commissioner of Internal Revenue (petitioner) filed this Petition for Review1 to reverse the Court of Appeals’ (CA) Decision2 dated 14 June 2004 in CA-G.R. SP No. 70693. In the assailed decision, the CA affirmed the Court of Tax Appeals’ (CTA) Decision3 and Resolution dated 15 January 2002 and 3 May 2002, respectively. The CTA cancelled the assessments issued against Julieta Ariete (respondent) for deficiency income taxes of P191,463.04 for the years 1993, 1994, 1995, and 1996.

The FactsOn 21 May 1997, George P. Mercado filed an Affidavit with the Special Investigation Division, Revenue Region No. 19, Davao City. The affidavit attested that respondent earned substantial income in 1994, 1995, and 1996 without paying income tax.4

The Chief of the Special Investigation Division (SID Chief) issued Mission Order No. 118-97 dated 23 May 1997, directing a Revenue Officer to conduct preliminary verification of the denunciation made and submit a progress report. The SID Chief also sent a request to access the BIR records of Revenue District No. 112, Tagum, Davao del Norte (RDO), inquiring if the income tax returns of respondent for the years 1993 to 1996 are available for examination. The RDO replied that respondent had no records of income tax returns for the years 1993 to 1996.5

On 15 October 1997, the Revenue Officer submitted a report stating that respondent admitted her non-filing of income tax returns.6lawph!lOn 2 December 1997, respondent filed her income tax returns for the years 1993, 1994, 1995, and 1996 under Revenue Memorandum Order (RMO) No. 59-97 as amended by RMO No. 60-97 and RMO No. 63-97, otherwise known as the Voluntary Assessment Program (VAP).7

On 28 July 1998, the Regional Director issued a Letter of Authority to investigate respondent for tax purposes covering theyears 1993 to 1996.1avvphi1On 14 October 1998, the Revenue Officer submitted a Memorandum to the SID Chief recommending that respondent be assessed with deficiency income taxes for the years 1993 to 1996. On 22 January 1999, four assessment notices were issued against respondent. The total deficiency income taxes, inclusive of interests and surcharges amounted to P191,463.04:

1993 P 6,462.188

1994 47,187.399

1995 24,729.6410

1996 113,083.8311

P 191,463.04 =============

On 22 February 1999, respondent filed an Assessment Protest with Prayer for Reinvestigation. On 30 March 1999, the assessment protest was denied.On 16 April 1999, respondent offered a compromise settlement but the same was denied.Respondent filed a petition for review with the CTA assailing the Bureau of Internal Revenue’s (BIR) decision denying withfinality the request for reinvestigation and disapproving her availment of the VAP. Respondent also contested the issuanceof the four assessment notices.On 15 January 2002, the CTA rendered a decision cancelling the deficiency assessments. Petitioner filed a motion for reconsideration but the CTA denied the same in a Resolution dated 3 May 2002.Petitioner appealed the CTA’s decision to the CA. In a decision dated 14 June 2004, the CA affirmed the CTA’s decision.Aggrieved by the CA’s decision affirming the cancellation of the tax deficiency assessments, petitioner elevated the case before this Court.

Ruling of the Court of Tax AppealsThe CTA stated that when respondent filed her income tax returns on 2 December 1997, she was not yet under investigation by the Special Investigation Division. The Letter of Authority to investigate respondent for tax purposes was issued only on 28 July 1998. Further, respondent’s case was not duly recorded in the Official Registry Book of the BIR before she availed of the VAP.The CTA, quoting RMO Nos. 59-97, 60-97, and 63-97, ruled that the requirements before a person may be excluded from the coverage of the VAP are:

a. The person(s) must be under investigation by the Tax Fraud Division and/or the regional Special Investigation Division;b. The investigation must be as a result of a verified information filed by an informer under Section 281 of the NIRC, as amended; andc. The investigation must be duly registered in the Official Registry Book of the Bureau before the date of availment under the VAP.12

The CTA ruled that the conjunctive word "and" is used; therefore, all of the above requisites must be present before a person may be excluded from the coverage of the VAP. The CTA explained that the word "and" is a conjunction connecting words or phrases expressing the idea that the latter is to be added or taken along with the first.13

The CTA also stated that the rationale behind the VAP is to give taxpayers a final opportunity to come up with a clean slate before they will be dealt with strictly for not paying their correct taxes. The CTA noted that under the RMOs, among the benefits that can be availed by the taxpayer-applicant are:

1) A bona fide rectification of filing errors and assessment of tax liabilities under the VAP shall relieve the taxpayer-applicant from any criminal or civil liability incident to the misdeclaration of incomes, purchases, deductions, etc., and non-filing of a return.2) The taxpayer who shall avail of the VAP shall be liable only for the payment of the basic tax due.14

The CTA ruled that even if respondent violated the National Internal Revenue Code (Tax Code), she was given the chanceto rectify her fault and be absolved of criminal and civil liabilities incident to her non-filing of income tax by virtue of the VAP. The CTA held that respondent is not disqualified to avail of the VAP. Hence, respondent has no more liabilities after paying the corresponding taxes due.15

The CTA found the four assessments issued against respondent to be erroneous and ordered that the same be cancelled.16

Ruling of the Court of AppealsThe CA explained that the persons who may avail of the VAP are those who are "liable to pay any of the above-cited internal revenue taxes for the above specified period who due to inadvertence or otherwise, has underdeclared his internal revenue tax liabilities or has not filed the required tax returns." The CA rationalized that the BIR used a broad language to define the persons qualified to avail of the VAP because the BIR intended to reach as many taxpayers as possible subject only to the exclusion of those cases specially enumerated.The CA ruled that in applying the rules of statutory construction, the exceptions enumerated in paragraph 317 of RMO No. 59-97, as well as those added in RMO No. 63-97, should be strictly construed and all doubts should be resolved in favor of the general provision stated under paragraph 218 rather than the said exceptions.The CA affirmed the CTA’s findings of facts and ruled that neither the verified information nor the investigation was recorded in the Official Registry Book of the BIR. The CA disagreed with petitioner’s contention that the recording in the Official Registry Book of the BIR is merely a procedural requirement which can be dispensed with for the purpose of determining who are excluded from the coverage of RMO No. 59-97.The CA explained that it is clear from the wordings of RMO No. 59-97 that the recording in the Official Registry Book of the BIR is a mandatory requirement before a taxpayer-applicant under the VAP may be excluded from its coverage as thisrequirement was preceded by the word "and." The use of the conjunction "and" in subparagraph 3.4 of RMO No. 59-97 must be understood in its usual and common meaning for the purpose of determining who are disqualified from availing ofthe benefits under the VAP. This interpretation is more in faithful compliance with the mandate of the RMOs.Aggrieved by the CA decision, petitioner elevated the case to this Court.

IssuePetitioner submits this sole issue for our consideration: whether the CA erred in holding that the recording in the Official Registry Book of the BIR of the information filed by the informer under Section 28119 of the Tax Code is a mandatory requirement before a taxpayer-applicant may be excluded from the coverage of the VAP.

Ruling of the CourtPetitioner contends that the VAP, being in the nature of a tax amnesty, must be strictly construed against the taxpayer-applicant such that petitioner’s failure to record the information in the Official Registry Book of the BIR does not affect respondent’s disqualification from availment of the benefits under the VAP. Petitioner argues that taxpayers who are underinvestigation for non-filing of income tax returns before their availment of the VAP are not covered by the program and are not entitiled to its benefits. Petitioner alleges that the underlying reason for the disqualification is that availment of the VAPby such taxpayer is no longer voluntary. Petitioner asserts that voluntariness is the very essence of the Voluntary Assessment Program.20

Respondent claims that where the terms of a statute are clear and unambiguous, no interpretation is called for, and the law is applied as written, for application is the first duty of the court, and interpretation, only where literal application is impossible or inadequate.

Verba LegisIt is well-settled that where the language of the law is clear and unequivocal, it must be given its literal application and applied without interpretation.21 The general rule of requiring adherence to the letter in construing statutes applies with particular strictness to tax laws and provisions of a taxing act are not to be extended by implication.22A careful reading of the RMOs pertaining to the VAP shows that the recording of the information in the Official Registry Book of the BIR is a mandatory requirement before a taxpayer may be excluded from the coverage of the VAP.On 27 October 1997, the CIR, in implementing the VAP, issued RMO No. 59-97 to give erring taxpayers a final opportunityto come up with a clean slate. Any person liable to pay income tax on business and compensation income, value-added tax and other percentage taxes under Titles II, IV and V, respectively, of the Tax Code for the taxable years 1993 to 1996,

who due to inadvertence or otherwise, has not filed the required tax return may avail of the benefits under the VAP.23 RMONo. 59-97 also enumerates the persons or cases that are excluded from the coverage of the VAP.3. Persons/Cases not coveredThe following shall be excluded from the coverage of the VAP under this Order:x x x3.4. Persons under investigation as a result of verified information filed by an informer under Section 281 of the NIRC, as amended, and duly recorded in the Official Registry Book of the Bureau before the date of availment under the VAP; x x x (Boldfacing supplied)On 30 October 1997, the CIR issued RMO No. 60-97 which supplements RMO No. 59-97 and amended Item No. 3.4 to read as:3. Persons/Cases not coveredThe following shall be excluded from the coverage of the VAP under this Order:x x x3.4 Persons under investigation by the Tax Fraud Division and/or the Regional Special Investigation Divisions as a result of verified information filed by an informer under Section 281 of the NIRC, as amended, and duly recorded in the Official Registry Book of the Bureau before the date of availment under VAP; (Boldfacing supplied)On 27 November 1997, the CIR issued RMO No. 63-97 and clarified issues related to the implementation of the VAP. RMO No. 63-97 provides:3. Persons/cases not covered:x x x3.4 Persons under investigation by the Tax Fraud Division and/or the Regional Special Investigation Divisions as a result of verified information filed by an informer under Section 281 of the NIRC, as amended, and duly recorded in the Official Registry Book of the Bureau before the date of availment under the VAP; (Underscoring in the original, boldfacing supplied)It is evident from these RMOs that the CIR was consistent in using the word "and" and has even underscored the word in RMO No. 63-97. This denotes that in addition to the filing of the verified information, the same should also be duly recorded in the Official Registry Book of the BIR. The conjunctive word "and" is not without legal significance. It means "in addition to." The word "and," whether it is used to connect words, phrases or full sentences, must be accepted as binding together and as relating to one another.24 "And" in statutory construction implies conjunction or union.25

It is sufficiently clear that for a person to be excluded from the coverage of the VAP, the verified information must not only be filed under Section 28126 of the Tax Code, it must also be duly recorded in the Official Registry Book of the BIR before the date of availment under the VAP. This interpretation of Item 3.4 of RMO Nos. 59-97, 60-97, and 63-97 is further bolstered by the fact that on 12 October 2005, the BIR issued Revenue Regulations (RR) No. 18-2005 and reiterated the same provision in the implementation of the Enhanced Voluntary Assessment Program (EVAP). RR No. 18-2005 reads:SECTION 1. COVERAGE. – x x xAny person, natural or juridical, including estates and trusts, liable to pay any of the above-cited internal revenue taxes forthe above specified period/s who, due to inadvertence or otherwise, erroneously paid his/its internal revenue tax liabilities or failed to file tax returns/pay taxes, may avail of the EVAP, except those falling under any of the following instances:x x xb. Persons under investigation as a result of verified information filed by a Tax Informer under Section 282 of the NIRC, duly processed and recorded in the BIR Official Registry Book on or before the effectivity of these regulations. (Boldfacing supplied)When a tax provision speaks unequivocally, it is not the province of a Court to scan its wisdom or its policy.27 The more correct course of dealing with a question of construction is to take the words to mean exactly what they say. Where a provision of law expressly limits its application to certain transactions, it cannot be extended to other transactions by interpretation.28

Findings of FactGenerally, the findings of fact of the CTA, a court exercising expertise on the subject of tax, are regarded as final, binding, and conclusive upon this Court, especially if these are similar to the findings of the Court of Appeals which is normally the final arbiter of questions of fact.29

In this case, the CA affirmed the CTA’s findings of fact which states:We will start with the question as to whether or not the respondent was already under investigation for violation of the Tax Code provisions at the time she applied under VAP on December 2, 1997. The records show that she was indeed under investigation. Albeit, the Letter of Authority was issued only on 28 July 1998, there is no question that on 23 May 1997, a Mission Order No. 118-97 had already been issued by the Chief of Special Investigation Division of the BIR, Revenue Region No. 19 to Intelligence Officer Eustaquio M. Valdez authorizing the conduct of monitoring and surveillance activities on the respondent. This investigation was preceded by the filing of a verified information by a certain George Mercado alleging respondent’s failure to pay her income taxes for the years 1994 to 1996.x x x

We now proceed to the question as to whether or not the requirement of recording in the Official Registry Book of the BIR is present in the respondent’s case. At this juncture, we affirm CTA’s finding that neither the verified information nor the investigation was recorded in the Official Registry Book of the BIR. Petitioner claims that this was merely a procedural omission which does not affect respondent’s exclusion from the coverage of the VAP.30(Boldfacing supplied)Petitioner’s failure to effect compliance with the requirement of recording the verified information or investigation in the Official Registry Book of the BIR means that respondent, even if under investigation, can avail of the benefits of the VAP. Consequently, respondent is relieved from any criminal or civil liability incident to the non-filing of a return. Wherefore, we DENY the petition. We AFFIRM the Court of Appeals’ Decision dated 14 June 2004 in CA-G.R. SP No. 70693.SO ORDERED.

ons to the rule on exhaustion of administrative remedies are: (1) where the question in dispute is purely a legal one; (2) where the controverted act is patently illegal or was performed without jurisdiction or in excess of jurisdiction. 3 Moreover, while certiorari as a remedy may not be used as a substitute for an appeal, especially for a lost appeal, this rule should not be strictly enforced if the petition is genuinely meritorious. 4 It has been said that where the rigid application of the ruleswould frustrate substantial justice, or bar the vindication of a legitimate grievance, the courts are justified in exempting a particular case from the operation of the rules. 5

We vote to give the petition due course. The assailed Amendment to the Rules and Regulations and the Revised Guidelines suffer from a legal infirmity and should be set aside.The law pertinent to the Home Development Mutual Fund, otherwise known as the Pag-IBIG Fund, should be revisited.The Human Development Mutual Funds were created by Presidential Decree No. 1530, promulgated on June 11, 1978. The said funds, one for government employees and another for private employees, were to be established and maintained from contributions by the employees and counterpart contributions by their employers. P.D. No. 1752, enacted on December 13, 1980, amended P.D. 1530 to make the Home Development Mutual Fund a body corporate and to make its coverage mandatory upon all employers covered by the Social Security System and the Government Service Insurance System. Section 19 of P.D. No. 1752 provides for waiver or suspension from coverage or participation in the fund, thus:

Sec. 19. Existing Provident/Housing Plans. — An employer and/or employee-group who, at the time this Decree becomes effective have their own provident and/or employee-housing plans, may register with theFund, for any of the following purposes:

(a) For annual certification of waiver or suspension from coverage or participation in the Fund, which shall be granted on the basis of verification that the wavier or suspension does not contravene any effective collective bargaining agreement and that the features of the plan or plans are superior to the Fund or continue to be so; or(b) For integration with the Fund, either fully or partially.

The establishment of a separate provident and/or housing plan after the effectivity of this Decree shall notbe a ground for waiver of coverage in the Fund; nor shall such coverage bar any employer and/or employee-group from establishing separate provident and/or housing plans. (emphasis supplied)

On June 17, 1994, Republic Act No. 7742, amending certain sections of P.D. 1752 was approved. Section 5 of the said provides "that within sixty (60) days from the approval of the Act, the Board of Trustees of the Home Development Mutual Fund shall promulgate the rules and regulations necessary for the effective implementation of (this ) Act."Pursuant to the above authority the Home Development Mutual Fund Board of Trustees promulgated. The Implementing Rules and Regulations of Republic Act. 7742 amending Presidential Decree No. 1752, Executive Order Nos. 35 and 90, which was published on August 1, 1994. Rule VII thereof reads:

RULE VIIWAIVER OR SUSPENSION

Sec. 1. Waiver or Suspension Existing Provident or Retirement Plan.An employer and/or employee group who has an existing provident or retirement plan as of the effectivity of Republic Act No. 7742, qualified under Republic Act No. 4917 and actuarially determined to be sound and reasonable by an independent actuary duly accredited by the Insurance Commission, may apply withthe Fund for waiver or suspension of coverage. Such waiver or suspension may be granted by the President of the Fund on the basis of verification that the waiver or suspension does not contravene any effective collective bargaining or other existing agreement and that the features of the plan or plans are superior to the Fund and continue to be so. The certificate of waiver or suspension of coverage issued herein shall only be for a period of one (1) year but the same may be renewed for another of sixty (60) days prior to the expiration of the existing waiver or suspension.Sec. 2. Waiver or Suspension-Existing Housing Plan.An employer and/or employee group who has an existing housing plan as of the effectivity of Republic ActNo. 7742 may apply with the fund waiver or suspension of coverage. Such waiver or suspension of

coverage may be granted by the President of the Fund on the basis of verification that the waiver or suspension of coverage does not contravene any effective collective bargaining or other existing agreement and that the features of the plan or plans are superior to the Fund and continue to be so. The certificate of waiver or suspension of coverage issued herein shall only be for a period of one (1) year but the same may be renewed for another year upon the filing of a proper application within a period of sixty (60) days prior to the expiration of the existing waiver or suspension.

Subsequently, the HDMF Board adopted in its Special Board Meeting held on September 1, 1995. Amendments to the Rules and Regulations Implementing Republic Act 7742. As amended, Rule VII on "Waiver or Suspension" now reads:

RULE VIIWAIVER OF SUSPENSION

Sec. 1. Waiver or Suspension Because of Existing Provident/Retirement and Housing Plan.Any employer with a plan providing both for a provident/retirement and housing benefits for all his employees and existing as of December 14, 1980, the effectivity date of Presidential Decree No. 1752, may apply with the Fund for waiver or suspension of coverage. The provident/retirement aspect of the plan must be qualified under R.A. 4917 and actuarially determined to be sound and reasonable by an independent, actuary duly accredited by the Insurance Commission. The provident/retirement and housing benefits as provided for under the plan must be superior to the provident/retirement and housing benefits offered by the Fund.Such waiver or suspension may be granted by the Fund on the basis of actual verification that the waiver or suspension does not contravene any collective bargaining agreement, any other existing agreement or clearly spelled out management policy and that the features of the Fund and continue to be so.Provided further that the application must be endorsed by the labor union representing a majority of the employees or in the absence thereof by at least a majority vote of all employees in the said establishmentin a meeting specifically called for the purpose. Provided, furthermore that such a meeting be held or be conducted under the supervision of an authorized representative from the Fund.The certificate of waiver or suspension of coverage issued herein shall be for a period of one (1) year effective upon issuance thereof. No certificate of waiver issued by the President of the Fund shall have retroactive effect. Application for renewal must be filed within-sixty (60) days prior to the expiration of the existing waiver or suspension and such application for renewal shall only be granted based on the same conditions and requirements under which the original application was approved. Pending the approval of the application for waiver or suspension of coverage or the application for renewal, the employer and his covered employees shall continue to be mandatorily covered by the Fund as provided for under R.A. 7742. (emphasis ours)

On October 23, 1995, HDMF Circular No. 124-B entitled "Revised Guidelines and Procedure for Filing application for Waiver or Suspension of Fund Coverage" under P.D. No. 1752, as amended by Republic Act No. 7742, was promulgated. The Circular pertinently provides:

I. GROUNDS FOR WAIVER OR SUSPENSION OF FUND COVERAGEA. SUPERIOR PROVIDENT/RETIREMENT PLAN AND HOUSING PLANANY EMPLOYER WHO HAS A PROVIDENT, RETIREMENT, GRATUITY OR PENSION PLAN AND A HOUSING PLAN, EXISTING AS OF DECEMBER 14, 1980, THE EFFECTIVITY OF P.D. NO. 1752, may file an application for waiver or suspension from Fund coverage, provided, that —

1. The retirement/provident plan is qualified as such under Republic Act No. 4917 (An ActProviding That Retirement Benefits of Employees of Private Firms Shall Not Be Subject to Attachment, Levy, or Execution or Any Tax Whatsoever), as certified by the Bureau of Internal Revenue;2. The retirement/provident plan is actuarially determined to be financially sound and reasonable by an independent actuary duly accredited by the Insurance Commission;3. The retirement/provident plan is superior to the retirement/provident benefits offered bythe Fund in terms of:• vesting features

— full and immediate crediting of employer's contributionto the employee's account, the TAV of which the employee carries with him in the event he transfers to another employer, or he becomes self-employed or unemployed;

• employer's contribution (* For provident plans)— must be equal to or higher than two percent (2%) of employee's monthly compensation, defined in the HDMFImplementing Rules and Regulations as the employee's basic monthly salary plus Cost of Living Allowances;

• retirement age and years of service required to avail of plan benefits— 85 or lower— 10 years of services or less

• amount of benefits extended to EEs(* For retirement plans)

— at least fifty (50%) of monthly compensation, as defined in the HDMF IRR, for every year of service

4. The housing plan must be superior to the PAG-IBIG Housing Loan Program in terms of:• residency requirement as employee of the company or member

of the plan to avail of housing loan under the plan— six (6) months or less;

• interest rates— equal to or lower than the prescribed rated under the PAG-IBIG Expanded Housing Loan Program (EHLP);

• repayment period— 25 years or more;

• loanable amount— equal to or grater than the maximum loan amount under the PAG-IBIG Expanded Housing Loan Program; and

• percentage of covered EEs benefited by the Housing Plan— EEs who have availed of the Housing Plan benefits as of date of waiver application must be no less than five(5%) of the total.

5. The application for waiver or suspension, based on actual verification of the Fund, does not contravene any effective collective bargaining or any other agreement existing between the employer and his employees.6. The application must be endorsed by the labor union representing a majority of the employees, or in the absence thereof, at least a majority vote of all company employees in a meeting specially called for the purpose and conducted under the supervision of an authorized representative of the Fund.

As above stated, when petitioners CBC and CBC-PCCI applied for the renewal of waiver of Fund coverage for the year 1996, the applications were disapproved on identical grounds namely, that the retirement plan is not superior to Pag-IBIG Fund and that the amended Implementing Rules and Regulations of R.A. 7742 provides that to qualify for waiver, a company must have retirement/provident and housing plan which are both superior to Pag-IBIG Funds.Petitioner contends that respondent, in the exercise of its rule making power has "overstepped the bounds and exceeded its limit". The law provides as a condition for exemption from coverage, the exercise of either a superior provident (retirement) plan and/or a superior housing plan, and not the existence of both plans.On the other hand, respondents claim that the use of the words "and/or" in Section 19 of P.D. No. 1752, which words are "diametrically opposed in meaning", can only be used interchangeably and not together, and the option of making it either both or any one belongs to the Board of Trustees of HDMF, which has the power and authority to issue rules and regulations for the effective implementation of the Pag-IBIG Fund Law, and the guidelines for the grant of waiver or suspension of coverage.There is no question that the HDMF Board has rule-making powers. Section 5 of R.A. No. 7742 states that the said Board shall promulgate the rules and regulations necessary for the effective implementation of said Act. Its rule-making power is also provided in Section 13 of P.D. No. 1752 which states insofar as pertinent that the Board is authorized to make and change needful rules and regulations to provide for, among others,

a. the effective administration, custody, development, utilization and disposition of the Fund or parts thereof including payment of amounts credited to members or to their beneficiaries or states;b. Extension of Fund coverage to other working groups and waiver or suspension of coverage or its enforcement for reasons therein stated.

xxx xxx xxxi. Other matters that, by express or implied provisions of this Act, shall require implementation by appropriate policies, rules and regulations.

The controversy lies in the legal signification of the words "and/or".In the instant case, the legal meaning of the words "and/or" should be taken in its ordinary signification, i.e., "either and or"; e.g. butter and/or eggs means butter and eggs or butter or eggs. 6

The term "and/or" means that effect shall be given to both the conjunctive "and" and the disjunctive "or;" or that one word or the other may be taken accordingly as one or the other will best effectuate the purpose intended by the legislature as gathered from the whole statute. The term is used to avoid a construction which by the use of the disjunctive "or" alone will exclude the combination of several of the alternatives or by the use of the conjunctive "and" will exclude the efficacy of any one of the alternatives standing alone. 7

It is according ordinarily held that the intention of the legislature in using the term "and/or" is that word "and" and the word "or" are to be used interchangeably. 8

It is seems to us clear from the language of the enabling law that Section 19 of P.D. No. 1752, intended that an employer with a provident plan or an employee housing plan superior to that of the fund may obtain exemption from coverage. If thelaw had intended that the employee should have both a superior provident plan and a housing plan in order to qualify for exemption, it would have used the words "and instead of "and/or". Notably, paragraph (a) of Section 19 requires for annualcertification of waiver or suspension, that the features of the plan or plans are superior to the fund or continue to be so. The law obviously comptemplates that the existence of either plan is considered as sufficient basis for the grant of an exemption; needless to state, the concurrence of both plans is more than sufficient. To require the existence of both plans would radically impose a more stringent condition for waiver which was not clearly envisioned by the basic law. By removing the disjunctive word "or" in the implementing rules the respondent Board has exceeded its authority.It is well settled that the rules and regulations which are the product of a delegated power to create new or additional legalprovisions that have effect of law, should be within the scope of the statutory authority granted by the legislature to the administrative agency. 9 "Department zeal may not be permitted to outrun the authority conferred by statute." 10 As aptly observed in People vs. Macaren 11:

Administrative regulations adopted under legislative authority by a particular department must be in harmony with the provisions of the law, and should be for the sole purpose of carrying into effect its general provisions. By such regulations, of course, the law itself cannot be extended. U. S. vs. Tupasi Molina, supra). An administrative agency cannot amend as act of Congress (Santos vs. Estenzo, 109 Phil. 419 422; Teoxon vs. Members of the Board of Administrators, L-25619, June 30, 1970, 33 SCRA 585; Manuel vs. General Auditing Office, L-28952, December 29, 1971, 42 SCRA 660; Deluao vs. Casteel, L-21906, August 29, 1969 SCRA 350).The rule making power must be confined to details for regulating the mode or proceeding to carry into effect the law as it has been enacted. The power cannot be extended to amending or expanding the statutory requirements or to embrace matters not covered by the statute. Rules that subvert the statute cannot be sanctioned. (University of Santo Tomas vs. Board of Tax Appeals, 93 Phil. 376, 382, citing 12 C. J. 845-46. As to invalid regulations, see Collector of Internal Revenue vs. Villaflor, 69 Phil. 319; Wise & Co. vs. Meer, 78 Phil. 655, 676; Del Mar vs. Phil. Veterans Administration, L-27299, June 27, 1973, 51 SCRA 340, 349).

While it may be conceded that the requirement of the concurrence of both plans to qualify for exemption would strengthenthe Home Development Mutual Fund and make it more effective both as savings generation and a house building program, the basic law should prevail as the embodiment of the legislative purpose, and the rules and regulations issued to implement said law cannot go beyond its terms and provisions.We accordingly find merit in petitioner's contention that Section 1, Rule VII of the Rules and Regulations Implementing R.A. 7742, and HDMF Circular No. 124-B and the Revised Guidelines and Procedure for Filing Application for Waiver or Suspension of Fund Coverage under P.D. 1752, as amended by R.A. 7742, should be declared invalid insofar as they require that an employer must have both a superior retirement/provident plan and a superior employees housing plan in order to be entitled to a certificate of waiver and suspension of coverage from the HDMF.WHEREFORE, the petition is given due course and the assailed Orders of the court a quo dated October 10, 1997 and December 19, 1997 are hereby set aside. Section 1 of Rule VII of the Amendments to the Rules and Regulations Implementing R.A. 7742, and HDMF Circular No. 124-B prescribing the Revised Guidelines and Procedure for Filing Applications for Waiver or Suspension of Fund Coverage under P.D. 1752, as amended by R.A. No. 7742, insofar as they require that an employer should have both a provident/retirement plan superior to the retirement/provident benefits offeredby the Fund and a housing plan superior to the Pag-IBIG housing loan program in order to qualify for waiver or suspension of fund coverage, are hereby declared null and void.1âwphi1.nêtSO ORDERED.Romero, Vitug and Panganiban, JJ., concur.Purisima, J., took no part in the deliberation.

G.R. No. 164987 April 24, 2012LAWYERS AGAINST MONOPOLY AND POVERTY (LAMP), represented by its Chairman and counsel, CEFERINO PADUA, Members, ALBERTO ABELEDA, JR., ELEAZAR ANGELES, GREGELY FULTON ACOSTA, VICTOR AVECILLA, GALILEO BRION, ANATALIA BUENAVENTURA, EFREN CARAG, PEDRO CASTILLO, NAPOLEON

CORONADO, ROMEO ECHAUZ, ALFREDO DE GUZMAN, ROGELIO KARAGDAG, JR., MARIA LUZ ARZAGA-MENDOZA, LEO LUIS MENDOZA, ANTONIO P. PAREDES, AQUILINO PIMENTEL III, MARIO REYES, EMMANUEL SANTOS, TERESITA SANTOS, RUDEGELIO TACORDA, SECRETARY GEN. ROLANDO ARZAGA, Board of Consultants, JUSTICE ABRAHAM SARMIENTO, SEN. AQUILINO PIMENTEL, JR., and BARTOLOME FERNANDEZ, JR., Petitioners, vs.THE SECRETARY OF BUDGET AND MANAGEMENT, THE TREASURER OF THE PHILIPPINES, THE COMMISSION ON AUDIT, and THE PRESIDENT OF THE SENATE and the SPEAKER OF THE HOUSE OF REPRESENTATIVES in representation of the Members of the Congress, Respondents.

D E C I S I O NMENDOZA, J.:For consideration of the Court is an original action for certiorari assailing the constitutionality and legality of the implementation of the Priority Development Assistance Fund (PDAF) as provided for in Republic Act (R.A.) 9206 or the General Appropriations Act for 2004 (GAA of 2004). Petitioner Lawyers Against Monopoly and Poverty(LAMP), a group of lawyers who have banded together with a mission of dismantling all forms of political, economic or social monopoly in the country,1 also sought the issuance of a writ of preliminary injunction or temporary restraining order to enjoin respondent Secretary of the Department of Budget and Management (DBM) from making, and, thereafter, releasing budgetary allocations to individual members of Congress as "pork barrel" funds out of PDAF. LAMP likewise aimed to stop the National Treasurer and the Commission on Audit (COA) from enforcing the questioned provision.On September 14, 2004, the Court required respondents, including the President of the Senate and the Speaker of the House of Representatives, to comment on the petition. On April 7, 2005, petitioner filed a Reply thereto.2On April 26, 2005, both parties were required to submit their respective memoranda.The GAA of 2004 contains the following provision subject of this petition:

PRIORITY DEVELOPMENT ASSISTANCE FUNDFor fund requirements of priority development programs and projects, as indicated hereunder – P8,327,000,000.00X x x x xSpecial Provision1. Use and Release of the Fund. The amount herein appropriated shall be used to fund priority programs and projects or to fund the required counterpart for foreign-assisted programs and projects: PROVIDED, That such amount shall be released directly to the implementing agency or Local Government Unit concerned: PROVIDED, FURTHER, That the allocations authorized herein may be realigned to any expense class, if deemed necessary: PROVIDED FURTHERMORE, That a maximum of ten percent (10%) of the authorized allocations by district may be used for procurement of rice and other basic commodities which shall be purchased from the National Food Authority.Petitioner’s PositionAccording to LAMP, the above provision is silent and, therefore, prohibits an automatic or direct allocation of lump sums toindividual senators and congressmen for the funding of projects. It does not empower individual Members of Congress to propose, select and identify programs and projects to be funded out of PDAF. "In previous GAAs, said allocation and identification of projects were the main features of the ‘pork barrel’ system technically known as Countrywide Development Fund (CDF). Nothing of the sort is now seen in the present law (R.A. No. 9206 of CY 2004).3 In its memorandum, LAMP insists that "[t]he silence in the law of direct or even indirect participation by members of Congress betrays a deliberate intent on the part of the Executive and the Congress to scrap and do away with the ‘pork barrel’ system."4 In other words, "[t]he omission of the PDAF provision to specify sums as ‘allocations’ to individual Members of Congress is a ‘casus omissus’ signifying an omission intentionally made by Congress that this Court is forbidden to supply."5 Hence, LAMP is of the conclusion that "the pork barrel has become legally defunct under the present state of GAA 2004."6

LAMP further decries the supposed flaws in the implementation of the provision, namely: 1) the DBM illegally made and directly released budgetary allocations out of PDAF in favor of individual Members of Congress; and 2) the latter do not possess the power to propose, select and identify which projects are to be actually funded by PDAF.For LAMP, this situation runs afoul against the principle of separation of powers because in receiving and, thereafter, spending funds for their chosen projects, the Members of Congress in effect intrude into an executive function. In other words, they cannot directly spend the funds, the appropriation for which was made by them. In their individual capacities, the Members of Congress cannot "virtually tell or dictate upon the Executive Department how to spend taxpayer’s money.7 Further, the authority to propose and select projects does not pertain to legislation. "It is, in fact, a non-legislative function devoid of constitutional sanction,"8 and, therefore, impermissible and must be considered nothing less than malfeasance. The proposal and identification of the projects do not involve the making of laws or the repeal and amendment thereof, which is the only function given to the Congress by the Constitution. Verily, the power of appropriationgranted to Congress as a collegial body, "does not include the power of the Members thereof to individually propose, select and identify which projects are to be actually implemented and funded - a function which essentially and exclusivelypertains to the Executive Department."9 By allowing the Members of Congress to receive direct allotment from the fund, to

propose and identify projects to be funded and to perform the actual spending of the fund, the implementation of the PDAF provision becomes legally infirm and constitutionally repugnant.Respondents’ PositionFor their part, the respondents10 contend that the petition miserably lacks legal and factual grounds. Although they admit that PDAF traced its roots to CDF,11 they argue that the former should not be equated with "pork barrel," which has gained a derogatory meaning referring "to government projects affording political opportunism."12 In the petition, no proof of this was offered. It cannot be gainsaid then that the petition cannot stand on inconclusive media reports, assumptions and conjectures alone. Without probative value, media reports cited by the petitioner deserve scant consideration especially the accusation that corrupt legislators have allegedly proposed cuts or slashes from their pork barrel. Hence, the Court should decline the petitioner’s plea to take judicial notice of the supposed iniquity of PDAF because there is no concrete proof that PDAF, in the guise of "pork barrel," is a source of "dirty money" for unscrupulous lawmakers and other officials who tend to misuse their allocations. These "facts" have no attributes of sufficient notoriety or general recognition accepted by the public without qualification, to be subjected to judicial notice. This applies, a fortiori, to the claim that Members of Congress are beneficiaries of commissions (kickbacks) taken out of the PDAF allocations and releases and preferred by favored contractors representing from 20% to 50% of the approved budget for a particular project. 13Suffice it to say, the perceptions of LAMP on the implementation of PDAF must not be based on mere speculations circulated in thenews media preaching the evils of pork barrel. Failing to present even an iota of proof that the DBM Secretary has been releasing lump sums from PDAF directly or indirectly to individual Members of Congress, the petition falls short of its cause.Likewise admitting that CDF and PDAF are "appropriations for substantially similar, if not the same, beneficial purposes," 14 the respondents invoke Philconsa v. Enriquez,15 where CDF was described as an imaginative and innovativeprocess or mechanism of implementing priority programs/projects specified in the law. In Philconsa, the Court upheld the authority of individual Members of Congress to propose and identify priority projects because this was merely recommendatory in nature. In said case, it was also recognized that individual members of Congress far more than the President and their congressional colleagues were likely to be knowledgeable about the needs of their respective constituents and the priority to be given each project.

The IssuesThe respondents urge the Court to dismiss the petition for its failure to establish factual and legal basis to support its claims, thereby lacking an essential requisite of judicial review—an actual case or controversy.

The Court’s RulingTo the Court, the case boils down to these issues: 1) whether or not the mandatory requisites for the exercise of judicial review are met in this case; and 2) whether or not the implementation of PDAF by the Members of Congress is unconstitutional and illegal.Like almost all powers conferred by the Constitution, the power of judicial review is subject to limitations, to wit: (1) there must be an actual case or controversy calling for the exercise of judicial power; (2) the person challenging the act must have the standing to question the validity of the subject act or issuance; otherwise stated, he must have a personal and substantial interest in the case such that he has sustained, or will sustain, direct injury as a result of its enforcement; (3) the question of constitutionality must be raised at the earliest opportunity; and (4) the issue of constitutionality must be thevery lis mota of the case.16

An aspect of the "case-or-controversy" requirement is the requisite of "ripeness." In the United States, courts are centrally concerned with whether a case involves uncertain contingent future events that may not occur as anticipated, or indeed may not occur at all. Another concern is the evaluation of the twofold aspect of ripeness: first, the fitness of the issues for judicial decision; and second, the hardship to the parties entailed by withholding court consideration. In our jurisdiction, the issue of ripeness is generally treated in terms of actual injury to the plaintiff. Hence, a question is ripe for adjudication when the act being challenged has had a direct adverse effect on the individual challenging it.17

In this case, the petitioner contested the implementation of an alleged unconstitutional statute, as citizens and taxpayers. According to LAMP, the practice of direct allocation and release of funds to the Members of Congress and the authority given to them to propose and select projects is the core of the law’s flawed execution resulting in a serious constitutional transgression involving the expenditure of public funds. Undeniably, as taxpayers, LAMP would somehow be adversely affected by this. A finding of unconstitutionality would necessarily be tantamount to a misapplication of public funds which, in turn, cause injury or hardship to taxpayers. This affords "ripeness" to the present controversy.Further, the allegations in the petition do not aim to obtain sheer legal opinion in the nature of advice concerning legislative or executive action. The possibility of constitutional violations in the implementation of PDAF surely involves theinterplay of legal rights susceptible of judicial resolution. For LAMP, this is the right to recover public funds possibly misapplied by no less than the Members of Congress. Hence, without prejudice to other recourse against erring public officials, allegations of illegal expenditure of public funds reflect a concrete injury that may have been committed by other branches of government before the court intervenes. The possibility that this injury was indeed committed cannot be discounted. The petition complains of illegal disbursement of public funds derived from taxation and this is sufficient reason to say that there indeed exists a definite, concrete, real or substantial controversy before the Court.Anent locus standi, "the rule is that the person who impugns the validity of a statute must have a personal and substantial interest in the case such that he has sustained, or will sustained, direct injury as a result of its enforcement.18 The gist of

the question of standing is whether a party alleges "such a personal stake in the outcome of the controversy as to assure that concrete adverseness which sharpens the presentation of issues upon which the court so largely depends for illumination of difficult constitutional questions."19 In public suits, the plaintiff, representing the general public, asserts a "public right" in assailing an allegedly illegal official action. The plaintiff may be a person who is affected no differently fromany other person, and could be suing as a "stranger," or as a "citizen" or "taxpayer."20 Thus, taxpayers have been allowed to sue where there is a claim that public funds are illegally disbursed or that public money is being deflected to any improper purpose, or that public funds are wasted through the enforcement of an invalid or unconstitutional law.21 Of greater import than the damage caused by the illegal expenditure of public funds is the mortal wound inflicted upon the fundamental law by the enforcement of an invalid statute.22

Here, the sufficient interest preventing the illegal expenditure of money raised by taxation required in taxpayers’ suits is established. Thus, in the claim that PDAF funds have been illegally disbursed and wasted through the enforcement of an invalid or unconstitutional law, LAMP should be allowed to sue. The case of Pascual v. Secretary of Public Works23 is authority in support of the petitioner:In the determination of the degree of interest essential to give the requisite standing to attack the constitutionality of a statute, the general rule is that not only persons individually affected, but also taxpayers have sufficient interest in preventing the illegal expenditures of moneys raised by taxation and may therefore question the constitutionality of statutes requiring expenditure of public moneys. [11 Am. Jur. 761, Emphasis supplied.]Lastly, the Court is of the view that the petition poses issues impressed with paramount public interest. The ramification of issues involving the unconstitutional spending of PDAF deserves the consideration of the Court, warranting the assumption of jurisdiction over the petition.Now, on the substantive issue.The powers of government are generally divided into three branches: the Legislative, the Executive and the Judiciary. Each branch is supreme within its own sphere being independent from one another and it is this supremacy which enables the courts to determine whether a law is constitutional or unconstitutional.24 The Judiciary is the final arbiter on the question of whether or not a branch of government or any of its officials has acted without jurisdiction or in excess of jurisdiction or so capriciously as to constitute an abuse of discretion amounting to excess of jurisdiction. This is not only a judicial power but a duty to pass judgment on matters of this nature.25

With these long-established precepts in mind, the Court now goes to the crucial question: In allowing the direct allocation and release of PDAF funds to the Members of Congress based on their own list of proposed projects, did the implementation of the PDAF provision under the GAA of 2004 violate the Constitution or the laws?The Court rules in the negative.In determining whether or not a statute is unconstitutional, the Court does not lose sight of the presumption of validity accorded to statutory acts of Congress. In Fariñas v. The Executive Secretary,26 the Court held that:Every statute is presumed valid. The presumption is that the legislature intended to enact a valid, sensible and just law and one which operates no further than may be necessary to effectuate the specific purpose of the law. Every presumption should be indulged in favor of the constitutionality and the burden of proof is on the party alleging that there is a clear and unequivocal breach of the Constitution.To justify the nullification of the law or its implementation, there must be a clear and unequivocal, not a doubtful, breach of the Constitution. In case of doubt in the sufficiency of proof establishing unconstitutionality, the Court must sustain legislation because "to invalidate [a law] based on x x x baseless supposition is an affront to the wisdom not only of the legislature that passed it but also of the executive which approved it."27 This presumption of constitutionality can be overcome only by the clearest showing that there was indeed an infraction of the Constitution, and only when such a conclusion is reached by the required majority may the Court pronounce, in the discharge of the duty it cannot escape, that the challenged act must be struck down.28

The petition is miserably wanting in this regard. LAMP would have the Court declare the unconstitutionality of the PDAF’s enforcement based on the absence of express provision in the GAA allocating PDAF funds to the Members of Congress and the latter’s encroachment on executive power in proposing and selecting projects to be funded by PDAF. Regrettably, these allegations lack substantiation. No convincing proof was presented showing that, indeed, there were direct releases of funds to the Members of Congress, who actually spend them according to their sole discretion. Not even a documentation of the disbursement of funds by the DBM in favor of the Members of Congress was presented by the petitioner to convince the Court to probe into the truth of their claims. Devoid of any pertinent evidentiary support that illegal misuse of PDAF in the form of kickbacks has become a common exercise of unscrupulous Members of Congress, the Court cannot indulge the petitioner’s request for rejection of a law which is outwardly legal and capable of lawful enforcement. In a case like this, the Court’s hands are tied in deference to the presumption of constitutionality lest the Court commits unpardonable judicial legislation. The Court is not endowed with the power of clairvoyance to divine from scanty allegations in pleadings where justice and truth lie.29 Again, newspaper or electronic reports showing the appalling effects of PDAF cannot be appreciated by the Court, "not because of any issue as to their truth, accuracy, or impartiality, but for the simple reason that facts must be established in accordance with the rules of evidence."30

Hence, absent a clear showing that an offense to the principle of separation of powers was committed, much less tolerated by both the Legislative and Executive, the Court is constrained to hold that a lawful and regular government

budgeting and appropriation process ensued during the enactment and all throughout the implementation of the GAA of 2004. The process was explained in this wise, in Guingona v. Carague:31

1. Budget preparation. The first step is essentially tasked upon the Executive Branch and covers the estimation of government revenues, the determination of budgetary priorities and activities within the constraints imposed by available revenues and by borrowing limits, and the translation of desired priorities and activities into expenditure levels.Budget preparation starts with the budget call issued by the Department of Budget and Management. Each agency is required to submit agency budget estimates in line with the requirements consistent with the general ceilings set by the Development Budget Coordinating Council (DBCC).With regard to debt servicing, the DBCC staff, based on the macro-economic projections of interest rates (e.g. LIBOR rate) and estimated sources of domestic and foreign financing, estimates debt service levels. Upon issuance of budget call, the Bureau of Treasury computes for the interest and principal payments for the year for all direct national government borrowings and other liabilities assumed by the same.2. Legislative authorization. –– At this stage, Congress enters the picture and deliberates or acts on the budget proposals of the President, and Congress in the exercise of its own judgment and wisdom formulatesan appropriation act precisely following the process established by the Constitution, which specifies that no money may be paid from the Treasury except in accordance with an appropriation made by law.x x x3. Budget Execution. Tasked on the Executive, the third phase of the budget process covers the variousoperational aspects of budgeting. The establishment of obligation authority ceilings, the evaluation of work and financial plans for individual activities, the continuing review of government fiscal position, the regulation of funds releases, the implementation of cash payment schedules, and other related activities comprise this phase ofthe budget cycle.4. Budget accountability. The fourth phase refers to the evaluation of actual performance and initially approved work targets, obligations incurred, personnel hired and work accomplished are compared with the targets set at the time the agency budgets were approved.

Under the Constitution, the power of appropriation is vested in the Legislature, subject to the requirement that appropriation bills originate exclusively in the House of Representatives with the option of the Senate to propose or concurwith amendments.32 While the budgetary process commences from the proposal submitted by the President to Congress, it is the latter which concludes the exercise by crafting an appropriation act it may deem beneficial to the nation, based on its own judgment, wisdom and purposes. Like any other piece of legislation, the appropriation act may then be susceptibleto objection from the branch tasked to implement it, by way of a Presidential veto. Thereafter, budget execution comes under the domain of the Executive branch which deals with the operational aspects of the cycle including the allocation and release of funds earmarked for various projects. Simply put, from the regulation of fund releases, the implementation of payment schedules and up to the actual spending of the funds specified in the law, the Executive takes the wheel. "The DBM lays down the guidelines for the disbursement of the fund. The Members of Congress are then requested by the President to recommend projects and programs which may be funded from the PDAF. The list submitted by the Members of Congress is endorsed by the Speaker of the House of Representatives to the DBM, which reviews and determines whether such list of projects submitted are consistent with the guidelines and the priorities set by the Executive."33 This demonstrates the power given to the President to execute appropriation laws and therefore, to exercise the spending per se of the budget.As applied to this case, the petition is seriously wanting in establishing that individual Members of Congress receive and thereafter spend funds out of PDAF. Although the possibility of this unscrupulous practice cannot be entirely discounted, surmises and conjectures are not sufficient bases for the Court to strike down the practice for being offensive to the Constitution. Moreover, the authority granted the Members of Congress to propose and select projects was already upheld in Philconsa. This remains as valid case law. The Court sees no need to review or reverse the standing pronouncements in the said case. So long as there is no showing of a direct participation of legislators in the actual spending of the budget, the constitutional boundaries between the Executive and the Legislative in the budgetary process remain intact.While the Court is not unaware of the yoke caused by graft and corruption, the evils propagated by a piece of valid legislation cannot be used as a tool to overstep constitutional limits and arbitrarily annul acts of Congress. Again, "all presumptions are indulged in favor of constitutionality; one who attacks a statute, alleging unconstitutionality must prove its invalidity beyond a reasonable doubt; that a law may work hardship does not render it unconstitutional; that if any reasonable basis may be conceived which supports the statute, it will be upheld, and the challenger must negate all possible bases; that the courts are not concerned with the wisdom, justice, policy, or expediency of a statute; and that a liberal interpretation of the constitution in favor of the constitutionality of legislation should be adopted."34

There can be no question as to the patriotism and good motive of the petitioner in filing this petition. Unfortunately, the petition must fail based on the foregoing reasons.WHEREFORE, the petition is DISMISSED without pronouncement as to costs.SO ORDERED.

G.R. No. 94723 August 21, 1997KAREN E. SALVACION, minor, thru Federico N. Salvacion, Jr., father and Natural Guardian, and Spouses FEDERICO N. SALVACION, JR., and EVELINA E. SALVACION, petitioners, vs.CENTRAL BANK OF THE PHILIPPINES, CHINA BANKING CORPORATION and GREG BARTELLI y NORTHCOTT, respondents. TORRES, JR., J.:In our predisposition to discover the "original intent" of a statute, courts become the unfeeling pillars of the status quo. Ligle do we realize that statutes or even constitutions are bundles of compromises thrown our way by their framers. Unless we exercise vigilance, the statute may already be out of tune and irrelevant to our day.The petition is for declaratory relief. It prays for the following reliefs:

a.) Immediately upon the filing of this petition, an Order be issued restraining the respondents from applying and enforcing Section 113 of Central Bank Circular No. 960;b.) After hearing, judgment be rendered:1.) Declaring the respective rights and duties of petitioners and respondents;2.) Adjudging Section 113 of Central Bank Circular No. 960 as contrary to the provisions of the Constitution, hence void; because its provision that "Foreign currency deposits shall be exempt from attachment, garnishment, or any other order or process of any court, legislative body, government agencyor any administrative body whatsoever

i.) has taken away the right of petitioners to have the bank deposit of defendant Greg Bartelli y Northcott garnished to satisfy the judgment rendered in petitioners' favor in violation of substantive due process guaranteed by the Constitution;ii.) has given foreign currency depositors an undue favor or a class privilege in violation ofthe equal protection clause of the Constitution;iii.) has provided a safe haven for criminals like the herein respondent Greg Bartelli y Northcott since criminals could escape civil liability for their wrongful acts by merely converting their money to a foreign currency and depositing it in a foreign currency deposit account with an authorized bank.

The antecedent facts:On February 4, 1989, Greg Bartelli y Northcott, an American tourist, coaxed and lured petitioner Karen Salvacion, then 12 years old to go with him to his apartment. Therein, Greg Bartelli detained Karen Salvacion for four days, or up to February 7, 1989 and was able to rape the child once on February 4, and three times each day on February 5, 6, and 7, 1989. On February 7, 1989, after policemen and people living nearby, rescued Karen, Greg Bartelli was arrested and detained at the Makati Municipal Jail. The policemen recovered from Bartelli the following items: 1.) Dollar Check No. 368, Control No.021000678-1166111303, US 3,903.20; 2.) COCOBANK Bank Book No. 104-108758-8 (Peso Acct.); 3.) Dollar Account — China Banking Corp., US$/A#54105028-2; 4.) ID-122-30-8877; 5.) Philippine Money (P234.00) cash; 6.) Door Keys 6 pieces; 7.) Stuffed Doll (Teddy Bear) used in seducing the complainant.On February 16, 1989, Makati Investigating Fiscal Edwin G. Condaya filed against Greg Bartelli, Criminal Case No. 801 for Serious Illegal Detention and Criminal Cases Nos. 802, 803, 804, and 805 for four (4) counts of Rape. On the same day, petitioners filed with the Regional Trial Court of Makati Civil Case No. 89-3214 for damages with preliminary attachment against Greg Bartelli. On February 24, 1989, the day there was a scheduled hearing for Bartelli's petition for bail the latter escaped from jail.On February 28, 1989, the court granted the fiscal's Urgent Ex-Parte Motion for the Issuance of Warrant of Arrest and Hold Departure Order. Pending the arrest of the accused Greg Bartelli y Northcott, the criminal cases were archived in an Order dated February 28, 1989.Meanwhile, in Civil Case No. 89-3214, the Judge issued an Order dated February 22, 1989 granting the application of herein petitioners, for the issuance of the writ of preliminary attachment. After petitioners gave Bond No. JCL (4) 1981 by FGU Insurance Corporation in the amount of P100,000.00, a Writ of Preliminary Attachment was issued by the trial court on February 28, 1989.On March 1, 1989, the Deputy Sheriff of Makati served a Notice of Garnishment on China Banking Corporation. In a letter dated March 13, 1989 to the Deputy Sheriff of Makati, China Banking Corporation invoked Republic Act No. 1405 as its answer to the notice of garnishment served on it. On March 15, 1989, Deputy Sheriff of Makati Armando de Guzman sent his reply to China Banking Corporation saying that the garnishment did not violate the secrecy of bank deposits since the disclosure is merely incidental to a garnishment properly and legally made by virtue of a court order which has placed the subject deposits in custodia legis. In answer to this letter of the Deputy Sheriff of Makati, China Banking Corporation, in a letter dated March 20, 1989, invoked Section 113 of Central Bank Circular No. 960 to the effect that the dollar deposits or

defendant Greg Bartelli are exempt from attachment, garnishment, or any other order or process of any court, legislative body, government agency or any administrative body, whatsoever.This prompted the counsel for petitioners to make an inquiry with the Central Bank in a letter dated April 25, 1989 on whether Section 113 of CB Circular No. 960 has any exception or whether said section has been repealed or amended since said section has rendered nugatory the substantive right of the plaintiff to have the claim sought to be enforced by the civil action secured by way of the writ of preliminary attachment as granted to the plaintiff under Rule 57 of the Revised Rules of Court. The Central Bank responded as follows:

May 26, 1989Ms. Erlinda S. Carolino12 Pres. Osmena AvenueSouth Admiral VillageParanaque, Metro ManilaDear Ms. Carolino:This is in reply to your letter dated April 25, 1989 regarding your inquiry on Section 113, CB Circular No. 960 (1983).The cited provision is absolute in application. It does not admit of any exception, nor has the same been repealed nor amended.The purpose of the law is to encourage dollar accounts within the country's banking system which would help in the development of the economy. There is no intention to render futile the basic rights of a person as was suggested in your subject letter. The law may be harsh as some perceive it, but it is still the law. Compliance is, therefore, enjoined.Very truly yours,(SGD) AGAPITO S. FAJARDODirector 1

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

WHEREFORE, judgment is hereby rendered in favor of plaintiffs and against defendant, ordering the latter:1. To pay plaintiff Karen E. Salvacion the amount of P500,000.00 as moral damages;2. To pay her parents, plaintiffs spouses Federico N. Salvacion, Jr., and Evelina E. Salvacion the amount of P150,000.00 each or a total of P300,000.00 for both of them;3. To pay plaintiffs exemplary damages of P100,000.00; and4. To pay attorney's fees in an amount equivalent to 25% of the total amount of damages herein awarded;5. To pay litigation expenses of P10,000.00; plus6. Costs of the suit.SO ORDERED.

The heinous acts of respondent Greg Bartelli which gave rise to the award were related in graphic detail by the trial court in its decision as follows:

The defendant in this case was originally detained in the municipal jail of Makati but was able to escape therefrom on February 24, 1989 as per report of the Jail Warden of Makati to the Presiding Judge, Honorable Manuel M. Cosico of the Regional Trial Court of Makati, Branch 136, where he was charged with four counts of Rape and Serious Illegal Detention (Crim. Cases Nos. 802 to 805). Accordingly, upon motion of plaintiffs, through counsel, summons was served upon defendant by publication in the Manila Times, a newspaper of general circulation as attested by the Advertising Manager of the Metro Media Times, Inc., the publisher of the said newspaper. Defendant, however, failed to file his answer to the complaint despite the lapse of the period of sixty (60) days from the last publication; hence, upon motion of the plaintiffs, through counsel, defendant was declared in default and plaintiffs were authorized to present their evidence ex parte.In support of the complaint, plaintiffs presented as witnesses the minor Karen E. Salvacion, her father, Federico N. Salvacion, Jr., a certain Joseph Aguilar and a certain Liberato Madulio, who gave the following testimony:Karen took her first year high school in St. Mary's Academy in Pasay City but has recently transferred to Arellano University for her second year.In the afternoon of February 4, 1989, Karen was at the Plaza Fair Makati Cinema Square, with her friend Edna Tangile whiling away her free time. At about 3:30 p.m. while she was finishing her snack on a

concrete bench in front of Plaza Fair, an American approached her. She was then alone because Edna Tangile had already left, and she was about to go home. (TSN, Aug. 15, 1989, pp. 2 to 5)The American asked her name and introduced himself as Greg Bartelli. He sat beside her when he talked to her. He said he was a Math teacher and told her that he has a sister who is a nurse in New York. His sister allegedly has a daughter who is about Karen's age and who was with him in his house along Kalayaan Avenue. (TSN, Aug. 15, 1989, pp. 4-5)The American asked Karen what was her favorite subject and she told him it's Pilipino. He then invited herto go with him to his house where she could teach Pilipino to his niece. He even gave her a stuffed toy to persuade her to teach his niece. (Id., pp. 5-6)They walked from Plaza Fair along Pasong Tamo, turning right to reach the defendant's house along Kalayaan Avenue. (Id., p. 6)When they reached the apartment house, Karen noticed that defendant's alleged niece was not outside the house but defendant told her maybe his niece was inside. When Karen did not see the alleged niece inside the house, defendant told her maybe his niece was upstairs, and invited Karen to go upstairs. (Id., p. 7)Upon entering the bedroom defendant suddenly locked the door. Karen became nervous because his niece was not there. Defendant got a piece of cotton cord and tied Karen's hands with it, and then he undressed her. Karen cried for help but defendant strangled her. He took a packing tape and he covered her mouth with it and he circled it around her head. (Id., p. 7)Then, defendant suddenly pushed Karen towards the bed which was just near the door. He tied her feet and hands spread apart to the bed posts. He knelt in front of her and inserted his finger in her sex organ. She felt severe pain. She tried to shout but no sound could come out because there were tapes on her mouth. When defendant withdrew his finger it was full of blood and Karen felt more pain after the withdrawal of the finger. (Id., p. 8)He then got a Johnson's Baby Oil and he applied it to his sex organ as well as to her sex organ. After that he forced his sex organ into her but he was not able to do so. While he was doing it, Karen found it difficult to breathe and she perspired a lot while feeling severe pain. She merely presumed that he was able to insert his sex organ a little, because she could not see. Karen could not recall how long the defendant was in that position. (Id. pp. 8-9)After that, he stood up and went to the bathroom to wash. He also told Karen to take a shower and he untied her hands. Karen could only hear the sound of the water while the defendant, she presumed, was in the bathroom washing his sex organ. When she took a shower more blood came out from her. In the meantime, defendant changed the mattress because it was full of blood. After the shower, Karen was allowed by defendant to sleep. She fell asleep because she got tired crying. The incident happened at about 4:00 p.m. Karen had no way of determining the exact time because defendant removed her watch. Defendant did not care to give her food before she went to sleep. Karen woke up at about 8:00 o'clock thefollowing morning. (Id., pp. 9-10)The following day, February 5, 1989, a Sunday, after a breakfast of biscuit and coke at about 8:30 to 9:00 a.m. defendant raped Karen while she was still bleeding. For lunch, they also took biscuit and coke. She was raped for the second time at about 12:00 to 2:00 p.m. In the evening, they had rice for dinner which defendant had stored downstairs; it was he who cooked the rice that is why it looks like "lugaw". For the third time, Karen was raped again during the night. During those three times defendant succeeded in inserting his sex organ but she could not say whether the organ was inserted wholly.Karen did not see any firearm or any bladed weapon. The defendant did not tie her hands and feet nor put a tape on her mouth anymore but she did not cry for help for fear that she might be killed; besides, all the windows and doors were closed. And even if she shouted for help, nobody would hear her. She was so afraid that if somebody would hear her and would be able to call the police, it was still possible that as she was still inside the house, defendant might kill her. Besides, the defendant did not leave that Sunday, ruling out her chance to call for help. At nighttime he slept with her again. (TSN, Aug. 15, 1989, pp. 12-14)On February 6, 1989, Monday, Karen was raped three times, once in the morning for thirty minutes after abreakfast of biscuits; again in the afternoon; and again in the evening. At first, Karen did not know that there was a window because everything was covered by a carpet, until defendant opened the window for around fifteen minutes or less to let some air in, and she found that the window was covered by styrofoamand plywood. After that, he again closed the window with a hammer and he put the styrofoam, plywood, and carpet back. (Id., pp. 14-15)That Monday evening, Karen had a chance to call for help, although defendant left but kept the door closed. She went to the bathroom and saw a small window covered by styrofoam and she also spotted a small hole. She stepped on the bowl and she cried for help through the hole. She cried: "Maawa no po kayo so akin. Tulungan n'yo akong makalabas dito. Kinidnap ako!" Somebody heard her. It was a woman,probably a neighbor, but she got angry and said she was "istorbo". Karen pleaded for help and the

woman told her to sleep and she will call the police. She finally fell asleep but no policeman came. (TSN, Aug. 15, 1989, pp. 15-16)She woke up at 6:00 o'clock the following morning, and she saw defendant in bed, this time sleeping. Shewaited for him to wake up. When he woke up, he again got some food but he always kept the door locked. As usual, she was merely fed with biscuit and coke. On that day, February 7, 1989, she was againraped three times. The first at about 6:30 to 7:00 a.m., the second at about 8:30 — 9:00, and the third was after lunch at 12:00 noon. After he had raped her for the second time he left but only for a short while.Upon his return, he caught her shouting for help but he did not understand what she was shouting about. After she was raped the third time, he left the house. (TSN, Aug. 15, 1989, pp. 16-17) She again went to the bathroom and shouted for help. After shouting for about five minutes, she heard many voices. The voices were asking for her name and she gave her name as Karen Salvacion. After a while, she heard a voice of a woman saying they will just call the police. They were also telling her to change her clothes. She went from the bathroom to the room but she did not change her clothes being afraid that should the neighbors call for the police and the defendant see her in different clothes, he might kill her. At that time she was wearing a T-shirt of the American because the latter washed her dress. (Id., p. 16)Afterwards, defendant arrived and he opened the door. He asked her if she had asked for help because there were many policemen outside and she denied it. He told her to change her clothes, and she did change to the one she was wearing on Saturday. He instructed her to tell the police that she left home and willingly; then he went downstairs but he locked the door. She could hear people conversing but she could not understand what they were saying. (Id., p. 19)When she heard the voices of many people who were conversing downstairs, she knocked repeatedly at the door as hard as she could. She heard somebody going upstairs and when the door was opened, she saw a policeman. The policeman asked her name and the reason why she was there. She told him she was kidnapped. Downstairs, he saw about five policemen in uniform and the defendant was talking to them. "Nakikipag-areglo po sa mga pulis," Karen added. "The policeman told him to just explain at the precinct. (Id., p. 20)They went out of the house and she saw some of her neighbors in front of the house. They rode the car ofa certain person she called Kuya Boy together with defendant, the policeman, and two of her neighbors whom she called Kuya Bong Lacson and one Ate Nita. They were brought to Sub-Station I and there she was investigated by a policeman. At about 2:00 a.m., her father arrived, followed by her mother together with some of their neighbors. Then they were brought to the second floor of the police headquarters. (Id., p. 21)At the headquarters, she was asked several questions by the investigator. The written statement she gave to the police was marked as Exhibit A. Then they proceeded to the National Bureau of Investigation together with the investigator and her parents. At the NBI, a doctor, a medico-legal officer, examined her private parts. It was already 3:00 in the early morning of the following day when they reached the NBI. (TSN, Aug. 15, 1989, p. 22) The findings of the medico-legal officer has been marked as Exhibit B.She was studying at the St. Mary's Academy in Pasay City at the time of the incident but she subsequently transferred to Apolinario Mabini, Arellano University, situated along Taft Avenue, because she was ashamed to be the subject of conversation in the school. She first applied for transfer to Jose Abad Santos, Arellano University along Taft Avenue near the Light Rail Transit Station but she was deniedadmission after she told the school the true reason for her transfer. The reason for their denial was that they might be implicated in the case. (TSN, Aug. 15, 1989, p. 46)

xxx xxx xxxAfter the incident, Karen has changed a lot. She does not play with her brother and sister anymore, and she is always in a state of shock; she has been absent-minded and is ashamed even to go out of the house. (TSN, Sept. 12, 1989, p. 10) She appears to be restless or sad, (Id., p. 11) The father prays for P500,000.00 moral damages for Karen for this shocking experience which probably, she would always recall until she reaches old age, and he is not sure if she could ever recover from this experience. (TSN, Sept. 24, 1989, pp. 10-11)

Pursuant to an Order granting leave to publish notice of decision, said notice was published in the Manila Bulletin once a week for three consecutive weeks. After the lapse of fifteen (15) days from the date of the last publication of the notice of judgment and the decision of the trial court had become final, petitioners tried to execute on Bartelli's dollar deposit with China Banking Corporation. Likewise, the bank invoked Section 113 of Central Bank Circular No. 960.Thus, petitioners decided to seek relief from this Court.The issues raised and the arguments articulated by the parties boil down to two:May this Court entertain the instant petition despite the fact that original jurisdiction in petitions for declaratory relief rests with the lower court? Should Section 113 of Central Bank Circular No. 960 and Section 8 of R.A. 6426, as amended by P.D. 1246, otherwise known as the Foreign Currency Deposit Act be made applicable to a foreign transient?Petitioners aver as heretofore stated that Section 113 of Central Bank Circular No. 960 providing that "Foreign currency deposits shall be exempt from attachment, garnishment, or any other order or process of any court, legislative body,

government agency or any administrative body whatsoever." should be adjudged as unconstitutional on the grounds that: 1.) it has taken away the right of petitioners to have the bank deposit of defendant Greg Bartelli y Northcott garnished to satisfy the judgment rendered in petitioners' favor in violation of substantive due process guaranteed by the Constitution; 2.) it has given foreign currency depositors an undue favor or a class privilege in violation of the equal protection clause ofthe Constitution; 3.) it has provided a safe haven for criminals like the herein respondent Greg Bartelli y Northcott since criminals could escape civil liability for their wrongful acts by merely converting their money to a foreign currency and depositing it in a foreign currency deposit account with an authorized bank; and 4.) The Monetary Board, in issuing Section 113 of Central Bank Circular No. 960 has exceeded its delegated quasi-legislative power when it took away: a.) the plaintiffs substantive right to have the claim sought to be enforced by the civil action secured by way of the writ of preliminary attachment as granted by Rule 57 of the Revised Rules of Court; b.) the plaintiffs substantive right to have the judgment credit satisfied by way of the writ of execution out of the bank deposit of the judgment debtor as granted to the judgment creditor by Rule 39 of the Revised Rules of Court, which is beyond its power to do so.On the other hand, respondent Central Bank, in its Comment alleges that the Monetary Board in issuing Section 113 of CB Circular No. 960 did not exceed its power or authority because the subject Section is copied verbatim from a portion ofR.A. No. 6426 as amended by P.D. 1246. Hence, it was not the Monetary Board that grants exemption from attachment orgarnishment to foreign currency deposits, but the law (R.A. 6426 as amended) itself; that it does not violate the substantive due process guaranteed by the Constitution because a.) it was based on a law; b.) the law seems to be reasonable; c.) it is enforced according to regular methods of procedure; and d.) it applies to all members of a class.Expanding, the Central Bank said; that one reason for exempting the foreign currency deposits from attachment, garnishment or any other order or process of any court, is to assure the development and speedy growth of the Foreign Currency Deposit System and the Offshore Banking System in the Philippines; that another reason is to encourage the inflow of foreign currency deposits into the banking institutions thereby placing such institutions more in a position to properly channel the same to loans and investments in the Philippines, thus directly contributing to the economic development of the country; that the subject section is being enforced according to the regular methods of procedure; andthat it applies to all foreign currency deposits made by any person and therefore does not violate the equal protection clause of the Constitution.Respondent Central Bank further avers that the questioned provision is needed to promote the public interest and the general welfare; that the State cannot just stand idly by while a considerable segment of the society suffers from economicdistress; that the State had to take some measures to encourage economic development; and that in so doing persons and property may be subjected to some kinds of restraints or burdens to secure the general welfare or public interest. Respondent Central Bank also alleges that Rule 39 and Rule 57 of the Revised Rules of Court provide that some properties are exempted from execution/attachment especially provided by law and R.A. No. 6426 as amended is such a law, in that it specifically provides, among others, that foreign currency deposits shall be exempted from attachment, garnishment, or any other order or process of any court, legislative body, government agency or any administrative body whatsoever.For its part, respondent China Banking Corporation, aside from giving reasons similar to that of respondent Central Bank, also stated that respondent China Bank is not unmindful of the inhuman sufferings experienced by the minor Karen E. Salvacion from the beastly hands of Greg Bartelli; that it is only too willing to release the dollar deposit of Bartelli which may perhaps partly mitigate the sufferings petitioner has undergone; but it is restrained from doing so in view of R.A. No. 6426 and Section 113 of Central Bank Circular No. 960; and that despite the harsh effect of these laws on petitioners, CBC has no other alternative but to follow the same.This Court finds the petition to be partly meritorious.Petitioner deserves to receive the damages awarded to her by the court. But this petition for declaratory relief can only be entertained and treated as a petition for mandamus to require respondents to honor and comply with the writ of execution in Civil Case No. 89-3214.This Court has no original and exclusive jurisdiction over a petition for declaratory relief. 2 However, exceptions to this rule have been recognized. Thus, where the petition has far-reaching implications and raises questions that should be resolved, it may be treated as one for mandamus. 3

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

Indeed, after hearing the testimony of Karen, the Court believes that it was undoubtedly a shocking and traumatic experience she had undergone which could haunt her mind for a long, long time, the mere recall of which could make her feel so humiliated, as in fact she had been actually humiliated once when she was refused admission at the Abad Santos High School, Arellano University, where she sought to

transfer from another school, simply because the school authorities of the said High School learned aboutwhat happened to her and allegedly feared that they might be implicated in the case.

xxx xxx xxxThe reason for imposing exemplary or corrective damages is due to the wanton and bestial manner defendant had committed the acts of rape during a period of serious illegal detention of his hapless victim,the minor Karen Salvacion whose only fault was in her being so naive and credulous to believe easily thatdefendant, an American national, could not have such a bestial desire on her nor capable of committing such a heinous crime. Being only 12 years old when that unfortunate incident happened, she has never heard of an old Filipino adage that in every forest there is asnake, . . . . 4

If Karen's sad fate had happened to anybody's own kin, it would be difficult for him to fathom how the incentive for foreign currency deposit could be more important than his child's rights to said award of damages; in this case, the victim's claim for damages from this alien who had the gall to wrong a child of tender years of a country where he is a mere visitor. This further illustrates the flaw in the questioned provisions.It is worth mentioning that R.A. No. 6426 was enacted in 1983 or at a time when the country's economy was in a shambles; when foreign investments were minimal and presumably, this was the reason why said statute was enacted. But the realities of the present times show that the country has recovered economically; and even if not, the questioned law still denies those entitled to due process of law for being unreasonable and oppressive. The intention of the questioned law may be good when enacted. The law failed to anticipate the iniquitous effects producing outright injustice and inequality such as the case before us.It has thus been said that —

But I also know, 5 that laws and institutions must go hand in hand with the progress of the human mind. Asthat becomes more developed, more enlightened, as new discoveries are made, new truths are disclosedand manners and opinions change with the change of circumstances, institutions must advance also, and keep pace with the times. . . We might as well require a man to wear still the coat which fitted him when a boy, as civilized society to remain ever under the regimen of their barbarous ancestors.

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

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

Sec. 113. Exemption from attachment. — Foreign currency deposits shall be exempt fromattachment, garnishment, or any other order or process of any court, legislative body, government agency or any administrative body whatsoever.

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

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

Sec. 8. Secrecy of Foreign Currency Deposits. — All foreign currency deposits authorizedunder this Act, as amended by Presidential Decree No. 1035, as well as foreign currency deposits authorized under Presidential Decree No. 1034, are hereby declared as and considered of an absolutely confidential nature and, except upon the written permission of the depositor, in no instance shall such foreign currency deposits be examined, inquired or looked into by any person, government official, bureau or office whether judicial or administrative or legislative or any other entity whether public or

private: Provided, however, that said foreign currency deposits shall be exempt from attachment, garnishment, or any other order or process of any court, legislative body, government agency or any administrative body whatsoever.

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

WHEREAS, under Republic Act No. 6426, as amended by Presidential Decree No. 1035,certain Philippine banking institutions and branches of foreign banks are authorized to accept deposits in foreign currency;WHEREAS, under the provisions of Presidential Decree No. 1034 authorizing the establishment of an offshore banking system in the Philippines, offshore banking units are also authorized to receive foreign currency deposits in certain cases;WHEREAS, in order to assure the development and speedy growth of the Foreign Currency Deposit System and the Offshore Banking System in the Philippines, certain incentives were provided for under the two Systems such as confidentiality of deposits subject to certain exceptions and tax exemptions on the interest income of depositors who are nonresidents and are not engaged in trade or business in the Philippines;WHEREAS, making absolute the protective cloak of confidentiality over such foreign currency deposits, exempting such deposits from tax, and guaranteeing the vested rights of depositors would better encourage the inflow of foreign currency deposits into the banking institutions authorized to accept such deposits in the Philippines thereby placing such institutions more in a position to properly channel the same to loans and investments in the Philippines, thus directly contributing to the economic development of the country;

Thus, one of the principal purposes of the protection accorded to foreign currency deposits is "to assure the development and speedy growth of the Foreign Currency Deposit system and the Offshore Banking inthe Philippines" (3rd Whereas).The Offshore Banking System was established by PD No. 1034. In turn, the purposes of PD No. 1034 areas follows:

WHEREAS, conditions conducive to the establishment of an offshore banking system, such as political stability, a growing economy and adequate communication facilities, among others, exist in the Philippines;WHEREAS, it is in the interest of developing countries to have as wide access as possible to the sources of capital funds for economic development;WHEREAS, an offshore banking system based in the Philippines will be advantageous and beneficial to the country by increasing our links with foreign lenders, facilitating the flow of desired investments into the Philippines, creating employment opportunities and expertise in international finance, and contributing to the national development effort.WHEREAS, the geographical location, physical and human resources, and other positive factors provide the Philippines with the clear potential to develop as another financial center in Asia;

On the other hand, the Foreign Currency Deposit system was created by PD. No. 1035. Its purposes are as follows:

WHEREAS, the establishment of an offshore banking system in the Philippines has been authorized under a separate decree;WHEREAS, a number of local commercial banks, as depository bank under the Foreign Currency Deposit Act (RA No. 6426), have the resources and managerial competence to more actively engage in foreign exchange transactions and participate in the grant of foreign currency loans to resident corporations and firms;WHEREAS, it is timely to expand the foreign currency lending authority of the said depository banks under RA 6426 and apply to their transactions the same taxes as wouldbe applicable to transaction of the proposed offshore banking units;

It is evident from the above [Whereas clauses] that the Offshore Banking System and the Foreign Currency Deposit System were designed to draw deposits from foreign lenders and investors (Vide second Whereas of PD No. 1034; third Whereas of PD No. 1035). It is these deposits that are induced by the two laws and given protection and incentives by them.Obviously, the foreign currency deposit made by a transient or a tourist is not the kind of deposit encouraged by PD Nos. 1034 and 1035 and given incentives and protection by said laws because such depositor stays only for a few days in the country and, therefore, will maintain his deposit in the bank only for a short time.

Respondent Greg Bartelli, as stated, is just a tourist or a transient. He deposited his dollars with respondent China Banking Corporation only for safekeeping during his temporary stay in the Philippines.For the reasons stated above, the Solicitor General thus submits that the dollar deposit of respondent Greg Bartelli is not entitled to the protection of Section 113 of Central Bank Circular No. 960 and PD No. 1246 against attachment, garnishment or other court processes. 6

In fine, the application of the law depends on the extent of its justice. Eventually, if we rule that the questioned Section 113of Central Bank Circular No. 960 which exempts from attachment, garnishment, or any other order or process of any court, legislative body, government agency or any administrative body whatsoever, is applicable to a foreign transient, injustice would result especially to a citizen aggrieved by a foreign guest like accused Greg Bartelli. This would negate Article 10 of the New Civil Code which provides that "in case of doubt in the interpretation or application of laws, it is presumed that the lawmaking body intended right and justice to prevail. "Ninguno non deue enriquecerse tortizeramente con dano de otro." Simply stated, when the statute is silent or ambiguous, this is one of those fundamental solutions that would respond to the vehement urge of conscience. (Padilla vs. Padilla, 74 Phil. 377).It would be unthinkable, that the questioned Section 113 of Central Bank No. 960 would be used as a device by accused Greg Bartelli for wrongdoing, and in so doing, acquitting the guilty at the expense of the innocent.Call it what it may — but is there no conflict of legal policy here? Dollar against Peso? Upholding the final and executory judgment of the lower court against the Central Bank Circular protecting the foreign depositor? Shielding or protecting the dollar deposit of a transient alien depositor against injustice to a national and victim of a crime? This situation calls for fairness against legal tyranny.We definitely cannot have both ways and rest in the belief that we have served the ends of justice.IN VIEW WHEREOF, the provisions of Section 113 of CB Circular No. 960 and PD No. 1246, insofar as it amends Section8 of R.A. No. 6426 are hereby held to be INAPPLICABLE to this case because of its peculiar circumstances. Respondents are hereby REQUIRED to COMPLY with the writ of execution issued in Civil Case No. 89-3214, "Karen Salvacion, et al. vs. Greg Bartelli y Northcott, by Branch CXLIV, RTC Makati and to RELEASE to petitioners the dollar deposit of respondent Greg Bartelli y Northcott in such amount as would satisfy the judgment.SO ORDERED.Narvasa, C.J., Regalado, Davide, Jr., Romero, Bellosillo, Melo, Puno, Vitug, Kapunan, Francisco and Panganiban, JJ., concur.Padilla, J., took no part.Mendoza and Hermosisima, Jr., JJ., are on leave.

G.R. No. 72873 May 28, 1987CARLOS ALONZO and CASIMIRA ALONZO, petitioners, vs.INTERMEDIATE APPELLATE COURT and TECLA PADUA, respondents.Perpetuo L.B. Alonzo for petitioners.Luis R. Reyes for private respondent. CRUZ, J.:The question is sometimes asked, in serious inquiry or in curious conjecture, whether we are a court of law or a court of justice. Do we apply the law even if it is unjust or do we administer justice even against the law? Thus queried, we do not equivocate. The answer is that we do neither because we are a court both of law and of justice. We apply the law with justice for that is our mission and purpose in the scheme of our Republic. This case is an illustration.Five brothers and sisters inherited in equal pro indiviso shares a parcel of land registered in 'the name of their deceased parents under OCT No. 10977 of the Registry of Deeds of Tarlac. 1On March 15, 1963, one of them, Celestino Padua, transferred his undivided share of the herein petitioners for the sum of P550.00 by way of absolute sale. 2 One year later, on April 22, 1964, Eustaquia Padua, his sister, sold her own share to the same vendees, in an instrument denominated "Con Pacto de Retro Sale," for the sum of P 440.00. 3

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

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

The trial court * also dismiss this complaint, now on the ground that the right had lapsed, not having been exercised withinthirty days from notice of the sales in 1963 and 1964. Although there was no written notice, it was held that actual knowledge of the sales by the co-heirs satisfied the requirement of the law. 7

In truth, such actual notice as acquired by the co-heirs cannot be plausibly denied. The other co-heirs, including Tecla Padua, lived on the same lot, which consisted of only 604 square meters, including the portions sold to the petitioners . 8 Eustaquia herself, who had sold her portion, was staying in the same house with her sister Tecla, who later claimed redemption petition. 9 Moreover, the petitioners and the private respondents were close friends and neighbors whose children went to school together. 10It is highly improbable that the other co-heirs were unaware of the sales and that they thought, as they alleged, that the area occupied by the petitioners had merely been mortgaged by Celestino and Eustaquia. In the circumstances just narrated, it was impossible for Tecla not to know that the area occupied by the petitioners had been purchased by them from the other. co-heirs. Especially significant was the erection thereon of the permanent semi-concrete structure by the petitioners' son, which was done without objection on her part or of any of the other co-heirs.The only real question in this case, therefore, is the correct interpretation and application of the pertinent law as invoked, interestingly enough, by both the petitioners and the private respondents. This is Article 1088 of the Civil Code, providing as follows:

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

In reversing the trial court, the respondent court ** declared that the notice required by the said article was writtennotice and that actual notice would not suffice as a substitute. Citing the same case of De Conejero v. Court of Appeals 11 applied by the trial court, the respondent court held that that decision, interpreting a like rule in Article 1623, stressed the need for written notice although no particular form was required.Thus, according to Justice J.B.L. Reyes, who was the ponente of the Court, furnishing the co-heirs with a copy of the deed of sale of the property subject to redemption would satisfy the requirement for written notice. "So long, therefore, as the latter (i.e., the redemptioner) is informed in writing of the sale and the particulars thereof," he declared, "the thirty days for redemption start running. "In the earlier decision of Butte v. UY, 12 " the Court, speaking through the same learned jurist, emphasized that the writtennotice should be given by the vendor and not the vendees, conformably to a similar requirement under Article 1623, reading as follows:

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

As "it is thus apparent that the Philippine legislature in Article 1623 deliberately selected a particular method of giving notice, and that notice must be deemed exclusive," the Court held that notice given by the vendees and not the vendor would not toll the running of the 30-day period.The petition before us appears to be an illustration of the Holmes dictum that "hard cases make bad laws" as the petitioners obviously cannot argue against the fact that there was really no written notice given by the vendors to their co-heirs. Strictly applied and interpreted, Article 1088 can lead to only one conclusion, to wit, that in view of such deficiency, the 30 day period for redemption had not begun to run, much less expired in 1977.But as has also been aptly observed, we test a law by its results; and likewise, we may add, by its purposes. It is a cardinal rule that, in seeking the meaning of the law, the first concern of the judge should be to discover in its provisions the in tent of the lawmaker. Unquestionably, the law should never be interpreted in such a way as to cause injustice as thisis never within the legislative intent. An indispensable part of that intent, in fact, for we presume the good motives of the legislature, is to render justice.Thus, we interpret and apply the law not independently of but in consonance with justice. Law and justice are inseparable,and we must keep them so. To be sure, there are some laws that, while generally valid, may seem arbitrary when applied in a particular case because of its peculiar circumstances. In such a situation, we are not bound, because only of our nature and functions, to apply them just the same, in slavish obedience to their language. What we do instead is find a balance between the word and the will, that justice may be done even as the law is obeyed.As judges, we are not automatons. We do not and must not unfeelingly apply the law as it is worded, yielding like robots tothe literal command without regard to its cause and consequence. "Courts are apt to err by sticking too closely to the words of a law," so we are warned, by Justice Holmes again, "where these words import a policy that goes beyond them." 13 While we admittedly may not legislate, we nevertheless have the power to interpret the law in such a way as to reflect the will of the legislature. While we may not read into the law a purpose that is not there, we nevertheless have the right to read out of it the reason for its enactment. In doing so, we defer not to "the letter that killeth" but to "the spirit that vivifieth," to give effect to the law maker's will.

The spirit, rather than the letter of a statute determines its construction, hence, a statute must be read according to its spirit or intent. For what is within the spirit is within the letter but although it is not within the letter thereof, and that which is within the letter but not within the spirit is not within the statute. Stated

differently, a thing which is within the intent of the lawmaker is as much within the statute as if within the letter; and a thing which is within the letter of the statute is not within the statute unless within the intent ofthe lawmakers. 14In requiring written notice, Article 1088 seeks to ensure that the redemptioner is properly notified of the sale and to indicate the date of such notice as the starting time of the 30-day period of redemption. Considering the shortness of the period, it is really necessary, as a general rule, to pinpoint the precise date it is supposed to begin, to obviate any problem of alleged delays, sometimes consisting of only a dayor two.

The instant case presents no such problem because the right of redemption was invoked not days but years after the sales were made in 1963 and 1964. The complaint was filed by Tecla Padua in 1977, thirteen years after the first sale and fourteen years after the second sale. The delay invoked by the petitioners extends to more than a decade, assuming of course that there was a valid notice that tolled the running of the period of redemption.Was there a valid notice? Granting that the law requires the notice to be written, would such notice be necessary in this case? Assuming there was a valid notice although it was not in writing. would there be any question that the 30-day periodfor redemption had expired long before the complaint was filed in 1977?In the face of the established facts, we cannot accept the private respondents' pretense that they were unaware of the sales made by their brother and sister in 1963 and 1964. By requiring written proof of such notice, we would be closing our eyes to the obvious truth in favor of their palpably false claim of ignorance, thus exalting the letter of the law over its purpose. The purpose is clear enough: to make sure that the redemptioners are duly notified. We are satisfied that in this case the other brothers and sisters were actually informed, although not in writing, of the sales made in 1963 and 1964, and that such notice was sufficient.Now, when did the 30-day period of redemption begin?While we do not here declare that this period started from the dates of such sales in 1963 and 1964, we do say that sometime between those years and 1976, when the first complaint for redemption was filed, the other co-heirs were actually informed of the sale and that thereafter the 30-day period started running and ultimately expired. This could have happened any time during the interval of thirteen years, when none of the co-heirs made a move to redeem the propertiessold. By 1977, in other words, when Tecla Padua filed her complaint, the right of redemption had already been extinguished because the period for its exercise had already expired.The following doctrine is also worth noting:

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

It was the perfectly natural thing for the co-heirs to wonder why the spouses Alonzo, who were not among them, should enclose a portion of the inherited lot and build thereon a house of strong materials. This definitely was not the act of a temporary possessor or a mere mortgagee. This certainly looked like an act of ownership. Yet, given this unseemly situation, none of the co-heirs saw fit to object or at least inquire, to ascertain the facts, which were readily available. It took all of thirteen years before one of them chose to claim the right of redemption, but then it was already too late.We realize that in arriving at our conclusion today, we are deviating from the strict letter of the law, which the respondent court understandably applied pursuant to existing jurisprudence. The said court acted properly as it had no competence toreverse the doctrines laid down by this Court in the above-cited cases. In fact, and this should be clearly stressed, we ourselves are not abandoning the De Conejero and Buttle doctrines. What we are doing simply is adopting an exception to the general rule, in view of the peculiar circumstances of this case.The co-heirs in this case were undeniably informed of the sales although no notice in writing was given them. And there is no doubt either that the 30-day period began and ended during the 14 years between the sales in question and the filing of the complaint for redemption in 1977, without the co-heirs exercising their right of redemption. These are the justifications for this exception.More than twenty centuries ago, Justinian defined justice "as the constant and perpetual wish to render every one his due." 16 That wish continues to motivate this Court when it assesses the facts and the law in every case brought to it for decision. Justice is always an essential ingredient of its decisions. Thus when the facts warrants, we interpret the law in a way that will render justice, presuming that it was the intention of the lawmaker, to begin with, that the law be dispensed with justice. So we have done in this case.WHEREFORE, the petition is granted. The decision of the respondent court is REVERSED and that of the trial court is reinstated, without any pronouncement as to costs. It is so ordered.Teehankee, C.J., Yap, Narvasa, Melencio-Herrera Gutierrez, Jr., Paras, Gancayco, Padilla, Bidin, Sarmiento and Cortes, JJ., concur.Fernan and Feliciano, JJ., are on leave.

A.M. No. P-95-1167 December 21, 1998CARMELITA L. LLEDO, complainant, vs.ATTY. CESAR V. LLEDO, Branch Clerk of Court, Regional Trial Court, Branch 94, Quezon City, respondent. PER CURIAM:Court personnel, from the judge to the lowest clerk, are invested with the sacred duty to maintain the good name and standing of the institution they serve. A court employee abdicates that duty when he abandons his family and openly cohabits with his mistress. He aggravates his culpability by falsely representing his paramour to be his lawful wife.This principle is applied by the Court in resolving the present Administrative Complaint for immorality, abandonment and conduct unbecoming a public official. Filed on February 4, 1994 by Mrs. Carmelita Lledo against her husband, Atty. Cesar V. Lledo, branch clerk of court of the Regional Trial Court (RTC) of Quezon City, said Complaint presented the facts as follows:

That sometime last year (1993) I received some information that he is keeping a paramour, which information I verified, as a result of which, I personally came to know that my husband is living with another woman named Katrina Narvaez with whom he has children[. A] certified true copy of the Birth Certificate of his son named Ryan Narvaez Lledo, is hereto attached marked as "Annex B";That the other children's birth certificates named Don and Kathleen are still for release by the National Statistics Office;That when I was able to secure a copy of the Birth Certificate of Ryan, I immediately went to see the specified address at 240 Rd. 1 Pag-asa, Quezon City, only to be informed by Ms. Songco, their landlady that they transferred to another apartment in Burol I Sta. Cruz Village, Balagtas Bulacan because they had a serious altercation which resulted in the filing of three (3) cases namely: IS No. 92-15883 Oral Defamation and Grave Threats, IS No 92-16957. Grave Threats, Malicious Mischiefs and Physical Injuries and IS No. 92-15650 for Slight Physical Injuries, xerox copies of which are hereto attached and marked as Annex "C", "D" and "E" respectively;That on November 12, 1992, Atty. Cesar Lledo executed an affidavit subscribed and sworn to on [the] same date by the Assistant City Prosecutor, Perpetuo L.B. Alonzo, Fiscal['s] Office, Quezon City, attestingto the truth that Katrina is his wife and that they are tenants or lessees of one of the rooms of the house ofMs. Dolores Songco, xerox copy of which is hereto attached as Annex "G";That they lived as husband and wife at 240 Rd. I, Pag-asa as evidenced by a contract entered into by his paramour K.N. Lledo, xerox copy of which is attached and marked as Annex "F" and that Katrina and Atty.Lledo are known in the community as husband and wife;That upon knowledge of my husband's infidelity which caused irreparable psychological and emotional damage to the children and gross humiliation I suffered as the lawful wife, I immediately wrote a formal letter (xerox copy of which is hereto attached as Annex "H") to Judge Pedro Santiago, Executive Judge ofthe Quezon City Regional Trial Court, copy furnished Atty. Lledo's immediate superior. Judge Romeo Zamora, Regional Trial Court Branch 94, requesting . . . a dialogue which never transpire[d] because my husband refused to see me;That Atty. Lledo with his paramour Katrina has been transferring their residence from 240 Rd. I Pagasa, Quezon City, to Burol I Sta. Cruz Village, Balagtas Bulacan and at present at Santol Burol 5, Balagtas Bulacan, maintaining their illicit relationship up to the present;That such actuations of Atty. Lledo [constitute] disgraceful and immoral conduct violative of the provisions of Administrative Code of 1987 (PD 807) and RA 6713 (Code of Conduct and Ethical Standards for PublicOfficials and Employees); and,That I am executing this affidavit to attest to the truthfulness of the foregoing statements and as basis for my complaint against my husband for immorality, abandonment and for conduct unbecoming . . . a publicofficial. 1

In his Comment, respondent denied all the material allegations of the complainant and stated:That since the birth of all their children, respondent has not been remiss in his obligation to provide for their support as he is still paying the matriculation fees of their youngest daughter who is taking up [the] Degree of Bachelor of Psychology in an amount of not less than P9,000.00 per semester, more or less. Additionally, he (respondent) caused the employment of his two (2) sons, both married namely Eric — employed at the sala of Judge Lucas Bersamin, and Cesar, Jr. — employed at the National Power Corporation.Additionally, the amount obtained on the maturity of his GSIS Policy was all utilized for the payment of all the debts incurred due to advances made to pay the needs of his children especially for payment of tuitionfees and other miscellaneous needs of the children.The filing of the case was triggered on the unfounded ground or claim that the petitioner [would] not [get] her alleged one-half share of the respondent's pension. The said ground is untrue and bias[ed]. The truth

of the matter is respondent will be paying the amortized house and lot and will give the complainant her one-half share of the pension. 2

On August 28, 1996, the Court referred the Complaint and the Comment to then Executive Judge Pedro T. Santiago, RTC,Quezon City, for investigation, report and recommendation.Finding that the Report of Judge Santiago was not responsive, in fact totally irrelevant, to the issue in the case, the Court on September 30, 1997 asked the new executive judge, Hon. Estrella Trias-Estrada, to reinvestigate the matter.After a thorough reinvestigation, wherein both the complainant and the respondent were accorded the opportunity to present their respective causes and to cross-examine each other's witness, Judge Trias-Estrada submitted her Report, the pertinent portions of which are quoted hereunder:

From the evidence on record, the undersigned has reason to believe the claim of complainant Carmelita Lledo that respondent ha[s] indeed abandoned her and their children sometime in 1987 without giving adequate support to their four legitimate children and [that] he had established a second family with one Katrina Narvaez and their own set of children. In the affidavit-complaint dated November 12, 1992 which respondent Cesar Lledo filed before the Quezon City Prosecutor's Office executed under oath (Exhibit "J"), respondent Lledo gave the name [of] Katrina as his wife and [of] . . . Don as his child. The complaint-affidavit was filed in connection with a serious altercation he had with one Dolores Songco, the landlady/administrator of the house at No. 240, Road I, Pag-asa, Quezon City where he and Katrina lived together as husband and wife with their children. The cases filed by him were oral defamation through malicious mischief and slight physical injuries. These cases, however, were dismissed by Judge Tolentinoof the MTC. The affidavit-complaint of respondent is in effect an admission that he considered Katrina Narvaez as his wife and Don as his child. Complainant was also able to secure a birth certificate of one Ryan Narvaez Lledo whose father's name is Czar Diaz Lledo with address at No. 240, Road I, Pag-asa, Quezon City. Although the name of the purported father appears to be different, Czar Diaz Lledo, it is obvious that it is a typographical error or perhaps, it was intentionally misspelled that way because it was Katrina Narvaez who furnished that dat[um] in said certificate of live birth. But despite the erroneous spelling, said certificate of live birth became the key to the discovery of the address of the respondent after he left their conjugal dwelling.The complainant was able to get information through Dolores Songco, the landlady of respondent and Katrina Narvaez Lledo who gave a full account of the relationship of respondent and Katrina who[m] she personally observed to have conducted themselves as husband and wife; that Don was four years old when he was brought to said residence as their son and where the two other children Ryan and Kat[h]leen were conceived and born Dolores Songco categorically stated that respondent and Katrina lived in the house where she is the administrator together with her from June, 1988 up to November 7, 1992.Respondent Lledo did not make any [categorical] denial of the charges. His answers were only that he didnot know said Katrina, that he did not also [know] Ryan, but the only reason that he left the conjugal dwelling [was] that his wife was a complete nagger and was not performing her duties as a responsible wife and mother, that it was he who performed the household chores and often he would bring to his office one of his children to take care of. He also denied that he was not giving financial support but it washis wife who never spent any single cent. He admitted that the signature appearing in the affidavit-complaint marked as Exhibit "J" which was the basis of the criminal charges against Dolores-Songco is his signature.Between the oral and documentary evidence of the complainant and the oral denials and admissions made by the respondent, the inevitable conclusion is that the charges against respondent Lledo are true. The abandonment of complainant and their children apparently came about when respondent Lledo was already at the JDRC and had started to have drinking buddies and later on a sweetheart. And in 1987 he already completely left the conjugal dwelling to establish a second family and for the purpose, he and Katrina with their son Don, established their residence in a room in the house at No. 240, Road I, Pag-asa, Quezon City which was being administered by one Dolores Songco for and in behalf of her brother who is living in the United States. Such second family stayed in said residence for four (4) years, lived as a complete family without the benefit of marriage and therefore was living in an immoral status which is a ground for dismissal of a government official or employee. Considering that respondent is holding a high government position which requires him to be of good moral character and fit to perform his functions as Branch Clerk of Court, his actuations [are] not a good example to his subordinates.IN VIEW OF THE FOREGOING, it is respectfully recommended that the corresponding penalty of dismissal from the service be meted [out to] respondent Atty. Cesar V. Lledo.

In its September 2, 1998 Memorandum addressed to the Office of the Chief Justice, the Office of the Court Administrator (OCA) agreed with the findings of Judge Estrada and recommended that Atty. Cesar Lledo be dismissed from the service for disgraceful and immoral conduct.The Court agrees with the recommendation of Judge Estrada and the OCA that respondent should be sanctioned.

The Court has emphasized time and again that "the conduct and behavior of everyone connected with an office charged with the dispensation of justice, from the presiding judge to the sheriff and to the lowliest clerk, should be circumscribed with the heavy burden of responsibility." 3 In a similar case, the Court has further held that "a court personnel, being a public servant, must exhibit the highest sense of honesty and integrity not only in the performance of his official duties but also in his personal and private dealings with other people, to preserve the court's good name and standing." 4 The Court has also admonished court personnel that their conduct "should be geared towards maintaining the prestige and integrity of the court, for the image of a court of justice is necessarily mirrored in the conduct, official or otherwise, of the men and women who work thereat, from the judge to the least and lowest of its personnel; hence, it becomes the imperative and sacred duty of each and everyone in the court to maintain it good name and standing as a temple of justice." 5

In the present case, sufficient proof, both oral and documentary, was presented to show that Respondent Lledo abandoned his conjugal dwelling without providing support for his legitimate children and subsequently cohabited with Katrina Narvaez with whom he had three children. It is beyond dispute that respondent flaunted his disregard of the fundamental institution of marriage and his elementary obligation to provide for his legitimate children. Worse, he executed several Sworn Statements that he was lawfully wedded to his mistress.Clearly, the respondent in this case has failed to comply with the strict standard required of court employees. His conduct betrays an unscrupulous streak that has, in turn, tarnished the image of the judiciary.We impose on respondent the penalty of dismissal, in line with numerous similar cases. In Sicat v. Alcantara, 6 the Court dismissed a clerk of court and judge for maintaining an illicit amorous relationship with each other. In Castillo v. Calanog 7 and in Dy Teban Hardware & Auto Supply v. Tapucar 8, respondent judges were also dismissed from the servicefor moral obtuseness in maintaining mistresses and for immoral advances against the complainants. These cases demonstrate, as we do once again, that "exacting standards of morality and decency have been strictly adhered to and laid down by the highest Court of the land in regard to those in the service of the judiciary . . . ." 9 "In fact, moral integrity is more than a virtue; it is a necessity in the judiciary." 10 Because respondent clerk of court has failed to perform his imperative duty to maintain the prestige and integrity of the judiciary, he has forfeited his privilege to partake in the administration of justice.Moreover, the conduct for which he is here penalized affects not only his qualifications as a court employee, but also as a member of the bar. For this reason, the Court hereby refers the case to the Board of Governors of the Integrated Bar of the Philippines, pursuant to Section 1 of Rule 139-B of the Rules of Court. 11

WHEREFORE, Cesar V. Lledo, branch clerk of court of RTC, Branch 94, Quezon City, is hereby DISMISSED from the service, with forfeiture of all retirement benefits and leave credits and with prejudice to reemployment in any branch or instrumentality of the government, including any government-owned or controlled corporation. This case is REFERRED tothe IBP Board of Governors pursuant to Section 1 of Rule 139-B of the Rules of Court.SO ORDERED.Davide, Jr., C.J., Romero, Bellosillo, Melo, Puno, Vitug, Kapunan, Mendoza, Panganiban, Martinez, Quisumbing, Purisima and Pardo, JJ., concur.

G.R. No. 123169 November 4, 1996DANILO E. PARAS, petitioner, vs.COMMISSION ON ELECTIONS, respondent.

R E S O L U T I O N

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

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

Petitioner's argument is simple and to the point. Citing Section 74 (b) of Republic Act No. 7160, otherwise known as the Local Government Code, which states that "no recall shall take place within one (1) year from the date of the official's assumption to office or one (1) year immediately preceding a regular local election", petitioner insists that the scheduled January 13, 1996 recall election is now barred as the Sangguniang Kabataan (SK) election was set by Republic Act No. 7808 on the first Monday of May 1996, and every three years thereafter. In support thereof, petitioner cites Associated Labor Union v. Letrondo-Montejo, 237 SCRA 621, where the Court considered the SK election as a regular local election. Petitioner maintains that as the SK election is a regular local election, hence no recall election can be had for barely four months separate the SK election from the recall election. We do not agree.The subject provision of the Local Government Code provides:

Sec. 74. Limitations on Recall. — (a) Any elective local official may be the subject of a recall election only once during his term of office for loss of confidence.(b) No recall shall take place within one (1) year from the date of the official's assumption to office or one (1) year immediately preceding a regular local election.[Emphasis added]

It is a rule in statutory construction that every part of the statute must be interpreted with reference to the context, i.e., that every part of the statute must be considered together with the other parts, and kept subservient to the general intent of thewhole enactment. 4 The evident intent of Section 74 is to subject an elective local official to recall election once during his term of office. Paragraph (b) construed together with paragraph (a) merely designates the period when such elective local official may be subject of a recall election, that is, during the second year of his term of office. Thus, subscribing to petitioner's interpretation of the phrase regular local election to include the SK election will unduly circumscribe the novel provision of the Local Government Code on recall, a mode of removal of public officers by initiation of the people before the end of his term. And if the SK election which is set by R.A No. 7808 to be held every three years from May 1996 were to be deemed within the purview of the phrase "regular local election", as erroneously insisted by petitioner, then no recall election can be conducted rendering inutile the recall provision of the Local Government Code.In the interpretation of a statute, the Court should start with the assumption that the legislature intended to enact an effective law, and the legislature is not presumed to have done a vain thing in the enactment of a statute. 5 An interpretation should, if possible, be avoided under which a statute or provision being construed is defeated, or as otherwise expressed, nullified, destroyed, emasculated, repealed, explained away, or rendered insignificant, meaningless,inoperative or nugatory. 6

It is likewise a basic precept in statutory construction that a statute should be interpreted in harmony with the Constitution. 7 Thus, the interpretation of Section 74 of the Local Government Code, specifically paragraph (b) thereof, should not be in conflict with the Constitutional mandate of Section 3 of Article X of the Constitution to "enact a local government code which shall provide for a more responsive and accountable local government structure instituted through a system of decentralization with effective mechanism of recall, initiative, and referendum . . . ."Moreover, petitioner's too literal interpretation of the law leads to absurdity which we cannot countenance. Thus, in a case,the Court made the following admonition:

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

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

Finally, recall election is potentially disruptive of the normal working of the local government unit necessitating additional expenses, hence the prohibition against the conduct of recall election one year immediately preceding the regular local election. The proscription is due to the proximity of the next regular election for the office of the local elective official concerned. The electorate could choose the official's replacement in the said election who certainly has a longer tenure in office than a successor elected through a recall election. It would, therefore, be more in keeping with the intent of the recall provision of the Code to construe regular local election as one referring to an election where the office held by the local elective official sought to be recalled will be contested and be filled by the electorate.Nevertheless, recall at this time is no longer possible because of the limitation stated under Section 74 (b) of the Code considering that the next regular election involving the barangay office concerned is barely seven (7) months away, the same having been scheduled on May 1997. 9

ACCORDINGLY, the petition is hereby dismissed for having become moot and academic. The temporary restraining orderissued by the Court on January 12, 1996, enjoining the recall election should be as it is hereby made permanent.SO ORDERED.Narvasa, C.J., Padilla, Regalado, Romero, Bellosillo, Melo, Puno, Vitug, Kapunan, Mendoza, Hermosisima, Jr., Panganiban and Torres, Jr., JJ., concur.

Separate OpinionsDAVIDE, JR., J., concurring:I concur with Mr. Justice Ricardo J. Francisco in his ponencia.

However, I wish to add another reason as to why the SK election cannot be considered a "regular local election" for purposes of recall under Section 74 of the Local Government Code of 1991.The term "regular local election" must be confined to the regular election of elective local officials, as distinguished from the regular election of national officials. The elective national officials are the President, Vice-President, Senators and Congressmen. The elective local officials are Provincial Governors, Vice-Governors of provinces, Mayors and Vice-Mayors of cities and municipalities, Members of the Sanggunians of provinces, cities and municipalities, punong barangays and members of the sangguniang barangays, and the elective regional officials of the Autonomous Region of Muslim Mindanao. These are the only local elective officials deemed recognized by Section 2(2) of Article IX-C of the Constitution, which provides:

Sec. 2. The Commission on Elections shall exercise the following powers and functions:xxx xxx xxx

(2) Exercise exclusive original jurisdiction over all contests relating to the elections, returns, and qualifications of all elective regional, provincial, and city officials, and appellate jurisdiction over all contests involving elective municipal officials decided by trial courts of general jurisdiction, or involving elective barangay officials decided by trial courts of limited jurisdiction.

A regular election, whether national or local, can only refer to an election participated in by those who possess the right of suffrage, are not otherwise disqualified by law, and who are registered voters. One of the requirements for the exercise of suffrage under Section 1, Article V of the Constitution is that the person must be at least 18 years of age, and one requisite before he can vote is that he be a registered voter pursuant to the rules on registration prescribed in the Omnibus Election Code (Section 113-118).Under the law, the SK includes the youth with ages ranging from 15 to 21 (Sec. 424, Local Government Code of 1991). Accordingly, they include many who are not qualified to vote in a regular election, viz., those from ages 15 to less than 18. In no manner then may SK elections be considered a regular election (whether national or local).Indeed the Sangguniang Kabataan is nothing more than a youth organization, and although fully recognized in the Local Government Code and vested with certain powers and functions, its elective officials have not attained the status of local elective officials. So, in Mercado vs. Board of Election Supervisors (243 SCRA 422 [1995]), this Court ruled that although the SK Chairman is an ex-officio member of the sangguniang barangay — an elective body — that fact does not make him "an elective barangay official," since the law specifically provides who comprise the elective officials of the sangguniang barangay, viz., the punong barangay and the seven (7) regularsangguniang barangay members elected at large by those qualified to exercise the right of suffrage under Article V of the Constitution, who are likewise registered voters of the barangay. This shows further that the SK election is not a regular local election for purposes of recall under Section 74 of the Local Government Code. Separate OpinionsDAVIDE, JR., J., concurring:I concur with Mr. Justice Ricardo J. Francisco in his ponencia.However, I wish to add another reason as to why the SK election cannot be considered a "regular local election" for purposes of recall under Section 74 of the Local Government Code of 1991.The term "regular local election" must be confined to the regular election of elective local officials, as distinguished from the regular election of national officials. The elective national officials are the President, Vice-President, Senators and Congressmen. The elective local officials are Provincial Governors, Vice-Governors of provinces, Mayors and Vice-Mayors of cities and municipalities, Members of the Sanggunians of provinces, cities and municipalities, punong barangays and members of the sangguniang barangays, and the elective regional officials of the Autonomous Region of Muslim Mindanao. These are the only local elective officials deemed recognized by Section 2(2) of Article IX-C of the Constitution, which provides:

Sec. 2. The Commission on Elections shall exercise the following powers and functions:xxx xxx xxx

(2) Exercise exclusive original jurisdiction over all contests relating to the elections, returns, and qualifications of all elective regional, provincial, and city officials, and appellate jurisdiction over all contests involving elective municipal officials decided by trial courts of general jurisdiction, or involving elective barangay officials decided by trial courts of limited jurisdiction.

A regular election, whether national or local, can only refer to an election participated in by those who possess the right of suffrage, are not otherwise disqualified by law, and who are registered voters. One of the requirements for the exercise of suffrage under Section 1, Article V of the Constitution is that the person must be at least 18 years of age, and one requisite before he can vote is that he be a registered voter pursuant to the rules on registration prescribed in the Omnibus Election Code (Section 113-118).Under the law, the SK includes the youth with ages ranging from 15 to 21 (Sec. 424, Local Government Code of 1991). Accordingly, they include many who are not qualified to vote in a regular election, viz., those from ages 15 to less than 18. In no manner then may SK elections be considered a regular election (whether national or local).

Indeed the Sangguniang Kabataan is nothing more than a youth organization, and although fully recognized in the Local Government Code and vested with certain powers and functions, its elective officials have not attained the status of local elective officials. So, in Mercado vs. Board of Election Supervisors (243 SCRA 422 [1995]), this Court ruled that although the SK Chairman is an ex-officio member of the sangguniang barangay — an elective body — that fact does not make him "an elective barangay official," since the law specifically provides who comprise the elective officials of the sangguniang barangay, viz., the punong barangay and the seven (7) regularsangguniang barangay members elected at large by those qualified to exercise the right of suffrage under Article V of the Constitution, who are likewise registered voters of the barangay. This shows further that the SK election is not a regular local election for purposes of recall under Section 74 of the Local Government Code.Narvasa, C.J., Padilla, Regalado, Bellosillo, Vitug and Mendoza, JJ., concur.

G.R. Nos. L-28502-03 April 18, 1989COMMISSIONER OF INTERNAL REVENUE, petitioner, vs.ESSO STANDARD EASTERN, INC. and THE COURT OF TAX APPEALS, respondents. NARVASA, J.:In two (2) cases appealed to it 1 by the private respondent, hereafter simply referred to as ESSO, the Court of Tax Appeals rendered judgment 2 sustaining the decisions of the Commissioner of Internal Revenue excepted to, save "the refund-claim .. in the amount of P39,787.94 as overpaid interest which it ordered refunded to ESSOReversal of this decision is sought by the Commissioner by a petition for review on certiorari filed with this Court. He ascribes to the Tax Court one sole error: "of applying the tax credit for overpayment of the 1959 income tax of .. ESSO, granted by the petitioner (Commissioner), to .. (ESSO's) basic 1960 deficiency income tax liability x x and imposing the 1-1/2% monthly interests 3 only on the remaining balance thereof in the sum of P146,961.00" 4(instead of the full amount of the 1960 deficiency liability in the amount of P367,994.00). Reversal of the same judgment of the Court of Tax Appeals is also sought by ESSO in its own appeal (docketed as G.R. Nos. L28508-09); but in the brief filed by it in this case, it indicates that it will not press its appeal in the event that "the instant petition for review be denied and that judgment be rendered affirming the decision of the Court of Tax Appeals."The facts are simple enough and are quite quickly recounted. ESSO overpaid its 1959 income tax by P221,033.00. It was accordingly granted a tax credit in this amount by the Comissioner on August 5,1964. However, ESSOs payment of its income tax for 1960 was found to be short by P367,994.00. So, on July 10, 1964, the Commissioner wrote to ESSO demanding payment of the deficiency tax, together with interest thereon for the period from April 18,1961 to April 18,1964.On August 10, 1964, ESSO paid under protest the amount alleged to be due, including the interest as reckoned by the Commissioner. It protested the computation of interest, contending it was more than that properly due. It claimed that it should not have been required to pay interest on the total amount of the deficiency tax, P367,994.00, but only on the amount of P146,961.00—representing the difference between said deficiency, P367,994.00, and ESSOs earlier overpayment of P221,033.00 (for which it had been granted a tax credit). ESSO thus asked for a refund.The Internal Revenue Commissioner denied the claim for refund. ESSO appealed to the Court of Tax Appeals. As aforestated. that Court ordered payment to ESSO of its "refund-claim x x in the amount of P39,787.94 as overpaid interest. Hence, this appeal by the Commissioner. The CTA justified its award of the refund as follows:

... In the letter of August 5, 1964, .. (the Commissioner) admitted that .. ESSO had overpaid its 1959 income tax by P221,033.00. Accordingly .. (the Commissioner) granted to .. ESSO a tax credit of P221,033.00. In short, the said sum of P221,033.00 of ESSO's money was in the Government's hands at the latest on July 15, 1960 when it ESSO paid in full its second installment of income tax for 1959. On July 10, 1964 .. (the Commissioner) claimed that for 1960, .. ESSO underpaid its income tax by P367,994.00. However, instead of deducting from P367,994.00 the tax credit of P221,033.00 which .. (theCommissioner) had already admitted was due .. ESSO .. (the Commissioner) still insists in collecting the interest on the full amount of P367,994.00 for the period April 18, 1961 to April 18,1964 when the Government had already in its hands the sum of P221,033.00 of .. ESSOs money even before the latter's income tax for 1960 was due and payable. If the imposition of interest does not amount to a penalty but merely a just compensation to the State for the delay in paying the tax, and for the concomitant use by thetaxpayer of funds that rightfully should be in the Government's hand (Castro v. Collector, G.R. No. L-1274,Dec. 28, 1962), the collection of the interest on the full amount of P367,994.00 without deducting first the tax credit of P221,033.00, which has long been in the hands of the Government, becomes erroneous, illegal and arbitrary... (ESSO) could hardly be charged of delinquency in paying P221,033.00 out of the deficiency income tax of P367,994.00, for which the State should be compensated by the payment of interest, because the said amount of P221,033.00 was already in the coffers of the Government. Neither could .. ESSO be charged for the concomitant use of funds that rightfully belong to the Government because as early as July 15, 1960, it was the Government that was using .. ESSOs funds of P221,033.00. In the circumstances, we

find it unfair and unjust for .. (the Commissioner) to exact the interest on the said sum of P221,033.00 which, after all, was paid to and received by the Government even before the incidence of the deficiency income tax of P367,994.00. (Itogon-Suyoc Mines, Inc. v. Commissioner, C.T.A. Case No. 1327, Sept. 30,1965). On the contrary, the Government should be the first to blaze the trail and set the example of fairness and honest dealing in the administration of tax laws.Accordingly, we hold that the tax credit of P221,033.00 for 1959 should first be deducted from the basic deficiency tax of P367,994.00 for 1960 and the resulting difference of P146,961.00 would be subject to the 18% interest prescribed by Section 51 (d) of the Revenue Code. According to the prayer of ..(ESSO) ..(the Commissioner) is hereby ordered to refund to .. (ESSO) the amount of P39,787.94 as overpaid interest in the settlement of its 1960 income tax liability. However, as the collection of the tax was not attended with arbitrariness because .. (ESSO) itself followed x x (the Commissioner's) manner of computing the tax in paying the sum of P213,189.93 on August 10, 1964, the prayer of .. (ESSO) that it begranted the legal rate of interest on its overpayment of P39,787.94 from August 10, 1964 to the time it is actually refunded is denied. (See Collector of Internal Revenue v. Binalbagan Estate, Inc., G.R. No. 1,12752, Jan. 30, 1965).

The Commissioner's position is that income taxes are determined and paid on an annual basis, and that such determination and payment of annual taxes are separate and independent transactions; and that a tax credit could not be so considered until it has been finally approved and the taxpayer duly notified thereof. Since in this case, he argues, the tax credit of P221,033.00 was approved only on August 5, 1964, it could not be availed of in reduction of ESSOs earlier tax deficiency for the year 1960; as of that year, 1960, there was as yet no tax credit to speak of, which would reduce the deficiency tax liability for 1960. In support of his position, the Commissioner invokes the provisions of Section 51 of the Tax Code pertinently reading as follows:

(c) Definition of deficiency. As used in this Chapter in respect of tax imposed by this Title, the term 'deficiency' means:(1) The amount by which the tax imposed by this Title exceeds the amount shown as the tax by the taxpayer upon his return; but the amount so shown on the return shall first be increased by the amounts previously assessed (or collected without assessment) as a deficiency, and decreased by the amount previously abated credited, returned, or otherwise in respect of such tax; ..xxx xxx xxx(d) Interest on deficiency. — Interest upon the amount determined as deficiency shall be assessed at the same time as the deficiency and shall be paid upon notice and demand from the Commissioner of InternalRevenue; and shall be collected as a part of the tax, at the rate of six per centum per annum from the date prescribed for the payment of the tax (or, if the tax is paid in installments, from the date prescribed for the payment of the first installment) to the date the deficiency is assessed; Provided, That the amount that may be collected as interest on deficiency shall in no case exceed the amount corresponding to a period of three years, the present provision regarding prescription to the contrary notwithstanding.

The fact is that, as respondent Court of Tax Appeals has stressed, as early as July 15, 1960, the Government already had in its hands the sum of P221,033.00 representing excess payment. Having been paid and received by mistake, as petitioner Commissioner subsequently acknowledged, that sum unquestionably belonged to ESSO, and the Government had the obligation to return it to ESSO That acknowledgment of the erroneous payment came some four (4) years afterwards in nowise negates or detracts from its actuality. The obligation to return money mistakenly paid arises from the moment that payment is made, and not from the time that the payee admits the obligation to reimburse. The obligation of the payee to reimburse an amount paid to him results from the mistake, not from the payee's confession of the mistake or recognition of the obligation to reimburse. In other words, since the amount of P221,033.00 belonging to ESSO was already in the hands of the Government as of July, 1960, although the latter had no right whatever to the amount and indeed was bound to return it to ESSO, it was neither legally nor logically possible for ESSO thereafter to be considered a debtor of the Government in that amount of P221,033.00; and whatever other obligation ESSO might subsequently incur in favor of the Government would have to be reduced by that sum, in respect of which no interest could be charged. To interpret the words of the statute in such a manner as to subvert these truisms simply can not and should not be countenanced. "Nothing is better settled than that courts are not to give words a meaning which would lead to absurd or unreasonable consequences. That is a principle that goes back to In re Allen (2 Phil. 630) decided on October 29, 1903, where it was held that a literal interpretation is to be rejected if it would be unjust or lead to absurd results." 6"Statutes should receive a sensible construction, such as will give effect to the legislative intention and so as to avoid an unjust or absurd conclusion." 7WHEREFORE, the petition for review is DENIED, and the Decision of the Court of Tax Appeals dated October 28, 1967 subject of the petition is AFFIRMED, without pronouncement as to costs.Cruz, Gancayco, Griño-Aquino and Medialdea, JJ., concur.

G.R. No. 112170 April 10, 1996

CESARIO URSUA, petitioner, vs.COURT OF APPEALS AND PEOPLE OF THE PHILIPPINES, respondents. BELLOSILLO, J.:pThis is a petition for review of the decision of the Court of Appeals which affirmed the conviction of petitioner by the Regional Trial Court of Davao City for violation of Sec. 1 of C.A. No. 142, as amended by R.A. No. 6085, otherwise knownas "An Act to Regulate the Use of Aliases". 1

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

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

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

Before petitioner could leave the premises he was greeted by an acquaintance, Josefa Amparo, who also worked in the same office. They conversed for a while then he left. When Loida learned that the person who introduced himself as "Oscar Perez" was actually petitioner Cesario Ursua, a customer of Josefa Amparo in her gasoline station, Loida reported the matter to the Deputy Ombudsman who recommended that petitioner be accordingly charged.On 18 December 1990, after the prosecution had completed the presentation of its evidence, petitioner without leave of court filed a demurrer to evidence alleging that the failure of the prosecution to prove that his supposedalias was different from his registered name in the local civil registry was fatal to its cause. Petitioner argued that no document from the local civil registry was presented to show the registered name of accused which according to him was a condition sine qua non for the validity of his conviction.The trial court rejected his contentions and found him guilty of violating Sec. 1 of C.A. No. 142 as amended by R.A. No. 6085. He was sentenced to suffer a prison term of one (1) year and one (1) day of prision correccionalminimum as minimum, to four (4) years of prision correccional medium as maximum, with all the accessory penalties provided for by law, and to pay a fine of P4,000.00 plus costs.Petitioner appealed to the Court of Appeals.On 31 May 1993 the Court of Appeals affirmed the conviction of petitioner but modified the penalty by imposing an indeterminate term of one (1) year as minimum to three (3) years as maximum and a fine of P5,000.00.Petitioner now comes to us for review of his conviction as he reasserts his innocence. He contends that he has not violated C.A. No. 142 as amended by R.A. No. 6085 as he never used any alias name; neither is "Oscar Perez" hisalias. An alias, according to him, is a term which connotes the habitual use of another name by which a person is also known. He claims that he has never been known as "Oscar Perez" and that he only used such name on one occasion and it was with the express consent of Oscar Perez himself. It is his position that an essential requirement for a conviction under C.A. No. 142 as amended by R.A. No. 6085 has not been complied with when the prosecution failed to prove that his supposed alias was different from his registered name in the Registry of Births. He further argues that the Court of Appeals erred in not considering the defense theory that he was charged under the wrong law. 5

Time and again we have decreed that statutes are to be construed in the light of the purposes to be achieved and the evils sought to be remedied. Thus in construing a statute the reason for its enactment should be kept in mind and the statute should be construed with reference to the intended scope and purpose. 6 The court may consider the spirit and reason of the statute, where a literal meaning would lead to absurdity, contradiction, injustice, or would defeat the clear purpose of the lawmakers. 7

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

Sec. 1. Except as a pseudonym for literary purposes, no person shall use any name different from the one with which he was christened or by which he has been known since his childhood, or such substitute name as may have been authorized by a competent court. The name shall comprise the patronymic name and one or two surnames.Sec. 2. Any person desiring to use an alias or aliases shall apply for authority therefor in proceedings like those legally provided to obtain judicial authority for a change of name. Separate proceedings shall be had for each alias, and each new petition shall set forth the original name and the alias oraliases for the use of which judicial authority has been, obtained, specifying the proceedings and the date on which suchauthority was granted. Judicial authorities for the use of aliases shall be recorded in the proper civil register . . . .

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

Sec. 1. Except as a pseudonym solely for literary, cinema, television, radio or other entertainment purposes and in athletic events where the use of pseudonym is a normally accepted practice, no person shall use any name different from the one with which he was registered at birth in the office of the local civil registry or with which he was baptized for the first time, or in case of all alien, with which he was registered in the bureau of immigration upon entry; or such substitute name as may have been authorizedby a competent court: Provided, That persons whose births have not been registered in any local civil registry and who have not been baptized, have one year from the approval of this act within which to register their names in the civil registry of their residence. The name shall comprise the patronymic name and one or two surnames.Sec. 2. Any person desiring to use an alias shall apply for authority therefor in proceedings like those legally provided to obtain judicial authority for a change of name and no person shall be allowed to securesuch judicial authority for more than one alias. The petition for an alias shall set forth the person's baptismal and family name and the name recorded in the civil registry, if different, his immigrant's name, ifan alien, and his pseudonym, if he has such names other than his original or real name, specifying the reason or reasons for the desired alias. The judicial authority for the use ofalias, the Christian name and the alien immigrant's name shall be recorded in the proper local civil registry, and no person shall use anyname or names other than his original or real name unless the same is or are duly recorded in the proper local civil registry.

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

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

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

In Yu Kheng Chiau v. Republic 10 the Court had occasion to explain the meaning, concept and ill effects of the use of an alias within the purview of C.A. No. 142 when we ruled —

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

his petition, because if naturalized as a Filipino citizen, there would then be no necessity for his further using said alias, as it would be contrary to the usual Filipino way and practice of using only one name in ordinary as well as business transactions. And, as the lower court correctly observed, if he believes (after he is naturalized) that it would be better for him to write his name following the Occidental method, "he can easily file a petition for change of name, so that in lieu of the name "Yu Kheng Chian," he can, abandoning the same, ask for authority to adopt the name Kheng Chiau Young."All things considered, we are of the opinion and so hold, that petitioner has not shown satisfactory proper and reasonable grounds under the aforequoted provisions of Commonwealth Act No. 142 and the Rules of Court, to warrant the grant of his petition for the use of an alias name.

Clearly therefore an alias is a name or names used by a person or intended to be used by him publicly and habitually usually in business transactions in addition to his real name by which he is registered at birth or baptized the first time or substitute name authorized by a competent authority. A man's name is simply the sound or sounds by which he is commonly designated by his fellows and by which they distinguish him but sometimes a man is known by several differentnames and these are known as aliases. 11 Hence, the use of a fictitious name or a different name belonging to another person in a single instance without any sign or indication that the user intends to be known by this name in addition to his real name from that day forth does not fall within the prohibition contained in C.A. No. 142 as amended. This is so in the case at bench.It is not disputed that petitioner introduced himself in the Office of the Ombudsman as "Oscar Perez," which was the nameof the messenger of his lawyer who should have brought the letter to that office in the first place instead of petitioner. He did so while merely serving the request of his lawyer to obtain a copy of the complaint in which petitioner was a respondent. There is no question then that "Oscar Perez" is not an alias name of petitioner. There is no evidence showing that he had used or was intending to use that name as his second name in addition to his real name. The use of the name"Oscar Perez" was made by petitioner in an isolated transaction where he was not even legally required to expose his realidentity. For, even if he had identified himself properly at the Office of the Ombudsman, petitioner would still be able to get a copy of the complaint as a matter of right, and the Office of the Ombudsman could not refuse him because the complaintwas part of public records hence open to inspection and examination by anyone under the proper circumstances.While the act of petitioner may be covered by other provisions of law, such does not constitute an offense within the concept of C.A. No. 142 as amended under which he is prosecuted. The confusion and fraud in business transactions which the anti-alias law and its related statutes seek to prevent are not present here as the circumstances are peculiar and distinct from those contemplated by the legislature in enacting C.A. No. 142 as amended. There exists a valid presumption that undesirable consequences were never intended by a legislative measure and that a construction of which the statute is fairly susceptible is favored, which will avoid all objectionable, mischievous, indefensible, wrongful, evil and injurious consequences. 12 Moreover, as C.A. No. 142 is a penal statute, it should be construed strictly against theState and in favor of the accused. 13 The reason for this principle is the tenderness of the law for the rights of individuals and the object is to establish a certain rule by conformity to which mankind would be safe, and the discretion of the court limited. 14 Indeed, our mind cannot rest easy on the proposition that petitioner should be convicted on a law that does not clearly penalize the act done by him.WHEREFORE, the questioned decision of the Court of Appeals affirming that of the Regional Trial Court of Davao City is REVERSED and SET ASIDE and petitioner CESARIO URSUA is ACQUITTED of the crime charged.SO ORDERED.Padilla, Vitug, Kapunan and Hermosisima, Jr., JJ., concur.

G.R. No. 127383 August 18, 2005THE CITY OF DAVAO, CITY TREASURER AND THE CITY ASSESSOR OF DAVAO CITY, Petitioners, vs.THE REGIONAL TRIAL COURT, BRANCH XII, DAVAO CITY AND THE GOVERNMENT SERVICE INSURANCE SYSTEM (GSIS), Respondent.

D E C I S I O NTinga, J.:A Davao City Regional Trial Court (RTC) upheld the tax-exempt status of the Government Service Insurance System (GSIS) for the years 1992 to 1994 in contravention of the mandate under the Local Government Code of 1992,1 the precedent set by this Court in Mactan-Cebu International Airport Authority v. Hon. Marcos,2 and the public policy on local autonomy enshrined in the Constitution.3

The matter was elevated to this Court directly from the trial court on a pure question of law.4 The facts are uncontroverted.On 8 April 1994, the GSIS Davao City branch office received a Notice of Public Auction scheduling the public bidding of GSIS properties located in Matina and Ulas, Davao City for non-payment of realty taxes for the years 1992 to 1994 totaling Two Hundred Ninety Five Thousand Seven Hundred Twenty One Pesos and Sixty One Centavos (P295,721.61).5 The auction was subsequently reset by virtue of a deadline extension allowed by Davao City for the payment of delinquent real property taxes.6

On 28 July 1994, the GSIS received Warrants of Levy and Notices of Levy on three parcels of land owned by the GSIS. Another Notice of Public Auction was received by the GSIS on 29 August 1994, setting the date of auction sale for 20 September 1994.On 13 September 1994, the GSIS filed a Petition for Certiorari, Prohibition, Mandamus And/Or Declaratory Reliefwith the RTC of Davao City. It also sought the issuance of a temporary restraining order. The case was raffled to Branch 12, presided by Judge Maximo Magno Libre. On 13 September 1994, the RTC issued a temporary restraining order for a period of twenty (20) days,7 effectively enjoining the auction sale scheduled seven days later. Following exchange of arguments, the RTC issued an Order dated 3 April 1995 issuing a writ of preliminary injunction effective for the duration of the suit.8

At the pre-trial, it was agreed that the sole issue for resolution was purely a question of law, that is, whether Sections 234 and 534 of the Local Government Code, which have withdrawn real property tax exemptions of government owned and controlled corporations (GOCCs), have also withdrawn from the GSIS its right to be exempted from payment of the realty taxes sought to be levied by Davao City.9 The parties submitted their respective memoranda.On 28 May 1996, the RTC rendered the Decision10 now assailed before this Court. It concluded that notwithstanding the enactment of the Local Government Code, the GSIS retained its exemption from all taxes, including real estate taxes. TheRTC cited Section 33 of Presidential Decree (P.D.) No. 1146, the Revised Government Service Insurance Act of 1977, as amended by P. D. No. 1981, which mandated such exemption.The RTC conceded that the tax exempting statute, P.D. No. 1146, was enacted prior to the Local Government Code. However, it noted that the earlier law had prescribed two conditions in order that the tax exemption provided therein could be withdrawn by future enactments, namely: (1) that Section 33 be expressly and categorically repealed by law; and (2) that a provision be enacted to substitute the declared policy of exemption from any and all taxes as an essential factor for the solvency of the GSIS fund.11 The RTC concluded thatboth conditions had not been satisfied by the Local Government Code. The RTC likewise accorded weight to Legal Opinion No. 165 of the Secretary of Justice dated 16 December 1996 concluding that Section 33 was not repealed by the Local Government Code, and a memorandum emanating from the Office of the President dated 14 February 1995 expressing the same opinion.12

The dispositive portion of the assailed Decision reads:Now then, in light of the foregoing observation, the court perceives, that the cause of action asseverated by petitioner in its petition has been well established by law and jurisprudence, and therefore the following relief should be granted:a) The tax exemption privilege of petitioner should be upheld and continued and that the warrants of levy and notices of levy issued by the respondent Treasurer is hereby voided and declared of no effect;b) Let a writ of prohibition be issued restraining the City Treasurer from proceeding with the auction sale of the subject properties, as well as the respondents Register of Deeds from annotating the warrants/notices of levy on the certificate of titles of petitioners real properties subject of this suit; andc) Compelling the City Assessor of Davao City to include the properties of petitioner in the list of properties exempt from payment of realty tax and if the warrants and levies issued by the City Treasurer had been annotated in the memorandum of encumbrance on the certificates of title of petitioner’s properties, to cancel such annotation so that the certificates of titles of petitioners will be free from such liens and encumbrances.SO ORDERED.13

Petitioners’ Motion for Reconsideration was denied by the RTC in an Order dated 30 October 1996, hence the present petition.Petitioners argue that the exemption granted in Section 33 of P.D. No. 1146, as amended, was effectively withdrawn upon the enactment of the Local Government Code, particularly Sections 193 and 294 thereof. These provisions made the GSIS, along with all other GOCCs, subject to realty taxes. Petitioners point out that under Section 534(f) of the Local Government Code, even special laws, such as PD No. 1146, which are inconsistent with the Local Government Code, are repealed or modified accordingly.On the other hand, GSIS contends, as the RTC held, that the requisites for repeal are laid down in Section 33 of P.D. No. 1146, as amended, namely that it be done expressly and categorically by law, and that a provision be enacted to substitute the declared policy of exemption from taxes as an essential factor for the solvency of theGSIS fund. It stresses that it had been exempt from taxation as far back as 1936, when its original charter was enacted through Commonwealth Act No. 186.14 It asserts further that this Court had previously recognized the "extraordinary exemption" of GSIS in Testate Estate of Concordia T. Lim v. City of Manila,15 and such exemption has similarly been affirmed by the Secretary of Justice and the Office of the President in the aforementioned issuances also cited by the RTC.16

GSIS likewise notes that had it been the intention of the legislature to repeal Section 33 of P.D. No. 1146 through the Local Government Code, said law would have included the appropriate retraction in its repealing clause found in Section 534(f). However, said section, according to the GSIS, partakes the nature of a general repealing provision which is accorded less weight in light of the rule that implied repeals are not favored. Consequently with its position that it remains exempt from realty taxation, the GSIS argues that the Notices of Assessment, Warrants and Notices of Levy, Notices of Public Auction Sale and the Annotations of the Notice of Levy are void ab initio.

A review of the relevant statutory provisions is in order.Presidential Decree No. 1146 was enacted in 1977 by President Marcos in the exercise of his legislative powers. Section 33, as originally enacted, read:Sec. 33. Exemption from tax, Legal Process and Lien.- It is hereby declared to be the policy of the State that the actuarial solvency of the funds of the System shall be preserved and maintained at all times and that the contribution rates necessary to sustain the benefits under this Act shall be kept as low as possible in order not to burden the members of thesystem and/or their employees. . . . Accordingly, notwithstanding any laws to the contrary, the System, its assets, revenues including the accruals thereto, and benefits paid, shall be exempt from all taxes. These exemptions shall continue unless expressly and specifically revoked and any assessment against the System as of the approval of this Act are hereby considered paid.As it stood then, Section 33 merely provided a general rule exempting the GSIS from all taxes. However, Section 33 of P.D. No. 1146 was amended in 1985 by President Marcos, again in the exercise of his legislative powers, through P.D. No.1981. It was through this latter decree that a second paragraph was added to Section 33 delineating the requisites for repeal of the tax exemption enjoyed by the GSIS by incorporating the following:…Moreover, these exemptions shall not be affected by subsequent laws to the contrary, such as the provisions of Presidential Decree No. 1931 and other similar laws that have been or will be enacted, unless this section is expressly and categorically repealed by law and a provision is enacted to substitute the declared policy of exemption from any and all taxes as an essential factor for the solvency of the fund.17

It bears noting though, and it is perhaps key to understanding the necessity of the addendum provided under P.D. No. 1981, that a presidential decree enacted a year earlier, P.D. No. 1931, effectively withdrew all tax exemption privileges granted to GOCCs.18 In fact, P.D. No. 1931 was specifically named in the afore-quoted addendum as among those laws which, despite passage, would not affect the tax exempt status of GSIS. Section 1 of P.D. No. 1931 states:Sec. 1. The provisions of special or general law to the contrary notwithstanding, all exemptions from the payment of duties, taxes, fees, imposts and other charges heretofore granted in favor of government-owned or controlled corporationsincluding their subsidiaries, are hereby withdrawn.There is no doubt that the GSIS which was established way back in 1937 is a GOCC, a fact that GSIS itself admits in its petition for certiorari before the RTC.19 It thus clear that Section 1 of P.D. No. 1931 expressly withdrew those exemptions granted to the GSIS. Presidential Decree No. 1931 did allow the exemption to be restored in special cases through an application for restoration with the Secretary of Finance, but otherwise, the exemptions granted to the GSIS prior to the enactment of P.D. No. 1931 were withdrawn.Notably, P.D. No. 1931 was also an exercise of legislative powers then accorded to President Marcos by virtue of Amendment No. 6 to the 1973 Constitution. Whether he was aware of the effect of P.D. No. 1931 on the GSIS’s tax-exempt status or the ramifications of the decree thereon is unknown; but apparently, he immediately reconsidered the withdrawal of the exemptions on the GSIS. Thus, P.D. No. 1981 was enacted, expressly stating that the tax-exempt statusof the GSIS under Section 33 of P.D. No. 1146 remained in place, notwithstanding the passage of P.D. No. 1931.However, P.D. No. 1981 did not stop there, serving merely as it should to restore the previous exemptions on the GSIS. It also attempted to proscribe future attempts to alter the tax-exempt status of the GSIS by imposing unorthodox conditions for its future repeal. Thus, as intimated earlier, a second paragraph was added to Section 33, containing the restrictions relied upon by the RTC and presently invoked by the GSIS before this Court.These laws have to be weighed against the Local Government Code of 1992, a landmark law which implemented the constitutional aspirations for a more extensive breadth of local autonomy. The Court, in Mactan, was asked to consider theeffect of the Local Government Code on the taxability by local governments of GOCCs such as the Mactan Cebu International Airport Authority (MCIAA). Particularly, MCIAA invoked Section 133(o) of the Local Government Code as the basis for its claimed exemption, the provision reading:SECTION 133. Common Limitations on the Taxing Powers of Local Government Units.— Unless otherwise provided herein, the exercise of the taxing powers of provinces, cities, municipalities, and barangays shall not extend to the levy of the following:

. . . .(o) Taxes, fees or charges of any kind on the National Government, its agencies and instrumentalities and local

government units.However, the Court, in ruling MCIAA non-exempt from realty taxes, considered that Section 133 qualified the exemption ofthe National Government, its agencies and instrumentalities from local taxation with the phrase "unless otherwise provided herein." The Court then considered the other relevant provisions of the Local Government Code, particularly the following:SECTION 193. Withdrawal of Tax Exemption Privileges. – Unless otherwise provided in this Code, tax exemption or incentives granted to, or enjoyed by all persons, whether natural or juridical, including government-owned and controlled corporations, except local water districts, cooperatives duly registered under R.A. No. 6938, non-stock and non-profit hospitals and educational institutions, are hereby withdrawn upon the effectivity of this Code.

SECTION 232. Power to Levy Real Property Tax. – A province or city or a municipality within the Metropolitan Manila areamay levy an annual ad valorem tax on real property such as land, building, machinery, and other improvements not hereafter specifically exempted.SECTION 234. Exemptions from Real Property Tax. -- The following are exempted from payment of the real property tax:(a) Real property owned by the Republic of the Philippines or any of its political subdivisions except when the beneficial use thereof has been granted, for consideration or otherwise, to a taxable person;(b) Charitable institutions, churches, parsonages or convents appurtenant thereto, mosques, non-profit or religious cemeteries and all lands, buildings, and improvements actually, directly, and exclusively used for religious charitable or educational purposes;(c) All machineries and equipment that are actually, directly and exclusively used by local water districts and government-owned and controlled corporations engaged in the distribution of water and/or generation and transmission of electric power;(d) All real property owned by duly registered cooperatives as provided for under R.A. No. 6938; and(e) Machinery and equipment used for pollution control and environmental protection.Except as provided herein, any exemption from payment of real property tax previously granted to, or presently enjoyed by, all persons, whether natural or juridical, including all government-owned or controlled corporations are hereby withdrawn upon the effectivity of this Code. (Emphasis supplied.)Evidently, Section 133 was not intended to be so absolute a prohibition on the power of LGUs to tax the National Government, its agencies and instrumentalities, as evidenced by these cited provisions which "otherwise provided." But what was the extent of the limitation under Section 133? This is how the Court, in a discussion of far-reaching consequence, defined the parameters in Mactan:The foregoing sections of the LGC speak of: (a) the limitations on the taxing powers of local government units and the exceptions to such limitations; and (b) the rule on tax exemptions and the exceptions thereto. The use of exceptions or provisos in these sections, as shown by the following clauses:(1) "unless otherwise provided herein" in the opening paragraph of Section 133;(2) "Unless otherwise provided in this Code" in Section 193;(3) "not hereafter specifically exempted" in Section 232; and(4) "Except as provided herein" in the last paragraph of Section 234initially hampers a ready understanding of the sections. Note, too, that the aforementioned clause in Section 133 seems tobe inaccurately worded. Instead of the clause "unless otherwise provided herein," with the "herein" to mean, of course, thesection, it should have used the clause "unless otherwise provided in this Code." The former results in absurdity since the section itself enumerates what are beyond the taxing powers of local government units and, where exceptions were intended, the exceptions are explicitly indicated in the next. For instance, in item (a) which excepts income taxes "when levied on banks and other financial institutions"; item (d) which excepts "wharfage on wharves constructed and maintainedby the local government unit concerned"; and item (1) which excepts taxes, fees and charges for the registration and issuance of licenses or permits for the driving of "tricycles." It may also be observed that within the body itself of the section, there are exceptions which can be found only in other parts of the LGC, but the section interchangeably uses therein the clause, "except as otherwise provided herein" as in items (c) and (i), or the clause "except as provided in this Code" in item (j). These clauses would be obviously unnecessary or mere surplusages if the opening clause of the sectionwere "Unless otherwise provided in this Code" instead of "Unless otherwise provided herein." Inany event, even if the latter is used, since under Section 232 local government units have the power to levy real property tax, except those exempted therefrom under Section 234, then Section 232 must be deemed to qualify Section 133.Thus, reading together Sections 133, 232, and 234 of the LGC, we conclude that as a general rule, as laid down in Section 133, the taxing powers of local government units cannot extend to the levy of,inter alia, "taxes, fees and charges of any kind on the National Government, its agencies and instrumentalities, and local government units"; however, pursuant to Section 232, provinces, cities, and municipalities in the Metropolitan Manila Area may impose the real property tax except on, inter alia, "real property owned by the Republic of the Philippines or any of its political subdivisions except when the beneficial use thereof has been granted, for consideration or otherwise, to a taxable person," as provided in item (a) of the first paragraph of Section 234.As to tax exemptions or incentives granted to or presently enjoyed by natural or judicial persons, including government-owned and controlled corporations, Section 193 of the LGC prescribes the general rule, viz., they are withdrawn upon the effectivity of the LGC, except those granted to local water districts, cooperatives duly registered under R.A. No. 6938, non-stock and non-profit hospitals and educational institutions, and unless otherwise provided in the LGC. The latter proviso could refer to Section 234 which enumerates the properties exempt from real property tax. But the last paragraph of Section 234 further qualifies the retention of the exemption insofar as real property taxes are concerned by limiting the retention only to those enumerated therein; all others not included in the enumeration lost the privilege upon the effectivity of the LGC. Moreover, even as to real property owned by the Republic of the Philippines or any of its political subdivisions covered by item (a) of the first paragraph of Section 234, the exemption is withdrawn if the beneficial use of such property has been granted to a taxable person for consideration or otherwise.

Since the last paragraph of Section 234 unequivocally withdrew, upon the effectivity of the LGC, exemptions from payment of real property taxes granted to natural or juridical persons, including government-owned or controlled corporations, except as provided in the said section, and the petitioner is, undoubtedly, a government-owned corporation, it necessarily follows that its exemption from such tax granted it in Section 14 of its Charter, R.A. No. 6958, has been withdrawn. Any claim to the contrary can only be justified if the petitioner can seek refuge under any of the exceptions provided in Section 234, but not under Section 133, as it now asserts, since, as shown above, the said section is qualified by Sections 232 and 234.20 (Emphasis supplied.)This Court, in Mactan, acknowledged that under Section 133, instrumentalities were generally exempt from all forms of local government taxation, unless otherwise provided in the Code. On the other hand, Section 232 "otherwise provides" insofar as it allowed local government units to levy an ad valorem real property tax, irrespective of who owned the property. At the same time, the imposition of real property taxes under Section 232 is in turn qualified by the phrase "not hereinafter specifically exempted." The exemptions from real property taxes are enumerated in Section 234, which specifically states that only real properties owned "by the Republic of the Philippines or any of its political subdivisions" areexempted from the payment of the tax. Clearly, instrumentalities or GOCCs do not fall within the exceptions under Section234.Worth reckoning, however, is an essential difference between the situation of the MCIAA (and most other GOCCs, for that matter) and that of the GSIS. Unlike most other GOCCs, there is a statutory provision— Section 33 of P.D. No. 1146, as amended—which imposes conditions on the subsequent withdrawal of the GSIS’s tax exemptions. The RTC justified the affirmance of the tax exemptions based on the non-compliance by the Local Government Code with these conditionalities,and not by reason of a general proposition that GOCCs or instrumentalities remain exempt from local government taxation.Absent Section 33 of P.D. No. 1146, as amended, there would be no impediment in squarely applying the express provisions of Sections 193, 232 and 234 of the Local Government Code, as the Court did in Mactan and recently in Philippine Rural Electric Cooperatives Association, Inc. et al. v. Secretary of Interior And Local Government, et al. 21 andin ruling that the tax exemptions of GSIS were withdrawn by the Code. Thus, the crucial proposition is whether the GSIS tax exemptions can be deemed as withdrawn by the Local Government Code notwithstanding Section 33 of P.D. No. 1146as amended.Concededly, it does not appear that at the very least, the second conditionality of Section 33 has been met. No provision has been enacted "to substitute the declared policy of exemption from any and all taxes as an essential factor for the solvency of the fund."22 Yet the Court is averse to employing this framework, in the first place as utilized by the RTC, for we recognize a fundamental flaw in Section 33, particularly the amendatory second paragraph introduced by P.D. No. 1981.The second paragraph of Section 33 of P.D. No. 1146, as amended, effectively imposes restrictions on the competency of the Congress to enact future legislation on the taxability of the GSIS. This places an undue restraint on the plenary power of the legislature to amend or repeal laws, especially considering that it is a lawmaker’s act that imposes such burden. Only the Constitution may operate to preclude or place restrictions on the amendment or repeal of laws. Constitutional dicta is of higher order than legislative statutes, and the latter should always yield to the former in cases of irreconcilable conflict.It is a basic precept that among the implied substantive limitations on the legislative powers is the prohibition against the passage of irrepealable laws.23 Irrepealable laws deprive succeeding legislatures of the fundamental best senses carte blanche in crafting laws appropriate to the operative milieu. Their allowance promotes an unhealthy stasis in the legislativefront and dissuades dynamic democratic impetus that may be responsive to the times. As Senior Associate Justice Reynato S. Puno once observed, "[t]o be sure, there are no irrepealable laws just as there are no irrepealable Constitutions. Change is the predicate of progress and we should not fear change."24

Moreover, it would be noxious anathema to democratic principles for a legislative body to have the ability to bind the actions of future legislative body, considering that both assemblies are regarded with equal footing, exercising as they do the same plenary powers. Perpetual infallibility is not one of the attributes desired in a legislative body, and a legislature which attempts to forestall future amendments or repeals of its enactments labors under delusions of omniscience.It might be argued that Section 33 of P.D. No. 1146, as amended, does not preclude the repeal of the tax-exempt status ofGSIS, but merely imposes conditions for such to validly occur. Yet these conditions, if honored, have the precise effect of limiting the powers of Congress. Thus, the same rationale for prohibiting irrepealable laws applies in prohibiting restraints on future amendatory laws. President Marcos, who exercised his legislative powers in amending P.D. No. 1146, could not have demanded obeisance from future legislators by imposing restrictions on their ability to legislate amendments or repeals. The concerns that may have militated his enactment of these restrictions need not necessarily be shared by subsequent Congresses.We do not mean to trivialize the need to ensure the solvency of the GSIS fund, a concern that has seen legislative expression, even with the most recently enacted Government Service Insurance System Act of 1997.25 Yet at the same time, we recognize that Congress has the putative authority, through valid legislation, to diminish such fund, or even abolish the GSIS itself if it so desires. The GSIS may provide vital services and security to employees of the civil service, yet it is not a sacred cow that is beyond abolition by Congress if, for example, more innovative methods are devised to ensure stable pension funds for government employees. If Congress has the inherent power to abrogate the GSIS itself,

then it necessarily has the ability to inflict less detrimental burdens, such as abolishing its tax-exempt status. If there couldbe legal authority proscribing the Congress from enacting such legislation, such should be sourced from the Constitution itself, and not from antecedent statutes which were themselves enacted by legislative power.The Court’s position is aligned with entrenched norms of statutory construction. In Duarte v. Dade,26 the Court cited with approval Lewis’ Southerland on Statutory Construction, which states:A state legislature has a plenary law-making power over all subjects, whether pertaining to persons or things, within its territorial jurisdiction, either to introduce new laws or repeal the old, unless prohibited expressly or by implication by the federal constitution or limited or restrained by its own. It cannot bind itself or its successors by enacting irrepealable laws except when so restrained. Every legislative body may modify or abolish the acts passed by itself or its predecessors. Thispower of repeal may be exercised at the same session at which the original act was passed; and even while a bill is in its progress and before it becomes a law. This legislature cannot bind a future legislature to a particular mode of repeal. It cannot declare in advance the intent of subsequent legislatures or the effect of subsequent legislation upon existing statutes. (Emphasis supplied.)27

The citation is particularly apropos to our present task, since the question for resolution is primarily one of statutory construction, i.e., whether or not Section 33 of P.D. No. 1146 has been repealed by the Local Government Code. It is evident that we cannot render effective the amendatory second paragraph of Section 33as the RTC did, for by doing so, we would be giving sanction to a disingenuous means employed through legislative power to bind subsequent legislators to a particular mode of repeal.Thus, the two conditionalities of Section 33 cannot bear relevance on whether the Local Government Code removed the tax-exempt status of the GSIS. The express withdrawal of all tax exemptions accorded to all persons, natural or juridical, as stated in Section 193 of the Local Government Code, applies without impediment to the present case. Such position is bolstered by the other cited provisions of the Local Government Code, and by theMactan ruling.There are other reasons that guide us to construe the Local Government Code in favor of the City of Davao’s position. Section 5 of the Local Government Code provides the guidelines on how to construe the Code’s provisions in cases of doubt, and they are self-explanatory, thus:Section 5. Rules of Interpretation. – In the interpretation of the provisions of this Code, the following rules shall apply:(a) Any provision on a power of a local government unit shall be liberally interpreted in its favor, and in case of doubt, any question thereon shall be resolved in favor of devolution of powers and of the lower local governmentunit. Any fair and reasonable doubt as to the existence of the power shall be interpreted in favor of the local government unit concerned;(b) In case of doubt, any tax ordinance or revenue measure shall be construed strictly against the local government unit enacting it, and liberally in favor of the taxpayer. Any tax exemption, incentive or relief granted by any local government unit pursuant to the provisions of this Code shall be construed strictly against the person claiming it; (Emphasis supplied.)Also worthy of note is that the Constitution itself promotes the principles of local autonomy as embodied in the Local Government Code. The State is mandated to ensure the autonomy of local governments,28 and local governments are empowered to levy taxes, fees and charges that accrue exclusively to them, subject to congressional guidelines and limitations.29 The principle of local autonomy is no mere passing dalliance but a constitutionally enshrined precept that deserves respect and appropriate enforcement by this Court.We are aware that this stance runs contrary to that which was adopted by the Secretary of Justice in his Opinion dated 22 July 1993, as well as the memorandum from the Office of the President dated 14 February 1995, expressing the same opinion. However, statutory interpretations of these executive bodies do not hold decisive sway upon the judiciary but are merely persuasive. These issuances cannot derogate from the binding precept that one legislature cannot enact irrepealable legislation or limit or restrict its own power or the power of its successors as to the repeal of statutes.30 The act of one legislature is not binding upon and does not tie the hands of future legislatures.31

The GSIS’s tax-exempt status, in sum, was withdrawn in 1992 by the Local Government Code but restored by the Government Service Insurance SystemAct of 1997, the operative provision of which is Section39.32 The subject real property taxes for the years 1992 to 1994 were assessed against GSIS while the Local GovernmentCode provisions prevailed and, thus, may be collected by the City of Davao.WHEREFORE, premises considered, the Petition for Review is hereby GRANTED. The appealed Decision of the Regional Trial Court of Davao City, Branch 12 is REVERSED and SET ASIDE.Costs de oficio.SO ORDERED.